##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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Form 10-K

FOR ANNUAL AND TRANSITION REPORTS


PURSUANT TO SECTIONS 13 OR 15(d) OF
THE


SECURITIES EXCHANGE ACT OF 1934


|           |  |                                                                                                 
|---------- |  | ------------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                                 
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE
    SECURITIES EXCHANGE ACT OF 1934*   
|          
|           |  | For the fiscal year ended November 30,
    2002                                                 
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR
    15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
|          
|           |  | For the transition period
    from           to           .                                     

Commission file number 333-49957-01



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Eagle-Picher Holdings, Inc.

A Delaware Corporation


I.R.S. Employer Identification

No. 13-3989553




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11201 North Tatum Blvd. Suite 110,
Phoenix, Arizona 85028

Registrants telephone number, including
area code:

602-923-7200




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

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

* EAGLE-PICHER HOLDINGS, INC. IS FILING
THIS REPORT VOLUNTARILY IN ORDER TO COMPLY WITH THE REQUIREMENTS
OF THE TERMS OF ITS 9 3/8% SENIOR SUBORDINATED NOTES AND
11 3/4% SERIES B CUMULATIVE EXCHANGEABLE PREFERRED
STOCK AND IS NOT REQUIRED TO FILE THIS REPORT PURSUANT TO EITHER
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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 Act of 1934 during
the preceding 12 months, and (2) has been subject to
such filing requirements for the past
90 days.    Yes o          No þ
(See explanatory note immediately above.)

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.    þ

The aggregate market value of the voting and
non-voting common equity held by non-affiliates computed by
reference to the price at which the common equity was last sold
as of the last business day of the registrants most
recently completed second fiscal quarter was zero.

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

930,500 shares of common capital stock, $.01 par
value each, were outstanding at February 25, 2003

TABLE OF ADDITIONAL REGISTRANTS

|                                                                |  |                  |          |             |  |                |  |  |            | 
|--------------------------------------------------------------- |  | ---------------- | -------- | ----------- |  | -------------- |  |  | ---------- | 
|                                                                |  | Jurisdiction     |          |             |  | IRS Employer  
|                                                                |  | Incorporation or |          | Commission  |  | Identification
|Name                                                            |  | Organization     |          | File Number |  | Number        
|                                                                |  |                  |          |             |  |               
|Eagle-Picher Industries, Inc.                                   |  |                  | Ohio     |             |  | 333-49957      |  |  | 31-0268670 | 
|Daisy Parts, Inc.                                               |  |                  | Michigan |             |  | 333-49957-02   |  |  | 38-1406772 | 
|Eagle-Picher Development Co., Inc.                              |  |                  | Delaware |             |  | 333-49957-03   |  |  | 31-1215706 | 
|Eagle-Picher Far East, Inc.                                     |  |                  | Delaware |             |  | 333-49957-04   |  |  | 31-1235685 | 
|Eagle-Picher Minerals, Inc.                                     |  |                  | Nevada   |             |  | 333-49957-06   |  |  | 31-1188662 | 
|Eagle-Picher Technologies, LLC                                  |  |                  | Delaware |             |  | 333-49957-09   |  |  | 31-1587660 | 
|Hillsdale Tool & Manufacturing
    Co.                          |  |                  | Michigan |             |  | 333-49957-07   |  |  | 38-0946293 | 
|EPMR Corporation (f/k/a Michigan Automotive
    Research Corp.) |  |                  | Michigan |             |  | 333-49957-08   |  |  | 38-2185909 | 



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TABLE OF CONTENTS



|               |                                                                                               |  |  |  |  |  |  | 
|-------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I        
|               | Item 1. Business                                                                             
|               | Item 2. Properties                                                                           
|               | Item 3. Legal Proceedings                                                                    
|               | Item 4. Submission of Matters to a Vote of Security Holders                                  
|PART II       
|               | Item 5. Market for the Registrants Common Equity and Related Stockholder Matters            
|               | Item 6. Selected Financial Data                                                              
|               | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
|               | Item 7a. Quantitative and Qualitative Disclosures About Market Risk                          
|               | Item 8. Financial Statements and Supplementary Data                                          
|               | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
|PART III      
|               | Item 10. Directors and Executive Officers of the Registrant                                  
|               | Item 11. Executive Compensation                                                              
|               | Item 12. Security Ownership of Certain Beneficial Owners and Management                      
|               | Item 13. Certain Relationships and Related Party Transactions                                
|PART IV       
|               | Item 14. Controls and Procedures                                                             
|               | Item 15. Exhibits and Reports on Form 8-K                                                    
|SIGNATURES    
|SIGNATURES    
|SIGNATURES    
|SIGNATURES    
|SIGNATURES    
|SIGNATURES    
|SIGNATURES    
|SIGNATURES    
|SIGNATURES    
|CERTIFICATIONS
|EXHIBIT INDEX 
|EX-12.1       
|EX-18         
|EX-21.1       
|EX-24(a)      
|EX-24(b)      
|EX-24(c)      



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##### Table of Contents



TABLE OF CONTENTS

|               |     |  |    |                                                                                           |  |  |    | 
|-------------- | --- |  | -- | ----------------------------------------------------------------------------------------- |  |  | -- | 
|Item           |     |  |    | Page                                                                                     
|               |     |  |    |                                                                                          
|PART I        
|               | 1.  |  |    | Business                                                                                  |  |  | 2  | 
|               | 2.  |  |    | Properties                                                                                |  |  | 7  | 
|               | 3.  |  |    | Legal Proceedings                                                                         |  |  | 9  | 
|               | 4.  |  |    | Submission of Matters to a Vote of Security
    Holders                                   |  |  | 11 | 
|PART II       
|               | 5.  |  |    | Market for the Registrants Common Equity
    and Related Stockholder Matters             |  |  | 11 | 
|               | 6.  |  |    | Selected Financial Data                                                                   |  |  | 11 | 
|               | 7.  |  |    | Managements Discussion and Analysis of
    Financial Condition and Results of Operations |  |  | 13 | 
|               | 7a. |  |    | Quantitative and Qualitative Disclosures About
    Market Risk                            |  |  | 33 | 
|               | 8.  |  |    | Financial Statements and Supplementary Data                                               |  |  | 35 | 
|               | 9.  |  |    | Changes In and Disagreements with Accountants on
    Accounting and Financial Disclosure  |  |  | 75 | 
|PART III      
|               | 10. |  |    | Directors and Executive Officers of the Registrant                                        |  |  | 75 | 
|               | 11. |  |    | Executive Compensation                                                                    |  |  | 75 | 
|               | 12. |  |    | Security Ownership of Certain Beneficial Owners
    and Management                        |  |  | 75 | 
|               | 13. |  |    | Certain Relationships and Related Transactions                                            |  |  | 75 | 
|PART IV       
|               | 14. |  |    | Controls and Procedures                                                                   |  |  | 75 | 
|               | 15. |  |    | Exhibits and Reports on Form 8-K                                                          |  |  | 75 | 
|Signatures     |     |  | 81 |                                                                                          
|Certifications |     |  | 90 |                                                                                          
|Exhibit Index  |     |  | 92 |                                                                                          

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PART I




Item 1.     Business

Eagle-Picher Holdings, Inc. is a diversified
manufacturer of products for automotive, defense and aerospace
applications in addition to other industrial arenas. Today, we
are organized into three strategic business units, or our
reportable business segments. These are our Automotive Segment,
our Technologies Segment, and our Filtration and Minerals
Segment.

Automotive Segment

Our Automotive Segment consists of our Hillsdale
and Wolverine divisions. Together these two divisions produce
systems, components and raw materials for passenger cars,
trucks, vans and sport utility vehicles. These products are sold
to major automotive manufacturers and their suppliers in North
America, Europe and Asia. The Automotive Segments products
can be broken down into two product categories: Hillsdale
Precision Machined Components and Wolverine Rubber-Coated Metal
Products. The following table sets forth the percentage of our
consolidated Net Sales contributed by each product category:

|                                        |  |              |      |      |  |      |      |   |  |  |      |  
|--------------------------------------- |  | ------------ | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                                        |  |             
|                                        |  | Years Ended 
|                                        |  | November 30,
|                                        |  |             
|                                        |  | 2002         |      | 2001 |  | 2000
|                                        |  |              |      |      |  |     
|Hillsdale Precision Machined Components |  |              | 51.2 | %    |  |      | 49.8 | % |  |  | 48.6 | %
|Wolverine Rubber Coated Metal Products  |  |              | 11.4 | %    |  |      | 10.5 | % |  |  | 10.6 | %
|Divested Divisions                      |  |              |     |      |  |      |     |   |  |  | 5.6  | %
|                                        |  |              |      |      |  |      |      |   |  |  |      |  
|                                        |  |              | 62.6 | %    |  |      | 60.3 | % |  |  | 64.8 | %
|                                        |  |              |      |      |  |      |      |   |  |  |      |  

Hillsdale Precision Machined Components.The largest of our divisions, the
Hillsdale division is a provider of noise, vibration and
harshness solutions to the worldwide automotive market. The
Hillsdale division also supplies complex machined components and
systems for engine, transmission, axle/ driveline and chassis/
suspension applications. The Hillsdale divisions expertise
runs from product design and development, through prototypes and
testing, launch and production. Widely recognized as North
Americas leading torsional vibration damper manufacturer
with custom rubber compounding and manufacturing capabilities,
the Hillsdale divisions product line also includes
transmission oil pumps, vibration dampening devices and a
variety of other products that are precision machined from
castings and forgings. The Hillsdale division is skilled at
working with a wide range of metals, including magnesium,
aluminum, steel, gray iron and nodular iron. Its products are
manufactured in facilities located in the United States, Mexico
and the United Kingdom. The Hillsdale division, through its Tech
Center located in Hillsdale, Michigan, offers technical,
cost-effective solutions for todays demanding customer
applications. The market for precision machined components has
many competitors, including a few strong and well-positioned
competitors and the original equipment manufacturers
(OEMs) themselves. The Hillsdale division competes
in this market primarily on the basis of quality, price,
delivery and service. The Hillsdale division currently has
several programs underway, including Lean Manufacturing,
expansion of manufacturing operations in Mexico, Advanced
Product Quality and Planning, and value engineering initiatives
to improve its cost and quality positions.

Wolverine Rubber Coated Metal Products.Our Wolverine division pioneered and
perfected the technology to produce rubber coated paper and
metal using the line coating process. In this process, bulk
rolls of metal or paper run through a coating line,
which prepares the material for coating, applies specially
formulated and proprietary rubber and other compounds to the
material in precise thicknesses, and dries and cures the coated
material to bond the compound to the metal or paper and achieve
the sealing, heat resistance, durability and precise thickness
characteristics required for the intended application. These
coated materials are impervious to fluid penetration and can
withstand high compression loads, making these materials ideal
for applications where high temperature and pressure create a
requirement for close tolerances, exceptional sealing
characteristics and durability. Typical applications include
sealing systems (i.e. gaskets) for engines, transmissions and
compressors. These materials are also used as a noise
suppressant for brakes, a product in

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which the Wolverine division is the market
leader. The rubber coated materials are manufactured in the
United States. Certain sealing and insulating products, such as
compressor gaskets for air conditioning units and brake noise
insulators, are stamped out of the rubber coated materials both
in the United States and in Germany. The primary competition of
the Wolverine divisions products is a process known as
curtain coating, which refers to a process of coating metal
products with rubber after stamping or cutting the metal into
the required shape. We do not believe that the curtain coating
process can offer the close tolerances or exceptional sealing
characteristics and durability of the Wolverine divisions
line coating process. The Wolverine division has installed
additional manufacturing capacity and is focused on several
growth initiatives, including new market opportunities in the
brake aftermarket and small engines markets, as well as
increased penetration of the global market.


The Automotive Segment distributes its products
primarily through internal sales personnel located in offices in
North America, Japan and Europe. Generally, competitive
conditions for the Automotive Segment are characterized by
intense pricing pressures from major customers and by an
emphasis on quality, delivery and service.

The Automotive Segments largest customer in
fiscal year 2002 was Honda, who accounted for $84.2 million
or 12.1% of our consolidated net sales. No other customer
accounted for 10% or more of consolidated net sales.

Technologies Segment

The Technologies Segment is a diverse group of
businesses with a broad spectrum of technologies and
capabilities. The following indicates the percentage of revenues
for our Technologies businesses compared to our consolidated
revenues:

|                                                |  |              |      |      |  |      |      |   |  |  |      |  
|----------------------------------------------- |  | ------------ | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                                                |  |             
|                                                |  | Years Ended 
|                                                |  | November 30,
|                                                |  |             
|                                                |  | 2002         |      | 2001 |  | 2000
|                                                |  |              |      |      |  |     
|Power Group                                     |  |              | 15.0 | %    |  |      | 14.2 | % |  |  | 11.8 | %
|Precision Products  divested
    July 17, 2002 |  |              | 0.5  | %    |  |      | 1.4  | % |  |  | 1.7  | %
|Specialty Materials Group                       |  |              | 8.2  | %    |  |      | 10.7 | % |  |  | 10.1 | %
|Chemsyn                                         |  |              | 1.9  | %    |  |      | 1.9  | % |  |  | 1.2  | %
|                                                |  |              |      |      |  |      |      |   |  |  |      |  
|                                                |  |              | 25.6 | %    |  |      | 28.2 | % |  |  | 24.8 | %
|                                                |  |              |      |      |  |      |      |   |  |  |      |  

Power
Group

The Power Group is a major supplier of batteries
and power systems components for aerospace, defense and
telecommunications applications. It has been providing the
aerospace and defense industries with high quality, reliable
batteries for more than 50 years. Its batteries have been
on every United States manned space flight, and its silver
zinc batteries provided the power for the safe return to earth
of the famed Apollo 13 flight crew. Its nickel hydrogen
batteries power more than 85% of the United States most
advanced communications and surveillance satellites as well as
items such as the Hubble Telescope and the International Space
Station. Other batteries manufactured by the Power Group serve
as launch batteries in booster rockets and support a variety of
military applications, including missile guidance, seat ejection
and weapons systems. It also manufactures a line of batteries
sold commercially for use in items such as industrial fire and
burglary alarm panels, telecommunications backup, remote global
positioning units, animal tracking and incarceration bracelets.

Over 90% of the Power Groups revenue comes
from military or space applications. Major customers include
Raytheon, Lockheed Martin and Boeing. SAFT, a subsidiary of
Alcatel, is our primary competitor. The Power Group is looking
to expand its presence in the commercial market through joint
ventures, licensing, and other technology development
initiatives. These new market opportunities presently include
high performance lead-acid batteries, implantable medical device
batteries, super fast battery chargers, and long life batteries
for remote applications, such as coastal buoys and remote
monitoring stations. The Power

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Group has started to incorporate six
sigma in their operations to enhance quality and
reliability and reduce costs. This new initiative started as a
joint development activity with one of their major customers,
Raytheon, and is now being utilized across the organization and
with other key customers, such as Lockheed Martin and Boeing.


Specialty
Materials Group (SMG) Business

The SMG business manufactures and tests high
purity specialty material compounds for a wide range of services
and products. For example, they are a major source for high
purity isotopically enriched boron compounds and isotopically
purified zinc, both of which are used in nuclear power plants.
They also refine rare metals, such as high purity germanium and
germanium compounds. These products serve several markets,
including fiber optic cable, plastics, semiconductors, infrared
thermal imaging and substrates for satellite solar cell arrays.
SMG has recently introduced the use of boron as a nuclear waste
containment material, named BondAidsTM. It is
undergoing testing with the U.S. Department of Energy. SMG
also manufactures industrial chemicals and a wide range of super
clean containers, which meet strict EPA protocols for
environmental sampling. Our primary customers in the SMG
business include utility companies for boron-related products,
and telecom and semi-conducting companies for our
Germanium-based products. Our primary competitors are Umicore
and General Electric.

Chemsyn
Business

The Chemsyn business manufactures drug active
ingredients for pharmaceutical companies, principally in small
batches for clinical trials and low volume prescription drugs.
Chemsyns primary customers are Wyeth, Immunogen and
Celgene and it has numerous small competitors in a highly
fragmented market.

Filtration and Minerals Segment

The Filtration and Minerals Segment is recognized
as a world leader in the mining, process technology and
marketing of diatomaceous earth and perlite filter aids. This
segment comprised 11.8% of our net sales in 2002, 11.5% in 2001,
and 10.4% in 2000.

Diatomaceous earth, or diatomite, is a
non-metallic material that is odorless, tasteless and highly
stable. With its natural honeycomb structure, strength and low
bulk density, diatomite is an ideal medium for filtration
applications. Perlite is a mineral of volcanic origin, also with
natural qualities that make it valuable as a filter aid. These
products are used in a variety of industrial and commercial
applications, including liquid solid separation in food and
beverage, chemical, pharmaceutical and wastewater industries and
as catalyst carriers and for liquid waste solidification. This
segment is second to Allegheny Corporation in the sale of filter
aid products made using diatomaceous earth, perlite and
cellulose. Filtration and Minerals sells its filter aid products
under the trademark CELATOM® both directly and through
distributors to many customers.

This segment also produces industrial absorbents,
functional fillers and soil amendments and conditioners. It is
the worlds number one producer of granular diatomite
absorbent products known as FLOOR DRYTM, as well as
AXIS® and PLAY BALL!® soil amendments and
conditioners. In the North American market for industrial
absorbents, this segment has a variety of competitors due to a
number of other materials, such as clay, which are also used for
this purpose.

The Filtration and Minerals Segment serves over
35 markets and more than 2,000 customers around the
globe with its various products. Shipments to these customers
worldwide place this segment among the top ten container
shippers from ports along the West Coast of the United States.

Filtration and Minerals competes using a
value-chain strategy based on price, service and
quality as well as technical support provided to filter aid
customers. The intent is to shift the buying decision from a
commodity-oriented dollars/ton to a specialty
materials value-in-use model. This is a unique
approach in an industry that has historically been dominated by
a major supplier. Filtration and Minerals is also looking to
penetrate new high-growth markets, such as potable water
filtration, biotech and industrial filtration.

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The segment operates four mines and three
processing facilities in the United States. The sales offices
located in the United States and Europe market diatomite,
perlite and cellulose directly and through distributors in North
America, Europe, Asia, Africa and the Middle East.

Other Information

Corporate Structure.We are a majority-owned subsidiary of
Granaria Industries, B.V. of The Netherlands. Our corporate
headquarters is located in Phoenix, Arizona with operations in
11 U.S. states, Mexico, Canada, the United Kingdom and
Germany. We were founded in 1843 as a manufacturer of paint
pigments which were marketed under the brand name Eagle White
Lead. In 1876, the Picher family of Joplin, Missouri formed the
Picher Lead Mining Company. The two firms merged in 1916 forming
the Eagle-Picher Lead Company. In 1966, we were renamed
Eagle-Picher Industries, Inc. to reflect ongoing diversification
into other industries.

Recent Acquisitions and Divestures.During 2002, we sold certain assets
and liabilities of our Precision Products business in our
Technologies Segment to a group of former employees and
divisional management personnel. We received approximately
$3.1 million in proceeds and recorded a $2.8 million
loss on the sale.

Effective December 14, 2001, we sold certain
of the assets of our former Construction Equipment Division.
This division represented our entire former Machinery Segment.
The sale price was $6.1 million in cash, plus an estimated
working capital adjustment of $1.0 million, and the
assumption of approximately $6.7 million of current
liabilities. We retained the land and buildings of the
Construction Equipment Divisions main facility in Lubbock,
Texas and lease the facility to the buyer for a five year term.
The buyer has an option to buy the facility for
$2.5 million, increasing $0.1 million per year over
the term. We also retained approximately $2.3 million of
raw materials inventory, which the buyer was required to
purchase within one year. The buyer failed to purchase 25%, or
approximately $0.6 million, of the inventory. We intend to
pursue collection actions. Finally, we retained approximately
$0.9 million of accounts receivable. The Net Assets of
Operations to be Sold at November 30, 2002 are primarily
the remaining balance of the inventory as the liabilities
associated with this transaction have been transferred to the
Accrued Divestitures reserve at November 30, 2002. The
measurement date to account for the Machinery Segment as a
discontinued operation was March 1, 2001. Accordingly, the
results of the Machinery Segments operations have been
reported separately as a discontinued operation in the
accompanying financial statements. Net sales from discontinued
operations were $65.1 million in 2001 and
$82.6 million in 2000. During 2001, we recorded provisions
totaling $30.4 million, net of an income tax benefit of
$6.1 million. This provision included estimated losses and
costs to be incurred in connection with the disposition of the
Machinery Segment, including $5.7 million in expected
losses during the phase out period from March 1, 2001 to
December 14, 2001. An operating loss of $1.7 million,
net of a $0.9 million tax benefit, was incurred in the
first quarter of 2001.

During 2000, as part of our previously announced
program to focus management, technical and financial resources
on core businesses, we completed the sale of our Ross Aluminum
Foundries, Fluid Systems, Michigan Automotive Research
Corporation, Rubber Molding, and Cincinnati Industrial Machinery
divisions for aggregate net proceeds of $85.0 million.

On June 30, 2000, our Technologies Segment
acquired the stock of BlueStar Battery Systems Corporation for
$4.9 million in cash. Immediately following the transaction
the name of the corporation was changed to Eagle-Picher Energy
Products Corp. (EPEP). EPEP manufactures batteries
using lithium based technology, which is of strategic importance
to the battery manufacturing operations in our Technologies
Segment. Substantially all of EPEPs products are sold to
the United States Army, a branch of the military previously not
counted among the significant customers of the Technologies
Segment.

On December 1, 1999, our Technologies
Segment acquired the depleted zinc distribution business (the
DZ Business) of Isonics Corporation
(Isonics) for approximately $8.2 million.

Our Hillsdale Division acquired Carpenter
Enterprises Limited (Carpenter) as of March 1,
1999 for a purchase price of approximately $73.0 million.
Carpenter is a supplier of precision machined components to

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the automotive industry with operations, products
and a customer base complimentary to those of the Hillsdale
Division.


Raw Materials.The
prices of our raw materials are subject to volatility. Our
principal raw materials are rubber, steel, zinc, nickel,
germanium, boron, and aluminum. With the exception of germanium,
these raw materials are commodities that are widely available.
We believe that the germanium supply available to us will be
sufficient to satisfy our requirements for 2003. Although we
have alternate sources for most of our raw materials, our policy
is to establish arrangements with select vendors based upon
price, quality and delivery terms. We are also looking to
further diversify our supplier base and increase the percentage
of our materials purchased in lower cost regions, such as Asia,
Mexico, and Eastern Europe. In addition, due to their
manufacturing processes, our Filtration and Minerals Segment and
our Wolverine Rubber-Coated Metal Products division are heavy
consumers of natural gas.

Intellectual Property.We own or license a number of patents,
primarily in the United States. Many of our products incorporate
a wide variety of technological innovations, some of which are
protected by individual patents. Many of these innovations are
treated as trade secrets with programs in place to protect these
trade secrets. No one patent or group of related patents is
material to our business. We also have numerous trademarks,
including the Eagle-Picher name.

Backlog.Our backlog
was $131.1 million at November 30, 2002,
$134.4 million at November 30, 2001 and
$134.6 million at November 30, 2000. We expect our
order backlog outstanding at November 30, 2002 to be filled
during fiscal 2003. As is customary in the automotive industry,
we enter into blanket purchase orders with our customers with
respect to specific product orders. From time to time, the
customer, depending on their needs, will provide us with
releases on a blanket purchase order for a specified amount of
products. As a result, the backlog for the Automotive Segment is
not significant.

Government Contracts.Our Technologies Segment has contracts
with the U.S. Government that have standard termination
provisions. The U.S. Government retains the right to
terminate the contracts at its convenience. However, if
contracts are terminated, we are entitled to be reimbursed for
allowable costs and profits through the date of the contract
termination. U.S. Government contracts are also subject to
reduction or modification in the event of changes in Government
requirements or budgetary constraints. During 2002,
approximately 54.4% of our Technologies Segments sales
were directly with the U.S Government or with other
companies where the U.S. Government was the end customer.

Research and Development.We spent approximately
$9.8 million in 2002, $10.4 million in 2001 and
$11.7 million in 2000 on research and development
activities, primarily for the development of new products or the
improvement of existing products.

Employees.As of
November 30, 2002, we employed approximately 3,800 persons.
A portion of our employees are represented by labor
organizations. We believe that our relations with our employees
are generally good.

Environmental
Matters.We are subject to extensive
and evolving Federal, state and local environmental laws and
regulations. Compliance with such laws and regulations can be
costly. Governmental authorities may enforce these laws and
regulations with a variety of enforcement measures, including
monetary penalties and remediation requirements. We have
policies and procedures in place to ensure that our operations
are conducted in compliance with such laws and regulations and
with a commitment to the protection of the environment.

We are involved in various stages of
investigation and remediation related to environmental
remediation projects at a number of sites as a result of past
and present operations, including currently-owned and
formerly-owned plants. Also, we have received notice that we may
have liability under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 as a potentially
responsible party at a number of sites (Superfund
Sites).

The ultimate cost of site remediation is
difficult to predict given the uncertainties regarding the
extent of the required remediation, the interpretation of
applicable laws and regulations and alternative remediation

6



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##### Table of Contents



methods. Based on our experience with
environmental remediation matters, we have accrued reserves for
our best estimate of remediation costs, and we do not believe
that remediation activities will have a material adverse impact
on our financial condition, results of operations or cash flows.
In addition, in the course of our bankruptcy described below in
Item 3 of this report, we obtained an agreement with the
U.S. Environmental Protection Agency and the states of
Arizona, Michigan and Oklahoma whereby we are limited in our
responsibility for environmental sites not owned by us that
allegedly arise from pre-bankruptcy activities. We retain all of
our defenses, legal or factual, at such sites. However, if we
are found liable at any of these sites we may be required to pay
as if such claims had been resolved in our bankruptcy and
therefore our liability is paid at approximately 37%.


We had total expenditures for environmental
compliance and remediation of $10.0 million in 2002,
$9.1 million in 2001, and $11.3 million in 2000. We
estimate that we will spend $12.8 million during 2003. As
of November 30, 2002, we had $17.7 million accrued for
sold divisions or businesses related to legal and environmental
matters, and believe such reserves to be adequate under the
current circumstances. In addition, we have $2.4 million
recorded in other accrued liabilities related to environmental
liabilities for our on-going businesses.

Financial Information about Foreign and
Domestic Operations and Export Sales.Financial information about Foreign and Domestic Operations and
Export Sales is included in our financial statements (see
Notes O and H of the financial statements).




Item 2.     Properties

Our principal fixed assets consist of our
manufacturing, processing and storage facilities, and our
transportation and plant vehicles. Substantially all of our
owned properties and assets are pledged as collateral under our
syndicated senior credit agreement. The following sets forth
selected information regarding our manufacturing and processing
facilities:

|                            |               |          |                                          |                   |  |        | 
|--------------------------- | ------------- | -------- | ---------------------------------------- | ----------------- |  | ------ | 
|                            |               |          |                                          | Description of   
|Reportable Business Segment |               | Location |                                          | Property Interest
|                            |               |          |                                          |                  
|Automotive                  |               |          |                                          |                   |  |       
|                            | Domestic      |          | Blacksburg, Virginia (2 plant locations) |                   |  | owned  | 
|                            |               |          | Hillsdale, Michigan (4 plant locations)  |                   |  | owned  | 
|                            |               |          | Hamilton, Indiana                        |                   |  | owned  | 
|                            |               |          | Inkster, Michigan                        |                   |  | owned  | 
|                            |               |          | Jonesville, Michigan                     |                   |  | owned  | 
|                            |               |          | Leesburg, Florida                        |                   |  | owned  | 
|                            |               |          | Manchester, Tennessee                    |                   |  | leased | 
|                            |               |          | Mount Pleasant, Michigan                 |                   |  | owned  | 
|                            |               |          | Traverse City, Michigan                  |                   |  | owned  | 
|                            |               |          | Vassar, Michigan                         |                   |  | leased | 
|                            | International |          | Ohringen, Germany                        |                   |  | owned  | 
|                            |               |          | San Luis Potosi, Mexico                  |                   |  | owned  | 
|                            |               |          | Tamworth, England                        |                   |  | owned  | 

7



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##### Table of Contents



|                               |               |          |                                       |                   |  |                | 
|------------------------------ | ------------- | -------- | ------------------------------------- | ----------------- |  | -------------- | 
|                               |               |          |                                       | Description of   
|Reportable Business Segment    |               | Location |                                       | Property Interest
|                               |               |          |                                       |                  
|Technologies                   |               |          |                                       |                   |  |               
|                               | Domestic      |          | Colorado Springs, Colorado            |                   |  | owned          | 
|                               |               |          | Galena, Kansas                        |                   |  | owned          | 
|                               |               |          | Grove, Oklahoma                       |                   |  | owned          | 
|                               |               |          | Harrisonville, Missouri               |                   |  | owned          | 
|                               |               |          | Joplin, Missouri (6 plant locations)  |                   |  | owned & leased | 
|                               |               |          | Lenexa, Kansas                        |                   |  | owned          | 
|                               |               |          | Miami, Oklahoma (3 plant locations)   |                   |  | owned & leased | 
|                               |               |          | Quawpaw, Oklahoma (2 plant locations) |                   |  | owned          | 
|                               |               |          | Seneca, Missouri                      |                   |  | owned          | 
|                               |               |          | Stella, Missouri                      |                   |  | owned          | 
|                               | International |          | Vancouver, Canada                     |                   |  | leased         | 
|Filtration and
    Minerals(1) |               |          |                                       |                   |  |               
|                               | Domestic      |          | Clark Station, Nevada                 |                   |  | owned          | 
|                               |               |          | Lovelock, Nevada                      |                   |  | owned          | 
|                               |               |          | Vale, Oregon                          |                   |  | owned          | 
|Other                          |               |          |                                       |                   |  |               
|                               | Domestic      |          | Lubbock, Texas                        |                   |  | owned          | 



---



|    |                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In addition to the facilities listed, our
    Filtration and Minerals Segment has office space in Reno,
    Nevada, and mining locations in Nevada, Oregon and California.

We own or lease additional office space,
including our corporate headquarters in Phoenix, Arizona as well
as our former corporate headquarters in Cincinnati, Ohio. We
also have sales offices in Europe and Asia, and warehouse space
for certain of our operations.

Our properties are adequate and suitable for our
business and generally have capacity for expansion of existing
buildings on owned real estate. Plants range in size from
420,000 square feet of floor space to under
50,000 square feet and generally are located away from
large urban centers. Substantially all of our buildings have
been well maintained, and are in sound operating condition.

Mining.Our
Filtration and Minerals Segment owns and leases diatomaceous
earth and perlite mining locations as well as numerous claims in
Nevada, Oregon and California (collectively, mining
properties). Our owned and leased mining properties,
including those not currently being mined, comprise a total of
approximately 10,500 acres in Storey, Lyon, Pershing and
Churchill Counties in Nevada and 5,000 acres in Malhuer and
Harney Counties in Oregon, as well as rights on 2,500 acres
not currently being mined in Siskiyou County in California. We
continually evaluate potential mining properties, and additional
mining properties may be acquired in the future. The Filtration
and Minerals Segment extracts diatomaceous earth and perlite
through open-pit mining using a combination of bulldozers, wheel
type tractor scrapers, excavators and articulated trucks. The
extracted materials are carried by truck to separate processing
facilities. A total of approximately 374,000 tons of
diatomaceous earth and perlite were extracted by our mining
properties in Nevada and Oregon in 2002. On average, we have
extracted a total of approximately 423,000 tons of
diatomaceous earth and perlite from our Nevada and Oregon
properties each year for the past six years. As ore deposits are
depleted, we reclaim the land in accordance with plans approved
by the relevant Federal, state and local regulators. The
following mining properties are of major significance to our
mining operations.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Nevada.Our
    diatomaceous earth mining operations in Nevada commenced in 1945
    in Storey County. We commenced perlite-mining operations in
    Churchill County in 1993. We extracted a total of approximately
    223,000 tons of diatomaceous earth and perlite from our
    Nevada mining properties in 2002 and, on average, extracted a
    total of approximately 266,000 tons of diatomaceous earth
    and perlite from our Nevada mining properties each year for the
    past six years, or approximately 60% of our total diatomaceous
    earth and perlite production (and including 100% of our perlite
    production). Approxi-

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | mately 265 acres in Storey County, where
    mining activities commenced 57 years ago, and approximately
    62 acres in the Counties of Lyon and Churchill are actively
    being mined by us for diatomaceous earth. Diatomaceous earth
    from Storey, Churchill and Lyon mining properties is processed
    at the Clark Station, Nevada facility. We believe our
    diatomaceous earth reserves in the Counties of Storey, Churchill
    and Lyon, including mining properties not actively being mined,
    are in excess of 30 years at current levels of extraction
    based upon estimates prepared by our mining and exploration
    personnel. Diatomaceous earth extractions from the Pershing
    mining properties, which commenced more than 42 years ago,
    are processed at the Lovelock, Nevada facility. Approximately
    975 acres are actively being mined for diatomaceous earth
    in Pershing. We believe our diatomaceous earth reserves in
    Pershing, including mining properties not actively being mined,
    to be in excess of 15 years at the current level of
    extraction based on estimates prepared by our mining and
    exploration personnel. Beginning in 1993, we have actively mined
    approximately 25 acres in Churchill County for perlite,
    which is processed at the Lovelock, Nevada facility. We believe
    our perlite reserves in Churchill County, including mining
    properties not actively mined, are in excess of 30 years at
    the current level of extraction based upon estimates prepared by
    our mining and exploration personnel.
|
| | Oregon.We commenced
    mining diatomaceous earth in Oregon in 1985 at our mining
    properties in Harney and Malhuer Counties. Approximately 88
    acres in Harney County and 80 acres in Malhuer County are
    actively being mined. Diatomaceous earth extracted from these
    mines is processed at our Vale, Oregon facility. We extracted
    approximately 151,000 tons of diatomaceous earth from the
    Harney County and Malhuer County mining properties during 2002
    and on average, have extracted approximately 158,000 tons
    of diatomaceous earth each year for the past six years from
    these mining properties, or approximately 40% of our total
    diatomaceous earth and perlite production. We believe our
    diatomaceous earth reserves in Harney County and Malhuer County,
    including mining properties not actively being mined, are in
    excess of 30 years at the current level of extraction based
    on estimates prepared by our mining and exploration personnel.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               




Item 3.     Legal
Proceedings

As a result of sales prior to 1971 of
asbestos-containing insulation materials, Eagle-Picher
Industries, Inc. became the target of numerous lawsuits seeking
damages for illness resulting from exposure to asbestos. By the
end of 1990, we had paid hundreds of millions of dollars to
asbestos litigation plaintiffs and their lawyers. In
January 1991, we filed for protection under Chapter 11
of the U.S. Bankruptcy Code as a direct consequence of cash
shortfalls attributable to pending asbestos litigation
liabilities. On November 29, 1996, we emerged from
bankruptcy as a reorganized company. The bankruptcy court issued
permanent injunction which precludes holders of present and
future asbestos-related or lead-related personal injury claims
from pursuing their claims against us. Consequently, we have no
further liability in connection with such asbestos-related or
lead-related personal injury claims. Instead, those claims will
be channeled to the Eagle-Picher Industries, Inc. Personal
Injury Settlement Trust (the PI Trust) which is an
independently administered qualified settlement trust
established to resolve and satisfy those claims. Under the terms
of our bankruptcy reorganization, all of the outstanding common
stock of the former Eagle-Picher Industries, Inc. was cancelled
and newly issued common stock of the reorganized entity was
contributed to the PI Trust, together with certain notes and
cash. On February 24, 1998, we acquired the reorganized
entity from the PI Trust for $702.5 million. A final
distribution of approximately $10.9 million was made by us
to the PI Trust and all other eligible unsecured claimants in
June 2001.

On January 25, 1996, Richard Darrell
Peoples, a former employee, filed a lawsuit in the United States
District Court for the Western District of Missouri claiming
that we violated the federal False Claims Act based on alleged
irregularities in testing procedures in connection with certain
U.S. Government contracts. Mr. Peoples filed this
lawsuit under a procedure which gives a private individual the
right to file a lawsuit for a violation of a Federal statute and
be awarded up to 30% of any recovery. The government has the
right to intervene and take control of such a lawsuit. Following
an extensive investigation, the U.S. Government declined
the opportunity to intervene or take control of this suit. The
allegations in the lawsuit are similar to allegations made by
Mr. Peoples, and investigated by our outside counsel, prior
to the filing of the lawsuit. Our

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outside counsels investigation found no
evidence to support any of Mr. Peoples allegations,
except for some inconsequential expense account matters. The
case is in a discovery phase. Recently the court disqualified
Mr. Peoples lawyer from the case after he read some
of our attorney-client privileged documents that
Mr. Peoples took from our lawyers offices without
authorization. We intend to contest this suit vigorously and do
not believe that the resolution of this lawsuit will have a
material adverse effect on our financial condition, results of
operations or cash flows.


On May 8, 1997, Caradon Doors and Windows,
Inc. (Caradon), filed a suit against us in the
United States District Court for the Northern District of
Georgia alleging breach of contract, negligent
misrepresentation, and contributory infringement and seeking
contribution and indemnification in the amount of approximately
$20.0 million. This suit arose out of patent infringement
litigation between Caradon and Therma-Tru Corporation extending
over the 1989-1996 time period, the result of which was for
Caradon to be held liable for patent infringement. In
June 1997, we filed a motion with the United States
Bankruptcy Court for the Southern District of Ohio, Western
Division, seeking an order that Caradons claims had been
discharged by our bankruptcy and enjoining Caradon from pursuing
its lawsuit. On December 24, 1997, the Bankruptcy Court
held that Caradons claims had been discharged and enjoined
Caradon from pursuing its lawsuit. Caradon appealed the
Bankruptcy Courts decision to the United States District
Court for the Southern District of Ohio, and on February 3,
1999, the District Court reversed on the grounds that the
Bankruptcy Court had not done the proper factual analysis and
remanded the matter back to the Bankruptcy Court. The Bankruptcy
Court held a hearing on this matter on September 24 and 25,
2001, and on May 9, 2002 again held that Caradons
claims had been discharged and enjoined Caradon from pursuing
the Caradon Suit. Caradon has again appealed this decision to
the District Court. We intend to contest this suit vigorously
and do not believe that the resolution of this suit will have a
material adverse effect on our financial condition, results of
operations or cash flows.

As previously reported, last year our former
President and Chief Executive Officer, Andries Ruijssenaars,
filed a lawsuit against us, certain of our directors, and ABN
AMRO Bank in the U.S. District Court for the Southern
District of Ohio, Western Division. Mr. Ruijssenaars
claimed that we were obligated to purchase his shares of our
common stock for approximately $4.7 million rather than
$2.8 million as we claimed. Mr. Ruijssenaars
lawsuit also challenged a 2001 amendment to our Supplemental
Executive Retirement Plan which changed the determination of
benefits under the SERP, and claimed that we were obligated to
purchase an annuity for his additional SERP benefit accrued
after 2000 and reimburse him for the tax consequences. In the
fourth quarter of 2002 we finalized a settlement of the lawsuit,
agreeing to pay Mr. Ruijssenaars $3.8 million in
December 2002 for his stock and recognize his SERP benefits
under the pre-2001 amendment, but not to purchase an annuity or
reimburse any taxes. Granaria Holdings B.V., our controlling
common shareholder, and ABN AMRO Bank, N.V., the agent under our
senior credit facility and the indirect holder of approximately
37.5% of our common stock, each guaranteed 50% of
Mr. Ruijssenaars unfunded SERP payments.

On December 1, 1999, our Technologies
Segment acquired the depleted zinc distribution business (the
DZ Business) of Isonics Corporation
(Isonics) for approximately $8.2 million,
payable $6.7 million at closing and $1.5 million in three
installments of $500,000 each payable on the first three
anniversaries of the closing. In connection with the purchase of
the DZ Business, we agreed to sell 200 kg of isotopically
purified silicon-28 to Isonics. Due to various factors, we did
not deliver any silicon-28 to Isonics. Isonics asserted a claim
against us for $75.0 million in arbitration for the failure
to deliver silicon-28. On July 24, 2002, we paid
$2.5 million to Isonics to settle all claims among us and
Isonics including the remaining installment payments totaling
$1.5 million for the DZ business, and the parties signed
mutual general releases.

