##### 









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-K/A


|   |  |                                                                                             
|-- |  | --------------------------------------------------------------------------------------------
|þ  |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|  
|   |  | For the Fiscal Year Ended December 31, 2004                                                 
|  
|or
|  
|o  |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
|  
|   |  | For the Transition Period
    From           to                                             

Commission file number 0-13198





Morton Industrial Group, Inc.


www.mortongroup.com


(Exact name of registrant as specified in its charter)


|                                                                                      |  |                                                                       
|------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------
|Georgia                                                                               |  | 38-0811650                                                            
|(State or other jurisdiction of
    Incorporation or organization)                    |  | (I.R.S. Employer
     Identification No.)                             
|                                                                                     
|1021 W. Birchwood, Morton,
    Illinois 61550(Address of principal executive offices) |  | (309) 266-7176(Registrants telephone number, including area
    code)

Securities registered pursuant to Section 12(b) of the
Act:


None


Securities registered pursuant to section 12(g) of the
Act:


Class A Common Stock, par value $.01 per share


(Title of class)


þ


þ


o þ






DOCUMENTS INCORPORATED BY REFERENCE












---



##### 





MORTON INDUSTRIAL GROUP, INC.


Item Amended


Part II




| |         |                                            
| | ------- | -------------------------------------------
| | Item 8. | Financial Statements and Supplementary Data







TEXT OF AMENDMENT








---



##### 



Safe Harbor Statement Under The Private
Securities Litigation Reform Act Of 1995:


PART I




|        |         
|------- | --------
|Item 1. | Business

Narrative Description of Business




| |         
| | --------
| | Business



| |         
| | --------
| | Overview







| |        
| | -------
| | Markets





2



---



##### 







| |                       
| | ----------------------
| | Construction Equipment





| |                     
| | --------------------
| | Industrial Equipment





| |                       
| | ----------------------
| | Agricultural Equipment





| |         
| | --------
| | Products





| |                        
| | -----------------------
| | Sheet Metal Fabrication







| |   |                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Sheet Metal Enclosures and Boxes generator
    set enclosures, electrical and battery boxes, panels, doors,
    hoods and covers used in backhoes, excavators and tractors.
|
| |  | Special Weldments seat modules, frames,
    guards, platforms, step assemblies and cabs used in backhoes,
    excavators, crawlers, tractors and skid steer loaders.       
|
| |  | Fabricated Steel Tanks fuel and hydraulic
    fluid reservoirs used in motor graders, trucks, crawlers, wheel
    loaders and excavators.                                  

3



---



##### 





| |   |                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Sheet Metal Component Packages laser cut and
    formed parts that are used in higher level assemblies at
    customer locations. These products include brackets, plates and
    frame components that are used in a wide variety of customer end
    products.
|
| |  | Store Fixtures back frames, lights and
    brackets used in store displays and commercial refrigeration
    units.                                                                                                                                              



| |         
| | --------
| | Services





| |                               
| | ------------------------------
| | Product Design and Development





| |                     
| | --------------------
| | Prototyping/ Tooling





| |                                       
| | --------------------------------------
| | Part Decorating and Exterior Finishing





| |                      
| | ---------------------
| | Just-In-Time Delivery





| |                                    
| | -----------------------------------
| | Engineering and Design Capabilities





| |                     
| | --------------------
| | Systems and Controls



Sales and Marketing




4



---



##### 





Manufacturing/ Production




Sheet Metal Fabrication.


Raw Materials




Competition




Regulatory/ Environmental Matters




Financial Information about Industry Segments




5



---



##### 



Backlog




Patents, Trademarks, Licenses, Franchises, and Concessions;
Research and Development




Working Capital Items




Employees




Internet


www.mortongroup.com.


Significant Past Events of the Business






6



---



##### 





|        |           
|------- | ----------
|Item 2. | Properties



|                                        |  |         |         |  |                       |                                                                                                                   
|--------------------------------------- |  | ------- | ------- |  | --------------------- | ------------------------------------------------------------------------------------------------------------------
|                                        |  | Approx. |         |  |                      
|Location                                |  | Sq. Ft. |         |  | Products Manufactured
|                                        |  |         |         |  |                      
|1021 West Birchwood Street, Morton, IL  |  |         | 284,000 |  |                       | Sheet metal enclosures and boxes, sheet metal component
    packages, store fixtures and tractor frames           
|400 Detroit Avenue, Morton, IL (leased) |  |         | 155,000 |  |                       | Special weldments, including seat modules, cabs and fabricated
    steel tanks                                    
|231 Detroit Avenue, Morton, IL (leased) |  |         | 40,000  |  |                       | Raw materials and components storage                                                                              
|Apex, NC (leased)                       |  |         | 100,000 |  |                       | Special weldments, sheet metal enclosures and boxes, sheet metal
    component packages and fabricated steel tanks
|Honea Path, SC                          |  |         | 30,000  |  |                       | Store fixtures and sheet metal component packages                                                                 
|Welcome, NC                             |  |         | 185,000 |  |                       | Sheet metal enclosures and boxes, special weldments, fabricated
    steel tanks and sheet metal component packages







|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings

Worthington








7



---



##### 









|        |                                                  
|------- | -------------------------------------------------
|Item 4. | Submission of Matters to Vote of Security Holders



PART II


Item 5.                      Market
for Registrants Common Equity and Related Stockholder
Matters.






|     |                          |      |   |      |     |  |   |      | 
|---- | ------------------------ | ---- | - | ---- | --- |  | - | ---- | 
|     |                          | High |   |      | Low | 
|     |                          |      |   |      |     | 
|2004 |                          |      |   |      |     |  |   |     
|     | October 1 to December 31 |      | $ | 5.95 |     |  | $ | 4.30 | 
|     | July 1 to September 30   |      | $ | 5.10 |     |  | $ | 3.55 | 
|     | April 1 to June 30       |      | $ | 4.05 |     |  | $ | 2.20 | 
|     | January 1 to March 31    |      | $ | 1.90 |     |  | $ | 0.50 | 
|2003 |                          |      |   |      |     |  |   |     
|     | October 1 to December 31 |      | $ | 0.71 |     |  | $ | 0.01 | 



|     |                        |      |   |       |     |  |   |       | 
|---- | ---------------------- | ---- | - | ----- | --- |  | - | ----- | 
|     |                        | High |   |       | Low | 
|     |                        |      |   |       |     | 
|2003 |                        |      |   |       |     |  |   |      
|     | July 1 to September 30 |      | $ | 0.700 |     |  | $ | 0.150 | 
|     | April 1 to June 30     |      | $ | 0.650 |     |  | $ | 0.200 | 
|     | January 1 to March 31  |      | $ | 0.550 |     |  | $ | 0.100 | 











8



---



##### 







|          |         |  |          |   |       |                 |  |        |               |  |  |  |         | 
|--------- | ------- |  | -------- | - | ----- | --------------- |  | ------ | ------------- |  |  |  | ------- | 
|          |         |  |          |   |       | Number of       | 
|Number of |         |  | Exercise |   |       |                 |  | Shares |              
|Shares    |         |  | Price    |   |       | Expiration Date |  |        | Exercisable   | 
|          |         |  |          |   |       |                 |  |        |               | 
|          | 51,650  |  |          | $ | 1.875 |                 |  |        | February 2011 |  |  |  | 51,650  | 
|          | 46,668  |  |          |   | 0.325 |                 |  |        | June 2012     |  |  |  | 21,668  | 
|          | 465,001 |  |          |   | 0.150 |                 |  |        | February 2013 |  |  |  | 89,996  | 
|          | 30,000  |  |          |   | 0.250 |                 |  |        | April 2013    |  |  |  | 30,000  | 
|          | 72,500  |  |          |   | 0.250 |                 |  |        | August 2013   |  |  |  | 72,500  | 
|          | 10,000  |  |          |   | 0.300 |                 |  |        | November 2013 |  |  |  | 3,333   | 
|          |         |  |          |   |       |                 |  |        |               | 
|          | 675,819 |  |          |   |       |                 |  |        |               |  |  |  | 269,147 | 
|          |         |  |          |   |       |                 |  |        |               | 



9



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##### 





|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data

Selected Historical Financial Data




|                                                                                                           |                                              |                         |         |       |      |   |         |       |   |   |         |       |   |      |         |      |  |   |         |      | 
|---------------------------------------------------------------------------------------------------------- | -------------------------------------------- | ----------------------- | ------- | ----- | ---- | - | ------- | ----- | - | - | ------- | ----- | - | ---- | ------- | ---- |  | - | ------- | ---- | 
|                                                                                                           |                                              | Year Ended December 31, |        
|                                                                                                           |                                              |                         |        
|                                                                                                           |                                              | 2000                    |         |       | 2001 |   |         | 2002  |   |   | 2003    |       |   | 2004 |        
|                                                                                                           |                                              |                         |         |       |      |   |         |       |   |   |         |       |   |      |        
|Operating data:                                                                                            |                                              |                         |         |       |      |   |         |       |   |   |         |       |   |      |         |      |  |   |         |     
|Net sales                                                                                                  |                                              | $                       | 147,417 |       |      | $ | 127,103 |       |   | $ | 116,567 |       |   | $    | 131,431 |      |  | $ | 185,469 |     
|Cost of sales                                                                                              |                                              |                         | 128,007 |       |      |   | 111,358 |       |   |   | 101,522 |       |   |      | 113,318 |      |  |   | 161,910 |     
|Gross profit                                                                                               |                                              |                         | 19,410  |       |      |   | 15,745  |       |   |   | 15,045  |       |   |      | 18,113  |      |  |   | 23,559  |     
|Selling and administrative expenses                                                                        |                                              |                         | 12,874  |       |      |   | 13,131  |       |   |   | 12,170  |       |   |      | 13,362  |      |  |   | 14,797  |     
|Restructuring charges                                                                                      |                                              |                         |        |       |      |   | 1,323   |       |   |   |        |       |   |      |        |      |  |   |        |     
|Operating income (loss)                                                                                    |                                              |                         | 6,536   |       |      |   | 1,291   |       |   |   | 2,875   |       |   |      | 4,751   |      |  |   | 8,762   |     
|Gain (loss) on sale of business units and other                                                            |                                              |                         | (248    | )     |      |   | (610    | )     |   |   | 365     |       |   |      | 442     |      |  |   | 172     |     
|Interest expense, net                                                                                      |                                              |                         | (7,376  | )     |      |   | (6,706  | )     |   |   | (4,228  | )     |   |      | (3,084  | )    |  |   | (4,526  | )   
|Interest on redeemable preferred stock                                                                     |                                              |                         |        |       |      |   |        |       |   |   |        |       |   |      | (427    | )    |  |   | (250    | )   
|Earnings (loss) before income taxes, accounting change and
    discontinued operations                     |                                              |                         | (1,088  | )     |      |   | (6,025  | )     |   |   | (988    | )     |   |      | 1,682   |      |  |   | 6,991   |     
|Income taxes (benefit)                                                                                     |                                              |                         | (632    | )     |      |   | 1,242   |       |   |   | (288    | )     |   |      | 426     |      |  |   | (5,775  | )   
|Earnings (loss) before discontinued operations and cumulative
    effect of change in accounting principle |                                              |                         | (456    | )     |      |   | (7,267  | )     |   |   | (700    | )     |   |      | 1,256   |      |  |   | 12,766  |     
|Net income (loss) from operations of discontinued plastics
    operations                                  |                                              |                         | 1,048   |       |      |   | (9,454  | )     |   |   | 6,790   |       |   |      | 85      |      |  |   |        |     
|Earnings (loss) before cumulative effect of accounting change                                              |                                              |                         | 592     |       |      |   | (16,721 | )     |   |   | 6,090   |       |   |      | 1,341   |      |  |   | 12,766  |     
|Cumulative effect of change in accounting principle                                                        |                                              |                         |        |       |      |   |        |       |   |   | (8,118  | )     |   |      |        |      |  |   |        |     
|Net earnings (loss)                                                                                        |                                              |                         | 592     |       |      |   | (16,721 | )     |   |   | (2,028  | )     |   |      | 1,341   |      |  |   | 12,766  |     
|Accretion of discount on preferred shares                                                                  |                                              |                         | (898    | )     |      |   | (1,066  | )     |   |   | (1,265  | )     |   |      | (715    | )    |  |   |        |     
|Net earnings (loss) available to common shareholders                                                       |                                              | $                       | (306    | )     |      |   | (17,787 | )     |   |   | (3,293  | )     |   |      | 626     |      |  |   | 12,766  |     
|                                                                                                           |                                              |                         |         |       |      |   |         |       |   |   |         |       |   |      |        
|Earnings (loss) per share  basic:                                                                         |                                              |                         |         |       |      |   |         |       |   |   |         |       |   |      |         |      |  |   |         |     
|                                                                                                           | Earnings (loss) from continuing operations   |                         | $       | (0.30 | )    |   |         | (1.81 | ) |   |         | (0.42 | ) |      |         | 0.12 |  |   |         | 2.73 | 
|                                                                                                           | Earnings (loss) from discontinued operations |                         |         | 0.23  |      |   |         | (2.06 | ) |   |         | 1.46  |   |      |         | 0.02 |  |   |         |     | 
|Cumulative effect of a change in accounting principle                                                      |                                              |                         |        |       |      |   |        |       |   |   | (1.75   | )     |   |      |        |      |  |   |        |     
|                                                                                                           |                                              |                         |         |       |      |   |         |       |   |   |         |       |   |      |        
|                                                                                                           | Total earnings (loss) per share              |                         | $       | (0.07 | )    |   |         | (3.87 | ) |   |         | (0.71 | ) |      |         | 0.14 |  |   |         | 2.73 | 
|                                                                                                           |                                              |                         |         |       |      |   |         |       |   |   |         |       |   |      |        
|Earnings (loss) per share  diluted:                                                                       |                                              |                         |         |       |      |   |         |       |   |   |         |       |   |      |         |      |  |   |         |     
|                                                                                                           | Earnings (loss) from continuing operations   |                         | $       | (0.30 | )    |   |         | (1.81 | ) |   |         | (0.42 | ) |      |         | 0.11 |  |   |         | 2.16 | 
|                                                                                                           | Earnings (loss) from discontinued operations |                         |         | 0.23  |      |   |         | (2.06 | ) |   |         | 1.46  |   |      |         | 0.02 |  |   |         |     | 
|Cumulative effect of a change in accounting principle                                                      |                                              |                         |        |       |      |   |        |       |   |   | (1.75   | )     |   |      |        |      |  |   |        |     
|                                                                                                           |                                              |                         |         |       |      |   |         |       |   |   |         |       |   |      |        
|                                                                                                           | Total earnings (loss) per share              |                         | $       | (0.07 | )    |   |         | (3.87 | ) |   |         | (0.71 | ) |      |         | 0.13 |  |   |         | 2.16 | 
|                                                                                                           |                                              |                         |         |       |      |   |         |       |   |   |         |       |   |      |        
|Financial position (at end of year):                                                                       |                                              |                         |         |       |      |   |         |       |   |   |         |       |   |      |         |      |  |   |         |     
|Working capital                                                                                            |                                              | $                       | 12,774  |       |      | $ | (1,475  | )     |   | $ | (2,294  | )     |   | $    | (6,818  | )    |  | $ | 6,428   |     
|Total assets                                                                                               |                                              |                         | 130,533 |       |      |   | 106,517 |       |   |   | 56,853  |       |   |      | 48,822  |      |  |   | 67,145  |     
|Total debt                                                                                                 |                                              |                         | 88,357  |       |      |   | 79,138  |       |   |   | 45,102  |       |   |      | 38,541  |      |  |   | 43,575  |     
|Stockholders equity (deficit)                                                                             |                                              | $                       | (3,157  | )     |      | $ | (20,944 | )     |   | $ | (24,224 | )     |   | $    | (23,598 | )    |  |   | (10,804 | )   

