<PAGE>   1


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C., 20549

                                   FORM 10-K

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

         For the fiscal year ended December 31, 2000

                                        OR

[ ]      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 333-45823

                           STANADYNE AUTOMOTIVE CORP.
             (Exact name of registrant as specified in its charter)

           Delaware                                            22-2940378
(State or Other Jurisdiction of                            (I.R.S. Employer
Incorporation or Organization)                            Identification No.)

92 Deerfield Road, Windsor, Connecticut                      06095-4209
(Address of Principal Executive Offices)                     (Zip Code)

Registrant's telephone number including area code (860) 525-0821


        Securities registered pursuant to Section 12(b) of the Act: None

        Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes [X]           No [ ]


Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

As of December 31, 2000, there was no established public trading market for the
shares of the Registrant's common stock and no shares of common stock were held
by non-affiliates of the Registrant.

The number of Common Shares of the Company, $0.01 per share par value,
outstanding as of March 1, 2001 was 1,000.

                   DOCUMENTS INCORPORATED BY REFERENCE - None
<PAGE>   2
                           STANADYNE AUTOMOTIVE CORP.

                                   FORM 10-K

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                             PAGE
<S>                                                                                          <C>
PART I:
       ITEM   1.      Business..............................................................   3
       ITEM   2.      Properties............................................................   9
       ITEM   3.      Legal Proceedings.....................................................   9
       ITEM   4.      Submission of Matters to a Vote of Security Holders...................   9

PART II:
       ITEM   5.      Market for the Registrant's Common Equity and Related Stockholder
                      Matters...............................................................  10
       ITEM   6.      Selected Financial Data...............................................  10
       ITEM   7.      Management's Discussion and Analysis of Financial Condition and
                      Results of Operations.................................................  11
       ITEM  7A.      Quantitative and Qualitative Disclosures About Market Risk............  16
       ITEM   8.      Financial Statements and Supplementary Data...........................  17
       ITEM   9.      Changes in and Disagreements with Accountants on Accounting
                      and Financial Disclosure..............................................  18

PART III:
       ITEM  10.      Directors and Executive Officers of the Registrant....................  19
       ITEM  11.      Executive Compensation................................................  22
       ITEM  12.      Security Ownership of Certain Beneficial Owners and Management........  27
       ITEM  13.      Certain Relationships and Related Transactions........................  29

PART IV:
       ITEM  14.      Exhibits, Financial Statement Schedules, and Reports on Form 8-K......  30
       Signatures     ......................................................................  33
</TABLE>

                                       2
<PAGE>   3
                                     PART I

ITEM 1.  BUSINESS

GENERAL

Stanadyne Automotive Corp. (the "Company") is a designer and manufacturer of
highly engineered, precision manufactured engine components, including fuel
injection equipment for diesel engines and hydraulic lash compensating devices
primarily for gasoline engines (the latter commonly known as "hydraulic valve
lifters"). With over 100 years of machining experience and over 50 years as a
supplier of diesel fuel injection equipment and hydraulic lash devices,
Stanadyne's core competencies in product design, precision machining, and the
assembly and testing of complex components have earned the Company a reputation
for innovative, high quality products. The Company possesses an extremely broad
range of manufacturing technology and know-how and is capable of high-volume
production runs, machining high-quality components within tolerances of 20
millionths of an inch on a cost effective basis.

The Company sells engine components to original equipment manufacturers ("OEMs")
in a variety of applications, including automobiles, light duty trucks,
agricultural and construction vehicles and equipment, industrial products and
marine equipment. The Company also sells replacement units and parts through its
aftermarket distribution network. The Company conducts its business through two
principal operating segments: the Diesel Group, which accounted for 85% of the
Company's 2000 net sales, and Precision Engine Products Corp. ("Precision
Engine"), a wholly-owned subsidiary, which accounted for 15% of the Company's
2000 net sales. Additional segment information can be found in Notes 17 and 18
of Notes to Consolidated Financial Statements contained in Item 8 of this
Report.

The Company is a wholly-owned subsidiary of Stanadyne Automotive Holding Corp.
("Holdings"). The Company and Holdings were formed by American Industrial
Partners Capital Fund II, L.P. ("AIP") upon the purchase of Stanadyne Automotive
Corp. and Subsidiaries (the "Predecessor") from Metromedia Company (the
"Sellers") on December 11, 1997 (the "Acquisition").

THE DIESEL GROUP

The Diesel Group is one of only four independent worldwide manufacturers selling
to the geographic areas in which the Company competes. Net sales for the Diesel
Group were $248.4 million, $231.0 million and $256.6 million for 2000, 1999 and
1998, respectively. Operating income for the Diesel Group was $23.9 million,
$17.7 million and $12.9 million for 2000, 1999 and 1998, respectively. Total
assets of the Diesel Group were $257.4 million, $270.5 million and $283.7
million at December 31, 2000, 1999 and 1998, respectively.

PRODUCTS

The Diesel Group produces fuel injection equipment for diesel engines of up to
250 horsepower, an engine range comprising approximately 90% of all diesel
engines produced worldwide. The Diesel Group sells its fuel injection products
to its customers on an individual component basis or by complete line with the
primary focus of the Diesel Group on the off highway agricultural and industrial
segment of the market. Fuel pumps and injectors, the Diesel Group's primary
products,

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<PAGE>   4
are the most highly engineered, precision manufactured components on a diesel
engine and comprise the core components of a diesel engine's fuel system.
Because fuel system components are so elemental to the proper functioning and
optimal performance of a diesel engine, they are essentially custom engineered
for a specific engine platform. As a result, the Company typically supplies
these components on a sole source basis for the life of engine platforms. The
Diesel Group also manufactures diesel fuel filters, fuel heaters and water
separators and distributes diesel fuel conditioners, stabilizers, diesel engine
diagnostic equipment and oil pumps.

CUSTOMERS

The Diesel Group's primary customers are OEMs of diesel engines. The Diesel
Group's four largest customers, Deere & Company ("Deere"), General Motors
Corporation ("GM"), Perkins Engines Company Limited, and Ford Motor Company
("Ford), accounted for approximately $162.7 million, or approximately 65.5%, of
the Diesel Group's net sales. The Diesel Group had two customers that accounted
for more than 10% of 2000 net sales: Deere accounted for 26.2% and GM accounted
for 22.9% of the Diesel Group's 2000 net sales.

The Diesel Group supports the servicing of the engine and its own products
through sales of aftermarket units and parts to the service organizations of its
OEM customers and through its own global network of authorized distributors and
dealers.

PLANT CLOSING

On September 9, 1998, the Company announced the closure of its manufacturing
facility in Bari, Italy. The Bari plant was part of a wholly-owned subsidiary,
Stanadyne Automotive, SpA ("SpA"), which is headquartered in Brescia, Italy.
This action was taken because of continuing financial losses at Bari resulting
from worldwide excess manufacturing capacity for the types of diesel fuel
injectors produced there. The cost of closing the operation resulted in a charge
to 1998 earnings of $4.2 million. The Company favorably concluded the major cost
elements of the plant closure in the third quarter of 1999 and as a result
recorded a $1.9 million savings, primarily as a result of lower severance costs,
to the reserve established in 1998.

PRECISION ENGINE

Precision Engine is a major independent (non-captive) manufacturer of hydraulic
valve lifters primarily for gasoline engines. Net sales for Precision Engine
were $44.0 million, $50.5 million and $50.5 million for 2000, 1999 and 1998,
respectively. Operating income for Precision Engine was $0.0 million, $4.2
million and $2.1 million for 2000, 1999 and 1998, respectively. Total assets of
Precision Engine were $46.0 million, $53.6 million and $58.0 million at December
31, 2000, 1999 and 1998, respectively.

PRODUCTS

Precision Engine designs and manufactures four types of hydraulic valve lifters:
roller rocker arm assemblies, lash adjusters, roller valve lifters and slipper
valve lifters. These products convert the rotary motion of a camshaft into a
reciprocating motion and allow for the adjustment of lash (clearance) as valves
are opened and closed in the cylinder head of an engine. Roller rocker arms
accounted for 67.1% of Precision Engine's 2000 net sales.


                                       4
<PAGE>   5
CUSTOMERS

Precision Engine's primary customers are OEMs. DaimlerChrysler Corp. ("DCX") and
Ford accounted for 66.0% and 15.5%, respectively, of Precision Engine's 2000 net
sales. Precision Engine also sells to several companies for distribution into
the aftermarket.

BRAZIL BUSINESS STATUS

Precision Engine was selected in 1997 as the sole supplier of roller rocker arm
assemblies for use on an engine to be manufactured in Brazil by Tritec Motors
LTDA. ("Tritec"), a Brazilian joint venture company formed by DCX and BMW AG. To
support this new business opportunity, Precision Engine established a new
subsidiary in Brazil, Precision Engine Products LTDA. ("PEPL"), on October 16,
1998. This new limited liability company will manufacture, assemble and test
roller rocker arm assemblies for supply to Tritec. Investment in PEPL began in
the first quarter of 1999. Limited production at PEPL began in the fourth
quarter of 2000.

COMPETITION

Because of the technical expertise required to design and manufacture the
Company's products to the tolerances required, the existence of longstanding
supply relationships in the engine component business and the significant
capital expenditures and lead time required to enter the business, there are a
limited number of manufacturers selling to the global markets in which the
Company operates. The Company competes on the basis of technological innovation,
product quality, processing and manufacturing capabilities, service support and
price.

The main competitors of the Diesel Group are Robert Bosch GmbH, Delphi
Automotive Systems ("Delphi") and Denso (formerly Nippondenso of Japan). In
1999, several acquisitions occurred within the diesel fuel injection industry.
Robert Bosch GmbH, the largest fuel injection manufacturer, acquired the
controlling share of ownership in Zexel of Japan. Also, Delphi entered the
diesel market through the purchase of Lucas Diesel Systems from TRW Inc.

The main competitors of Precision Engine are INA Walzlager Schaeffler KG, Eaton
Corporation, Delphi and in the aftermarket, WA Thomas (formerly the Hylift
division of SPX Corporation).

RAW MATERIALS AND COMPONENT PARTS

The Company's products are made largely of specially designed metal parts, most
of which are designed, purchased, cast or stamped and machined by the Company to
its own technical specifications. Metallic raw materials such as steel,
aluminum, copper and brass are commodity items readily available from a number
of suppliers. Certain parts, such as electronic components, are made to the
Company's specifications. Other parts such as fasteners, are purchased by the
Company from outside suppliers as standardized parts or are made to the
Company's specifications. Although from time to time the Company has experienced
temporary supply shortages due to localized conditions, no such shortage has
materially adversely affected the Company.


                                       5
<PAGE>   6
PATENTS AND TRADEMARKS

The Company relies upon patent, trademark and copyright protection as well as
upon unpatented technological know-how and other trade secrets for certain
products, components, processes and applications. However, the Company's
operations are not dependent upon any single or related group of patents,
copyrights or trademarks or their duration. The Company considers its
proprietary information important, especially in the maintenance of its
competitive position in the aftermarket business, and takes actions to protect
its intellectual property rights.

EMPLOYEES

At December 31, 2000, the Company employed 2,087 persons of whom approximately
29% were salaried and 71% were hourly employees. All of the Company's employees
are non-unionized with the exception of those in SpA. The Company believes its
relations with its employees are good.

TECHNOLOGY, RESEARCH AND DEVELOPMENT

Engine manufacturers are required to continually improve engine performance and
fuel economy. Accordingly, the Company's research and development investment is
significant. In general, the Company funds its own research and development
expenses, although during the pre-production program phase some of those
expenses may be customer-funded. Research and development costs incurred for
2000, 1999 and 1998 were $10.1 million, $9.1 million and $10.3 million,
respectively, of which $0.9 million, $0.6 million and $0.7 million,
respectively, were reimbursed by customers. The Diesel Group accounts for over
95% of these amounts.

Once an OEM commits to purchasing a product from the Company, usually one to
three years into the development or application process, the Company may need to
allocate capital for the machinery, equipment and tooling necessary for engine
program launch, ramp-up and product volume increases. Furthermore, given the
significant existing capital investment in plant and equipment already made by
the Company, the Company has on-going programs to maintain, upgrade and replace
its investments. In 2000, 1999 and 1998, the Company spent $9.5 million, $11.4
million and $14.4 million, respectively, on capital investments.


                                       6
<PAGE>   7
FINANCIAL INFORMATION ABOUT INTERNATIONAL AND DOMESTIC OPERATIONS AND EXPORT
SALES

The Company has manufacturing operations in the United States, Italy and Brazil.
The products manufactured in the United States and Italy are sold within their
respective domestic markets, as well as exported throughout the world. These
products are sold to both OEM and aftermarket customers. The products
manufactured in Brazil are sold only to an OEM customer in Brazil.

The sales to OEM and aftermarket customers during 2000, 1999 and 1998 were as
follows:

<TABLE>
<CAPTION>
                                         2000         1999         1998
                                        ------       ------       ------
                                             (dollars in millions)
<S>                                     <C>          <C>          <C>
         Original Equipment:
              Diesel Group              $147.5       $153.7       $159.4
              Precision Engine            38.9         45.0         44.8
         Aftermarket:
              Diesel Group               100.9         77.4         97.2
              Precision Engine             5.2          5.5          5.7
                                        ------       ------       ------
                  Total Net Sales       $292.5       $281.6       $307.1
                                        ======       ======       ======
</TABLE>


Detailed results of operations and assets by geographic area for the years ended
December 31, 2000, 1999 and 1998 appear below and appear in Note 21 of Notes to
Consolidated Financial Statements contained in Item 8 of this Report.

<TABLE>
<CAPTION>
                                                  2000           1999          1998
                                                 ------         ------        ------
                                                         (dollars in millions)
<S>                                               <C>           <C>           <C>
         Net Sales:
              United States                       $173.8        $168.5        $195.6
              England                               34.4          43.5          51.0
              All Other Geographic Areas            84.3          69.6          60.5
                                                  ------        ------        ------
                  Total Net Sales                 $292.5        $281.6        $307.1
                                                  ======        ======        ======

         Operating Income (Loss):
              United States                       $ 23.2        $ 20.8        $ 21.8
              Italy                                  1.8           1.5          (6.8)
              Brazil                                (1.0)          (.4)         --
                                                  ------        ------        ------
                  Total Operating Income          $ 24.0        $ 21.9        $ 15.0
                                                  ======        ======        ======

         Identifiable Assets:
              United States                       $249.8        $264.9        $271.4
              Italy                                 33.0          40.1          50.5
              Brazil                                 1.3           1.1          --
                                                  ------        ------        ------
                  Total Identifiable Assets       $284.1        $306.1        $321.9
                                                  ======        ======        ======
</TABLE>

The Company's worldwide operations are subject to the risks normally associated
with foreign operations, including but not limited to, the disruption of
markets, changes in export or import laws, labor unrest, political instability,
restrictions on transfers of funds, unexpected changes in regulatory
environments, difficulty in obtaining distribution and support, and potentially
adverse tax consequences. In addition, even though the Company generally
matches, to the extent possible, related costs and revenues in a single
currency, and generally includes exchange rate protections in its sales
contracts, the U.S. dollar value of the Company's foreign sales varies with
foreign currency

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<PAGE>   8
exchange rate fluctuations. There can be no assurance that any of the foregoing
factors will not have a material adverse effect on the Company.

ENVIRONMENTAL MATTERS

The Company's facilities are subject to federal, state and local environmental
requirements, including those governing discharges to the air and water, the
handling and disposal of industrial and hazardous wastes, and the remediation of
contamination associated with releases of hazardous substances. The Company
operates under various environmental permits and approvals, the violation of
which may subject the Company to fines and penalties. There are no known
violations of environmental permits or approvals that have material adverse
effect to the Company's financial position or results of operations. The
Company's manufacturing operations involve the use of hazardous substances and,
if a release of hazardous substances occurs or has occurred on or from the
Company's facilities, the Company may be held liable and may be required to pay
the cost of remedying the condition. The amount of any such liability could be
material. Pursuant to the terms of the Acquisition, the Sellers have agreed to
conduct and complete remediation of soil and groundwater contamination at the
Company's Windsor, CT and Jacksonville, NC facilities. While many of these
remediations are underway and the Sellers have agreed to complete these
remediations and have indemnified the Company with respect to these matters and
certain other environmental matters, there can be no assurance that the Sellers
will have the ability to completely fulfill their obligations to indemnify the
Company for such matters. If the Sellers are unable to fulfill their
obligations, the Company will be responsible for such matters and the cost could
be material. Estimates of the cost at the time of the Acquisition for the
remediations to be completed by the Sellers at the Windsor, CT and Jacksonville,
NC facilities were $1.7 million and $0.3 million, respectively. Additional
information can be found in Note 16 of Notes to Consolidated Financial
Statements contained in Item 8 of this Report.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This annual report contains certain forward-looking statements with respect to
the financial condition, results of operations and business of the Company,
including financial statements, notes to financial statements and Management's
Discussion and Analysis of Financial Condition and Results of Operations. All of
these forward-looking statements are based on estimates and assumptions made by
the management of the Company which, although believed to be reasonable, are
inherently uncertain. Therefore, undue reliance should not be placed upon such
estimates and statements. No assurance can be given that any such estimates will
be realized, and actual results may differ materially from those contemplated by
such forward-looking statements. Factors that may cause such differences
include: (1) increased competition; (2) increased costs; (3) loss or retirement
of key members of management; (4) increases in the Company's cost of borrowing
or inability or unavailability of additional debt or equity capital; (5) adverse
state or federal legislation or regulation or adverse determinations in pending
litigation; and (6) changes in general economic conditions and/or in the
automobile, light duty trucks, agricultural and construction vehicles and
equipment, industrial products and marine equipment markets in which the Company
competes. Many of such factors are beyond the control of the Company and its
management.


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<PAGE>   9
ITEM 2.  PROPERTIES

The Company's executive offices are located in Windsor, Connecticut. The Company
believes that substantially all of its properties and equipment are in good
condition, and that it has sufficient capacity to meet its current and projected
manufacturing and distribution needs.

Below is a summary of the existing facilities:

<TABLE>
<CAPTION>
                                     Square        Type of
            Location                Footage        Interest   Description of Use
            --------                -------        --------   ------------------
<S>                                <C>             <C>        <C>
  DIESEL GROUP:
      Windsor, CT                     571,000       Owned     Corporate Offices, Diesel Group Headquarters, Sales and
                                                              Marketing, Engineering Center, Manufacturing
      Jacksonville, NC                110,000       Owned     Manufacturing, Distribution
      Washington, NC                  177,000       Owned     Manufacturing
      Trappes, France                  23,000       Leased    Engineering, Sales
      Huntingdon, England               3,000       Leased    Engineering, Sales
      Brescia, Italy                  175,000       Owned     SpA Headquarters, Engineering, Sales, Manufacturing

  PRECISION ENGINE:
      Windsor, CT                     119,000       Owned     Precision Engine Headquarters, Manufacturing
      Tallahassee, FL                 125,000       Owned     Manufacturing, Engineering
      Elmhurst, IL                      1,100       Leased    Sales
      Curitiba, Brazil                 10,000       Leased    Manufacturing
</TABLE>


ITEM 3. LEGAL PROCEEDINGS

The Company is involved in various legal and regulatory proceedings generally
incidental to its business. While the results of any litigation or regulatory
issue contain an element of uncertainty, management believes that the outcome of
any known, pending or threatened legal proceeding, or all of them combined, will
not have a materially adverse effect on the Company's financial position or
results of operations.