On October 30, 2001, GMAC Business Credit,
LLC (GMAC) and Eagle Trim, Inc. filed a lawsuit in the United
States District Court for the Eastern District of Michigan,
Southern Division, against us arising out of the sale of our
former automotive interior trim division to Eagle Trim. In
connection with that sale, we guaranteed to GMAC, which funded
the acquisition, that approximately $3.9 million of
receivables relating to tooling purchased by us on behalf of
customers would be paid by November 2001. Eagle Trim ceased
operations during 2001. At that time, Eagle Trim and GMAC
alleged that approximately $2.7 million of the tooling
receivables had not been collected and did not exist at the time
of the sale. On September 30, 2002, we

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settled this matter by agreeing to pay
$5.4 million to GMAC, payable $1.5 million by
December 5, 2002, $1.7 million, payable in monthly
installments from January 2003 through June 2003, and
$2.2 million, payable in monthly installments from
July 2003 through October 2005, plus interest at 4.5%
per annum.


In addition, we are involved in routine
litigation, environmental proceedings and claims pending with
respect to matters arising out of the normal course of our
business. In our opinion, the ultimate liability resulting from
all claims, individually or in the aggregate, will not
materially affect our financial position, results of operations
or cash flows.




Item 4.     Submission
of Matters to a Vote of Security Holders

None.




PART II






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

Not Applicable.






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

|                                                                                                           |  |                                  |         |      |  |               |         |      |  |              |         |              |  |   |         |   |  |   |         |   |  |   |         | 
|---------------------------------------------------------------------------------------------------------- |  | -------------------------------- | ------- | ---- |  | ------------- | ------- | ---- |  | ------------ | ------- | ------------ |  | - | ------- | - |  | - | ------- | - |  | - | ------- | 
|                                                                                                           |  |                                  |         |      |  |               |         |      |  | Nine Months  |         | Three Months
|                                                                                                           |  |                                  |         |      |  |               |         |      |  | Ended        |         | Ended       
|                                                                                                           |  |                                  |         |      |  |               |         |      |  | November 30, |         | February 28,
|                                                                                                           |  | 2002                             |         | 2001 |  | 2000          |         | 1999 |  | 1998         |         | 1998        
|                                                                                                           |  |                                  |         |      |  |               |         |      |  |              |         |             
|                                                                                                           |  |                                  |         |      |  | (Predecessor)
|                                                                                                           |  | (in thousands of dollars, except |         |      |  |              
|                                                                                                           |  | per share amounts)               |         |      |  |              
|Statement of Income (Loss):                                                                                |  |                                  |         |      |  |               |         |      |  |              |         |              |  |   |         |   |  |   |         |   |  |   |         | 
|Net sales(A)                                                                                               |  | $                                | 696,765 |      |  | $             | 708,750 |      |  | $            | 770,466 |              |  | $ | 838,948 |   |  | $ | 572,018 |   |  | $ | 185,729 | 
|Operating income(B)                                                                                        |  |                                  | 5,346   |      |  |               | 4,278   |      |  |              | 62,288  |              |  |   | 27,915  |   |  |   | 7,083   |   |  |   | 9,170   | 
|Interest expense(C)                                                                                        |  |                                  | 41,142  |      |  |               | 40,105  |      |  |              | 43,989  |              |  |   | 45,475  |   |  |   | 33,477  |   |  |   | 4,104   | 
|Income (loss) from continuing operations
    before taxes                                                  |  |                                  | (34,231 | )    |  |               | (31,914 | )    |  |              | 18,395  |              |  |   | (14,000 | ) |  |   | (24,551 | ) |  |   | 3,807   | 
|Net income (loss)                                                                                          |  |                                  | (36,832 | )    |  |               | (53,971 | )    |  |              | 5,610   |              |  |   | (17,587 | ) |  |   | (14,364 | ) |  |   | 807     | 
|Preferred stock dividends accreted                                                                         |  |                                  | 14,887  |      |  |               | 13,282  |      |  |              | 11,848  |              |  |   | 10,569  |   |  |   | 7,382   |   |  |   |        | 
|Basic and diluted income (loss) per share
    from continuing operations applicable to common shareholders |  |                                  | (53.60  | )    |  |               | (35.84  | )    |  |              | (2.53   | )            |  |   | (24.03  | ) |  |   | (24.55  | ) |  |   | 0.40    | 
|Basic and diluted income (loss) per share
    applicable to common shareholders                            |  |                                  | (53.60  | )    |  |               | (68.51  | )    |  |              | (6.26   | )            |  |   | (28.16  | ) |  |   | (21.75  | ) |  |   | 0.08    | 
|Balance Sheet Data (end of period):                                                                        |  |                                  |         |      |  |               |         |      |  |              |         |              |  |   |         |   |  |   |         |   |  |   |         | 
|Total assets                                                                                               |  | $                                | 613,041 |      |  | $             | 728,934 |      |  | $            | 767,699 |              |  | $ | 833,947 |   |  | $ | 807,307 |   |  |   | N/A     | 
|Total debt and preferred stock(D)                                                                          |  |                                  | 511,698 |      |  |               | 566,212 |      |  |              | 567,735 |              |  |   | 642,035 |   |  |   | 571,743 |   |  |   | N/A     | 
|Other Data and Selected Ratios:                                                                            |  |                                  |         |      |  |               |         |      |  |              |         |              |  |   |         |   |  |   |         |   |  |   |         | 
|EBITDA(E)                                                                                                  |  | $                                | 70,955  |      |  | $             | 67,298  |      |  | $            | 119,810 |              |  | $ | 92,142  |   |  | $ | 48,249  |   |  | $ | 22,135  | 
|Earnings/fixed charges and preferred stock
    dividends(F)                                                |  |                                  | N/A     |      |  |               | N/A     |      |  |              | 1.11x   |              |  |   | N/A     |   |  |   | N/A     |   |  |   | 1.85x   | 



---

All prior year figures have been restated to
exclude discontinued operations. See Note C in our
financial statements.

11



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##### Table of Contents





|    |                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(A) | Includes net sales attributed to Divested
    Divisions in our Automotive Segment of $42.8 million in
    2000, $130.0 million in 1999, $112.7 million in the
    nine months ended November 30, 1998, and $37.1 million
    in the three months ended February 28, 1998.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As discussed in Note Q to the consolidated
    financial statements in Item 8, during the fourth quarter
    of 2002 we restated prior years financial statements to reflect
    the appropriate adoption of EITF 00-10, Accounting
    for Shipping and Handling Fees and Costs. EITF 00-10
    states that all amounts billed to a customer in a sale
    transaction related to shipping and handling represent revenues
    earned for the goods provided and should be classified as
    revenue. Prior to the adoption of EITF 00-10, some of the
    costs billed to customers for shipping and handling costs (our
    transportation expenses) were included as an offset to our
    costs. This restatement had no impact on operating income, net
    income, or cash flows. The impact of this restatement on the
    financial statements was to increase net sales and cost of
    products sold by $16.3 million in 2001, $15.5 million
    2000, $16.0 million in 1999, $12.5 million in the nine
    months ended November 30, 1998, and $2.5 million in
    the three months ended February 28, 1998.



|    |                                                                                                                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(B) | Operating income is not indicative of trends as
    the results for the nine months ended November 30, 1998
    (subsequent to the acquisition) and those of the Predecessor
    (subsequent to the bankruptcy reorganization, but before the
    acquisition) were derived using different bases of accounting.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The following items also materially affect the
    comparability of data.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | In fiscal 1999, we recorded a non-cash provision
    of $21.4 million, primarily related to the impairment of
    asset values for certain of our divisions that we held for sale,
    which was recognized because the expected net realizable value
    of these divisions was estimated to be insufficient to recover
    their carrying value. These divisions were sold in fiscal 2000.                                                                                                                                                     
|
| | In fiscal 2000, we settled claims against a
    former insurer regarding environmental remediation costs and
    received $16.0 million which was recorded as income.
    Additionally, we completed the sale of various divisions
    primarily in our Automotive Segment for aggregate net proceeds
    of approximately $85.0 million and an aggregate gain on
    sale of $17.1 million, which was reduced by various provisions
    of $14.0 million for items relating to divisions sold in
    prior years, to a net gain of $3.1 million.
|
| | In fiscal 2001, we recorded $14.1 million in
    restructuring charges related to our Technologies Segments
    operations and the relocation of our corporate headquarters to
    Phoenix, Arizona. Also, during 2001, we recorded additional
    costs of $2.1 million related to divisions sold in prior
    years.                                                                                                                                                                                                                          
|
| | In fiscal 2002, we recorded approximately
    $5.9 million in restructuring charges primarily related to
    exiting our Gallium business within our Technologies Segment. In
    addition, fiscal 2002 included approximately $6.5 million
    of losses related to divisions sold in prior years, and a
    $3.1 million loss for an insurance receivable primarily
    related to inventories damaged in a fire during the third
    quarter of 2001 at our Missouri bulk pharmaceutical
    manufacturing plant.                             



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(C) | Excluded from interest expense is
    $3.3 million in 2001, $3.4 million in 2000,
    $3.6 million in 1999, $2.8 million in the nine months
    ended November 30, 1998, and $2.8 million in the three
    months ended February 28, 1998 which has been allocated to
    discontinued operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|(D) | Includes 11.75% Cumulative Redeemable
    Exchangeable Preferred Stock (Preferred Stock) of
    $138.0 million in 2002, $123.1 million in 2001,
    $109.8 million in 2000, and $98.0 million 1999, which
    was issued to finance the acquisition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(E) | EBITDA (earnings before interest, income taxes,
    depreciation and amortization) is presented because we believe
    it is an indicator of our ability to service and incur debt.
    EBITDA, as defined herein, may not be comparable to similarly
    titled measures reported by other companies and should not be
    construed as an alternative to operating income, as determined
    by Generally Accepted Accounting Principles (GAAP),
    as an indicator of our operating performance, or to cash flows
    from operating activities, as determined by GAAP, or as a
    measure of liquidity. Funds depicted by EBITDA are not available
    for our discretionary use to the extent they are required for
    debt service and other commitments. Included in EBITDA are
    amounts contributed by Divested Divisions in our Automotive
    Segment of $3.4 million in

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | 2000, $9.2 million in 1999,
    $10.5 million in the nine months ended November 30,
    1998, and $4.0 million in the three months ended
    February 28, 1998.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(F) | For purposes of determining the ratio of earnings
    to fixed charges and preferred stock dividends,
    earnings consist of income from continuing
    operations before provision (benefit) for income taxes and fixed
    charges. Fixed charges consist of interest expense
    (including amortization of deferred financing costs) and
    approximately 30% of rental expense, representing that portion
    of rental expense deemed representative of the interest factor.
    Earnings were insufficient to cover fixed charges and preferred
    stock dividends by $49.1 million in 2002,
    $45.2 million in 2001, $24.6 million in 1999, and
    $31.9 million in the nine months ended November 30,
    1998.






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

As discussed in Note Q to our financial
statements, the accompanying 2001 and 2000 financial statements
have been restated to reflect the appropriate adoption of
EITF 00-10 which resulted in an increase to Net Sales and
Cost of Products Sold for transportation costs billed to our
customers. This restatement had no impact on operating income,
net income or cash flows. The following discussion and analysis
gives effect to the restatement.

Critical Accounting Policies

Our financial statements are prepared in
conformity with accounting principles generally accepted in the
United States of America. The preparation of these financial
statements requires the use of estimates, judgments, and
assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the periods
presented. We believe that our critical accounting policies,
which involve a higher degree of judgments, estimates and
complexity, are as follows:



| |                       
| | ----------------------
| | Environmental Reserves

We are subject to extensive and evolving Federal,
state and local environmental laws and regulations. Compliance
with such laws and regulations can be costly. Governmental
authorities may enforce these laws and regulations with a
variety of enforcement measures, including monetary penalties
and remediation requirements. We have policies and procedures in
place to ensure that our operations are conducted in compliance
with such laws and regulations and with a commitment to the
protection of the environment.

We are involved in various stages of
investigation and remediation related to environmental
remediation projects at a number of sites as a result of past
and present operations, including currently-owned and
formerly-owned plants. Also, we have received notice that we may
have liability under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 as a potentially
responsible party at a number of sites (Superfund
Sites).

The ultimate cost of site remediation is
difficult to predict given the uncertainties regarding the
extent of the required remediation, the interpretation of
applicable laws and regulations and alternative remediation
methods. Based on our experience with environmental remediation
matters, we have accrued reserves for our best estimate of
remediation costs, and we do not believe that remediation
activities will have a material adverse impact on our financial
condition, results of operations or cash flows. In addition, in
the course of our bankruptcy described above in Item 3 of
this report, we obtained an agreement with the
U.S. Environmental Protection Agency and the states of
Arizona, Michigan and Oklahoma whereby we are limited in our
responsibility for environmental sites not owned by us that
allegedly arise from pre-bankruptcy activities. We retain all of
our defenses, legal or factual, at such sites. However, if we
are found liable at any of these sites, we may be required to
pay as if such claims had been resolved in our bankruptcy and
therefore our liability is paid at approximately 37%.

We had total expenditures for environmental
compliance and remediation of $10.0 million in 2002,
$9.1 million in 2001, and $11.3 million in 2000. We
estimate that we will spend $12.8 million during 2003. As
of November 30, 2002, we had $17.7 million accrued for
sold divisions or businesses related to legal and

13



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environmental matters, and believe such reserves
to be adequate under the current circumstances. In addition, we
have $2.4 million recorded in other accrued liabilities
related to environmental liabilities for our on-going businesses.




| |                                                        
| | -------------------------------------------------------
| | Impairment of Long-Lived Assets, including
    Goodwill

We review the carrying value of our long-lived
assets held for use and assets to be disposed of. For all assets
excluding goodwill, the carrying value of a long-lived asset is
considered impaired if the sum of the undiscounted cash flows is
greater than the carrying value of the asset. If this occurs, an
impairment charge is recorded for the amount by which the
carrying value of the long-lived assets exceeds its fair value.
Effective December 1, 2002, we adopted
SFAS No. 142, Goodwill and Other Intangible
Assets. Under this new accounting standard, we will no
longer amortize our goodwill and will be required to complete an
annual impairment test. We have determined that we have six
reporting units, as defined in SFAS No. 142, within
our three reportable business segments. We have completed our
initial impairment test required by this accounting standard and
have determined we will not recognize an impairment charge
related to the adoption of this accounting standard in 2003.
These impairment tests require us to forecast our future cash
flows, which requires significant judgment. As of
November 30, 2002, we have $163.9 million of goodwill
and $183.4 million of property, plant, and equipment (our
primary long-lived asset), recorded on the balance sheet.



| |                    
| | -------------------
| | Revenue Recognition

We recognize revenue when persuasive evidence of
an arrangement exists, delivery has occurred, the fee is fixed
and determinable, and collectibility is reasonably assured.
Generally, all of these conditions are met at the time we ship
our products to our customers. Net Sales and Cost of Products
Sold include transportation costs (see Note Q to the
consolidated financial statements included in Item 8). For
certain products sold under fixed-price contracts and
subcontracts with various United States Government agencies and
aerospace and defense contractors, we utilize the
percentage-of-completion method of accounting. When we use the
percentage-of-completion method, we measure our percent complete
based on total costs incurred to date as compared to our best
estimate of total costs to be incurred.

Contract costs include direct material, labor
costs, and those indirect costs related to contract performance,
such as indirect labor, supplies, tools and repairs. Selling and
administrative expenses are charged to expense as incurred.
Provisions for estimated losses on uncompleted contracts are
made in the period in which such losses are determined. Changes
to job performance, job conditions, and estimated profitability
may result in revisions to contract revenue and costs and are
recognized in the period in which the revisions are made. We
provided for estimated losses on uncompleted contracts of
$0.5 million at November 30, 2002 and
$0.9 million at November 30, 2001. The percentage of
completion method requires a higher degree of judgment and use
of estimates than other revenue recognition methods. The primary
judgments and estimates involved include our ability to
accurately estimate the contracts percent complete and the
reasonableness of the estimated costs to complete as of each
financial reporting period.



| |                                                        
| | -------------------------------------------------------
| | Pension and Postretirement Benefit Plan
    Assumptions

We sponsor pension plans covering substantially
all employees who meet eligibility requirements. We also sponsor
postretirement benefit plans that make health care and life
insurance benefits available for certain employees. Several
statistical and other factors that attempt to anticipate future
events are used in calculating the expense and liability related
to these plans. These factors include key assumptions, such as
discount rate, expected return on plan assets, rate of increase
of health care costs and rate of future compensation increases.
In addition, our actuarial consultants also use subjective
factors such as withdrawal and mortality rates to estimate these
factors. The actuarial assumptions we use may differ materially
from actual results due to changing market and economic
conditions, higher or lower withdrawal rates or longer or
shorter life spans of participants. These differences may result
in a significant impact to the amount of pension or
postretirement benefits expenses we have recorded or may record
in the future. Assuming a constant employee base, the most
important estimate associated with our post retirement plan is
the assumed health care cost trend rate. As of November 30,
2002, a one-percentage-point increase in this estimate would
increase the expense by

14



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approximately $0.2 million. A similar
analysis for the expense associated with our pension plans is
more difficult due to the variety of assumptions, plan types and
regulatory requirements for these plans around the world.
However, for example, our U.S. plans, which represent
approximately 90% of the consolidated projected benefit
obligation at November 30, 2002, a 0.25% change in the
discount rate, would change the annual pension expense by
approximately $0.8 million, and the annual post-retirement
expense by approximately $0.1 million. Additionally, a
0.25% change in the expected return on plan assets would change
the pension expense by approximately $0.6 million.




| |                    
| | -------------------
| | Legal Contingencies

We are a defendant in numerous litigation and
regulatory matters including those involving environmental law,
employment law and patent law, as discussed in Note M to
the consolidated financial statements. As required by
SFAS No. 5, we determine whether an estimated loss
from a loss contingency should be accrued by assessing whether a
loss is deemed probable and can be reasonably estimated. We
analyze our litigation and regulatory matters based on available
information to assess potential liability. We develop our views
on estimated losses in consultation with outside counsel and
environmental experts handling our defense in these matters
which involves an analysis of potential results, assuming a
combination of litigation and settlement strategies. Should
these matters result in an adverse judgment or be settled for
significant amounts, they could have a material adverse effect
on our results of operations, cash flows and financial position
in the period or periods in which such judgment or settlement
occurs.



| |                                                                                 
| | --------------------------------------------------------------------------------
| | Estimates Used Relating to Restructuring,
    Divestitures and Asset Impairments

Over the last several years we have engaged in
significant restructuring actions and divestitures, which have
required us to develop formalized plans as they relate to exit
activities. These plans have required us to utilize significant
estimates related to salvage values of assets that were made
redundant or obsolete. In addition, we have had to record
estimated expenses for severance and other employee separation
costs, lease cancellation and other exit costs. Given the
significance of, and the timing of the execution of such
actions, this process is complex and involves periodic
reassessments of estimates made at the time the original
decisions were made. The accounting for restructuring costs and
asset impairments requires us to record provisions and charges
when we have a formal and committed plan. Our policies, as
supported by current authoritative guidance, require us to
continually evaluate the adequacy of the remaining liabilities
under our restructuring initiatives. As management continues to
evaluate the business, there may be supplemental charges for new
plan initiatives as well as changes in estimates to amounts
previously recorded as payments are made or actions are
completed.



| |                                              
| | ---------------------------------------------
| | Income Taxes and Tax Valuation
    Allowances

We record the estimated future tax effects of
temporary differences between the tax bases of assets and
liabilities and amounts reported in our balance sheets, as well
as operating loss and tax credit carryforwards. We follow very
specific and detailed guidelines in each tax jurisdiction
regarding the recoverability of any tax assets recorded on the
balance sheet and provide necessary valuation allowances as
required. We regularly review our deferred tax assets for
recoverability based on historical taxable income, projected
future taxable income, the expected timing of the reversals of
existing temporary differences and tax planning strategies. If
we continue to operate at a loss in certain jurisdictions, as we
have in the United States, or are unable to generate sufficient
future taxable income, or if there is a material change in the
actual effective tax rates or time period within which the
underlying temporary differences become taxable or deductible,
we could be required to increase the valuation allowance against
all or a significant portion of our deferred tax assets
resulting in a substantial increase in our effective tax rate
and a material adverse impact on our operating results. The
valuation allowance provision was approximately
$15.0 million for the year ended November 30, 2002,
and the total valuation allowance at November 30, 2002 is
approximately $21.5 million. Our gross deferred tax assets
at November 30, 2002 are approximately $58.7 million,
and our gross deferred tax liabilities at November 30, 2002
are approximately $26.4 million.

15



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##### Table of Contents





| |                           
| | --------------------------
| | Risk Management Activities

We are exposed to market risk including changes
in interest rates, currency exchange rates and commodity prices.
We use derivative instruments to manage our interest rate and
foreign currency exposures. We do not use derivative instruments
for speculative or trading purposes. Generally, we enter into
hedging relationships such that changes in the fair values or
cash flows of items and transactions being hedged are expected
to be offset by corresponding changes in the values of the
derivatives. Accounting for derivative instruments is complex,
as evidenced by the significant interpretations of the primary
accounting standard, and continues to evolve. As of
November 30, 2002, we had $13.5 million of foreign
forward exchange contracts and had $90.0 million of
interest rate swap contracts to hedge our foreign currency and
interest rate risks.



| |                                          
| | -----------------------------------------
| | Other Significant Accounting
    Policies

Other significant accounting policies, not
involving the same level of uncertainties as those discussed
above, are nevertheless important to an understanding of our
financial statements. See Note B to the consolidated
financial statements, Summary of Significant Accounting
Policies, which discusses accounting policies that must be
selected by us when there are acceptable alternatives.

Results of Operations

The following summary financial information about
our industry segment data is presented to gain a better
understanding of the narrative discussion below about our
business segments. See Note O in our financial statements
for the years ended November 30, 2002, 2001, and 2000 for
additional financial information by segment. All references
herein to years are to our fiscal year ending November 30
unless otherwise indicated (in thousands of dollars).

|                                                |              |      |         |         |  |      |         |         |  |   |         |         | 
|----------------------------------------------- | ------------ | ---- | ------- | ------- |  | ---- | ------- | ------- |  | - | ------- | ------- | 
|                                                |              | 2002 |         | 2001    |  | 2000
|                                                |              |      |         |         |  |     
|Net Sales                                       |              |      |         |         |  |      |         |         |  |   |         |        
|Hillsdale                                       |              | $    | 356,614 |         |  | $    | 353,146 |         |  | $ | 374,087 |        
|Wolverine                                       |              |      | 79,367  |         |  |      | 74,100  |         |  |   | 82,300  |        
|                                                |              |      |         |         |  |      |         |         |  |   |         |        
|                                                | Automotive   |      | $       | 435,981 |  |      | $       | 427,246 |  |   | $       | 456,387 | 
|                                                |              |      |         |         |  |      |         |         |  |   |         |        
|Power Group                                     |              |      | 104,620 |         |  |      | 100,788 |         |  |   | 90,600  |        
|Precision Products  divested
    July 17, 2002 |              |      | 3,435   |         |  |      | 10,214  |         |  |   | 13,400  |        
|Specialty Materials                             |              |      | 57,400  |         |  |      | 75,584  |         |  |   | 78,100  |        
|Chemsyn                                         |              |      | 13,200  |         |  |      | 13,714  |         |  |   | 9,300   |        
|                                                |              |      |         |         |  |      |         |         |  |   |         |        
|                                                | Technologies |      |         | 178,655 |  |      |         | 200,300 |  |   |         | 191,400 | 
|                                                |              |      |         |         |  |      |         |         |  |   |         |        
|Filtration and Minerals                         |              |      | 82,129  |         |  |      | 82,004  |         |  |   | 80,579  |        
|                                                |              |      |         |         |  |      |         |         |  |   |         |        
|Divested Divisions                              |              |      |        |         |  |      |        |         |  |   | 42,800  |        
|                                                |              |      |         |         |  |      |         |         |  |   |         |        
|Corporate/ Intersegment                         |              |      |        |         |  |      | (800    | )       |  |   | (700    | )      
|                                                |              |      |         |         |  |      |         |         |  |   |         |        
|                                                |              | $    | 696,765 |         |  | $    | 708,750 |         |  | $ | 770,466 |        
|                                                |              |      |         |         |  |      |         |         |  |   |         |        
|Operating Income (Loss)                         |              |      |         |         |  |      |         |         |  |   |         |        
|Automotive                                      |              | $    | 9,970   |         |  | $    | 8,636   |         |  | $ | 28,146  |        
|Technologies                                    |              |      | (1,887  | )       |  |      | 1,539   |         |  |   | 15,073  |        
|Filtration and Minerals                         |              |      | 8,078   |         |  |      | 4,730   |         |  |   | 4,837   |        
|Divested Divisions                              |              |      | (6,497  | )       |  |      | (2,105  | )       |  |   | 976     |        
|Corporate/ Intersegment                         |              |      | (4,318  | )       |  |      | (8,522  | )       |  |   | 13,256  |        
|                                                |              |      |         |         |  |      |         |         |  |   |         |        
|                                                |              | $    | 5,346   |         |  | $    | 4,278   |         |  | $ | 62,288  |        
|                                                |              |      |         |         |  |      |         |         |  |   |         |        

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2002 Compared to 2001



| |                   
| | ------------------
| | Automotive Segment

Sales in our Automotive Segment increased
$8.7 million, or 2.0%, to $435.9 million in 2002 from
$427.2 million in 2001. In our Hillsdale division, our net
sales increased $3.5 million, or 1.0%, in 2002 compared to
2001. As we have previously announced, we are exploring
strategic alternatives for our Hillsdale U.K. Automotive
operation including the possible sale of all or a portion of its
assets and liabilities, as a result of decreased volume with its
largest customer, Fiat. Excluding our Hillsdale U.K. Automotive
operation, our Hillsdale divisions net sales increased
$8.5 million, or 2.5%, to $342.6 million in 2002 from
$334.1 million in 2001. This increase is a result of
increased North American automotive builds in 2002 compared to
2001. Our Wolverine divisions sales increased
$5.3 million, or 7.2%, to $79.4 million in 2002 from
$74.1 million in 2001. This increase was a result of the
increased North American automotive build in 2002 compared to
2001, as well as the initial penetration in the United States
aftermarket business.

Operating income increased $1.4 million, or
16.3%, to $10.0 million in 2002 from $8.6 million in
2001. This improved performance resulted primarily from slightly
higher sales volumes, improved sales mix, and productivity
improvements. Unusual expenses, totaling $1.8 million in
2002 were incurred for severance, recruiting and relocation
related to strengthening the Automotive Segments
management team and workforce-related consulting fees that
further dampened our profitability. An additional
$1.1 million in depreciation expense was recorded in the
second quarter of 2002 related to adjustments to bring the
estimated useful lives of certain equipment within this segment
in line with estimated periods of active production.



| |                     
| | --------------------
| | Technologies Segment

Sales in our Technologies Segment decreased
$21.6 million, or 10.8%, to $178.7 million in 2002
from $200.3 million in 2001. Excluding sales from our
Precision Products business, which we divested in July 2002,
this segments sales decreased $14.9 million, or 7.8%.
Sales in the Power Group increased $3.8 million, or 3.8%,
during 2002 compared to 2001, which was offset by a decrease of
$18.2 million, or 24.1%, in our Specialty Materials Group.
Within the Specialty Materials Group, the demand for Germanium
and Gallium-based products, which are sold to the
telecommunications, fiber optics and semiconductor markets, was
significantly impacted by the extremely weak demand in these
markets which led to our decision to exit the Gallium business.
Germanium and Gallium sales decreased $21.8 million, or
59.1%, in 2002 compared to 2001, which were partially offset by
an increase of $5.5 million, or 33.5%, in sales of enriched
Boric acid products sold to nuclear power reactor facilities.

Operating results decreased $3.4 million to
an operating loss of $1.9 million in 2002 from operating
income of $1.5 million in 2001. The decrease in 2002
operating results included provisions of $15.7 million in
special charges, detailed in (a) to (d) below, versus
$8.7 million of restructuring charges recorded in our 2001
earnings. These 2002 special charges, detailed below, impact the
comparability with 2001. The following items detail the
$15.7 million of special charges in 2002:



| |    |                                                                                                                                                                                             
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. | $5.7 million of legal expenses and legal
    settlement charges recorded in Selling and Administrative
    expenses during the first half of 2002 as described in
    Item 3 of this report;



| |    |                                                                                                                                                                                                       
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b. | $3.1 million loss for an insurance
    receivable primarily related to inventories damaged in a fire
    during the third quarter of 2001 at our Missouri bulk
    pharmaceutical manufacturing plant.



| |    |                                                                                                                 
| | -- | ----------------------------------------------------------------------------------------------------------------
| | c. | $1.4 million in expense for business
    consulting fees to develop a strategy for our Power Group
    business;



| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | d. | $5.5 million charge in Restructuring expense
    in the second quarter of 2002 associated with our decision to
    exit our Gallium-based specialty material business due to
    continued soft demand from customers in the telecommunications
    and semi-conductor markets. The $5.5 million restructuring
    charge during the second quarter of 2002 included an inventory
    write-down of $2.9 million, representing the estimated loss
    incurred from the liquidation of current inventory. An additional

17



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| |  |                                                                                                                                                                                                                                                                                  
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | $2.4 million was recorded in other accrued
    liabilities primarily related to the estimated loss of inventory
    to be purchased under a firm purchase commitment. Finally, a
    $0.2 million asset impairment charge was recorded against
    property, plant and equipment.



| |                                    
| | -----------------------------------
| | Filtration and Minerals
    Segment

Sales in our Filtration and Minerals Segment
increased $0.1 million, or 0.1%, to $82.1 million in
2002 from $82.0 million in 2001. The sales increase during
2002 was primarily the result of improved pricing and sales mix,
partially offset by decreased volumes.

Operating income increased $3.4 million, or
72.3%, to $8.1 million in 2002 from $4.7 million in
2001. Improved profitability was primarily attributable to lower
energy costs, favorable product mix and pricing, improved
production efficiencies and favorable foreign currency exchange
rates due to the strengthening of the Euro during 2002.



| |                   
| | ------------------
| | Company Discussion

Net Sales.Net sales
of $696.8 million in 2002 decreased $12.0 million, or
1.7%, from $708.8 million in 2001. Excluding the sale in
July 2002 of our Precision Products business included in our
Technologies Segment, our net sales decreased $5.2 million,
or 0.7%, in 2002 compared to 2001. This decrease was primarily
driven by declines in our Technologies Segments Specialty
Materials Group ($18.2 million), due primarily to weak
demand in the telecommunications, fiber optics, and
semiconductor markets, and our Hillsdale U.K. Automotive
operation ($5.0 million), due primarily to low volumes with
our primary U.K. customer, Fiat. These decreases were partially
offset by sales increases in our North American automotive
business and our Technologies Segments Power Group.

Cost of Products Sold (exclusive of
depreciation).Our gross margins
increased 2.7 points to 21.6% in 2002 from 18.9% in 2001. The
improved sales mix primarily related to increased sales in our
Technologies Segments Power Group and our Automotive
Segments Wolverine operation, and productivity
improvements in all our businesses contributed to the increased
gross margins. Our Technologies Segment was also favorably
impacted by the restructuring actions initiated in the fourth
quarter of 2001, while our Filtration and Minerals Segment
benefited from improved pricing and significantly lower energy
costs, which were high in 2001 when the Western United States
experienced an energy crisis.

Selling and Administrative.Selling and administrative expenses
increased $10.9 million, or 21.4%, to $61.9 million in
2002 from $51.0 million in 2001. The increased costs in
2002 were primarily related to:



| |    |                                                                                                                                                                                             
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. | $6.0 million of legal expenses and legal
    settlement charges recorded in Selling and Administrative
    expenses during the first half of 2002 as described in
    Item 3 of this report;



| |    |                                                                                                                                  
| | -- | ---------------------------------------------------------------------------------------------------------------------------------
| | b. | $1.4 million in our Technologies Segment for
    business consulting fees to develop a strategy for our Power
    Group business;



| |    |                                                                                                                                                                                                                                      
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | c. | $3.7 million in severance (excluding
    management compensation  special), recruiting,
    relocation costs, and workforce-related consulting fees as we
    continued our investment in strengthening our leadership team,
    and



| |    |                                                                                                                                                                    
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | d. | $1.2 million in increased compensation costs
    related to a recently adopted long-term bonus plan for certain
    corporate and divisional management executives.

Depreciation and Amortization.Depreciation and amortization expenses
increased $4.9 million, or 8.3%, to $64.0 million in
2002 from $59.1 million in 2001. The increase is primarily
attributable to higher depreciation costs as a result of capital
expenditures in 2001, primarily for new automotive programs, and
an adjustment for an additional $1.1 million in expense in
the second quarter of 2002 to bring the estimated useful lives
of certain equipment in the Automotive Segment in line with
estimated periods of active production on existing automotive
programs.

18



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Restructuring.During 2002, we recorded
$5.9 million of restructuring expense, which was primarily
related to our announcement on May 31, 2002 to exit our
Gallium business in our Technologies Segment due to the downturn
in the fiber-optic, telecommunication and semiconductor markets.
This resulted in a $5.5 million charge recorded in
restructuring expense during the second quarter of 2002. This
charge primarily represents the liquidation of existing
inventories and an accrual for inventory to be purchased under
firm purchase commitments.

Divestitures.All
amounts recorded in divestitures expense relate to operations
that were sold or that were divested prior to November 30,
2002. During 2002, we completed the sale of our Precision
Products business in our Technologies Segment to a group of
former employees and divisional management personnel. We
recorded in the second quarter of 2002 a $2.8 million loss
on this sale. Also, during the second quarter of 2002, we
recorded $3.2 million in accruals related to costs for
certain litigation issues and environmental remediation costs.
The remaining amounts related to workmens compensation
claims for employees of our sold divisions, and additional
accruals related to litigation and environmental remediation
costs. The amounts recorded in 2001 related to costs of
divestitures in previous years.

Management Compensation 
Special.These expenses primarily
relate to the separation of officer employment and the
settlement with our former Chief Executive Officer. During 2002,
we separated five officers (three in our Automotive Segment, one
in our Corporate Segment and one in our Technologies Segment) at
a cost of $1.4 million, and finalized a settlement with our
former Chief Executive Officer as described in Item 3 of
this report. During 2001, we separated three officers in the
Corporate Segment that aggregated $3.1 million.

Insurance Related
Losses.During the second quarter
2002, we recorded a $3.1 million loss for an insurance
receivable primarily related to inventories damaged in a fire
during the third quarter 2001 at our Missouri bulk
pharmaceutical manufacturing plant. We have recorded this charge
to fully reserve the receivable because the insurance
underwriter is contesting the coverage on these assets. We are
disputing the insurance carriers position and are
vigorously pursuing efforts to collect on our claims, but the
recovery of our claim is uncertain at this time.

Interest Expense.Interest expense was
$41.1 million in 2002 and $40.1 million in 2001 (not
including interest allocated to discontinued operations in 2001
of $3.3 million). Also included in interest expense in 2002
are $1.5 million in fees and other costs, primarily related
to our accounts receivable asset-backed securitization (see
Accounts Receivable Asset-Backed Securitization under Liquidity
and Capital Resources). Excluding these $1.5 million in
fees and other costs, our 2002 interest expense was
$39.6 million, a decrease of 8.8% or $3.8 million from
2001 (including interest allocated to discontinued operations in
2001). The decrease in interest expense is due to lower interest
rates and lower debt levels.

Income (Loss) from Continuing Operations
Before Taxes.Loss from continuing
operations before taxes increased $2.3 million, or 7.2%, to
$34.2 million in 2002 from $31.9 million in 2001. The
following items represent charges by segment that affect the
comparability between loss from continuing operations before
taxes for 2002 and 2001. All of these items are excluded from
calculating compliance with our debt covenants

19



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under our senior credit facility. (see Credit
Agreement EBITDA and Credit Agreement Financial Covenants under
Liquidity and Capital Resources) (in millions of dollars):


|   |  |                                                               |  |      |      |      |  |   |      |  |  |  |                    | 
|-- |  | ------------------------------------------------------------- |  | ---- | ---- | ---- |  | - | ---- |  |  |  | ------------------ | 
|   |  |                                                               |  | 2002 |      | 2001 |  |  
|   |  |                                                               |  |      |      |      |  |  
|a. |  | Management compensation  special                             |  | $    | 2.3  |      |  | $ | 3.1  |  |  |  | Corporate          | 
|b. |  | Management compensation  special                             |  |      | 0.4  |      |  |   |     |  |  |  | Technologies       | 
|c. |  | Management compensation  special                             |  |      | 0.7  |      |  |   |     |  |  |  | Automotive         | 
|d. |  | Loss from divestitures                                        |  |      | 6.5  |      |  |   | 2.1  |  |  |  | Divested Divisions | 
|e. |  | Restructuring  exiting of the Gallium
    business           |  |      | 5.5  |      |  |   |     |  |  |  | Technologies       | 
|f. |  | Restructuring                                                 |  |      | 0.4  |      |  |   | 5.4  |  |  |  | Corporate          | 
|g. |  | Restructuring                                                 |  |      |     |      |  |   | 8.7  |  |  |  | Technologies       | 
|h. |  | Selling and administrative  legal and
    settlement costs   |  |      | 5.7  |      |  |   |     |  |  |  | Technologies       | 
|i. |  | Selling and administrative  legal and
    settlement costs   |  |      | 0.3  |      |  |   |     |  |  |  | Corporate          | 
|j. |  | Insurance related losses                                      |  |      | 3.1  |      |  |   |     |  |  |  | Technologies       | 
|k. |  | Depreciation adjustment related to equipment
    useful lives |  |      | 1.1  |      |  |   |     |  |  |  | Automotive         | 
|   |  |                                                               |  |      |      |      |  |   |      |  |  |  |                    | 
|   |  |                                                               |  | $    | 26.0 |      |  | $ | 19.3 |  |  |  |                    | 
|   |  |                                                               |  |      |      |      |  |   |      |  |  |  |                    | 

In addition, during 2002, we incurred
$1.4 million of expense in our Technologies Segment for
business consulting fees to develop a strategy for our Power
Group and $3.7 million in severance, recruiting, relocation
and workforce-related consulting projects as we have continued
our investment in strengthening our leadership team.

Income Taxes (Benefit).Income tax provision was
$2.6 million in 2002 compared to a benefit of
$10.0 million in 2001. Differences in the income taxes
recorded primarily relate to recording a tax benefit during 2001
on losses, to the extent those losses could be carried back to
prior fiscal years, and a refund could be obtained from the
taxing authority. For any amounts in excess of the carry back
amounts, we have elected to provide a valuation allowance as it
is more likely than not that some or all of the deferred tax
assets will not be realized. Accordingly, there is no tax
benefit recorded during 2002. The provision in 2002 relates to
the allocation of income and loss between the United States and
foreign jurisdictions and represents the estimated tax that will
be due in certain jurisdictions where no tax benefit can be
assured from utilizing our losses.

Discontinued Operations.Throughout 2001, we accounted for our
former Machinery Segment as a discontinued operation and prior
periods have been restated to conform to the discontinued
operations presentation. On December 14, 2001, we completed
the sale of our Machinery Segment as of November 30, 2001.
Accordingly, there is no effect on our operations in 2002. See
Note C in our financial statements.

Net Loss.The net
loss decreased $17.2 million, or 31.9%, to
$36.8 million in 2002 from $54.0 million in 2001. The
decrease in net loss is the result of the items discussed above.

Preferred stock dividend accretion of
$14.9 million in 2002 increased our net loss of
$36.8 million to a net loss applicable to common
shareholders of $51.7 million. In 2001, preferred stock
dividend accretion of $13.3 million increased the net loss
of $54.0 million to a net loss applicable to common
shareholders of $67.3 million.