10



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##### 





|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

MANAGEMENTS DISCUSSION AND ANALYSIS OF


FINANCIAL CONDITION AND RESULTS OF OPERATIONS




General














11



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##### 







Results of Operations




|                                                                                                            |  |                         |       |   |      |  |       |      |  |  |       |  
|----------------------------------------------------------------------------------------------------------- |  | ----------------------- | ----- | - | ---- |  | ----- | ---- |  |  | ----- | -
|                                                                                                            |  | Year Ended December 31, |      
|                                                                                                            |  |                         |      
|                                                                                                            |  | 2002                    |       |   | 2003 |  |       | 2004 | 
|                                                                                                            |  |                         |       |   |      |  |       |      | 
|Statements of Operations Data:                                                                              |  |                         |       |   |      |  |       |      |  |  |       |  
|Net sales                                                                                                   |  |                         | 100.0 | % |      |  | 100.0 | %    |  |  | 100.0 | %
|Gross profit                                                                                                |  |                         | 12.9  |   |      |  | 13.8  |      |  |  | 12.7  |  
|Selling and administrative expenses                                                                         |  |                         | 10.4  |   |      |  | 10.2  |      |  |  | 8.0   |  
|Operating income                                                                                            |  |                         | 2.5   |   |      |  | 3.6   |      |  |  | 4.7   |  
|Interest expense, net                                                                                       |  |                         | 3.6   |   |      |  | 2.3   |      |  |  | 2.4   |  
|Earnings (loss) before income taxes, discontinued operations and
    cumulative effect of accounting change |  |                         | (.8   | ) |      |  | 1.3   |      |  |  | 3.8   |  



|                                                                               |  |   |       |  |  |  |       |  |  |  |       | 
|------------------------------------------------------------------------------ |  | - | ----- |  |  |  | ----- |  |  |  | ----- | 
|Operating income                                                               |  | $ | 2,875 |  |  |  | 4,751 |  |  |  | 8,762 | 
|Depreciation and amortization of plant and equipment and
    intangible assets |  |   | 9,420 |  |  |  | 5,694 |  |  |  | 5,804 | 
|Capital expenditures                                                           |  |   | 4,023 |  |  |  | 4,119 |  |  |  | 5,365 | 



| |                                                                     
| | --------------------------------------------------------------------
| | Year Ended December 31, 2004 versus Year Ended
    December 31, 2003





12



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##### 





















| |                                                                     
| | --------------------------------------------------------------------
| | Year Ended December 31, 2003 versus Year Ended
    December 31, 2002



13



---



##### 



















Financial Position and Liquidity








14



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##### 











| |                           
| | --------------------------
| | March 26, 2004 Refinancing









| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1) A four-year secured term loan in the amount of
    $21.0 million with variable rate interest; principal
    payments are due in quarterly installments of $500,000 which
    began June 30, 2004 and continue through March 31,
    2005 and due in quarterly installments of $750,000 beginning
    June 30, 2005 through December 31, 2007 with the
    balance of $10,667,500 due on March 31, 2008. A mandatory
    principal payment of $82,500 related to an asset sale was made
    in September 2004.                                                                                                                                                            
|
| | 2) A secured revolving credit facility with a limit of
    $18.0 million, with variable rate interest, with an initial
    revolving credit balance of $8.7 million, and with initial
    availability of $5.4 million as of March 26, 2004. At
    December 31, 2004, the Company has a revolving credit
    balance of $11.4 million and availability of
    $4.7 million. The balance is due March 31, 2008. The
    amount available under the revolving credit facility is limited
    to 85% of eligible accounts receivable and 60% of eligible
    inventories. The facility requires a commitment fee of
    0.50% per annum on the unused portion of the facility.
|
| | At the Companys option, for both the secured term loan and
    the secured revolving credit facility, interest will be at
    either a bank base rate plus applicable margin, or an adjusted
    LIBOR plus a LIBOR                                                                                                                                                                                                                                                                                                                                                                                                                                                        

15



---



##### 



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | applicable margin. At inception, the bank rate plus applicable
    margin was 6.75% and the adjusted LIBOR plus a LIBOR applicable
    margin was 5.35%. At December 31, 2004, those rates were
    7.75% and 6.78%, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | The Company entered into a swap agreement effective
    June 30, 2004 on $10.75 million (the original notional
    amount) of its term debt. Under this agreement, the Company pays
    a fixed LIBOR rate of 3.72% on the notional amount, which is
    payable quarterly. In accordance with the term loan agreement,
    the Company also pays an interest margin which adjusts in steps
    based on achieved operating and leverage metrics (4.25% during
    2004). The notional amount for the period from June 30
    through September 30, 2004 was $10.75 million and for
    the period from October 1 through December 31, 2004
    was $10.5 million. The swap agreement expires
    March 31, 2008. As described below, the swap agreement is
    for the purpose of limiting the effects of interest rate
    increases on approximately one-half of the Companys
    variable rate term debt.
|
| | The Company reports the swap agreement at fair value. As of
    December 31, 2004, and for the year then ended, the Company
    recorded a $40,000 liability to mark-to-market the
    swap agreement at fair value and charged interest expense.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | 3) Senior secured subordinated notes totaling
    $12.0 million with cash interest of 12% and payment-in-kind
    interest of 2% and 4% with no principal amortization, and the
    balances due March 26, 2009. This debt is subordinated to
    the secured term loan and the revolving credit facility with
    respect to both payment and lien priority.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | Related to the senior secured subordinated note, on
    March 26, 2004 the Company issued 545,467 warrants to
    purchase shares of its Class A Common Stock for
    $0.02 per share; these warrants expire March 26, 2014.
    The warrant holder may exercise the warrants at any time. The
    warrants may be put to the Company, at the then fair market
    value, at the earlier of: a) five years from the date of
    issue; b) a change of control; c) a default on the
    senior secured subordinated loan; or d) a prepayment of 75%
    or more of the original principal balance of the senior secured
    subordinated loan.                                                                                                                                                                                                                                                                 
|
| | The Company estimated the fair value of the warrants at the date
    of issue, and as of December 31, 2004 to be $1,500,000 and
    $1,791,000, respectively. The $1,791,000 estimate is reported as
    warrants payable in the accompanying consolidated balance
    sheets. The fair value at the date of issue was recorded as debt
    discount, and is being amortized using the effective yield
    method over 5 years, the term of the related senior secured
    subordinated note. The Company reports the warrants at fair
    value and records changes in the fair value as interest expense.                                                                                                                                                                                                                                                                                                   
|
| | The stock purchase warrant includes provisions that will reduce
    the 545,467 warrants that can be put to the Company if a) a
    change of control occurs prior to 5 years from the date of
    issue and the Company achieves specified net equity levels; or
    b) if a change of control has not occurred prior to
    5 years from the date of issue and the Company achieves
    specified EBITDA (earnings before interest, taxes, depreciation
    and amortization) levels. The number of warrants could be
    reduced to any one of several levels, but no lower than 290,278.
    For the year ended December 31, 2004, the Company achieved
    the EBITDA level that would reduce the maximum number of
    warrants outstanding. The maximum number of warrants that may be
    put or exercised has been reduced to 479,859.                                                               





16



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##### 







| |                
| | ---------------
| | Preferred Stock





| |                     
| | --------------------
| | Capital Expenditures







Quarterly Financial Information




|                                              |  |                                       |        |  |         |   |        |         |  |   |         |  |  |       |        |  |  |   |         | 
|--------------------------------------------- |  | ------------------------------------- | ------ |  | ------- | - | ------ | ------- |  | - | ------- |  |  | ----- | ------ |  |  | - | ------- | 
|                                              |  | First                                 |        |  | Second  |   |        | Third   |  |   | Fourth  |  |  | Total |       
|                                              |  | Quarter                               |        |  | Quarter |   |        | Quarter |  |   | Quarter |  |  | Year  |       
|                                              |  |                                       |        |  |         |   |        |         |  |   |         |  |  |       |       
|                                              |  | (In thousands, except per share data) |       
|2004                                          |  |                                       |        |  |         |   |        |         |  |   |         |  |  |       |        |  |  |   |         | 
|Sales                                         |  | $                                     | 39,920 |  |         | $ | 50,706 |         |  | $ | 46,146  |  |  | $     | 48,697 |  |  | $ | 185,469 | 
|Gross profit                                  |  |                                       | 5,509  |  |         |   | 6,145  |         |  |   | 5,318   |  |  |       | 6,587  |  |  |   | 23,559  | 
|Operating income                              |  |                                       | 2,069  |  |         |   | 2,631  |         |  |   | 1,789   |  |  |       | 2,273  |  |  |   | 8,762   | 
|Net earnings available to common shareholders |  |                                       | 2,126  |  |         |   | 2,228  |         |  |   | 965     |  |  |       | 7,447  |  |  |   | 12,766  | 
|Earnings per share of common stock  basic:   |  | $                                     | 0.46   |  |         |   | 0.48   |         |  |   | 0.20    |  |  |       | 1.59   |  |  |   | 2.73    | 
|Earnings per share of common stock  diluted: |  | $                                     | 0.38   |  |         |   | 0.38   |         |  |   | 0.15    |  |  |       | 1.25   |  |  |   | 2.16    | 

17



---



##### 



|                                              |       |                                       |        |      |         |   |        |         |  |   |         |      |  |       |        |      |  |   |         |      | 
|--------------------------------------------- | ----- | ------------------------------------- | ------ | ---- | ------- | - | ------ | ------- |  | - | ------- | ---- |  | ----- | ------ | ---- |  | - | ------- | ---- | 
|                                              |       | First                                 |        |      | Second  |   |        | Third   |  |   | Fourth  |      |  | Total |       
|                                              |       | Quarter                               |        |      | Quarter |   |        | Quarter |  |   | Quarter |      |  | Year  |       
|                                              |       |                                       |        |      |         |   |        |         |  |   |         |      |  |       |       
|                                              |       | (In thousands, except per share data) |       
|2003                                          |       |                                       |        |      |         |   |        |         |  |   |         |      |  |       |        |      |  |   |         |     
|Sales                                         |       | $                                     | 32,380 |      |         | $ | 34,398 |         |  | $ | 31,452  |      |  | $     | 33,201 |      |  | $ | 131,431 |     
|Gross profit                                  |       |                                       | 4,591  |      |         |   | 5,010  |         |  |   | 4,063   |      |  |       | 4,449  |      |  |   | 18,113  |     
|Operating income                              |       |                                       | 1,283  |      |         |   | 1,698  |         |  |   | 886     |      |  |       | 884    |      |  |   | 4,751   |     
|Net earnings available to common shareholders |       |                                       | 119    |      |         |   | 140    |         |  |   | 106     |      |  |       | 261    |      |  |   | 626     |     
|Earnings per share of common stock  basic:   |       |                                       |        |      |         |   |        |         |  |   |         |      |  |       |        |      |  |   |         |     
|From continuing operations                    |       | $                                     | 0.00   |      |         |   | 0.04   |         |  |   | 0.02    |      |  |       | 0.06   |      |  |   | 0.12    |     
|From discontinued operations                  |       |                                       | 0.03   |      |         |   | (0.01  | )       |  |   |        |      |  |       |       |      |  |   | 0.02    |     
|                                              |       |                                       |        |      |         |   |        |         |  |   |         |      |  |       |       
|                                              | Total |                                       | $      | 0.03 |         |   |        | 0.03    |  |   |         | 0.02 |  |       |        | 0.06 |  |   |         | 0.14 | 
|                                              |       |                                       |        |      |         |   |        |         |  |   |         |      |  |       |       
|Earnings per share of common stock  diluted: |       |                                       |        |      |         |   |        |         |  |   |         |      |  |       |        |      |  |   |         |     
|From continuing operations                    |       | $                                     | 0.00   |      |         |   | 0.03   |         |  |   | 0.02    |      |  |       | 0.06   |      |  |   | 0.11    |     
|From discontinued operations                  |       |                                       | 0.03   |      |         |   | (0.01  | )       |  |   |        |      |  |       |       |      |  |   | 0.02    |     
|                                              |       |                                       |        |      |         |   |        |         |  |   |         |      |  |       |       
|                                              | Total |                                       | $      | 0.03 |         |   |        | 0.02    |  |   |         | 0.02 |  |       |        | 0.06 |  |   |         | 0.13 | 
|                                              |       |                                       |        |      |         |   |        |         |  |   |         |      |  |       |       

Off-Balance Sheet Arrangements






| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) The operating lease obligation amounts are shown in the
    significant cash commitments table below. The Company enters
    into operating leases for larger units of manufacturing
    equipment related to many of its operations, including the laser
    cutting of sheet metal and the forming of sheet metal. Most
    parts fabricated by the Company are either laser cut, or formed,
    or both. The Company has operating leases that are scheduled to
    expire in 2005-2009; as these leases expire, it is likely that
    the Company will either extend those operating leases for the
    same units of manufacturing equipment or enter into new
    operating lease arrangements for replacement manufacturing units.                                                                                                                                                                                                         
|
| | (ii) The Company has had its bank issue letters of credit
    totaling approximately $1.5 million (as of March 5,
    2005) to two creditors. One letter of credit is in support of
    operating lease payments; this letter of credit is for $618,000
    and is scheduled to expire at the end of December 2005; the
    other letter of credit, in the amount of $870,000 supports
    future potential payments by the Company related to workers
    compensation claims. This is an evergreen letter of
    credit that will renew on an annual basis until the need for the
    letter of credit expires. Based on workers compensation claims
    experience, the amount of this letter of credit could either
    increase or decrease on December 31, 2005. The outstanding
    letters of credit decrease, on a dollar-for-dollar basis, the
    amount of revolving line of credit available under the
    Companys credit facilities.
|
| | (iii) The Company entered into a swap agreement in April
    2004 as described above in this Item 7 and also below in
    Item 7A. The swap agreement is for the purpose of limiting
    the effects of interest rate increases on approximately one-half
    of the Companys variable rate term debt.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               



Significant Cash Commitments




18



---



##### 





|                                   |  |                        |        |           |        |  |        |           |       |  |           |  |  |         |        |  |  |  |   | 
|---------------------------------- |  | ---------------------- | ------ | --------- | ------ |  | ------ | --------- | ----- |  | --------- |  |  | ------- | ------ |  |  |  | - | 
|                                   |  | Payments Due by Period |        |           |       
|                                   |  |                        |        |           |       
|                                   |  |                        |        | Less than |        |  |        |           | After | 
|                                   |  | Total                  |        |           | 1 Year |  |        | 1-3 Years |       |  | 4-5 Years |  |  | 5 Years |       
|                                   |  |                        |        |           |        |  |        |           |       |  |           |  |  |         |       
|                                   |  | (In thousands)         |        |           |        |  |        |           |       |  |          
|Term loan                          |  | $                      | 19,418 |           |        |  | 2,750  |           |       |  | 16,668    |  |  |         |       |  |  |  |  | 
|Revolving line of credit           |  |                        | 11,400 |           |        |  |       |           |       |  | 11,400    |  |  |         |       |  |  |  |  | 
|Senior subordinated debt           |  |                        | 12,326 |           |        |  |       |           |       |  |          |  |  |         | 12,326 |  |  |  |   | 
|Other debt obligations             |  |                        | 1,767  |           |        |  | 545    |           |       |  | 1,222     |  |  |         |       |  |  |  |  | 
|Operating leases                   |  |                        | 16,527 |           |        |  | 6,319  |           |       |  | 9,460     |  |  |         | 748    |  |  |  |  | 
|Preferred stock redemption         |  |                        | 1,000  |           |        |  | 500    |           |       |  | 500       |  |  |         |       |  |  |  |  | 
|                                   |  |                        |        |           |        |  |        |           |       |  |           |  |  |         |       
|Total contractual cash obligations |  | $                      | 62,438 |           |        |  | 10,114 |           |       |  | 39,250    |  |  |         | 13,074 |  |  |  |  | 
|                                   |  |                        |        |           |        |  |        |           |       |  |           |  |  |         |       







Seasonality




Critical Accounting Policies






| |                                
| | -------------------------------
| | Allowance for Doubtful Accounts



19



---



##### 





| |            
| | -----------
| | Inventories





| |                        
| | -----------------------
| | Group health care costs





| |                      
| | ---------------------
| | Valuation of warrants





| |                                      
| | -------------------------------------
| | Recoverability of Deferred Tax Assets



Recently Adopted Accounting Standards


Consolidation
of Variable Interest Entities


Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity Effective Date, Disclosures, and Transition
for Mandatorily Redeemable Financial Instruments of Certain
Nonpublic Entities and Certain Mandatorily Redeemable
Noncontrolling Interest under FASB Statement No. 150,
Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity,




| |                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) related to the consolidated balance sheet, the
    redeemable preferred stock, previously reported as temporary
    equity, is classified as a liability.                                                                                        
|
| | (ii) related to the consolidated statements of operations,
    the expense reported in previous periods as accretion of
    discount on preferred shares is classified as
    interest on redeemable preferred stock commencing
    July 1, 2003.