The Company is subject to potential environmental liability and various claims
and legal actions, which are pending or may be asserted against the Company
concerning environmental matters. Reserves for such liabilities have been
established and no insurance recoveries have been anticipated in the
determination of the reserves. In management's opinion, the aforementioned
claims will be resolved without materially adverse effects on the results of
operations, financial position or cash flows of the Company. In conjunction with
the Acquisition of the Company from the Sellers on December 10, 1997, the
Sellers agreed to partially indemnify the Company and AIP relating to certain
environmental matters. See "Environmental Matters" in Item 1 of this report.


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

No matters were submitted to a vote of security holders during the fourth
quarter of 2000.


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<PAGE>   10
                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
        MATTERS

As of March 1, 2000, Holdings was the holder of record of all the shares of
common stock, par value, $.01 per share (the "Common Stock"), of the Company.
There is no established trading market for the Common Stock. The Company has
never paid or declared a cash dividend on the Common Stock. Furthermore, the
Company is restricted from paying dividends under the covenants of its revolving
credit and term loan agreements.


ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth selected consolidated historical financial and
operating data of the Company and its subsidiaries for the years ended 2000,
1999 and 1998 and the 21 day period ended December 31, 1997 and of the
Predecessor for the 344 day period ended December 10, 1997 and the year ended
December 31, 1996. All data prior to December 11, 1997 was taken from the
consolidated financial statements of the Predecessor and represents the results
of operations of the Predecessor through the date of the Acquisition. The
selected consolidated financial data for the years ended December 31, 2000, 1999
and 1998 and the 21 day period ended December 31, 1997 were derived from the
consolidated financial statements of the Company and represent the results of
operations of the Company subsequent to the Acquisition. The data presented
below should be read in conjunction with the consolidated financial statements
and the related footnotes and "Management's Discussion and Analysis of Financial
Condition and Results of Operations".

<TABLE>
<CAPTION>

                                                                  Company                                         Predecessor
                                          ---------------------------------------------------------    ---------------------------
                                            Year Ended     Year Ended    Year Ended   21 Days Ended    344 Days Ended    Year Ended
                                           December 31,   December 31,  December 31,   December 31,     December 10,   December 31,
                                              2000          1999           1998             1997           1997             1996
                                           -----------    -----------   -----------    ------------     ------------   ------------
Statement of Operations Data:                                         (dollars in thousands)
<S>                                        <C>           <C>            <C>           <C>               <C>            <C>
  Net sales                                  $ 292,452     $ 281,580      $ 307,053     $  14,154        $ 259,144        $ 275,639
  Cost of goods sold                   (a)     229,591       224,204        251,730        11,418          219,642          234,756
                                             ---------     ---------      ---------    ----------       ----------        ---------
  Gross profit                                  62,861        57,376         55,323         2,736           39,502           40,883
  Selling, general and
    administrative expenses            (a)      38,904        35,516         40,291         1,845           28,098           30,976
                                             ---------     ---------      ---------     ---------        ---------        ---------
  Operating income                              23,957        21,860         15,032           891           11,404            9,907
  Interest expense, net                        (11,669)      (13,576)       (15,138)         (880)          (6,673)          (8,259)
                                             ---------     ---------      ---------     ---------        ---------        ---------
  Income (loss) before income
    taxes, extraordinary item and
    cumulative effect of change in
    accounting principle                        12,288         8,284           (106)           11            4,731            1,648
  Income tax expense                             5,457         3,128          1,581            23            1,789              376
                                             ---------     ---------      ---------     ---------        ---------        ---------
  Income (loss) before
    extraordinary item and
    cumulative effect of change in
    accounting principle                         6,831         5,156         (1,687)          (12)           2,942            1,272
  Extraordinary item                   (b)         951           750           --            --               --              --
  Effect of change in accounting
    principle                          (c)          --            --             --            --               --            4,330
                                             ---------     ---------      ---------     ---------        ---------        ---------
  Net income (loss)                              7,782         5,906         (1,687)          (12)           2,942            5,602
  Preferred dividend requirement                  --            --             --            --               (450)            (600)
                                             ---------     ---------      ---------     ---------        ---------        ---------
  Net income (loss) applicable to
    common shareholders                      $   7,782     $   5,906      $  (1,687)    $     (12)       $   2,492        $   5,002
                                             =========     =========      =========     =========        =========        =========


Balance Sheet Data (at year end):
  Fixed assets, net of accumulated
    depreciation                             $ 110,965     $ 119,611      $ 125,966     $ 124,443        $    --          $  96,116
  Total assets                                 284,092       306,105        321,916       321,310             --            194,917
  Long-term debt (including
    current portion)                           122,944       142,280        160,486       161,152             --             85,912
  Stockholders' equity                          66,248        61,681         59,191        59,845             --              8,879
</TABLE>

(a)   Net income in 1999 included $1.9 million of savings in selling, general
      and administrative expenses as a result of favorably concluding the major
      elements of plant closure costs. Net

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<PAGE>   11
      loss for 1998 includes plant closure costs of $4.2 million, of which
      approximately $0.8 million is included in cost of goods sold and the
      remaining $3.4 million is included in selling, general and administrative
      expenses.

(b)   Net income for 2000 and 1999 includes an extraordinary gain of $1.0
      million and $0.8 million, respectively, net of income taxes, for the early
      extinguishment of debt.

(c)   Net income for 1996 includes a gain of $4.3 million, net of income taxes,
      for the cumulative effect of a change in accounting principle for
      postretirement benefits to amortize unrecognized gains and losses
      exceeding 10% of the accumulated postretirement benefit obligation over
      twelve months. Previously, such gains and losses were amortized over the
      average remaining service period of the plan participants.


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

BASIS OF PRESENTATION

The following table sets forth certain performance details for the periods
shown. Net sales, cost of goods sold, gross profit, selling, general and
administrative expense ("SG&A"), amortization of intangibles, management fees,
operating income and net income (loss) are presented in thousands of dollars and
as a percentage of net sales.

<TABLE>
<CAPTION>
                                                                      Years Ended December 31,
                                                     2000                        1999                     1998
                                              -----------------------     --------------------       -------------------
                                                                      (dollars in thousands)
                                                   $             %            $            %             $           %
                                              ---------      --------     --------      ------       --------     -------
<S>                                           <C>            <C>          <C>           <C>          <C>          <C>
Net sales..............................         292,452        100.0       281,580       100.0        307,053      100.0
Cost of goods sold.....................         229,591         78.5       224,204        79.6        251,730       82.0
Gross profit...........................          62,861         21.5        57,376        20.4         55,323       18.0
SG&A...................................          32,057         11.0        28,515        10.1         33,223       10.8
Amortization of intangibles............           5,747          2.0         5,901         2.1          5,968        1.9
Management fees........................           1,100          0.4         1,100         0.4          1,100        0.4
Operating income.......................          23,957          8.2        21,860         7.8         15,032        4.9
Net income (loss)......................           7,782          2.7         5,906         2.1         (1,687)      (0.5)
</TABLE>


                                       11
<PAGE>   12
COMPARISON OF RESULTS OF OPERATIONS

OVERVIEW

Despite some softening of customer demand in the fourth quarter in both
segments, overall financial results for 2000 were better than the prior year
with net sales up 3.9% and net income up 31.8%. Diesel Group fuel pump and
filter products accounted for virtually all of the year-to-year sales increase,
with revenues in Precision Engine down 12.8% from 1999. Two OEM programs in the
Diesel Group were concluded during 2000, with final shipments made to GM for the
6.5l engine equipped with the DS fuel pump and to Ford in Daggenham, England for
the 2.5l Transit engine equipped with RSN injectors. During 2000 OEM sales to GM
for the 6.5l engine was $19.8 million and OEM sales to Ford for the 2.5l Transit
engine was $6.4 million. Strong aftermarket demand continues for both product
lines. Gross profits, already benefiting from the higher sales volumes, were
further enhanced through productivity improvement programs completed during 2000
in the Washington, North Carolina and Tallahassee, Florida facilities. Limited
production shipments from the Brazilian subsidiary PEPL to Tritec Motors Ltda
began late in the year.

2000 COMPARED TO 1999

Net Sales. Net sales increased in 2000 from 1999 by $10.9 million or 3.9%.
Higher sales in Diesel Group, up $17.4 million, or 7.5%, related to increased
demand for fuel pumps and filter products. Sales of fuel pump products increased
$15.0 million, with $11.8 million of the increase traceable to GM where service
demand remained strong following the end of OEM shipments in the third quarter
for the 6.5l engine. Sales of filter products in 2000 were $10.0 million higher
than 1999 due primarily to new applications introduced at Ford and New Holland
as well as increased aftermarket demand for filter elements. Precision Engine's
sales in 2000 decreased by $6.5 million or 12.8% versus 1999, with fourth
quarter sales down $4.2 million or 34.5%. This dramatic downturn was due almost
entirely to lower demand from DCX based on reduced car sales.

Gross Profit. Gross profit improved in 2000 from 1999 by $5.5 million or 9.6%.
As a percentage of net sales, gross profit improved to 21.5% from 20.4%.
Reflective of strong customer demand for fuel pumps and filter products, all of
this increase came from the Diesel Group, where gross profit as a percentage of
net sales was 23.0% in 2000, up from 20.8% in 1999. In addition to the higher
earnings on increased sales volumes in the Diesel Group, gross profit benefited
from cost reduction programs completed during 1999 and 2000. Lower sales volumes
drove gross profits lower in Precision Engine during the year, with the result
for 2000 at 12.9% of net sales down from 18.6% in 1999.

Selling, General and Administrative Expense. SG&A expense increased in 2000 from
1999 by $3.6 million or 12.4%. As a percentage of net sales, SG&A increased to
11.0% from 10.1%. Approximately $1.9 million of this change was due to the
savings recorded in 1999 associated with the Diesel Group's successful
conclusion of the closure of its Bari, Italy location. Other significant
contributors to the overall increase included $0.6 million increase in PEPL
startup costs in Precision Engine and $0.7 million associated with an
unsuccessful union organizing effort by the UAW at the Windsor, Connecticut
facility.

Amortization of Intangibles. Amortization of intangible assets totaled $5.7
million in 2000 and $5.9 million in 1999. Amortization of goodwill was $1.9
million in both 2000 and 1999.


                                       12
<PAGE>   13
Operating Income. Operating income increased in 2000 from 1999 by $2.1 million
or 9.6%. As a percentage of sales, operating income increased to 8.2% from 7.8%.
The increase was due to improved gross profits in the Diesel Group as noted
above, partially offset by lower gross profits in Precision Engine and higher
SG&A expenses in both segments.

Net Income. Net income increased to $7.8 million in 2000 from $5.9 million in
1999, an increase of $1.9 million or 31.8%. The increase in net income was due
to a combination of a $2.1 million improvement in operating income, a $1.9
million reduction in net interest expense and an extraordinary gain of $0.2
million, net of taxes, associated with the early retirement of Senior
Subordinated Notes ("Notes"). Net income was reduced by $1.7 million in
additional income taxes based on higher earnings and $0.6 million in federal
taxes associated with an examination of fiscal years 1997 and 1998.

1999 COMPARED TO 1998

Net Sales. Net sales decreased in 1999 from 1998 by $25.5 million or 8.3%. The
decrease was attributable to a sales decline at Diesel Group of $25.5 million,
or 10.0%, which resulted from lower sales of GMDS pumps of $18.9 million during
1999 as compared to 1998, when General Motors completed stocking a service
inventory for their extended warranty program, and lower sales of Ford injectors
of $3.2 million. Precision Engine's sales in 1999 were equal to 1998, with
higher demand for DCX products offset by lower sales to European customers.

Gross Profit. Gross profit increased in 1999 from 1998 by $2.1 million or 3.7%.
As a percentage of net sales, gross profit increased to 20.4% from 18.0%. Most
of the improvement occurred in Precision Engine due to the vertical integration
of its manufacturing process for the roller-rocker product line, a $0.7 million
reduction of a liability established in 1998 and a combination of price
increases and other cost reduction efforts. Lower earnings on reduced sales
volumes in the Diesel Group were offset by $3.9 million in revenue from a major
customer for volumes not purchased under a supply agreement, indirect staff
reductions and cost reduction programs in the Windsor, Connecticut and
Jacksonville, North Carolina facilities involving assistance from outside
consultants.

Selling, General and Administrative Expense. SG&A expense decreased in 1999 from
1998 by $4.7 million or 14.2%. As a percentage of net sales, SG&A decreased to
10.1% from 10.8%. The lower 1999 SG&A expense was primarily attributable to
lower severance costs associated with the successful conclusion of closure
activities at the Bari, Italy location which resulted in $1.9 million of savings
compared to the $3.4 million estimate recorded to SG&A in 1998. Lower research
and development costs in the Diesel Group, as a result of staffing reductions
completed in 1999, further contributed to the year-to-year reduction in SG&A.

Amortization of Intangibles. Amortization of intangible assets totaled $5.9
million in 1999 and $6.0 million in 1998. Amortization of goodwill was $1.9
million in both 1999 and 1998.

Operating Income. Operating income increased in 1999 from 1998 by $6.9 million
or 45.4%. As a percentage of sales, operating income increased to 7.8% from
4.9%. The increase was due to an improved gross profit and lower SG&A expenses.


                                       13
<PAGE>   14
Net Income (Loss). Net income increased to $5.9 million in 1999 from a net loss
of ($1.7) million in 1998, an increase of $7.6 million. The increase in net
income was due to a combination of a $6.9 million improvement in operating
income, a $1.6 million reduction in net interest expense, an increase of $1.5
million in income taxes and an extraordinary gain of $0.8 million, net of taxes,
associated with the early retirement of $10.0 million in Notes.

LIQUIDITY AND CAPITAL RESOURCES

The Company is highly leveraged as a result of the Acquisition and will continue
to have a significant amount of indebtedness. As of December 31, 2000, the
Company had $122.9 million of indebtedness. The Company's principal sources of
liquidity are cash flow from operations supplemented by borrowings under a
revolving credit facility. The Company occasionally has utilized capital leases
and, for its Italian subsidiary, SpA, has overdraft facilities with local
financial institutions. In addition, subject to the restrictions in the
Company's lending agreements, additional senior or other indebtedness may be
incurred from time to time to finance acquisitions or capital expenditures or
for other general corporate purposes.

Net cash flow provided by operating activities was $35.1 million, $25.9 million
and $20.6 million in 2000, 1999 and 1998, respectively. The increase in cash
flows in 2000 compared to 1999 was primarily due to increased net income of $1.9
million, additional depreciation of $0.5 million, decrease in deferred taxes of
$0.6 million and a $6.1 million decrease in funds required for working capital,
noncurrent asset and noncurrent liability accounts. Notable changes in asset and
liability accounts during 2000 compared to 1999 included: a reduction in
accounts receivable of $7.3 million primarily due to the downturn in DCX
business; lower inventories of $5.1; offset by reduced accounts payables of $7.3
million.

Capital expenditures were $9.5 million, $11.4 million and $14.4 million in 2000,
1999 and 1998, respectively. These amounts reflect cash outlays for the purchase
of machinery and equipment and the maintenance of existing facilities.
Management estimates that the Company has historically spent, and will continue
to spend, approximately $3.0 to $4.0 million annually on maintenance of plant
and equipment. The remaining non-maintenance capital expenditures represent cash
outlays for equipment, machinery or plant expansion in order to support new
engine platforms on which the Company intends to supply engine components or to
increase capacity to support increased production volumes on existing engine
platforms. The Company's capital expenditures of $9.5 million in 2000 were
primarily for cost reduction programs in the Diesel Group and general
maintenance projects to existing facilities.

Cash flow from financing activities for 2000 resulted in a net reduction to cash
of $16.5 million. Principal payments of long-term debt totaled $13.6 million,
including an $11.5 million retirement of Notes with a face value $14.1 million.
Net payments of Stanadyne Automotive, SpA's overdraft facility were $2.1
million. Scheduled payments of capital lease obligations totaled $0.8 million in
2000.

Management believes that cash flows from operations and availability under the
revolving credit facility will provide adequate funds for the Company's
foreseeable working capital needs, planned capital expenditures and debt service
obligations including increased long-term debt payments totaling $6.4 million.
At December 31, 2000, the Company had $30 million in revolving credit lines
available through December 11, 2003, of which $3.4 million was used for standby
letters of

                                       14
<PAGE>   15
credit, leaving $26.6 million available for borrowings. The Company's ability to
fund its operations, make planned capital expenditures, make scheduled debt
payments, refinance indebtedness and remain in compliance with all of the
financial covenants under its debt agreements will depend on its future
operating performance and cash flow, which, in turn, are subject to prevailing
economic conditions and to financial, business and other factors, some of which
are beyond its control.

At December 31, 2000, 1999 and 1998, the Company did not establish a valuation
allowance to offset any deferred tax assets. The Company has reported operating
income on the consolidated statements of operations as well as income for tax
purposes in 2000, 1999 and 1998. Based on projections for future taxable income
over the periods during which the deferred tax assets are deductible, and the
expectation that a significant portion of these deferred tax assets are to be
realized by offsetting them against temporary items, it is management's belief
that it is more likely than not that all deferred tax assets will be fully
realized.

NEW ACCOUNTING STANDARD

In June of 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 requires an entity to recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. Gains or losses resulting
from changes in the values of those derivatives would be recognized immediately
or deferred depending on the use of the derivative and if the derivative is a
qualifying hedge. The Company adopted SFAS No. 133 as amended by SFAS No. 138
"Accounting for Certain Derivatives and Certain Hedging Activities", on January
1, 2001, as required. Management has determined that the adoption of these
standards will have no significant impact on the Company's consolidated
financial statements and related disclosures.


                                       15
<PAGE>   16
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risks which include changes in interest rates
and changes in foreign currency exchange rates as measured against the U.S.
dollar.

Interest Rate Risk. The carrying value of the Company's revolving credit lines
and term loans approximate fair value. The term loans are primarily LIBOR
borrowings and are re-priced approximately every month based on prevailing
market rates. A 10% change in the interest rate on the term loans would have
increased or decreased the 2000 interest expense by $0.4 million. The Notes bear
interest at a fixed rate of 10-1/4% and, therefore, are not sensitive to
interest rate fluctuation. The fair value of the Notes based on quoted market
prices at December 31, 2000 was approximately $56.4 million.