Company Outlook.Projected sales for 2003 are estimated
to be in the range of $670.0 million to $700.0 million
compared to $696.8 million in 2002. The 2003 sales range is
primarily attributed to the current uncertainty regarding
industry forecasted Automotive builds for 2003. Also, the sales
estimate for 2003 reflects the anticipated decrease in sales of
approximately $18.0 million related to the phase-out of an
automotive transmission pump program in our Hillsdale Division,
as well as our decision to explore strategic alternatives with
our Hillsdale U.K. Automotive operation, which had sales of
$10.0 million in 2002. These strategic alternatives with
our Hillsdale U.K. Automotive operation include the possible
sale of all or a portion of its assets and liabilities.

20



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We are projecting 2003 EBITDA to be in the range
of approximately $99.0 million to $103.0 million and
our Credit Agreement EBITDA (as defined under Liquidity and
Capital Resources, below) to be approximately
$102.0 million to $106.0 million. Credit Agreement
EBITDA in 2003 excludes approximately $3.0 million of non-cash
provisions related to our long-term bonus program. The projected
EBITDA improvement, despite anticipated lower sales, reflects
improved sales mix, cost reduction and productivity initiatives,
which more than offset an approximate $4.8 million increase
in our pension expense, from $3.8 million of income in 2002
(excluding special termination benefits incurred in 2002) to an
estimated $1.0 million of expense in 2003. On the basis of
these projections, we believe we will be in compliance with all
covenants under our various credit facilities during 2003.

2001 Compared to 2000



| |                   
| | ------------------
| | Automotive Segment

Sales in our Automotive Segment decreased 6.4% to
$427.2 million in 2001 from $456.4 million in 2000
(excluding Divested Divisions). The decline in our sales was
principally attributed to reduced demand for our products. North
American car and light truck build for 2001 was reported at
15.9 million units, down more than 10% from the 2000 build,
reported at 17.7 million units. The decline in volumes was
partially offset by new product launches. In addition, North
American production by the U.S.-based original equipment
manufacturers (OEMs  General Motors, Ford and
Chrysler) declined on a percentage basis more than North
American production by non-U.S. based OEMs, and our Automotive
Segment has a higher percentage of sales in North America to
non-U.S. based OEMs than North American production in general.

Operating income decreased $19.5 million to
$8.6 million in 2001 from $28.1 million in 2000.
Reduced profitability was primarily the result of lower volumes,
$4.5 million in new program launch costs in our precision
machined components business, an increase in depreciation of
$3.3 million caused by capital expenditures placed in
service during 2001 and 2000 primarily related to new programs,
pricing reductions of $2.8 million, and higher workers
compensation expense. Although in 2000 we had projected
declining sales, offsetting cost reductions could not be
achieved in a timely manner. In particular, high fixed costs in
our Automotive Segment severely impact profitability in the
event of a decrease in sales. Capital expenditures for the
Automotive Segment were $28.0 million in 2001 compared to
$34.2 million in 2000. These capital expenditures were
related to a significant number of new product launches in our
Hillsdale operation and the acquisition of a new rubber coating
line in our Wolverine operation.



| |                     
| | --------------------
| | Technologies Segment

Sales in our Technologies Segment increased 4.6%
to $200.3 million in 2001 from $191.4 million in 2000.
Slightly more than half of the increase is attributable to the
sales of Eagle-Picher Energy Products Corporation, which was
acquired by us in June 2000. Other increases were attributable
to sales of specialty materials used in fiber-optic applications
along with certain aerospace battery programs. Additionally,
volumes of bulk pharmaceutical products increased in 2001
resulting from added capacity at a recent plant expansion. These
increases were offset by lower demands for lead based products
sold as chemical agents and lead-acid batteries. A decline in
orders from telecommunications customers also had a negative
impact on our electronics assembly products. Additionally, we
experienced a fire at our Harrisonville, Missouri bulk
pharmaceutical chemical processing plant in August 2001. We
estimate we lost sales in 2001 of approximately
$1.5 million from the fire. This plant was restored to full
operation in December 2001.

Operating income decreased 90.1% to
$1.5 million in 2001 from $15.1 million in 2000.
Reduced profitability was primarily a result of an
$8.7 million restructuring charge taken in the fourth
quarter of 2001. Three plants were impacted by this
restructuring charge. They are located in Seneca, Missouri;
Grove, Oklahoma and Colorado Springs, Colorado. These plants
will be closed once final customer orders are completed and
shipped. Asset impairment charges of approximately
$3.6 million were recorded to bring these facilities to
their estimated net realizable value. Approximately 100
employees, primarily manufacturing labor from these locations,
will be provided severance based upon their length of service
totaling approximately $1.6 million. Other shutdown costs,
estimated to be $3.5 million, are primarily non-cash and
relate to

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inventory. These charges are all included in the
restructuring charge. Additionally, operating income decreased
due to lower operating margins and increased reserves
($2.0 million) for bad debt and warranty costs. As
mentioned above, we experienced a fire at one of our chemical
plants which resulted in lost margins and incremental costs of
approximately $0.9 million, which was offset by an equal
amount of benefit from insurance coverage.




| |                                    
| | -----------------------------------
| | Filtration and Minerals
    Segment

Sales in our Filtration and Minerals Segment
increased 1.7% to $82.0 million in 2001 from
$80.6 million in 2000 despite a decrease in the total
volume of products sold. Volume decreases were due to the
rationalization of existing business and general economic
weakness. Revenue increased because of volume increases in
higher value-added products, a general price increase, and an
energy surcharge that was in effect for part of the year to
defray a portion of the increase in natural gas and electricity
costs experienced nationwide. At the end of 2001, we also
implemented an aggressive price improvement program directed
toward improving margins.

Operating income decreased 2.1% to
$4.7 million in 2001 from $4.8 million in 2000. This
decrease was primarily caused by increased natural gas costs of
$2.8 million and power cost increases of $0.4 million.
The increases in energy costs were partially mitigated through
the use of alternative fuels, energy conservation measures, and
energy surcharges to our customers. Additionally, penalties of
$0.5 million and legal and consultant costs of
$0.4 million were incurred in the settlement of regulatory
claims for violating gaseous emission permits in Nevada and
Oregon. Settlements have been reached in both jurisdictions and
we are in compliance with current permits and interim orders.



| |                   
| | ------------------
| | Company Discussion

Net Sales.Sales
decreased 8.0% to $708.8 million in 2001 from
$770.5 million in 2000, or 2.6% or $18.9 million
excluding sales from Divested Divisions in 2000. The decline in
sales was principally attributed to reduced demand for our
products in the Automotive Segment from automobile
manufacturers. These decreases were partially offset by gains in
our Technologies Segment.

Cost of Products Sold (exclusive of
depreciation).Gross margins decreased
to 18.9% in 2001 from 20.9% in 2000 largely as a result of poor
overhead absorption due to lower volumes, particularly in the
Automotive Segment, as well as new product launch costs in the
Automotive Segment.

Selling and Administrative.Selling and administrative expenses
decreased 13.9% or $8.2 million from 2000 to 2001. The
Divested Divisions accounted for $4.8 million of the
reduction. As a percentage of sales, selling and administrative
expenses declined from 7.7% in 2000 to 7.2% in 2001.

Depreciation and Amortization.Depreciation expense increased
$1.3 million and amortization expense increased
$0.4 million. The increase in depreciation expense is
primarily attributable to capital expenditures in the Automotive
Segment.

Management Compensation  Special.Management compensation 
special is severance primarily related to the separation from
employment for officers. This aggregated $3.1 million in
2001 for three senior executives and $1.6 million in 2000
for one senior executive.

Insurance Related Loss (Gains).During 2000, we settled claims against
a former insurer regarding environmental remediation costs for
$16.0 million and received such proceeds in the first
quarter of 2000.

Restructuring.During the fourth quarter of 2001 we
announced a restructuring of our Technologies Segment and a
restructuring and relocation of our corporate headquarters to
Phoenix, Arizona. We recorded a charge of $14.1 million.
Approximately $5.4 million related to facilities,
$5.0 million related to involuntary severance of
approximately 165 employees and $3.7 million related to
other costs to exit business activities.

In the facilities charge, approximately
$3.6 million is non-cash adjustments to write-down the
carrying value of the three Technologies plants to their
estimated net realizable value and abandoning primarily
machinery and equipment at these locations. The affected plants
are located in Seneca, Missouri; Grove,

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Oklahoma and Colorado Springs, Colorado. Each
plant will be closed once final customer orders are completed
and shipped. Approximately $1.9 million represents an
estimate of the total future lease commitments less estimated
proceeds received from subleasing the various spaces, primarily
at our former corporate headquarters in Cincinnati.


Approximately 100 employees in our Technologies
Segment will be provided approximately $1.6 million in
severance based upon their length of service. Approximately 40
employees at our former corporate headquarters located in
Cincinnati will be provided approximately $3.2 million in
severance based upon length of service. The remaining 25
employees in various locations will be provided approximately
$0.2 million in severance based upon length of service.

The $3.7 million in other shutdown costs is
primarily non-cash and relate to inventory.

Divestitures.During
2001, we incurred additional costs of $2.1 million related
to Divested Divisions which were sold in prior years. During
2000, as part of our previously announced program to focus
management, technical and financial resources on our core
businesses, we completed the sale of our Ross Aluminum
Foundries, Fluid Systems, MARCO, Rubber Molding and Cincinnati
Industrial Machinery divisions for aggregate net proceeds of
$85.0 million and realized an aggregate gain on the sale of
these divisions of $17.1 million, which was reduced for
provisions of $14.0 million for items relating to divisions
sold in prior years, to a net gain of $3.1 million.

Interest expense.Interest expense was
$40.1 million in 2001 (not including interest allocated to
discontinued operations of $3.3 million) and
$44.0 million in 2000 (not including interest allocated to
discontinued operations of $3.4 million), a decrease of
$3.9 million. The decrease in interest expense is due to
lower interest rates in 2001 and lower debt balances in 2001 as
a result of the application of proceeds from the sales of
divisions and the insurance settlement received in 2000.

Income (Loss) from Continuing Operations
Before Taxes.Income (loss) from
Continuing Operations Before Taxes was $(31.9) million in
2001 and $18.4 million in 2000. The following items are
significant differences between Income (Loss) from Continuing
Operations Before Taxes for 2001 and 2000:



| |   |                                                                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A restructuring charge of $14.1 million
    principally related to our Technologies Segment and Headquarters
    relocation during 2001;                                                                                                                        
|
| |  | Provisions for Management
    Compensation  Special of $3.1 million in 2001
    versus $1.6 million in 2000;                                                                                                                                                   
|
| |  | Income of $16.0 million from an insurance
    settlement in 2000;                                                                                                                                                                                               
|
| |  | Gain on the sale of the Divested Divisions of
    $3.1 million in 2000;                                                                                                                                                                                         
|
| |  | In 2001, recognition of additional costs of
    $2.1 million related to environmental and litigation
    matters associated with divisions divested in prior years. See
    Note C in our financial statements.                                                 
|
| |  | An increase in Other Income of $3.8 million
    in 2001 primarily due to gains in foreign currency transactions
    of $0.5 million in 2001 versus a loss of $1.4 million
    in 2000 and an increase in royalty income of $0.9 million
    in 2001 versus 2000.
|
| |  | Loss before tax of Divested Divisions, before the
    gain on the sale of such divisions, in 2000 of $4.3 million.                                                                                                                                              
|
| |  | Operating income decreases in 2001 of
    $13.5 million in our Technologies Segment and
    $19.5 million in our Automotive Segment, and                                                                                                                        
|
| |  | A decrease in headquarters operating expenses of
    $1.7 million, excluding the insurance settlement proceeds
    in 2000 and the restructuring charge in 2001.                                                                                                

Income Taxes (Benefit).Income taxes (benefit) were
$(10.0) million in 2001 and $9.1 million in 2000. The
sale of the Divested Divisions and the income from the insurance
settlement in 2000 affect comparability

23



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##### Table of Contents



of income taxes and the effective tax rates. The
income taxes (benefit) in 2000 are largely attributable to
taxable gains resulting from divestitures.


Discontinued Operations.Throughout 2001, we accounted for our
former Machinery Segment as a discontinued operation and prior
periods have been restated to conform to the discontinued
operations presentation. On December 14, 2001, we completed
the sale of our Machinery Segment. See Note C in our
financial statements.

Net Income (Loss).Net income (loss) for 2001 was
$(54.0) million and $5.6 million in 2000. The
significant items are discussed in the Income (Loss) from
Continuing Operations Before Taxes and Discontinued Operations
sections above.

Preferred stock dividend accretion of
$13.3 million in 2001 increased net loss of
$54.0 million to a net loss applicable to common
shareholders of $67.3 million. In 2000, preferred stock
dividend accretion of $11.8 million reduced net income of
$5.6 million to a net loss applicable to common
shareholders of $6.2 million.

Liquidity and Capital Resources

Our cash flows from operations and availability
under our credit facilities are considered adequate to fund our
short-term capital needs. As of November 30, 2002, we had
$56.3 million unused under our senior credit agreement.
However, due to various financial covenant limitations under our
senior credit agreement measured at the end of each quarter, on
November 30, 2002, we could only incur an additional
$39.3 million of indebtedness.

At November 30, 2002, we were in compliance
with all our debt covenants. Also, based on our projections for
2003, we expect to remain in compliance with all covenants. Our
senior secured credit agreement expires in February 2004. We
will need to replace or extend this facility before that date.
Although there are no guarantees this can be accomplished, based
on the projections described in the Company Outlook section
under 2002 Compared to 2001 in the Results of Operations above
and discussion with potential lenders, we believe we can obtain
a new credit facility sufficient to meet our long-term capital
requirements. As described below under Accounts Receivable
Asset-Backed Securitization, our special purpose entity which is
an important element of our liquidity, capital resources, and
credit risk management with major customers, will terminate upon
the expiration of our senior credit agreement unless the senior
credit agreement is refinanced.



| |           
| | ----------
| | Cash Flows

Operating Activities.Net cash provided by operating
activities during 2002 was $81.9 million compared to
$67.5 million during 2001, which includes
$67.2 million of non-cash depreciation and amortization
expense in 2002 and $62.8 million in 2001. The majority of
the increase in reported cash from operating activities was
$46.5 million which was received as a result of selling
certain of our receivables to an unconsolidated qualifying
special purpose entity, as discussed below in Accounts
Receivable Asset-Backed Securitization. A decrease in our
inventory provided $4.7 million, a decrease in accounts
payable used $2.7 million and a decrease in accrued
liabilities used $5.9 million. The use of cash as a result
of the decrease in accrued liabilities is primarily related to
spending on restructuring and environmental activities. Also,
during 2002 we received approximately $5.2 million of net
operating loss tax refunds, and we expect to receive a similar
amount during 2003.

Investing Activities.Investing activities used
$6.6 million in cash during 2002 compared to
$36.8 million used in 2001. During 2002, $6.9 million
was provided by proceeds from the sale of our Construction
Equipment Division, which represented our former Machinery
Segment, and $3.1 million was provided by proceeds from the
sale of our Precision Products business. Capital expenditures
amounted to $17.3 million during 2002 compared to
$36.5 million during 2001. We expect our capital
expenditures during 2003 will be approximately
$22.0 million to $25.0 million, with the largest
increase in our Technologies Segment.

24



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##### Table of Contents



Financing Activities.Financing activities used
$69.6 million during 2002 compared to $17.6 million
during 2001. During 2002, we used $34.7 million to reduce
our revolving credit facility, primarily from proceeds
associated with the sale of our receivables to an unconsolidated
qualifying special purpose entity, as discussed below under
Accounts Receivable Asset-Backed Securitization. Both regularly
scheduled debt payments and the proceeds from the sale of CED
and Precision Products resulted in a $34.7 million decline
in our long-term debt during 2002.



| |                                                                             
| | ----------------------------------------------------------------------------
| | Accounts Receivable Asset-Backed
    Securitization (Special Purpose Entity)

During 2002, we entered into an agreement with a
major U.S. financial institution to sell an interest in certain
receivables through an unconsolidated qualifying special purpose
entity, Eagle-Picher Funding Corporation (EPFC).
Initially $47.0 million of proceeds from this new facility
were used primarily to payoff amounts outstanding under our
existing Receivables Loan Agreement with our wholly-owned
subsidiary, Eagle-Picher Acceptance Corporation. This agreement
provides for the sale of certain receivables to EPFC, which in
turn sells an interest in a revolving pool of receivables to the
financial institution. EPFC has no recourse against us for
failure of the debtors to pay when due. The agreement provides
for the continuation of the program on a revolving basis until
the earlier of a) the maturity of our senior credit
facility, or b) assuming we are able to refinance our
senior credit facility, the fourth quarter of 2004. We account
for the securitization of these sold receivables in accordance
with SFAS No. 140. Under this guidance, at the time the
receivables are sold, the balances are removed from our
financial statements. For purposes of determining outstanding
debt under our Credit Agreement, as discussed below in
Capitalization, we include the debt outstanding on EPFC.

At November 30, 2002, our interest in EPFC,
including a service fee receivable, was $29.4 million and
the revolving pool of receivables that we service totaled
$77.5 million. At November 30, 2002, the outstanding
balance of the interest sold to the financial institution
recorded on EPFC was $46.5 million. The effective interest
rate as of November 30, 2002 in the securitization was
approximately 2.55%.

We believe the EPFC is an important element of
our ability to manage our liquidity, capital resources and
credit risk with certain major customers.



| |                                                                                                     
| | ----------------------------------------------------------------------------------------------------
| | Accounts Receivable Asset-Backed
    Securitization (Special Purpose Entity) Financial
    Covenants

EPFC has two financial covenants contained in its
asset-backed securitization agreement. They are a minimum fixed
charge coverage ratio (the ratio of total EBITDA minus capital
expenditures to the sum of interest expense, scheduled payments
of principal on debt, cash income taxes, and cash dividends, all
as defined in the agreement), and a minimum EBITDA (as defined
in the agreement) amount. These ratios and amounts are
calculated based on the financial statement amounts of
Eagle-Picher Holdings, Inc. and EPFC,

25



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##### Table of Contents



which are not consolidated in our financial
statements as EPFC is an off balance sheet special purpose
entity. The following table presents the required ratios and the
actual ratios (in millions of dollars):


|                  |          |                 |   |                |  |  |  |      | 
|----------------- | -------- | --------------- | - | -------------- |  |  |  | ---- | 
|                  |          |                
|                  |          | (not less than)
|                  |          |                
|                  |          |                 |   | Minimum       
|                  |          | Minimum         |   | Fixed Charge  
|                  |          | EBITDA          |   | Coverage Ratio
|                  |          |                 |   |               
|November 30, 2001 |          |                 |   |                |  |  |  |     
|                  | Required |                 | $ | 77.4           |  |  |  | 0.62 | 
|                  | Actual   |                 | $ | 80.3           |  |  |  | 0.73 | 
|November 30, 2002 |          |                 |   |                |  |  |  |     
|                  | Required |                 | $ | 75.9           |  |  |  | 0.82 | 
|                  | Actual   |                 | $ | 98.7           |  |  |  | 1.42 | 
|February 28, 2003 |          |                 |   |                |  |  |  |     
|                  | Required |                 | $ | 77.4           |  |  |  | 0.86 | 
|May 31, 2003      |          |                 |   |                |  |  |  |     
|                  | Required |                 | $ | 78.3           |  |  |  | 0.86 | 
|August 31, 2003   |          |                 |   |                |  |  |  |     
|                  | Required |                 | $ | 78.2           |  |  |  | 0.85 | 
|November 30, 2003 |          |                 |   |                |  |  |  |     
|                  | Required |                 | $ | 80.5           |  |  |  | 0.75 | 
|November 30, 2004 |          |                 |   |                |  |  |  |     
|                  | Required |                 | $ | 82.5           |  |  |  | 0.75 | 

In the event that EPFC failed to meet one of the
financial covenants listed above, we would not be required to
buy back any receivables from EPFC that had not been collected;
however, we would no longer be able to sell any future
receivables to EPFC. In addition, if EPFC fails to meet one of
these financial covenants, we would be in default under our
senior credit facility. This could have a significant impact on
our liquidity and capital resources. We believe that based on
our projected 2003 results, EPFC will remain in compliance with
its financial debt covenants; however, there is no assurance
this will occur.



| |               
| | --------------
| | Capitalization

Our capitalization consisted of the following at
November 30 (in thousands of dollars):

|                                                                  |                                                      |      |         |         |  |   |         |         | 
|----------------------------------------------------------------- | ---------------------------------------------------- | ---- | ------- | ------- |  | - | ------- | ------- | 
|                                                                  |                                                      | 2002 |         | 2001   
|                                                                  |                                                      |      |         |        
|Credit Agreement:                                                 |                                                      |      |         |         |  |   |         |        
|                                                                  | Revolving credit facility, due February 27,
    2004 |      | $       | 121,500 |  |   | $       | 142,000 | 
|                                                                  | Term loan, due 2003                                  |      |         | 16,925  |  |   |         | 47,739  | 
|Accounts Receivable Loan Agreement, paid-off in
    January 2002. |                                                      |      |        |         |  |   | 14,250  |        
|Senior Subordinated Notes, 9.375% interest, due
    2008          |                                                      |      | 220,000 |         |  |   | 220,000 |        
|Industrial Revenue Bonds, 1.8% to 2.2% interest,
    due 2005     |                                                      |      | 15,300  |         |  |   | 17,000  |        
|Other                                                             |                                                      |      |        |         |  |   | 2,137   |        
|                                                                  |                                                      |      |         |         |  |   |         |        
|                                                                  |                                                      |      | 373,725 |         |  |   | 443,126 |        
|Preferred Stock                                                   |                                                      |      | 137,973 |         |  |   | 123,086 |        
|Shareholders Deficit                                             |                                                      |      | (87,578 | )       |  |   | (33,655 | )      
|                                                                  |                                                      |      |         |         |  |   |         |        
|                                                                  |                                                      | $    | 424,120 |         |  | $ | 532,557 |        
|                                                                  |                                                      |      |         |         |  |   |         |        

Credit Agreement.We
have a syndicated senior secured loan facility (Credit
Agreement) providing an original term loan (Term
Loan) of $75.0 million, as amended, and a
$220.0 million revolving credit facility
(Facility). The Facility and the Term Loan bear
interest, at our option, at LIBOR rate plus 2.75%, or the
banks prime rate plus 1.5%. Interest is generally payable
quarterly on the Facility and Term Loan. We

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have entered into interest rate swap agreements
to manage our variable interest rate exposure. See Note B
for a discussion of our outstanding interest rate swap
agreements.


At November 30, 2002, we had
$42.2 million in outstanding letters of credit under the
Facility, which together with borrowings of $121.5 million,
made our available borrowing capacity $56.3 million.
However, due to various financial covenant limitations under the
Credit Agreement, we could only incur an additional
$39.3 million of indebtedness at November 30, 2002.
The Credit Agreement also contains certain fees. There are fees
for letters of credit equal to 2.75% per annum for all issued
letters of credit, and there is a commitment fee on the Facility
equal to 0.5% per annum of the unused portion of the Facility.
If we meet or fail to meet certain financial benchmarks, the
interest rate spreads on the borrowing, the commitment fees and
the fees for letters of credit may be reduced or increased

The Credit Agreement is secured by our capital
stock, the capital stock of our domestic United States
subsidiaries, a certain portion of the capital stock of our
foreign subsidiaries, and substantially all other property of
our United States subsidiaries. Additionally, the Credit
Agreement is guaranteed by us and certain of our subsidiaries.

The Credit Agreement contains covenants that
restrict our ability to declare dividends or redeem capital
stock, incur additional debt or liens, alter existing debt
agreements, make loans or investments, form joint ventures,
undergo a change in control or engage in mergers, acquisitions
or asset sales. These covenants also limit the annual amount of
capital expenditures and require us to meet certain minimum
financial ratios. For purposes of determining outstanding debt
under our Credit Agreement, we include the debt outstanding on
EPFC, our off-balance sheet special purpose entity. See Accounts
Receivable Asset-Backed Securitization above for a detailed
discussion of EPFC. We are in compliance with all covenants at
November 30, 2002.

Our Credit Agreement borrowings decreased during
2002 primarily due to scheduled principal payments, proceeds
from the sale of assets which were used to permanently reduce
principal, and the creation of EPFC. See Accounts Receivable
Asset-Backed Securitization above for a detailed discussion of
EPFC.

Accounts Receivable Loan Agreement.Prior to the formation of EPFC, we had
an accounts receivable loan agreement, whereby we sold certain
of our trade receivables to a wholly-owned, consolidated
subsidiary, Eagle-Picher Acceptance Corporation. The receivables
were then used as security for loans made under a separate
revolving credit facility. This accounts receivable loan
agreement was paid-off with the formation of EPFC. See Accounts
Receivable Asset-Backed Securitization above for a discussion of
EPFC.

Senior Subordinated Notes.Our Senior Subordinated Notes, due in
2008, require semi-annual interest payments on September 1
and March 1. The Senior Subordinated Notes, which are
unsecured, are redeemable at our option, in whole or in part,
any time after February 28, 2003 at set redemption prices.
We are required to offer to purchase the Senior Subordinated
Notes at a set redemption price should there be a change in
control. The Senior Subordinated Notes contain covenants which
restrict or limit our ability to declare or pay dividends, incur
additional debt or liens, issue stock, engage in affiliate
transactions, undergo a change in control or sell assets. We are
in compliance with these covenants at November 30, 2002.
The Senior Subordinated Notes are guaranteed by us and certain
of our subsidiaries.

Industrial Revenue Bonds.Our industrial revenue bonds require
monthly interest payments at variable interest rates based on
the market for similar issues and are secured by letters of
credit issued under the Facility described above.

Preferred Stock.Our
preferred stock increased $14.9 million during 2002 as a
result of mandatory dividend accretion. Commencing March 1,
2003, dividends on our Cumulative Redeemable Exchangeable
Preferred Stock become cash payable at 11.75% per annum; the
first semiannual dividend payment of $8.3 million is due
September 1, 2003. If we do not pay cash dividends on the
preferred stock, then holders of the preferred stock become
entitled to elect a majority of our Board of Directors.
Dakruiter S.A., a company controlled by Granaria Holdings B.V.,
our controlling common shareholder, holds a majority of our
preferred stock, and therefore Granaria Holdings B.V. would
continue to elect our entire Board of Directors.

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Shareholders
Deficit.Our shareholders
deficit increased due to our $36.8 million net loss during
2002, and the accretion of the preferred stock dividend
discussed above.



| |                                                             
| | ------------------------------------------------------------
| | Contractual Obligations and Other
    Commercial Commitments

The following table lists our contractual cash
obligations as of November 30, 2002 (in million of dollars):

|                              |                             |       |       |                    |  |        |      |      |  |      |       |       |  |      |      |      |  |   |     |     |  |   |     |     |  |   |       |       | 
|----------------------------- | --------------------------- | ----- | ----- | ------------------ |  | ------ | ---- | ---- |  | ---- | ----- | ----- |  | ---- | ---- | ---- |  | - | --- | --- |  | - | --- | --- |  | - | ----- | ----- | 
|                              |                             |       |       |                   
|                              |                             |       |       | Payments by Period
|                              |                             |       |       |                   
|                              |                             |       |       |                    |  | Beyond
|                              |                             | Total |       | 2003               |  | 2004   |      | 2005 |  | 2006 |       | 2007  |  | 2007
|                              |                             |       |       |                    |  |        |      |      |  |      |       |       |  |     
|Contractual Cash Obligations: |                             |       |       |                    |  |        |      |      |  |      |       |       |  |      |      |      |  |   |     |     |  |   |     |     |  |   |       |      
|                              | Long-term Debt              |       | $     | 373.7              |  |        | $    | 18.6 |  |      | $     | 123.3 |  |      | $    | 11.8 |  |   | $   |    |  |   | $   |    |  |   | $     | 220.0 | 
|                              | Operating Lease Commitments |       |       | 21.6               |  |        |      | 5.5  |  |      |       | 5.0   |  |      |      | 3.3  |  |   |     | 2.6 |  |   |     | 2.4 |  |   |       | 2.8   | 
|                              | Preferred Stock             |       |       | 141.9              |  |        |      |     |  |      |       |      |  |      |      |     |  |   |     |    |  |   |     |    |  |   |       | 141.9 | 
|                              | Advisory Agreement          |       |       | 9.4                |  |        |      | 1.8  |  |      |       | 1.8   |  |      |      | 1.8  |  |   |     | 1.8 |  |   |     | 1.8 |  |   |       | 0.4   | 
|                              | GMAC Legal Settlement       |       |       | 5.4                |  |        |      | 3.6  |  |      |       | 0.9   |  |      |      | 0.9  |  |   |     |    |  |   |     |    |  |   |       |      | 
|                              | Environmental Liability     |       |       | 5.6                |  |        |      | 2.7  |  |      |       | 1.7   |  |      |      | 0.4  |  |   |     | 0.4 |  |   |     | 0.4 |  |   |       |      | 
|                              |                             |       |       |                    |  |        |      |      |  |      |       |       |  |      |      |      |  |   |     |     |  |   |     |     |  |   |       |      
|                              |                             | $     | 557.6 |                    |  | $      | 32.2 |      |  | $    | 132.7 |       |  | $    | 18.2 |      |  | $ | 4.8 |     |  | $ | 4.6 |     |  | $ | 365.1 |      
|                              |                             |       |       |                    |  |        |      |      |  |      |       |       |  |      |      |      |  |   |     |     |  |   |     |     |  |   |       |      

For a discussion of our long-term debt and
preferred stock, and their related provisions, see the
Capitalization section above. For long-term debt and preferred
stock in the above table, we have included only principal
payments on long-term debt and the maturity redemption amount on
the preferred stock (interest expense and preferred stock cash
dividends are excluded). Included in long-term debt is primarily
our Credit Agreement and Senior Subordinated Notes. The Credit
Agreements interest is based on variable rates and
therefore the amount is not determinable. The Senior
Subordinated Notes require semi-annual interest payments of
approximately $10.3 million through 2008. Commencing
March 1, 2003, the preferred stocks dividends become
cash payable at 11.75% per annum; the first semiannual dividend
payment of $8.3 million is due September 1, 2003.
Thereafter, annual dividend payments on the preferred stock are
$16.7 million. In addition, our Accounts Receivable
Asset-Backed Securitization, EPFC, which is described above,
expires at the earlier of a) the maturity of our Credit
Agreement, or b) assuming we are able to refinance our
Credit Agreement, the fourth quarter of 2004.

We have an advisory and consulting agreement with
a related party, Granaria Holdings B.V., our controlling common
shareholder, which requires an annual management fee of
$1.8 million plus out-of-pocket expenses. The agreement
terminates on February 24, 2008. Included in the above
table is the annual $1.8 million management fee, excluding
out-of-pocket expenses, as the out-of-pocket costs vary from
year to year.

During 2002, we settled a lawsuit with GMAC and
Eagle Trim, Inc. (a business we divested in 1998) whereby we are
required to pay $5.4 million to GMAC, payable
$1.7 million by December 5, 2002, $1.5 million,
payable in monthly installments from January 2003 through June
2003, and $2.2 million payable in monthly installments from
July 2003 through October 2005, plus interest at 4.5% per annum.

We are involved in various stages of
investigation and remediation related to environmental
remediation projects at a number of sites as a result of past
and present operations, including currently-owned and
formerly-owned plants. Also, we have received notice that we may
have liability under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 as a Potentially
Responsible Party at a number of sites (Superfund
Sites). The ultimate cost of site remediation is difficult
to predict given the uncertainties regarding the extent of the
required remediation, the interpretation of applicable laws and
regulations and alternative remediation methods. Based on our
experience with environmental remediation matters, we have
accrued $17.7 million in our Accrued Divestitures Reserve
at November 30, 2002 related to environmental and legal
matters for sold divisions or businesses, and $2.4 million
is recorded in Other Accrued Liabilities related to on-going
businesses. There can be no assurances that environmental laws
and regulations will not become more stringent in the future or
that we will not incur significant costs in the future to comply

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with such laws and regulations. Accordingly,
future information and developments will require us to
continually reassess the expected impact of these environmental
matters. We have included in the above table $5.6 million
of contractual cash commitments based on our current remediation
plans. The remaining commitments are not contractually committed
and therefore not included in the above table.


The following table lists our other commercial
commitments as of November 30, 2002 (in million of dollars):

|                              |                                    |       |      |                      |  |        |      |      |  |      |     |      |  |      |     |     |  |   |   |   |  |   |   |   |  |   |   |   | 
|----------------------------- | ---------------------------------- | ----- | ---- | -------------------- |  | ------ | ---- | ---- |  | ---- | --- | ---- |  | ---- | --- | --- |  | - | - | - |  | - | - | - |  | - | - | - | 
|                              |                                    |       |      |                     
|                              |                                    |       |      | Expiration by Period
|                              |                                    |       |      |                     
|                              |                                    |       |      |                      |  | Beyond
|                              |                                    | Total |      | 2003                 |  | 2004   |      | 2005 |  | 2006 |     | 2007 |  | 2007
|                              |                                    |       |      |                      |  |        |      |      |  |      |     |      |  |     
|Other Commercial Commitments: |                                    |       |      |                      |  |        |      |      |  |      |     |      |  |      |     |     |  |   |   |   |  |   |   |   |  |   |   |  
|                              | Third-Party Guarantee  Transicoil |       | $    | 4.0                  |  |        | $    | 1.4  |  |      | $   | 1.4  |  |      | $   | 1.2 |  |   | $ |  |  |   | $ |  |  |   | $ |  | 
|                              | Stand-by Letters of Credit         |       |      | 42.2                 |  |        |      | 42.2 |  |      |     |     |  |      |     |    |  |   |   |  |  |   |   |  |  |   |   |  | 
|                              |                                    |       |      |                      |  |        |      |      |  |      |     |      |  |      |     |     |  |   |   |   |  |   |   |   |  |   |   |  
|                              |                                    | $     | 46.2 |                      |  | $      | 43.6 |      |  | $    | 1.4 |      |  | $    | 1.2 |     |  | $ |  |   |  | $ |  |   |  | $ |  |  
|                              |                                    |       |      |                      |  |        |      |      |  |      |     |      |  |      |     |     |  |   |   |   |  |   |   |   |  |   |   |  

We are the guarantor on the lease of a building
of our former Transicoil subsidiary which was sold in 1997. We
believe the likelihood of being liable for the lease is remote.
The original term of the lease expires in 2005; however, there
are two five-year renewal terms that we have also guaranteed.
The rent for the two five-year renewal terms is based upon the
Consumer Price Index, at the time of renewal, should Transicoil
not exercise its purchase option on the building. The amount of
the guarantee for the current lease has been included in the
table above; however, any potential commitments related to the
two five-year renewals have not been disclosed in the table
above as the buyers intent is unknown at this time.

The stand-by letters of credit are required by
various governmental regulatory agencies and support our
obligations for certain environmental remediation, industrial
revenue bonds, workers compensation and mining reclamation
activities. Although the letters of credit expire by their terms
within one year, the obligations they support extend into the
future and it is expected that these letters of credit will be
renewed annually.

In addition, we are engaged in various litigation
matters as further described in Item 3 of this report. It
is not possible to quantify an estimate of the cost of such
litigation matters at this time and accordingly they have not
been included as an other commercial commitment.



| |                        
| | -----------------------
| | Credit Agreement EBITDA

Our senior secured credit facility has several
financial covenants which are based on EBITDA as defined in the
credit agreement. EBITDA is defined in the credit agreement
(Credit Agreement EBITDA) as earnings before
interest expense, income taxes, depreciation and amortization,
determined (A) without giving effect to (i) any
extraordinary gains or losses but with giving effect to gains or
losses from sales of assets sold in the ordinary course of
business, (ii) any impact from the LIFO method of inventory
accounting, (iii) any non-cash charge other than routine
recurring non-cash charges that result in an accrual of a
reserve for cash charges in any future period deducted in
determining consolidated net income for such period,
(iv) amounts paid to present or future officers or
employees in connection with their separation from employment,
up to a limit (together with any compensation expense incurred
in connection with the acquisition of us by Granaria Industries,
Inc.) of $43.2 million (of which $5.1 million remained
unused as of November 30, 2002), (v) a
$16.0 million gain from the receipt of insurance proceeds
in 2000, (vi) the loss from the sale of our former
Machinery Segment and the loss from operations of the Machinery
Segment in 2001, and (B) with giving effect to proforma
pre-acquisition consolidated EBITDA attributable to businesses
acquired during the year.

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The following adjustments have been made to our
EBITDA to arrive at Credit Agreement EBITDA:

|                                                                                                      |                                                   |      |        |       |   |      |        |        |   |   |         |         |  
|----------------------------------------------------------------------------------------------------- | ------------------------------------------------- | ---- | ------ | ----- | - | ---- | ------ | ------ | - | - | ------- | ------- | -
|                                                                                                      |                                                   | 2002 |        | 2001  |   | 2000
|                                                                                                      |                                                   |      |        |       |   |     
|Earnings from continuing operations before income
    taxes, interest, depreciation, and amortization |                                                   | $    | 70,955 |       |   | $    | 67,298 |        |   | $ | 119,810 |        
|                                                                                                      | Restructuring charges                             |      |        | 5,898 |   |      |        | 14,163 |   |   |         |        |  
|                                                                                                      | Loss from divestitures                            |      |        | 6,497 |   |      |        | 2,105  |   |   |         |        |  
|                                                                                                      | Management compensation  special                 |      |        | 3,457 |   |      |        | 3,125  |   |   |         | 1,560   |  
|                                                                                                      | Severance                                         |      |        | 536   |   |      |        |       |   |   |         |        |  
|                                                                                                      | Long-term bonus plan and share appreciation plans |      |        | 1,200 |   |      |        | (950   | ) |   |         | 605     |  
|                                                                                                      | Insurance related losses (gains)                  |      |        | 3,100 |   |      |        |       |   |   |         | (16,000 | )
|                                                                                                      | LIFO provision (benefit)                          |      |        | (957  | ) |      |        | 372    |   |   |         | 985     |  
|                                                                                                      | Proforma pre-acquisition EBITDA                   |      |        |      |   |      |        |       |   |   |         | 1,221   |  
|                                                                                                      | Legal and litigation costs                        |      |        | 6,050 |   |      |        |       |   |   |         |        |  
|                                                                                                      | Other non-cash, non-recurring items               |      |        |      |   |      |        | 1,000  |   |   |         | 218     |  
|                                                                                                      | Discontinued operations  CED                     |      |        |      |   |      |        |       |   |   |         | 2,290   |  
|                                                                                                      |                                                   |      |        |       |   |      |        |        |   |   |         |        
|Credit Agreement EBITDA                                                                               |                                                   | $    | 96,736 |       |   | $    | 87,113 |        |   | $ | 110,689 |        
|                                                                                                      |                                                   |      |        |       |   |      |        |        |   |   |         |        

In 2002, our Credit Agreement EBITDA was
positively impacted by productivity improvements throughout all
businesses, which was offset by reduced sales volume in our
Technologies Segment. In 2001, our Credit Agreement EBITDA
losses in the Automotive Segment and the Technologies Segment
were the principal reasons for the deterioration from 2000.