20



---



##### 





Recently Issued Accounting Standards


Share-Based Payment, Accounting for Stock Issued to Employees,


Inventory Costs,




|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures about Market
    Risk



| |                   
| | ------------------
| | Interest Rate Risk











21



---



##### 







| |                     
| | --------------------
| | Steel Commodity Risk



22



---



##### 





|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data

MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES


INDEX


|                                                                                                                   |  |      |    | 
|------------------------------------------------------------------------------------------------------------------ |  | ---- | -- | 
|                                                                                                                   |  | Page |   
|                                                                                                                   |  |      |   
|Report of Independent Registered Public Accounting Firm                                                            |  |      | 24 | 
|Consolidated Balance Sheets as of December 31, 2003 and 2004                                                       |  |      | 25 | 
|Consolidated Statements of Operations for the years ended
    December 31, 2002, 2003 and 2004                     |  |      | 26 | 
|Consolidated Statements of Stockholders Equity (Deficit)
    for the years ended December 31, 2002, 2003 and 2004 |  |      | 27 | 
|Consolidated Statements of Cash Flows for the years ended
    December 31, 2002, 2003 and 2004                     |  |      | 28 | 
|Notes to Consolidated Financial Statements                                                                         |  |      | 30 | 
|Schedule                                                                                                           |  |      |    | 
|Schedule II  Valuation and Qualifying Accounts
    for the years ended December 31, 2002, 2003 and 2004           |  |      | 47 | 

23



---



##### 



Report of Independent Registered Public Accounting Firm












Goodwill and Other Intangible
Assets.




| |             
| | ------------
| | /s/ KPMG LLP







24



---



##### 



MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES






|                                                          |                                                                                                                                                            |                                      |        |         |         |   |        |         |         |  
|--------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------ | ------ | ------- | ------- | - | ------ | ------- | ------- | -
|                                                          |                                                                                                                                                            | 2003                                 |        |         | 2004    |  
|                                                          |                                                                                                                                                            |                                      |        |         |         |  
|                                                          |                                                                                                                                                            | (Dollars in thousands,               |       
|                                                          |                                                                                                                                                            | except per share data)               |       
|ASSETS                                                   
|Current assets:                                           |                                                                                                                                                            |                                      |        |         |         |   |        |        
|                                                          | Trade accounts receivable, less allowance for doubtful accounts
    of $202 in 2003 and $160 in 2004                                                       |                                      | $      | 7,253   |         |   |        | 9,788   |        
|                                                          | Unbilled receivables                                                                                                                                       |                                      |        |        |         |   |        | 2,741   |        
|                                                          | Note receivable                                                                                                                                            |                                      |        | 100     |         |   |        |        |        
|                                                          | Inventories                                                                                                                                                |                                      |        | 13,863  |         |   |        | 19,218  |        
|                                                          | Prepaid expenses and other current assets                                                                                                                  |                                      |        | 1,087   |         |   |        | 1,324   |        
|                                                          | Deferred income taxes                                                                                                                                      |                                      |        | 1,600   |         |   |        | 2,700   |        
|                                                          |                                                                                                                                                            |                                      |        |         |         |  
|                                                          |                                                                                                                                                            | Total current assets                 |        |         | 23,903  |   |        |         | 35,771  |  
|Property, plant, and equipment, net                       |                                                                                                                                                            |                                      | 22,432 |         |         |   | 22,390 |        
|Note receivable                                           |                                                                                                                                                            |                                      | 1,183  |         |         |   | 1,102  |        
|Intangible assets, at cost, less accumulated amortization |                                                                                                                                                            |                                      | 1,100  |         |         |   | 2,148  |        
|Deferred income taxes                                     |                                                                                                                                                            |                                      |       |         |         |   | 5,400  |        
|Other assets                                              |                                                                                                                                                            |                                      | 204    |         |         |   | 334    |        
|                                                          |                                                                                                                                                            |                                      |        |         |         |  
|                                                          |                                                                                                                                                            | $                                    | 48,822 |         |         |   | 67,145 |        
|                                                          |                                                                                                                                                            |                                      |        |         |         |  
|                                                         
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)           
|Current liabilities:                                      |                                                                                                                                                            |                                      |        |         |         |   |        |        
|                                                          | Outstanding checks in excess of bank balance                                                                                                               |                                      | $      | 943     |         |   |        | 2,801   |        
|                                                          | Current installments of long-term debt                                                                                                                     |                                      |        | 6,210   |         |   |        | 3,295   |        
|                                                          | Accounts payable                                                                                                                                           |                                      |        | 17,343  |         |   |        | 17,860  |        
|                                                          | Accrued expenses                                                                                                                                           |                                      |        | 5,450   |         |   |        | 4,687   |        
|                                                          | Income taxes payable                                                                                                                                       |                                      |        | 275     |         |   |        | 200     |        
|                                                          | Redeemable preferred stock                                                                                                                                 |                                      |        | 500     |         |   |        | 500     |        
|                                                          |                                                                                                                                                            |                                      |        |         |         |  
|                                                          |                                                                                                                                                            | Total current liabilities            |        |         | 30,721  |   |        |         | 29,343  |  
|Long-term debt, excluding current installments            |                                                                                                                                                            |                                      | 32,331 |         |         |   | 40,280 |        
|Other liabilities                                         |                                                                                                                                                            |                                      | 118    |         |         |   | 368    |        
|Redeemable preferred stock                                |                                                                                                                                                            |                                      | 9,250  |         |         |   | 6,167  |        
|Warrants payable                                          |                                                                                                                                                            |                                      |       |         |         |   | 1,791  |        
|                                                          |                                                                                                                                                            |                                      |        |         |         |  
|                                                          |                                                                                                                                                            | Total liabilities                    |        |         | 72,420  |   |        |         | 77,949  |  
|                                                          |                                                                                                                                                            |                                      |        |         |         |  
|Stockholders equity (deficit):                           |                                                                                                                                                            |                                      |        |         |         |   |        |        
|                                                          | Class A common stock  $0.01 par value.
    Authorized 20,000,000 shares; issued and outstanding
    4,560,547 shares in 2003 and 4,723,878 shares in 2004 |                                      |        | 46      |         |   |        | 47      |        
|                                                          | Class B common stock  $0.01 par value.
    Authorized 200,000 shares; issued and outstanding 100,000
    in 2003 and 2004                                 |                                      |        | 1       |         |   |        | 1       |        
|                                                          | Additional paid-in capital                                                                                                                                 |                                      |        | 20,895  |         |   |        | 20,922  |        
|                                                          | Accumulated deficit                                                                                                                                        |                                      |        | (44,540 | )       |   |        | (31,774 | )      
|                                                          |                                                                                                                                                            |                                      |        |         |         |  
|                                                          |                                                                                                                                                            | Total stockholders equity (deficit) |        |         | (23,598 | ) |        |         | (10,804 | )
|                                                          |                                                                                                                                                            |                                      |        |         |         |  
|                                                          |                                                                                                                                                            | $                                    | 48,822 |         |         |   | 67,145 |        
|                                                          |                                                                                                                                                            |                                      |        |         |         |  



25



---



##### 



MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES






|                                                                                 |                                                     |                                                       |                                                                                                             |        |       |        |         |        |      |        |         |        |      |        |  
|-------------------------------------------------------------------------------- | --------------------------------------------------- | ----------------------------------------------------- | ----------------------------------------------------------------------------------------------------------- | ------ | ----- | ------ | ------- | ------ | ---- | ------ | ------- | ------ | ---- | ------ | -
|                                                                                 |                                                     | 2002                                                  |                                                                                                             |        | 2003  |        |         | 2004   |     
|                                                                                 |                                                     |                                                       |                                                                                                             |        |       |        |         |        |     
|                                                                                 |                                                     | (Dollars in thousands, except                         |                                                                                                            
|                                                                                 |                                                     | per share data)                                       |                                                                                                            
|Net sales                                                                        |                                                     | $                                                     | 116,567                                                                                                     |        |       |        | 131,431 |        |      |        | 185,469 |       
|Cost of sales                                                                    |                                                     |                                                       | 101,522                                                                                                     |        |       |        | 113,318 |        |      |        | 161,910 |       
|                                                                                 |                                                     |                                                       |                                                                                                             |        |       |        |         |        |     
|                                                                                 |                                                     |                                                       | Gross profit                                                                                                |        |       | 15,045 |         |        |      | 18,113 |         |        |      | 23,559 |  
|                                                                                 |                                                     |                                                       |                                                                                                             |        |       |        |         |        |     
|Operating expenses:                                                              |                                                     |                                                       |                                                                                                             |        |       |        |         |        |      |        |         |       
|                                                                                 | Selling expenses                                    |                                                       |                                                                                                             | 2,723  |       |        |         | 2,948  |      |        |         | 3,211  |     
|                                                                                 | Administrative expenses                             |                                                       |                                                                                                             | 9,447  |       |        |         | 10,414 |      |        |         | 11,586 |     
|                                                                                 |                                                     |                                                       |                                                                                                             |        |       |        |         |        |     
|                                                                                 |                                                     |                                                       | Total operating expenses                                                                                    |        |       | 12,170 |         |        |      | 13,362 |         |        |      | 14,797 |  
|                                                                                 |                                                     |                                                       |                                                                                                             |        |       |        |         |        |     
|                                                                                 |                                                     |                                                       | Operating income                                                                                            |        |       | 2,875  |         |        |      | 4,751  |         |        |      | 8,762  |  
|                                                                                 |                                                     |                                                       |                                                                                                             |        |       |        |         |        |     
|Other income (expense):                                                          |                                                     |                                                       |                                                                                                             |        |       |        |         |        |      |        |         |       
|                                                                                 | Interest expense                                    |                                                       |                                                                                                             | (4,228 | )     |        |         | (3,084 | )    |        |         | (4,526 | )   
|                                                                                 | Interest on redeemable preferred stock              |                                                       |                                                                                                             |       |       |        |         | (427   | )    |        |         | (250   | )   
|                                                                                 | Gain on redemption of preferred stock               |                                                       |                                                                                                             |       |       |        |         |       |      |        |         | 2,833  |     
|                                                                                 | Other                                               |                                                       |                                                                                                             | 365    |       |        |         | 442    |      |        |         | 172    |     
|                                                                                 |                                                     |                                                       |                                                                                                             |        |       |        |         |        |     
|                                                                                 |                                                     |                                                       | Other expense, net                                                                                          |        |       | (3,863 | )       |        |      | (3,069 | )       |        |      | (1,771 | )
|                                                                                 |                                                     |                                                       |                                                                                                             |        |       |        |         |        |     
|                                                                                 |                                                     |                                                       | Earnings (loss) before income taxes, discontinued operations and
    cumulative effect of accounting change |        |       | (988   | )       |        |      | 1,682  |         |        |      | 6,991  |  
|Income taxes                                                                     |                                                     |                                                       | (288                                                                                                        | )      |       |        | 426     |        |      |        | (5,775  | )     
|                                                                                 |                                                     |                                                       |                                                                                                             |        |       |        |         |        |     
|                                                                                 |                                                     |                                                       | Earnings (loss) before discontinued operations and cumulative
    effect of accounting change               |        |       | (700   | )       |        |      | 1,256  |         |        |      | 12,766 |  
|                                                                                 |                                                     |                                                       |                                                                                                             |        |       |        |         |        |     
|Discontinued operations:                                                         |                                                     |                                                       |                                                                                                             |        |       |        |         |        |      |        |         |       
|                                                                                 | Earnings from discontinued plastics operations, net |                                                       |                                                                                                             | 8,947  |       |        |         | 140    |      |        |         |       |     
|                                                                                 | Income taxes                                        |                                                       |                                                                                                             | 2,157  |       |        |         | 55     |      |        |         |       |     
|                                                                                 |                                                     |                                                       |                                                                                                             |        |       |        |         |        |     
|                                                                                 |                                                     |                                                       | 6,790                                                                                                       |        |       |        | 85      |        |      |        |        |       
|                                                                                 |                                                     |                                                       |                                                                                                             |        |       |        |         |        |     
|                                                                                 |                                                     |                                                       | Earnings before cumulative effect of accounting change                                                      |        |       | 6,090  |         |        |      | 1,341  |         |        |      | 12,766 |  
|Cumulative effect of change in accounting principle, net of tax
    of $0        |                                                     |                                                       | (8,118                                                                                                      | )      |       |        |        |        |      |        |        |       
|                                                                                 |                                                     |                                                       |                                                                                                             |        |       |        |         |        |     
|                                                                                 |                                                     |                                                       | Net earnings (loss)                                                                                         |        |       | (2,028 | )       |        |      | 1,341  |         |        |      | 12,766 |  
|Accretion of discount on preferred shares                                        |                                                     |                                                       | (1,265                                                                                                      | )      |       |        | (715    | )      |      |        |        |       
|                                                                                 |                                                     |                                                       |                                                                                                             |        |       |        |         |        |     
|                                                                                 |                                                     |                                                       | Net earnings (loss) available to common shareholders                                                        |        | $     | (3,293 | )       |        |      | 626    |         |        |      | 12,766 |  
|                                                                                 |                                                     |                                                       |                                                                                                             |        |       |        |         |        |     
|Earnings (loss) available to common shareholders per common
    share  basic:   |                                                     |                                                       |                                                                                                             |        |       |        |         |        |      |        |         |       
|                                                                                 |                                                     | Earnings (loss) from continuing operations            |                                                                                                             | $      | (0.42 | )      |         |        | 0.12 |        |         |        | 2.73 |       
|                                                                                 |                                                     | Earnings from discontinued operations                 |                                                                                                             |        | 1.46  |        |         |        | 0.02 |        |         |        |     |       
|                                                                                 |                                                     |                                                       |                                                                                                             |        |       |        |         |        |     
|                                                                                 |                                                     |                                                       | Earnings available to common shareholders before cumulative
    effect of accounting change                 |        |       | 1.04   |         |        |      | 0.14   |         |        |      | 2.73   |  
|                                                                                 |                                                     | Cumulative effect of a change in accounting principle |                                                                                                             |        | (1.75 | )      |         |        |     |        |         |        |     |       
|                                                                                 |                                                     |                                                       |                                                                                                             |        |       |        |         |        |     
|                                                                                 |                                                     |                                                       | Net earnings (loss) available to common shareholders                                                        |        | $     | (0.71  | )       |        |      | 0.14   |         |        |      | 2.73   |  
|                                                                                 |                                                     |                                                       |                                                                                                             |        |       |        |         |        |     
|Earnings (loss) available to common shareholders per common
    share  diluted: |                                                     |                                                       |                                                                                                             |        |       |        |         |        |      |        |         |       
|                                                                                 |                                                     | Earnings (loss) from continuing operations            |                                                                                                             | $      | (0.42 | )      |         |        | 0.11 |        |         |        | 2.16 |       
|                                                                                 |                                                     | Earnings from discontinued operations                 |                                                                                                             |        | 1.46  |        |         |        | 0.02 |        |         |        |     |       
|                                                                                 |                                                     |                                                       |                                                                                                             |        |       |        |         |        |     
|                                                                                 |                                                     |                                                       | Earnings available to common shareholders before cumulative
    effect of accounting change                 |        |       | 1.04   |         |        |      | 0.13   |         |        |      | 2.16   |  
|                                                                                 |                                                     | Cumulative effect of a change in accounting principle |                                                                                                             |        | (1.75 | )      |         |        |     |        |         |        |     |       
|                                                                                 |                                                     |                                                       |                                                                                                             |        |       |        |         |        |     
|                                                                                 |                                                     |                                                       | Net earnings (loss) available to common shareholders                                                        |        | $     | (0.71  | )       |        |      | 0.13   |         |        |      | 2.16   |  
|                                                                                 |                                                     |                                                       |                                                                                                             |        |       |        |         |        |     