Foreign Currency Risk. The Company has subsidiaries in Italy and Brazil and
branch offices in France and England, thereby creating exposures to changes in
foreign currency exchange rates. Changes in exchange rates may positively or
negatively affect the Company's sales, gross margins, and retained earnings.
However, historically, these locations have contributed less than 15% of the
Company's net sales and retained earnings, with most of these sales attributable
to the Italian subsidiary. The Company also sells its products from the United
States to foreign customers for payment in foreign currencies as well as
dollars. Historically, foreign currency exchange gains and losses have been
immaterial. The Company does not hedge against foreign currency risk.


                                       16
<PAGE>   17
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<TABLE>
<CAPTION>
                                                                                                                 Page
                                                                                                                 ----

                                        STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES
<S>                                                                                                              <C>
INDEPENDENT AUDITORS' REPORT...................................................................................    F-1
      Consolidated Balance Sheets as of December  31, 2000 and 1999............................................    F-2
      Consolidated Statements of Operations for the Years Ended December 31, 2000,
        1999 and 1998..........................................................................................    F-3
      Consolidated Statements of Changes in Stockholders' Equity and Comprehensive
         Income (Loss) for the Years Ended December 31, 2000, 1999 and 1998....................................    F-4
      Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, 1999 and 1998...............    F-5
      Notes to the Consolidated Financial Statements...........................................................    F-6
</TABLE>

                                       17
<PAGE>   18
INDEPENDENT AUDITORS' REPORT


Board of Directors
Stanadyne Automotive Corp.:

We have audited the accompanying consolidated balance sheets of Stanadyne
Automotive Corp. and subsidiaries (the "Company") as of December 31, 2000 and
1999, and the related consolidated statements of operations, changes in
stockholders' equity and comprehensive income (loss) and cash flows for each of
the three years in the period ended December 31, 2000. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Stanadyne Automotive Corp. and
subsidiaries as of December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2000 in conformity with accounting principles generally accepted in
the United States of America.

February 2, 2001



                                      F-1
<PAGE>   19
                   STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      (DOLLARS IN THOUSANDS, EXCEPT SHARES)

<TABLE>
<CAPTION>

                                       ASSETS                                                    December 31,
                                                                                            2000              1999
                                                                                          ---------        ---------
<S>                                                                                       <C>              <C>
Current Assets:
     Cash and cash equivalents                                                            $  13,647        $   4,057
     Accounts receivable, net of allowance for uncollectible accounts
        (Notes 15 and 19)                                                                    32,030           40,296
     Inventories, net (Notes 2 and 19)                                                       31,793           36,582
     Prepaid expenses and other assets                                                        1,635            1,451
     Deferred income taxes (Note 11)                                                          6,998            8,360
                                                                                          ---------        ---------
                  Total current assets                                                       86,103           90,746
Property, plant and equipment, net (Note 3)                                                 110,965          119,611
Intangible and other assets, net (Note 4)                                                    82,963           91,687
Due from Stanadyne Automotive Holdings Corp. (Note 14)                                        4,061            4,061
                                                                                          ---------        ---------
                  Total assets                                                            $ 284,092        $ 306,105
                                                                                          =========        =========

                        LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
     Accounts payable                                                                     $  17,291        $  22,354
     Accrued liabilities (Note 6)                                                            27,156           27,788
     Current maturities of long-term debt (Note 8)                                            6,765            5,198
     Current installments of capital lease obligations (Note 5)                                 471              819
                                                                                          ---------        ---------
                  Total current liabilities                                                  51,683           56,159
Long-term debt, excluding current maturities (Note 8)                                       115,667          135,671
Deferred income taxes (Note 11)                                                               5,304            5,747
Capital lease obligations, excluding current installments (Note 5)                               41              592
Other noncurrent liabilities (Note 7)                                                        45,149           46,255
                                                                                          ---------        ---------
                  Total liabilities                                                         217,844          244,424
                                                                                          ---------        ---------

Commitments and Contingencies (Notes 5 and 16)

Stockholders' Equity:
     Common stock, par value $.01, authorized 10,000 shares,
        issued and outstanding 1,000 shares                                                    --               --
     Additional paid-in capital                                                              59,858           59,858
     Other accumulated comprehensive loss                                                    (5,599)          (2,384)
     Retained earnings                                                                       11,989            4,207
                                                                                          ---------        ---------
                  Total stockholders' equity                                                 66,248           61,681
                                                                                          ---------        ---------
                  Total liabilities and stockholders' equity                              $ 284,092        $ 306,105
                                                                                          =========        =========
</TABLE>

                See notes to consolidated financial statements.


                                      F-2
<PAGE>   20
                   STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                Years Ended December 31,
                                                                   ---------------------------------------------
                                                                       2000             1999             1998
                                                                     ---------        ---------        ---------
<S>                                                                <C>               <C>              <C>
Net sales (Notes 15, 17, 18)                                         $ 292,452        $ 281,580        $ 307,053
Costs of goods sold                                                    229,591          224,204          250,943
Plant closure costs (Note 12)                                             --               --                787
                                                                     ---------        ---------        ---------
     Gross profit                                                       62,861           57,376           55,323
Selling, general and administrative expenses (Note 14)                  38,904           37,446           36,863
Plant closure costs (Note 12)                                             --             (1,930)           3,428
                                                                     ---------        ---------        ---------
     Operating income                                                   23,957           21,860           15,032
Other income (expense):
     Interest income                                                       347              522              121
     Interest expense                                                  (12,016)         (14,098)         (15,259)
                                                                     ---------        ---------        ---------
     Income (loss) before income taxes and extraordinary item           12,288            8,284             (106)
Income taxes (Note 11)                                                   5,457            3,128            1,581
                                                                     ---------        ---------        ---------
Income (loss) before extraordinary item                                  6,831            5,156           (1,687)
Extraordinary gain related to early retirement of debt, net of
     income taxes of $634 in 2000 and $500 in 1999 (Note 8)                951              750             --
                                                                     ---------        ---------        ---------
Net income (loss)                                                    $   7,782        $   5,906        $  (1,687)
                                                                     =========        =========        =========
</TABLE>

                See notes to consolidated financial statements.

                                      F-3
<PAGE>   21
                   STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                         AND COMPREHENSIVE INCOME (LOSS)
                      (DOLLARS IN THOUSANDS EXCEPT SHARES)

<TABLE>
<CAPTION>
                                                                                  Accumulated
                                                                                     Other
                                                                                    Compre-      Retained
                                                    Common Stock     Additional      hensive      Earnings     Compre-
                                                    ------------      Paid-in       Income      (Accumulated   hensive
                                                  Shares    Amount    Capital       (Loss)       Deficit)    Income (Loss)   Total
                                                  ------    ------    -------     -----------    --------    -------------  ------
<S>                                               <C>      <C>        <C>         <C>           <C>          <C>           <C>
January 1, 1998                                    1,000    $ --       $59,858     $    (1)      $    (12)                 $ 59,845
Comprehensive income:
  Net loss                                          --        --          --          --           (1,687)     $(1,687)      (1,687)
                                                                                                               -------
  Other comprehensive income, net of tax -
      Foreign currency translation adjustments      --        --          --         1,033           --          1,033        1,033
                                                                                                               -------
  Other comprehensive income                                                                                     1,033
                                                                                                               -------
Comprehensive loss                                                                                             $  (654)
                                                                                                               =======
                                                  ------    ------     -------     -------       --------                  --------
December 31, 1998                                  1,000      --        59,858       1,032         (1,699)                   59,191
Comprehensive income:
  Net income                                        --        --          --          --            5,906      $ 5,906        5,906
                                                                                                               -------
  Other comprehensive loss, net of tax -
      Foreign currency translation adjustments      --        --          --        (3,416)          --         (3,416)      (3,416)
                                                                                                               -------
  Other comprehensive loss                                                                                      (3,416)
                                                                                                               -------
Comprehensive income                                                                                           $ 2,490
                                                                                                               =======
                                                  ------    ------     -------     -------       --------                  --------
December 31, 1999                                  1,000      --        59,858      (2,384)         4,207                    61,681

Comprehensive income:
  Net income                                        --        --          --          --            7,782      $ 7,782        7,782
                                                                                                               -------
  Other comprehensive loss, net of tax -
      Foreign currency translation adjustments      --        --          --        (3,215)          --         (3,215)      (3,215)
                                                                                                               -------
  Other comprehensive loss                                                                                      (3,215)
                                                                                                               -------
Comprehensive income                                                                                           $ 4,567
                                                                                                               =======
                                                  ------    ------     -------     -------       --------                  --------
December 31, 2000                                  1,000    $ --       $59,858     $(5,599)      $ 11,989                  $ 66,248
                                                  ======    ======     =======     =======       ========                  ========
</TABLE>

                See notes to consolidated financial statements.


                                      F-4
<PAGE>   22
                   STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                   Years Ended December 31,
                                                                           ----------------------------------------
                                                                             2000            1999            1998
                                                                           --------        --------        --------
<S>                                                                        <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income (loss)                                                     $  7,782        $  5,906        $ (1,687)
     Adjustments to reconcile net income (loss) to net cash provided
         by operating activities:
         Depreciation and amortization                                       21,277          20,804          19,816
         Extraordinary gain, net of applicable income taxes                    (951)           (750)           --
         Deferred income taxes                                                  944             394          (1,065)
         Loss on disposal of property, plant and equipment                      384              77             105
         Changes in assets and liabilities:
              Accounts receivable                                             7,726             450           1,939
              Inventories                                                     4,186            (874)          2,505
              Prepaid expenses and other assets                                (150)          1,268          (2,335)
              Due to Stanadyne Automotive Holding Corp.                        --              --                70
              Accounts payable                                               (4,744)          2,542          (4,068)
              Accrued liabilities                                              (896)         (2,713)          8,648
              Other noncurrent liabilities                                     (496)         (1,190)         (3,296)
                                                                           --------        --------        --------
                  Net cash provided by operating activities                  35,062          25,914          20,632
                                                                           --------        --------        --------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Capital expenditures                                                    (9,465)        (11,449)        (14,379)
     Proceeds from disposal of property, plant and equipment                    251             689              30
                                                                           --------        --------        --------
                  Net cash used in investing activities                      (9,214)        (10,760)        (14,349)
                                                                           --------        --------        --------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Net (payments) proceeds on revolving credit notes and overdraft
         facilities                                                          (2,072)           (754)          1,755
     Payments on long-term debt                                             (13,628)        (14,246)         (1,000)
     Payments on capital lease obligations                                     (770)         (1,252)         (2,197)
                                                                           --------        --------        --------
                  Net cash used in financing activities                     (16,470)        (16,252)         (1,442)
                                                                           --------        --------        --------
Net increase (decrease) in cash and cash equivalents                          9,378          (1,098)          4,841
Effect of exchange rate changes on cash and cash equivalents                    212              23             (34)
Cash and cash equivalents at beginning of period                              4,057           5,132             325
                                                                           --------        --------        --------
Cash and cash equivalents at end of period                                 $ 13,647        $  4,057        $  5,132
                                                                           ========        ========        ========
</TABLE>

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING TRANSACTIONS:

During 1999 and 1998 the Company entered into capital leases for new equipment
resulting in capital lease obligations of $30 and $383, respectively.

                See notes to consolidated financial statements.


                                      F-5
<PAGE>   23
                   STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (DOLLARS IN THOUSANDS, EXCEPT SHARES)



(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Description of Business. Stanadyne Automotive Corp. (the "Company"), a
wholly-owned subsidiary of Stanadyne Automotive Holding Corp. ("Holdings"), is a
producer of diesel fuel injection equipment which is sold worldwide to
agricultural, industrial and automotive diesel engine manufacturers and to the
diesel aftermarket. The Company's wholly owned subsidiary, Precision Engine
Products Corp. ("Precision Engine"), is a supplier of roller-rocker arms,
hydraulic valve lifters and lash adjusters to automotive engine manufacturers
and the independent automotive aftermarket.

         A majority of the outstanding equity of Holdings is owned by American
Industrial Partners Capital Fund II, L.P. ("AIP").

         Principles of Consolidation. The consolidated financial statements
include the accounts of the Company and all of the Company's wholly-owned
subsidiaries: Precision Engine, Stanadyne Automotive SpA ("SpA"), DSD
International Corp. (dissolved October 6, 1998), Precision Engine Products LTDA
("PEPL") (incorporated on October 16, 1998) and Stanadyne Automotive Foreign
Sales Corp. ("FSC"). Intercompany balances have been eliminated in
consolidation. The financial statements of SpA and PEPL are consolidated on a
fiscal year basis ending November 30.

         Cash and Cash Equivalents. The Company considers cash on hand and
short-term investments with an original maturity of three months or less to be
"cash and cash equivalents" for financial statement purposes.

         Inventories. Inventories are stated at the lower of cost or market. The
principal components of costs included in inventories are materials, labor,
subcontract cost and overhead. The Company uses the last-in/first-out ("LIFO")
method of valuing its inventory, except for the inventories of SpA and PEPL,
which are valued using the first-in/first-out ("FIFO") method. At December 31,
2000 and 1999, inventories valued at LIFO represented 88% and 86% of total
inventories, respectively.

         Property, Plant and Equipment. Property, plant and equipment, including
significant improvements thereto, are recorded at cost. Equipment under capital
leases is stated at the net present value of minimum lease payments.
Depreciation of plant and equipment is calculated using the straight-line method
over the estimated useful lives of the respective assets which are within the
following ranges:

          Buildings and improvements                      15 to 45 years
          Machinery and equipment                          3 to 15 years

         Intangibles and Other Assets. Intangible assets consist primarily of
goodwill, technological know-how, trademarks, patents and deferred debt issuance
costs. Intangible assets are amortized using the straight-line method over their
estimated useful lives of 3 to 40 years.

         Accounting for the Impairment of Long-Lived Assets. The Company
assesses impairment of long-lived assets such as property, plant and equipment
and intangible assets whenever changes or events indicate that the carrying
value may not be recoverable. Such long-lived assets are written down to fair
value if the sum of the expected future undiscounted cash flows is less than the
carrying amount.


                                      F-6
<PAGE>   24
                  STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     (DOLLARS IN THOUSANDS, EXCEPT SHARES)

(1)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

         Fair Value of Financial Instruments. Statement of Financial Accounting
Standards ("SFAS") No. 107, Disclosures about Fair Value of Financial
Instruments, requires the disclosure of fair value information for certain
assets and liabilities, whether or not recorded in the balance sheet, for which
it is practicable to estimate that value. The Company has the following
financial instruments: cash and cash equivalents, receivables, accounts payable,
accrued liabilities and long-term debt. The Company considers the carrying
amount of these items, excluding long-term debt, to approximate their fair
values because of the short period of time between the origination of such
instruments and their expected realization. Refer to Note 8 for fair value
disclosures of long-term debt.

         Product Warranty. The Company provides an accrual for the estimated
future warranty costs of its products. These estimates are based upon
statistical analyses of historical experience of product returns and the related
cost.

         Postretirement Benefits. For the defined benefit pension plans, the
Company amortizes unrecognized gains and losses exceeding 10% of the accumulated
benefit obligation over the average remaining service period of the plan
participants as this period approximates the benefit period. This amortization
method of postretirement benefit obligations distributes gains and losses over
the benefit period of the participants thereby minimizing any volatility caused
by actuarial gains and losses.

         Income Taxes. Income taxes are accounted for in accordance with the
asset and liability method. Deferred tax assets and liabilities are recognized
for future tax consequences attributable to differences between the tax basis of
assets and liabilities and their financial reporting amounts.

         Foreign Currency Translation. The Company's policy is to translate
balance sheet accounts using the exchange rate at the balance sheet date and
statement of operations accounts using the average monthly exchange rate for the
month in which the transactions are recognized. The resulting translation
adjustment is recorded as accumulated other comprehensive income (loss) in the
consolidated balance sheets. Worldwide foreign currency transaction losses of
$336, $145 and $40 are included in the consolidated statements of operations for
2000, 1999 and 1998, respectively.

         Revenue Recognition. Sales and related costs of sales are recorded when
products are shipped to customers. The Company enters into long-term contracts
with certain customers for the supply of parts during the contract period. Some
of these contracts have provisions which allow the Company to negotiate with its
customers if targeted volumes, as defined in each contract, are not achieved.
Those negotiations may result in payments which are recognized as revenue when
the amount of such payment is agreed upon by the Company and the customer and
when collection is deemed probable.


                                      F-7
<PAGE>   25
                  STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     (DOLLARS IN THOUSANDS, EXCEPT SHARES)


(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

         Research and Development. Research and development ("R&D") costs
incurred for 2000, 1999 and 1998 were $10,135, $9,075 and $10,283, respectively,
of which $911, $596 and $657, respectively, were reimbursed by customers. The
net expenses of $9,224, $8,479 and $9,626 in 2000, 1999 and 1998, respectively,
are included in the consolidated statements of operations.

         Use of Estimates. The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

         Interest Rate Cap Agreement. The Company utilized an interest rate cap
agreement (the "Cap") to limit the impact of increases in interest rates on its
variable rate debt. The Cap required a premium payment of $7 to the counterparty
based on the agreement's notional amount and cap interest rate. The premium was
expensed in the Company's 1998 consolidated financial statements. The Cap
entitled the Company to receive from the counterparty the amounts by which the
selected market interest rates exceeded the Cap interest rate stated in the
agreement. The Cap expired December 30, 1999 (see Note 8).

         Accounting for Derivative Instruments and Hedging Activities. In June
1998, SFAS No. 133 "Accounting for Derivative Instruments and Hedging
Activities" was issued. SFAS No. 133 requires an entity to recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. Gains and losses resulting
from changes in the values of those derivatives would be recognized immediately
or deferred depending on the use of the derivative and if the derivative is a
qualifying hedge. The Company has adopted SFAS No. 133, as amended by SFAS No.
138 "Accounting for Certain Derivative Instruments and Certain Hedging
Activities" on January 1, 2001, as required. Management has determined that the
adoption of these standards will have no significant impact on the Company's
consolidated financial statements and related disclosures.

         Reclassifications. Certain amounts have been reclassified in the 1999
and 1998 financial statements to conform to the 2000 presentation.


(2)      INVENTORIES

         Inventories at December 31, consisted of:

<TABLE>
<CAPTION>
                                  2000          1999
                               -------       -------
<S>                            <C>           <C>
         Raw materials         $ 1,816       $ 1,968
         Work in process        21,198        24,891
         Finished goods          8,779         9,723
                               -------       -------
                               $31,793       $36,582
                               =======       =======
</TABLE>


         The LIFO reserve at December 31, 2000 and 1999 was $1,759 and $940,
respectively.