Credit Agreement EBITDA may not be comparable to
similarly titled measures reported by other companies and should
not be construed as an alternative to operating income, as
determined by Generally Accepted Accounting Principles
(GAAP), as an indicator of our operating
performance, or to cash flows from operating activities, as
determined by GAAP, or as a measure of liquidity. Funds depicted
by Credit Agreement EBITDA are not available for
managements discretionary use to the extent they are
required for debt service and other commitments.



| |                                         
| | ----------------------------------------
| | Credit Agreement Financial
    Covenants

There are three financial covenants contained in
our senior secured credit agreement. They are a leverage ratio
(the ratio of total debt less cash on the balance sheet to
Credit Agreement EBITDA), an interest coverage ratio (the ratio
of Credit Agreement EBITDA to interest expense) and a fixed
charge coverage ratio (the ratio of Credit Agreement EBITDA to
the sum of interest expense plus required principal payments
plus cash dividends paid plus income taxes paid). For purposes
of determining outstanding debt under our Credit Agreement, we
include the debt outstanding on EPFC, our off-balance sheet
special purpose entity. See

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Accounts Receivable Asset-Backed Securitization
above for a detailed discussion of EPFC. The following table
presents the required ratios and the actual ratios.


|                  |          |                 |  |                 |  |          |  |      |  |  |  |      | 
|----------------- | -------- | --------------- |  | --------------- |  | -------- |  | ---- |  |  |  | ---- | 
|                  |          |                 |  |                
|                  |          |                 |  | (not less than)
|                  |          |                 |  |                
|                  |          |                 |  |                 |  | Minimum 
|                  |          | (not more than) |  | Minimum         |  | Fixed   
|                  |          | Maximum         |  | Interest        |  | Charge  
|                  |          | Leverage        |  | Coverage        |  | Coverage
|                  |          | Ratio           |  | Ratio           |  | Ratio   
|                  |          |                 |  |                 |  |         
|November 30, 2001 |          |                 |  |                 |  |          |  |      |  |  |  |     
|                  | Required |                 |  | 5.25            |  |          |  | 2.00 |  |  |  | 1.25 | 
|                  | Actual   |                 |  | 4.80            |  |          |  | 2.23 |  |  |  | 1.45 | 
|November 30, 2002 |          |                 |  |                 |  |          |  |      |  |  |  |     
|                  | Required |                 |  | 4.75            |  |          |  | 2.00 |  |  |  | 1.25 | 
|                  | Actual   |                 |  | 4.02            |  |          |  | 2.63 |  |  |  | 1.65 | 
|February 28, 2003 |          |                 |  |                 |  |          |  |      |  |  |  |     
|                  | Required |                 |  | 4.75            |  |          |  | 2.25 |  |  |  | 1.35 | 
|May 31, 2003      |          |                 |  |                 |  |          |  |      |  |  |  |     
|                  | Required |                 |  | 4.50            |  |          |  | 2.25 |  |  |  | 1.35 | 
|August 31, 2003   |          |                 |  |                 |  |          |  |      |  |  |  |     
|                  | Required |                 |  | 4.25            |  |          |  | 2.25 |  |  |  | 1.40 | 
|November 30, 2003 |          |                 |  |                 |  |          |  |      |  |  |  |     
|                  | Required |                 |  | 4.25            |  |          |  | 2.50 |  |  |  | 1.40 | 

Based on our 2003 Credit Agreement EBITDA
projection of $102.0 million to $106.0 million, we
believe that we will be in compliance with all of our debt
covenants throughout 2003. However, any adverse changes in
actual results from projections, along with the contractual
tightening of the covenants under the Credit Agreement, would
place us at risk of not being able to comply with all of the
covenants of the Credit Agreement. In the event we cannot comply
with the terms of the Credit Agreement as currently written, it
would be necessary for us to obtain a waiver or renegotiate our
loan covenants, and there can be no assurance that such
negotiations will be successful. In addition, EPFC would be in
default under our accounts receivable asset-backed
securitization, described above, and we would need to obtain a
waiver. Any agreements to amend the covenants and/or obtain
waivers would likely require us to pay a fee and increase the
interest rate payable under the Credit Agreement. The amount of
such fee and increase in interest rate would be determined in
the negotiations of the amendment.



| |                                                            
| | -----------------------------------------------------------
| | Earnings to Fixed Charges and Preferred
    Stock Dividends

During 2002, our earnings were insufficient to
cover fixed charges and preferred stock dividends by
$49.1 million, and in 2001, our earnings were insufficient
to cover fixed charges and preferred stock dividends by
$45.2 million. During 2000, the fixed charge ratio was
1.11x. In 2002, the ability to cover fixed charges and preferred
stock dividends was significantly impacted by the
$26.0 million of special charges as discussed in the 2002
Compared to 2001 Results of Operations section above. In 2001,
the ability to cover fixed charges and preferred stock dividend
was significantly impacted by the $14.2 million of
restructuring charges.

Recently Released or Adopted Accounting
Standards

In June 2001, the FASB issued SFAS No. 142,
Goodwill and Intangible Assets and effective
December 1, 2002, we adopted this standard. This standard
addresses goodwill and other intangible assets that have
indefinite useful lives and, as such, prescribes that these
assets will not be amortized, but rather tested, at least
annually, for impairment. This standard also provides specific
guidance on performing the annual impairment test for goodwill
and intangibles with indefinite lives. Under this new accounting
standard, we will no longer amortize our goodwill and will be
required to complete an annual impairment test. We have had
approximately $16.0 million of goodwill amortization per
year that will no longer be recorded in fiscal 2003 and beyond.
We have determined that we have six reporting units, as defined
in SFAS No. 142, within our three reportable business
segments. We have completed our initial impairment test required
by this accounting

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standard and have determined we will not
recognize an impairment charge related to the adoption of this
accounting standard in 2003.


In June 2001, the FASB issued SFAS No. 143,
Accounting for Asset Retirement Obligations, which
requires that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is
incurred if a reasonable estimate of fair value can be made. The
associated asset retirement costs are capitalized as part of the
carrying amount of the long-lived assets and depreciated over
their estimated useful life while the liability is accreted to
its expected obligation amount upon retirement. We adopted SFAS
No. 143 on December 1, 2002. The adoption did not have
a material impact on our financial condition or results of
operations.

In September 2001, the FASB issued SFAS
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, which superceded SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed of. The primary
difference is that goodwill and certain intangibles with
indefinite lives have been removed from the scope of SFAS
No. 144, as they are covered by SFAS No. 142, as
described above. It also broadens the presentation of
discontinued operations to include a component of an entity
rather than a segment of a business. A component of an entity
comprises operations and cash flows that can clearly be
distinguished operationally and for financial accounting
purposes from the rest of the entity. We adopted SFAS
No. 144 on December 1, 2002. The adoption did not have
a material impact on our financial condition or results of
operations.

In June 2002, the FASB issued SFAS No. 146,
Accounting for Costs Associated with Exit or disposal
Activities, which is effective for exit or disposal
activities initiated after December 31, 2002. SFAS
No. 146 addresses financial accounting and reporting for
costs associated with exit or disposal activities and nullifies
Emerging Issues Task Force (EITF) Issue No. 94-3,
Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring). The adoption of this
statement is not expected to have a material impact on our
financial condition or results of operations.

In November 2002, the FASB issued Interpretation
No. 45 (FIN 45) Guarantors
Accounting and Disclosure requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN 45
elaborates on the existing disclosure requirements for most
guarantees, including loan guarantees. It also clarifies that at
the time a company issues a guarantee, the company must
recognize an initial liability for the fair value, or market
value, of the obligations it assumes under that guarantee.
However, the provisions related to recognizing a liability at
inception of the guarantee for the fair value of the
guarantors obligations does not apply to product
warranties or to guarantees accounted for as derivatives. The
initial recognition and initial measurement provisions apply on
a prospective basis to guarantees issued or modified after
December 31, 2002. The disclosure requirements of
FIN 45 are effective for financial statements of interim or
annual periods ending after December 15, 2002. We have not
completed the process of evaluating the impact that will result
from adopting this interpretation. We, therefore, are unable to
disclose the impact, if any, of adopting this interpretation on
our financial position and results of operations.

In January 2003, the FASB issued Interpretation
No. 46 (FIN 46) Consolidation of
Variable Interest Entities. Until this interpretation, a
company generally included another entity in its consolidated
financial statements only if it controlled the entity through
voting interests. FIN 46 requires a variable interest
entity to be consolidated by a company if that company is
subject to a majority of the risk of loss from the variable
interest entitys activities or entitled to receive a
majority of the entitys residual returns. FIN 46
applies to variable interest entities created after
January 31, 2003, and to variable interest entities in
which an enterprise obtains an interest in after that date. A
public entity with a variable interest in a variable interest
entity created before February 1, 2003, shall apply the
provisions of this interpretation (other than the transition
disclosure provisions in paragraph 26) to that entity no
later than the beginning of the first interim or annual
reporting period beginning after June 15, 2003. The related
disclosure requirements are effective immediately. The impact of
this interpretation is not expected to have a material impact on
our financial condition or results of operations.

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In November 2002, the EITF issued
EITF 00-21, Revenue Arrangements with Multiple
Deliverables. EITF 00-21 prescribes a method to
account for contracts that have multiple elements or
deliverables. It provides guidance on how to allocate the value
of a contract to its different deliverables, as well as guidance
on when to recognize revenue allocated to each deliverable over
its performance period. We are required to adopt EITF 00-21
on December 1, 2003. We are evaluating the impact
EITF 00-21 will have on us, but do not expect it to have a
material impact on our financial condition or results of
operations.

Forward Looking Statements

This report contains statements which, to the
extent that they are not statements of historical fact,
constitute forward looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
Section 21E of the Securities Exchange Act of 1934. The
words estimate, anticipate,
project, intend, believe,
expect, and similar expressions are intended to
identify forward-looking statements. Forward looking statements
in this report include, but are not limited to, any statements
under the Outlook headings. Such forward-looking
information involves risks and uncertainties that could cause
actual results to differ materially from those expressed in any
such forward-looking statements. These risks and uncertainties
include, but are not limited to, our ability to maintain
existing relationships with customers, demand for our products,
our ability to successfully implement productivity improvements
and/or cost reduction initiatives, our ability to develop,
market and sell new products, our ability to obtain raw
materials, increased government regulation or changing
regulatory policies resulting in conditions, acquisitions and
divestitures, technological developments and changes in the
competitive environment in which we operate. Persons reading
this report are cautioned that such forward-looking statements
are only predictions and that actual events or results may
differ materially.




Item 7a.Quantitative
and Qualitative Disclosures About Market Risk

Risk Management Activities

We are exposed to market risk including changes
in interest rates, currency exchange rates and commodity prices.
We use derivative instruments to manage our interest rate and
foreign currency exposures. We do not use derivative instruments
for speculative or trading purposes. Generally, we enter into
hedging relationships such that changes in the fair values or
cash flows of items and transactions being hedged are expected
to be offset by corresponding changes in the values of the
derivatives.

Interest Rate
Management

We use interest rate swap contracts to adjust the
proportion of our total debt that is subject to variable
interest rates. Under our interest rate swap contracts, we agree
to pay an amount equal to a specified fixed-rate of interest for
a certain notional amount and receive in return an amount equal
to a variable-rate. The notional amounts of the contract are not
exchanged. No other cash payments are made unless the contract
is terminated prior to maturity. Although no collateral is held
or exchanged for these contracts, interest rate swap contracts
are entered into with a major financial institution in order to
minimize our counterparty credit risk. These interest rate swap
contracts are designated as cash flow hedges against changes in
the amount of future cash flows associated with our interest
payments on variable-rate debt. Accordingly, they are reflected
at fair value in our balance sheets and the related changes in
fair value on these contracts, net of tax, are recorded as a
component of Accumulated Other Comprehensive Income (Loss) in
our balance sheets. To the extent that any of these contracts
are not considered to be effective in offsetting the change in
the value of the interest payments being hedged, any changes in
fair value relating to the ineffective portion of these
contracts are immediately recognized in our income statement.
The net effect of this accounting on our operating results is
that interest expense on a portion of variable-rate debt being
hedged is generally recorded based on fixed interest rates. At
November 30, 2002, we had interest rate swap contracts to
pay fixed-rates of interest (average rate of 5.68%) on
$90.0 million notional amount of indebtedness. The
$90.0 million notional amount of outstanding contracts will
mature during fiscal year 2004. At November 30, 2001, we
had interest rate swap contracts on $90.0 million notional
amount of indebtedness. As of November 30, 2002, we had
$4.5 million in unrealized losses under our interest rate
swap agreements, and as of November 30, 2001 we had
$4.8 million in

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unrealized losses which represent the fair values
of the interest rate swap agreements as of those dates. The fair
value of interest rate swap contracts is based on quoted market
prices and third-party provided calculations, which reflect the
present values of the difference between estimated future
variable-rate receipts and future fixed-rate payments. The
unrealized losses, net of tax, are recorded in Accumulated Other
Comprehensive Income (Loss) in our balance sheets. Accordingly,
the combined effect of a 1% increase in the applicable index
rates would result in additional interest expense of
approximately $1.1 million annually, assuming no change in
the level of borrowings.


Currency Rate
Management

We use foreign currency forward exchange
contracts to hedge the risk of cash flow fluctuations due to
changes in exchange rates on sales denominated in foreign
currencies. As part of our overall strategy to manage the level
of exposure to the risk of foreign currency exchange rate
fluctuations, we hedge a portion of our foreign currency
exposures anticipated over the next twelve-months. To hedge this
exposure, we used foreign currency forward exchange contracts
that generally have maturities that approximate the timing of
the forecasted transactions. Foreign currency forward exchange
contracts are placed with a number of major financial
institutions in order to minimize our counterparty credit risk.
We record these foreign currency forward exchange contracts at
fair value in our balance sheets and the related unrealized
gains or losses on these contracts, net of tax, are recorded as
a component of Accumulated Other Comprehensive Income (Loss) in
our balance sheets. These unrealized gains and losses are
recognized in the income statement in the period in which the
related transactions being hedged are recognized in the income
statement. However, to the extent that any of these contracts
are not considered to be effective in offsetting the change in
the value of the cash flows being hedged, any changes in fair
value relating to the ineffective portion of these contracts are
immediately recognized in our income statement. As of
November 30, 2002, we had outstanding foreign currency
forward exchange contracts with an aggregate notional amount of
$13.5 million. Net unrealized losses on these contracts,
based on prevailing financial market information, as of
November 30, 2002, were $148,000 and were included in
Accumulated Other Comprehensive Income (Loss), net of tax, in
our balance sheets. As of November 30, 2001, we had
outstanding foreign currency forward exchange contracts with an
aggregate notional amount of $14.5 million. Net unrealized
losses on these contracts, based on prevailing financial market
information, as of November 30, 2001 were $149,000 and were
included in Accumulated Other Comprehensive Income (Loss), net
of tax, in our balance sheets. During 2002, we recognized
$52,000 in gains from foreign currency hedge transactions, which
were offset by losses of $1.2 million. The fair value of
foreign currency contracts represents the amount required to
enter into offsetting contracts with similar remaining
maturities based on quoted market prices. During 2001, we
recognized $693,000 in gains from foreign currency hedge
transactions, which were offset by losses of approximately
$186,000. During 2000, we recognized $314,000 in gains from
foreign currency hedge transactions, which were offset by losses
of $157,000.

Credit
Risk

Our concentrations of credit risk consist
primarily of cash and cash equivalents, trade accounts
receivable, retained interest in EPFC and sales concentrations
with certain customers. As part of our ongoing control
procedures, we monitor concentrations of credit risk associated
with financial institutions with which we conduct business.
Credit risk with financial institutions is considered minimal as
we utilize only high quality financial institutions. We conduct
periodic credit evaluations of our customers financial
condition and generally do not require collateral. Our customer
base includes all significant automotive manufacturers and their
first tier suppliers in North America and Europe. Although we
are directly affected by the well-being of the automotive
industry, we do not believe significant credit risk existed at
November 30, 2002. In addition, during 2002, we formed
EPFC, a qualifying special-purpose entity, to sell an interest
in certain receivables. See Note D in our financial
statements for a discussion of EPFC. We believe that EPFC
assists in the management of our credit risk related to trade
receivables as it permits us to sell an interest in our
receivables on a non-recourse basis.

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Item 8.Financial
Statements and Supplementary Data

Independent Auditors Report

The Board of Directors

Eagle-Picher Holdings, Inc.:


We have audited the accompanying consolidated
balance sheets of Eagle-Picher Holdings, Inc. and subsidiaries
as of November 30, 2002 and 2001, and the related
consolidated statements of income (loss), shareholders
equity (deficit), and cash flows for each of the three years in
the period ended November 30, 2002. 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, the consolidated financial
statements referred to above present fairly, in all material
respects, the financial position of Eagle-Picher Holdings, Inc.
as of November 30, 2002 and 2001, and the results of its
operations and its cash flows for each of the three years in the
period ended November 30, 2002, in conformity with
accounting principles generally accepted in the United States of
America.

As discussed in Note Q, the accompanying
2001 and 2000 financial statements have been restated to reflect
the appropriate adoption of EITF 00-10, Accounting
for Shipping and Handling Fees and Costs which resulted in
an increase to Net Sales and a corresponding increase to Cost of
Products Sold for transportation costs billed to customers.

/s/ DELOITTE & TOUCHE LLP

Cincinnati, Ohio

February 3, 2003


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EAGLE-PICHER HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

November 30, 2002 and 2001


|                                                                                                                                                                                                             |                                                                                              |                           |         |          |   |   |         |          |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------- | ------------------------- | ------- | -------- | - | - | ------- | -------- | -
|                                                                                                                                                                                                             |                                                                                              | 2002                      |         | 2001    
|                                                                                                                                                                                                             |                                                                                              |                           |         |         
|                                                                                                                                                                                                             |                                                                                              |                          
|                                                                                                                                                                                                             |                                                                                              | (In thousands of dollars,
|                                                                                                                                                                                                             |                                                                                              | except per share and par 
|                                                                                                                                                                                                             |                                                                                              | value amounts)           
|ASSETS                                                                                                                                                                                                      
|Current Assets:                                                                                                                                                                                              |                                                                                              |                           |         |          |   |   |         |         
|                                                                                                                                                                                                             | Cash and cash equivalents                                                                    |                           | $       | 31,522   |   |   | $       | 24,620   |  
|                                                                                                                                                                                                             | Receivables, net of doubtful accounts of $435 in
    2002 and $1,000 in 2001                 |                           |         | 23,704   |   |   |         | 100,052  |  
|                                                                                                                                                                                                             | Retained interest in Eagle-Picher Funding
    Corporation, net of allowances of $700 in 2002 |                           |         | 29,400   |   |   |         |         |  
|                                                                                                                                                                                                             | Costs and estimated earnings in excess of billings                                           |                           |         | 16,942   |   |   |         | 10,744   |  
|                                                                                                                                                                                                             | Inventories                                                                                  |                           |         | 54,718   |   |   |         | 67,623   |  
|                                                                                                                                                                                                             | Net assets of operations to be sold                                                          |                           |         | 643      |   |   |         | 3,258    |  
|                                                                                                                                                                                                             | Prepaid expenses and other assets                                                            |                           |         | 15,667   |   |   |         | 15,122   |  
|                                                                                                                                                                                                             | Deferred income taxes                                                                        |                           |         | 10,798   |   |   |         | 24,287   |  
|                                                                                                                                                                                                             |                                                                                              |                           |         |          |   |   |         |         
|                                                                                                                                                                                                             |                                                                                              |                           | 183,394 |          |   |   | 245,706 |         
|Property, Plant and Equipment, net                                                                                                                                                                           |                                                                                              |                           | 183,405 |          |   |   | 216,755 |         
|Goodwill, net of accumulated amortization of
    $73,446 in 2002 and $57,624 in 2001                                                                                                                         |                                                                                              |                           | 163,940 |          |   |   | 179,762 |         
|Prepaid Pension                                                                                                                                                                                              |                                                                                              |                           | 54,796  |          |   |   | 54,676  |         
|Other Assets, net                                                                                                                                                                                            |                                                                                              |                           | 27,506  |          |   |   | 32,035  |         
|                                                                                                                                                                                                             |                                                                                              |                           |         |          |   |   |         |         
|                                                                                                                                                                                                             |                                                                                              | $                         | 613,041 |          |   | $ | 728,934 |         
|                                                                                                                                                                                                             |                                                                                              |                           |         |          |   |   |         |         
|LIABILITIES AND SHAREHOLDERS EQUITY
    (DEFICIT)                                                                                                                                                          
|Current Liabilities:                                                                                                                                                                                         |                                                                                              |                           |         |          |   |   |         |         
|                                                                                                                                                                                                             | Accounts payable                                                                             |                           | $       | 85,055   |   |   | $       | 86,297   |  
|                                                                                                                                                                                                             | Current portion of long-term debt                                                            |                           |         | 18,625   |   |   |         | 41,957   |  
|                                                                                                                                                                                                             | Compensation and employee benefits                                                           |                           |         | 21,044   |   |   |         | 18,909   |  
|                                                                                                                                                                                                             | Billings in excess of costs and estimated earnings                                           |                           |         | 944      |   |   |         | 2,088    |  
|                                                                                                                                                                                                             | Accrued divestiture reserve                                                                  |                           |         | 17,662   |   |   |         | 17,810   |  
|                                                                                                                                                                                                             | Other accrued liabilities                                                                    |                           |         | 37,653   |   |   |         | 37,241   |  
|                                                                                                                                                                                                             |                                                                                              |                           |         |          |   |   |         |         
|                                                                                                                                                                                                             |                                                                                              |                           | 180,983 |          |   |   | 204,302 |         
|Long-Term Debt, net of current portion                                                                                                                                                                       |                                                                                              |                           | 355,100 |          |   |   | 401,169 |         
|Postretirement Benefits Other Than Pensions                                                                                                                                                                  |                                                                                              |                           | 17,635  |          |   |   | 17,873  |         
|Deferred Income Taxes                                                                                                                                                                                        |                                                                                              |                           |        |          |   |   | 6,277   |         
|Other Long-Term Liabilities                                                                                                                                                                                  |                                                                                              |                           | 8,928   |          |   |   | 9,882   |         
|                                                                                                                                                                                                             |                                                                                              |                           |         |          |   |   |         |         
|                                                                                                                                                                                                             |                                                                                              |                           | 562,646 |          |   |   | 639,503 |         
|                                                                                                                                                                                                             |                                                                                              |                           |         |          |   |   |         |         
|11.75% Cumulative Redeemable Exchangeable
    Preferred Stock;
    50,000,000 shares authorized; 14,191 shares issued and
    outstanding (Mandatorily Redeemable at $10,000 per share on
    March 1, 2008) |                                                                                              |                           | 137,973 |          |   |   | 123,086 |         
|                                                                                                                                                                                                             |                                                                                              |                           |         |          |   |   |         |         
|Commitments and Contingencies (Notes I, L
    and M)                                                                                                                                                         |                                                                                              |                           |         |          |   |   |         |         
|Shareholders Equity (Deficit):                                                                                                                                                                              |                                                                                              |                           |         |          |   |   |         |         
|                                                                                                                                                                                                             | Common stock; $0.01 par value each;
    1,000,000 shares authorized and issued               |                           |         | 10       |   |   |         | 10       |  
|                                                                                                                                                                                                             | Additional paid-in capital                                                                   |                           |         | 99,991   |   |   |         | 99,991   |  
|                                                                                                                                                                                                             | Accumulated deficit                                                                          |                           |         | (175,112 | ) |   |         | (123,393 | )
|                                                                                                                                                                                                             | Accumulated other comprehensive income (loss)                                                |                           |         | (4,376   | ) |   |         | (5,730   | )
|                                                                                                                                                                                                             | Treasury stock, at cost, 66,500 shares in 2002
    and 27,750 shares in 2001                 |                           |         | (8,091   | ) |   |         | (4,533   | )
|                                                                                                                                                                                                             |                                                                                              |                           |         |          |   |   |         |         
|                                                                                                                                                                                                             |                                                                                              |                           | (87,578 | )        |   |   | (33,655 | )       
|                                                                                                                                                                                                             |                                                                                              |                           |         |          |   |   |         |         
|                                                                                                                                                                                                             |                                                                                              | $                         | 613,041 |          |   | $ | 728,934 |         
|                                                                                                                                                                                                             |                                                                                              |                           |         |          |   |   |         |         

The accompanying notes are an integral part of
these consolidated balance sheets.

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EAGLE-PICHER HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF INCOME
(LOSS)

Years Ended November 30, 2002, 2001 and
2000


|                                                                        |                                                                                                                                                      |                                      |         |         |   |      |         |         |   |   |         |         |  
|----------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------ | ------- | ------- | - | ---- | ------- | ------- | - | - | ------- | ------- | -
|                                                                        |                                                                                                                                                      | 2002                                 |         | 2001    |   | 2000
|                                                                        |                                                                                                                                                      |                                      |         |         |   |     
|                                                                        |                                                                                                                                                      |                                     
|                                                                        |                                                                                                                                                      | (In thousands of dollars, except per
|                                                                        |                                                                                                                                                      | share amounts)                      
|Net Sales                                                               |                                                                                                                                                      | $                                    | 696,765 |         |   | $    | 708,750 |         |   | $ | 770,466 |        
|                                                                        |                                                                                                                                                      |                                      |         |         |   |      |         |         |   |   |         |        
|Operating Costs and Expenses:                                           |                                                                                                                                                      |                                      |         |         |   |      |         |         |   |   |         |        
|                                                                        | Cost of products sold (exclusive of depreciation)                                                                                                    |                                      |         | 546,490 |   |      |         | 574,993 |   |   |         | 609,158 |  
|                                                                        | Selling and administrative                                                                                                                           |                                      |         | 61,933  |   |      |         | 50,979  |   |   |         | 59,183  |  
|                                                                        | Depreciation                                                                                                                                         |                                      |         | 46,567  |   |      |         | 42,617  |   |   |         | 41,313  |  
|                                                                        | Amortization of intangibles                                                                                                                          |                                      |         | 17,477  |   |      |         | 16,490  |   |   |         | 16,113  |  
|                                                                        | Restructuring                                                                                                                                        |                                      |         | 5,898   |   |      |         | 14,163  |   |   |         |        |  
|                                                                        | Loss (gain) from divestitures                                                                                                                        |                                      |         | 6,497   |   |      |         | 2,105   |   |   |         | (3,149  | )
|                                                                        | Management compensation  special                                                                                                                    |                                      |         | 3,457   |   |      |         | 3,125   |   |   |         | 1,560   |  
|                                                                        | Insurance related losses (gains)                                                                                                                     |                                      |         | 3,100   |   |      |         |        |   |   |         | (16,000 | )
|                                                                        |                                                                                                                                                      |                                      |         |         |   |      |         |         |   |   |         |        
|                                                                        |                                                                                                                                                      |                                      | 691,419 |         |   |      | 704,472 |         |   |   | 708,178 |        
|                                                                        |                                                                                                                                                      |                                      |         |         |   |      |         |         |   |   |         |        
|Operating Income                                                        |                                                                                                                                                      |                                      | 5,346   |         |   |      | 4,278   |         |   |   | 62,288  |        
|                                                                        | Interest expense                                                                                                                                     |                                      |         | (41,142 | ) |      |         | (40,105 | ) |   |         | (43,989 | )
|                                                                        | Other income, net                                                                                                                                    |                                      |         | 1,565   |   |      |         | 3,913   |   |   |         | 96      |  
|                                                                        |                                                                                                                                                      |                                      |         |         |   |      |         |         |   |   |         |        
|Income (Loss) from Continuing Operations Before
    Taxes               |                                                                                                                                                      |                                      | (34,231 | )       |   |      | (31,914 | )       |   |   | 18,395  |        
|                                                                        | Income Taxes (Benefit)                                                                                                                               |                                      |         | 2,601   |   |      |         | (10,016 | ) |   |         | 9,061   |  
|                                                                        |                                                                                                                                                      |                                      |         |         |   |      |         |         |   |   |         |        
|Income (Loss) from Continuing Operations                                |                                                                                                                                                      |                                      | (36,832 | )       |   |      | (21,898 | )       |   |   | 9,334   |        
|Discontinued Operations:                                                |                                                                                                                                                      |                                      |         |         |   |      |         |         |   |   |         |        
|                                                                        | Loss from operations of discontinued segment, net
    of income tax benefits of $900 and $2,061                                                      |                                      |         |        |   |      |         | (1,657  | ) |   |         | (3,724  | )
|                                                                        | Loss on disposal of segment, including provision
    of $5,685 for operating losses during phase-out period, net of
    income tax benefit of $6,084 |                                      |         |        |   |      |         | (30,416 | ) |   |         |        |  
|                                                                        |                                                                                                                                                      |                                      |         |         |   |      |         |         |   |   |         |        
|Net Income (Loss)                                                       |                                                                                                                                                      |                                      | (36,832 | )       |   |      | (53,971 | )       |   |   | 5,610   |        
|Preferred Stock Dividends Accreted                                      |                                                                                                                                                      |                                      | (14,887 | )       |   |      | (13,282 | )       |   |   | (11,848 | )      
|                                                                        |                                                                                                                                                      |                                      |         |         |   |      |         |         |   |   |         |        
|Loss Applicable to Common Shareholders                                  |                                                                                                                                                      | $                                    | (51,719 | )       |   | $    | (67,253 | )       |   | $ | (6,238  | )      
|                                                                        |                                                                                                                                                      |                                      |         |         |   |      |         |         |   |   |         |        
|Basic and Diluted Loss per Share Applicable to
    Common Shareholders: |                                                                                                                                                      |                                      |         |         |   |      |         |         |   |   |         |        
|                                                                        | Loss from Continuing Operations                                                                                                                      |                                      | $       | (53.60  | ) |      | $       | (35.84  | ) |   | $       | (2.53   | )
|                                                                        | Loss from Discontinued Operations                                                                                                                    |                                      |         |        |   |      |         | (32.67  | ) |   |         | (3.73   | )
|                                                                        |                                                                                                                                                      |                                      |         |         |   |      |         |         |   |   |         |        
|                                                                        | Net Loss                                                                                                                                             |                                      | $       | (53.60  | ) |      | $       | (68.51  | ) |   | $       | (6.26   | )
|                                                                        |                                                                                                                                                      |                                      |         |         |   |      |         |         |   |   |         |        
|Weighted Average Number of Common Shares                                |                                                                                                                                                      |                                      | 964,979 |         |   |      | 981,583 |         |   |   | 997,125 |        
|                                                                        |                                                                                                                                                      |                                      |         |         |   |      |         |         |   |   |         |        

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

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EAGLE-PICHER HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS
EQUITY (DEFICIT)

Years Ended November 30, 2002, 2001 and
2000


|                          |                                                                 |                           |    |         |  |         |   |            |   |         |   |               |   |          |        |               |  |               |          |         |   |   |        |        |   |   |        |        |   |   |         |         |   |   |         |         |  
|------------------------- | --------------------------------------------------------------- | ------------------------- | -- | ------- |  | ------- | - | ---------- | - | ------- | - | ------------- | - | -------- | ------ | ------------- |  | ------------- | -------- | ------- | - | - | ------ | ------ | - | - | ------ | ------ | - | - | ------- | ------- | - | - | ------- | ------- | -
|                          |                                                                 |                           |    |         |  |         |   |            |   |         |   | Accumulated   |   |          |        |               |  |              
|                          |                                                                 |                           |    |         |  |         |   |            |   |         |   | Other         |   |          |        | Total         |  |              
|                          |                                                                 |                           |    | Class A |  | Class B |   | Additional |   |         |   | Comprehensive |   |          |        | Shareholders |  | Comprehensive
|                          |                                                                 | Common                    |    | Common  |  | Common  |   | Paid-In    |   |         |   | Income        |   | Treasury |        | Equity        |  | Income       
|                          |                                                                 | Stock                     |    | Stock   |  | Stock   |   | Capital    |   | Deficit |   | (Loss)        |   | Stock    |        | (Deficit)     |  | (Loss)       
|                          |                                                                 |                           |    |         |  |         |   |            |   |         |   |               |   |          |        |               |  |              
|                          |                                                                 |                          
|                          |                                                                 | (In thousands of dollars)
|Balance November 30, 1999 |                                                                 | $                         |   |         |  | $       | 6 |            |   | $       | 4 |               |   | $        | 99,991 |               |  | $             | (49,902  | )       |   | $ | (788   | )      |   | $ |       |        |   | $ | 49,311  |         |   |   |         |        
|                          | Net income                                                      |                           |    |        |  |         |   |           |   |         |   |              |   |          |        |              |  |               |          | 5,610   |   |   |        |       |   |   |        |       |   |   |         | 5,610   |   |   | $       | 5,610   |  
|                          | Foreign currency translation, net of tax of $810                |                           |    |        |  |         |   |           |   |         |   |              |   |          |        |              |  |               |          |        |   |   |        | (1,505 | ) |   |        |       |   |   |         | (1,505  | ) |   |         | (1,505  | )
|                          | Purchase of treasury stock                                      |                           |    |        |  |         |   |           |   |         |   |              |   |          |        |              |  |               |          |        |   |   |        |       |   |   |        | (2,371 | ) |   |         | (2,371  | ) |   |         |         |  
|                          | Preferred stock dividend accretion                              |                           |    |        |  |         |   |           |   |         |   |              |   |          |        |              |  |               |          | (11,848 | ) |   |        |       |   |   |        |       |   |   |         | (11,848 | ) |   |         |         |  
|                          |                                                                 |                           |    |         |  |         |   |            |   |         |   |               |   |          |        |               |  |               |          |         |   |   |        |        |   |   |        |        |   |   |         |         |   |   |         |        
|Balance November 30, 2000 |                                                                 |                           |   |         |  |         | 6 |            |   |         | 4 |               |   |          | 99,991 |               |  |               | (56,140  | )       |   |   | (2,293 | )      |   |   | (2,371 | )      |   |   | 39,197  |         |   | $ | 4,105   |        
|                          |                                                                 |                           |    |         |  |         |   |            |   |         |   |               |   |          |        |               |  |               |          |         |   |   |        |        |   |   |        |        |   |   |         |         |   |   |         |        
|                          | Net loss                                                        |                           |    |        |  |         |   |           |   |         |   |              |   |          |        |              |  |               |          | (53,971 | ) |   |        |       |   |   |        |       |   |   |         | (53,971 | ) |   | $       | (53,971 | )
|                          | Foreign currency translation, net of tax of $134                |                           |    |        |  |         |   |           |   |         |   |              |   |          |        |              |  |               |          |        |   |   |        | (248   | ) |   |        |       |   |   |         | (248    | ) |   |         | (248    | )
|                          | Gains (losses) on hedging derivatives, net of tax
    of $1,718 |                           |    |        |  |         |   |           |   |         |   |              |   |          |        |              |  |               |          |        |   |   |        | (3,189 | ) |   |        |       |   |   |         | (3,189  | ) |   |         | (3,189  | )
|                          | Amendment to capital structure                                  |                           |    | 10      |  |         |   | (6         | ) |         |   | (4            | ) |          |        |              |  |               |          |        |   |   |        |       |   |   |        |       |   |   |         |        |   |   |         |         |  
|                          | Purchase of treasury stock                                      |                           |    |        |  |         |   |           |   |         |   |              |   |          |        |              |  |               |          |        |   |   |        |       |   |   |        | (2,162 | ) |   |         | (2,162  | ) |   |         |         |  
|                          | Preferred stock dividend accretion                              |                           |    |        |  |         |   |           |   |         |   |              |   |          |        |              |  |               |          | (13,282 | ) |   |        |       |   |   |        |       |   |   |         | (13,282 | ) |   |         |         |  
|                          |                                                                 |                           |    |         |  |         |   |            |   |         |   |               |   |          |        |               |  |               |          |         |   |   |        |        |   |   |        |        |   |   |         |         |   |   |         |        
|Balance November 30, 2001 |                                                                 |                           | 10 |         |  |         |  |            |   |         |  |               |   |          | 99,991 |               |  |               | (123,393 | )       |   |   | (5,730 | )      |   |   | (4,533 | )      |   |   | (33,655 | )       |   | $ | (57,408 | )      
|                          |                                                                 |                           |    |         |  |         |   |            |   |         |   |               |   |          |        |               |  |               |          |         |   |   |        |        |   |   |        |        |   |   |         |         |   |   |         |        
|                          | Net loss                                                        |                           |    |        |  |         |   |           |   |         |   |              |   |          |        |              |  |               |          | (36,832 | ) |   |        |       |   |   |        |       |   |   |         | (36,832 | ) |   | $       | (36,832 | )
|                          | Foreign currency translation, net of tax of ($624)              |                           |    |        |  |         |   |           |   |         |   |              |   |          |        |              |  |               |          |        |   |   |        | 1,159  |   |   |        |       |   |   |         | 1,159   |   |   |         | 1,159   |  
|                          | Gains (losses) on hedging derivatives, net
    of tax of ($105) |                           |    |        |  |         |   |           |   |         |   |              |   |          |        |              |  |               |          |        |   |   |        | 195    |   |   |        |       |   |   |         | 195     |   |   |         | 195     |  
|                          | Purchase of treasury stock                                      |                           |    |        |  |         |   |           |   |         |   |              |   |          |        |              |  |               |          |        |   |   |        |       |   |   |        | (3,558 | ) |   |         | (3,558  | ) |   |         |         |  
|                          | Preferred stock dividend accretion                              |                           |    |        |  |         |   |           |   |         |   |              |   |          |        |              |  |               |          | (14,887 | ) |   |        |       |   |   |        |       |   |   |         | (14,887 | ) |   |         |         |  
|                          |                                                                 |                           |    |         |  |         |   |            |   |         |   |               |   |          |        |               |  |               |          |         |   |   |        |        |   |   |        |        |   |   |         |         |   |   |         |        
|Balance November 30, 2002 |                                                                 | $                         | 10 |         |  | $       |  |            |   | $       |  |               |   | $        | 99,991 |               |  | $             | (175,112 | )       |   | $ | (4,376 | )      |   | $ | (8,091 | )      |   | $ | (87,578 | )       |   | $ | (35,478 | )      
|                          |                                                                 |                           |    |         |  |         |   |            |   |         |   |               |   |          |        |               |  |               |          |         |   |   |        |        |   |   |        |        |   |   |         |         |   |   |         |        

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

38



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##### Table of Contents



EAGLE-PICHER HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH
FLOWS

Years Ended November 30, 2002, 2001 and
2000


|                                                         |                                                                                              |                                                                                         |                                       |         |         |        |        |         |         |        |        |         |         |         |  
|-------------------------------------------------------- | -------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------- | ------------------------------------- | ------- | ------- | ------ | ------ | ------- | ------- | ------ | ------ | ------- | ------- | ------- | -
|                                                         |                                                                                              | 2002                                                                                    |                                       | 2001    |         | 2000  
|                                                         |                                                                                              |                                                                                         |                                       |         |         |       
|                                                         |                                                                                              |                                                                                        
|                                                         |                                                                                              | (In thousands of dollars)                                                              
|Cash Flows From Operating Activities:                    |                                                                                              |                                                                                         |                                       |         |         |        |        |         |         |        |        |        
|                                                         | Net income (loss)                                                                            |                                                                                         | $                                     | (36,832 | )       |        | $      | (53,971 | )       |        | $      | 5,610   |        
|                                                         | Adjustments to reconcile net income (loss) to net
    cash provided by operating activities: |                                                                                         |                                       |         |         |        |        |         |         |        |        |         |        
|                                                         |                                                                                              | Depreciation and amortization                                                           |                                       |         | 67,175  |        |        |         | 62,814  |        |        |         | 60,672  |        
|                                                         |                                                                                              | Provisions for discontinued operations                                                  |                                       |         |        |        |        |         | 30,416  |        |        |         |        |        
|                                                         |                                                                                              | Loss (gain) from divestitures                                                           |                                       |         | 6,497   |        |        |         | 2,105   |        |        |         | (3,149  | )      
|                                                         |                                                                                              | Deferred income taxes                                                                   |                                       |         | 6,147   |        |        |         | (9,344  | )      |        |         | 4,897   |        
|                                                         |                                                                                              | Changes in assets and liabilities, net of effects
    of acquisitions and divestitures: |                                       |         |         |        |        |         |         |        |        |         |         |        
|                                                         |                                                                                              |                                                                                         | Sale of receivables, net (See Note D) |         |         | 46,475 |        |         |         |       |        |         |         |        |  
|                                                         |                                                                                              |                                                                                         | Receivables                           |         |         | 473    |        |         |         | (773   | )      |         |         | 9,460   |  
|                                                         |                                                                                              |                                                                                         | Inventories                           |         |         | 4,742  |        |         |         | 8,175  |        |         |         | (8,655  | )
|                                                         |                                                                                              |                                                                                         | Prepaid expenses                      |         |         | (571   | )      |         |         | (2,411 | )      |         |         | (371    | )
|                                                         |                                                                                              |                                                                                         | Other assets                          |         |         | 2,609  |        |         |         | (533   | )      |         |         | (13,201 | )
|                                                         |                                                                                              |                                                                                         | Accounts payable                      |         |         | (2,703 | )      |         |         | 28,432 |        |         |         | 10,959  |  
|                                                         |                                                                                              |                                                                                         | Accrued liabilities                   |         |         | (5,921 | )      |         |         | 4,476  |        |         |         | (23,384 | )
|                                                         |                                                                                              |                                                                                         | Other, net                            |         |         | (6,198 | )      |         |         | (1,916 | )      |         |         | 2,726   |  
|                                                         |                                                                                              |                                                                                         |                                       |         |         |        |        |         |         |        |        |        
|                                                         |                                                                                              | Net cash provided by operating activities                                               |                                       |         | 81,893  |        |        |         | 67,470  |        |        |         | 45,564  |        
|                                                         |                                                                                              |                                                                                         |                                       |         |         |        |        |         |         |        |        |        
|Cash Flows From Investing Activities:                    |                                                                                              |                                                                                         |                                       |         |         |        |        |         |         |        |        |        
|                                                         | Proceeds from sales of divisions                                                             |                                                                                         |                                       | 10,027  |         |        |        |        |         |        |        | 85,048  |        
|                                                         | Proceeds from the sale of property and equipment,
    and other, net                         |                                                                                         |                                       | 639     |         |        |        |        |         |        |        |        |        
|                                                         | Cash paid for acquisitions                                                                   |                                                                                         |                                       |        |         |        |        |        |         |        |        | (12,306 | )      
|                                                         | Capital expenditures                                                                         |                                                                                         |                                       | (17,256 | )       |        |        | (36,544 | )       |        |        | (41,367 | )      
|                                                         | Other, net                                                                                   |                                                                                         |                                       |        |         |        |        | (247    | )       |        |        | 4,464   |        
|                                                         |                                                                                              |                                                                                         |                                       |         |         |        |        |         |         |        |        |        
|                                                         |                                                                                              | Net cash provided by (used in) investing
    activities                                 |                                       |         | (6,590  | )      |        |         | (36,791 | )      |        |         | 35,839  |        
|                                                         |                                                                                              |                                                                                         |                                       |         |         |        |        |         |         |        |        |        
|Cash Flows From Financing Activities:                    |                                                                                              |                                                                                         |                                       |         |         |        |        |         |         |        |        |        
|                                                         | Reduction of long-term debt                                                                  |                                                                                         |                                       | (34,665 | )       |        |        | (20,795 | )       |        |        | (24,374 | )      
|                                                         | Net borrowings (repayments) under revolving
    credit agreements                            |                                                                                         |                                       | (34,736 | )       |        |        | 6,229   |         |        |        | (61,774 | )      
|                                                         | Acquisition of treasury stock                                                                |                                                                                         |                                       | (159    | )       |        |        | (2,162  | )       |        |        | (2,371  | )      
|                                                         | Other, net                                                                                   |                                                                                         |                                       |        |         |        |        | (872    | )       |        |        | 1,454   |        
|                                                         |                                                                                              |                                                                                         |                                       |         |         |        |        |         |         |        |        |        
|                                                         |                                                                                              | Net cash used in financing activities                                                   |                                       |         | (69,560 | )      |        |         | (17,600 | )      |        |         | (87,065 | )      
|                                                         |                                                                                              |                                                                                         |                                       |         |         |        |        |         |         |        |        |        
|                                                         |                                                                                              |                                                                                         | 5,743                                 |         |         |        | 13,079 |         |         |        | (5,662 | )      
|Net Cash Provided by Discontinued Operations             |                                                                                              |                                                                                         |                                      |         |         |        | 4,322  |         |         |        | 4,563  |        
|Effect of Exchange Rates on Cash                         |                                                                                              |                                                                                         | 1,159                                 |         |         |        | (248   | )       |         |        | (1,505 | )      
|                                                         |                                                                                              |                                                                                         |                                       |         |         |        |        |         |         |        |        |        
|Net Increase (Decrease) in Cash and Cash
    Equivalents |                                                                                              |                                                                                         | 6,902                                 |         |         |        | 17,153 |         |         |        | (2,604 | )      
|Cash and Cash Equivalents, beginning of year             |                                                                                              |                                                                                         | 24,620                                |         |         |        | 7,467  |         |         |        | 10,071 |        
|                                                         |                                                                                              |                                                                                         |                                       |         |         |        |        |         |         |        |        |        
|Cash and Cash Equivalents, end of year                   |                                                                                              | $                                                                                       | 31,522                                |         |         | $      | 24,620 |         |         | $      | 7,467  |        
|                                                         |                                                                                              |                                                                                         |                                       |         |         |        |        |         |         |        |        |        
|Supplemental Cash Flow Information:                      |                                                                                              |                                                                                         |                                       |         |         |        |        |         |         |        |        |        
|                                                         |                                                                                              | Interest paid                                                                           |                                       | $       | 34,585  |        |        | $       | 38,419  |        |        | $       | 43,589  |        
|                                                         |                                                                                              |                                                                                         |                                       |         |         |        |        |         |         |        |        |        
|                                                         |                                                                                              | Income taxes paid (refunded), net                                                       |                                       | $       | (4,036  | )      |        | $       | (4,500  | )      |        | $       | 6,300   |        
|                                                         |                                                                                              |                                                                                         |                                       |         |         |        |        |         |         |        |        |        

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

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##### Table of Contents



EAGLE-PICHER HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2002, 2001 and
2000




|   |                            
|-- | ---------------------------
|A. | Organization and Operations

We are a majority-owned subsidiary of Granaria
Industries, B.V. (Granaria Industries).
Granaria Industries formed us to acquire the operations of
Eagle-Picher Industries, Inc. (EPI). We have no
other operations other than the operations of EPI.