26



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MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES








|                           |                                                                                      |              |           |         |              |   |        |            |  |  |         |          |   |         |             |    |         |  |        |       |  |  |         |        |   |  |         |        |  
|-------------------------- | ------------------------------------------------------------------------------------ | ------------ | --------- | ------- | ------------ | - | ------ | ---------- |  |  | ------- | -------- | - | ------- | ----------- | -- | ------- |  | ------ | ----- |  |  | ------- | ------ | - |  | ------- | ------ | -
|                           |                                                                                      | Class A      |           |         | Class B      |   |        |            |  |  |         |         
|                           |                                                                                      | Common Stock |           |         | Common Stock |   |        |            |  |  |         |         
|                           |                                                                                      |              |           |         |              |   |        | Additional |  |  |         |          |  
|                           |                                                                                      | Shares       |           |         |              |   | Shares |            |  |  |         | Paid-in  |   |         | Accumulated |    |         | 
|                           |                                                                                      | Issued       |           |         | Amount       |   |        | Issued     |  |  | Amount  |          |   | Capital |             |    | Deficit |  |        | Total | 
|                           |                                                                                      |              |           |         |              |   |        |            |  |  |         |          |   |         |             |    |         |  |        |       | 
|Balance, December 31, 2001 |                                                                                      |              | 4,400,850 |         |              | $ | 44     |            |  |  | 200,000 |          |   | $       | 2           |    |         |  | 20,883 |       |  |  | (41,873 | )      |   |  | (20,944 | )     
|                           | Net loss                                                                             |              |           |        |              |   |        |           |  |  |         |         |   |         |             |   |         |  |        |      |  |  |         | (2,028 | ) |  |         | (2,028 | )
|                           | Stock options exercised                                                              |              |           | 59,697  |              |   |        | 1          |  |  |         |         |   |         |             |   |         |  |        | 12    |  |  |         |       |   |  |         | 13     |  
|                           | Accretion of discount on preferred shares                                            |              |           |        |              |   |        |           |  |  |         |         |   |         |             |   |         |  |        |      |  |  |         | (1,265 | ) |  |         | (1,265 | )
|                           |                                                                                      |              |           |         |              |   |        |            |  |  |         |          |   |         |             |    |         |  |        |       | 
|Balance, December 31, 2002 |                                                                                      |              | 4,460,547 |         |              |   | 45     |            |  |  | 200,000 |          |   |         | 2           |    |         |  | 20,895 |       |  |  | (45,166 | )      |   |  | (24,224 | )     
|                           | Net earnings                                                                         |              |           |        |              |   |        |           |  |  |         |         |   |         |             |   |         |  |        |      |  |  |         | 1,341  |   |  |         | 1,341  |  
|                           | Accretion of discount on preferred shares                                            |              |           |        |              |   |        |           |  |  |         |         |   |         |             |   |         |  |        |      |  |  |         | (715   | ) |  |         | (715   | )
|                           | Conversion of shares of Class B common stock into shares of
    Class A common stock |              |           | 100,000 |              |   |        | 1          |  |  |         | (100,000 | ) |         |             | (1 | )       |  |        |      |  |  |         |       |   |  |         |       |  
|                           |                                                                                      |              |           |         |              |   |        |            |  |  |         |          |   |         |             |    |         |  |        |       | 
|Balance, December 31, 2003 |                                                                                      |              | 4,560,547 |         |              |   | 46     |            |  |  | 100,000 |          |   |         | 1           |    |         |  | 20,895 |       |  |  | (44,540 | )      |   |  | (23,598 | )     
|                           | Net earnings                                                                         |              |           |         |              |   |        |            |  |  |         |          |   |         |             |    |         |  |        |      |  |  |         | 12,766 |   |  |         | 12,766 |  
|                           | Stock options exercised                                                              |              |           | 163,331 |              |   |        | 1          |  |  |         |         |   |         |             |   |         |  |        | 27    |  |  |         |       |   |  |         | 28     |  
|                           |                                                                                      |              |           |         |              |   |        |            |  |  |         |          |   |         |             |    |         |  |        |       | 
|Balance, December 31, 2004 |                                                                                      |              | 4,723,878 |         |              | $ | 47     |            |  |  | 100,000 |          |   | $       | 1           |    |         |  | 20,922 |       |  |  | (31,774 | )      |   |  | (10,804 | )     
|                           |                                                                                      |              |           |         |              |   |        |            |  |  |         |          |   |         |             |    |         |  |        |       | 



27



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MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES






|                                                   |                                                                                                          |                        |                                                                                           |                                                          |                                                     |         |       |        |       |       |        |         |       |        |        |        |  
|-------------------------------------------------- | -------------------------------------------------------------------------------------------------------- | ---------------------- | ----------------------------------------------------------------------------------------- | -------------------------------------------------------- | --------------------------------------------------- | ------- | ----- | ------ | ----- | ----- | ------ | ------- | ----- | ------ | ------ | ------ | -
|                                                   |                                                                                                          | 2002                   |                                                                                           |                                                          | 2003                                                |         |       | 2004   |      
|                                                   |                                                                                                          |                        |                                                                                           |                                                          |                                                     |         |       |        |      
|                                                   |                                                                                                          | (Dollars in thousands) |                                                                                          
|Cash flows from operating activities:              |                                                                                                          |                        |                                                                                           |                                                          |                                                     |         |       |        |       |       |        |        
|                                                   | Net earnings (loss)                                                                                      |                        | $                                                                                         | (2,028                                                   | )                                                   |         |       | 1,341  |       |       |        | 12,766  |      
|                                                   | Adjustments to reconcile net earnings (loss) to net cash
    provided by (used in) operating activities: |                        |                                                                                           |                                                          |                                                     |         |       |        |       |       |        |         |      
|                                                   |                                                                                                          |                        | Depreciation and amortization of plant and equipment and
    intangible assets            |                                                          |                                                     | 9,420   |       |        |       | 5,694 |        |         |       | 5,804  |       
|                                                   |                                                                                                          |                        | Other amortization and accretion                                                          |                                                          |                                                     |        |       |        |       | 427   |        |         |       | 1,253  |       
|                                                   |                                                                                                          |                        | Payments on restructuring charge                                                          |                                                          |                                                     | (375    | )     |        |       |      |        |         |       |       |       
|                                                   |                                                                                                          |                        | Cumulative effect of change in accounting principle                                       |                                                          |                                                     | 8,118   |       |        |       |      |        |         |       |       |       
|                                                   |                                                                                                          |                        | Provision for bad debts                                                                   |                                                          |                                                     | 7       |       |        |       | 310   |        |         |       | 145    |       
|                                                   |                                                                                                          |                        | Change in deferred income taxes                                                           |                                                          |                                                     | 3,197   |       |        |       | 151   |        |         |       | (6,500 | )     
|                                                   |                                                                                                          |                        | Loss (gain) on sale of property and equipment                                             |                                                          |                                                     | (8      | )     |        |       | (12   | )      |         |       | 2      |       
|                                                   |                                                                                                          |                        | Gain on sale of businesses                                                                |                                                          |                                                     | (17,784 | )     |        |       | (8    | )      |         |       |       |       
|                                                   |                                                                                                          |                        | Unrealized loss (gain) on derivative instruments                                          |                                                          |                                                     | (418    | )     |        |       |      |        |         |       | 40     |       
|                                                   |                                                                                                          |                        | Gain on redemption of preferred stock                                                     |                                                          |                                                     |        |       |        |       |      |        |         |       | (2,833 | )     
|                                                   |                                                                                                          |                        | Changes in operating assets and liabilities, excluding effects
    of sale of businesses: |                                                          |                                                     |         |       |        |       |       |        |         |       |        |       
|                                                   |                                                                                                          |                        |                                                                                           | Decrease (increase) in trade accounts receivable         |                                                     |         | 3,470 |        |       |       | (2,115 | )       |       |        | (2,680 | )     
|                                                   |                                                                                                          |                        |                                                                                           | Increase in unbilled receivables                         |                                                     |         |      |        |       |       |       |         |       |        | (2,741 | )     
|                                                   |                                                                                                          |                        |                                                                                           | Decrease (increase) in inventories                       |                                                     |         | (162  | )      |       |       | 583    |         |       |        | (5,355 | )     
|                                                   |                                                                                                          |                        |                                                                                           | Decrease (increase) in prepaid expenses and other assets |                                                     |         | (201  | )      |       |       | 431    |         |       |        | (286   | )     
|                                                   |                                                                                                          |                        |                                                                                           | Increase (decrease) in income taxes payable              |                                                     |         |      |        |       |       | 275    |         |       |        | (75    | )     
|                                                   |                                                                                                          |                        |                                                                                           | Increase in accounts payable                             |                                                     |         | 1,976 |        |       |       | 2,856  |         |       |        | 817    |       
|                                                   |                                                                                                          |                        |                                                                                           | Increase (decrease) in accrued expenses and other        |                                                     |         | 2,166 |        |       |       | 327    |         |       |        | (553   | )     
|                                                   |                                                                                                          |                        |                                                                                           |                                                          |                                                     |         |       |        |      
|                                                   |                                                                                                          |                        |                                                                                           |                                                          | Net cash provided by (used in) operating activities |         |       | 7,378  |       |       |        | 10,260  |       |        |        | (196   | )
|                                                   |                                                                                                          |                        |                                                                                           |                                                          |                                                     |         |       |        |      
|Cash flows from investing activities:              |                                                                                                          |                        |                                                                                           |                                                          |                                                     |         |       |        |       |       |        |        
|                                                   | Capital expenditures                                                                                     |                        |                                                                                           | (4,023                                                   | )                                                   |         |       | (4,119 | )     |       |        | (5,365  | )    
|                                                   | Proceeds from sale of property and equipment                                                             |                        |                                                                                           | 538                                                      |                                                     |         |       | 67     |       |       |        | 54      |      
|                                                   | Proceeds from sale of businesses                                                                         |                        |                                                                                           |                                                         |                                                     |         |       | 4,800  |       |       |        |        |      
|                                                   | Payment received on note receivable for sale of business                                                 |                        |                                                                                           |                                                         |                                                     |         |       | 99     |       |       |        | 100     |      
|                                                   |                                                                                                          |                        |                                                                                           |                                                          |                                                     |         |       |        |      
|                                                   |                                                                                                          |                        |                                                                                           |                                                          | Net cash provided by (used in) investing activities |         |       | (3,485 | )     |       |        | 847     |       |        |        | (5,211 | )
|                                                   |                                                                                                          |                        |                                                                                           |                                                          |                                                     |         |       |        |      
|Cash flows from financing activities:              |                                                                                                          |                        |                                                                                           |                                                          |                                                     |         |       |        |       |       |        |        
|                                                   | Increase (decrease) in checks issued in excess of bank balance                                           |                        |                                                                                           | (1,869                                                   | )                                                   |         |       | (346   | )     |       |        | 1,858   |      
|                                                   | Net advances (repayments) on revolving debt                                                              |                        |                                                                                           | (485                                                     | )                                                   |         |       | (5,350 | )     |       |        | 5,600   |      
|                                                   | Principal payments on long-term debt and capital leases                                                  |                        |                                                                                           | (5,597                                                   | )                                                   |         |       | (4,961 | )     |       |        | (4,246  | )    
|                                                   | Retirement of revolving debt in connection with refinancing                                              |                        |                                                                                           |                                                         |                                                     |         |       |       |       |       |        | (14,650 | )    
|                                                   | Retirement of term debt in connection with refinancing                                                   |                        |                                                                                           |                                                         |                                                     |         |       |       |       |       |        | (22,153 | )    
|                                                   | Proceeds from issuance of revolving debt                                                                 |                        |                                                                                           |                                                         |                                                     |         |       |       |       |       |        | 7,200   |      
|                                                   | Proceeds from issuance of long-term debt                                                                 |                        |                                                                                           | 4,907                                                    |                                                     |         |       |       |       |       |        | 34,071  |      
|                                                   | Redemption of preferred stock                                                                            |                        |                                                                                           |                                                         |                                                     |         |       |       |       |       |        | (500    | )    
|                                                   | Proceeds from issuance of common stock                                                                   |                        |                                                                                           | 13                                                       |                                                     |         |       |       |       |       |        | 28      |      
|                                                   | Debt issuance costs                                                                                      |                        |                                                                                           | (862                                                     | )                                                   |         |       | (450   | )     |       |        | (1,801  | )    
|                                                   |                                                                                                          |                        |                                                                                           |                                                          |                                                     |         |       |        |      
|                                                   |                                                                                                          |                        |                                                                                           |                                                          | Net cash provided by (used in) financing activities |         |       | (3,893 | )     |       |        | (11,107 | )     |        |        | 5,407  |  
|                                                   |                                                                                                          |                        |                                                                                           |                                                          |                                                     |         |       |        |      
|                                                   |                                                                                                          |                        |                                                                                           |                                                          | Net change in cash                                  |         |       |       |       |       |        |        |       |        |        |       |  
|Cash at beginning of year                          |                                                                                                          |                        |                                                                                          |                                                          |                                                     |         |      |        |       |       |       |        
|                                                   |                                                                                                          |                        |                                                                                           |                                                          |                                                     |         |       |        |      
|Cash at end of year                                |                                                                                                          | $                      |                                                                                          |                                                          |                                                     |         |      |        |       |       |       |        
|                                                   |                                                                                                          |                        |                                                                                           |                                                          |                                                     |         |       |        |      
|Supplemental disclosures of cash flow information: |                                                                                                          |                        |                                                                                           |                                                          |                                                     |         |       |        |       |       |        |        
|                                                   | Cash paid during the year for:                                                                           |                        |                                                                                           |                                                          |                                                     |         |       |        |       |       |        |         |      
|                                                   |                                                                                                          | Interest               |                                                                                           | $                                                        | 5,511                                               |         |       |        | 3,296 |       |        |         | 3,481 |       
|                                                   |                                                                                                          | Income taxes           |                                                                                           |                                                          | 26                                                  |         |       |        | 48    |       |        |         | 550   |       