                                      F-8
<PAGE>   26
                  STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     (DOLLARS IN THOUSANDS, EXCEPT SHARES)


(3)      PROPERTY, PLANT AND EQUIPMENT

         Property, plant and equipment including equipment under capital leases
at December 31, consisted of:

<TABLE>
<CAPTION>
                                                 2000           1999
                                             --------       --------
<S>                                          <C>            <C>
         Land                                $ 11,246       $ 11,532
         Building and improvements             22,594         22,296
         Machinery and equipment              114,268        106,165
         Capitalized leases                     2,130          3,530
         Construction in progress               3,838          5,186
                                             --------       --------
                                              154,076        148,709
         Less accumulated depreciation         43,111         29,098
                                             --------       --------
                                             $110,965       $119,611
                                             ========       ========
</TABLE>


         Depreciation expense including amortization of assets acquired under
capital leases was $15,530, $14,904 and $13,847 for 2000, 1999 and 1998,
respectively. The net book value of assets acquired under remaining capital
leases was $1,603 and $2,397 at December 31, 2000 and 1999, respectively.


(4)      INTANGIBLE AND OTHER ASSETS

         Major components of intangible and other assets at December 31,
consisted of:

<TABLE>
<CAPTION>

                                                 2000           1999
                                             --------       --------
<S>                                          <C>            <C>
         Goodwill                            $ 73,935       $ 75,963
         Patents                                9,809          9,809
         Debt issuance costs                    8,149          9,111
         Software                               3,544          3,822
         Customer contracts                     2,690          2,690
         Technological know-how                  --            3,200
         Other                                  2,009          2,352
                                             --------       --------
                                              100,136        106,947
         Less accumulated amortization         17,173         15,260
                                             --------       --------
                                             $ 82,963       $ 91,687
                                             ========       ========
</TABLE>

                                      F-9
<PAGE>   27
                  STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     (DOLLARS IN THOUSANDS, EXCEPT SHARES)


(5)      LEASES

         The Company is obligated under certain noncancelable operating leases.
Rent expense for 2000, 1999 and 1998 was $1,959, $1,698 and $1,608,
respectively.

         Future minimum lease payments under noncancelable operating leases with
initial or remaining lease terms in excess of one year and future minimum
capital lease payments as of December 31, 2000 were as follows:

<TABLE>
<CAPTION>

                                                                             CAPITAL     OPERATING
                                                                             LEASES       LEASES
                                                                             ------       ------
<S>                                                                          <C>         <C>
         Year ending December 31:
            2001                                                               $488       $  845
            2002                                                                 41          594
            2003                                                                --           401
            2004                                                                --           234
            2005                                                                --             6
                                                                               ----       ------
         Total minimum lease payments                                           529       $2,080
                                                                                          ======
         Less amount representing interest at a weighted average
           rate of 6.9%                                                          17
                                                                               ----
         Present value of net minimum capital lease obligations                 512
         Less current installments of capital lease obligations                 471
                                                                               ----
                  Capital lease obligations, excluding current
                      installments                                             $ 41
                                                                               ====
</TABLE>


                                      F-10
<PAGE>   28
                  STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     (DOLLARS IN THOUSANDS, EXCEPT SHARES)


(6)      ACCRUED LIABILITIES

         Accrued liabilities at December 31, consisted of:

<TABLE>
<CAPTION>
                                                2000          1999
                                             -------       -------
<S>                                          <C>           <C>
         Salaries, wages and bonus           $ 6,077       $ 7,625
         Vacation                              4,748         4,578
         Retiree health benefits               3,979         4,116
         Accrued warranty                      3,112         3,447
         Pensions                              2,333           937
         Workers' compensation                 2,154         1,916
         Accrued taxes                         1,851         2,123
         Professional fees                       881           402
         Health benefits                         604           425
         Accrued interest payable                390           552
         Plant closure costs (Note 12)           220           326
         Other                                   807         1,341
                                             -------       -------
                                             $27,156       $27,788
                                             =======       =======
</TABLE>

(7)     OTHER NONCURRENT LIABILITIES

        Other noncurrent liabilities at December 31, consisted of:

<TABLE>
<CAPTION>
                                                     2000          1999
                                                  -------       -------
<S>                                               <C>           <C>
         Retiree health benefits                  $23,927       $24,314
         Pensions                                  11,961        12,036
         Italian leaving indemnity (Note 9)         4,014         4,427
         Workers' compensation                      2,266         1,953
         Accrued warranty                           1,231         1,700
         Environmental                              1,020         1,183
         Other noncurrent liabilities                 730           642
                                                  -------       -------
                                                  $45,149       $46,255
                                                  =======       =======
</TABLE>

(8)      LONG-TERM DEBT

         Long-term debt at December 31, consisted of:

<TABLE>
<CAPTION>
                                                                             2000           1999
                                                                         --------       --------
<S>                                                                      <C>            <C>
         Revolving credit lines                                          $   --         $   --
         Term A loans                                                      23,407         25,358
         Term B loans                                                      22,972         23,146
         Senior Subordinated Notes                                         75,950         90,000
         Stanadyne Automotive SpA debt, payable to Italian banks
              through 2001, bearing interest at rates ranging from
              5.15% to 5.19%                                                  103          2,365
                                                                         --------       --------
                                                                          122,432        140,869
         Less current maturities of long-term debt                          6,765          5,198
                                                                         --------       --------
              Long-term debt, excluding current maturities               $115,667       $135,671
                                                                         ========       ========
</TABLE>

                                      F-11
<PAGE>   29
                  STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     (DOLLARS IN THOUSANDS, EXCEPT SHARES)


(8)      LONG-TERM DEBT - (CONTINUED)

         At December 31, 2000 and 1999, the Company had $30,000 in revolving
credit lines (the "Revolving Credit Lines") of which $3,410 and $3,572,
respectively, was used for standby letters of credit leaving $26,590 and
$26,428, respectively, available for borrowings. Any amounts outstanding are
payable on December 11, 2003. The interest rate, had there been any borrowings
against the Revolving Credit Lines, would have been a maximum of 10.25% and 9.5%
at December 31, 2000 and 1999, respectively. The Company also pays a commitment
fee based on the percentage of the unused portion of the Revolving Credit Lines.
The percentage used to calculate the commitment fee is .35% to .45% based on
certain financial ratios.

         At December 31, 2000 and 1999, the Company had $46,379 and $48,504,
respectively, in term loans (the "Term Loans") outstanding at various interest
rates ranging from 8.19% to 10.25%. The remaining $23,407 Term A loans
outstanding at December 31, 2000 are payable in quarterly installments of $650.2
on January 2, 2001; $1,430.5 from March 31, 2001 through December 31, 2001;
$1,820.5 from March 31, 2002 through December 31, 2002; $2,470.7 from March 31,
2003 through September 30, 2003; and $2,340.7 on December 11, 2003. The
remaining $22,972 Term B loans outstanding at December 31, 2000 are payable in
quarterly installments of $58 from January 2, 2001 through September 30, 2004
with a final balloon payment of $22,044 on December 11, 2004. The Term Loans are
primarily LIBOR borrowings and are repriced approximately every month based on
prevailing market rates.

         Payment of the Revolving Credit Lines and Term Loans (collectively, the
"Credit Agreement") is guaranteed by Stanadyne Automotive Corp. (the "Parent")
and Precision Engine and DSD International Corp. through October 6, 1998,
(collectively, the "Subsidiary Guarantors"). The Credit Agreement is secured by
substantially all of the assets of the Parent and Subsidiary Guarantors and by a
pledge of substantially all the issued and outstanding capital stock of the
Parent and the Subsidiary Guarantors and 65% of the capital stock of SpA. In
addition, the Credit Agreement is subject to financial and other covenants,
including limits on indebtedness, liens and capital expenditures, and restricts
dividends or other distributions to stockholders.

         The Company had $75,950 and $90,000 of Senior Subordinated Notes (the
"Notes") at an interest rate of 10.25% outstanding at December 31, 2000 and
1999, respectively. Between January 25, 2000 and February 2, 2000, the Company
retired $14,050 in Notes at a discounted price of $11,503. As a result of the
early retirement of the Notes, the Company realized a $1,585 gain which was
recorded net of tax and the write off of unamortized debt issuance cost of $962.
The transaction was recorded as an extraordinary item in 2000. On October 5,
1999 the Company retired $10,000 in Notes at a discount price of $8,750. The
resulting $1,250 gain on this transaction was recorded as a net of tax
extraordinary item in 1999. The Notes are due on December 15, 2007. Payment of
the Notes is guaranteed by the Subsidiary Guarantors. In addition, the Notes are
subject to covenants including limitations on indebtedness, liens, and dividends
or other distributions to stockholders.

         At December 31, 2000 and 1999, the weighted average interest rate on
the Company's short term borrowings was 5.2% and 4.2%, respectively.

         The fair values of the Company's Term Loans and short-term borrowings
approximate their recorded values at December 31, 2000 based on similar
borrowing agreements offered by other major institutional banks. The fair value
of the Notes based on quoted market prices at December 31, 2000 was
approximately $56,393.


                                      F-12
<PAGE>   30
                  STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     (DOLLARS IN THOUSANDS, EXCEPT SHARES)


(8)      LONG-TERM DEBT - (CONCLUDED)

         The aggregate maturities of long-term debt outstanding at December 31,
2000 were:

<TABLE>
<S>                                 <C>
                  2001              $     6,765
                  2002                    7,514
                  2003                    9,985
                  2004                   22,218
                  2005                        -
                  Thereafter             75,950
                                    -----------
                                    $   122,432
                                    ===========
</TABLE>


         For 2000, 1999 and 1998, interest paid was $12,170, $14,098 and
$15,380, respectively.

(9)      PENSIONS

         The Company has a noncontributory defined benefit pension plan which
covers substantially all of the domestic hourly and salaried employees except
for Tallahassee hourly employees. Benefits under the pension plan are based on
years of service and compensation levels during employment for salaried
employees and years of service for hourly employees. It is the Company's policy
to fund the pension plan based on the minimum permissible contribution as
determined by the plan's actuaries. Plan assets are invested primarily in a
diversified portfolio of equity and fixed income securities. The Company also
sponsors an unfunded defined benefit supplemental executive retirement plan.

         The following table sets forth the change in benefit obligation, change
in plan assets and funded status of the pension plans and amounts recognized in
the Company's consolidated balance sheet as of December 31:

<TABLE>
<CAPTION>
                                                             2000                                   1999
                                              ---------------------------------      ---------------------------------
                                              Plans in Which     Plans in Which      Plans in Which    Plans in Which
                                              Assets Exceed       Accumulated         Assets Exceed      Accumulated
                                               Accumulated          Benefit            Accumulated         Benefit
                                                 Benefit           Obligation            Benefit         Obligation
                                                Obligation       Exceeds Assets        Obligation      Exceeds Assets
<S>                                           <C>                  <C>                <C>                  <C>
CHANGE IN PROJECTED BENEFIT OBLIGATIONS:
   Benefit obligation at beginning of year          $ 44,372           $ 2,265           $ 46,016           $ 2,377
   Service cost                                        2,401                71              2,455                61
   Interest cost                                       3,630               196              3,214               162
   Amendments                                          1,401              --                  675              --
   Curtailment gain                                     --                --                 (336)             --
   Actuarial loss (gain)                                 651               308             (6,517)             (226)
   Benefits paid                                      (1,318)             (104)            (1,135)             (109)
                                                    --------           -------           --------           -------
   Benefit obligations at end of year               $ 51,137           $ 2,736           $ 44,372           $ 2,265
                                                    ========           =======           ========           =======
</TABLE>


                                      F-13
<PAGE>   31
                  STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     (DOLLARS IN THOUSANDS, EXCEPT SHARES)


(9)      PENSIONS - (CONTINUED)

<TABLE>
<CAPTION>
                                                             2000                                   1999
                                              ---------------------------------      ---------------------------------
                                              Plans in Which     Plans in Which      Plans in Which    Plans in Which
                                              Assets Exceed       Accumulated         Assets Exceed      Accumulated
                                               Accumulated          Benefit            Accumulated         Benefit
                                                 Benefit           Obligation            Benefit         Obligation
                                                Obligation       Exceeds Assets        Obligation      Exceeds Assets
<S>                                           <C>                <C>                 <C>               <C>
CHANGE IN PLAN ASSETS:
   Fair value of plan assets at
     beginning of year                           $ 43,898         $  --                $ 37,425          $  --
   Actual return on plan asset                      1,062            --                   6,742             --
   Employer contribution                              588            104                    866             109
   Benefits paid                                   (1,318)          (104)                (1,135)           (109)
                                                 --------           ----               --------            ----
   Fair value of plan asset at end
     of year                                     $ 44,230          $  --               $ 43,898           $  --
                                                 ========          =====               =========          =====
</TABLE>


<TABLE>
<CAPTION>
                                                             2000                                   1999
                                              ---------------------------------      ---------------------------------
                                              Plans in Which     Plans in Which      Plans in Which    Plans in Which
                                              Assets Exceed       Accumulated         Assets Exceed      Accumulated
                                               Accumulated          Benefit            Accumulated         Benefit
                                                 Benefit           Obligation            Benefit         Obligation
                                                Obligation       Exceeds Assets        Obligation      Exceeds Assets
<S>                                           <C>                <C>                  <C>              <C>
FUNDED STATUS:
   Funded status                              $    (6,907)         $    (2,736)       $      (474)         $   (2,265)
   Unrecognized prior service cost                  1,933                   --                647                  --
   Unrecognized net actuarial (gain) loss          (6,614)                  79            (10,609)               (229)
                                             ------------          -----------        -----------          ----------
   Accrued pension cost                       $   (11,588)         $    (2,657)       $   (10,436)         $   (2,494)
                                              ===========          ===========        ===========          ==========
</TABLE>

         The components of the net periodic pension costs were as follows:

<TABLE>
<CAPTION>
                                                                Years Ended December 31,
                                                  -----------------------------------------------------
                                                     2000                   1999                   1998
                                                  -------                -------                -------
<S>                                               <C>                    <C>                    <C>
Service cost                                      $ 2,472                $ 2,516                $ 2,542
Interest cost                                       3,826                  3,376                  3,036
Expected return on plan assets                     (4,042)                (3,520)                (2,997)
Amortization of prior service costs                   114                     28                   --
Curtailment gain                                     --                     (336)                  --
Recognized net actuarial gain                        (364)                  (123)                  --
                                                  -------                -------                -------
   Net periodic pension cost                      $ 2,006                $ 1,941                $ 2,581
                                                  =======                =======                =======
</TABLE>



                                      F-14
<PAGE>   32
                   STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (DOLLARS IN THOUSANDS, EXCEPT SHARE)

(9)      PENSIONS - (CONCLUDED)

         Actuarial assumptions used in accounting for the pension plans during
2000, 1999 and 1998 were:

<TABLE>
<CAPTION>
                                                                   Years Ended December 31,
                                                            -----------------------------------
                                                              2000          1999          1998
                                                            -------       -------       -------
<S>                                                         <C>           <C>           <C>
         Assumed average salary compensation increase          5.0%          5.0%          5.0%
         Discount rate                                        7.75%         7.75%          7.0%
         Expected long-term rate of return on assets           9.0%          9.0%          9.0%
</TABLE>


         No compensation increase rate is applicable for the hourly plans, as
they are flat pay for each year of service (regardless of compensation earned).

         Effective July 1, 2000 and 1999 the unit benefit for hourly
participants and the minimum benefit for salaried participants were increased by
two dollars and one dollar, respectively, per month for each year of service.

          Staff reductions in the first half of 1999 resulted in a curtailment
gain of $336.

         In accordance with Italian Civil Code, the Company provides employees
of SpA a leaving indemnity payable upon termination of employment. The amount of
this leaving indemnity is determined by the employee's category, length of
service, and overall remuneration earned during service. Amounts included as
part of other noncurrent liabilities at December 31, 2000 and 1999 were $4,014
and $4,427, respectively. Leaving indemnity expense was $538, $634 and $950 for
2000, 1999 and 1998, respectively.

(10)     POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE

         The Company and its domestic subsidiaries currently make available
certain health care and life insurance benefits for retired employees. Full-time
employees of the Company (except non-grandfathered employees at the Tallahassee
and Elmhurst locations) may become eligible for those benefits when they reach
retirement, provided they attain age 57 with a minimum of 10 consecutive years
of service immediately preceding retirement, if such programs are still in
effect.

         Employees who retired prior to January 1, 1987 are eligible for a
Basic/Major Medical Plan and, in certain cases, prescription drug benefits for a
basic monthly contribution by the retiree. Benefit levels vary depending upon
the retiree's benefit plan eligibility. The Company's health benefit cost
commitment for employees who retire between January 1, 1987 and December 31,
1997 is limited to the 1997 cost level. Furthermore, the Company's cost
commitment for employees who were hired prior to 1997 and retire after 1997 will
be one hundred dollars per month per eligible participant prior to becoming
Medicare eligible and fifty dollars per month when Medicare eligible. Employees
hired after 1996 are required to pay the full cost of postretirement medical
coverage. Employees who retire before 1998 are eligible for Company provided
life insurance benefits. Employees who retire after 1997 are allowed to purchase
life insurance through the Company at full cost.


                                      F-15
<PAGE>   33
                   STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (DOLLARS IN THOUSANDS, EXCEPT SHARE)


(10)     POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE - (CONTINUED)

         Unrecognized gains and losses exceeding 10% of the accumulated
postretirement benefit obligation are amortized over the average remaining
service period of the plan participants.