We operate as a diversified manufacturer serving
global markets and many industries. Our reportable segments
operate in different industries and are managed separately. We
have three reportable business segments: Automotive,
Technologies, and Filtration and Minerals.

Our Automotive Segment provides mechanical and
structural parts and raw materials for passenger cars, trucks,
vans and sport utility vehicles for original equipment
manufacturers and replacement markets. Resources are
concentrated in serving the North American, European and Pacific
Rim markets. Our Hillsdale operation is a precision machined
components business, and our Wolverine operation is a rubber
coated metal products business.

Our Technologies Segment is a diverse group of
businesses with a broad spectrum of technologies and
capabilities. It is a major supplier of batteries and power
systems components for aerospace, defense and telecommunications
applications. In addition, it produces high-purity specialty
material compounds and rare metals, industrial chemicals, bulk
pharmaceuticals and super-clean containers, which meet strict
EPA protocols, for environmental sampling. This segment serves
the commercial aerospace, nuclear, telecommunication,
electronics and other industrial markets globally. Some of these
products are also used in defense applications.

Our Filtration and Minerals Segment mines and
refines diatomaceous earth products, which are used globally in
high purity filtration applications, primarily by the food and
beverage industry. These products are also used as industrial
absorbents.

Our consolidated financial statements include the
accounts of our wholly-owned and majority (50% or more) owned or
controlled subsidiaries. All significant intercompany accounts
and transactions have been eliminated. Investments in our
unconsolidated affiliates or subsidiaries in which we own at
least 20%, or over which we exercise significant influence, are
accounted for using the equity method.



|   |                                               
|-- | ----------------------------------------------
|B. | Summary of Significant Accounting
    Policies



| |                 
| | ----------------
| | Use of Estimates

The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States of America requires us to make estimates and
assumptions that affect amounts reported in the consolidated
financial statements. Actual results could differ from those
estimates.



| |                 
| | ----------------
| | Cash Equivalents

Marketable securities with original maturities of
three months or less are considered to be cash equivalents.



| |                    
| | -------------------
| | Revenue Recognition

We recognize revenue when persuasive evidence of
an arrangement exists, delivery has occurred, the fee is fixed
and determinable, and collectability is reasonably assured.
Generally, all of these conditions are met at the time we ship
our products to our customers. Net Sales and Cost of Products
Sold include transportation costs (see Note Q) that are
billed to customers. For certain products sold under fixed-price
contracts and subcontracts with various United States Government
agencies and aerospace and defense contractors, we

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##### Table of Contents



EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

utilize the percentage-of-completion method of
accounting. When we use the percentage-of-completion method, we
measure our percent complete based on total costs incurred to
date as compared to our best estimate of total costs to be
incurred.

Contract costs include direct material, labor
costs, and those indirect costs related to contract performance,
such as indirect labor, supplies, tools and repairs. Selling and
administrative expenses are charged to expense as incurred.
Provisions for estimated losses on uncompleted contracts are
made in the period in which such losses are determined. Changes
to job performance, job conditions, and estimated profitability
may result in revisions to contract revenue and costs and are
recognized in the period in which the revisions are made. We
provided for estimated losses on uncompleted contracts of
$468,000 at November 30, 2002 and $935,000 at
November 30, 2001.

The asset, Costs and Estimated Earnings in Excess
of Billings, represents revenues recognized in excess of amounts
billed on individual contracts. The liability, Billings in
Excess of Costs and Estimated Earnings, represents billings in
excess of revenues recognized on individual contracts.

The following provides information on contracts
in progress at November 30 (in thousands of dollars):

|                                                   |  |      |          |      |  |   |         |  
|-------------------------------------------------- |  | ---- | -------- | ---- |  | - | ------- | -
|                                                   |  | 2002 |          | 2001
|                                                   |  |      |          |     
|Costs incurred on uncompleted contracts            |  | $    | 115,476  |      |  | $ | 90,222  |  
|Estimated earnings                                 |  |      | 21,664   |      |  |   | 17,046  |  
|                                                   |  |      |          |      |  |   |         |  
|                                                   |  |      | 137,140  |      |  |   | 107,268 |  
|Less: billings to date                             |  |      | (121,142 | )    |  |   | (98,612 | )
|                                                   |  |      |          |      |  |   |         |  
|                                                   |  | $    | 15,998   |      |  | $ | 8,656   |  
|                                                   |  |      |          |      |  |   |         |  
|Costs and estimated earnings in excess of billings |  | $    | 16,942   |      |  | $ | 10,744  |  
|Billings in excess of costs and estimated earnings |  |      | (944     | )    |  |   | (2,088  | )
|                                                   |  |      |          |      |  |   |         |  
|                                                   |  | $    | 15,998   |      |  | $ | 8,656   |  
|                                                   |  |      |          |      |  |   |         |  



| |                              
| | -----------------------------
| | Concentrations of Credit Risk

Our concentrations of credit risk consist
primarily of cash and cash equivalents, trade accounts
receivable, retained interest in Eagle-Picher Funding
Corporation, and sales concentrations with certain customers. As
part of our ongoing control procedures, we monitor
concentrations of credit risk associated with financial
institutions with which we conduct business. Credit risk with
financial institutions is considered minimal as we utilize only
high quality financial institutions. We conduct periodic credit
evaluations of our customers financial condition and
generally do not require collateral. Our customer base includes
all significant automotive manufacturers and their first tier
suppliers in North America and Europe. Although we are directly
affected by the well-being of the automotive industry, we do not
believe significant credit risk existed at November 30,
2002. In addition, during 2002, we formed EPFC, a qualifying
special-purpose entity, to sell an interest in certain
receivables. See Note D for a discussion of EPFC. We
believe that EPFC assists in the management of our credit risk
related to trade receivables as it permits us to sell an
interest in our receivables on a non-recourse basis.

Net sales to our largest customer were
$84.2 million in 2002, $91.0 million in 2001, and
$98.2 million in 2000. No other customer accounted for 10%
or more of consolidated sales.



| |                                        
| | ---------------------------------------
| | Fair Value of Financial
    Instruments

Our financial instruments consist primarily of
investments in cash and cash equivalents, receivables and
certain other assets, as well as obligations under accounts
payable, long-term debt and preferred stock. The

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##### Table of Contents



EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

carrying values of these financial instruments,
with the exception of long-term debt and preferred stock,
approximate their fair value. See Note H for a discussion
of the fair value of the long-term debt and Note I for a
discussion of the fair value of preferred stock.



| |                                     
| | ------------------------------------
| | Derivative Financial
    Instruments

On December 1, 2000, we adopted SFAS
No. 133, Accounting for Derivative Instruments and
Hedging Activities, as amended by SFAS No. 138,
Accounting for Certain Derivative Instruments and Certain
Hedging Activities an Amendment of
SFAS 133. The adoption of these standards was not
material to our financial position or results of operations.
Under this guidance, all derivative instruments are recognized
as assets or liabilities at their fair value on the balance
sheet. On the date a derivative contract is entered into, we
designate the derivative as either a) a hedge of the fair
value of a recognized asset or liability (a fair value hedge),
b) a hedge of a forecasted transaction or as a hedge of the
variability of cash flows to be received or paid related to a
recognized asset or liability (a cash flow hedge), or c) as
a hedge of a net investment in a foreign operation (a net
investment hedge). Changes in the fair value of derivatives are
either recognized in the income statement or as a component of
Accumulated Other Comprehensive Income (Loss) in the balance
sheet, depending on whether the derivative is being used to
hedge changes in fair value or cash flows. The ineffective
portion of derivatives that are designated as hedges is recorded
in the consolidated statements of income. From time to time, we
enter into interest rate swaps and foreign currency forward
exchange contracts to manage our interest costs and foreign
currency exposures.

We use interest rate swap contracts to adjust the
proportion of our total debt that is subject to variable
interest rates. Under our interest rate swap contracts, we agree
to pay an amount equal to a specified fixed-rate of interest for
a certain notional amount and receive in return an amount equal
to a variable-rate. The notional amounts of the contract are not
exchanged. No other cash payments are made unless the contract
is terminated prior to maturity. Although no collateral is held
or exchanged for these contracts, interest rate swap contracts
are entered into with a major financial institution in order to
minimize our counterparty credit risk. These interest rate swap
contracts are designated as cash flow hedges against changes in
the amount of future cash flows associated with our interest
payments on variable-rate debt. Accordingly, they are reflected
at fair value in our balance sheets and the related changes in
fair value on these contracts, net of tax, are recorded as a
component of Accumulated Other Comprehensive Income (Loss) in
our balance sheets. To the extent that any of these contracts
are not considered to be effective in offsetting the change in
the value of the interest payments being hedged, any changes in
fair value relating to the ineffective portion of these
contracts are immediately recognized in our income statement.
The net effect of this accounting on our operating results is
that interest expense on a portion of variable-rate debt being
hedged is generally recorded based on fixed interest rates. At
November 30, 2002, we had interest rate swap contracts to
pay fixed-rates of interest (average rate of 5.68%) on
$90.0 million notional amount of indebtedness. The
$90.0 million notional amount of outstanding contracts will
mature during fiscal year 2004. At November 30, 2001, we
had interest rate swap contracts on $90.0 million notional
amount of indebtedness. As of November 30, 2002, we had
$4.5 million in unrealized losses under our interest rate
swap agreements, and as of November 30, 2001 we had
$4.8 million in unrealized losses which represent the fair
values of the interest rate swap agreements as of those dates.
The fair value of interest rate swap contracts is based on
quoted market prices and third-party provided calculations,
which reflect the present values of the difference between
estimated future variable-rate receipts and future fixed-rate
payments. The unrealized losses, net of tax, are recorded in
Accumulated Other Comprehensive Income (Loss) in our balance
sheets.

We use foreign currency forward exchange
contracts to hedge the risk of cash flow fluctuations due to
changes in exchange rates on sales denominated in foreign
currencies. As part of our overall strategy to manage the level
of exposure to the risk of foreign currency exchange rate
fluctuations, we hedge a portion of our foreign currency
exposures anticipated over the next twelve-months. To hedge this
exposure, we used foreign currency forward exchange contracts
that generally have maturities that approximate the timing of the

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EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

forecasted transactions. Foreign currency forward
exchange contracts are placed with a number of major financial
institutions in order to minimize our counterparty credit risk.
We record these foreign currency forward exchange contracts at
fair value in our balance sheets and the related unrealized
gains or losses on these contracts, net of tax, are recorded as
a component of Accumulated Other Comprehensive Income (Loss) in
our balance sheets. These unrealized gains and losses are
recognized in the income statement in the period in which the
related transactions being hedged are recognized in the income
statement. However, to the extent that any of these contracts
are not considered to be effective in offsetting the change in
the value of the cash flows being hedged, any changes in fair
value relating to the ineffective portion of these contracts are
immediately recognized in our income statement. As of
November 30, 2002, we had outstanding foreign currency
forward exchange contracts with an aggregate notional amount of
$13.5 million. Net unrealized losses on these contracts,
based on prevailing financial market information, as of
November 30, 2002, were $148,000 and were included in
Accumulated Other Comprehensive Income (Loss), net of tax, in
our balance sheets. As of November 30, 2001, we had
outstanding foreign currency forward exchange contracts with an
aggregate notional amount of $14.5 million. Net unrealized
losses on these contracts, based on prevailing financial market
information, as of November 30, 2001 were $149,000 and were
included in Accumulated Other Comprehensive Income (Loss), net
of tax, in our balance sheets. During 2002, we recognized
$52,000 in gains from foreign currency hedge transactions, which
were offset by losses of $1.2 million. The fair value of
foreign currency contracts represents the amount required to
enter into offsetting contracts with similar remaining
maturities based on quoted market prices. During 2001, we
recognized $693,000 in gains from foreign currency hedge
transactions, which were offset by losses of approximately
$186,000. During 2000, we recognized $314,000 in gains from
foreign currency hedge transactions, which were offset by losses
of $157,000.



| |             
| | ------------
| | Income Taxes

Current income taxes are provided for based upon
income for financial statement purposes. Deferred tax assets and
liabilities are established based on the difference between the
financial statement and income tax bases of assets and
liabilities. A valuation allowance represents a provision for
uncertainty on the realization of the deferred tax asset.



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

Inventories are stated at the lower of cost or
market using the first-in, first-out (FIFO) method. Until
2002, the current fiscal year, a substantial portion of domestic
inventories were accounted for at cost determined on a last-in,
first-out (LIFO) basis. In 2002, our domestic operations
changed to the FIFO method. This change in accounting principle
was made to provide a better matching of revenue and expenses
and to be consistent with prevalent industry practice. This
accounting change was not material to the financial statements
on an annual or quarterly basis, and accordingly, no retroactive
restatement of prior financial statements was made.



| |                              
| | -----------------------------
| | Property, Plant and Equipment

We record our investment in property, plant and
equipment at cost. We provide for depreciation on property,
plant and equipment using the straight-line method over the
estimated useful lives of the assets which are generally 20 to
30 years for buildings and 3 to 10 years for machinery
and equipment. Improvements which extend the useful life of
property are capitalized, while repair and maintenance costs are
charged to operations as incurred. Property, plant and equipment
acquired in the acquisition of a business, are stated at fair
value, based on independent appraisal, as of the date of the
acquisition.

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EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |         
| | --------
| | Goodwill

Goodwill represents the excess of purchase price
paid over the fair value of assets acquired and liabilities
assumed in business combinations. This amount has been amortized
on a straight-line basis over 15 years. The recoverability
of the asset is evaluated periodically as events or
circumstances indicate a possible inability to recover its
carrying value. Effective December 1, 2002, we adopted
SFAS No. 142, Goodwill and Other Intangible
Assets which addresses goodwill and other intangible
assets that have indefinite useful lives and, as such,
prescribes that these assets will not be amortized, but rather
tested, at least annually, for impairment. This pronouncement
also provides specific guidance on performing the annual
impairment test for goodwill and intangibles with indefinite
lives. Under this new accounting standard, we will no longer
amortize our goodwill and will be required to complete an annual
impairment test. We have had approximately $16.0 million of
goodwill amortization per year that will no longer be recorded
in fiscal 2003 and beyond. We have determined that we have six
reporting units, as defined in SFAS No. 142, within
our three reportable business segments. We have completed our
initial impairment test required by this accounting standard and
have determined we will not recognize an impairment charge
related to the adoption of this accounting standard in 2003.



| |                                                                  
| | -----------------------------------------------------------------
| | Pre-Production Costs Related to Long-Term
    Supply Arrangements

We capitalize costs incurred during the
pre-production phase of new product launches for goods that will
be sold under long-term supply arrangements, primarily in our
Automotive Segment. These costs consist primarily of product
development and validation costs. The costs are amortized into
Cost of Products Sold over the life of the related programs. At
November 30, 2002, the unamortized balance of these costs
was $3.1 million, and at November 30, 2001, the
unamortized balance was $3.0 million. The unamortized
balance is included in Other Assets in the accompanying balance
sheets.



| |                                                                      
| | ---------------------------------------------------------------------
| | Tooling Costs Incurred and Held for Future
    Customer Reimbursement

We capitalize costs incurred to design and
develop molds, dies and other tools for customers that we
contract to sell product to under long-term supply arrangements.
We are typically reimbursed for these costs when volume
production commences; however, we are also reimbursed for these
costs over the period of volume production. For contracts where
we are reimbursed over the period of volume production, we
amortize the balance over the estimated life of the supply
arrangement. At November 30, 2002, the unamortized balance
of the costs held by us for which ownership will be transferred
to the customer was $5.7 million, and at November 30,
2001, the unamortized balance was $4.4 million. The
unamortized balance is included in Other Assets in the
accompanying balance sheets.



| |             
| | ------------
| | Other Assets

Other assets consist primarily of the
pre-production costs related to long-term supply arrangements
and tooling costs incurred and held for future customer
reimbursement (as discussed above), and debt issuance costs. The
debt issuance costs are being amortized over the term of the
related debt. The debt issuance costs have an original cost of
$25.4 million at November 30, 2002, and
$26.1 million at November 30, 2001. The related
accumulated amortization amounts are $14.3 million at
November 30, 2002, and $12.6 million at
November 30, 2001.



| |                                     
| | ------------------------------------
| | Accounting for Long-Lived
    Assets

Impairment losses are recorded on long-lived
assets used in operations when impairment indicators are present
and the undiscounted cash flows estimated to be generated by
those assets are less than the carrying value of such assets. If
this occurs, an impairment charge is recorded for the amount by
which the carrying value of the long-lived assets exceeds its
fair value.

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EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



| |                                    
| | -----------------------------------
| | Environmental Remediation
    Costs

We accrue for environmental expenses when the
costs are probable and can be reasonably estimated. The
estimated liabilities are not discounted or reduced for possible
recoveries from insurance carriers.



| |                         
| | ------------------------
| | Research and Development

Research and development expenditures are
expensed in Selling and Administrative expense as incurred.
Research and development expense was $9.8 million in 2002,
$10.4 million in 2001, and $11.7 million in 2000.



| |                             
| | ----------------------------
| | Foreign Currency Translation

Assets and liabilities of foreign subsidiaries
are translated at current exchange rates, and income and
expenses are translated using weighted average exchange rates.
Adjustments resulting from translation of financial statements
stated in local currencies are included in Accumulated Other
Comprehensive Income (Loss). Gains and losses from foreign
currency transactions are included in the statements of income
(loss).



| |                  
| | -----------------
| | Reclassifications

During 2002, we reclassified amounts in our 2001
and 2000 financial statements to conform to our 2002
presentation.



| |                                              
| | ---------------------------------------------
| | Basic and Diluted Income (Loss) Per
    Share

The calculation of net income (loss) per
share is based upon the average number of common shares
outstanding. No potentially dilutive shares were outstanding
during the three year period ended November 30, 2002.



| |                                      
| | -------------------------------------
| | Management Compensation 
    Special

Management compensation  special
expense consists of payments to former officers upon their
separation from employment.

Insurance
Related Loss (Gains)

In 2002 we recorded a provision of
$3.1 million related to a dispute with an insurance carrier
over the coverage on a fire which occurred at one of our
facilities during 2001. In addition, in 2000 we received
$16.0 million from insurance companies as a result of the
settlement of certain claims relating primarily to environmental
remediation.

Recently
Released or Adopted Accounting Standards

In June 2001, the FASB issued SFAS
No. 143, Accounting for Asset Retirement
Obligations, which requires that the fair value of a
liability for an asset retirement obligation be recognized in
the period in which it is incurred if a reasonable estimate of
fair value can be made. The associated asset retirement costs
are capitalized as part of the carrying amount of the long-lived
assets and depreciated over their estimated useful life while
the liability is accreted to its expected obligation amount upon
retirement. We adopted SFAS No. 143 on December 1,
2002. The adoption did not have a material impact on our
financial condition or results of operations.

In September 2001, the FASB issued SFAS
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, which superceded SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed of. The primary
difference is that goodwill and certain intangibles with
indefinite lives have been removed from the scope of SFAS
No. 144, as they are covered by

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EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

SFAS No. 142, as described above. It also
broadens the presentation of discontinued operations to include
a component of an entity rather than a segment of a business. A
component of an entity comprises operations and cash flows that
can clearly be distinguished operationally and for financial
accounting purposes from the rest of the entity. We adopted SFAS
No. 144 on December 1, 2002. The adoption did not have
a material impact on our financial condition or results of
operations.

In June 2002, the FASB issued SFAS
No. 146, Accounting for Costs Associated with Exit or
disposal Activities, which is effective for exit or
disposal activities initiated after December 31, 2002. SFAS
No. 146 addresses financial accounting and reporting for
costs associated with exit or disposal activities and nullifies
Emerging Issues Task Force (EITF) Issue No. 94-3,
Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring). The adoption of this
statement is not expected to have a material impact on our
financial condition or results of operations.

In November 2002, the FASB issued Interpretation
No. 45 (FIN 45) Guarantors
Accounting and Disclosure requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN 45
elaborates on the existing disclosure requirements for most
guarantees, including loan guarantees. It also clarifies that at
the time a company issues a guarantee, the company must
recognize an initial liability for the fair value, or market
value, of the obligations it assumes under that guarantee.
However, the provisions related to recognizing a liability at
inception of the guarantee for the fair value of the
guarantors obligations does not apply to product
warranties or to guarantees accounted for as derivatives. The
initial recognition and initial measurement provisions apply on
a prospective basis to guarantees issued or modified after
December 31, 2002. The disclosure requirements of
FIN 45 are effective for financial statements of interim or
annual periods ending after December 15, 2002. We have not
completed the process of evaluating the impact that will result
from adopting this interpretation. We therefore are unable to
disclose the impact, if any, of adopting this interpretation on
our financial position and results of operations.

In January 2003, the FASB issued
Interpretation No. 46 (FIN 46)
Consolidation of Variable Interest Entities. Until
this interpretation, a company generally included another entity
in its consolidated financial statements only if it controlled
the entity through voting interests. FIN 46 requires a
variable interest entity to be consolidated by a company if that
company is subject to a majority of the risk of loss from the
variable interest entitys activities or entitled to
receive a majority of the entitys residual returns.
FIN 46 applies to variable interest entities created after
January 31, 2003, and to variable interest entities in
which an enterprise obtains an interest in after that date. A
public entity with a variable interest in a variable interest
entity created before February 1, 2003, shall apply the
provisions of this interpretation (other than the transition
disclosure provisions in paragraph 26) to that entity no
later than the beginning of the first interim or annual
reporting period beginning after June 15, 2003. The related
disclosure requirements are effective immediately. The impact of
this interpretation is not expected to have a material impact on
our financial condition or results of operations.

In November 2002, the EITF issued
EITF 00-21, Revenue Arrangements with Multiple
Deliverables. EITF 00-21 prescribes a method to
account for contracts that have multiple elements or
deliverables. It provides guidance on how to allocate the value
of a contract to its different deliverables, as well as guidance
on when to recognize revenue allocated to each deliverable over
its performance period. We are required to adopt EITF 00-21
on December 1, 2003. We are evaluating the impact
EITF 00-21 will have on us, but do not expect it to have a
material impact on our financial condition or results of
operations.

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EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

C.     Acquisitions,
Divestitures and Discontinued Operations



| |             
| | ------------
| | Acquisitions

During fiscal 2000, we acquired the assets of the
depleted zinc business of Isonics Corporation and the stock of
the Blue Star Battery Systems Corporation, a manufacturer of
special purpose batteries. These acquisitions were made at an
aggregate cost, including acquisition-related expenses, of
$13.8 million, consisting of $12.3 million in cash and
contingent cash payments of $500,000 annually for three years.
These acquisitions were accounted for using the purchase method.
The excess of the purchase prices over the assessed values of
the net assets was $6.9 million. This amount was allocated
to Goodwill in our balance sheets and was amortized over
15 years prior to the adoption of SFAS No. 142 on
December 1, 2002. The impact of these transactions on our
results of operations in 2000 was not material. See Note M
for a discussion of the litigation and subsequent settlement
related to this acquisition.

Divestitures

We recognized amounts related to divestitures in
our statements of income (loss) during the years ended
November 30 as follows: (in thousands of dollars):

|                                                                  |  |      |       |      |  |      |        |   |  |   |         |  
|----------------------------------------------------------------- |  | ---- | ----- | ---- |  | ---- | ------ | - |  | - | ------- | -
|                                                                  |  | 2002 |       | 2001 |  | 2000
|                                                                  |  |      |       |      |  |     
|(Gain) loss on sale of divisions                                  |  | $    | 2,800 |      |  | $    | (2,635 | ) |  | $ | (17,077 | )
|Losses recognized related to divisions sold in
    previous years |  |      | 3,352 |      |  |      | 4,740  |   |  |   | 13,928  |  
|Losses recognized for medical and workers
    compensation        |  |      | 345   |      |  |      |       |   |  |   |        |  
|                                                                  |  |      |       |      |  |      |        |   |  |   |         |  
|                                                                  |  | $    | 6,497 |      |  | $    | 2,105  |   |  | $ | (3,149  | )
|                                                                  |  |      |       |      |  |      |        |   |  |   |         |  

We have indemnified the buyers for certain
liabilities related to items such as environmental remediation
and warranty issues on divisions sold in previous years.
Liabilities for these exposures had been previously recorded by
us; however, from time to time, as additional information
becomes available, additional amounts need to be recorded.

During 2002, we sold certain assets and
liabilities of our Precision Products business in our
Technologies Segment to a group of former employees and
divisional management personnel. We received approximately
$3.1 million in proceeds and recorded a $2.8 million
loss on the sale. During 2002, based on new information that
became available, we also recorded additional amounts totaling
$3.4 million for various environmental and litigation
matters, and $345,000 for medical and workers compensation
claims relating to previous divestitures.

During 2001, additional amounts totaling
$4.7 million were recorded for various environmental and
litigation matters. Also in 2001, we received $2.6 million
in cash which was previously held in an escrow account for
environmental matters related to a previously sold division.
These environmental matters were settled with the regulatory
authorities and we have no further exposure. The amount was
recorded as a gain on sale of divisions.

During 2000, we sold a significant number of
divisions for aggregate net proceeds of $85.0 million. The
aggregate net gain resulting from these transactions during 2000
was $17.1 million. This net gain included a gain of
$3.7 million resulting from a curtailment of our pension
and postretirement plans. Also in 2000, we recorded
$13.9 million in losses primarily related to environmental
exposures for divisions sold prior to 2000.

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EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

An analysis of the other liabilities related to
divestitures is as follows (in thousands of dollars):



|                             |                                                                          |   |        |        |  
|---------------------------- | ------------------------------------------------------------------------ | - | ------ | ------ | -
|Balance at November 30, 1999 |                                                                          | $ | 877    |       
|                             | Additional amounts recorded for transaction
    expenses and other items |   |        | 3,459  |  
|                             | Additional amounts recorded                                              |   |        | 18,018 |  
|                             | Amounts spent                                                            |   |        | (7,354 | )
|                             |                                                                          |   |        |       
|Balance at November 30, 2000 |                                                                          |   | 15,000 |       
|                             | Additional amounts recorded                                              |   |        | 4,740  |  
|                             | Amounts spent                                                            |   |        | (1,930 | )
|                             |                                                                          |   |        |       
|Balance at November 30, 2001 |                                                                          |   | 17,810 |       
|                             | Additional amounts recorded                                              |   |        | 3,697  |  
|                             | Amounts spent                                                            |   |        | (6,757 | )
|                             | Amounts transferred from Net Assets of Operations
    to be Sold         |   |        | 2,912  |  
|                             |                                                                          |   |        |       
|Balance at November 30, 2002 |                                                                          | $ | 17,662 |       
|                             |                                                                          |   |        |       

Discontinued
Operations

Effective December 14, 2001, we sold certain
of the assets of our former Construction Equipment Division.
This division represented our entire former Machinery Segment.
The sale price was $6.1 million in cash, plus an estimated
working capital adjustment of $1.0 million, and the
assumption of approximately $6.7 million of current
liabilities. We retained the land and buildings of the
Construction Equipment Divisions main facility in Lubbock,
Texas and lease the facility to the buyer for a five year term.
The buyer has an option to buy the facility for
$2.5 million, increasing $100,000 per year over the term.
We also retained approximately $2.3 million of raw
materials inventory, which the buyer was required to purchase
within one year. The buyer failed to purchase 25%, or
approximately $600,000, of the inventory. We intend to pursue
collection actions. Finally, we retained approximately $900,000
of accounts receivable. The Net Assets of Operations to be Sold
at November 30, 2002 are primarily the remaining balance of
the inventory as the liabilities associated with this
transaction, totaling $2.9 million and representing
primarily environmental liabilities, have been transferred to
the Accrued Divestitures reserve at November 30, 2002.

The measurement date to account for the Machinery
Segment as a discontinued operation was March 1, 2001.
Accordingly, the results of the Machinery Segments
operations have been reported separately as a discontinued
operation in the accompanying financial statements. Net sales
from discontinued operations were $65.1 million in 2001 and
$82.6 million in 2000. During 2001, we recorded provisions
totaling $30.4 million, net of an income tax benefit of
$6.1 million. This provision included estimated losses and
costs to be incurred in connection with the disposition of the
Machinery Segment, including $5.7 million in expected
losses during the phase out period from March 1, 2001 to
December 14, 2001. An operating loss of $1.7 million,
net of a $900,000 tax benefit, was incurred in the first quarter
of 2001.

D.     Accounts
Receivable Asset-Backed Securitization (Special Purpose
Entity)

During 2002, we entered into an agreement with a
major U.S. financial institution to sell an interest in
certain receivables through an unconsolidated qualifying special
purpose entity, Eagle-Picher Funding Corporation
(EPFC). Initially $47.0 million of proceeds
from this new facility were used primarily to payoff amounts
outstanding under our existing Receivables Loan Agreement with
our wholly-owned subsidiary, Eagle-Picher Acceptance
Corporation. This agreement provides for the sale of certain
receivables to EPFC, which in turn sells an interest in a
revolving pool of receivables to the financial institution. EPFC
has no recourse against us for failure of the debtors to pay
when due. The agreement provides for the continuation of

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EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

the program on a revolving basis until the
earlier of a) the maturity of our senior credit facility,
or b) assuming we are able to refinance our senior credit
facility, the fourth quarter of 2004.

We account for the securitization of these sold
receivables in accordance with SFAS No. 140,
Accounting for Transfers and Servicing of Financial Assets
and Extinguishment of Liabilities  a Replacement of
FASB Statement No. 125. Under this guidance, at the
time the receivables are sold, the balances are removed from our
financial statements. For purposes of determining outstanding
debt under our Credit Agreement (see Note H for a
discussion of our debt), we include the debt outstanding on EPFC.

In conjunction with the initial transaction, we
sold $82.5 million of receivables to EPFC, and we incurred
charges of $1.5 million which are included in Interest
Expense in the accompanying statements of operations. We
continue to service sold receivables and receive a monthly
servicing fee from EPFC of approximately 1% per annum of the
receivable pools average balance. As this servicing fee
approximates our cost to service, no servicing asset or
liability has been recorded at November 30, 2002. We do
retain an interest in a portion of the receivables transferred,
representing an over collateralization on the securitization.
Our involvement with both the retained interest and the
transferred receivables is generally limited to the servicing
performed. Our interest in the receivables is carried at fair
value which is estimated as its net realizable value. The net
realizable value considers the collection period and includes an
estimated provision for credit losses and returns and
allowances. Due to the short duration of the receivables
transferred, the carrying value of our retained interest is a
reasonable approximation of its fair value. Assumed credit
losses are based on our historical results and probable future
losses.

At November 30, 2002, our interest in EPFC,
including a service fee receivable, was $29.4 million and
the revolving pool of receivables that we service totaled
$77.5 million. At November 30, 2002, the outstanding
balance of the interest sold to the financial institution
recorded on EPFC was $46.5 million. During the year ended
November 30, 2002, we sold outside of the initial sale,
$568.2 million of accounts receivable to EPFC. During 2002,
EPFC collected $546.8 million of cash that was reinvested
in new securitizations. The effective interest rate as of
November 30, 2002 in the securitization was approximately
2.55%.

E.     Restructuring

During 2001, we recorded asset write-downs and
other charges totaling $14.1 million in connection with a
restructuring plan (the Plan) announced in
November 2001. The Plan primarily relocates our corporate
headquarters from Cincinnati, Ohio to Phoenix, Arizona and
closes three plants in the Technologies Segment as a result of
the elimination of certain product lines in the Power Group
business. The costs related to the Plan, which were recognized
as a separate component of operating expenses during 2001,
included $5.4 million related to the facilities,
$5.0 million related to severance of approximately 165
employees and $3.7 million in other costs to exit business
activities.

The facility costs of $5.4 million include a
non-cash adjustment of $1.3 million to write down the
carrying value of the three plants to their estimated fair value
in holding them for sale, a non-cash charge of $2.3 million
on the loss of abandoning the machinery and equipment and other
assets at the plant locations and at corporate headquarters, and
a $1.9 million charge for future lease commitments, less
estimated proceeds, received from subleasing the various spaces.
The asset impairment adjustments are recorded against Property
Plant and Equipment in our balance sheets. The other shutdown
costs to exit the business consist primarily of a
$3.0 million non-cash charge related to inventory. The
$7.4 million restructuring reserve balance as of
November 30, 2001 is included in Other Accrued Liabilities.

During 2002, we determined that a portion of the
assets in our over-funded pension plan at November 30, 2001
could be made available to pay severance costs related to the
Plan. Accordingly, we have amended our pension plan and have
provided new or amended severance plans to allow for such
payments. Accordingly, a portion of our restructuring liability
has been paid from our prepaid pension asset.

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EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

In May 2002, we announced we would exit the
Gallium business in our Technologies Segment due to the downturn
in the fiber-optic, telecommunication and semiconductor markets,
the primary markets for our Gallium products. This action
resulted in a $5.5 million charge to restructuring expense.
This charge consists of an inventory impairment totaling
$2.9 million, representing the loss to be incurred from the
liquidation of current inventory. The charge also consists of an
accrual totaling $2.4 million recorded in Other Accrued
Liabilities representing primarily the loss to be incurred from
the liquidation of inventory to be purchased under firm purchase
commitments. In addition, a $200,000 asset impairment charge was
recorded against Property, Plant and Equipment.