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MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES












|    |                                                                           
|--- | --------------------------------------------------------------------------
|(1) | Description of Business and Summary of Significant Accounting
    Policies



|    |                        
|--- | -----------------------
|(a) | Description of Business





|    |                            
|--- | ---------------------------
|(b) | Principles of Consolidation





|    |                                                   
|--- | --------------------------------------------------
|(c) | Use of Estimates in Preparing Financial Statements





|    |                          
|--- | -------------------------
|(d) | Trade Accounts Receivable





|    |            
|--- | -----------
|(e) | Inventories





|    |                               
|--- | ------------------------------
|(f) | Property, Plant, and Equipment







|    |                                     
|--- | ------------------------------------
|(g) | Goodwill and Other Intangible Assets

Goodwill and Other


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MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES




Intangible Assets, Accounting for Impairment or Disposal
of Long-Lived Assets.




|    |             
|--- | ------------
|(h) | Income Taxes





|    |                  
|--- | -----------------
|(i) | Stock Option Plan

Accounting for Stock Issued
to Employees, Accounting for Certain
Transactions Involving Stock Compensation, an interpretation of
APB Opinion No. 25, Accounting for Stock-Based
Compensation, Accounting for
Stock-Based Compensation  Transition and Disclosure,
an amendment of SFAS No. 123,






|                                                                        |                                                                                                             |      |   |        |      |  |  |      |   |  |  |        |  
|----------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------- | ---- | - | ------ | ---- |  |  | ---- | - |  |  | ------ | -
|                                                                        |                                                                                                             | 2002 |   |        | 2003 |  |  | 2004 |  
|                                                                        |                                                                                                             |      |   |        |      |  |  |      |  
|Net earnings (loss) available to common shareholders:                   |                                                                                                             |      |   |        |      |  |  |      |   |  |  |       
|                                                                        | As reported                                                                                                 |      | $ | (3,293 | )    |  |  | 626  |   |  |  | 12,766 |  
|                                                                        | Total stock-based employee compensation expense determined under
    fair-value-based method for all awards |      |   | (216   | )    |  |  | (112 | ) |  |  | (49    | )
|                                                                        |                                                                                                             |      |   |        |      |  |  |      |  
|                                                                        | Pro forma                                                                                                   |      | $ | (3,509 | )    |  |  | 514  |   |  |  | 12,717 |  
|                                                                        |                                                                                                             |      |   |        |      |  |  |      |  
|Basic earnings (loss) available to common shareholders per share:       |                                                                                                             |      |   |        |      |  |  |      |   |  |  |       
|                                                                        | As reported                                                                                                 |      | $ | (0.71  | )    |  |  | 0.14 |   |  |  | 2.73   |  
|                                                                        | Pro forma                                                                                                   |      |   | (0.76  | )    |  |  | 0.11 |   |  |  | 2.72   |  
|Diluted earnings (loss) available to common shareholders per
    share: |                                                                                                             |      |   |        |      |  |  |      |   |  |  |       
|                                                                        | As reported                                                                                                 |      |   | (0.71  | )    |  |  | 0.13 |   |  |  | 2.16   |  
|                                                                        | Pro forma                                                                                                   |      |   | (0.76  | )    |  |  | 0.10 |   |  |  | 2.15   |  

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|    |                                                                            
|--- | ---------------------------------------------------------------------------
|(j) | Impairment of Long-lived Assets and Long-lived Assets to
    Be Disposed Of



Business Combinations.




|    |                    
|--- | -------------------
|(k) | Revenue Recognition







|    |                    
|--- | -------------------
|(l) | Interest Rate Swaps



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|    |                                    
|--- | -----------------------------------
|(m) | Fair Value of Financial Instruments







|    |                          
|--- | -------------------------
|(n) | Earnings (Loss) Per Share

Earnings Per Share.




|    |                                     
|--- | ------------------------------------
|(o) | Recently Issued Accounting Standards

Share-Based Payment, Accounting for Stock Issued to Employees,


Inventory
Costs,




|    |                        
|--- | -----------------------
|(2) | Discontinued Operations



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|                             |                                                            |      |        |        |      |  |       |     | 
|---------------------------- | ---------------------------------------------------------- | ---- | ------ | ------ | ---- |  | ----- | --- | 
|                             |                                                            | 2002 |        |        | 2003 | 
|                             |                                                            |      |        |        |      | 
|Operating revenue            |                                                            | $    | 78,737 |        |      |  | 9,124 |    
|Operating expense            |                                                            |      | 85,469 |        |      |  | 8,819 |    
|                             |                                                            |      |        |        |      | 
|                             | Operating income (loss)                                    |      |        | (6,732 | )    |  |       | 305 | 
|Interest expense             |                                                            |      | (2,105 | )      |      |  | (165  | )  
|                             |                                                            |      |        |        |      | 
|                             | Earnings (loss) from operations of discontinued operations |      |        | (8,837 | )    |  |       | 140 | 
|Gain on disposal of MCP, LLC |                                                            |      | 17,784 |        |      |  |      |    
|Income taxes                 |                                                            |      | 2,157  |        |      |  | 55    |    
|                             |                                                            |      |        |        |      | 
|                             | Net earnings from discontinued operations                  |      | $      | 6,790  |      |  |       | 85  | 
|                             |                                                            |      |        |        |      | 

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|    |            
|--- | -----------
|(3) | Inventories



|                |  |             |        |  |      |  |        | 
|--------------- |  | ----------- | ------ |  | ---- |  | ------ | 
|                |  | December 31 |       
|                |  |             |       
|                |  | 2003        |        |  | 2004 | 
|                |  |             |        |  |      | 
|Finished goods  |  | $           | 5,427  |  |      |  | 8,361  | 
|Work in process |  |             | 3,521  |  |      |  | 4,765  | 
|Raw materials   |  |             | 4,915  |  |      |  | 6,092  | 
|                |  |             |        |  |      | 
|                |  | $           | 13,863 |  |      |  | 19,218 | 
|                |  |             |        |  |      | 



|    |                               
|--- | ------------------------------
|(4) | Property, Plant, and Equipment



|                                     |                                     |             |         |  |             |   |        |        |  |  |        |        | 
|------------------------------------ | ----------------------------------- | ----------- | ------- |  | ----------- | - | ------ | ------ |  |  | ------ | ------ | 
|                                     |                                     | Depreciable |         |  | December 31 |  
|                                     |                                     | Lives       |         |  |             |  
|                                     |                                     | (In years)  |         |  | 2003        |   |        | 2004   | 
|                                     |                                     |             |         |  |             |   |        |        | 
|Land and land improvements           |                                     |             | 15      |  |             | $ | 1,757  |        |  |  | 1,769  |       
|Buildings and leasehold improvements |                                     |             | 15  39 |  |             |   | 8,577  |        |  |  | 8,991  |       
|Machinery and vehicles               |                                     |             | 5  12  |  |             |   | 27,008 |        |  |  | 29,421 |       
|Tooling                              |                                     |             | 3       |  |             |   | 11,068 |        |  |  | 12,637 |       
|Office equipment                     |                                     |             | 5  10  |  |             |   | 5,724  |        |  |  | 6,712  |       
|Construction in progress             |                                     |             |        |  |             |   | 462    |        |  |  | 99     |       
|                                     |                                     |             |         |  |             |   |        |        | 
|                                     |                                     |             |         |  |             |   | 54,596 |        |  |  | 59,629 |       
|Less accumulated depreciation        |                                     |             |         |  |             |   | 32,164 |        |  |  | 37,239 |       
|                                     |                                     |             |         |  |             |   |        |        | 
|                                     | Property, plant, and equipment, net |             |         |  |             |   | $      | 22,432 |  |  |        | 22,390 | 
|                                     |                                     |             |         |  |             |   |        |        | 



|    |                  
|--- | -----------------
|(5) | Intangible Assets



|                              |                       |             |       |       |      |  |       |       | 
|----------------------------- | --------------------- | ----------- | ----- | ----- | ---- |  | ----- | ----- | 
|                              |                       | December 31 |      
|                              |                       |             |      
|                              |                       | 2003        |       |       | 2004 | 
|                              |                       |             |       |       |      | 
|Goodwill                      |                       | $           | 1,200 |       |      |  | 1,200 |      
|Debt issuance costs           |                       |             | 2,645 |       |      |  | 2,124 |      
|Other                         |                       |             | 535   |       |      |  | 535   |      
|                              |                       |             |       |       |      | 
|                              |                       |             | 4,380 |       |      |  | 3,859 |      
|Less accumulated amortization |                       |             | 3,280 |       |      |  | 1,711 |      
|                              |                       |             |       |       |      | 
|                              | Net intangible assets |             | $     | 1,100 |      |  |       | 2,148 | 
|                              |                       |             |       |       |      | 

34



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MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES






|             |      |  |   |     | 
|------------ | ---- |  | - | --- | 
|Year ending: |      |  |   |    
|             | 2005 |  | $ | 501 | 
|             | 2006 |  |   | 484 | 
|             | 2007 |  |   | 443 | 
|             | 2008 |  |   | 218 | 
|             | 2009 |  |   | 47  | 

Goodwill and
Other Intangible Assets,






|    |                                              
|--- | ---------------------------------------------
|(6) | Derivative Instruments and Hedging Activities



Accounting for Derivative Instruments
and Hedging Activities,


35



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##### 



MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES






|    |               
|--- | --------------
|(7) | Long-term Debt



|                                                                                                                                                              |  |             |        |  |      |  |        | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------- | ------ |  | ---- |  | ------ | 
|                                                                                                                                                              |  | December 31 |       
|                                                                                                                                                              |  |             |       
|                                                                                                                                                              |  | 2003        |        |  | 2004 | 
|                                                                                                                                                              |  |             |        |  |      | 
|Revolving credit facility with the current Harris syndicate                                                                                                   |  | $           |       |  |      |  | 11,400 | 
|Senior Subordinated Debt, net of debt discount of $1,159                                                                                                      |  |             |       |  |      |  | 11,166 | 
|Note payable to the current Harris syndicate, with variable rate
    interest (6.45% as of December 31, 2004)                                                 |  |             |       |  |      |  | 19,418 | 
|Revolving credit facility with the former Harris syndicate                                                                                                    |  |             | 13,250 |  |      |  |       | 
|Note payable to the former Harris syndicate, with variable rate
    interest (5.75% as of December 31, 2003)                                                  |  |             | 23,253 |  |      |  |       | 
|Subordinated note payable with interest payable at 7.0%,
    discounted $393 to yield 10.0%, due in quarterly payments with
    the balance due April 8, 2008 |  |             | 1,734  |  |      |  | 1,396  | 
|Note payable, electric cooperative, non-interest bearing, due in
    monthly payments with the balance due November 1, 2006                                   |  |             | 130    |  |      |  | 85     | 
|Capital lease obligations                                                                                                                                     |  |             | 113    |  |      |  | 81     | 
|Notes payable, miscellaneous                                                                                                                                  |  |             | 61     |  |      |  | 29     | 
|                                                                                                                                                              |  |             |        |  |      | 
|                                                                                                                                                              |  |             | 38,541 |  |      |  | 43,575 | 
|Less current installments                                                                                                                                     |  |             | 6,210  |  |      |  | 3,295  | 
|                                                                                                                                                              |  |             |        |  |      | 
|                                                                                                                                                              |  | $           | 32,331 |  |      |  | 40,280 | 
|                                                                                                                                                              |  |             |        |  |      | 



| |                                            
| | -------------------------------------------
| | Financing in effect as of December 31, 2003







| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In February 2002, the Company entered into a new secured
    revolving credit facility with the former Harris syndicate. The
    revolving credit agreement permitted the Company to borrow up to
    a maximum of $21,000. The agreement required payments of a
    quarterly commitment fee of 0.50% per annum of the average
    daily unused portion of the revolving credit facility. Interest
    was due monthly and was based upon the bank prime rate plus 1.5%
    (effective rate of 5.75% at December 31, 2003). The
    Company, alternatively, could have selected a LIBOR plus 4.0%
    interest rate. The amount available under the revolving credit
    facility was limited to 85% of qualified accounts receivable,
    60% of eligible inventories, plus $2,121 of other assets. The
    revolving credit agreement was originally due on July 1,
    2003, and as amended, was extended to April 1, 2005. At
    December 31, 2003, the Company had $13,250 outstanding and
    $1,211 available under this credit facility.
|
| | In February 2002, the Company also entered into a secured term
    loan arrangement with the former Harris syndicate for a term
    loan of $32,965. The former Harris syndicate term loan
    arrangement replaced existing term loans and did not provide
    additional availability. The term loan under this financing
    arrangement was amortized monthly with principal payments
    ranging from $235 to $500 and the balance of $24,930 due
    originally on July 1, 2003, as amended, was extended to
    April 1, 2005. Interest was due monthly and was based upon
    the bank prime rate plus 1.5% (effective rate of 5.75% at
    December 31, 2003). The Company, alternatively, could have
    selected a LIBOR plus 4.0% interest rate. The agreement                                                                                                                                                                                                                                                                        

36



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MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES






| |                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | was secured by a first lien on all of the Companys
    accounts receivable, inventories, equipment and various other
    assets, other than the assets of Morton Custom Plastics, LLC.
|
| | The February 2002 former Harris syndicate agreement was amended
    during 2003 as follows:                                                                                            



| |   |                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------
| |  | maturity date of the revolving credit facility and remaining
    balance of the term loan was extended to April 1, 2005             
|
| |  | a reduction in the revolving credit commitment to $18,800 (from
    a previous level of $21,000)                                    
|
| |  | effective February 28, 2003, increased the limit of
    eligible inventories under the revolving credit facility from
    50% to 60%
|
| |  | changed the definition of other asset value in the
    borrowing base to $2,212 (from previous levels of $2,500 and
    $3,500)   
|
| |  | established principal payment installments of $500 per
    month for the months ending April, 2004 through March, 2005              
|
| |  | provided consent to the June 2003 sale of Mid-Central Plastics
    Inc.                                                             
|
| |  | provided consent to enter into a settlement regarding the
    redeemable preferred stock held by Worthington Industries, Inc.       
|
| |  | increased the limitation for capital expenditures for 2003                                                                          



| |                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In addition, under this agreement, 238,584 warrants issued on
    September 20, 2000 to purchase Class A Common Stock at
    an exercise price of $0.01 per share remained outstanding.



| |                                                         
| | --------------------------------------------------------
| | March 26, 2004 Refinancing and Subsequent
    Amendments









| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1) A four-year secured term loan in the amount of $21,000
    with variable rate interest; principal payments are due in
    quarterly installments of $500 which began June 30, 2004
    and continue through March 31, 2005 and due in quarterly
    installments of $750 beginning June 30, 2005 through
    December 31, 2007 with the balance of $10,667.5 due on
    March 31, 2008. A mandatory principal payment of $82.5
    related to an asset sale was made in September 2004.