         The following table presents the plan's change in benefit obligation,
change in plan assets and funded status reconciled with amounts recognized in
the Company's consolidated balance sheet as of December 31:

<TABLE>
<CAPTION>
                                                           2000             1999
                                                         --------          --------
<S>                                                     <C>               <C>
Change in benefit obligations:
  Benefit obligation at beginning of year               $  32,129          $ 29,739
  Service cost                                                273               320
  Interest cost                                             2,352             2,311
  Actuarial (gain) loss                                      (210)            3,257
  Plan participants' contributions                            467               357
  Benefits paid                                            (3,679)           (3,855)
                                                        ---------          --------
  Benefit obligation at end of year                     $  31,332          $ 32,129
                                                        =========          ========
Change in plan assets:
  Fair value of plan assets at beginning of year         $     --          $     --
  Actual return on plan assets                                 --                --
  Employer contribution                                     3,212             3,498
  Plan participants' contribution                             467               357
  Benefit paid                                             (3,679)           (3,855)
                                                         --------          --------
  Fair value of plan assets at end of year               $     --          $     --
                                                         ========          ========
Funded status:
  Funded status                                          $(31,332)         $(32,129)
  Unrecognized net actuarial loss                           3,643             3,961
                                                         --------          --------
  Accrued postretirement cost                            $(27,689)         $(28,168)
                                                         ========          ========
</TABLE>


                                      F-16
<PAGE>   34
                   STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (DOLLARS IN THOUSANDS, EXCEPT SHARE)


(10)     POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE - (CONTINUED)

         Net periodic postretirement benefit costs included the following
components:

<TABLE>
<CAPTION>
                                                         Years Ended December 31,
                                                  ------------------------------------
                                                    2000           1999           1998
                                                  ------         ------         ------
<S>                                               <C>            <C>            <C>
Service cost                                      $  273         $  320         $  324
Interest cost                                      2,352          2,311          2,026
Recognition of net actuarial loss                    108            352             --
                                                  ------         ------         ------
     Net periodic postretirement benefits
       cost                                       $2,733         $2,983         $2,350
                                                  ======         ======         ======
</TABLE>


        For measurement purposes, the following medical and dental cost trend
rates were assumed in determining the accumulated benefit obligation:

       Medical Cost Trend Rates

       -   Medical prior to age 65           6.0% and 4.5% in 1998 and 1999,
           (Indemnity Plan)                  respectively, and 6.5% in 2000
                                             decreasing 0.5% per year for 3
                                             years, ultimately 4.5% in 2004 and
                                             thereafter.

       -   Medical prior to age 65 (HMOs);   4.5% in 1998 and 1999, 6.5% in 2000
           per medical age 65 and older      decreasing 0.5% per year for 3
                                             years, ultimately 4.5% in 2004 and
                                             thereafter.

       Dental Cost Trend Rate

       -   Dental costs                      4.5% in 1998 and thereafter.


                                      F-17
<PAGE>   35
                   STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (DOLLARS IN THOUSANDS, EXCEPT SHARE)

(10)     POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE - (CONCLUDED)

         The effect of a 1% change in health care cost trend rates would have
the following impact on the accumulated postretirement benefit obligation and
the net annualized postretirement benefit costs:

<TABLE>
<CAPTION>
                                                          2000            1999            1998
                                                         -----           -----           -----
<S>                                                      <C>             <C>             <C>
          One percentage point increase:
            -  Service cost plus interest                $  20           $  34           $  44
            -  Postretirement benefit obligation           218             390             591

          One percentage point decrease:
            -  Service cost plus interest cost             (23)            (38)            (50)
            -  Postretirement benefit obligation          (255)           (457)           (698)

          Discount rate                                   7.75%           7.75%            7.0%
</TABLE>


(11)     INCOME TAXES

         Income taxes (benefit) consisted of:

<TABLE>
<CAPTION>
                          Current         Deferred           Total
                          -------         --------           -----
<S>                       <C>              <C>              <C>
            2000
               Federal    $ 4,012          $   581          $ 4,593
               State          666              (58)             608
               Foreign        469              421              890
                          -------          -------          -------
                          $ 5,147          $   944          $ 6,091
                          =======          =======          =======

            1999
               Federal    $ 1,897          $   213          $ 2,110
               State          916             (383)             533
               Foreign        421              564              985
                          -------          -------          -------
                          $ 3,234          $   394          $ 3,628
                          =======          =======          =======

            1998
               Federal    $   769          $ 1,507          $ 2,276
               State          403              406              809
               Foreign        699           (2,203)          (1,504)
                          -------          -------          -------
                          $ 1,871          $  (290)         $ 1,581
                          =======          =======          =======
</TABLE>


                                      F-18
<PAGE>   36
                   STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (DOLLARS IN THOUSANDS, EXCEPT SHARE)

(11)     INCOME TAXES - (CONTINUED)

         The income taxes for 2000 and 1999 in the table above includes $634 and
$500, respectively, which offsets the extraordinary gain related to the early
retirement of debt.

         Total income taxes differed from the amounts computed by applying the
U.S. Federal income tax rate of 35% for 2000 and 34% for 1999 and 1998 to income
before income taxes as follows:

<TABLE>
<CAPTION>

                                                                   Years Ended December 31,
                                                           -----------------------------------------
                                                             2000             1999             1998
                                                           -------          -------          -------
<S>                                                        <C>              <C>              <C>
Computed "expected" expense (benefit)                      $ 4,855          $ 3,242          $   (36)
Increase (reduction) in income tax resulting from:
     State taxes, net of federal tax effect                    425              352              534
     Foreign taxes                                             467              431            1,008
     Goodwill permanent difference                             668              662              676
     Federal R & D credit permanent difference                 (76)            --                (99)
     Tax benefit of Foreign Sales Corp.                     (1,010)          (1,390)            (361)
     Rate difference on income of
        foreign operations                                      27              145             (222)
     Impact of tax examinations                                565             --               --
     Other, net                                                170              186               81
                                                           -------          -------          -------
                                                           $ 6,091          $ 3,628          $ 1,581
                                                           =======          =======          =======
</TABLE>


         U.S. Federal, state and foreign net income taxes paid amounted to
$5,395, $2,623 and $2,613 for 2000, 1999 and 1998, respectively.

         Income before taxes from domestic operations amounted to $8,451, $2,191
and $6,635 for 2000, 1999 and 1998, respectively. Income (loss) before taxes
from foreign operations amounted to $5,422, $7,343 and $(6,741) for 2000, 1999
and 1998, respectively.

         As a result of losses in current and previous years, the Company has
unused net operating loss carryforwards for state income tax purposes of
approximately $121 at December 31, 2000, which, if not used to offset future
state taxable income, will begin to expire in 2001. The Company also has unused
foreign net operating losses of $5,150 at December 31, 2000 which will begin to
expire in 2001.

         The Company has been subject to the U.S. Alternative Minimum Tax
("AMT") and, therefore, has a cumulative AMT credit carryforward of $2,613 as of
December 31, 2000. This carryforward has an unlimited life and may be used to
offset federal income taxes in excess of AMT in future periods.


                                      F-19
<PAGE>   37
                   STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (DOLLARS IN THOUSANDS, EXCEPT SHARE)

(11)     INCOME TAXES - (CONCLUDED)

         The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
are presented as follows:

<TABLE>
<CAPTION>
                                                             2000            1999
                                                            -------         -------
<S>                                                         <C>             <C>
Current:
   Deferred tax assets:
       Postretirement benefits                              $ 1,837         $ 1,892
       Compensated absences                                   1,714           1,603
       Alternative minimum tax credit carryforwards           1,060           2,087
       Workers' compensation                                    883             766
       Net operating losses                                     295             374
       Health benefits                                          248             170
       Federal general business credit                         --               213
       Other                                                  1,830           2,401
                                                            -------         -------
           Deferred tax assets                                7,867           9,506
   Deferred tax liabilities:
       Inventories                                              869           1,146
                                                            -------         -------
           Net current deferred tax asset                   $ 6,998         $ 8,360
                                                            =======         =======
Noncurrent:
   Deferred tax assets:
       Postretirement benefits                              $15,095         $14,797
       Alternative minimum tax credit carryforwards           1,553           2,273
       Net operating loss carryforwards                       1,400           2,230
       Workers' compensation                                    929             781
       Other                                                  1,700           1,299
                                                            -------         -------
           Deferred tax assets                               20,677          21,380
   Deferred tax liabilities:
       Property, plant and equipment                         25,981          27,127
                                                            -------         -------
           Net noncurrent deferred tax liability            $ 5,304         $ 5,747
                                                            =======         =======
</TABLE>


         At December 31, 2000, the Company did not establish a valuation
allowance to offset any deferred tax assets. The Company has reported operating
income on the consolidated statements of operations as well as income for tax
purposes in 2000, 1999 and 1998. Based on projections for future taxable income
over the periods during which the deferred tax assets are deductible, and the
expectation that a significant portion of these deferred tax assets are to be
realized by offsetting them against temporary items, it is management's belief
that it is more likely than not that all deferred tax assets will be fully
realized. Projections indicate full utilization of the following deferred tax
assets: 1) AMT credit carryforward of approximately $2,613 by 2003, 2) foreign
net operating losses of $5,150 by 2005, and 3) state net operating losses of
approximately $121 by 2003.


                                      F-20
<PAGE>   38
                   STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (DOLLARS IN THOUSANDS, EXCEPT SHARE)

(12)     PLANT CLOSURE COSTS

         On September 9, 1998, the Company announced the planned closure of the
manufacturing facility in Bari, Italy. The Bari Plant is a part of the wholly
owned subsidiary, Stanadyne Automotive, SpA. This closure was completed during
the second quarter of 1999. The estimated cost of closing the operation resulted
in a charge to fourth quarter 1998 earnings for $4,215. Inventory writedowns to
lower of cost or market totaled $787 and were recorded in cost of goods sold in
the 1998 consolidated statement of operations. Employee termination costs and
other plant closure expenses totaled $3,428 and were charged to operating income
in the 1998 consolidated statement of operations. Accrued liabilities at
December 31, 1998, included $6,457 to reflect the anticipated sum of plant
closure costs and leaving indemnity scheduled for payment in 1999.

         The Company favorably concluded the major cost elements of the plant
closure in the third quarter of 1999 and as a result recorded a $1,930 savings,
primarily as a result of lower severance costs, to the reserve established in
1998 which is reflected in the 1999 consolidated statement of operations.

(13)     401(k) PLAN

         Substantially all of the Company's domestic employees are eligible to
participate in 401(k) savings plans. The 401(k) savings plans provide such
employees with the opportunity to save for retirement on a tax deferred basis.
The Company contributes 50% of the employee's contribution per year up to a
limit, as defined in the plan documents. The Company made contributions of $396,
$396 and $404 during 2000, 1999 and 1998, respectively.

(14)     RELATED PARTY TRANSACTIONS

         During 2000, 1999 and 1998 the Company incurred management fees of
$1,100 from AIP for management services provided. These charges are included in
selling, general and administrative expenses.

         The Company has an amount due from Stanadyne Automotive Holding Corp.
of $4,061 as of December 31, 2000 and 1999.


                                      F-21
<PAGE>   39
                   STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (DOLLARS IN THOUSANDS, EXCEPT SHARE)


(15)     SIGNIFICANT CUSTOMERS

         Sales to customers and their affiliates, which represented
approximately 10% or more of consolidated total sales, were as follows:

<TABLE>
<CAPTION>
                                                                Years Ended December 31,
                                             -----------------------------------------------------------------
                          Segment                  2000        %         1999        %         1998        %
                          -------            -------------    ----     --------     ----   -----------    ----
<S>            <C>                           <C>              <C>      <C>          <C>    <C>            <C>
Customer A             Diesel Group             $ 56,872      19.4     $45,359      16.1    $ 56,416      18.4
Customer B     Precision Engine/Diesel Group      29,105      10.0      34,143      12.1      33,188      10.8
Customer C             Diesel Group               65,062      22.2      57,203      20.3      58,445      19.0
</TABLE>


         Accounts receivable balances with these customers and their affiliates
were $15,878 and $18,913 at December 31, 2000 and 1999, respectively.



(16)     COMMITMENTS AND CONTINGENCIES

         The Company is involved in various legal and regulatory proceedings
generally incidental to its business. While the results of any litigation or
regulatory issue contain an element of uncertainty, management believes that the
outcome of any known, pending or threatened legal proceeding, or all of them
combined, will not have a material adverse effect on the Company's financial
position or results of operations.

         The Company is subject to potential environmental liability and various
claims and legal actions which are pending or may be asserted against the
Company concerning environmental matters. In conjunction with the acquisition of
the Company from Metromedia Company ("Metromedia") on December 11, 1997,
Metromedia agreed to partially indemnify the Company and AIP for certain
environmental matters.

         The effect of this indemnification is to limit environmental exposure
of known sites. However, there are limitations to this indemnification.
Estimates of the cost as of the date of the acquisition for the remediations to
be completed by Metromedia at the Windsor, Connecticut and Jacksonville, North
Carolina facilities were $1,700 and $300, respectively. Estimates of future
costs of environmental matters are inevitably imprecise due to numerous
uncertainties, including the enactment of new laws and regulations, the
development and application of new technologies, the identification of new sites
for which the Company may have remediation responsibility and the apportionment
and collectibility of remediation costs among responsible parties. The Company
establishes reserves for these environmental matters when a loss is probable and
reasonably estimable and has accrued its best estimate, $1,182 and $1,344, with
respect to these matters at December 31, 2000 and 1999, respectively. It is
reasonably possible that the final resolution of some of these matters may
require the Company to make expenditures, in excess of established reserves,
over an extended period of time and in a range of amounts that cannot be
reasonably estimated. However, management does not believe that the costs
associated with resolution of these or any other environmental matters will have
a material adverse effect on the Company's financial position or results of
operations.


                                      F-22
<PAGE>   40
                   STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (DOLLARS IN THOUSANDS, EXCEPT SHARE)

(17)     SEGMENTS

         The Company has two reportable segments, the Diesel Systems Group (the
"Diesel Group") and Precision Engine. The Diesel Group manufactures diesel fuel
injection equipment including fuel pumps, injectors and filtration systems. This
segment accounted for approximately 85%, 82% and 84% of the Company's revenues
for 2000, 1999 and 1998, respectively. Precision Engine manufactures
roller-rocker arms, hydraulic valve lifters and lash adjusters for gasoline
engines. Revenues for Precision Engine accounted for 15%, 18% and 16% of total
revenues for 2000, 1999 and 1998, respectively. The Company's reportable
segments are strategic business units that offer similar products (engine parts)
to customers in related industries (agricultural, industrial and automotive
engine manufacturers). The Company considers the Diesel Group and Precision
Engine to be two distinct segments because the operating results of each are
compiled, reviewed and managed separately. In addition, the products and
services of each segment have an end use (gasoline versus diesel engines) which
entails different engineering and marketing efforts. There were no intersegment
sales between the Diesel Group and Precision Engine for any of the periods
presented below.

         The following summarizes key information used by the Company in
evaluating the performance of each segment:

<TABLE>
<CAPTION>

                                                          As of and For the Year Ended December 31, 2000
                                                 Diesel            Precision
                                                 Group              Engine            Eliminations           Totals
                                             -----------         -----------         -------------       -----------
<S>                                          <C>                 <C>                 <C>                 <C>
Net sales                                    $   248,404         $    44,048         $         --        $   292,452
Gross profit                                      57,160               5,701                   --             62,861
Depreciation and amortization expense             17,682               3,595                   --             21,277
Operating income                                  23,946                  11                   --             23,957
Net income (loss)                                  9,047              (1,265)                  --              7,782
Total assets                                     257,387              45,999              (19,294)           284,092
Total capital expenditures                         8,808                 657                   --              9,465
</TABLE>

<TABLE>
<CAPTION>

                                                          As of and For the Year Ended December 31, 1999
                                                 Diesel            Precision
                                                 Group              Engine            Eliminations           Totals
                                             -----------         -----------         -------------       -----------
<S>                                          <C>                 <C>                 <C>                 <C>
Net sales                                    $   231,048        $     50,532         $         --        $   281,580
Gross profit                                      48,001               9,375                   --             57,376
Depreciation and amortization expense             17,491               3,313                   --             20,804
Operating income                                  17,700               4,160                   --             21,860
Net income                                         5,050                 856                   --              5,906
Total assets                                     270,530              53,604              (18,029)           306,105
Total capital expenditures                         9,439               2,010                   --             11,449
</TABLE>



                                      F-23
<PAGE>   41
                   STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (DOLLARS IN THOUSANDS, EXCEPT SHARES)

(17)     SEGMENTS - (CONCLUDED)

<TABLE>
<CAPTION>

                                                          As of and For the Year Ended December 31, 1998
                                                 Diesel            Precision
                                                 Group              Engine            Eliminations           Totals
                                             -----------         -----------         -------------       -----------
<S>                                          <C>                 <C>                 <C>                 <C>
Net sales                                    $   256,594        $     50,459         $         --        $   307,053
Gross profit                                      48,641               6,682                   --             55,323
Depreciation and amortization
  expense                                         16,795               3,021                   --             19,816
Operating income                                  12,894               2,138                   --             15,032
Net loss                                          (1,070)               (617)                  --             (1,687)
Total assets                                     283,724              57,986              (19,794)           321,916
Total capital expenditures                        11,293               3,086                   --             14,379
</TABLE>



(18)     FOREIGN AND GEOGRAPHIC INFORMATION

         The Company has manufacturing operations in the United States, Italy
and Brazil. The following is a summary of information by area:

<TABLE>
<CAPTION>

                                                Years Ended December 31,
                                      -----------------------------------------
                                          2000             1999             1998
                                      --------         --------         --------
<S>                                   <C>              <C>              <C>
Net sales:
     Domestic -- United States        $173,802         $168,463         $195,595
                                      --------         --------         --------
     Foreign net sales:
         England                        34,417           43,547           51,009
         All other                      84,233           69,570           60,449
                                      --------         --------         --------
     Total foreign sales               118,650          113,117          111,458
                                      --------         --------         --------
Net sales                             $292,452         $281,580         $307,053
                                      ========         ========         ========
</TABLE>


                                      F-24
<PAGE>   42
                   STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (DOLLARS IN THOUSANDS, EXCEPT SHARES)

(18)     FOREIGN AND GEOGRAPHIC INFORMATION - (CONCLUDED)

<TABLE>
<CAPTION>

                                                             December 31,
                                                     ---------------------------
                                                        2000              1999
                                                     ---------          --------
<S>                                                  <C>                <C>
          Long-lived assets:
               United States                         $ 168,299          $181,610
               Italy                                    24,815            29,341
               Brazil                                      814               347
                                                     ---------          --------
                   Long-lived assets                 $ 193,928          $211,298
                                                     =========          ========

          Deferred tax assets (liabilities):
               United States                         $   1,703          $  2,226
               Italy                                      (526)              240
               Brazil                                      517               147
                                                     ---------          --------
                   Deferred tax assets               $   1,694          $  2,613
                                                     =========          ========
</TABLE>


(19)     VALUATION AND QUALIFYING ACCOUNTS

         The components of significant valuation and qualifying accounts were as
follows:

<TABLE>
<CAPTION>

                                                     Allowance for
                                                     Uncollectible
                                                       Accounts         Inventory
                                                      Receivable         Reserves
                                                     --------------     ---------
<S>                                                  <C>              <C>
          Balance January 1, 1998                      $ 1,508          $ 2,659
               Charged to costs and expenses                44            1,896
               (Write-offs) recoveries                  (1,062)               7
               Effect of exchange rate changes              10               58
                                                       -------          -------
          Balance December 31, 1998                        500            4,620

               Charged to costs and expenses               208              378
               Write-offs                                  (54)          (1,781)
               Effect of exchange rate changes             (44)            (125)
                                                       -------          -------
          Balance December 31, 1999                        610            3,092

               Charged to costs and expenses               142              473
               (Write-offs) recoveries                    (200)            (807)
               Effect of exchange rate changes             (52)             (64)
                                                       -------          -------
          Balance December 31, 2000                    $   500          $ 2,694
                                                       =======          =======
</TABLE>


                                      F-25
<PAGE>   43
                   STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (DOLLARS IN THOUSANDS, EXCEPT SHARES)

(20)     SUPPLEMENTAL COMBINED CONDENSED FINANCIAL STATEMENTS

         The Notes issued by the Company are guaranteed jointly, fully,
severally and unconditionally by the Subsidiary Guarantors on a subordinated
basis and are not guaranteed by SpA, PEPL and FSC (the "Non-Guarantors").