The remaining balance of $3.3 million as of
November 30, 2002, is included in Other Accrued Liabilities
in our balance sheets. An analysis of the facilities, severance
and other costs incurred related to restructuring reserves is as
follows (in thousands of dollars):

|                             |                                                                  |            |       |           |   |       |       |        |   |   |       |        |   |   |       |        |  
|---------------------------- | ---------------------------------------------------------------- | ---------- | ----- | --------- | - | ----- | ----- | ------ | - | - | ----- | ------ | - | - | ----- | ------ | -
|                             |                                                                  |            |       |           |   | Other |       |       
|                             |                                                                  | Facilities |       | Severance |   | Costs |       | Total 
|                             |                                                                  |            |       |           |   |       |       |       
|Original Reserve             |                                                                  | $          | 1,850 |           |   | $     | 5,044 |        |   | $ | 694   |        |   | $ | 7,588 |       
|                             | Amounts spent                                                    |            |       |          |   |       |       | (202   | ) |   |       |       |   |   |       | (202   | )
|                             |                                                                  |            |       |           |   |       |       |        |   |   |       |        |   |   |       |       
|Balance at November 30, 2001 |                                                                  |            | 1,850 |           |   |       | 4,842 |        |   |   | 694   |        |   |   | 7,386 |       
|                             | Amounts paid from prepaid pension assets                         |            |       |          |   |       |       | (3,080 | ) |   |       |       |   |   |       | (3,080 | )
|                             | Additional amounts recorded for exiting the
    Gallium business |            |       |          |   |       |       |       |   |   |       | 2,382  |   |   |       | 2,382  |  
|                             | Additional provision for severance liability                     |            |       |          |   |       |       | 416    |   |   |       |       |   |   |       | 416    |  
|                             | Amounts spent                                                    |            |       | (221      | ) |       |       | (1,864 | ) |   |       | (1,736 | ) |   |       | (3,821 | )
|                             |                                                                  |            |       |           |   |       |       |        |   |   |       |        |   |   |       |       
|Balance at November 30, 2002 |                                                                  | $          | 1,629 |           |   | $     | 314   |        |   | $ | 1,340 |        |   | $ | 3,283 |       
|                             |                                                                  |            |       |           |   |       |       |        |   |   |       |        |   |   |       |       

F.     Inventories

Inventories consisted of the following at
November 30 (in thousands of dollars):

|                                            |  |      |        |      |  |   |        |  
|------------------------------------------- |  | ---- | ------ | ---- |  | - | ------ | -
|                                            |  | 2002 |        | 2001
|                                            |  |      |        |     
|Raw materials and supplies                  |  | $    | 25,365 |      |  | $ | 22,527 |  
|Work-in-process                             |  |      | 14,058 |      |  |   | 26,783 |  
|Finished goods                              |  |      | 15,295 |      |  |   | 19,270 |  
|                                            |  |      |        |      |  |   |        |  
|                                            |  |      | 54,718 |      |  |   | 68,580 |  
|Adjustment to state inventory at LIFO value |  |      |       |      |  |   | (957   | )
|                                            |  |      |        |      |  |   |        |  
|                                            |  | $    | 54,718 |      |  | $ | 67,623 |  
|                                            |  |      |        |      |  |   |        |  

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EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

G.     Property,
Plant and Equipment

Property, plant and equipment consisted of the
following at November 30 (in thousands of dollars):

|                               |  |      |          |      |  |   |          |  
|------------------------------ |  | ---- | -------- | ---- |  | - | -------- | -
|                               |  | 2002 |          | 2001
|                               |  |      |          |     
|Land and land improvements     |  | $    | 15,217   |      |  | $ | 15,665   |  
|Buildings                      |  |      | 66,213   |      |  |   | 68,749   |  
|Machinery and equipment        |  |      | 268,564  |      |  |   | 243,272  |  
|Construction in progress       |  |      | 10,777   |      |  |   | 25,197   |  
|                               |  |      |          |      |  |   |          |  
|                               |  |      | 360,771  |      |  |   | 352,883  |  
|Less: accumulated depreciation |  |      | (177,366 | )    |  |   | (136,128 | )
|                               |  |      |          |      |  |   |          |  
|                               |  | $    | 183,405  |      |  | $ | 216,755  |  
|                               |  |      |          |      |  |   |          |  

H.     Long-Term
Debt

Long-term debt consisted of the following at
November 30 (in thousands of dollars):

|                                                                 |                                                      |      |         |         |  |   |         |         | 
|---------------------------------------------------------------- | ---------------------------------------------------- | ---- | ------- | ------- |  | - | ------- | ------- | 
|                                                                 |                                                      | 2002 |         | 2001   
|                                                                 |                                                      |      |         |        
|Credit Agreement:                                                |                                                      |      |         |         |  |   |         |        
|                                                                 | Revolving credit facility, due February 27,
    2004 |      | $       | 121,500 |  |   | $       | 142,000 | 
|                                                                 | Term loan, due 2003                                  |      |         | 16,925  |  |   |         | 47,739  | 
|Accounts Receivable Loan Agreement, paid-off in
    January 2002 |                                                      |      |        |         |  |   | 14,250  |        
|Senior Subordinated Notes, 9.375% interest, due
    2008         |                                                      |      | 220,000 |         |  |   | 220,000 |        
|Industrial Revenue Bonds, 1.8% to 2.2% interest,
    due 2005    |                                                      |      | 15,300  |         |  |   | 17,000  |        
|Other                                                            |                                                      |      |        |         |  |   | 2,137   |        
|                                                                 |                                                      |      |         |         |  |   |         |        
|                                                                 |                                                      |      | 373,725 |         |  |   | 443,126 |        
|Less: current portion                                            |                                                      |      | (18,625 | )       |  |   | (41,957 | )      
|                                                                 |                                                      |      |         |         |  |   |         |        
|Long-term debt, net of current portion                           |                                                      | $    | 355,100 |         |  | $ | 401,169 |        
|                                                                 |                                                      |      |         |         |  |   |         |        

Aggregate maturities of long-term debt are as
follows at November 30, 2002 (in thousands of dollars):

|           |  |   |         | 
|---------- |  | - | ------- | 
|2003       |  | $ | 18,625  | 
|2004       |  |   | 123,300 | 
|2005       |  |   | 11,800  | 
|2006       |  |   |        | 
|2007       |  |   |        | 
|Thereafter |  |   | 220,000 | 
|           |  |   |         | 
|           |  | $ | 373,725 | 
|           |  |   |         | 

Credit
Agreement

We have a syndicated senior secured loan facility
(Credit Agreement) providing an original term loan
(Term Loan) of $75.0 million, as amended, and a
$220.0 million revolving credit facility
(Facility). The Facility and the Term Loan bear
interest, at our option, at LIBOR rate plus 2.75%, or the
banks prime rate plus 1.5%. Interest is generally payable
quarterly on the Facility and Term Loan. We have entered into
interest rate swap agreements to manage our variable interest
rate exposure. See Note B for a discussion of our

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EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

outstanding interest rate swap agreements. Our
weighted average effective interest rate during 2002 was 7.36%
and during 2001 was 8.85%. The amounts are not comparable
because during 2002 we completed our accounts receivable
asset-backed securitization (see Note D) that significantly
reduced our Credit Agreement borrowings in 2002 compared to 2001.

At November 30, 2002, we had
$42.2 million in outstanding letters of credit under the
Facility, which together with borrowings of $121.5 million,
made our available borrowing capacity of $56.3 million.
However, due to various financial covenant limitations under the
Credit Agreement, we could only incur an additional
$39.3 million of indebtedness at November 30, 2002.
The Credit Agreement also contains certain fees. There are fees
for letters of credit equal to 2.75% per annum for all issued
letters of credit, and there is a commitment fee on the Facility
equal to 0.5% per annum of the unused portion of the Facility.
If we meet or fail to meet certain financial benchmarks, the
interest rate spreads on the borrowing, the commitment fees and
the fees for letters of credit may be reduced or increased.

The Credit Agreement is secured by our capital
stock, the capital stock of our domestic United States
subsidiaries, a certain portion of the capital stock of our
foreign subsidiaries, and substantially all other property of
our United States subsidiaries. Additionally, the Credit
Agreement is guaranteed by us and certain of our subsidiaries
(see Subsidiary Guarantors and Non-Guarantors below).

The Credit Agreement contains covenants that
restrict our ability to declare dividends or redeem capital
stock, incur additional debt or liens, alter existing debt
agreements, make loans or investments, form joint ventures,
undergo a change in control or engage in mergers, acquisitions
or asset sales. These covenants also limit the annual amount of
capital expenditures and require us to meet certain minimum
financial ratios. For purposes of determining outstanding debt
under our Credit Agreement, we include the debt outstanding on
EPFC, our off-balance sheet special purpose entity (see
Note D for a detailed discussion of EPFC). We are in
compliance with all covenants at November 30, 2002.

In addition to regularly scheduled payments on
the Credit Agreement, we are required to make mandatory
prepayments equal to 50.0% of annual excess cash flow as defined
in the Credit Agreement. The net proceeds from the sale of
assets (subject to certain conditions), the net proceeds of
certain new debt issued, and 50.0% of the net proceeds of any
equity securities issued are also subject to mandatory
prepayments on the Credit Agreement. No excess cash flow
payments were due for the years ended November 30, 2002 and
2001.



| |                                       
| | --------------------------------------
| | Accounts Receivable Loan
    Agreement

Prior to the formation of EPFC, we had an
accounts receivable loan agreement, whereby, we sold certain of
our trade receivables to a wholly-owned, consolidated
subsidiary, Eagle-Picher Acceptance Corporation. The receivables
were then used as security for loans made under a separate
revolving credit facility. This accounts receivable loan
agreement was paid-off with the formation of EPFC. See
Note D for a discussion of EPFC.



| |                          
| | -------------------------
| | Senior Subordinated Notes

Our Senior Subordinated Notes require semi-annual
interest payments on September 1 and March 1. The
Senior Subordinated Notes, which are unsecured, are redeemable
at our option, in whole or in part, any time after
February 28, 2003 at set redemption prices. We are required
to offer to purchase the Senior Subordinated Notes at a set
redemption price should there be a change in control. The Senior
Subordinated Notes contain covenants which restrict or limit our
ability to declare or pay dividends, incur additional debt or
liens, issue stock, engage in affiliate transactions, undergo a
change in control or sell assets. We are in

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EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

compliance with these covenants at
November 30, 2002. The Senior Subordinated Notes are
guaranteed by us and certain of our subsidiaries (see
Subsidiary Guarantors and Non-Guarantors below).



| |                         
| | ------------------------
| | Industrial Revenue Bonds

Our industrial revenue bonds require monthly
interest payments at variable interest rates based on the market
for similar issues and are secured by letters of credit issued
under the Facility described above.



| |                                                              
| | -------------------------------------------------------------
| | Effective Interest Rates and Fair Value of
    Long-term Debt

Our effective interest rate under our outstanding
debt at November 30, 2002 was 8.53% and at
November 30, 2001 was 8.07% (including the effect of the
interest rate swaps). Our debt had an estimated fair value of
$303.3 million at November 30, 2002, and
$337.2 million at November 30, 2001. The estimated
fair value of our debt, except for our Senior Subordinated
Notes, was calculated based on using discounted cash flow
analysis based on current rates offered for similar issues of
other debt. For our Senior Subordinated Notes, we were provided
the fair market value by the primary market maker of the Senior
Subordinated Notes, who based the amount on the current market
conditions at November 30, 2002 and 2001 as there is
generally no significant trading activity in our Senior
Subordinated Notes.



| |                                             
| | --------------------------------------------
| | Subsidiary Guarantors and
    Non-Guarantors

Both the Credit Agreement and the Senior
Subordinated Notes were issued by our wholly-owned subsidiary,
EPI, and are guaranteed on a full, unconditional, and joint and
several basis by us and certain of our wholly-owned domestic
subsidiaries (Subsidiary Guarantors). We have
determined that full financial statements and other disclosures
concerning EPI or the Subsidiary Guarantors would not be
material to investors, and such financial statements are not
presented. EPI and the Subsidiary Guarantors are subject to
restrictions on the payment of dividends under the terms of both
the Credit Agreement and the Senior Subordinated Notes. The
following supplemental condensed combining financial statements
present information regarding EPI, as the Issuer, the Subsidiary
Guarantors and Non-Guarantor Subsidiaries.

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EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

EAGLE-PICHER HOLDINGS, INC.

SUPPLEMENTAL CONDENSED COMBINING BALANCE
SHEETS

As of November 30, 2002


|                                                   |  |                           |          |                |  |                |         |              |  |              |         |       |  |   |         |  |  |   |          |   |  |   |         |  
|-------------------------------------------------- |  | ------------------------- | -------- | -------------- |  | -------------- | ------- | ------------ |  | ------------ | ------- | ----- |  | - | ------- |  |  | - | -------- | - |  | - | ------- | -
|                                                   |  |                           |          |                |  |                |         |              |  |             
|                                                   |  |                           |          | Guarantors     |  |                |         |              |  |             
|                                                   |  |                           |          |                |  | Non-Guarantors |         |              |  |             
|                                                   |  |                           |          | Eagle-Picher   |  | Subsidiary     |         | Foreign      |  |              |         |      
|                                                   |  | Issuer                    |          | Holdings, Inc. |  | Guarantors     |         | Subsidiaries |  | Eliminations |         | Total
|                                                   |  |                           |          |                |  |                |         |              |  |              |         |      
|                                                   |  |                          
|                                                   |  | (In thousands of dollars)
|ASSETS                                            
|Current Assets:                                    |  |                           |          |                |  |                |         |              |  |              |         |       |  |   |         |  |  |   |          |   |  |   |         |  
|Cash and cash equivalents                          |  | $                         | 27,694   |                |  | $              | 1       |              |  | $            | (4,895  | )     |  | $ | 7,902   |  |  | $ | 820      |   |  | $ | 31,522  |  
|Receivables and retained interest, net             |  |                           | 2,535    |                |  |                |        |              |  |              | 31,472  |       |  |   | 19,097  |  |  |   |         |   |  |   | 53,104  |  
|Costs and estimated earnings in excess of billings |  |                           |         |                |  |                |        |              |  |              | 16,942  |       |  |   |        |  |  |   |         |   |  |   | 16,942  |  
|Intercompany accounts receivable                   |  |                           | 1,997    |                |  |                |        |              |  |              | 6,228   |       |  |   | 2,037   |  |  |   | (10,262  | ) |  |   |        |  
|Inventories                                        |  |                           | 3,957    |                |  |                |        |              |  |              | 39,394  |       |  |   | 13,283  |  |  |   | (1,916   | ) |  |   | 54,718  |  
|Net assets of operations to be sold                |  |                           | 643      |                |  |                |        |              |  |              |        |       |  |   |        |  |  |   |         |   |  |   | 643     |  
|Prepaid expenses                                   |  |                           | 7,840    |                |  |                |        |              |  |              | 4,755   |       |  |   | 4,686   |  |  |   | (1,614   | ) |  |   | 15,667  |  
|Deferred income taxes                              |  |                           | 10,798   |                |  |                |        |              |  |              |        |       |  |   |        |  |  |   |         |   |  |   | 10,798  |  
|                                                   |  |                           |          |                |  |                |         |              |  |              |         |       |  |   |         |  |  |   |          |   |  |   |         |  
|                                                   |  |                           | 55,464   |                |  |                | 1       |              |  |              | 93,896  |       |  |   | 47,005  |  |  |   | (12,972  | ) |  |   | 183,394 |  
|Property, Plant and Equipment, net                 |  |                           | 24,016   |                |  |                |        |              |  |              | 129,052 |       |  |   | 30,337  |  |  |   |         |   |  |   | 183,405 |  
|Investment in Subsidiaries                         |  |                           | 51,727   |                |  |                | 75,612  |              |  |              | 18,286  |       |  |   |        |  |  |   | (145,625 | ) |  |   |        |  
|Goodwill, net                                      |  |                           | 37,339   |                |  |                |        |              |  |              | 116,586 |       |  |   | 13,154  |  |  |   | (3,139   | ) |  |   | 163,940 |  
|Prepaid Pension                                    |  |                           | 43,837   |                |  |                |        |              |  |              | 10,959  |       |  |   |        |  |  |   |         |   |  |   | 54,796  |  
|Other Assets                                       |  |                           | 13,746   |                |  |                | (7,541  | )            |  |              | 21,744  |       |  |   | 11,070  |  |  |   | (11,513  | ) |  |   | 27,506  |  
|                                                   |  |                           |          |                |  |                |         |              |  |              |         |       |  |   |         |  |  |   |          |   |  |   |         |  
|                                                   |  | $                         | 226,129  |                |  | $              | 68,072  |              |  | $            | 390,523 |       |  | $ | 101,566 |  |  | $ | (173,249 | ) |  | $ | 613,041 |  
|                                                   |  |                           |          |                |  |                |         |              |  |              |         |       |  |   |         |  |  |   |          |   |  |   |         |  
|LIABILITIES AND SHAREHOLDERS EQUITY
    (DEFICIT)
|Current Liabilities:                               |  |                           |          |                |  |                |         |              |  |              |         |       |  |   |         |  |  |   |          |   |  |   |         |  
|Accounts payable                                   |  | $                         | 15,398   |                |  | $              |        |              |  | $            | 53,151  |       |  | $ | 15,686  |  |  | $ | 820      |   |  | $ | 85,055  |  
|Intercompany accounts payable                      |  |                           | 3,171    |                |  |                |        |              |  |              | 5,887   |       |  |   | 1,184   |  |  |   | (10,242  | ) |  |   |        |  
|Long-term debt  current portion                   |  |                           | 18,625   |                |  |                |        |              |  |              |        |       |  |   |        |  |  |   |         |   |  |   | 18,625  |  
|Other accrued liabilities                          |  |                           | 46,313   |                |  |                |        |              |  |              | 25,128  |       |  |   | 5,862   |  |  |   |         |   |  |   | 77,303  |  
|                                                   |  |                           |          |                |  |                |         |              |  |              |         |       |  |   |         |  |  |   |          |   |  |   |         |  
|                                                   |  |                           | 83,507   |                |  |                |        |              |  |              | 84,166  |       |  |   | 22,732  |  |  |   | (9,422   | ) |  |   | 180,983 |  
|Long-term Debt, less current portion               |  |                           | 355,100  |                |  |                |        |              |  |              |        |       |  |   | 11,491  |  |  |   | (11,491  | ) |  |   | 355,100 |  
|Postretirement Benefits Other Than Pensions        |  |                           | 17,635   |                |  |                |        |              |  |              |        |       |  |   |        |  |  |   |         |   |  |   | 17,635  |  
|Deferred Income Taxes                              |  |                           |         |                |  |                |        |              |  |              |        |       |  |   |        |  |  |   |         |   |  |   |        |  
|Other Long-term Liabilities                        |  |                           | 8,687    |                |  |                |        |              |  |              |        |       |  |   | 216     |  |  |   | 25       |   |  |   | 8,928   |  
|                                                   |  |                           |          |                |  |                |         |              |  |              |         |       |  |   |         |  |  |   |          |   |  |   |         |  
|                                                   |  |                           | 464,929  |                |  |                |        |              |  |              | 84,166  |       |  |   | 34,439  |  |  |   | (20,888  | ) |  |   | 562,646 |  
|Intercompany Accounts                              |  |                           | (294,216 | )              |  |                |        |              |  |              | 280,532 |       |  |   | 23,930  |  |  |   | (10,246  | ) |  |   |        |  
|Preferred Stock                                    |  |                           |         |                |  |                | 137,973 |              |  |              |        |       |  |   |        |  |  |   |         |   |  |   | 137,973 |  
|Shareholders Equity (Deficit)                     |  |                           | 55,416   |                |  |                | (69,901 | )            |  |              | 25,825  |       |  |   | 43,197  |  |  |   | (142,115 | ) |  |   | (87,578 | )
|                                                   |  |                           |          |                |  |                |         |              |  |              |         |       |  |   |         |  |  |   |          |   |  |   |         |  
|                                                   |  | $                         | 226,129  |                |  | $              | 68,072  |              |  | $            | 390,523 |       |  | $ | 101,566 |  |  | $ | (173,249 | ) |  | $ | 613,041 |  
|                                                   |  |                           |          |                |  |                |         |              |  |              |         |       |  |   |         |  |  |   |          |   |  |   |         |  

54



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##### Table of Contents



EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

EAGLE-PICHER HOLDINGS, INC.

SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF
INCOME (LOSS)

Year Ended November 30, 2002


|                                                          |                                                              |                           |         |                |   |                |         |              |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |         |  
|--------------------------------------------------------- | ------------------------------------------------------------ | ------------------------- | ------- | -------------- | - | -------------- | ------- | ------------ | - | ------------ | ------- | ------- | - | - | ------ | ------ | - | - | ------- | ------- | - | - | ------- | ------- | -
|                                                          |                                                              |                           |         |                |   |                |         |              |   |             
|                                                          |                                                              |                           |         | Guarantors     |   |                |         |              |   |             
|                                                          |                                                              |                           |         |                |   | Non-Guarantors |         |              |   |             
|                                                          |                                                              |                           |         | Eagle-Picher   |   | Subsidiary     |         | Foreign      |   |              |         |        
|                                                          |                                                              | Issuer                    |         | Holdings, Inc. |   | Guarantors     |         | Subsidiaries |   | Eliminations |         | Total  
|                                                          |                                                              |                           |         |                |   |                |         |              |   |              |         |        
|                                                          |                                                              |                          
|                                                          |                                                              | (In thousands of dollars)
|Net Sales:                                                |                                                              |                           |         |                |   |                |         |              |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|                                                          | Customers                                                    |                           | $       | 50,879         |   |                | $       |             |   |              | $       | 553,983 |   |   | $      | 91,903 |   |   | $       |        |   |   | $       | 696,765 |  
|                                                          | Intercompany                                                 |                           |         | 16,411         |   |                |         |             |   |              |         | 13,628  |   |   |        | 4      |   |   |         | (30,043 | ) |   |         |        |  
|                                                          |                                                              |                           |         |                |   |                |         |              |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|                                                          |                                                              |                           | 67,290  |                |   |                |        |              |   |              | 567,611 |         |   |   | 91,907 |        |   |   | (30,043 | )       |   |   | 696,765 |        
|                                                          |                                                              |                           |         |                |   |                |         |              |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|Operating Costs and Expenses:                             |                                                              |                           |         |                |   |                |         |              |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|                                                          | Cost of products sold (exclusive of depreciation)            |                           |         | 36,167         |   |                |         |             |   |              |         | 465,907 |   |   |        | 74,459 |   |   |         | (30,043 | ) |   |         | 546,490 |  
|                                                          | Selling and administrative                                   |                           |         | 24,128         |   |                |         | 5            |   |              |         | 30,449  |   |   |        | 7,351  |   |   |         |        |   |   |         | 61,933  |  
|                                                          | Intercompany charges                                         |                           |         | (6,322         | ) |                |         |             |   |              |         | 6,322   |   |   |        |       |   |   |         |        |   |   |         |        |  
|                                                          | Depreciation                                                 |                           |         | 4,570          |   |                |         |             |   |              |         | 37,930  |   |   |        | 4,067  |   |   |         |        |   |   |         | 46,567  |  
|                                                          | Amortization of intangibles                                  |                           |         | 4,600          |   |                |         |             |   |              |         | 12,619  |   |   |        | 258    |   |   |         |        |   |   |         | 17,477  |  
|                                                          | Other                                                        |                           |         | 9,595          |   |                |         |             |   |              |         | 11,278  |   |   |        | (1,921 | ) |   |         |        |   |   |         | 18,952  |  
|                                                          |                                                              |                           |         |                |   |                |         |              |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|                                                          |                                                              |                           | 72,738  |                |   |                | 5       |              |   |              | 564,505 |         |   |   | 84,214 |        |   |   | (30,043 | )       |   |   | 691,419 |        
|                                                          |                                                              |                           |         |                |   |                |         |              |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|Operating Income (Loss)                                   |                                                              |                           | (5,448  | )              |   |                | (5      | )            |   |              | 3,106   |         |   |   | 7,693  |        |   |   |        |         |   |   | 5,346   |        
|Other Income (Expense):                                   |                                                              |                           |         |                |   |                |         |              |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|                                                          | Interest (expense) income                                    |                           |         | 12,680         |   |                |         |             |   |              |         | (54,407 | ) |   |        | (1,224 | ) |   |         | 1,809   |   |   |         | (41,142 | )
|                                                          | Other income (expense), net                                  |                           |         | 601            |   |                |         |             |   |              |         | 2,549   |   |   |        | 224    |   |   |         | (1,809  | ) |   |         | 1,565   |  
|                                                          | Equity in earnings (losses) of consolidated
    subsidiaries |                           |         | (31,844        | ) |                |         | (19,557      | ) |              |         | 2,228   |   |   |        |       |   |   |         | 49,173  |   |   |         |        |  
|                                                          |                                                              |                           |         |                |   |                |         |              |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|Income (Loss) from Continuing Operations Before
    Taxes |                                                              |                           | (24,011 | )              |   |                | (19,562 | )            |   |              | (46,524 | )       |   |   | 6,693  |        |   |   | 49,173  |         |   |   | (34,231 | )      
|Income Taxes                                              |                                                              |                           | 146     |                |   |                |        |              |   |              | 12      |         |   |   | 2,443  |        |   |   |        |         |   |   | 2,601   |        
|                                                          |                                                              |                           |         |                |   |                |         |              |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|Net Income (Loss)                                         |                                                              | $                         | (24,157 | )              |   | $              | (19,562 | )            |   | $            | (46,536 | )       |   | $ | 4,250  |        |   | $ | 49,173  |         |   | $ | (36,832 | )      
|                                                          |                                                              |                           |         |                |   |                |         |              |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        

55



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##### Table of Contents



EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

EAGLE-PICHER HOLDINGS, INC.

SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF
CASH FLOWS

For the Year Ended November 30, 2002


|                                                                                                   |                                                                        |                           |         |                |  |                |         |              |  |              |         |        |   |   |        |        |   |   |         |         |   |   |         |        | 
|-------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------- | ------------------------- | ------- | -------------- |  | -------------- | ------- | ------------ |  | ------------ | ------- | ------ | - | - | ------ | ------ | - | - | ------- | ------- | - | - | ------- | ------ | 
|                                                                                                   |                                                                        |                           |         |                |  |                |         |              |  |             
|                                                                                                   |                                                                        |                           |         | Guarantors     |  |                |         |              |  |             
|                                                                                                   |                                                                        |                           |         |                |  | Non-Guarantors |         |              |  |             
|                                                                                                   |                                                                        |                           |         | Eagle-Picher   |  | Subsidiary     |         | Foreign      |  |              |         |       
|                                                                                                   |                                                                        | Issuer                    |         | Holdings, Inc. |  | Guarantors     |         | Subsidiaries |  | Eliminations |         | Total 
|                                                                                                   |                                                                        |                           |         |                |  |                |         |              |  |              |         |       
|                                                                                                   |                                                                        |                          
|                                                                                                   |                                                                        | (In thousands of dollars)
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                              |                                                                        |                           |         |                |  |                |         |              |  |              |         |        |   |   |        |        |   |   |         |         |   |   |         |       
|Net income (loss)                                                                                  |                                                                        | $                         | (24,157 | )              |  | $              | (19,562 | )            |  | $            | (46,536 | )      |   | $ | 4,250  |        |   | $ | 49,173  |         |   | $ | (36,832 | )     
|Adjustments to reconcile net income (loss) to
    cash provided by (used in) operating activities: |                                                                        |                           |         |                |  |                |         |              |  |              |         |        |   |   |        |        |   |   |         |         |   |   |         |       
|                                                                                                   | Equity in (earnings) loss of consolidated
    subsidiaries             |                           |         | 31,844         |  |                |         | 19,557       |  |              |         | (2,228 | ) |   |        |       |   |   |         | (49,173 | ) |   |         |       | 
|                                                                                                   | Depreciation and amortization                                          |                           |         | 12,301         |  |                |         |             |  |              |         | 50,549 |   |   |        | 4,325  |   |   |         |        |   |   |         | 67,175 | 
|                                                                                                   | Provisions for discontinued operations                                 |                           |         |               |  |                |         |             |  |              |         |       |   |   |        |       |   |   |         |        |   |   |         |       | 
|                                                                                                   | Loss from Divestitures                                                 |                           |         | 3,325          |  |                |         |             |  |              |         | 3,172  |   |   |        |       |   |   |         |        |   |   |         | 6,497  | 
|                                                                                                   | Deferred income taxes                                                  |                           |         | 6,147          |  |                |         |             |  |              |         |       |   |   |        |       |   |   |         |        |   |   |         | 6,147  | 
|                                                                                                   | Changes in assets and liabilities, net of effect
    of non-cash items |                           |         | 33,873         |  |                |         | 5            |  |              |         | 58,068 |   |   |        | (6,351 | ) |   |         | (46,689 | ) |   |         | 38,906 | 
|                                                                                                   |                                                                        |                           |         |                |  |                |         |              |  |              |         |        |   |   |        |        |   |   |         |         |   |   |         |       
|                                                                                                   |                                                                        |                           | 63,333  |                |  |                |        |              |  |              | 63,025  |        |   |   | 2,224  |        |   |   | (46,689 | )       |   |   | 81,893  |       
|                                                                                                   |                                                                        |                           |         |                |  |                |         |              |  |              |         |        |   |   |        |        |   |   |         |         |   |   |         |       
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                              |                                                                        |                           |         |                |  |                |         |              |  |              |         |        |   |   |        |        |   |   |         |         |   |   |         |       
|Proceeds from sales of divisions                                                                   |                                                                        |                           | 6,927   |                |  |                |        |              |  |              | 3,100   |        |   |   |       |        |   |   |        |         |   |   | 10,027  |       
|Capital expenditures                                                                               |                                                                        |                           | (980    | )              |  |                |        |              |  |              | (13,566 | )      |   |   | (2,710 | )      |   |   |        |         |   |   | (17,256 | )     
|Proceeds from sale of property and equipment, and
    other, net                                   |                                                                        |                           | 639     |                |  |                |        |              |  |              |        |        |   |   |       |        |   |   |        |         |   |   | 639     |       
|                                                                                                   |                                                                        |                           |         |                |  |                |         |              |  |              |         |        |   |   |        |        |   |   |         |         |   |   |         |       
|                                                                                                   |                                                                        |                           | 6,586   |                |  |                |        |              |  |              | (10,466 | )      |   |   | (2,710 | )      |   |   |        |         |   |   | (6,590  | )     
|                                                                                                   |                                                                        |                           |         |                |  |                |         |              |  |              |         |        |   |   |        |        |   |   |         |         |   |   |         |       
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                              |                                                                        |                           |         |                |  |                |         |              |  |              |         |        |   |   |        |        |   |   |         |         |   |   |         |       
|Reduction of long-term debt                                                                        |                                                                        |                           | (32,515 | )              |  |                |        |              |  |              |        |        |   |   | (2,150 | )      |   |   |        |         |   |   | (34,665 | )     
|Net borrowings (repayments) under revolving
    credit agreements                                  |                                                                        |                           | 21,966  |                |  |                |        |              |  |              | (56,702 | )      |   |   |       |        |   |   |        |         |   |   | (34,736 | )     
|Acquisition of treasury stock                                                                      |                                                                        |                           | (159    | )              |  |                |        |              |  |              |        |        |   |   |       |        |   |   |        |         |   |   | (159    | )     
|Other                                                                                              |                                                                        |                           |        |                |  |                |        |              |  |              |        |        |   |   |       |        |   |   |        |         |   |   |        |       
|                                                                                                   |                                                                        |                           |         |                |  |                |         |              |  |              |         |        |   |   |        |        |   |   |         |         |   |   |         |       
|                                                                                                   |                                                                        |                           | (10,708 | )              |  |                |        |              |  |              | (56,702 | )      |   |   | (2,150 | )      |   |   |        |         |   |   | (69,560 | )     
|                                                                                                   |                                                                        |                           |         |                |  |                |         |              |  |              |         |        |   |   |        |        |   |   |         |         |   |   |         |       
|Effect of exchange rates on cash                                                                   |                                                                        |                           |        |                |  |                |        |              |  |              |        |        |   |   | 1,159  |        |   |   |        |         |   |   | 1,159   |       
|                                                                                                   |                                                                        |                           |         |                |  |                |         |              |  |              |         |        |   |   |        |        |   |   |         |         |   |   |         |       
|Net increase (decrease) in cash and cash
    equivalents                                           |                                                                        |                           | 59,211  |                |  |                |        |              |  |              | (4,143  | )      |   |   | (1,477 | )      |   |   | (46,689 | )       |   |   | 6,902   |       
|Intercompany accounts                                                                              |                                                                        |                           | (48,662 | )              |  |                |        |              |  |              | (1,223  | )      |   |   | 2,443  |        |   |   | 47,442  |         |   |   |        |       
|Cash and cash equivalents, beginning of period                                                     |                                                                        |                           | 17,145  |                |  |                | 1       |              |  |              | 471     |        |   |   | 6,936  |        |   |   | 67      |         |   |   | 24,620  |       
|                                                                                                   |                                                                        |                           |         |                |  |                |         |              |  |              |         |        |   |   |        |        |   |   |         |         |   |   |         |       
|Cash and cash equivalents, end of period                                                           |                                                                        | $                         | 27,694  |                |  | $              | 1       |              |  | $            | (4,895  | )      |   | $ | 7,902  |        |   | $ | 820     |         |   | $ | 31,522  |       
|                                                                                                   |                                                                        |                           |         |                |  |                |         |              |  |              |         |        |   |   |        |        |   |   |         |         |   |   |         |       

56



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##### Table of Contents



EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

EAGLE-PICHER HOLDINGS, INC.

SUPPLEMENTAL CONDENSED COMBINING BALANCE
SHEETS

As of November 30, 2001


|                                                   |  |                           |          |                |  |                |         |              |  |              |         |       |  |   |         |  |  |   |          |   |  |   |         |  
|-------------------------------------------------- |  | ------------------------- | -------- | -------------- |  | -------------- | ------- | ------------ |  | ------------ | ------- | ----- |  | - | ------- |  |  | - | -------- | - |  | - | ------- | -
|                                                   |  |                           |          |                |  |                |         |              |  |             
|                                                   |  |                           |          | Guarantors     |  |                |         |              |  |             
|                                                   |  |                           |          |                |  | Non-Guarantors |         |              |  |             
|                                                   |  |                           |          | Eagle-Picher   |  | Subsidiary     |         | Foreign      |  |              |         |      
|                                                   |  | Issuer                    |          | Holdings, Inc. |  | Guarantors     |         | Subsidiaries |  | Eliminations |         | Total
|                                                   |  |                           |          |                |  |                |         |              |  |              |         |      
|                                                   |  |                          
|                                                   |  | (In thousands of dollars)
|ASSETS                                            
|Current Assets:                                    |  |                           |          |                |  |                |         |              |  |              |         |       |  |   |         |  |  |   |          |   |  |   |         |  
|Cash and cash equivalents                          |  | $                         | 17,145   |                |  | $              | 1       |              |  | $            | 471     |       |  | $ | 6,936   |  |  | $ | 67       |   |  | $ | 24,620  |  
|Receivables, net                                   |  |                           | (18,238  | )              |  |                |        |              |  |              | 103,168 |       |  |   | 15,122  |  |  |   |         |   |  |   | 100,052 |  
|Costs and estimated earnings in excess of billings |  |                           |         |                |  |                |        |              |  |              | 10,744  |       |  |   |        |  |  |   |         |   |  |   | 10,744  |  
|Intercompany accounts receivable                   |  |                           | 46,674   |                |  |                |        |              |  |              | 3,559   |       |  |   | 65      |  |  |   | (50,298  | ) |  |   |        |  
|Inventories                                        |  |                           | 4,129    |                |  |                |        |              |  |              | 51,983  |       |  |   | 12,882  |  |  |   | (1,371   | ) |  |   | 67,623  |  
|Net assets of operations to be sold                |  |                           | 3,610    |                |  |                |        |              |  |              |        |       |  |   | 5,954   |  |  |   | (6,306   | ) |  |   | 3,258   |  
|Prepaid expenses                                   |  |                           | 6,948    |                |  |                |        |              |  |              | 6,152   |       |  |   | 2,887   |  |  |   | (865     | ) |  |   | 15,122  |  
|Deferred income taxes                              |  |                           | 24,287   |                |  |                |        |              |  |              |        |       |  |   |        |  |  |   |         |   |  |   | 24,287  |  
|                                                   |  |                           |          |                |  |                |         |              |  |              |         |       |  |   |         |  |  |   |          |   |  |   |         |  
|                                                   |  |                           | 84,555   |                |  |                | 1       |              |  |              | 176,077 |       |  |   | 43,846  |  |  |   | (58,773  | ) |  |   | 245,706 |  
|Property, Plant and Equipment, net                 |  |                           | 28,733   |                |  |                |        |              |  |              | 157,653 |       |  |   | 30,401  |  |  |   | (32      | ) |  |   | 216,755 |  
|Investment in Subsidiaries                         |  |                           | 83,571   |                |  |                | 95,169  |              |  |              | 16,058  |       |  |   |        |  |  |   | (194,798 | ) |  |   |        |  
|Goodwill, net                                      |  |                           | 41,939   |                |  |                |        |              |  |              | 120,969 |       |  |   | 19,994  |  |  |   | (3,140   | ) |  |   | 179,762 |  
|Prepaid Pension                                    |  |                           | 44,355   |                |  |                |        |              |  |              | 10,321  |       |  |   |        |  |  |   |         |   |  |   | 54,676  |  
|Other Assets                                       |  |                           | 33,227   |                |  |                | (4,533  | )            |  |              | 3,468   |       |  |   | 10,719  |  |  |   | (10,846  | ) |  |   | 32,035  |  
|                                                   |  |                           |          |                |  |                |         |              |  |              |         |       |  |   |         |  |  |   |          |   |  |   |         |  
|                                                   |  | $                         | 316,380  |                |  | $              | 90,637  |              |  | $            | 484,546 |       |  | $ | 104,960 |  |  | $ | (267,589 | ) |  | $ | 728,934 |  
|                                                   |  |                           |          |                |  |                |         |              |  |              |         |       |  |   |         |  |  |   |          |   |  |   |         |  
|LIABILITIES AND SHAREHOLDERS EQUITY
    (DEFICIT)
|Current Liabilities:                               |  |                           |          |                |  |                |         |              |  |              |         |       |  |   |         |  |  |   |          |   |  |   |         |  
|Accounts payable                                   |  | $                         | 16,156   |                |  | $              |        |              |  | $            | 62,171  |       |  | $ | 7,970   |  |  | $ |         |   |  | $ | 86,297  |  
|Intercompany accounts payable                      |  |                           | 76       |                |  |                |        |              |  |              | 48      |       |  |   | 7,404   |  |  |   | (7,528   | ) |  |   |        |  
|Long-term debt  current portion                   |  |                           | 25,569   |                |  |                |        |              |  |              | 14,250  |       |  |   | 9,430   |  |  |   | (7,292   | ) |  |   | 41,957  |  
|Other accrued liabilities                          |  |                           | 42,059   |                |  |                |         |              |  |              | 29,386  |       |  |   | 4,602   |  |  |   | 1        |   |  |   | 76,048  |  
|                                                   |  |                           |          |                |  |                |         |              |  |              |         |       |  |   |         |  |  |   |          |   |  |   |         |  
|                                                   |  |                           | 83,860   |                |  |                |        |              |  |              | 105,855 |       |  |   | 29,406  |  |  |   | (14,819  | ) |  |   | 204,302 |  
|Long-term Debt, less current portion               |  |                           | 401,169  |                |  |                |        |              |  |              | 42,452  |       |  |   |        |  |  |   | (42,452  | ) |  |   | 401,169 |  
|Postretirement Benefits Other Than Pensions        |  |                           | 17,873   |                |  |                |        |              |  |              |        |       |  |   |        |  |  |   |         |   |  |   | 17,873  |  
|Deferred Income Taxes                              |  |                           | 9,362    |                |  |                |        |              |  |              |        |       |  |   |        |  |  |   | (3,085   | ) |  |   | 6,277   |  
|Other Long-term Liabilities                        |  |                           | 8,038    |                |  |                | 19      |              |  |              | 1,000   |       |  |   | 825     |  |  |   |         |   |  |   | 9,882   |  
|                                                   |  |                           |          |                |  |                |         |              |  |              |         |       |  |   |         |  |  |   |          |   |  |   |         |  
|                                                   |  |                           | 520,302  |                |  |                | 19      |              |  |              | 149,307 |       |  |   | 30,231  |  |  |   | (60,356  | ) |  |   | 639,503 |  
|Intercompany Accounts                              |  |                           | (284,045 | )              |  |                |        |              |  |              | 262,878 |       |  |   | 35,782  |  |  |   | (14,615  | ) |  |   |        |  
|Preferred Stock                                    |  |                           |         |                |  |                | 123,086 |              |  |              |        |       |  |   |        |  |  |   |         |   |  |   | 123,086 |  
|Shareholders Equity (Deficit)                     |  |                           | 80,123   |                |  |                | (32,468 | )            |  |              | 72,361  |       |  |   | 38,947  |  |  |   | (192,618 | ) |  |   | (33,655 | )
|                                                   |  |                           |          |                |  |                |         |              |  |              |         |       |  |   |         |  |  |   |          |   |  |   |         |  
|                                                   |  | $                         | 316,380  |                |  | $              | 90,637  |              |  | $            | 484,546 |       |  | $ | 104,960 |  |  | $ | (267,589 | ) |  | $ | 728,934 |  
|                                                   |  |                           |          |                |  |                |         |              |  |              |         |       |  |   |         |  |  |   |          |   |  |   |         |  

57



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##### Table of Contents



EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

EAGLE-PICHER HOLDINGS, INC.

SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF
INCOME (LOSS)

Year Ended November 30, 2001


|                                                          |                                                              |                           |         |                |   |                |         |              |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |         |  
|--------------------------------------------------------- | ------------------------------------------------------------ | ------------------------- | ------- | -------------- | - | -------------- | ------- | ------------ | - | ------------ | ------- | ------- | - | - | ------ | ------ | - | - | ------- | ------- | - | - | ------- | ------- | -
|                                                          |                                                              |                           |         |                |   |                |         |              |   |             
|                                                          |                                                              |                           |         | Guarantors     |   |                |         |              |   |             
|                                                          |                                                              |                           |         |                |   | Non-Guarantors |         |              |   |             
|                                                          |                                                              |                           |         | Eagle-Picher   |   | Subsidiary     |         | Foreign      |   |              |         |        
|                                                          |                                                              | Issuer                    |         | Holdings, Inc. |   | Guarantors     |         | Subsidiaries |   | Eliminations |         | Total  
|                                                          |                                                              |                           |         |                |   |                |         |              |   |              |         |        
|                                                          |                                                              |                          
|                                                          |                                                              | (In thousands of dollars)
|Net Sales:                                                |                                                              |                           |         |                |   |                |         |              |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|                                                          | Customers                                                    |                           | $       | 47,892         |   |                | $       |             |   |              | $       | 571,914 |   |   | $      | 88,944 |   |   | $       |        |   |   | $       | 708,750 |  
|                                                          | Intercompany                                                 |                           |         | 15,398         |   |                |         |             |   |              |         | 15,185  |   |   |        |       |   |   |         | (30,583 | ) |   |         |        |  
|                                                          |                                                              |                           |         |                |   |                |         |              |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|                                                          |                                                              |                           | 63,290  |                |   |                |        |              |   |              | 587,099 |         |   |   | 88,944 |        |   |   | (30,583 | )       |   | $ | 708,750 |        
|                                                          |                                                              |                           |         |                |   |                |         |              |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|Operating Costs and Expenses:                             |                                                              |                           |         |                |   |                |         |              |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|                                                          | Cost of products sold (exclusive of depreciation)            |                           |         | 35,492         |   |                |         |             |   |              |         | 497,674 |   |   |        | 72,410 |   |   |         | (30,583 | ) |   |         | 574,993 |  
|                                                          | Selling and administrative                                   |                           |         | 21,627         |   |                |         | 5            |   |              |         | 21,163  |   |   |        | 8,184  |   |   |         |         |   |   |         | 50,979  |  
|                                                          | Intercompany charges                                         |                           |         | (6,329         | ) |                |         |             |   |              |         | 6,537   |   |   |        | (208   | ) |   |         |         |   |   |         |        |  
|                                                          | Depreciation                                                 |                           |         | 3,752          |   |                |         |             |   |              |         | 35,611  |   |   |        | 3,254  |   |   |         |         |   |   |         | 42,617  |  
|                                                          | Amortization of intangibles                                  |                           |         | 3,733          |   |                |         |             |   |              |         | 11,279  |   |   |        | 1,478  |   |   |         |         |   |   |         | 16,490  |  
|                                                          | Other                                                        |                           |         | 12,122         |   |                |         |             |   |              |         | 7,375   |   |   |        | (93    | ) |   |         | (11     | ) |   |         | 19,393  |  
|                                                          |                                                              |                           |         |                |   |                |         |              |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|                                                          |                                                              |                           | 70,397  |                |   |                | 5       |              |   |              | 579,639 |         |   |   | 85,025 |        |   |   | (30,594 | )       |   |   | 704,472 |        
|                                                          |                                                              |                           |         |                |   |                |         |              |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|Operating Income (Loss)                                   |                                                              |                           | (7,107  | )              |   |                | (5      | )            |   |              | 7,460   |         |   |   | 3,919  |        |   |   | 11      |         |   |   | 4,278   |        
|Other Income (Expense):                                   |                                                              |                           |         |                |   |                |         |              |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|                                                          | Interest (expense) income                                    |                           |         | (11,227        | ) |                |         |             |   |              |         | (36,006 | ) |   |        | (586   | ) |   |         | 7,714   |   |   |         | (40,105 | )
|                                                          | Other income (expense), net                                  |                           |         | 1,069          |   |                |         |             |   |              |         | 8,689   |   |   |        | 1,869  |   |   |         | (7,714  | ) |   |         | 3,913   |  
|                                                          | Equity in earnings (losses) of consolidated
    subsidiaries |                           |         | (15,145        | ) |                |         | (53,966      | ) |              |         | 2,183   |   |   |        |       |   |   |         | 66,928  |   |   |         |        |  
|                                                          |                                                              |                           |         |                |   |                |         |              |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|Income (Loss) from Continuing Operations Before
    Taxes |                                                              |                           | (32,410 | )              |   |                | (53,971 | )            |   |              | (17,674 | )       |   |   | 5,202  |        |   |   | 66,939  |         |   |   | (31,914 | )      
|Income Taxes (Benefit)                                    |                                                              |                           | (12,689 | )              |   |                |        |              |   |              | (8      | )       |   |   | 2,681  |        |   |   |        |         |   |   | (10,016 | )      
|                                                          |                                                              |                           |         |                |   |                |         |              |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|Income (Loss) from Continuing Operations                  |                                                              |                           | (19,721 | )              |   |                | (53,971 | )            |   |              | (17,666 | )       |   |   | 2,521  |        |   |   | 66,939  |         |   |   | (21,898 | )      
|Discontinued Operations                                   |                                                              |                           | (32,073 | )              |   |                |        |              |   |              |        |         |   |   |       |        |   |   |        |         |   |   | (32,073 | )      
|                                                          |                                                              |                           |         |                |   |                |         |              |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|Net Income (Loss)                                         |                                                              | $                         | (51,794 | )              |   | $              | (53,971 | )            |   | $            | (17,666 | )       |   | $ | 2,521  |        |   | $ | 66,939  |         |   | $ | (53,971 | )      
|                                                          |                                                              |                           |         |                |   |                |         |              |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        

58



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##### Table of Contents



EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

EAGLE-PICHER HOLDINGS, INC.

SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF
CASH FLOWS

For the Year Ended November 30, 2001


|                                                                                         |                                                                        |                           |         |                |   |                |         |              |  |              |         |         |   |   |         |        |   |   |         |         |   |   |         |        |  
|---------------------------------------------------------------------------------------- | ---------------------------------------------------------------------- | ------------------------- | ------- | -------------- | - | -------------- | ------- | ------------ |  | ------------ | ------- | ------- | - | - | ------- | ------ | - | - | ------- | ------- | - | - | ------- | ------ | -
|                                                                                         |                                                                        |                           |         |                |   |                |         |              |  |             
|                                                                                         |                                                                        |                           |         | Guarantors     |   |                |         |              |  |             
|                                                                                         |                                                                        |                           |         |                |   | Non-Guarantors |         |              |  |             
|                                                                                         |                                                                        |                           |         | Eagle-Picher   |   | Subsidiary     |         | Foreign      |  |              |         |        
|                                                                                         |                                                                        | Issuer                    |         | Holdings, Inc. |   | Guarantors     |         | Subsidiaries |  | Eliminations |         | Total  
|                                                                                         |                                                                        |                           |         |                |   |                |         |              |  |              |         |        
|                                                                                         |                                                                        |                          
|                                                                                         |                                                                        | (In thousands of dollars)
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |                                                                        |                           |         |                |   |                |         |              |  |              |         |         |   |   |         |        |   |   |         |         |   |   |         |       
|Net income (loss)                                                                        |                                                                        | $                         | (51,794 | )              |   | $              | (53,971 | )            |  | $            | (17,666 | )       |   | $ | 2,521   |        |   | $ | 66,939  |         |   | $ | (53,971 | )     
|Adjustments to reconcile net income
    (loss) to cash provided by operating activities: |                                                                        |                           |         |                |   |                |         |              |  |              |         |         |   |   |         |        |   |   |         |         |   |   |         |       
|                                                                                         | Equity in (earnings) loss of consolidated
    subsidiaries             |                           |         | 15,145         |   |                |         | 53,966       |  |              |         | (2,183  | ) |   |         |       |   |   |         | (66,928 | ) |   |         |       |  
|                                                                                         | Depreciation and amortization                                          |                           |         | 11,192         |   |                |         |             |  |              |         | 46,890  |   |   |         | 4,732  |   |   |         |        |   |   |         | 62,814 |  
|                                                                                         | Provisions for discontinued operations                                 |                           |         | 30,416         |   |                |         |             |  |              |         |        |   |   |         |       |   |   |         |        |   |   |         | 30,416 |  
|                                                                                         | Loss from Divestitures                                                 |                           |         | 2,105          |   |                |         |             |  |              |         |        |   |   |         |       |   |   |         |        |   |   |         | 2,105  |  
|                                                                                         | Deferred income taxes                                                  |                           |         | (9,344         | ) |                |         |             |  |              |         |        |   |   |         |       |   |   |         |        |   |   |         | (9,344 | )
|                                                                                         | Changes in assets and liabilities, net of effect
    of non-cash items |                           |         | 12,850         |   |                |         | 5            |  |              |         | (3,737  | ) |   |         | (1,797 | ) |   |         | 28,129  |   |   |         | 35,450 |  
|                                                                                         |                                                                        |                           |         |                |   |                |         |              |  |              |         |         |   |   |         |        |   |   |         |         |   |   |         |       
|                                                                                         |                                                                        |                           | 10,570  |                |   |                |        |              |  |              | 23,304  |         |   |   | 5,456   |        |   |   | 28,140  |         |   |   | 67,470  |       
|                                                                                         |                                                                        |                           |         |                |   |                |         |              |  |              |         |         |   |   |         |        |   |   |         |         |   |   |         |       
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |                                                                        |                           |         |                |   |                |         |              |  |              |         |         |   |   |         |        |   |   |         |         |   |   |         |       
|Proceeds from sales of divisions                                                         |                                                                        |                           |        |                |   |                |        |              |  |              |        |         |   |   |        |        |   |   |        |         |   |   |        |       
|Capital expenditures                                                                     |                                                                        |                           | (7,208  | )              |   |                |        |              |  |              | (16,469 | )       |   |   | (12,867 | )      |   |   |        |         |   |   | (36,544 | )     
|Proceeds from sale of property and equipment, and
    other, net                         |                                                                        |                           | 26      |                |   |                |        |              |  |              | 3,753   |         |   |   | (4,026  | )      |   |   |        |         |   |   | (247    | )     
|                                                                                         |                                                                        |                           |         |                |   |                |         |              |  |              |         |         |   |   |         |        |   |   |         |         |   |   |         |       
|                                                                                         |                                                                        |                           | (7,182  | )              |   |                |        |              |  |              | (12,716 | )       |   |   | (16,893 | )      |   |   |        |         |   |   | (36,791 | )     
|                                                                                         |                                                                        |                           |         |                |   |                |         |              |  |              |         |         |   |   |         |        |   |   |         |         |   |   |         |       
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |                                                                        |                           |         |                |   |                |         |              |  |              |         |         |   |   |         |        |   |   |         |         |   |   |         |       
|Reduction of long-term debt                                                              |                                                                        |                           | (20,795 | )              |   |                |        |              |  |              |        |         |   |   |        |        |   |   |        |         |   |   | (20,795 | )     
|Net borrowings (repayments) under revolving                                              |                                                                        |                           |         |                |   |                |         |              |  |              |         |         |   |   |         |        |   |   |         |         |   |   |        |       
|                                                                                         | credit agreements                                                      |                           |         | 36,340         |   |                |         |             |  |              |         | (28,500 | ) |   |         | (1,611 | ) |   |         |        |   |   |         | 6,229  |  
|Acquisition of treasury stock                                                            |                                                                        |                           | (2,162  | )              |   |                |         |              |  |              |        |         |   |   |        |        |   |   |        |         |   |   | (2,162  | )     
|Other                                                                                    |                                                                        |                           | 2,593   |                |   |                |        |              |  |              |         |         |   |   | (3,465  | )      |   |   |        |         |   |   | (872    | )     
|                                                                                         |                                                                        |                           |         |                |   |                |         |              |  |              |         |         |   |   |         |        |   |   |         |         |   |   |         |       
|                                                                                         |                                                                        |                           | 15,976  |                |   |                |        |              |  |              | (28,500 | )       |   |   | (5,076  | )      |   |   |        |         |   |   | (17,600 | )     
|                                                                                         |                                                                        |                           |         |                |   |                |         |              |  |              |         |         |   |   |         |        |   |   |         |         |   |   |         |       
|Net cash provided by discontinued operations                                             |                                                                        |                           | 4,322   |                |   |                |        |              |  |              |        |         |   |   |        |        |   |   |        |         |   |   | 4,322   |       
|                                                                                         |                                                                        |                           |         |                |   |                |         |              |  |              |         |         |   |   |         |        |   |   |         |         |   |   |         |       
|Effect of exchange rates on cash                                                         |                                                                        |                           |        |                |   |                |        |              |  |              |        |         |   |   | (248    | )      |   |   |        |         |   |   | (248    | )     
|                                                                                         |                                                                        |                           |         |                |   |                |         |              |  |              |         |         |   |   |         |        |   |   |         |         |   |   |         |       
|Net increase (decrease) in cash and cash
    equivalents                                 |                                                                        |                           | 23,686  |                |   |                |        |              |  |              | (17,912 | )       |   |   | (16,761 | )      |   |   | 28,140  |         |   |   | 17,153  |       
|Intercompany accounts                                                                    |                                                                        |                           | (9,343  | )              |   |                |        |              |  |              | 17,844  |         |   |   | 20,889  |        |   |   | (29,390 | )       |   |   |        |       
|Cash and cash equivalents, beginning of period                                           |                                                                        |                           | 2,802   |                |   |                | 1       |              |  |              | 539     |         |   |   | 2,808   |        |   |   | 1,317   |         |   |   | 7,467   |       
|                                                                                         |                                                                        |                           |         |                |   |                |         |              |  |              |         |         |   |   |         |        |   |   |         |         |   |   |         |       
|Cash and cash equivalents, end of period                                                 |                                                                        | $                         | 17,145  |                |   | $              | 1       |              |  | $            | 471     |         |   | $ | 6,936   |        |   | $ | 67      |         |   | $ | 24,620  |       
|                                                                                         |                                                                        |                           |         |                |   |                |         |              |  |              |         |         |   |   |         |        |   |   |         |         |   |   |         |       

59



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##### Table of Contents



EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

EAGLE-PICHER HOLDINGS,INC.

SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF
INCOME (LOSS)

Year Ended November 30, 2000


|                                                          |                                                              |                           |        |                |   |                |       |              |  |              |         |         |   |   |         |         |   |   |         |         |   |   |         |         |  
|--------------------------------------------------------- | ------------------------------------------------------------ | ------------------------- | ------ | -------------- | - | -------------- | ----- | ------------ |  | ------------ | ------- | ------- | - | - | ------- | ------- | - | - | ------- | ------- | - | - | ------- | ------- | -
|                                                          |                                                              |                           |        |                |   |                |       |              |  |             
|                                                          |                                                              |                           |        | Guarantors     |   |                |       |              |  |             
|                                                          |                                                              |                           |        |                |   | Non-Guarantors |       |              |  |             
|                                                          |                                                              |                           |        | Eagle-Picher   |   | Subsidiary     |       | Foreign      |  |              |         |        
|                                                          |                                                              | Issuer                    |        | Holdings, Inc. |   | Guarantors     |       | Subsidiaries |  | Eliminations |         | Total  
|                                                          |                                                              |                           |        |                |   |                |       |              |  |              |         |        
|                                                          |                                                              |                          
|                                                          |                                                              | (In thousands of dollars)
|Net Sales:                                                |                                                              |                           |        |                |   |                |       |              |  |              |         |         |   |   |         |         |   |   |         |         |   |   |         |        
|                                                          | Customers                                                    |                           | $      | 74,650         |   |                | $     |             |  |              | $       | 593,408 |   |   | $       | 102,408 |   |   | $       |        |   |   | $       | 770,466 |  
|                                                          | Intercompany                                                 |                           |        | 16,470         |   |                |       |             |  |              |         | 12,856  |   |   |         | 9,997   |   |   |         | (39,323 | ) |   |         |        |  
|                                                          |                                                              |                           |        |                |   |                |       |              |  |              |         |         |   |   |         |         |   |   |         |         |   |   |         |        
|                                                          |                                                              |                           | 91,120 |                |   |                |      |              |  |              | 606,264 |         |   |   | 112,405 |         |   |   | (39,323 | )       |   |   | 770,466 |        
|                                                          |                                                              |                           |        |                |   |                |       |              |  |              |         |         |   |   |         |         |   |   |         |         |   |   |         |        
|Operating Costs and Expenses:                             |                                                              |                           |        |                |   |                |       |              |  |              |         |         |   |   |         |         |   |   |         |         |   |   |         |        
|                                                          | Cost of products sold (exclusive of depreciation)            |                           |        | 55,066         |   |                |       |             |  |              |         | 497,162 |   |   |         | 96,168  |   |   |         | (39,238 | ) |   |         | 609,158 |  
|                                                          | Selling and administrative                                   |                           |        | 25,454         |   |                |       | 9            |  |              |         | 24,144  |   |   |         | 9,874   |   |   |         | (298    | ) |   |         | 59,183  |  
|                                                          | Intercompany charges                                         |                           |        | (11,370        | ) |                |       |             |  |              |         | 11,370  |   |   |         | (298    | ) |   |         | 298     |   |   |         |        |  
|                                                          | Depreciation                                                 |                           |        | 4,155          |   |                |       |             |  |              |         | 32,998  |   |   |         | 4,160   |   |   |         |        |   |   |         | 41,313  |  
|                                                          | Amortization of intangibles                                  |                           |        | 4,073          |   |                |       |             |  |              |         | 10,642  |   |   |         | 1,398   |   |   |         |        |   |   |         | 16,113  |  
|                                                          | Other                                                        |                           |        | 663            |   |                |       |             |  |              |         | (4,057  | ) |   |         | (14,238 | ) |   |         | 43      |   |   |         | (17,589 | )
|                                                          |                                                              |                           |        |                |   |                |       |              |  |              |         |         |   |   |         |         |   |   |         |         |   |   |         |        
|                                                          |                                                              |                           | 78,041 |                |   |                | 9     |              |  |              | 572,259 |         |   |   | 97,064  |         |   |   | (39,195 | )       |   |   | 708,178 |        
|                                                          |                                                              |                           |        |                |   |                |       |              |  |              |         |         |   |   |         |         |   |   |         |         |   |   |         |        
|Operating Income (Loss)                                   |                                                              |                           | 13,079 |                |   |                | (9    | )            |  |              | 34,005  |         |   |   | 15,341  |         |   |   | (128    | )       |   |   | 62,288  |        
|Other Income (Expense):                                   |                                                              |                           |        |                |   |                |       |              |  |              |         |         |   |   |         |         |   |   |         |         |   |   |         |        
|                                                          | Interest (expense) income                                    |                           |        | (16,311        | ) |                |       |             |  |              |         | (31,969 | ) |   |         | (4,027  | ) |   |         | 8,318   |   |   |         | (43,989 | )
|                                                          | Other income (expense), net                                  |                           |        | 1,247          |   |                |       |             |  |              |         | 7,790   |   |   |         | (623    | ) |   |         | (8,318  | ) |   |         | 96      |  
|                                                          | Equity in earnings (losses) of consolidated
    subsidiaries |                           |        | 13,538         |   |                |       | 5,619        |  |              |         | 1,920   |   |   |         |        |   |   |         | (21,077 | ) |   |         |        |  
|                                                          |                                                              |                           |        |                |   |                |       |              |  |              |         |         |   |   |         |         |   |   |         |         |   |   |         |        
|Income (Loss) from Continuing Operations Before
    Taxes |                                                              |                           | 11,553 |                |   |                | 5,610 |              |  |              | 11,746  |         |   |   | 10,691  |         |   |   | (21,205 | )       |   |   | 18,395  |        
|Income Taxes                                              |                                                              |                           | 2,082  |                |   |                |      |              |  |              | 6,099   |         |   |   | 880     |         |   |   |        |         |   |   | 9,061   |        
|                                                          |                                                              |                           |        |                |   |                |       |              |  |              |         |         |   |   |         |         |   |   |         |         |   |   |         |        
|Income (Loss) from Continuing Operations                  |                                                              |                           | 9,471  |                |   |                | 5,610 |              |  |              | 5,647   |         |   |   | 9,811   |         |   |   | (21,205 | )       |   |   | 9,334   |        
|Discontinued Operations                                   |                                                              |                           | (3,724 | )              |   |                |      |              |  |              |        |         |   |   |        |         |   |   |        |         |   |   | (3,724  | )      
|                                                          |                                                              |                           |        |                |   |                |       |              |  |              |         |         |   |   |         |         |   |   |         |         |   |   |         |        
|Net Income (Loss)                                         |                                                              | $                         | 5,747  |                |   | $              | 5,610 |              |  | $            | 5,647   |         |   | $ | 9,811   |         |   | $ | (21,205 | )       |   | $ | 5,610   |        
|                                                          |                                                              |                           |        |                |   |                |       |              |  |              |         |         |   |   |         |         |   |   |         |         |   |   |         |        

60



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##### Table of Contents



EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

EAGLE-PICHER HOLDINGS, INC.

SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF
CASH FLOWS

For the Year Ended November 30,
2000


|                                                                                                   |                                                                        |                           |         |                |   |                |       |              |   |              |         |        |   |   |         |         |   |   |         |        |  |   |         |         |  
|-------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------- | ------------------------- | ------- | -------------- | - | -------------- | ----- | ------------ | - | ------------ | ------- | ------ | - | - | ------- | ------- | - | - | ------- | ------ |  | - | ------- | ------- | -
|                                                                                                   |                                                                        |                           |         |                |   |                |       |              |   |             
|                                                                                                   |                                                                        |                           |         | Guarantors     |   |                |       |              |   |             
|                                                                                                   |                                                                        |                           |         |                |   | Non-Guarantors |       |              |   |             
|                                                                                                   |                                                                        |                           |         | Eagle-Picher   |   | Subsidiary     |       | Foreign      |   |              |         |       
|                                                                                                   |                                                                        | Issuer                    |         | Holdings, Inc. |   | Guarantors     |       | Subsidiaries |   | Eliminations |         | Total 
|                                                                                                   |                                                                        |                           |         |                |   |                |       |              |   |              |         |       
|                                                                                                   |                                                                        |                          
|                                                                                                   |                                                                        | (In thousands of dollars)
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                              |                                                                        |                           |         |                |   |                |       |              |   |              |         |        |   |   |         |         |   |   |         |        |  |   |         |        
|Net income (loss)                                                                                  |                                                                        | $                         | 5,747   |                |   | $              | 5,610 |              |   | $            | 5,647   |        |   | $ | 9,811   |         |   | $ | (21,205 | )      |  | $ | 5,610   |        
|Adjustments to reconcile net income (loss) to
    cash provided by (used in) operating activities: |                                                                        |                           |         |                |   |                |       |              |   |              |         |        |   |   |         |         |   |   |         |        |  |   |         |        
|                                                                                                   | Equity in (earnings) loss of consolidated
    subsidiaries             |                           |         | (13,538        | ) |                |       | (5,619       | ) |              |         | (1,920 | ) |   |         |        |   |   |         | 21,077 |  |   |         |        |  
|                                                                                                   | Depreciation and amortization                                          |                           |         | 11,474         |   |                |       |             |   |              |         | 43,640 |   |   |         | 5,558   |   |   |         |       |  |   |         | 60,672  |  
|                                                                                                   | Provisions for discontinued operations                                 |                           |         |               |   |                |       |             |   |              |         |       |   |   |         |        |   |   |         |       |  |   |         |        |  
|                                                                                                   | Loss (Gain) from Divestitures                                          |                           |         | 14,965         |   |                |       |             |   |              |         | (3,870 | ) |   |         | (14,244 | ) |   |         |       |  |   |         | (3,149  | )
|                                                                                                   | Deferred income taxes                                                  |                           |         | 4,897          |   |                |       |             |   |              |         |       |   |   |         |        |   |   |         |       |  |   |         | 4,897   |  
|                                                                                                   | Changes in assets and liabilities, net of effect
    of non-cash items |                           |         | (26,940        | ) |                |       | 9            |   |              |         | 11,230 |   |   |         | (17,558 | ) |   |         | 10,793 |  |   |         | (22,466 | )
|                                                                                                   |                                                                        |                           |         |                |   |                |       |              |   |              |         |        |   |   |         |         |   |   |         |        |  |   |         |        
|                                                                                                   |                                                                        |                           | (3,395  | )              |   |                |      |              |   |              | 54,727  |        |   |   | (16,433 | )       |   |   | 10,665  |        |  |   | 45,564  |        
|                                                                                                   |                                                                        |                           |         |                |   |                |       |              |   |              |         |        |   |   |         |         |   |   |         |        |  |   |         |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                              |                                                                        |                           |         |                |   |                |       |              |   |              |         |        |   |   |         |         |   |   |         |        |  |   |         |        
|Proceeds from sales of divisions                                                                   |                                                                        |                           | 47,002  |                |   |                |      |              |   |              | 10,430  |        |   |   | 27,616  |         |   |   |        |        |  |   | 85,048  |        
|Cash paid for acquisitions                                                                         |                                                                        |                           |        |                |   |                |      |              |   |              | (12,306 | )      |   |   |        |         |   |   |        |        |  |   | (12,306 | )      
|Capital expenditures                                                                               |                                                                        |                           | (6,183  | )              |   |                |      |              |   |              | (30,320 | )      |   |   | (4,864  | )       |   |   |        |        |  |   | (41,367 | )      
|Proceeds from sale of property and equipment, and
    other, net                                   |                                                                        |                           | 6,871   |                |   |                |      |              |   |              | 876     |        |   |   | (2,871  | )       |   |   | (412    | )      |  |   | 4,464   |        
|                                                                                                   |                                                                        |                           |         |                |   |                |       |              |   |              |         |        |   |   |         |         |   |   |         |        |  |   |         |        
|                                                                                                   |                                                                        |                           | 47,690  |                |   |                |      |              |   |              | (31,320 | )      |   |   | 19,881  |         |   |   | (412    | )      |  |   | 35,839  |        
|                                                                                                   |                                                                        |                           |         |                |   |                |       |              |   |              |         |        |   |   |         |         |   |   |         |        |  |   |         |        
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                              |                                                                        |                           |         |                |   |                |       |              |   |              |         |        |   |   |         |         |   |   |         |        |  |   |         |        
|Reduction of long-term debt                                                                        |                                                                        |                           | (24,374 | )              |   |                |      |              |   |              |        |        |   |   |        |         |   |   |        |        |  |   | (24,374 | )      
|Net borrowings (repayments) under revolving
    credit agreements                                  |                                                                        |                           | (30,340 | )              |   |                |      |              |   |              | (21,000 | )      |   |   | (10,434 | )       |   |   |        |        |  |   | (61,774 | )      
|Acquisition of treasury stock                                                                      |                                                                        |                           | (2,371  | )              |   |                |       |              |   |              |        |        |   |   |        |         |   |   |        |        |  |   | (2,371  | )      
|Other                                                                                              |                                                                        |                           | 1,454   |                |   |                |      |              |   |              |        |        |   |   |        |         |   |   |        |        |  |   | 1,454   |        
|                                                                                                   |                                                                        |                           |         |                |   |                |       |              |   |              |         |        |   |   |         |         |   |   |         |        |  |   |         |        
|                                                                                                   |                                                                        |                           | (55,631 | )              |   |                |      |              |   |              | (21,000 | )      |   |   | (10,434 | )       |   |   |        |        |  |   | (87,065 | )      
|                                                                                                   |                                                                        |                           |         |                |   |                |       |              |   |              |         |        |   |   |         |         |   |   |         |        |  |   |         |        
|Net cash provided (used in) by discontinued
    operations                                         |                                                                        |                           | 4,563   |                |   |                |      |              |   |              |        |        |   |   |        |         |   |   |        |        |  |   | 4,563   |        
|                                                                                                   |                                                                        |                           |         |                |   |                |       |              |   |              |         |        |   |   |         |         |   |   |         |        |  |   |         |        
|Effect of exchange rates on cash                                                                   |                                                                        |                           |        |                |   |                |      |              |   |              |        |        |   |   | (1,505  | )       |   |   |        |        |  |   | (1,505  | )      
|                                                                                                   |                                                                        |                           |         |                |   |                |       |              |   |              |         |        |   |   |         |         |   |   |         |        |  |   |         |        
|Net increase (decrease) in cash and cash
    equivalents                                           |                                                                        |                           | (6,773  | )              |   |                |      |              |   |              | 2,407   |        |   |   | (8,491  | )       |   |   | 10,253  |        |  |   | (2,604  | )      
|Intercompany accounts                                                                              |                                                                        |                           | 5,511   |                |   |                |      |              |   |              | (2,738  | )      |   |   | 6,211   |         |   |   | (8,984  | )      |  |   |        |        
|Cash and cash equivalents, beginning of period                                                     |                                                                        |                           | 4,064   |                |   |                | 1     |              |   |              | 870     |        |   |   | 5,088   |         |   |   | 48      |        |  |   | 10,071  |        
|                                                                                                   |                                                                        |                           |         |                |   |                |       |              |   |              |         |        |   |   |         |         |   |   |         |        |  |   |         |        
|Cash and cash equivalents, end of period                                                           |                                                                        | $                         | 2,802   |                |   | $              | 1     |              |   | $            | 539     |        |   | $ | 2,808   |         |   | $ | 1,317   |        |  | $ | 7,467   |        
|                                                                                                   |                                                                        |                           |         |                |   |                |       |              |   |              |         |        |   |   |         |         |   |   |         |        |  |   |         |        

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EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



|   |                                                              
|-- | -------------------------------------------------------------
|I. | 11.75% Cumulative Redeemable Exchangeable
    Preferred Stock

We have 14,191 shares of 11.75% Cumulative
Redeemable Exchangeable Preferred Stock outstanding. The
Preferred Stock had an initial liquidation preference at
February 24, 1998 of $5,637.70 per share which accretes
during the first five years after issuance at 11.75% per annum,
compounded semiannually, ultimately reaching $10,000 per share
on March 1, 2003. No dividends will accrue prior to
March 1, 2003, but will be cumulative at 11.75% per annum
thereafter. Beginning March 1, 2003, the holders of the
Preferred Stock shall be entitled to receive, when and as
declared by the Board of Directors, cash dividends at a rate per
annum equal to 11.75%. Such dividends shall be payable in
arrears in equal amounts semiannually. Future accretion and
dividends on the Preferred Stock are as follows (in thousands of
dollars):

|       |  |           |       |           |  |   |        | 
|------ |  | --------- | ----- | --------- |  | - | ------ | 
|Fiscal |  |           |       |          
|Year   |  | Accretion |       | Dividends
|       |  |           |       |          
|2003   |  | $         | 3,937 |           |  | $ | 12,737 | 
|2004   |  |           |      |           |  |   | 16,674 | 
|2005   |  |           |      |           |  |   | 16,674 | 
|2006   |  |           |      |           |  |   | 16,674 | 
|2007   |  |           |      |           |  |   | 16,674 | 
|2008   |  |           |      |           |  |   | 4,167  | 
|       |  |           |       |           |  |   |        | 
|       |  | $         | 3,937 |           |  | $ | 83,600 | 
|       |  |           |       |           |  |   |        | 

The Preferred Stock is mandatorily redeemable by
us on March 1, 2008 or earlier under certain circumstances,
but may be redeemed at our option, in whole or in part, at any
time after February 28, 2003, at set redemption prices. On
February 28, 2003, we may also exchange all of the
Preferred Stock for 11.75% Exchange Debentures, which would have
terms similar to a debt instrument. This debt instrument would
bear interest at 11.75% on the full redemption value in 2008 of
approximately $141.9 million with interest payable
semiannually and the principle due in 2008. We are required to
offer to purchase the Preferred Stock should there be a change
in control. Holders of the Preferred Stock have no voting rights
except in certain circumstances. The terms of the Preferred
Stock contain covenants similar to the covenants in the Senior
Subordinated Notes. We are in compliance with these covenants as
of November 30, 2002. The Preferred Stock had an estimated
fair value of $28.4 million at November 30, 2002 and
$21.3 million at November 30, 2001. These estimated
fair market values were determined by the primary market maker
of the Preferred Stock based on the then current market
conditions at those dates as there is generally no significant
trading activity in the Preferred Stock.



|   |                               
|-- | ------------------------------
|J. | Shareholders Equity (Deficit)



| |             
| | ------------
| | Common Stock

On August 31, 2001, we adopted an amendment
to our Amended and Restated Certificate of Incorporation to
change our capital structure. Effective with this amendment, the
total number of shares of common stock which we are authorized
to issue is 1,000,000 shares, par value $0.01 per share.
The holders of the Common Stock shares are entitled to one vote
per share on all matters which may be submitted to the holders
of the Common Stock. At the effective time of this amendment,
each share of Class A Common Stock and each share of the
Class B Common Stock outstanding immediately prior to the
effective time was reclassified as one share of Common Stock.



| |                                                  
| | -------------------------------------------------
| | Accumulated Other Comprehensive Income
    (Loss)

Accumulated Other Comprehensive Loss at
November 30, 2002 consisted of a net foreign currency
translation loss of $1.4 million, which is net of taxes of
$754,000, and a net loss on hedging derivatives of

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EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

$3.0 million, which is net of taxes of
$1.6 million. At November 30, 2001 Accumulated Other
Comprehensive Loss consisted of a net foreign currency
translation loss of $2.5 million, which is net of taxes of
$1.3 million, and a net loss on hedging derivatives of
$3.2 million, which is net of taxes of $1.7 million.



|   |             
|-- | ------------
|K. | Income Taxes

The following is a summary of the sources of
income (loss) from continuing operations before income
taxes (benefit) for the years ended November 30 (in
thousands of dollars):

|              |  |      |         |      |  |      |         |   |  |   |        | 
|------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------ | 
|              |  | 2002 |         | 2001 |  | 2000
|              |  |      |         |      |  |     
|United States |  | $    | (40,812 | )    |  | $    | (39,337 | ) |  | $ | 11,067 | 
|Foreign       |  |      | 6,581   |      |  |      | 7,423   |   |  |   | 7,328  | 
|              |  |      |         |      |  |      |         |   |  |   |        | 
|              |  | $    | (34,231 | )    |  | $    | (31,914 | ) |  | $ | 18,395 | 
|              |  |      |         |      |  |      |         |   |  |   |        | 

The following is a summary of the components of
income taxes (benefit) from continuing operations for the years
ended November 30 (in thousands of dollars):

|          |                 |      |        |        |   |      |         |        |   |   |       |       |  
|--------- | --------------- | ---- | ------ | ------ | - | ---- | ------- | ------ | - | - | ----- | ----- | -
|          |                 | 2002 |        | 2001   |   | 2000
|          |                 |      |        |        |   |     
|Current:  |                 |      |        |        |   |      |         |        |   |   |       |      
|          | Federal         |      | $      | (5,956 | ) |      | $       | (5,066 | ) |   | $     | 1,445 |  
|          | Foreign         |      |        | 2,455  |   |      |         | 2,700  |   |   |       | 900   |  
|          | State and local |      |        | (45    | ) |      |         | (700   | ) |   |       | 60    |  
|          |                 |      |        |        |   |      |         |        |   |   |       |      
|          |                 |      | (3,546 | )      |   |      | (3,066  | )      |   |   | 2,405 |      
|          |                 |      |        |        |   |      |         |        |   |   |       |      
|Deferred: |                 |      |        |        |   |      |         |        |   |   |       |      
|          | Federal         |      |        | 6,147  |   |      |         | (6,950 | ) |   |       | 6,916 |  
|          | Other           |      |        |       |   |      |         |       |   |   |       | (260  | )
|          |                 |      |        |        |   |      |         |        |   |   |       |      
|          |                 |      | 6,147  |        |   |      | (6,950  | )      |   |   | 6,656 |      
|          |                 |      |        |        |   |      |         |        |   |   |       |      
|          |                 | $    | 2,601  |        |   | $    | (10,016 | )      |   | $ | 9,061 |      
|          |                 |      |        |        |   |      |         |        |   |   |       |      

The following is a summary of the primary
differences between the income tax expense (benefit) from
continuing operations and the income tax expense computed using
the statutory Federal income tax rate for the years ended
November 30 (in thousands of dollars):

|                                                           |  |      |         |      |  |      |         |   |  |   |        |  
|---------------------------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------ | -
|                                                           |  | 2002 |         | 2001 |  | 2000
|                                                           |  |      |         |      |  |     
|Income tax expense (benefit) at Federal
    statutory rate |  | $    | (11,981 | )    |  | $    | (11,170 | ) |  | $ | 6,438  |  
|Foreign taxes rate differential                            |  |      | 152     |      |  |      |        |   |  |   | (2,500 | )
|State and local taxes, net of the Federal benefit          |  |      | (29     | )    |  |      | (100    | ) |  |   |       |  
|Non-deductible amortization relating to goodwill           |  |      | 992     |      |  |      | 700     |   |  |   | 5,400  |  
|Valuation allowance                                        |  |      | 14,951  |      |  |      |        |   |  |   |       |  
|Other                                                      |  |      | (1,484  | )    |  |      | 554     |   |  |   | (277   | )
|                                                           |  |      |         |      |  |      |         |   |  |   |        |  
|                                                           |  | $    | 2,601   |      |  | $    | (10,016 | ) |  | $ | 9,061  |  
|                                                           |  |      |         |      |  |      |         |   |  |   |        |  

63



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##### Table of Contents



EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Components of deferred tax balances as of
November 30 are as follows (in thousands of dollars):

|                                                                   |                                                                            |      |        |         |   |   |        |         |  
|------------------------------------------------------------------ | -------------------------------------------------------------------------- | ---- | ------ | ------- | - | - | ------ | ------- | -
|                                                                   |                                                                            | 2002 |        | 2001   
|                                                                   |                                                                            |      |        |        
|Current deferred tax assets attributable to:                       |                                                                            |      |        |         |   |   |        |        
|                                                                   | Accrued liabilities                                                        |      | $      | 15,619  |   |   | $      | 15,442  |  
|                                                                   | Reserve for discontinued operations and
    restructuring                  |      |        | 500     |   |   |        | 14,210  |  
|                                                                   | Other                                                                      |      |        | 929     |   |   |        | 1,135   |  
|                                                                   |                                                                            |      |        |         |   |   |        |        
|                                                                   | Current deferred tax asset                                                 |      |        | 17,048  |   |   |        | 30,787  |  
|                                                                   | Valuation allowance                                                        |      |        | (6,250  | ) |   |        | (6,500  | )
|                                                                   |                                                                            |      |        |         |   |   |        |        
|                                                                   | Current deferred tax asset, net of valuation
    allowance                 |      |        | 10,798  |   |   |        | 24,287  |  
|                                                                   |                                                                            |      |        |         |   |   |        |        
|Non-current deferred tax assets (liabilities)
    attributable to: |                                                                            |      |        |         |   |   |        |        
|                                                                   | Property, plant and equipment                                              |      |        | (7,321  | ) |   |        | (10,857 | )
|                                                                   | Prepaid pension                                                            |      |        | (19,177 | ) |   |        | (19,137 | )
|                                                                   | Net operating loss carryforwards                                           |      |        | 33,501  |   |   |        | 6,564   |  
|                                                                   | Alternative minimum tax credit carryforwards                               |      |        |        |   |   |        | 5,963   |  
|                                                                   | Amortization of intangibles                                                |      |        | 5,177   |   |   |        | 5,879   |  
|                                                                   | Other                                                                      |      |        | 3,021   |   |   |        | 5,311   |  
|                                                                   |                                                                            |      |        |         |   |   |        |        
|                                                                   | Non-current deferred tax asset (liability)                                 |      |        | 15,201  |   |   |        | (6,277  | )
|                                                                   | Valuation Allowance                                                        |      |        | (15,201 | ) |   |        |        |  
|                                                                   |                                                                            |      |        |         |   |   |        |        
|                                                                   | Non-current deferred tax asset (liability), net
    of valuation allowance |      |        |        |   |   |        | (6,277  | )
|                                                                   |                                                                            |      |        |         |   |   |        |        
|Net deferred tax asset                                             |                                                                            | $    | 10,798 |         |   | $ | 18,010 |        
|                                                                   |                                                                            |      |        |         |   |   |        |        

As of November 30, 2002 we had net operating
loss carryforwards of $88.0 million in the United States and
$9.0 million in the United Kingdom available to offset
future taxable income. The United States net operating loss
carryforwards will begin to expire in 2021, however, the United
Kingdom net operating loss carryforwards have no expiration date.