37



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MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES






| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2) A secured revolving credit facility with a limit of
    $18,000, with variable rate interest, with an initial revolving
    credit balance of $8,700, and with initial availability of
    $5,400 as of March 26, 2004. At December 31, 2004, the
    Company has a revolving credit balance of $11,400 and
    availability of $4,700. The balance is due March 31, 2008.
    The amount available under the revolving credit facility is
    limited to 85% of eligible accounts receivable and 60% of
    eligible inventories. The facility requires a commitment fee of
    0.50% per annum on the unused portion of the facility.                                                                                                                                                                                                                        
|
| | At the Companys option, for both the secured term loan and
    the secured revolving credit facility, interest will be at
    either a bank base rate plus applicable margin, or an adjusted
    LIBOR plus a LIBOR applicable margin. At inception, the bank
    rate plus applicable margin was 6.75% and the adjusted LIBOR
    plus a LIBOR applicable margin was 5.35%. At December 31,
    2004, those rates were 7.75% and 6.78%, respectively.                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | The Company entered into a swap agreement effective
    June 30, 2004 on $10,750 (the original notional amount) of
    its term debt. Under this agreement, the Company pays a fixed
    LIBOR rate of 3.72% on the notional amount, which is payable
    quarterly. In accordance with the term loan agreement, the
    Company also pays an interest margin which adjusts in steps
    based on achieved operating and leverage metrics (4.25% during
    2004). The notional amount for the period from June 30
    through September 30, 2004 was $10,750 and for the period
    from October 1 through December 31, 2004 was $10,500.
    The swap agreement expires March 31, 2008. The swap
    agreement is for the purpose of limiting the effects of interest
    rate increases on approximately one-half of the Companys
    variable rate term debt.
|
| | 3) Senior secured subordinated notes totaling $12,000 with
    cash interest of 12% and payment-in-kind interest of 2% and 4%
    with no principal amortization, and the balances due
    March 26, 2009. This debt is subordinated to the secured
    term loan and the revolving credit facility with respect to both
    payment and lien priority.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | Related to the senior secured subordinated note, on
    March 26, 2004, the Company issued 545,467 warrants to
    purchase shares of its Class A Common Stock for
    $0.02 per share; these warrants expire March 26, 2014.
    The warrant holder may exercise the warrants at any time. The
    warrants may be put to the Company, at the then fair market
    value, at the earlier of: a) five years from the date of
    issue; b) a change of control; c) a default on the
    senior secured subordinated loan; or d) a prepayment of 75%
    or more of the original principal balance of the senior secured
    subordinated loan.                                                                                                                                                                                                                    
|
| | The Company estimated the fair value of the warrants at the date
    of issue, and as of December 31, 2004, to be $1,500 and
    $1,791, respectively. The $1,791 estimate is reported as
    warrants payable in the accompanying consolidated balance
    sheets. The fair value at the date of issue was recorded as debt
    discount, and is being amortized using the effective yield
    method over 5 years, the term of the related senior secured
    subordinated note. The Company reports the warrants at fair
    value and records changes in the fair value as interest expense.                                                                                                                                                                                                                                                                  
|
| | The stock purchase warrant includes provisions that will reduce
    the 545,467 warrants that can be put to the Company if a) a
    change of control occurs prior to 5 years from the date of
    issue and the Company achieves specified net equity levels; or
    b) if a change of control has not occurred prior to
    5 years from the date of issue and the Company achieves
    specified EBITDA (earnings before interest, taxes, depreciation
    and amortization) levels. The number of warrants could be
    reduced to any one of several levels, but no lower than 290,278.
    For the year ended December 31, 2004, the Company achieved
    the EBITDA level that would reduce the maximum number of
    warrants outstanding. The maximum number of warrants that may be
    put or exercised has been reduced to 479,859.                   



38



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##### 



MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES










|      |      |   |        |        | 
|----- | ---- | - | ------ | ------ | 
|Year: |      |   |        |       
|      | 2005 |   | $      | 3,295  | 
|      | 2006 |   |        | 3,502  | 
|      | 2007 |   |        | 3,472  | 
|      | 2008 |   |        | 22,140 | 
|      | 2009 |   |        | 11,166 | 
|      |      |   |       
|      |      | $ | 43,575 |       
|      |      |   |       



|    |       
|--- | ------
|(8) | Leases



|          |                               |      |     |    |      |  |     |     | 
|--------- | ----------------------------- | ---- | --- | -- | ---- |  | --- | --- | 
|          |                               | 2003 |     |    | 2004 | 
|          |                               |      |     |    |      | 
|Machinery |                               | $    | 228 |    |      |  | 299 |    
|          | Less accumulated amortization |      |     | 93 |      |  |     | 136 | 
|          |                               |      |     |    |      | 
|          |                               | $    | 135 |    |      |  | 163 |    
|          |                               |      |     |    |      | 





|                                                      |      |                                                     |   |    |    | 
|----------------------------------------------------- | ---- | --------------------------------------------------- | - | -- | -- | 
|Year:                                                 |      |                                                     |   |   
|                                                      | 2005 |                                                     | $ | 67 |   
|                                                      | 2006 |                                                     |   | 18 |   
|                                                      |      |                                                     |  
|                                                      |      | Total minimum lease payments                        |   |    | 85 | 
|Less amount representing interest (from 6.0% to 7.9%) |      |                                                     | 4 |   
|                                                      |      |                                                     |  
|                                                      |      | Present value of net minimum capital lease payments |   | $  | 81 | 
|                                                      |      |                                                     |  

39



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##### 



MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES








|      |      |                              |   |       |        | 
|----- | ---- | ---------------------------- | - | ----- | ------ | 
|Year: |      |                              |   |      
|      | 2005 |                              | $ | 6,319 |       
|      | 2006 |                              |   | 4,298 |       
|      | 2007 |                              |   | 2,883 |       
|      | 2008 |                              |   | 2,279 |       
|      | 2009 |                              |   | 748   |       
|      |      |                              |  
|      |      | Total minimum lease payments |   | $     | 16,527 | 
|      |      |                              |  



|    |             
|--- | ------------
|(9) | Income Taxes



|                                                                                              |  |             |       |   |      |  |     |      |  |  |        |  
|--------------------------------------------------------------------------------------------- |  | ----------- | ----- | - | ---- |  | --- | ---- |  |  | ------ | -
|                                                                                              |  | December 31 |      
|                                                                                              |  |             |      
|                                                                                              |  | 2002        |       |   | 2003 |  |     | 2004 | 
|                                                                                              |  |             |       |   |      |  |     |      | 
|Earnings (loss) before discontinued operations and cumulative
    effect of accounting change |  | $           | (288  | ) |      |  | 426 |      |  |  | (5,775 | )
|Discontinued operations                                                                       |  |             | 2,157 |   |      |  | 55  |      |  |  |       |  
|                                                                                              |  |             |       |   |      |  |     |      | 
|                                                                                              |  | $           | 1,869 |   |      |  | 481 |      |  |  | (5,775 | )
|                                                                                              |  |             |       |   |      |  |     |      | 



|                              |         |         |      |      |          |  |        |        |   |  |        |        |  
|----------------------------- | ------- | ------- | ---- | ---- | -------- |  | ------ | ------ | - |  | ------ | ------ | -
|                              |         | Current |      |      | Deferred |  |        | Total  |  
|                              |         |         |      |      |          |  |        |        |  
|Year ended December 31, 2002: |         |         |      |      |          |  |        |        |   |  |        |       
|                              | Federal |         | $    | (288 | )        |  |        |       |   |  |        | (288   | )
|                              | State   |         |      |     |          |  |        |       |   |  |        |       |  
|                              |         |         |      |      |          |  |        |        |  
|                              |         | $       | (288 | )    |          |  |       |        |   |  | (288   | )     
|                              |         |         |      |      |          |  |        |        |  
|Year ended December 31, 2003: |         |         |      |      |          |  |        |        |   |  |        |       
|                              | Federal |         | $    | 80   |          |  |        | 151    |   |  |        | 231    |  
|                              | State   |         |      | 195  |          |  |        |       |   |  |        | 195    |  
|                              |         |         |      |      |          |  |        |        |  
|                              |         | $       | 275  |      |          |  | 151    |        |   |  | 426    |       
|                              |         |         |      |      |          |  |        |        |  
|Year ended December 31, 2004: |         |         |      |      |          |  |        |        |   |  |        |       
|                              | Federal |         | $    | 185  |          |  |        | (6,050 | ) |  |        | (5,865 | )
|                              | State   |         |      | 540  |          |  |        | (450   | ) |  |        | 90     |  
|                              |         |         |      |      |          |  |        |        |  
|                              |         | $       | 725  |      |          |  | (6,500 | )      |   |  | (5,775 | )     
|                              |         |         |      |      |          |  |        |        |  

40



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##### 



MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES






|                                                                       |  |             |      |   |      |  |      |      |  |  |        |  
|---------------------------------------------------------------------- |  | ----------- | ---- | - | ---- |  | ---- | ---- |  |  | ------ | -
|                                                                       |  | December 31 |     
|                                                                       |  |             |     
|                                                                       |  | 2002        |      |   | 2003 |  |      | 2004 | 
|                                                                       |  |             |      |   |      |  |      |      | 
|Computed expected tax expense (benefit)                              |  | $           | (336 | ) |      |  | 572  |      |  |  | 2,377  |  
|State income tax expense, net of Federal income tax benefit            |  |             |     |   |      |  | 129  |      |  |  | 59     |  
|Non-deductible interest on redeemable preferred stock                  |  |             |     |   |      |  | 146  |      |  |  | 85     |  
|Non-taxable gain on redemption of preferred stock                      |  |             |     |   |      |  |     |      |  |  | (963   | )
|Officers life insurance                                               |  |             | 20   |   |      |  | 20   |      |  |  | 3      |  
|Decrease in valuation allowance allocated to continuing
    operations |  |             | (42  | ) |      |  | (719 | )    |  |  | (7,441 | )
|Other, net                                                             |  |             | 70   |   |      |  | 278  |      |  |  | 105    |  
|                                                                       |  |             |      |   |      |  |      |      | 
|                                                                       |  | $           | (288 | ) |      |  | 426  |      |  |  | (5,775 | )
|                                                                       |  |             |      |   |      |  |      |      | 



|                                          |                                                                         |                                 |         |        |        |   |         |        |        |  
|----------------------------------------- | ----------------------------------------------------------------------- | ------------------------------- | ------- | ------ | ------ | - | ------- | ------ | ------ | -
|                                          |                                                                         | December 31                     |        
|                                          |                                                                         |                                 |        
|                                          |                                                                         | 2003                            |         |        | 2004   |  
|                                          |                                                                         |                                 |         |        |        |  
|Deferred tax assets attributable to:      |                                                                         |                                 |         |        |        |   |         |       
|                                          | Net operating loss and credit carryforwards                             |                                 | $       | 23,971 |        |   |         | 22,677 |       
|                                          | Accrued vacation pay                                                    |                                 |         | 314    |        |   |         | 345    |       
|                                          | Reserves and other                                                      |                                 |         | 853    |        |   |         | 398    |       
|                                          |                                                                         |                                 |         |        |        |  
|                                          |                                                                         | Total gross deferred tax assets |         |        | 25,138 |   |         |        | 23,420 |  
|Less valuation allowance                  |                                                                         |                                 | (20,484 | )      |        |   | (13,043 | )     
|                                          |                                                                         |                                 |         |        |        |  
|                                          |                                                                         | Total deferred tax assets       |         |        | 4,654  |   |         |        | 10,377 |  
|                                          |                                                                         |                                 |         |        |        |  
|Deferred tax liabilities attributable to: |                                                                         |                                 |         |        |        |   |         |       
|                                          | Plant and equipment, principally due to differences in
    depreciation |                                 |         | (2,926 | )      |   |         | (2,174 | )     
|                                          | Excess of tax over book amortization                                    |                                 |         | (41    | )      |   |         | (34    | )     
|                                          | Debt discount                                                           |                                 |         | (87    | )      |   |         | (69    | )     
|                                          |                                                                         |                                 |         |        |        |  
|                                          |                                                                         | Total deferred tax liabilities  |         |        | (3,054 | ) |         |        | (2,277 | )
|                                          |                                                                         |                                 |         |        |        |  
|                                          |                                                                         | Net deferred tax asset          |         | $      | 1,600  |   |         |        | 8,100  |  
|                                          |                                                                         |                                 |         |        |        |  



41



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##### 



MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES








|     |                           
|---- | --------------------------
|(10) | Redeemable Preferred Stock







|     |                     
|---- | --------------------
|(11) | Stockholders Equity







|     |                   
|---- | ------------------
|(12) | Stock Option Plans



42



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##### 



MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES






|                                 |  |           |            |          |          |   |         |  
|-------------------------------- |  | --------- | ---------- | -------- | -------- | - | ------- | -
|                                 |  |           |            | Weighted |         
|                                 |  |           |            | Average  |         
|                                 |  | Number of |            |          | Exercise |  
|                                 |  | Shares    |            |          | Price    |  
|                                 |  |           |            |          |          |  
|Outstanding at December 31, 2001 |  |           | 1,096,067  |          |          | $ | 13.072  |  
|Issued                           |  |           | 131,500    |          |          |   | 0.325   |  
|Exercised                        |  |           | (59,697    | )        |          |   | (0.216  | )
|Forfeited                        |  |           |           |          |          |   |        |  
|                                 |  |           |            |          |          |  
|Outstanding at December 31, 2002 |  |           | 1,167,870  |          |          |   | 12.290  |  
|Issued                           |  |           | 712,500    |          |          |   | 0.166   |  
|Exercised                        |  |           |           |          |          |   |        |  
|Forfeited                        |  |           | (1,041,220 | )        |          |   | (13.675 | )
|                                 |  |           |            |          |          |  
|Outstanding at December 31, 2003 |  |           | 839,150    |          |          |   | 0.286   |  
|Issued                           |  |           |           |          |          |   |        |  
|Exercised                        |  |           | (163,331   | )        |          |   | (0.180  | )
|Forfeited                        |  |           |           |          |          |   |        |  
|                                 |  |           |            |          |          |  
|Outstanding at December 31, 2004 |  |           | 675,819    |          |          | $ | 0.311   |  
|                                 |  |           |            |          |          |  



|          |         |  |          |   |       |                 |  |        |               |  |  |  |         | 
|--------- | ------- |  | -------- | - | ----- | --------------- |  | ------ | ------------- |  |  |  | ------- | 
|          |         |  |          |   |       | Number of       | 
|Number of |         |  | Exercise |   |       |                 |  | Shares |              
|Shares    |         |  | Price    |   |       | Expiration Date |  |        | Exercisable   | 
|          |         |  |          |   |       |                 |  |        |               | 
|          | 51,650  |  |          | $ | 1.875 |                 |  |        | February 2011 |  |  |  | 51,650  | 
|          | 46,668  |  |          |   | 0.325 |                 |  |        | June 2012     |  |  |  | 21,668  | 
|          | 465,001 |  |          |   | 0.150 |                 |  |        | February 2013 |  |  |  | 89,996  | 
|          | 30,000  |  |          |   | 0.250 |                 |  |        | April 2013    |  |  |  | 30,000  | 
|          | 72,500  |  |          |   | 0.250 |                 |  |        | August 2013   |  |  |  | 72,500  | 
|          | 10,000  |  |          |   | 0.300 |                 |  |        | November 2013 |  |  |  | 3,333   | 
|          |         |  |          |   |       |                 |  |        |               | 
|          | 675,819 |  |          |   |       |                 |  |        |               |  |  |  | 269,147 | 
|          |         |  |          |   |       |                 |  |        |               | 



|     |                       
|---- | ----------------------
|(13) | Concentration of Sales



|             |                   |            |  |    |            |  |  |    |  
|------------ | ----------------- | ---------- |  | -- | ---------- |  |  | -- | -
|             |                   | Customer A |  |    | Customer B | 
|             |                   |            |  |    |            | 
|Years ended: |                   |            |  |    |            |  |  |   
|             | December 31, 2002 |            |  | 37 | %          |  |  | 50 | %
|             | December 31, 2003 |            |  | 38 |            |  |  | 50 |  
|             | December 31, 2004 |            |  | 35 |            |  |  | 53 |  