         Supplemental combining condensed balance sheets as of December 31, 2000
and 1999 and the supplemental combined condensed statements of operations and
cash flows for 2000, 1999 and 1998 for the Parent, Subsidiary Guarantors and
Non-Guarantor Subsidiaries are presented below. Separate complete financial
statements of the Guarantor are not presented because management has determined
that they are not material to investors.

<TABLE>
<CAPTION>

                                                                                  December 31, 2000
                                                ----------------------------------------------------------------------------------
                                                  Stanadyne                                                            Stanadyne
                                                 Automotive                           Non-                             Automotive
                                                    Corp.          Subsidiary       Guarantor                            Corp. &
                                                   Parent          Guarantors      Subsidiaries      Eliminations     Subsidiaries
                                                 ----------        ----------      ------------      ------------     ------------
<S>                                              <C>                <C>               <C>             <C>               <C>
ASSETS
Cash and cash equivalents                        $  13,383          $     14          $    85         $    165          $  13,647
Accounts receivable, net                            25,094             3,537            3,399              --              32,030
Inventories                                         20,081             7,869            3,948             (105) (c)        31,793
Other current assets                                 5,815             1,584            1,234              --               8,633
                                                 ---------          --------          -------         --------          ---------
         Total current assets                       64,373            13,004            8,666               60             86,103
Property, plant and equipment, net                  79,212            19,141           12,612               --            110,965
Intangible and other assets, net                    57,499            12,964           13,017             (517) (b)        82,963
Investment in subsidiaries                          42,742            (1,111)            --            (41,631) (a)          --
Due from Stanadyne Automotive Holding
   Corp.                                             4,061              --               --                 --              4,061
                                                 ---------          --------          -------         --------          ---------
         Total assets                            $ 247,887          $ 43,998          $34,295         $(42,088)         $ 284,092
                                                 =========          ========          =======         ========          =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued
   liabilities                                   $  34,686          $  5,231          $ 4,530         $    --           $  44,447
Current maturities of long-term debt and
   capital lease obligations                         6,662              --                574              --               7,236
                                                 ---------          --------          -------         --------          ---------
         Total current liabilities                  41,348             5,231            5,104              --              51,683
Long-term debt and capital lease
   obligations                                     115,667              --                 41              --             115,708
Other noncurrent liabilities                        33,779            11,508            5,683             (517) (b)        50,453
Intercompany accounts                              (14,926)            7,909            6,616              401               --
Stockholders' equity                                72,019            19,350           16,851          (41,972) (a)        66,248
                                                 ---------          --------          -------         --------          ---------
         Total liabilities and
           stockholders' equity                  $ 247,887          $ 43,998          $34,295         $(42,088)         $ 284,092
                                                 =========          ========          =======         ========          =========
</TABLE>


(a)      Amount represents the elimination of investments in subsidiaries.

(b)      Reclassify Non-Guarantor deferred tax asset to deferred tax liability.

(c)      Amount represents the elimination of inventory for out of period
         transfers.



                                      F-26
<PAGE>   44
                   STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (DOLLARS IN THOUSANDS, EXCEPT SHARES)

(20)     SUPPLEMENTAL COMBINED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)

<TABLE>
<CAPTION>
                                                                                  December 31, 1999
                                                ----------------------------------------------------------------------------------
                                                  Stanadyne                                                            Stanadyne
                                                 Automotive                           Non-                             Automotive
                                                    Corp.          Subsidiary       Guarantor                            Corp. &
                                                   Parent          Guarantors      Subsidiaries      Eliminations     Subsidiaries
                                                 ---------         -----------     ------------      -------------    ------------
<S>                                              <C>                <C>               <C>             <C>             <C>
ASSETS
Cash and cash equivalents                        $   3,760          $      2          $    184          $    111          $  4,057
Accounts receivable, net                            28,068             8,213             4,112               (97)           40,296
Inventories                                         23,677             8,039             5,184              (318)(c)        36,582
Other current assets                                 6,636             1,196             1,979              --               9,811
                                                 ---------          --------          --------          --------          --------
         Total current assets                       62,141            17,450            11,459              (304)           90,746
Property, plant and equipment, net                  83,467            21,476            14,668              --             119,611
Intangible and other assets, net                    63,068            13,746            15,020              (147)(b)        91,687
Investment in subsidiaries                          36,516              (311)             --             (36,205)(a)          --
Due from Stanadyne Automotive Holding
   Corp.                                             4,061              --                --                --               4,061
                                                 ---------          --------          --------          --------          --------
         Total assets                            $ 249,253          $ 52,361          $ 41,147          $(36,656)         $306,105
                                                 =========          ========          ========          ========          ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued
   liabilities                                   $  37,857          $  6,511          $  5,842          $    (68)         $ 50,142
Current maturities of long-term debt and
   capital lease obligations                         3,007              --               3,010              --               6,017
                                                 ---------          --------          --------          --------          --------
         Total current liabilities                  40,864             6,511             8,852               (68)           56,159
Long-term debt and capital lease
   obligations                                     135,671              --                 592              --             136,263
Other noncurrent liabilities                        34,096            12,224             5,829              (147)(b)        52,002
Intercompany accounts                              (25,498)           15,567            10,023               (92)             --
Stockholders' equity                                64,120            18,059            15,851           (36,349)(a)        61,681
                                                 ---------          --------          --------          --------          --------
         Total liabilities and
           stockholders' equity                  $ 249,253          $ 52,361          $ 41,147          $(36,656)         $306,105
                                                 =========          ========          ========          ========          ========
</TABLE>


(a)      Amount represents the elimination of investments in subsidiaries.

(b)      Reclassify Non-Guarantor deferred tax asset to deferred tax liability.

(c)      Amount represents the elimination of inventory for out of period
         transfers.


                                      F-27
<PAGE>   45
                   STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (DOLLARS IN THOUSANDS, EXCEPT SHARES)

(20)     SUPPLEMENTAL COMBINED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)

<TABLE>
<CAPTION>
                                                                         Year Ended December 31, 2000
                                                ----------------------------------------------------------------------------------
                                                  Stanadyne                                                            Stanadyne
                                                 Automotive                           Non-                             Automotive
                                                    Corp.          Subsidiary       Guarantor                            Corp. &
                                                   Parent          Guarantors      Subsidiaries      Eliminations     Subsidiaries
                                                 ---------         -----------     ------------      -------------     ------------
<S>                                              <C>              <C>               <C>              <C>               <C>
Net sales                                         $228,375         $ 44,230          $ 20,433         $ (586) (a)       $292,452
Cost of goods sold                                 174,424           38,492            17,275           (600) (a)        229,591
                                                  --------         --------          --------          ------          ---------
         Gross profit                               53,951            5,738             3,158             14              62,861
Selling, general, administrative and
   other operating expenses                         32,025            4,593             2,449           (163)             38,904
Intercompany FSC commissions                         4,163              259            (4,422)            --                  --
                                                  --------         --------          --------          ------          ---------
         Operating income                           17,763              886             5,131            177              23,957
Interest, net                                        9,706              325             1,476            162              11,669
                                                  --------         --------          --------          ------          ---------
         Income before income taxes and
           extraordinary item                        8,057              561             3,655             15              12,288
Income taxes                                         3,060              999             1,398             --               5,457
                                                  --------         --------          --------          ------          ---------
         Income (loss) before extraordinary item     4,997             (438)            2,257             15               6,831
Extraordinary gain                                     951             --                --               --                 951
                                                  --------         --------          --------          ------          ---------
         Net income (loss)                        $  5,948         $   (438)         $  2,257          $  15            $  7,782
                                                  ========         ========          ========          ======          =========
</TABLE>

(a)      To eliminate intercompany sales and cost of sales.


                                      F-28
<PAGE>   46
                   STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (DOLLARS IN THOUSANDS, EXCEPT SHARES)

(20)     SUPPLEMENTAL COMBINED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)

<TABLE>
<CAPTION>
                                                                         Year Ended December 31, 1999
                                                ----------------------------------------------------------------------------------
                                                  Stanadyne                                                            Stanadyne
                                                 Automotive                           Non-                             Automotive
                                                    Corp.          Subsidiary       Guarantor                            Corp. &
                                                   Parent          Guarantors      Subsidiaries      Eliminations     Subsidiaries
                                                 ---------         -----------     ------------      -------------    ------------
<S>                                             <C>                <C>             <C>               <C>               <C>
Net sales                                         $ 207,348          $ 50,647        $ 24,199          $  (614)(a)      $281,580
Cost of goods sold                                  161,004            41,235          22,474             (509)(a)       224,204
                                                  ---------          --------        --------          -------          --------
         Gross profit                                46,344             9,412           1,725             (105)           57,376
Selling, general, administrative and
   other operating expenses                          30,588             4,092             804               32            35,516
Intercompany FSC commission                           5,711               683          (6,394)              --              --
                                                  ---------          --------        --------          -------          --------
         Operating income                            10,045             4,637           7,315             (137)           21,860
Interest, net                                        11,036             1,127           1,423              (10)           13,576
                                                  ---------          --------        --------          -------          --------
         (Loss) income before income taxes
           (benefit) and
           extraordinary item                          (991)            3,510           5,892             (127)            8,284
Income taxes (benefit)                                 (815)            2,285           1,658             --               3,128
                                                  ---------          --------        --------          -------          --------
         (Loss) income before
           extraordinary item                          (176)            1,225           4,234             (127)            5,156
Extraordinary gain                                      750              --              --               --                 750
                                                  ---------          --------        --------          -------          --------
         Net income  (loss)                       $     574          $  1,225        $  4,234          $  (127)         $  5,906
                                                  =========          ========        ========          =======          ========
</TABLE>


(a)      To eliminate intercompany sales and cost of sales.



                                      F-29
<PAGE>   47
                   STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (DOLLARS IN THOUSANDS, EXCEPT SHARES)


(20)     SUPPLEMENTAL COMBINED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)


<TABLE>
<CAPTION>
                                                                      Year Ended December 31, 1998
                                             ----------------------------------------------------------------------------------
                                               Stanadyne                                                            Stanadyne
                                              Automotive                           Non-                             Automotive
                                                 Corp.          Subsidiary       Guarantor                            Corp. &
                                                Parent          Guarantors      Subsidiaries      Eliminations     Subsidiaries
                                             ---------         -----------     ------------      -------------     ------------
<S>                                           <C>              <C>             <C>               <C>               <C>
Net sales                                     $231,215         $ 50,459          $ 26,138          $(759)(a)         $ 307,053
Cost of goods sold                             181,367           43,777            27,376           (790)(a)           251,730
                                              --------         --------          --------          -----             ---------
         Gross profit (loss)                    49,848            6,682            (1,238)            31                55,323
Selling, general, administrative and
   other operating expenses                     30,310            4,471             5,510             --                40,291
Intercompany FSC commissions                     1,560               73            (1,633)            --                    --
                                              --------         --------          --------          -----             ---------
         Operating income (loss)                17,978            2,138            (5,115)            31                15,032
Interest, net                                   11,851            1,539             1,730             18                15,138
                                              --------         --------          --------          -----             ---------
         Income (loss) before income
           taxes (benefit)                       6,127              599            (6,845)            13                  (106)
Income taxes (benefit)                           1,681            1,216            (1,316)          --                   1,581
                                              --------         --------          --------          -----             ---------
         Net income (loss)                    $  4,446         $   (617)         $ (5,529)         $  13             $  (1,687)
                                              ========         ========          ========          =====             =========
</TABLE>


(a)      To eliminate intercompany sales and cost of sales.


                                      F-30
<PAGE>   48
                   STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)


(20)     SUPPLEMENTAL COMBINED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)


<TABLE>
<CAPTION>
                                                                         Year Ended December 31, 2000
                                                ----------------------------------------------------------------------------------
                                                  Stanadyne                                                            Stanadyne
                                                 Automotive                           Non-                             Automotive
                                                    Corp.          Subsidiary       Guarantor                            Corp. &
                                                   Parent          Guarantors      Subsidiaries      Eliminations     Subsidiaries
                                                 ---------         -----------     ------------      -------------     ------------
<S>                                              <C>                <C>             <C>             <C>               <C>
Cash flows from operating activities:
     Net income (loss)                              $  5,948          $  (438)         $ 2,257          $  15          $  7,782
     Adjustments to reconcile net income (loss)
       to net cash provided by (used in)
       operating activities:
           Depreciation and amortization              16,336            3,561            1,380           --              21,277
           Other adjustments                             116             (163)             424           --                 377
           Changes in operating assets and
              liabilities                              8,854           (2,489)            (564)          (175)            5,626
                                                    --------          -------          -------          -----          --------
           Net cash provided by (used in)
              operating activities                    31,254              471            3,497           (160)           35,062
                                                    --------          -------          -------          -----          --------
Cash flows from investing activities:
     Capital expenditures                             (8,029)            (508)            (928)          --              (9,465)
     Proceeds from disposal of property,
       plant and equipment                               200               49                2           --                 251
                                                    --------          -------          -------          -----          --------
           Net cash used in investing
              activities                              (7,829)            (459)            (926)          --              (9,214)
                                                    --------          -------          -------          -----          --------

Cash flows from financing activities:
     Net change in debt                              (13,802)            --             (2,668)          --             (16,470)
                                                    --------          -------          -------          -----          --------
           Net cash used in financing
              activities                             (13,802)            --             (2,668)          --             (16,470)
                                                    --------          -------          -------          -----          --------

Net increase (decrease) in cash and cash
   equivalents                                         9,623               12              (97)          (160)            9,378
Effect of exchange rate changes on cash                 --               --                 (2)           214               212
Cash and cash equivalents at
   beginning of year                                   3,760                2              184            111             4,057
                                                    --------          -------          -------          -----          --------
Cash and cash equivalents at
   end of year                                      $ 13,383          $    14          $    85          $ 165          $ 13,647
                                                    ========          =======          =======          =====          ========
</TABLE>




                                      F-31
<PAGE>   49
                   STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)


(20)     SUPPLEMENTAL COMBINED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)


<TABLE>
<CAPTION>
                                                                         Year Ended December 31, 1999
                                                ----------------------------------------------------------------------------------
                                                  Stanadyne                                                            Stanadyne
                                                 Automotive                           Non-                             Automotive
                                                    Corp.          Subsidiary       Guarantor                            Corp. &
                                                   Parent          Guarantors      Subsidiaries      Eliminations     Subsidiaries
                                                 ---------         -----------     ------------      -------------     ------------
<S>                                              <C>                <C>             <C>             <C>               <C>
Cash flows from operating activities:
     Net income (loss)                              $    574          $ 1,225          $ 4,234          $  (127)         $  5,906
     Adjustments to reconcile net income
       (loss) to net cash provided by (used
       in) operating activities:
           Depreciation and amortization              15,902            3,306            1,596             --              20,804
           Other adjustments                            (191)            (652)             564             --                (279)
           Changes in operating assets and
              liabilities                             10,156           (2,679)          (7,909)             (85)             (517)
                                                    --------          -------          -------          -------          --------
           Net cash provided by (used in)
              operating activities                    26,441            1,200           (1,515)            (212)           25,914
                                                    --------          -------          -------          -------          --------

Cash flows from investing activities:
     Capital expenditures                             (8,854)          (1,792)            (803)            --             (11,449)
     Proceeds from disposal of property,
       plant and equipment                                71              618             --               --                 689
     Investment in subsidiaries                       (3,963)             (29)            --              3,992              --
                                                    --------          -------          -------          -------          --------
           Net cash (used in) provided by
              investing activities                   (12,746)          (1,203)            (803)           3,992           (10,760)
                                                    --------          -------          -------          -------          --------

Cash flows from financing activities:
     Net change in debt                              (14,791)            --             (1,461)            --             (16,252)
     Net change in equity                               --               --              3,992           (3,992)             --
                                                    --------          -------          -------          -------          --------
           Net cash (used in) provided by
              financing activities                   (14,791)            --              2,531           (3,992)          (16,252)
                                                    --------          -------          -------          -------          --------

Net (decrease) increase in cash and cash
   equivalents                                        (1,096)              (3)             213             (212)           (1,098)
Effect of exchange rate changes on cash                   (3)            --                (34)              60                23
Cash and cash equivalents at
   beginning of year                                   4,859                5                5              263             5,132
                                                    --------          -------          -------          -------          --------
Cash and cash equivalents at
   end of year                                      $  3,760          $     2          $   184          $   111          $  4,057
                                                    ========          =======          =======          =======          ========
</TABLE>


                                      F-32
<PAGE>   50
                   STANADYNE AUTOMOTIVE CORP. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  (DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)

(20)     SUPPLEMENTAL COMBINED CONDENSED FINANCIAL STATEMENTS - (CONCLUDED)


<TABLE>
<CAPTION>
                                                                         Year Ended December 31, 1998
                                                ----------------------------------------------------------------------------------
                                                  Stanadyne                                                            Stanadyne
                                                 Automotive                           Non-                             Automotive
                                                    Corp.          Subsidiary       Guarantor                            Corp. &
                                                   Parent          Guarantors      Subsidiaries      Eliminations     Subsidiaries
                                                 ---------         -----------     ------------      -------------     ------------
<S>                                              <C>                <C>             <C>             <C>               <C>
Cash flows from operating activities:
     Net income (loss)                             $  4,446          $  (617)         $(5,529)         $  13          $ (1,687)
     Adjustments to reconcile net income
       (loss) to net cash provided by
       operating activities:
           Depreciation and amortization             15,193            3,021            1,602           --              19,816
           Other adjustments                            863              331           (2,154)          --                (960)
           Changes in operating assets and
              liabilities                            (3,459)             351            6,283            288             3,463
                                                   --------          -------          -------          -----          --------
           Net cash provided by operating
              activities                             17,043            3,086              202            301            20,632
                                                   --------          -------          -------          -----          --------

Cash flows from investing activities:
     Capital expenditures                           (10,095)          (3,086)          (1,198)          --             (14,379)
     Proceeds from disposal of property,
       plant and equipment                               21                1                8           --                  30
                                                   --------          -------          -------          -----          --------
           Net cash used in investing
              activities                            (10,074)          (3,085)          (1,190)          --             (14,349)
                                                   --------          -------          -------          -----          --------

Cash flows from financing activities:
     Net change in debt                              (2,430)            --                988           --              (1,442)
                                                   --------          -------          -------          -----          --------
           Net cash (used in) provided by
              financing activities                   (2,430)            --                988           --              (1,442)
                                                   --------          -------          -------          -----          --------

Net increase in cash and cash equivalents             4,539                1             --              301             4,841
Effect of exchange rate changes on cash                   3             --                  1            (38)              (34)
Cash and cash equivalents at
   beginning of year                                    317                4                4           --                 325
                                                   --------          -------          -------          -----          --------
Cash and cash equivalents at
   end of year                                     $  4,859          $     5          $     5          $ 263          $  5,132
                                                   ========          =======          =======          =====          ========
</TABLE>


                                     ******

                                      F-33
<PAGE>   51

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

None.