43



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##### 



MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES






|     |                            
|---- | ---------------------------
|(14) | Employee Participation Plan





|     |                          
|---- | -------------------------
|(15) | Earnings (Loss) Per Share



|                            |                                                                                                     |                                                      |   |           |           |   |  |           |           |  |  |           |           | 
|--------------------------- | --------------------------------------------------------------------------------------------------- | ---------------------------------------------------- | - | --------- | --------- | - |  | --------- | --------- |  |  | --------- | --------- | 
|                            |                                                                                                     | 2002                                                 |   |           | 2003      |   |  | 2004      |          
|                            |                                                                                                     |                                                      |   |           |           |   |  |           |          
|Numerator:                  |                                                                                                     |                                                      |   |           |           |   |  |           |           |  |  |          
|                            | Earnings (loss) from continuing operations, including accretion
    of discount on preferred shares |                                                      | $ | (1,965    | )         |   |  | 541       |           |  |  | 12,766    |          
|                            | Earnings from discontinued operations                                                               |                                                      |   | 6,790     |           |   |  | 85        |           |  |  |          |          
|                            |                                                                                                     |                                                      |   |           |           |   |  |           |          
|                            | Earnings before cumulative effect of accounting change                                              |                                                      |   | 4,825     |           |   |  | 626       |           |  |  | 12,766    |          
|                            | Cumulative effect of change in accounting principle                                                 |                                                      |   | (8,118    | )         |   |  |          |           |  |  |          |          
|                            |                                                                                                     |                                                      |   |           |           |   |  |           |          
|                            |                                                                                                     | Net earnings (loss) available to common shareholders |   | $         | (3,293    | ) |  |           | 626       |  |  |           | 12,766    | 
|                            |                                                                                                     |                                                      |   |           |           |   |  |           |          
|Denominator:                |                                                                                                     |                                                      |   |           |           |   |  |           |           |  |  |          
|                            | Weighted average common shares outstanding  basic                                                  |                                                      |   | 4,638,467 |           |   |  | 4,660,547 |           |  |  | 4,670,374 |          
|                            | Dilutive potential common shares  stock options and
    warrants                                   |                                                      |   |          |           |   |  | 430,300   |           |  |  | 1,228,647 |          
|                            |                                                                                                     |                                                      |   |           |           |   |  |           |          
|                            |                                                                                                     | Weighted average common stock outstanding  diluted  |   |           | 4,638,467 |   |  |           | 5,090,847 |  |  |           | 5,899,021 | 
|                            |                                                                                                     |                                                      |   |           |           |   |  |           |          
|Basic earnings per share:   |                                                                                                     |                                                      |   |           |           |   |  |           |           |  |  |          
|                            | Earnings (loss) from continuing operations                                                          |                                                      | $ | (0.42     | )         |   |  | 0.12      |           |  |  | 2.73      |          
|                            | Earnings from discontinued operations                                                               |                                                      |   | 1.46      |           |   |  | 0.02      |           |  |  |          |          
|                            |                                                                                                     |                                                      |   |           |           |   |  |           |          
|                            | Earnings before cumulative effect of accounting change                                              |                                                      |   | 1.04      |           |   |  | 0.14      |           |  |  | 2.73      |          
|                            | Cumulative effect of change in accounting principle                                                 |                                                      |   | (1.75     | )         |   |  |          |           |  |  |          |          
|                            |                                                                                                     |                                                      |   |           |           |   |  |           |          
|                            |                                                                                                     | Net earnings (loss) available to common shareholders |   | $         | (0.71     | ) |  |           | 0.14      |  |  |           | 2.73      | 
|                            |                                                                                                     |                                                      |   |           |           |   |  |           |          
|Diluted earnings per share: |                                                                                                     |                                                      |   |           |           |   |  |           |           |  |  |          
|                            | Earnings (loss) from continuing operations                                                          |                                                      | $ | (0.42     | )         |   |  | 0.11      |           |  |  | 2.16      |          
|                            | Earnings from discontinued operations                                                               |                                                      |   | 1.46      |           |   |  | 0.02      |           |  |  |          |          
|                            |                                                                                                     |                                                      |   |           |           |   |  |           |          
|                            | Earnings before cumulative effect of accounting change                                              |                                                      |   | 1.04      |           |   |  | 0.13      |           |  |  | 2.16      |          
|                            | Cumulative effect of change in accounting principle                                                 |                                                      |   | (1.75     | )         |   |  |          |           |  |  |          |          
|                            |                                                                                                     |                                                      |   |           |           |   |  |           |          
|                            |                                                                                                     | Net earnings (loss) available to common shareholders |   | $         | (0.71     | ) |  |           | 0.13      |  |  |           | 2.16      | 
|                            |                                                                                                     |                                                      |   |           |           |   |  |           |          



44



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##### 



MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES








|     |                  
|---- | -----------------
|(16) | Segment Reporting





|     |                                              
|---- | ---------------------------------------------
|(17) | Selected Quarterly Financial Data (Unaudited)



|      |                                                                                        |                              |       |        |         |      |  |         |       |      |         |        |      |       |  |        |      |      |  |         |      |      | 
|----- | -------------------------------------------------------------------------------------- | ---------------------------- | ----- | ------ | ------- | ---- |  | ------- | ----- | ---- | ------- | ------ | ---- | ----- |  | ------ | ---- | ---- |  | ------- | ---- | ---- | 
|      |                                                                                        | First                        |       |        | Second  |      |  | Third   |       |      | Fourth  |        |      | Total | 
|      |                                                                                        | Quarter                      |       |        | Quarter |      |  | Quarter |       |      | Quarter |        |      | Year  | 
|      |                                                                                        |                              |       |        |         |      |  |         |       |      |         |        |      |       | 
|2004: |                                                                                        |                              |       |        |         |      |  |         |       |      |         |        |      |       |  |        |      |      |  |        
|      | Net sales                                                                              |                              | $     | 39,920 |         |      |  | 50,706  |       |      |         | 46,146 |      |       |  | 48,697 |      |      |  | 185,469 |     
|      | Gross profit                                                                           |                              |       | 5,509  |         |      |  | 6,145   |       |      |         | 5,318  |      |       |  | 6,587  |      |      |  | 23,559  |     
|      | Operating income                                                                       |                              |       | 2,069  |         |      |  | 2,631   |       |      |         | 1,789  |      |       |  | 2,273  |      |      |  | 8,762   |     
|      | Net earnings available to common shareholders                                          |                              |       | 2,126  |         |      |  | 2,228   |       |      |         | 965    |      |       |  | 7,447  |      |      |  | 12,766  |     
|      | Earnings per share of common stock  basic:                                            |                              |       |        |         |      |  |         |       |      |         |        |      |       |  |        |      |      |  |         |     
|      |                                                                                        | From continuing operations   |       |        | 0.46    |      |  |         | 0.48  |      |         |        | 0.20 |       |  |        | 1.59 |      |  |         | 2.73 |     
|      |                                                                                        | From discontinued operations |       |        |        |      |  |         |      |      |         |        |     |       |  |        |     |      |  |         |     |     
|      |                                                                                        |                              |       |        |         |      |  |         |       |      |         |        |      |       | 
|      |                                                                                        |                              | Total |        | $       | 0.46 |  |         |       | 0.48 |         |        |      | 0.20  |  |        |      | 1.59 |  |         |      | 2.73 | 
|      |                                                                                        |                              |       |        |         |      |  |         |       |      |         |        |      |       | 
|      | Earnings per share of common stock  diluted:                                          |                              |       |        |         |      |  |         |       |      |         |        |      |       |  |        |      |      |  |         |     
|      |                                                                                        | From continuing operations   |       |        | 0.38    |      |  |         | 0.38  |      |         |        | 0.15 |       |  |        | 1.25 |      |  |         | 2.16 |     
|      |                                                                                        | From discontinued operations |       |        |        |      |  |         |      |      |         |        |     |       |  |        |     |      |  |         |     |     
|      |                                                                                        |                              |       |        |         |      |  |         |       |      |         |        |      |       | 
|      |                                                                                        |                              | Total |        | $       | 0.38 |  |         |       | 0.38 |         |        |      | 0.15  |  |        |      | 1.25 |  |         |      | 2.16 | 
|      |                                                                                        |                              |       |        |         |      |  |         |       |      |         |        |      |       | 
|2003: |                                                                                        |                              |       |        |         |      |  |         |       |      |         |        |      |       |  |        |      |      |  |        
|      | Net sales                                                                              |                              | $     | 32,380 |         |      |  | 34,398  |       |      |         | 31,452 |      |       |  | 33,201 |      |      |  | 131,431 |     
|      | Gross profit                                                                           |                              |       | 4,591  |         |      |  | 5,010   |       |      |         | 4,063  |      |       |  | 4,449  |      |      |  | 18,113  |     
|      | Operating income                                                                       |                              |       | 1,283  |         |      |  | 1,698   |       |      |         | 886    |      |       |  | 884    |      |      |  | 4,751   |     
|      | Earnings before discontinued operations and cumulative effect of
    accounting change |                              |       | 316    |         |      |  | 573     |       |      |         | 106    |      |       |  | 261    |      |      |  | 1,256   |     
|      | Net earnings (loss) from discontinued operations                                       |                              |       | 135    |         |      |  | (50     | )     |      |         |       |      |       |  |       |      |      |  | 85      |     
|      | Net earnings available to common shareholders                                          |                              |       | 119    |         |      |  | 140     |       |      |         | 106    |      |       |  | 261    |      |      |  | 626     |     
|      | Earnings (loss) per share of common stock  basic:                                     |                              |       |        |         |      |  |         |       |      |         |        |      |       |  |        |      |      |  |         |     
|      |                                                                                        | From continuing operations   |       |        | 0.00    |      |  |         | 0.04  |      |         |        | 0.02 |       |  |        | 0.06 |      |  |         | 0.12 |     
|      |                                                                                        | From discontinued operations |       |        | 0.03    |      |  |         | (0.01 | )    |         |        |     |       |  |        |     |      |  |         | 0.02 |     
|      |                                                                                        |                              |       |        |         |      |  |         |       |      |         |        |      |       | 
|      |                                                                                        |                              | Total |        | $       | 0.03 |  |         |       | 0.03 |         |        |      | 0.02  |  |        |      | 0.06 |  |         |      | 0.14 | 
|      |                                                                                        |                              |       |        |         |      |  |         |       |      |         |        |      |       | 
|      | Earnings (loss) per share of common stock  diluted:                                   |                              |       |        |         |      |  |         |       |      |         |        |      |       |  |        |      |      |  |         |     
|      |                                                                                        | From continuing operations   |       |        | 0.00    |      |  |         | 0.03  |      |         |        | 0.02 |       |  |        | 0.06 |      |  |         | 0.11 |     
|      |                                                                                        | From discontinued operations |       |        | 0.03    |      |  |         | (0.01 | )    |         |        |     |       |  |        |     |      |  |         | 0.02 |     
|      |                                                                                        |                              |       |        |         |      |  |         |       |      |         |        |      |       | 
|      |                                                                                        |                              | Total |        | $       | 0.03 |  |         |       | 0.02 |         |        |      | 0.02  |  |        |      | 0.06 |  |         |      | 0.13 | 
|      |                                                                                        |                              |       |        |         |      |  |         |       |      |         |        |      |       | 

45



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##### 



MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES






|     |           
|---- | ----------
|(18) | Litigation





46



---



##### 



MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES




MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES




Schedule II  Valuation and Qualifying
Accounts


|                                 |                              |              |   |     |            |  |  |            |  |  |       |            |   |        |  |      |    |  |  |     | 
|-------------------------------- | ---------------------------- | ------------ | - | --- | ---------- |  |  | ---------- |  |  | ----- | ---------- | - | ------ |  | ---- | -- |  |  | --- | 
|                                 |                              | Balance at   |   |     | Charged to |  |  |            |  |  |       | Balance at |  
|                                 |                              | Beginning of |   |     | Costs and  |  |  |            |  |  |       | End of     |  
|Description                      |                              | Period       |   |     | Expenses   |  |  | Deductions |  |  | Other |            |   | Period | 
|                                 |                              |              |   |     |            |  |  |            |  |  |       |            |   |        | 
|Allowance for doubtful accounts: |                              |              |   |     |            |  |  |            |  |  |       |            |   |        |  |      |    |  |  |    
|                                 | Year ended December 31, 2002 |              | $ | 381 |            |  |  | 7          |  |  |       | (52        | ) |        |  | (252 | )* |  |  | 84  | 
|                                 |                              |              |   |     |            |  |  |            |  |  |       |            |   |        | 
|                                 | Year ended December 31, 2003 |              | $ | 84  |            |  |  | 310        |  |  |       | (192       | ) |        |  |     |    |  |  | 202 | 
|                                 |                              |              |   |     |            |  |  |            |  |  |       |            |   |        | 
|                                 | Year ended December 31, 2004 |              | $ | 202 |            |  |  | 145        |  |  |       | (187       | ) |        |  |     |    |  |  | 160 | 
|                                 |                              |              |   |     |            |  |  |            |  |  |       |            |   |        | 






|  |                                                                                                 
|- | ------------------------------------------------------------------------------------------------
|* | Represents the December 31, 2001 allowance for doubtful
    accounts of discontinued operations.

47



---



##### 





|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Evaluation of disclosure controls and procedures.




Changes in internal controls.




|         |                  
|-------- | -----------------
|Item 9B. | Other Information



PART III




|         |                                                    
|-------- | ---------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant.





|         |                        
|-------- | -----------------------
|Item 11. | Executive Compensation.





|         |                                                                    
|-------- | -------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management.





|         |                                                
|-------- | -----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions.



48



---



##### 







|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services



PART IV




|         |                                                                      
|-------- | ---------------------------------------------------------------------
|Item 15. | Exhibits, Financial Statement Schedules, and Reports on
    Form 8-K.