                                       18
<PAGE>   52
                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth the name, age as of February 15, 2001 and
position with the Company of each person who is a member of the Board of
Directors or an executive officer of the Company. All directors serve for the
term for which they are elected or until their successors are duly elected and
qualified or until death, retirement, resignation or removal. All directors of
the Company are also directors of Holdings.

<TABLE>
<CAPTION>

Name                         Age                                     Position
----                         ---                                     --------
<S>                          <C>    <C>
William D. Gurley             52    President, Chief Executive Officer and Director, Stanadyne Automotive Corp.
Stephen S. Langin             42    Vice President, Chief Financial Officer and Secretary, Stanadyne Automotive Corp.
Donald Buonomo                61    Vice President, Quality and Reliability, Stanadyne Automotive Corp.
Leon P. Janik                 57    Vice President and General Manager, Power Products and Fuel Injectors, Stanadyne
                                    Automotive Corp.
William W. Kelly              49    Vice President and General Manager, Fuel Pumps, Stanadyne Automotive Corp.
Jean S. McCarthy              53    Vice President, Human Resources, Stanadyne Automotive Corp.
Mark E. Murray                49    Vice President, Precision Components and Assembly, Stanadyne Automotive Corp.
Michael J. O'Day              41    Vice President and General Manager, Precision Engine Products Corp.
W. Richard Bingham            65    Director
Kenneth J. Diekroeger         38    Director
Kim A. Marvin                 39    Director
Theodore C. Rogers            66    Director and Chairman of the Board
</TABLE>


Mr. Gurley joined Stanadyne's Diesel Systems Division in 1984. In 1989, Mr.
Gurley became Executive Vice President, Marketing, Engineering and Operations
and was elected as a director of Stanadyne Automotive Corp. In 1995, he became
President and Chief Executive Officer of the Company.

Mr. Langin joined Stanadyne's Diesel Systems Division in 1981. In 1989, Mr.
Langin became Controller, Stanadyne Automotive Corp. and on February 7, 2001
became Vice President and Chief Financial Officer.

Mr. Buonomo joined Stanadyne in 1997 as Vice President, Quality and Reliability.
Prior to joining Stanadyne, he served as Vice President, Corporate Quality with
C. Cowles & Company and Vice President, Quality & Reliability with Veeder-Root
Company.

Mr. Janik joined Stanadyne in 1970. In 1992, Mr. Janik was appointed Vice
President, Power Products Division and in 1998 became Vice President and General
Manager, Power Products and Fuel Injectors.

Mr. Kelly joined Stanadyne in 1982. Effective with the formation of Stanadyne
Automotive Corp. in 1988, Mr. Kelly was appointed to Vice President of
Engineering and Marketing for Diesel Systems Division and in 1998 became Vice
President and General Manager, Fuel Pumps.


                                       19
<PAGE>   53
Ms. McCarthy joined Stanadyne in October 2000 as Vice President, Human
Resources. Prior to joining Stanadyne, she served as Vice President of Human
Resources with CTG Resources, Inc. since 1995.

Mr. Murray joined Stanadyne on January 1, 2001 as Vice President, Precision
Components and Assembly. Prior to joining Stanadyne, he worked as an independent
consultant from 1999 to 2000. During 1999 he served as Vice President of Sales
for API Motion. Mr. Murray also served with FAG Bearings Corporation as
Executive Vice President, Sales and Marketing from 1997 to 1998 and General
Manager from 1991 to 1996 and with Pope Spindle Corporation as President from
1996 to 1997.

Mr. O'Day joined Stanadyne's Precision Engine Products Corp. in May 2000 and
became Vice President and General Manager, Precision Engine Products Corp. in
October 2000. Prior to joining Stanadyne, he served with International Fuel
Cells as Vice President, Business Development from 1999 to 2000. Mr. O'Day also
was employed with various business units of United Technologies Automotive as
Vice President, General Motors Business Unit from 1997 to 1999, Vice President,
Quality and Enterprise Productivity from 1996 to 1997 and Director,
Sales/Marketing and Manufacturing Planning from 1995 to 1996.

Mr. Bingham co-founded AIP with Theodore C. Rogers in 1988 and, with Mr. Rogers,
is responsible for the overall management of the firm. Mr. Bingham was a
Managing Director of Shearson Lehman Brothers from 1984 to 1987. Prior to
joining Shearson Lehman Brothers, Mr. Bingham was a Director of the Corporate
Finance Department, a member of the board, and head of Mergers and Acquisitions
at Lehman Brothers Kuhn Loeb Inc. Prior thereto, he directed investment-banking
operations at Kuhn Loeb & Company where he was a partner and member of the board
and executive committee. Mr. Bingham also serves as a director of Bucyrus
International, Great Lakes Carbon Corporation, MBA Polymers, RBX Group, Sanluis
Developments, L.L.C., and Dearfield Associates. He was elected to the Board of
Directors of the Company in December 1997.

Mr. Diekroeger is a founder and managing director of Golden Gate Capital, a San
Francisco based private equity firm. Prior to joining Golden Gate Capital in
2000, he was a managing director and partner with AIP from 1996-2000, where he
sourced, executed and served as a director for several investments and buyouts.
He was elected to the Board of Directors of the Company in December 1997.

Mr. Marvin joined the San Francisco office of AIP in 1997 and serves as a
managing director of the firm. Mr. Marvin worked in the Mergers and Acquisitions
department of Goldman Sachs & Co. where he had been employed from 1994 to 1997.
He was elected to the Board of Directors of the Company in January 2001.
Additionally, he serves as a director of Bucyrus International, Consoltex Inc.,
Great Lakes Carbon Corporation and Sweetheart Holdings Inc.

Mr. Rogers became Chairman of the Board effective February 7, 2001. Mr. Rogers
co-founded AIP with W. Richard Bingham in 1988 and, with Mr. Bingham, is
responsible for the overall management of the firm. Mr. Rogers is former
President, Chairman, Chief Executive Officer and Chief Operating Officer of NL
Industries, a petroleum service and chemical company. Mr. Rogers currently
serves as a non-executive Chairman of the Board and Director of Great Lakes
Carbon Corporation. Additionally, he serves as a Director of Bucyrus
International, Central Industrial

                                       20
<PAGE>   54
Supply Company, Consoltex Inc., RBX Group, Steel Heddle Group and Derby
International, Incorporated. He was elected to the Board of Directors of the
Company in December 1997.

Directors do not receive compensation for their services as directors, with the
exception of Mr. Diekroeger who receives $125,000 per year. Directors of the
Company are entitled to reimbursement of their reasonable out-of-pocket expenses
in connection with their travel to and attendance at meetings of the Board of
Directors or committees thereof.


                                       21
<PAGE>   55
ITEM 11. EXECUTIVE COMPENSATION

The compensation of executive officers of the Company is determined by the Board
of Directors of the Company. The following table sets forth information
concerning the five most highly compensated officers of the Company for services
rendered in fiscal 2000, 1999 and 1998.

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

                                                                                Long Term
                                                                              Compensation
                                                                                Awards
                                                  Annual Compensation (1)      Securities
                                                  -----------------------      Underlying            All Other
Name and Position                  Year            Salary        Bonus          Options (#)       Compensation (2)
-----------------                  ----            ------        -----        -------------       ----------------
<S>                                <C>            <C>            <C>          <C>                 <C>
William D. Gurley                  2000           $358,000       $269,143          --                $24,021
   (President, Chief               1999            345,000        395,715           842               15,829
   Executive Officer and           1998            320,000        261,754         5,850               11,679
   Director)

Michael H. Boyer (resigned         2000            225,625        169,624          --                 14,735
   2/7/01)                         1999            217,500        249,473           306                9,150
   (Vice President, Chief          1998            202,000        165,232         2,125                7,954
   Financial Officer,
   Secretary and Director)

Arthur S. Caruso (retired          2000            193,000         49,835          --                  6,491
12/31/00)                          1999            193,000        215,388          --                 15,159
   (Vice President and             1998            185,000         91,760          --                 12,583
   General Manager)

Leon P. Janik                      2000            223,750        200,755          --                 25,015
   (Vice President and             1999            213,500        244,244           324                7,277
   General Manager)                1998            185,000        156,977         2,250                7,277

William W. Kelly                   2000            234,000        209,952          --                 14,073
   (Vice President and             1999            225,500        257,972           432                8,055
   General Manager)                1998            210,000        178,731         3,000                7,931
</TABLE>


(1)      None of the named executive officers received personal benefits or
         other annual compensation in excess of the lesser of $50,000 or 10% of
         the combined salary and bonus in each respective year.

(2)      All Other Compensation included the employer match under the Company's
         401(k) savings plan for each named executive officer of $300 per year.
         The remainder of the balance is the premium paid for executive life
         insurance.


                                       22
<PAGE>   56
EMPLOYMENT AGREEMENTS

The Company has entered into identical employment agreements with Messrs.
Gurley, Boyer and Kelly. Mr. Boyer resigned voluntarily from the Company on
February 7, 2001 under the terms of his employment agreement. Mr. Caruso entered
into a comparable agreement with Precision Engine. Pursuant to these agreements,
Messrs. Gurley, Boyer, Caruso and Kelly served in their noted capacities during
2000 at current base salaries of $371,000, $233,750, $201,000 and $242,500,
respectively. These salaries are reviewed at least annually and shall be
increased to be consistent with increases in base salary awarded in the ordinary
course of business to other key executives.

Each employment agreement is renewed automatically for a term of one year on the
anniversary of the effective date, unless notice is given by the Company no
later than thirty days before the end of the current term. If the Company does
not renew the agreement within the three-year period following a change of
control, the change of control provisions will continue to apply and the
executive may be entitled to certain payments under the agreement in the event
of termination.

The Company may terminate the executive for cause, as defined in the agreement,
as well as for death and disability. Moreover, the executive may terminate the
agreement for "Good Reason," which includes, among other circumstances, when the
executive is assigned duties inconsistent with, or is subject to any other
action by the Company that results in a diminution of, his position, authority,
duties or responsibilities. Upon the termination of the employment agreement by
the executive upon Good Reason, the Company shall pay to the executive within
thirty days of the date of termination (i) his base salary through the date of
termination, as well as any outstanding bonus payments; (ii) the previous year's
bonus payment prorated for the fiscal year of the termination; (iii) an amount
equal to the executive's base salary; (iv) any deferred compensation; and (v)
any other amount due the executive under any other separation or severance pay
plan of the Company.

Upon any termination within three years of a change of control, as defined in
the agreements, the executive is entitled to certain payments, unless the
termination is because of the death or retirement of the executive, by the
Company for cause or disability, or by the executive for other than Good Reason.
Such payments shall include (i) the executive's base salary through the date of
termination, as well as any outstanding bonus payments; (ii) the previous year's
bonus payment prorated for the fiscal year of termination; (iii) an amount equal
to three times the executive's current base salary, plus three times the average
amount paid to the executive in bonus payments over the prior three years; (iv)
any deferred compensation; and (v) certain payments with respect to the
executive's automobile. The executive shall be entitled to continued
participation under the welfare benefit plans of the Company for one year
following the date of termination. Payments under (iii) of this paragraph shall
be payable in three equal installments: the first on the date of termination;
the second on the first anniversary of the date of termination; and the third on
the second anniversary of the date of termination.

Mr. Janik is an at-will employee.


                                       23
<PAGE>   57
STOCK OPTION PLAN

The Board of Directors of Holdings adopted the Management Stock Option Plan (the
"Stock Plan") as of June 5, 1998. The Stock Plan provides for the grant of stock
options to certain management employees of Holdings and its subsidiary, the
Company, for the purchase of shares of Holdings, which options are non-qualified
for federal income tax purposes. Subject to the requirements and limitations of
the Stock Plan, the President and Chief Executive Officer of Holdings shall have
the authority to select the participants in the Stock Plan. The Board of
Directors of Holdings, or a committee designated by the Board of Holdings, shall
have the sole and complete responsibility and authority to, among other duties,
approve grants of options under the Stock Plan.

OPTION GRANTS

There were no stock options granted during the year ended December 31, 2000.

STOCK OPTION EXERCISES

There were no stock options exercised as of December 31, 2000.

EMPLOYEE BENEFIT PLANS

401(k) PLANS

The Company sponsors two savings plans which are intended to be qualified under
Sections 401(a) and 401(k) of the Internal Revenue Code. All regular U.S.
employees, except Tallahassee hourly employees, are eligible to participate in
the Stanadyne Automotive Corp. Savings Plus Plan (the "SAC Savings Plan").
Beginning on January 1, 1998, hourly employees at the Tallahassee Plant were
eligible to participate in the Precision Engine Products Corp. Retirement Fund
(the "PEPC 401(k) Plan"). The maximum matching contribution for any participant,
excluding the participants in the PEPC 401(k) Plan, for any year is 50% of such
participant's contributions up to a maximum amount of $300.00. The participants
in the PEPC 401(k) Plan receive a Company contribution of $300.00 per year plus
a maximum matching contribution of $200.00.

THE SAC PENSION PLAN

The SAC Pension Plan provides benefits for all domestic non-collectively
bargained, salaried employees of the Company and hourly employees of the Company
employed at the Windsor, Washington and Jacksonville facilities. Salaried
employees who participate in the SAC Pension Plan are provided benefits
calculated under one of two different formulas. Salaried participants are
entitled to the greater of the two benefit amounts. Under Formula One, benefits
are based upon (i) a percentage of the monthly average compensation received by
a participant during the five consecutive calendar years of employment that
would produce the highest such average (the "Final Average Compensation"), (ii)
the years of service of the participant with the Company and certain related or
predecessor employers ("Years of Credited Service"), and (iii) a percentage of
the primary age 65 Social Security benefit. Specifically, the accrued benefit
payable under Formula One of the SAC Pension Plan is equal to (w) + (x) - (y) -
(z), where

(w)   =   1.7% of Final Average Compensation times Years of Credited Service
          (not in excess of 30)


                                       24
<PAGE>   58
(x)    =  1% of Final Average Compensation times Years of Credited Service
          in excess of 30

(y)    =  1.66% of primary Social Security times Years of Credited Service
          (not in excess of 30)

(z)    =  Annuity for employees actively employed prior to July 2, 1988
          (where applicable)

Formula Two under the SAC Pension Plan provides salaried participants with an
accrued monthly benefit equal to $21.00 times Years of Credited Service less an
Annuity for employees actively employed prior to July 2, 1988 (where
applicable).

Benefits provided under the SAC Pension Plan for hourly employees are based upon
(i) a fixed amount per month and (ii) the years of service of the participant
with the Company and certain related or predecessor employers ("Years of
Credited Service"). Specifically, the accrued monthly benefit ordinarily payable
under the SAC Pension Plan for hourly employees employed at the Washington and
Jacksonville locations is equal to: $14.00 multiplied by the participant's Years
of Credited Service. Hourly employees employed at the Windsor facility receive a
monthly benefit of $21.00 multiplied by Years of Credited Service.

For purposes of the SAC Pension Plan, compensation used in the determination of
Final Average Compensation includes total earnings received for personal
services to the Company. The total compensation that can be considered for any
purpose under the SAC Pension Plan is limited to $170,000 for 2000 and $160,000
for 1999 and 1998, pursuant to requirements imposed by the Internal Revenue Code
of 1986, as amended (the "Code"). The Code also places certain other limitations
on the annual benefits that may be paid under the Plan.

The Company has also adopted two nonqualified plans entitled the "Stanadyne
Automotive Corp. Benefit Equalization Plan" and the "Stanadyne Automotive Corp.
Supplemental Retirement Plan" (together, the "SERP"), which are designed to
supplement the benefits payable under the SAC Pension Plan for designated
employees. The annual benefit payable under the SERP is equal to the difference
between the benefit the designated employee would have received under the SAC
Pension Plan if certain Code limitations did not apply and the designated
employee's SAC Pension Plan benefit.

Benefits may be paid under the SAC Pension Plan and the SERP in the form of (i)
a straight-life annuity for the life of the participant; (ii) a 50% joint and
survivor annuity for the lives of the participant and spouse; (iii) a 75% or
100% joint and survivor annuity whereby the participant receives a reduced
monthly benefit for life and the spouse receives 75% or 100% of such reduced
monthly benefit for life; and (iv) for participants with an accrued benefit of
$5,000.00 or less, a lump sum.


                                       25
<PAGE>   59
                            Pension Plan Table (1)(2)
<TABLE>
<CAPTION>
                                                                    Years of Service
                                                                    ----------------
        Final Average Compensation               15             20           25           30           35
        --------------------------           --------       --------      --------     --------     --------
<S>                                         <C>            <C>           <C>          <C>          <C>
        $ 125,000.......................     $ 27,755       $ 37,007      $ 46,259     $ 55,510     $ 61,760
          150,000.......................       34,130         45,507        56,884       68,260       75,760
          175,000.......................       40,505         54,007        67,509       81,010       89,760
          200,000.......................       46,880         62,507        78,134       93,760      103,760
          225,000.......................       53,255         71,007        88,759      106,510      117,760
          250,000.......................       59,630         79,507        99,384      119,260      131,760
          300,000.......................       72,380         96,507       120,634      144,760      159,760
          400,000.......................       97,880        130,507       163,134      195,760      215,760
          450,000.......................      110,630        147,507       184,384      221,260      243,760
          500,000.......................      123,380        164,507       205,634      246,760      271,760
</TABLE>

Note:

(1)      Amounts shown represent the annual single-life benefit at age 65 from
         the SAC Pension Plan (as defined herein) plus the benefit from the SERP
         (as defined herein).

(2)      For this illustration, the annual social security benefit was assumed
         to be $16,476 for the calculation of the Social Security offset.