Financial Statements.






| |    |                                                                  
| | -- | -----------------------------------------------------------------
| | a. | Report of KPMG LLP, Independent Registered Public Accounting Firm



| |    |                                                             
| | -- | ------------------------------------------------------------
| | b. | Consolidated Balance Sheets as of December 31, 2003 and 2004



| |    |                                                                                               
| | -- | ----------------------------------------------------------------------------------------------
| | c. | Consolidated Statements of Operations for the years ended
    December 31, 2002, 2003 and 2004



| |    |                                                                                                                   
| | -- | ------------------------------------------------------------------------------------------------------------------
| | d. | Consolidated Statements of Stockholders Equity (Deficit)
    for the years ended December 31, 2002, 2003 and 2004



| |    |                                                                                               
| | -- | ----------------------------------------------------------------------------------------------
| | e. | Consolidated Statements of Cash Flows for the years ended
    December 31, 2002, 2003 and 2004



| |    |                                           
| | -- | ------------------------------------------
| | f. | Notes to Consolidated Financial Statements

Financial Statement Schedules






| |                                                                                                         
| | --------------------------------------------------------------------------------------------------------
| | Schedule II  Valuation and Qualifying Accounts
    for the years ended December 31, 2002, 2003 and 2004

|                                  |  |                              |   |          |  |                                                                                                                                           |  |                                                                                                                                                              |  |  |  | 
|--------------------------------- |  | ---------------------------- | - | -------- |  | ----------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------ |  |  |  | 
|                                  |  |                              |   | Filed    | 
|Exhibit Number and Document Title |  | Incorporated by Reference to |   | Herewith | 
|                                  |  |                              |   |          | 
|2.1 and 10.1                      |  |                              |  |          |  | Agreement and Plan of Merger Between MLX Corp. and Morton
    Metalcraft Holding Co., dated as of October 20, 1997                        |  | Annex B to the Definitive Proxy Statement on Schedule 14A
    filed by MLX Corp. with the Securities and Exchange Commission
    (SEC) on January 6, 1998. |  |  |  | 
|                                 
|2.2 and 10.2                      |  |                              |  |          |  | Securities Purchase Agreement Among MLX Corp. and Security
    Holders of Morton Metalcraft Holding Co., dated as of
    October 20, 1997 |  | Morton Industrial Group, Inc. Form 10-K for the year ended
    December 31, 1997                                                                             |  |  |  | 
|                                 
|3.1 and 4.1                       |  |                              |  |          |  | Articles of Incorporation of the registrant as Amended prior to
    January 20, 1998                                                      |  | MLX Corp. Form 10-Q for the quarter ended June 30,
    1993 Exhibit 3 to Morton Industrial Group, Inc.                                                       |  |  |  | 
|                                 
|3.2 and 4.2                       |  |                              |  |          |  | Articles of Amendment to Articles of Incorporation of the
    Registrant Effective January 20, 1998                                       |  | Report on Form 8-K filed with the SEC on February 4,
    1998                                                                                                |  |  |  | 
|                                 
|3.2 and 4.2                       |  |                              |  |          |  | Bylaws of the Registrant, as Amended                                                                                                      |  | Morton Industrial Group, Inc. Form 10-K for the year ended
    December 31, 1997                                                                             |  |  |  | 

49



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##### 



|                                  |  |                              |   |          |  |                                                                                                                                                                         |  |                                                                                                                      |  |  |  | 
|--------------------------------- |  | ---------------------------- | - | -------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|                                  |  |                              |   | Filed    | 
|Exhibit Number and Document Title |  | Incorporated by Reference to |   | Herewith | 
|                                  |  |                              |   |          | 
|                                 
|10.7                              |  |                              |  |          |  | Limited Indemnification Agreement dated as of October 20,
    1997, among MLX Corp., William D. Morton, and Other Morton
    Metalcraft Shareholders and Option Holders |  | Morton Industrial Group, Inc. Form 10-K for the year ended
    December 31, 1997                                     |  |  |  | 
|                                 
|10.10                             |  |                              |  |          |  | Lease between Agracel, Inc., and Morton Metalcraft Co. dated
    November 6, 1996.                                                                                      |  | Morton Industrial Group, Inc. Form 10-K for the year ended
    December 31, 1997                                     |  |  |  | 
|                                 
|10.11                             |  |                              |  |          |  | Employment Agreement dated as of January 20, 1998, between
    the Registrant and William D. Morton                                                                     |  | Morton Industrial Group, Inc. Form 10-K for the year ended
    December 31, 1997                                     |  |  |  | 
|                                 
|10.12                             |  |                              |  |          |  | Employment Agreement dated as of January 20, 1998, between
    the Registrant and Daryl R. Lindemann                                                                    |  | Morton Industrial Group, Inc. Form 10-K for the year ended
    December 31, 1997                                     |  |  |  | 
|                                 
|10.13                             |  |                              |  |          |  | MLX Corp. 1997 Stock Option Plan                                                                                                                                        |  | Appendix C to the Definitive Proxy Statement on Schedule 14A
    filed by MLX Corp. with the SEC on January 6, 1998. |  |  |  | 
|                                 
|10.14                             |  |                              |  |          |  | MLX Corp. 1995 Stock Option Plan                                                                                                                                        |  | MLX Corp. Definitive Proxy Statement on Schedule 14A for the
    1995 Annual Meeting of Stockholders                 |  |  |  | 
|                                 
|10.15                             |  |                              |  |          |  | Master Lease Agreement between Morton Metalcraft Co. and General
    Electric Capital Corporation dated August 7, 1996                                                  |  | Morton Industrial Group, Inc. Form 10-K for the year ended
    December 31, 1997                                     |  |  |  | 
|                                 
|10.16                             |  |                              |  |          |  | Guaranty of Master Lease Agreement by Morton Metalcraft Holding
    Co., dated August 7, 1996                                                                           |  | Morton Industrial Group, Inc. Form 10-K for the year ended
    December 31, 1997                                     |  |  |  | 
|                                 
|10.23                             |  |                              |  |          |  | Death Benefit Agreement between Morton Metalcraft Co. and
    William D. Morton                                                                                         |  | Morton Industrial Group, Inc. Form 10-K for the year ended
    December 31, 1997                                     |  |  |  | 
|                                 
|10.24                             |  |                              |  |          |  | Salary Continuation Agreement between Morton Metalcraft Co. and
    William D. Morton dated February 26, 1996.                                                          |  | Morton Industrial Group, Inc. Form 10-K for the year ended
    December 31, 1997                                     |  |  |  | 
|                                 
|10.26                             |  |                              |  |          |  | Stock Purchase Agreement among the Company, Joseph T.
    Buie, Jr., and Ernest J. Butler, dated April 8, 1998.                                                         |  | Exhibit 10.2 to Morton Industrial Group, Inc. Report on
    Form 8-K filed with the SEC on April 14, 1998            |  |  |  | 
|                                 
|10.27                             |  |                              |  |          |  | Non-negotiable Promissory Note (subordinated) of the Company,
    Joseph T. Buie, Jr., dated April 8, 1998.                                                             |  | Exhibit 10.3 Morton Industrial Group, Inc. Report on
    Form 8-K filed with the SEC on April 14, 1998               |  |  |  | 
|                                 
|10.28                             |  |                              |  |          |  | Non-negotiable Promissory Note (subordinated) of the Company to
    Ernest. J. Butler, dated April 8, 1998.                                                             |  | Exhibit 10.4 Morton Industrial Group, Inc. Report on
    Form 8-K filed with the SEC on April 14, 1998               |  |  |  | 
|                                 
|10.41                             |  |                              |  |          |  | Amended and Restated Agreement with Harris Trust and Savings
    Bank, As Agent                                                                                         |  | Exhibit 99.1 to Morton Industrial Group, Inc. Report on
    Form 10-K filed with SEC on April 1, 2002                |  |  |  | 
|                                 
|10.42                             |  |                              |  |          |  | First Amendment to Amended and Restated Agreement with Harris
    Trust and Savings Bank, As Agent                                                                      |  | Exhibit 99.1 to Morton Industrial Group, Inc. Report on
    Form 10-K filed with SEC on March 31, 2003               |  |  |  | 

50



---



##### 



|                                  |  |                              |   |          |  |                                                                                                          |  |                                                                                                           |  |  |   | 
|--------------------------------- |  | ---------------------------- | - | -------- |  | -------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------- |  |  | - | 
|                                  |  |                              |   | Filed    | 
|Exhibit Number and Document Title |  | Incorporated by Reference to |   | Herewith | 
|                                  |  |                              |   |          | 
|                                 
|10.43                             |  |                              |  |          |  | Second Amendment to Amended and Restated Agreement with Harris
    Trust and Savings Bank, As Agent      |  | Exhibit 99.2 to Morton Industrial Group, Inc. Report on
    Form 10-K filed with SEC on March 31, 2003    |  |  |   | 
|                                 
|10.44                             |  |                              |  |          |  | Third Amendment to Amended and Restated Agreement with Harris
    Trust and Savings Bank, As Agent       |  | Exhibit 99.3 to Morton Industrial Group, Inc. Report on
    Form 10-K filed with SEC on March 31, 2003    |  |  |   | 
|                                 
|10.45                             |  |                              |  |          |  | Asset Purchase Agreement between Morton Custom Plastics, LLC and
    Wilbert, Inc.                       |  | Exhibit 99.1 to Morton Industrial Group, Inc. Report on
    Form 10-Q filed with SEC on November 4, 2002  |  |  |   | 
|                                 
|10.47                             |  |                              |  |          |  | Fourth Amendment to Amended and Restated Credit Agreement with
    Harris Trust & Savings Bank, As Agent |  | Exhibit 99.1 to Morton Industrial Group, Inc. Report on
    Form 10-Q filed with SEC on August 11, 2003.  |  |  |   | 
|                                 
|10.48                             |  |                              |  |          |  | Fifth Amendment to Amended and Restated Credit Agreement with
    Harris Trust & Savings Bank, As Agent  |  | Exhibit 99.1 to Morton Industrial Group, Inc. Report on
    Form 8-K filed with SEC on December 29, 2003. |  |  |   | 
|                                 
|10.49                             |  |                              |  |          |  | Sixth Amendment to Amended and Restated Credit Agreement with
    Harris Trust & Savings Bank, As Agent  |  | Exhibit 10.49 to Morton Industrial Group, Inc. Report on Form
    10-K filed with SEC on March 30, 2004   |  |  |   | 
|                                 
|10.50                             |  |                              |  |          |  | Second Amended and Restated Credit Agreement                                                             |  | Exhibit 10.50 to Morton Industrial Group, Inc. Report on Form
    10-K filed with SEC on March 30, 2004   |  |  |   | 
|                                 
|10.51                             |  |                              |  |          |  | Note and Warrant Purchase Agreement                                                                      |  | Exhibit 10.51 to Morton Industrial Group, Inc. Report on Form
    10-K filed with SEC on March 30, 2004   |  |  |   | 
|                                 
|10.52                             |  |                              |  |          |  | Settlement Agreement                                                                                     |  | Exhibit 99.2 to Morton Industrial Group, Inc. Report on
    Form 8-K filed with SEC on December 29, 2003. |  |  |   | 
|                                 
|10.53                             |  |                              |  |          |  | Stock Redemption Agreement                                                                               |  | Exhibit 99.3 to Morton Industrial Group, Inc. Report on
    Form 8-K filed with SEC on December 29, 2003. |  |  |   | 
|                                 
|10.54                             |  |                              |  |          |  | Agreement with Innovative Injection Technologies, Inc.                                                   |  | Exhibit 99.1 to Morton Industrial Group, Inc. Report on
    Form 8-K/A filed with SEC on July 7, 2003.    |  |  |   | 
|                                 
|10.55                             |  |                              |  |          |  | First Amendment to Agreement with Innovative Injection
    Technologies, Inc.                            |  | Exhibit 99.2 to Morton Industrial Group, Inc. Report on
    Form 8-K/A filed with SEC on July 7, 2003.    |  |  |   | 
|                                 
|10.56                             |  |                              |  |          |  | Investor Rights Agreement                                                                                |  | Exhibit 10.56 to Morton Industrial Group, Inc. Report on Form
    10-K filed with SEC on March 30, 2004   |  |  |   | 
|                                 
|10.57                             |  |                              |   |          |  | First Amendment to the Second Amended and Restated Credit
    Agreement                                  |  | Exhibit 99.1 to Morton Industrial Group, Inc. Report on
    Form 10-Q filed with SEC on August 6, 2004    |  |  |   | 
|                                 
|10.58                             |  |                              |   |          |  | Amended and Restated Note and Warrant Purchase Agreement                                                 |  | Exhibit 99.2 to Morton Industrial Group, Inc. Report on
    Form 10-Q filed with SEC on August 6, 2004    |  |  |   | 
|                                 
|10.59                             |  |                              |   |          |  | Amendment to By-Laws                                                                                     |  | Exhibit 99.1 to Morton Industrial Group, Inc. Report on
    Form 8-K filed with SEC on December 14, 2004  |  |  |   | 
|                                 
|10.60                             |  |                              |   |          |  | Second Amendment to Second Amended and Restated Credit Agreement                                         |  |                                                                                                           |  |  | X | 

51



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##### 



|                                  |  |                              |   |          |  |                                                                                                                  |  |                                                                                                              |  |  |   | 
|--------------------------------- |  | ---------------------------- | - | -------- |  | ---------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------ |  |  | - | 
|                                  |  |                              |   | Filed    | 
|Exhibit Number and Document Title |  | Incorporated by Reference to |   | Herewith | 
|                                  |  |                              |   |          | 
|                                 
|10.61                             |  |                              |   |          |  | First Amendment to Amended and Restated Note and Warrant
    Purchase Agreement                                  |  |                                                                                                              |  |  | X | 
|                                 
|13                                |  |                              |  |          |  | Annual Report                                                                                                    |  |                                                                                                              |  |  | X | 
|                                 
|16.2                              |  |                              |  |          |  | Letter re: change in certifying accountant                                                                       |  | Exhibit 16.1 to Morton Industrial Group, Inc. Report on
    Form 8-K filed with the SEC on February 18, 1999 |  |  |   | 
|                                 
|21.1                              |  |                              |  |          |  | Subsidiaries of Registrant                                                                                       |  |                                                                                                              |  |  | X | 
|                                 
|23.1                              |  |                              |  |          |  | Consent of KPMG LLP                                                                                              |  |                                                                                                              |  |  | X | 
|                                 
|31.1                              |  |                              |  |          |  | Certification pursuant to 18 U.S.C. Section 1350, pursuant
    to Section 302 of the Sarbanes-Oxley Act of 2002. |  |                                                                                                              |  |  | X | 
|                                 
|31.2                              |  |                              |  |          |  | Certification pursuant to 18 U.S.C. Section 1350, pursuant
    to Section 302 of the Sarbanes-Oxley Act of 2002. |  |                                                                                                              |  |  | X | 
|                                 
|32.1                              |  |                              |  |          |  | Certification pursuant to 18 U.S.C. Section 1350, pursuant
    to Section 906 of the Sarbanes-Oxley Act of 2002. |  |                                                                                                              |  |  | X | 





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##### 



SIGNATURES






| |                              
| | -----------------------------
| | MORTON INDUSTRIAL GROUP, INC.



| |     |                     
| | --- | --------------------
| | By: | /s/WILLIAM D. MORTON

| |                                                
| | -----------------------------------------------
| |                                                
| | William D. Morton                              
| | Chairman, Chief Executive Officer and President





|                                             |  |                                                 |  |               |  | 
|-------------------------------------------- |  | ----------------------------------------------- |  | ------------- |  | 
|Name                                         |  | Title                                           |  | Date         
|                                             |  |                                                 |  |              
|                                            
|/s/ WILLIAM D. MORTONWilliam
    D. Morton   |  | Chairman, Chief Executive Officer and President |  | July 29, 2005
|                                            
|/s/ DARYL R. LINDEMANNDaryl
    R. Lindemann |  | Chief Financial Officer and Secretary           |  | July 29, 2005
|                                            
|/s/ FRED W. BROLINGFred
    W. Broling       |  | Director                                        |  | July 29, 2005
|                                            
|/s/ MARK W. MEALYMark
    W. Mealy           |  | Director                                        |  | July 29, 2005

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##### 



SHAREHOLDER INFORMATION


CORPORATE OFFICES










INVESTOR INFORMATION














ANNUAL MEETING










FORM 10-K




STOCK TRANSFER AGENT AND REGISTRAR












INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM






STOCK MARKET INFORMATION




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##### 



BOARD OF DIRECTORS




















CORPORATE OFFICERS














55