The Years of Credited Service under the SAC Pension Plan at December 31, 2000,
were 16.8, 23.0, 35.4, 30.8 and 19.0 for Messrs. Gurley, Boyer, Caruso, Janik
and Kelly, respectively. The estimated annual benefits payable under the Plan
and the SERP, assuming termination on December 31, 2000 and retirement at age
65, are illustrated as follows:

                                Estimated Accrued
                         Pension Benefit as of 12/31/00
<TABLE>
<CAPTION>
                                         The Sac
                                       Pension Plan          The SERP         Total
                                       ------------          --------         -----
<S>                                    <C>                   <C>           <C>
       Gurley......................     $ 42,057             $ 68,717      $ 110,774
       Boyer.......................       47,861               38,223         86,084
       Caruso......................       58,080               55,770        113,850
       Janik.......................       46,548               38,481         85,029
       Kelly.......................       39,600               34,084         73,684
</TABLE>


                                       26
<PAGE>   60
ITEM 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The Company is authorized by its Certificate of Incorporation to issue 10,000
shares of common stock, par value $.01 per share ("Company Common Stock").
Holdings owns all of the issued and outstanding 1,000 shares of Company Common
Stock. Holdings is authorized by its Certificate of Incorporation to issue
1,200,000 shares of common stock, par value $.01 per share ("Holdings Common
Stock") of which 994,111 shares were outstanding on December 31, 2000. AIP and
management of the Company own substantially all of Holdings Common Stock.
Holdings has adopted the Stock Plan, which provides for the grant to certain key
employees and/or directors of the Company of stock options that are
non-qualified options for federal income tax purposes.

As of December 31, 2000, there were 20 holders of record of shares of Holdings
Common Stock. The following table sets forth certain information regarding
beneficial ownership of Holdings Common Stock as of December 31, 2000, assuming
the exercise of stock options exercisable within 60 days of such date, by (i)
each person who is known by Holdings to be the beneficial owner of more than 5%
of Holdings Common Stock, (ii) each of the Company's directors and the named
executive officers in the Summary Compensation Table and (iii) all directors and
executive officers as a group. To the knowledge of the Company, each stockholder
has sole voting and investment power as to the shares of Holdings Common Stock
shown unless otherwise noted. Except as indicated below, the address for each
such person is c/o Stanadyne Automotive Corp., 92 Deerfield Road, Windsor, CT
06095.

<TABLE>
<CAPTION>

                                                                                      Exercisable
                                                                     Total            Options (3)
                             Name                                  Number (1)       Included in Total      Percentage
                             ----                                  ----------      ------------------      ----------
<S>                                                                <C>             <C>                     <C>
American Industrial Partners Capital Fund II, L.P. (2).....          951,301                     0            95.69%
W. Richard Bingham (2).....................................                0                     0               *
Robert Cizik (5) - resigned 12/31/00 as Director...........                0                     0               *
Kenneth J. Diekroeger (6)..................................                0                     0               *
William D. Gurley..........................................           20,792                 6,692             2.08%
William W. Kelly...........................................           11,726                 3,432             1.18%
Leon P. Janik..............................................            7,899                 2,574               *
Michael H. Boyer - resigned 2/7/01 **......................            7,407                 2,431               *
Arthur S. Caruso - retired 12/31/00........................                0                     0               *
Theodore C. Rogers (4).....................................                0                     0               *
All directors and executive officers as a group
  (9 persons)..............................................           49,140                15,616             4.87%
</TABLE>

     * Represents less than 1%

     ** These options were unexercised and expired at the time of resignation.

(1)      Beneficial ownership is determined in accordance with Rule 13d-3 of the
         Securities and Exchange Commission. In computing the number of shares
         of Holdings Common Stock beneficially owned by a person and the
         percentage of beneficial ownership of that person, shares of Holdings
         Common Stock subject to options held by that person that are currently
         exercisable or exercisable within 60 days are deemed outstanding. Such
         shares, however, are not deemed outstanding for the purposes of
         computing the percentage ownership of each other person. The persons
         named in this table have sole voting and investment power with respect
         to all shares of Holdings Common Stock shown as beneficially owned by
         them,

                                       27
<PAGE>   61
         subject to community property laws where applicable and except as
         indicated in the other footnotes to this table.

(2)      The address of such entity or person is One Maritime Plaza, Suite 2525,
         San Francisco, California 94111.

(3)      Represents an aggregate of 16,102 shares of Holdings Common Stock held
         by directors and executive officers which are issuable upon exercise of
         options exercisable within 60 days of the date December 31, 2000.

(4)      The address of such person is 551 Fifth Avenue, Suite 3800, New York,
         New York 10176.

(5)      The address of such person is Texas Commerce Tower, 600 Travis, Suite
         3628, Houston, TX 77002

(6)      The address of such person is One Embarcadero, 33rd Floor, San
         Francisco, CA 94111


                                       28
<PAGE>   62
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

ACQUISITION ARRANGEMENTS

In connection with the Acquisition, Holdings, AIP and other stockholders of
Holdings entered into a stockholders agreement (the "Stockholders Agreement")
pursuant to which such persons were granted certain registration rights and
participation rights. Pursuant to the Stockholders Agreement, AIP has the right
to elect the directors of Holdings. The directors of the Company are the same as
the directors of Holdings.

MANAGEMENT SERVICES AGREEMENT

In accordance with a management services agreement, the Company is required to
pay AIP an annual fee of $1.1 million for providing general management,
financial and other corporate advisory services to the Company, payable
quarterly in advance on each January 1, April 1, July 1 and October 1 during the
term of the management services agreement. AIP also will be reimbursed for
out-of-pocket expenses. The management fees are subordinated in right of payment
to the Notes.


                                       29
<PAGE>   63
                                     PART IV

ITEM 14.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)      1. Financial Statements:

            See "Item 8. Financial Statements and Supplementary Data" of this
            Annual Report on Form 10-K.

         2. Financial Statement Schedules:

            The Company is not required by the applicable accounting
regulations of the Securities and Exchange Commission to provide all financial
statement schedules. The Financial Statements and the Notes thereto contain what
information is required and what is not required has been omitted.

         3. Exhibits:

TABLE
NUMBER                              DESCRIPTION

3.1        (1) Amended and Restated Certificate of Incorporation of Stanadyne
           Automotive Corp.

3.2        (1) Amended and Restated By-laws of Stanadyne Automotive Corp.

4.1        (1) Indenture dated as of December 11, 1997 between Stanadyne
           Automotive Corp., DSD International Corp., Precision Engine Products
           Corp. and United States Trust Company of New York

4.2        (1) Purchase Agreement dated as of December 4, 1997 among SAC
           Automotive, Inc. and Donaldson, Lufkin & Jenrette

4.3        (1) Registration Rights Agreement dated as of December 11, 1997 by
           and among Stanadyne Automotive Corp. and Donaldson, Lufkin & Jenrette

10.1       (1) Credit Agreement dated as of December 11, 1997 among SAC
           Automotive, Inc., Stanadyne Automotive Corp., the Lenders listed
           therein, as Lenders, DLJ Capital Funding, Inc., as Syndication Agent,
           and The First National Bank of Chicago, as Administrative Agent

10.1.1     (3) First Amendment To Credit Agreement dated July 31, 1998 to amend
           the Credit Agreement dated as of December 11, 1997 among SAC
           Automotive, Inc., Stanadyne Automotive Corp., the Lenders listed
           therein, as Lenders, DLJ Capital Funding, Inc., as Syndication Agent,
           and The First National Bank of Chicago, as Administrative Agent

10.1.2     (4) Second Amendment To Credit Agreement dated February 8, 1999 to
           amend the Credit Agreement dated as of December 11, 1997, as amended
           as of July 31, 1998, among SAC Automotive, Inc., Stanadyne Automotive
           Corp., the Lenders listed therein, as Lenders, DLJ Capital Funding,
           Inc., as Syndication Agent, and The First National Bank of Chicago,
           as Administrative Agent

10.1.3     (5) Consent Regarding Repurchase of Senior Subordinated Notes to the
           Credit Agreement dated September 24, 1999 to grant a consent to the
           Credit Agreement dated as of December 11, 1997, as amended as of July
           31, 1998 and February 8, 1999, among SAC Automotive, Inc., Stanadyne
           Automotive Corp., the Lenders listed therein, as Lenders, DLJ Capital
           Funding, Inc., as Syndication Agent, and The First National Bank of
           Chicago, as Administrative Agent

10.1.4     (7) Consent Regarding Repurchase of Senior Subordinated Notes dated
           January 24, 2000


                                       30
<PAGE>   64
10.2       (1) Stock Purchase Agreement dated November 7, 1997 for the Purchase
           of Stanadyne Automotive Holding Corp. among SAC, Inc., a wholly-owned
           subsidiary of American Industrial Partners Capital Fund II, L.P.,
           Stanadyne Automotive Holding Corp., and Stanadyne Automotive Holding
           Corp. Shareholders

10.3       (1) Form of Amended and Restated Employment Agreement by and between
           Stanadyne Automotive Corp. and William Gurley, Michael Boyer and
           William Kelly

10.4       (1) Form of Employment Agreement by and between Precision Engine
           Products Corp. and Arthur Caruso

10.5       (1) Stanadyne Automotive Corp. Pension Plan effective December 31,
           1994

10.6       (1) Stanadyne Automotive Corp. Savings Plus Plan restated as of
           January 1, 1993

10.7       (1) Precision Engine Products Corp. Retirement Fund effective as of
           January 1, 1998

10.8       (1) Stanadyne Automotive Corp. Benefit Equalization Plan effective as
           of January 1, 1992

10.9       (1) Stanadyne Automotive Corp. Supplemental Retirement Plan effective
           as of January 1, 1992

10.10      (1) Supply Agreement dated as of December 8, 1995 between Precision
           Engine Products Corp. and the Ina Bearing Company

10.11      (1) Customer Agreement dated as of November 1, 1996 between Stanadyne
           Automotive Corp. and Deere & Company

10.12      (1) Customer Agreement dated as of January 22, 1996 between Stanadyne
           Automotive Corp. and General Motors Powertrain Group

10.12.1    (2) Amendment dated March 13, 1998 to Customer Agreement dated as of
           January 22, 1996 between Stanadyne Automotive Corp. and General
           Motors Powertrain Group

10.13      (2) Management Services Agreement dated as of December 11, 1997
           between Stanadyne Automotive Corp. and American Industrial Partners.

10.14      (6) Stanadyne Automotive Holding Corp. Management Stock Option Plan
           effective as of June 5, 1998

10.15      (8) Severance Benefits Agreement by and between Stanadyne Automotive
           Corp. and Leon P. Janik dated as of May 25, 2000

12.1       Statement of Computation of Ratios

21.1       Subsidiaries of Stanadyne Automotive Corp.


(1)        Incorporated by reference to Registration Statement Form S-4, File
           No. 333-45823, filed on February 6, 1998 and amended on March 25,
           1998, April 24, 1998 and May 11, 1998.

(2)        Incorporated by reference to corresponding exhibit filed as an
           exhibit to Form 10-Q filed May 14, 1998.

(3)        Incorporated by reference to corresponding exhibit filed as an
           exhibit to Form 10-Q filed November 12, 1998.

(4)        Incorporated by reference to corresponding exhibit filed as an
           exhibit to Form 10-K filed March 19, 1999.

(5)        Incorporated by reference to corresponding exhibit filed as an
           exhibit to Form 10-Q filed November 12, 1999.

(6)        Incorporated by reference to corresponding exhibit filed as an
           exhibit to Form 10-K filed March 2, 2000.

(7)        Incorporated by reference to corresponding exhibit filed as an
           exhibit to Form 10-Q filed May 9, 2000.


                                       31
<PAGE>   65
(8)        Incorporated by reference to corresponding exhibit filed as an
           exhibit to Form 10-Q filed August 14, 2000.

(b)        Reports on Form 8-K:

         No reports on Form 8-K were filed during the last quarter of the period
covered by this report.


                                       32
<PAGE>   66
Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Stanadyne Automotive Corp. has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized.
                                                     Stanadyne Automotive Corp.
                                                     --------------------------
                                                     (Registrant)

Date:    March 29, 2001                         By:  /s/ William D. Gurley
         --------------                              ---------------------
                                                     William D. Gurley
                                                     President and
                                                     Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following person on behalf of Stanadyne Automotive
Corp. and in the capacities and on the dates indicated.

<TABLE>
<S>                                          <C>
Date:    March 29, 2001                      By:      /s/ William D. Gurley
         --------------                               ---------------------
                                                      William D. Gurley
                                                      President, Chief Executive Officer and Director

Date:    March 29, 2001                      By:      /s/ Stephen S. Langin
         --------------                               ---------------------
                                                      Stephen S. Langin
                                                      Vice President, Chief Financial Officer
                                                      and Secretary

Date:    March 29, 2001                      By:      /s/ W. Richard Bingham
         --------------                               ----------------------
                                                      W. Richard Bingham
                                                      Director

Date:    March 29, 2001                      By:      /s/ Kenneth J. Diekroeger
         --------------                               -------------------------
                                                      Kenneth J. Diekroeger
                                                      Director

Date:    March 29, 2001                      By:      /s/ Theodore C. Rogers
         --------------                               ----------------------
                                                      Theodore C. Rogers
                                                      Chairman of the Board and Director

Date:    March 29, 2001                      By:      /s/ Kim A. Marvin
         --------------                               -----------------
                                                      Kim A Marvin
                                                      Director
</TABLE>


                                       33
<PAGE>   67
EXHIBIT INDEX

TABLE
NUMBER                                                    DESCRIPTION

3.1        (1) Amended and Restated Certificate of Incorporation of Stanadyne
           Automotive Corp.

3.2        (1) Amended and Restated By-laws of Stanadyne Automotive Corp.

4.1        (1) Indenture dated as of December 11, 1997 between Stanadyne
           Automotive Corp., DSD International Corp., Precision Engine Products
           Corp. and United States Trust Company of New York

4.2        (1) Purchase Agreement dated as of December 4, 1997 among SAC
           Automotive, Inc. and Donaldson, Lufkin & Jenrette

4.3        (1) Registration Rights Agreement dated as of December 11, 1997 by
           and among Stanadyne Automotive Corp. and Donaldson, Lufkin & Jenrette

10.1       (1) Credit Agreement dated as of December 11, 1997 among SAC
           Automotive, Inc., Stanadyne Automotive Corp., the Lenders listed
           therein, as Lenders, DLJ Capital Funding, Inc., as Syndication Agent,
           and The First National Bank of Chicago, as Administrative Agent

10.1.1     (3) First Amendment To Credit Agreement dated July 31, 1998 to amend
           the Credit Agreement dated as of December 11, 1997 among SAC
           Automotive, Inc., Stanadyne Automotive Corp., the Lenders listed
           therein, as Lenders, DLJ Capital Funding, Inc., as Syndication Agent,
           and The First National Bank of Chicago, as Administrative Agent

10.1.2     (4) Second Amendment To Credit Agreement dated February 8, 1999 to
           amend the Credit Agreement dated as of December 11, 1997, as amended
           as of July 31, 1998, among SAC Automotive, Inc., Stanadyne Automotive
           Corp., the Lenders listed therein, as Lenders, DLJ Capital Funding,
           Inc., as Syndication Agent, and The First National Bank of Chicago,
           as Administrative Agent

10.1.3     (5) Consent Regarding Repurchase of Senior Subordinated Notes to the
           Credit Agreement dated September 24, 1999 to grant a consent to the
           Credit Agreement dated as of December 11, 1997, as amended as of July
           31, 1998 and February 8, 1999, among SAC Automotive, Inc., Stanadyne
           Automotive Corp., the Lenders listed therein, as Lenders, DLJ Capital
           Funding, Inc., as Syndication Agent, and The First National Bank of
           Chicago, as Administrative Agent

10.1.4     (7) Consent Regarding Repurchase of Senior Subordinated Notes dated
           January 24, 2000

10.2       (1) Stock Purchase Agreement dated November 7, 1997 for the Purchase
           of Stanadyne Automotive Holding Corp. among SAC, Inc., a wholly-owned
           subsidiary of American Industrial Partners Capital Fund II, L.P.,
           Stanadyne Automotive Holding Corp., and Stanadyne Automotive Holding
           Corp. Shareholders

10.3       (1) Form of Amended and Restated Employment Agreement by and between
           Stanadyne Automotive Corp. and William Gurley, Michael Boyer and
           William Kelly

10.4       (1) Form of Employment Agreement by and between Precision Engine
           Products Corp. and Arthur Caruso

10.5       (1) Stanadyne Automotive Corp. Pension Plan effective December 31,
           1994

10.6       (1) Stanadyne Automotive Corp. Savings Plus Plan restated as of
           January 1, 1993

10.7       (1) Precision Engine Products Corp. Retirement Fund effective as of
           January 1, 1998

10.8       (1) Stanadyne Automotive Corp. Benefit Equalization Plan effective as
           of January 1, 1992

10.9       (1) Stanadyne Automotive Corp. Supplemental Retirement Plan effective
           as of January 1, 1992

10.10      (1) Supply Agreement dated as of December 8, 1995 between Precision
           Engine Products Corp. and the Ina Bearing Company

10.11      (1) Customer Agreement dated as of November 1, 1996 between Stanadyne
           Automotive Corp. and Deere & Company

10.12      (1) Customer Agreement dated as of January 22, 1996 between Stanadyne
           Automotive Corp. and General Motors Powertrain Group
<PAGE>   68
10.12.1    (2) Amendment dated March 13, 1998 to Customer Agreement dated as of
           January 22, 1996 between Stanadyne Automotive Corp. and General
           Motors Powertrain Group

10.13      (1) Management Services Agreement dated as of December 11, 1997
           between Stanadyne Automotive Corp. and American Industrial Partners.

10.14      (6) Stanadyne Automotive Holding Corp. Management Stock Option Plan
           effective as of June 5, 1998

10.15      (8) Severance Benefits Agreement by and between Stanadyne Automotive
           Corp. and Leon Janik dated as of May 25, 2000

12.1       Statement of Computation of Ratios

21.1       Subsidiaries of Stanadyne Automotive Corp.


(1)        Incorporated by reference to Registration Statement Form S-4, File
           No. 333-45823, filed on February 6, 1998 and amended on March 25,
           1998, April 24, 1998 and May 11, 1998.

(2)        Incorporated by reference to corresponding exhibit filed as an
           exhibit to Form 10-Q filed May 14, 1998.

(3)        Incorporated by reference to corresponding exhibit filed as an
           exhibit to Form 10-Q filed November 12, 1998.

(4)        Incorporated by reference to corresponding exhibit filed as an
           exhibit to Form 10-K filed March 19, 1999.

(5)        Incorporated by reference to corresponding exhibit filed as an
           exhibit to Form 10-Q filed November 12, 1999.

(6)        Incorporated by reference to corresponding exhibit filed as an
           exhibit to Form 10-K filed March 2, 2000.

(7)        Incorporated by reference to corresponding exhibit filed as an
           exhibit to Form 10-Q filed May 9, 2000.

(8)        Incorporated by reference to corresponding exhibit filed as an
           exhibit to Form 10-Q filed August 14, 2000.