SFAS No. 109 requires a valuation
allowance to be recorded when it is more likely than not that
some or all of the deferred tax assets will not be realized. As
of November 30, 2002 and 2001, we recorded a valuation
allowance to reduce our deferred tax assets to an amount that is
more likely than not to be realized. In estimating levels of
future taxable income, we have considered historical results of
operations in recent years and the implementation of prudent and
feasible tax planning strategies to generate future taxable
income. If future taxable income is less than the amount that
has been assumed in determining the deferred tax asset, then an
increase in the valuation reserve will be required, with a
corresponding charge against income. On the other hand, if
future taxable income exceeds the level that has been assumed in
calculating the deferred tax asset, the valuation reserve could
be reduced, with a corresponding credit to income.



|   |                                                                           
|-- | --------------------------------------------------------------------------
|L. | Pension and Other Postretirement Benefit
    Plans, and Compensation Plans



| |                                                   
| | --------------------------------------------------
| | Pension and Other Postretirement Benefit
    Plans

Substantially all of our employees are covered by
various pension or profit sharing retirement plans. Our funding
policy for defined benefit plans is to fund amounts on an
actuarial basis to provide for current and future benefits in
accordance with the funding guidelines of ERISA.

Plan benefits for salaried employees are based
primarily on employees highest five consecutive
years earnings during the last ten years of employment.
Plan benefits for hourly employees are typically based on a

64



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EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

dollar unit multiplied by the number of service
years. In December 2002, our board of directors authorized us to
change from a final average pay plan, as described
above, to a cash-balance pension plan effective January 1,
2004. All benefits earned through December 31, 2003, will
be unchanged. This will apply to all salaried and certain hourly
employees.

In addition to providing pension retirement
benefits, we make health care and life insurance benefits
available to certain retired employees on a limited basis.
Generally, the medical plans pay a stated percentage of medical
expenses reduced by deductibles and other coverages. Eligible
employees may elect to be covered by these health and life
insurance benefits if they reach early or normal retirement age
while employed by us. In most cases, a retiree contribution for
health care coverage is required. We fund these benefit costs
primarily on a pay-as-you-go basis.

Net periodic pension and postretirement benefit
costs are based on valuations performed by our actuary as of the
beginning of each fiscal year. The components of the costs are
as follows (in thousands of dollars):

|                                                              |  |                  |         |                         |  |      |         |      |  |      |         |      |  |   |       |  |  |   |       |  |  |   |       | 
|------------------------------------------------------------- |  | ---------------- | ------- | ----------------------- |  | ---- | ------- | ---- |  | ---- | ------- | ---- |  | - | ----- |  |  | - | ----- |  |  | - | ----- | 
|                                                              |  |                  |         |                        
|                                                              |  | Pension Benefits |         | Postretirement Benefits
|                                                              |  |                  |         |                        
|                                                              |  | 2002             |         | 2001                    |  | 2000 |         | 2002 |  | 2001 |         | 2000
|                                                              |  |                  |         |                         |  |      |         |      |  |      |         |     
|Service cost  benefits earned during
    the period          |  | $                | 3,933   |                         |  | $    | 4,790   |      |  | $    | 5,006   |      |  | $ | 463   |  |  | $ | 546   |  |  | $ | 519   | 
|Interest cost on projected benefit obligations                |  |                  | 15,652  |                         |  |      | 15,314  |      |  |      | 15,662  |      |  |   | 1,187 |  |  |   | 1,271 |  |  |   | 1,191 | 
|Expected return on plan assets                                |  |                  | (23,705 | )                       |  |      | (23,600 | )    |  |      | (24,091 | )    |  |   |      |  |  |   |      |  |  |   |      | 
|Net amortization and deferral                                 |  |                  | 327     |                         |  |      | 210     |      |  |      | 107     |      |  |   |      |  |  |   |      |  |  |   |      | 
|                                                              |  |                  |         |                         |  |      |         |      |  |      |         |      |  |   |       |  |  |   |       |  |  |   |       | 
|Net periodic cost (income)                                    |  |                  | (3,793  | )                       |  |      | (3,286  | )    |  |      | (3,316  | )    |  | $ | 1,650 |  |  | $ | 1,817 |  |  | $ | 1,710 | 
|                                                              |  |                  |         |                         |  |      |         |      |  |      |         |      |  |   |       |  |  |   |       |  |  |   |       | 
|Special termination benefits                                  |  |                  | 3,674   |                         |  |      |        |      |  |      |        |      |  |   |       |  |  |   |       |  |  |   |       | 
|Other retirement plans                                        |  |                  | 1,082   |                         |  |      | 1,131   |      |  |      | 1,228   |      |  |   |       |  |  |   |       |  |  |   |       | 
|                                                              |  |                  |         |                         |  |      |         |      |  |      |         |      |  |   |       |  |  |   |       |  |  |   |       | 
|Total cost of (income from) providing retirement
    benefits |  | $                | 963     |                         |  | $    | (2,155  | )    |  | $    | (2,088  | )    |  |   |       |  |  |   |       |  |  |   |       | 
|                                                              |  |                  |         |                         |  |      |         |      |  |      |         |      |  |   |       |  |  |   |       |  |  |   |       | 

During 2002, we recognized special termination
benefits as a result of determining that a portion of assets in
our over-funded pension plan at November 30, 2001 could be
made available to pay severance costs. Accordingly, we have
amended our pension plan and have provided new or amended
severance plans to allow for such payments. Approximately
$3.7 million has been or is expected to be paid out of the
pension plan, and was recorded as special termination benefits
in 2002. Of this amount, $400,000 in 2001 and $2.7 million
in 2002 is included in Restructuring expense in our statements
of income (loss). In 2000, we recognized curtailment gains of
$3.2 million in our pension plan and $569,000 in our
postretirement plan due to the reduction in active or eligible
participants in the plans primarily from the divestiture of
certain divisions.

Our board of directors froze our Supplemental
Executive Retirement Plan (the SERP), effective
January 1, 2003. The SERP has been replaced with a
Pension Restoration Plan which will allow certain
employees whose compensation is greater than $200,000 to receive
pension benefits, which are currently limited primarily by
governmental regulations. In addition, certain key executives
will be provided an additional 5% of compensation per year in
lieu of the prior SERP benefits. These will be unfunded and
unsecured obligations.

The pension plans assets consist primarily
of listed equity securities and publicly traded notes and bonds.

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EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The following tables set forth the plans
changes in benefit obligation, plan assets and funded status on
the measurement dates, November 30, 2002 and 2001, and
amounts recognized in our consolidated balance sheets as of
those dates (in thousands of dollars).

|                                                                    |                                     |                  |         |                         |   |      |         |         |   |   |         |        |   |   |         |        |  
|------------------------------------------------------------------- | ----------------------------------- | ---------------- | ------- | ----------------------- | - | ---- | ------- | ------- | - | - | ------- | ------ | - | - | ------- | ------ | -
|                                                                    |                                     |                  |         |                        
|                                                                    |                                     | Pension Benefits |         | Postretirement Benefits
|                                                                    |                                     |                  |         |                        
|                                                                    |                                     | 2002             |         | 2001                    |   | 2002 |         | 2001   
|                                                                    |                                     |                  |         |                         |   |      |         |        
|Changes in Benefit Obligations:                                     |                                     |                  |         |                         |   |      |         |         |   |   |         |        |   |   |         |       
|Benefit Obligation, beginning of year                               |                                     | $                | 219,816 |                         |   | $    | 222,353 |         |   | $ | 16,509  |        |   | $ | 17,549  |       
|                                                                    | Service cost                        |                  |         | 3,933                   |   |      |         | 4,790   |   |   |         | 463    |   |   |         | 546    |  
|                                                                    | Interest cost                       |                  |         | 15,652                  |   |      |         | 15,314  |   |   |         | 1,187  |   |   |         | 1,271  |  
|                                                                    | Amendments                          |                  |         | 2,305                   |   |      |         | 644     |   |   |         |       |   |   |         |       |  
|                                                                    | Actuarial (gain)/loss               |                  |         | 3,397                   |   |      |         | (10,166 | ) |   |         | 2,367  |   |   |         | (1,424 | )
|                                                                    | Divestitures and other              |                  |         |                        |   |      |         | 109     |   |   |         |       |   |   |         |       |  
|                                                                    | Plan participants contributions    |                  |         |                        |   |      |         |        |   |   |         | 776    |   |   |         | 699    |  
|                                                                    | Special termination benefits        |                  |         | 3,674                   |   |      |         |        |   |   |         |       |   |   |         |       |  
|                                                                    | Benefits paid                       |                  |         | (16,763                 | ) |      |         | (13,228 | ) |   |         | (2,664 | ) |   |         | (2,132 | )
|                                                                    |                                     |                  |         |                         |   |      |         |         |   |   |         |        |   |   |         |       
|Benefit Obligation, end of year                                     |                                     |                  | 232,014 |                         |   |      | 219,816 |         |   |   | 18,638  |        |   |   | 16,509  |       
|                                                                    |                                     |                  |         |                         |   |      |         |         |   |   |         |        |   |   |         |       
|Change in Plan Assets:                                              |                                     |                  |         |                         |   |      |         |         |   |   |         |        |   |   |         |       
|Fair Value of Plan Assets, beginning of year                        |                                     |                  | 264,104 |                         |   |      | 267,410 |         |   |   |        |        |   |   |        |       
|                                                                    | Actual return (loss) on plan assets |                  |         | (14,440                 | ) |      |         | 9,922   |   |   |         |       |   |   |         |       |  
|                                                                    | Employer contributions              |                  |         |                        |   |      |         |        |   |   |         | 1,888  |   |   |         | 1,433  |  
|                                                                    | Plan participants contributions    |                  |         |                        |   |      |         |        |   |   |         | 776    |   |   |         | 699    |  
|                                                                    | Benefits paid                       |                  |         | (16,763                 | ) |      |         | (13,228 | ) |   |         | (2,664 | ) |   |         | (2,132 | )
|                                                                    |                                     |                  |         |                         |   |      |         |         |   |   |         |        |   |   |         |       
|Fair Value of Plan Assets, end of year                              |                                     |                  | 232,901 |                         |   |      | 264,104 |         |   |   |        |        |   |   |        |       
|                                                                    |                                     |                  |         |                         |   |      |         |         |   |   |         |        |   |   |         |       
|Funded Status                                                       |                                     |                  | 887     |                         |   |      | 44,288  |         |   |   | (18,638 | )      |   |   | (16,509 | )     
|Unrecognized Actuarial (Gain)/Loss                                  |                                     |                  | 49,205  |                         |   |      | 8,052   |         |   |   | 1,003   |        |   |   | (1,364  | )     
|Unrecognized Prior Service Cost                                     |                                     |                  | 4,704   |                         |   |      | 2,336   |         |   |   |        |        |   |   |        |       
|                                                                    |                                     |                  |         |                         |   |      |         |         |   |   |         |        |   |   |         |       
|Net Prepaid Benefit Cost (Accrued Benefit
    Liability) Recognized |                                     | $                | 54,796  |                         |   | $    | 54,676  |         |   | $ | (17,635 | )      |   | $ | (17,873 | )     
|                                                                    |                                     |                  |         |                         |   |      |         |         |   |   |         |        |   |   |         |       

Weighted average assumptions as of
November 30 are:

|                                       |  |          |      |                |  |      |      |      |  |  |      |   |  |  |      |  
|-------------------------------------- |  | -------- | ---- | -------------- |  | ---- | ---- | ---- |  |  | ---- | - |  |  | ---- | -
|                                       |  |          |      |               
|                                       |  | Pension  |      | Postretirement
|                                       |  | Benefits |      | Benefits      
|                                       |  |          |      |               
|                                       |  | 2002     |      | 2001           |  | 2002 |      | 2001
|                                       |  |          |      |                |  |      |      |     
|Discount rate                          |  |          | 6.95 | %              |  |      | 7.25 | %    |  |  | 6.95 | % |  |  | 7.25 | %
|Expected rate of return on plan assets |  |          | 9.25 | %              |  |      | 9.25 | %    |  |  | N/A  |   |  |  | N/A  |  
|Rate of compensation increase          |  |          | 3.00 | %              |  |      | 3.00 | %    |  |  | N/A  |   |  |  | N/A  |  

During 2002, we recognized $2.3 million in
amendments to our projected benefit obligation related to
changes in benefit obligations for our hourly employees. These
employees benefits are periodically increased as a result
of negotiations with our unions.

The effect of a 0.25% change in our discount rate
would be to decrease or increase our annual pension cost by
$800,000 and the annual post retirement welfare cost by
$100,000. Additionally, a 0.25% change in our expected return on
plan assets, would change our pension cost by approximately
$600,000.

Postretirement benefit costs were estimated
assuming retiree health care costs would initially increase at a
12% annual rate. The rate was assumed to decrease 1% per year
until it reaches 5% and then remain at that

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EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

level thereafter. If this annual trend rate would
increase by 1%, the accumulated postretirement obligation as of
November 30, 2002 would increase by $1.9 million with
a corresponding increase of $201,000 in the postretirement
benefit expense in 2002. A 1% decrease in this annual trend rate
would decrease the accumulated postretirement benefit obligation
by $1.5 million and the postretirement benefit expense by
$164,000 in 2002.



| |                   
| | ------------------
| | Compensation Plans

We also offer 401(k) savings plans to our
employees in the United States. Participants may contribute a
portion of their earnings, of which 50% of their contribution,
up to 6% of their earnings, is matched by us. Our matching cost
for these plans was $1.6 million in 2002, and
$2.1 million in 2001 and 2000. Our board of directors
adopted a 401(k) Restoration Plan, effective
January 1, 2003, for all employees whose base compensation
is greater than $200,000. This will allow all employees to
maximize our matching policy without being limited by
governmental regulations related to maximum employee
contributions into a 401(k) plan. This will be an unfunded and
unsecured obligation.

We have a Share Appreciation Plan (SAP
Plan) to reward certain executives and managers whose
individual performance and effort will have a direct impact on
achieving our profit and growth objectives. Shares of stock are
not actually awarded, however participants are awarded units on
which appreciation is calculated based upon a formula of the
prior years earnings before interest, taxes, depreciation,
and amortization (EBITDA) minus net debt and
preferred stock. The units vested over five years and are
payable any time during the sixth through tenth year following
the date of award. We recognized income of $1.0 million
related to this plan in the fourth quarter of 2001 because the
calculated value of the units at November 30, 2001 was
below the base price; the units had no value at the end of
November 30, 2002 as well. Expense related to the SAP Plan
in 2000 was $635,000. It is our intent to no longer grant units
under the SAP Plan.

In June 2002, we adopted a Long-Term Bonus
Program, effective December 1, 2001. This plan
provides for the grant of units to certain members of
management. Individuals are rewarded based on the growth of a
units value over time. The unit value is determined based
on our annual EBITDA less net debt and preferred stock, as
defined and as adjusted for certain items approved by the Board
of Directors. The initial grant of approximately 500,000 units
was completed retroactive to December 1, 2001. The units
vest ratably over three years and can be redeemed by the
individuals after the vesting period and up to five years, which
is when the units expire. No award payments can be made until
the earlier of a) September 2004, or b) Dakruiter S.A., a
company controlled by Granaria Holdings B.V., our controlling
common shareholder, selling all shares of our preferred stock
owned by it. Additionally, the potential annual payment of any
vested units is limited to certain conditions to prevent any
undue financial stress. During 2002, we expensed
$1.2 million in Selling and Administrative expense in the
statements of income (loss) for the cost associated with this
plan.

M.     Commitments
and Contingencies



| |                      
| | ---------------------
| | Environmental Matters

We are subject to extensive and evolving Federal,
state and local environmental laws and regulations. Compliance
with such laws and regulations can be costly. Governmental
authorities may enforce these laws and regulations with a
variety of enforcement measures, including monetary penalties
and remediation requirements. We have policies and procedures in
place to ensure that our operations are conducted in compliance
with such laws and regulations and with a commitment to the
protection of the environment.

We are involved in various stages of
investigation and remediation related to environmental
remediation projects at a number of sites as a result of past
and present operations, including currently-owned and
formerly-owned plants. Also, we have received notice that we may
have liability under the Comprehensive

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EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Environmental Response, Compensation and
Liability Act of 1980 as a potentially responsible party at a
number of sites (Superfund Sites).

The ultimate cost of site remediation is
difficult to predict given the uncertainties regarding the
extent of the required remediation, the interpretation of
applicable laws and regulations and alternative remediation
methods. Based on our experience with environmental remediation
matters, we have accrued reserves for our best estimate of
remediation costs, and we do not believe that remediation
activities will have a material adverse impact on our financial
condition, results of operations or cash flows. In addition, in
the course of our bankruptcy described below under Legal
Matters, we obtained an agreement with the
U.S. Environmental Protection Agency and the states of
Arizona, Michigan and Oklahoma whereby we are limited in our
responsibility for environmental sites not owned by us that
allegedly arise from pre-bankruptcy activities. We retain all of
our defenses, legal or factual, at such sites. However, if we
are found liable at any of these sites we may be required to pay
as if such claims had been resolved in our bankruptcy and
therefore our liability is paid at approximately 37%.

We had total expenditures for environmental
compliance and remediation of $10.0 million in 2002,
$9.1 million in 2001, and $11.3 million in 2000. We
estimate that we will spend $12.8 million during 2003. As
of November 30, 2002, we had $17.7 million accrued for
sold divisions or businesses related to legal and environmental
matters, and believe such reserves to be adequate under the
current circumstances. In addition, we have $2.4 million
recorded in other accrued liabilities related to environmental
liabilities for our on-going businesses.



| |              
| | -------------
| | Legal Matters

As a result of sales prior to 1971 of
asbestos-containing insulation materials, Eagle-Picher
Industries, Inc. became the target of numerous lawsuits seeking
damages for illness resulting from exposure to asbestos. By the
end of 1990, we had paid hundreds of millions of dollars to
asbestos litigation plaintiffs and their lawyers. In January
1991, we filed for protection under Chapter 11 of the
U.S. Bankruptcy Code as a direct consequence of cash
shortfalls attributable to pending asbestos litigation
liabilities. On November 29, 1996, we emerged from
bankruptcy as a reorganized company. The bankruptcy court issued
permanent injunction which precludes holders of present and
future asbestos-related or lead-related personal injury claims
from pursuing their claims against us. Consequently, we have no
further liability in connection with such asbestos-related or
lead-related personal injury claims. Instead, those claims will
be channeled to the Eagle-Picher Industries, Inc. Personal
Injury Settlement Trust (the PI Trust) which is an
independently administered qualified settlement trust
established to resolve and satisfy those claims. Under the terms
of our bankruptcy reorganization, all of the outstanding common
stock of the former Eagle-Picher Industries, Inc. was cancelled
and newly issued common stock of the reorganized entity was
contributed to the PI Trust, together with certain notes and
cash. On February 24, 1998, we acquired the reorganized
entity from the PI Trust for $702.5 million. A final
distribution of approximately $10.9 million was made by us
to the PI Trust and all other eligible unsecured claimants in
June 2001.

On January 25, 1996, Richard Darrell
Peoples, a former employee, filed a lawsuit in the United States
District Court for the Western District of Missouri claiming
that we violated the federal False Claims Act based on alleged
irregularities in testing procedures in connection with certain
U.S. Government contracts. Mr. Peoples filed this
lawsuit under a procedure which gives a private individual the
right to file a lawsuit for a violation of a Federal statute and
be awarded up to 30% of any recovery. The government has the
right to intervene and take control of such a lawsuit. Following
an extensive investigation, the U.S. Government declined
the opportunity to intervene or take control of this suit. The
allegations in the lawsuit are similar to allegations made by
Mr. Peoples, and investigated by our outside counsel, prior
to the filing of the lawsuit. Our outside counsels
investigation found no evidence to support any of
Mr. Peoples allegations, except for some
inconsequential expense account matters. The case is in a
discovery phase. Recently the court disqualified

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EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Mr. Peoples lawyer from the case after
he read some of our attorney-client privileged documents that
Mr. Peoples took from our lawyers offices without
authorization. We intend to contest this suit vigorously and do
not believe that the resolution of this lawsuit will have a
material adverse effect on our financial condition, results of
operations or cash flows.

On May 8, 1997, Caradon Doors and Windows,
Inc. (Caradon), filed a suit against us in the
United States District Court for the Northern District of
Georgia alleging breach of contract, negligent
misrepresentation, and contributory infringement and seeking
contribution and indemnification in the amount of approximately
$20.0 million. This suit arose out of patent infringement
litigation between Caradon and Therma-Tru Corporation extending
over the 1989-1996 time period, the result of which was for
Caradon to be held liable for patent infringement. In June 1997,
we filed a motion with the United States Bankruptcy Court for
the Southern District of Ohio, Western Division, seeking an
order that Caradons claims had been discharged by our
bankruptcy and enjoining Caradon from pursuing its lawsuit. On
December 24, 1997, the Bankruptcy Court held that
Caradons claims had been discharged and enjoined Caradon
from pursuing its lawsuit. Caradon appealed the Bankruptcy
Courts decision to the United States District Court for
the Southern District of Ohio, and on February 3, 1999, the
District Court reversed on the grounds that the Bankruptcy Court
had not done the proper factual analysis and remanded the matter
back to the Bankruptcy Court. The Bankruptcy Court held a
hearing on this matter on September 24 and 25, 2001, and on
May 9, 2002 again held that Caradons claims had been
discharged and enjoined Caradon from pursuing the Caradon Suit.
Caradon has again appealed this decision to the District Court.
We intend to contest this suit vigorously and do not believe
that the resolution of this suit will have a material adverse
effect on our financial condition, results of operations or cash
flows.

As previously reported, last year our former
President and Chief Executive Officer, Andries Ruijssenaars,
filed a lawsuit against us, certain of our directors, and ABN
AMRO Bank in the U.S. District Court for the Southern
District of Ohio, Western Division. Mr. Ruijssenaars
claimed that we were obligated to purchase his shares of our
common stock for approximately $4.7 million rather than
$2.8 million as we claimed. Mr. Ruijssenaars
lawsuit also challenged a 2001 amendment to our Supplemental
Executive Retirement Plan which changed the determination of
benefits under the SERP, and claimed that we were obligated to
purchase an annuity for his additional SERP benefit accrued
after 2000 and reimburse him for the tax consequences. In the
fourth quarter of 2002 we finalized a settlement of the lawsuit,
agreeing to pay Mr. Ruijssenaars $3.8 million in
December 2002 for his stock and recognize his SERP benefits
under the pre-2001 amendment, but not to purchase an annuity or
reimburse any taxes. We allocated $2.8 million of the
$3.8 million settlement for the stock to our Treasury
shares in the accompanying balance sheets and the remaining
amount, representing the difference between the formula price
and the settlement amount of the stock, was recorded as
compensation expense. In addition, we recognized approximately
$1.0 million in expense which represents the actuarially
determined net present value of his SERP benefits. Granaria
Holdings B.V., our controlling common shareholder, and ABN AMRO
Bank, N.V., the agent under our senior credit facility and the
indirect holder of approximately 37.5% of our common stock, each
guaranteed 50% of Mr. Ruijssenaars unfunded SERP payments.

On December 1, 1999, our Technologies
Segment acquired the depleted zinc distribution business (the
DZ Business) of Isonics Corporation
(Isonics) for approximately $8.2 million,
payable $6.7 million at closing and $1.5 million in
three installments of $500,000 each payable on the first three
anniversaries of the closing. In connection with the purchase of
the DZ Business, we agreed to sell 200 kg of isotopically
purified silicon-28 to Isonics. Due to various factors, we did
not deliver any silicon-28 to Isonics. Isonics asserted a claim
against us for $75.0 million in arbitration for the failure
to deliver silicon-28. On July 24, 2002, we paid
$2.5 million to Isonics to settle all claims among us and
Isonics including the remaining installment payments totaling
$1.5 million for the DZ business, and the parties signed
mutual general releases.

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EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

On October 30, 2001, GMAC Business Credit,
LLC (GMAC) and Eagle Trim, Inc. filed a lawsuit in the
United States District Court for the Eastern District of
Michigan, Southern Division, against us arising out of the sale
of our former automotive interior trim division to Eagle Trim.
In connection with that sale, we guaranteed to GMAC, which
funded the acquisition, that approximately $3.9 million of
receivables relating to tooling purchased by us on behalf of
customers would be paid by November 2001. Eagle Trim ceased
operations during 2001. At that time, Eagle Trim and GMAC
alleged that approximately $2.7 million of the tooling
receivables had not been collected and did not exist at the time
of the sale. On September 30, 2002, we settled this matter
by agreeing to pay $5.4 million, which is included in
Accrued Divestitures in our balance sheets, to GMAC, payable
$1.7 million by December 5, 2002, $1.5 million
payable in monthly installments from January 2003 through June
2003, and $2.2 million, payable in monthly installments
from July 2003 through October 2005, plus interest at 4.5% per
annum.

In addition, we are involved in routine
litigation, environmental proceedings and claims pending with
respect to matters arising out of the normal course of our
business. In our opinion, the ultimate liability resulting from
all claims, individually or in the aggregate, will not
materially affect our financial position, results of operations
or cash flows.



| |                 
| | ----------------
| | Operating Leases

Future minimum rental commitments over the next
five years as of November 30, 2002, under noncancellable
operating leases, which expire at various dates, are as follows:
$5.5 million in 2003, $5.0 million in 2004,
$3.3 million in 2005, $2.6 million in 2006,
$2.4 million in 2007, and $2.8 million thereafter.
Rent expense was $6.4 million in 2002, $5.7 million in
2001, and $4.8 million in 2000.



| |          
| | ---------
| | Guarantee

We are the guarantor on the lease of a building
that was owned by one of our former subsidiaries. We believe the
likelihood of being liable for the lease is remote. The original
term of the lease expires in 2005; however, there are two
five-year renewal terms that we have also guaranteed. The rent
for the two five-year renewals is based upon the Consumer Price
Index, at the time of renewal, should the buyer of the former
subsidiary not exercise its purchase option on the building. The
amount of the guarantee is $4.0 million at
November 30, 2002; however, this amount excludes any
guarantee on the two five-year renewals as those amounts can not
be determined as of November 30, 2002.

N.     Related Party
Transactions

We have an advisory and consulting agreement with
Granaria Holdings B.V., our controlling common shareholder,
pursuant to which we pay Granaria Holdings B.V. an annual
management fee of $1.8 million, plus out-of-pocket
expenses. The agreement terminates on February 24, 2008.
Fees and expenses relating to these services amounted to
$2.2 million in 2002, and $2.1 million in 2001 and
2000. At November 30, 2002, $556,000 was accrued in Other
Accrued Liabilities in the accompanying balance sheet relating
to these fees and expenses. At November 30, 2001, $600,000
was accrued in Other Accrued Liabilities in the accompanying
balance sheet relating to these fees and expenses.

During 2002, we paid $800,000 which is included
in Other Assets in our balance sheets to a start-up
high-technology manufacturing company for the exclusive right to
manufacture the start-up companies battery technology.
This asset will be amortized into Cost of Products Sold over the
term of the supply arrangement. In addition, an entity
affiliated with Granaria Holdings, B.V., our controlling common
shareholder, invested $2.0 million for a 14.8% interest,
and Thomas R. Pilholski, our Senior Vice President and Chief
Financial Officer invested $200,000 for a 1.5% interest. In
addition, John H. Weber, our President and Chief Executive
Officer, invested $20,000, and David G. Krall, our Senior Vice
President and General Counsel, invested $5,000. Both
Mr. Weber and Mr. Krall received less than 1% interest
for their investments. In addition, Noel

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EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Longuemare, a director of our wholly-owned
subsidiary, Eagle Picher Technologies, LLC, holds a 5% interest
in this start-up company.

O.     Business
Segment Information

Our Automotive Segment provides mechanical and
structural parts and raw materials for passenger cars, trucks,
vans and sport utility vehicles for original equipment
manufacturers and replacement markets. Resources are
concentrated in serving the North American, European and Pacific
Rim markets. Our Hillsdale operation is a precision machined
components business, and our Wolverine operation is a rubber
coated metal products business.

Our Technologies Segment is a diverse group of
businesses with a broad spectrum of technologies and
capabilities. It is a major supplier of batteries and power
systems components for aerospace, defense and telecommunications
applications. In addition, it produces high-purity specialty
material compounds and rare metals, industrial chemicals, bulk
pharmaceuticals and super-clean containers, which meet strict
EPA protocols, for environmental sampling. This segment serves
the commercial aerospace, nuclear, telecommunication electronics
and other industrial markets globally. Some of these products
are also used in defense applications. An $8.7 million
restructuring charge was recorded in the fourth quarter of 2001,
and a $5.5 million restructuring charge was recorded in the
second quarter of 2002. See Note E for a discussion of the
restructuring charges.

Our Filtration and Minerals Segment mines and
refines diatomaceous earth products, which are used globally in
high purity filtration applications, primarily by the food and
beverage industry. These products are also used as industrial
absorbents.

Sales between segments were not material.

Our foreign operations are located primarily in
Europe and in Mexico. Our subsidiary guarantor and non-guarantor
disclosure included in Note H discloses our net sales and
long-lived asset amounts by geographic region. In that note, the
columns marked as Issuer, Eagle-Picher Holdings, Inc., and
Subsidiary Guarantors represent all United States operations,
and the column marked Non-Guarantor Foreign Subsidiaries
represent our foreign operations. Net sales and long-lived
assets included in Note H are based on where the sale
originates, and where the long-lived assets reside. Included in
the United States net sales amounts are export sales to
non-affiliated customers of $78.6 million in 2002,
$76.7 million in 2001, and $75.3 million in 2000.
Intercompany transactions with foreign operations are made at
established transfer prices.

The following data represents financial
information about our reportable business segments. During 2002,
we elected to modify our internal methodology of allocating
certain expenses from the corporate segment to the operating
segments. In the following tables, the financial information for
2001 and 2000 has been restated to conform to the new 2002
presentation (in thousands of dollars).

|                                                |              |      |         |         |  |      |         |         |  |   |         |         | 
|----------------------------------------------- | ------------ | ---- | ------- | ------- |  | ---- | ------- | ------- |  | - | ------- | ------- | 
|                                                |              | 2002 |         | 2001    |  | 2000
|                                                |              |      |         |         |  |     
|Net Sales                                       |              |      |         |         |  |      |         |         |  |   |         |        
|Hillsdale                                       |              | $    | 356,614 |         |  | $    | 353,146 |         |  | $ | 374,087 |        
|Wolverine                                       |              |      | 79,367  |         |  |      | 74,100  |         |  |   | 82,300  |        
|                                                |              |      |         |         |  |      |         |         |  |   |         |        
|                                                | Automotive   |      |         | 435,981 |  |      |         | 427,246 |  |   |         | 456,387 | 
|                                                |              |      |         |         |  |      |         |         |  |   |         |        
|Power Group                                     |              |      | 104,620 |         |  |      | 100,788 |         |  |   | 90,600  |        
|Precision Products  divested
    July 17, 2002 |              |      | 3,435   |         |  |      | 10,214  |         |  |   | 13,400  |        
|Specialty Materials                             |              |      | 57,400  |         |  |      | 75,584  |         |  |   | 78,100  |        
|Chemsyn                                         |              |      | 13,200  |         |  |      | 13,714  |         |  |   | 9,300   |        
|                                                |              |      |         |         |  |      |         |         |  |   |         |        
|                                                | Technologies |      |         | 178,655 |  |      |         | 200,300 |  |   |         | 191,400 | 
|                                                |              |      |         |         |  |      |         |         |  |   |         |        

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EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

|                              |  |      |         |      |  |      |         |   |  |   |         |  
|----------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|                              |  | 2002 |         | 2001 |  | 2000
|                              |  |      |         |      |  |     
|Filtration and Minerals       |  |      | 82,129  |      |  |      | 82,004  |   |  |   | 80,579  |  
|                              |  |      |         |      |  |      |         |   |  |   |         |  
|Divested Divisions            |  |      |        |      |  |      |        |   |  |   | 42,800  |  
|                              |  |      |         |      |  |      |         |   |  |   |         |  
|Corporate/ Intersegment       |  |      |        |      |  |      | (800    | ) |  |   | (700    | )
|                              |  |      |         |      |  |      |         |   |  |   |         |  
|                              |  | $    | 696,765 |      |  | $    | 708,750 |   |  | $ | 770,466 |  
|                              |  |      |         |      |  |      |         |   |  |   |         |  
|Operating Income (Loss)       |  |      |         |      |  |      |         |   |  |   |         |  
|Automotive                    |  | $    | 9,970   |      |  | $    | 8,636   |   |  | $ | 28,146  |  
|Technologies                  |  |      | (1,887  | )    |  |      | 1,539   |   |  |   | 15,073  |  
|Filtration and Minerals       |  |      | 8,078   |      |  |      | 4,730   |   |  |   | 4,837   |  
|Divested Divisions            |  |      | (6,497  | )    |  |      | (2,105  | ) |  |   | 976     |  
|Corporate/ Intersegment       |  |      | (4,318  | )    |  |      | (8,522  | ) |  |   | 13,256  |  
|                              |  |      |         |      |  |      |         |   |  |   |         |  
|                              |  | $    | 5,346   |      |  | $    | 4,278   |   |  | $ | 62,288  |  
|                              |  |      |         |      |  |      |         |   |  |   |         |  
|Depreciation and Amortization |  |      |         |      |  |      |         |   |  |   |         |  
|Automotive                    |  | $    | 43,917  |      |  | $    | 38,795  |   |  | $ | 34,694  |  
|Technologies                  |  |      | 14,346  |      |  |      | 14,612  |   |  |   | 14,389  |  
|Filtration and Minerals       |  |      | 5,276   |      |  |      | 5,482   |   |  |   | 5,712   |  
|Divested Divisions            |  |      |        |      |  |      |        |   |  |   | 2,418   |  
|Corporate/ Intersegment       |  |      | 505     |      |  |      | 218     |   |  |   | 213     |  
|                              |  |      |         |      |  |      |         |   |  |   |         |  
|                              |  | $    | 64,044  |      |  | $    | 59,107  |   |  | $ | 57,426  |  
|                              |  |      |         |      |  |      |         |   |  |   |         |  
|Capital Expenditures          |  |      |         |      |  |      |         |   |  |   |         |  
|Automotive                    |  | $    | 12,199  |      |  | $    | 28,000  |   |  | $ | 34,200  |  
|Technologies                  |  |      | 1,889   |      |  |      | 5,500   |   |  |   | 3,300   |  
|Filtration and Minerals       |  |      | 1,969   |      |  |      | 2,600   |   |  |   | 2,100   |  
|Divested Divisions            |  |      |        |      |  |      |        |   |  |   | 1,400   |  
|Corporate/ Intersegment       |  |      | 1,199   |      |  |      | 444     |   |  |   | 367     |  
|                              |  |      |         |      |  |      |         |   |  |   |         |  
|                              |  | $    | 17,256  |      |  | $    | 36,544  |   |  | $ | 41,367  |  
|                              |  |      |         |      |  |      |         |   |  |   |         |  

|                                                 |  |      |         |      |  |   |         |  |  |  |  | 
|------------------------------------------------ |  | ---- | ------- | ---- |  | - | ------- |  |  |  |  | 
|                                                 |  | 2002 |         | 2001 |  |  
|                                                 |  |      |         |      |  |  
|Identifiable Assets                              |  |      |         |      |  |   |         |  |  |  |  | 
|Automotive                                       |  | $    | 288,267 |      |  | $ | 334,400 |  |  |  |  | 
|Technologies                                     |  |      | 169,909 |      |  |   | 209,023 |  |  |  |  | 
|Filtration and Minerals                          |  |      | 48,721  |      |  |   | 52,000  |  |  |  |  | 
|Divested Divisions                               |  |      |        |      |  |   |        |  |  |  |  | 
|Corporate/ Intersegment/ Discontinued Operations |  |      | 106,144 |      |  |   | 133,511 |  |  |  |  | 
|                                                 |  |      |         |      |  |   |         |  |  |  |  | 
|                                                 |  | $    | 613,041 |      |  | $ | 728,934 |  |  |  |  | 
|                                                 |  |      |         |      |  |   |         |  |  |  |  | 

P.     Quarterly
Financial Information (Unaudited)

The following table summarizes the unaudited
consolidated quarterly financial results of operations for 2002
and 2001, which we believe include all necessary adjustments for
a fair presentation of our interim results.

During the fourth quarter of 2002, we restated
the 2001 and 2000 financial statements to reflect the
appropriate adoption of EITF 00-10, Accounting for
Shipping and Handling Fees and Costs as discussed in

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EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Note Q. As a result, Net Sales and Cost of
Products Sold in prior years comparative financial statements
have been restated and increased from the amounts previously
reported. Net Sales and Cost of Products Sold were increased by
$3.9 million in the first quarter of 2002,
$4.1 million in the second quarter of 2002, and
$3.9 million in the third quarter of 2002;
$4.2 million in the first quarter of 2001,
$3.6 million in the second quarter of 2001,
$5.3 million in the third quarter of 2001, and
$3.2 million in the fourth quarter of 2001. These
restatements had no impact on operating income, net income, or
cash flow. The following table is in thousands of dollars,
except per share amounts.

|                                                  |  |               |         |    |  |    |         |    |  |   |         |   |  |   |         |  
|------------------------------------------------- |  | ------------- | ------- | -- |  | -- | ------- | -- |  | - | ------- | - |  | - | ------- | -
|                                                  |  |              
|                                                  |  | 2002 Quarters
|                                                  |  |              
|                                                  |  | Q1            |         | Q2 |  | Q3 |         | Q4
|                                                  |  |               |         |    |  |    |         |   
|Net sales                                         |  | $             | 163,229 |    |  | $  | 185,399 |    |  | $ | 172,988 |   |  | $ | 175,149 |  
|Cost of products sold                             |  |               | 129,772 |    |  |    | 144,152 |    |  |   | 135,468 |   |  |   | 137,098 |  
|Operating income (loss)                           |  |               | 4,856   |    |  |    | (10,499 | )  |  |   | 6,399   |   |  |   | 4,590   |  
|Loss from continuing operations                   |  |               | (6,207  | )  |  |    | (21,968 | )  |  |   | (3,571  | ) |  |   | (5,086  | )
|Net loss                                          |  |               | (6,207  | )  |  |    | (21,968 | )  |  |   | (3,571  | ) |  |   | (5,086  | )
|Diluted loss per share from continuing operations |  |               | (10.04  | )  |  |    | (26.63  | )  |  |   | (7.57   | ) |  |   | (9.36   | )
|Diluted net loss per share                        |  |               | (10.04  | )  |  |    | (26.63  | )  |  |   | (7.57   | ) |  |   | (9.36   | )

|                                                  |  |               |         |    |  |    |         |    |  |   |         |   |  |   |         |  
|------------------------------------------------- |  | ------------- | ------- | -- |  | -- | ------- | -- |  | - | ------- | - |  | - | ------- | -
|                                                  |  |              
|                                                  |  | 2001 Quarters
|                                                  |  |              
|                                                  |  | Q1            |         | Q2 |  | Q3 |         | Q4
|                                                  |  |               |         |    |  |    |         |   
|Net sales                                         |  | $             | 168,244 |    |  | $  | 187,714 |    |  | $ | 174,793 |   |  | $ | 177,999 |  
|Cost of products sold                             |  |               | 134,343 |    |  |    | 151,086 |    |  |   | 144,946 |   |  |   | 144,618 |  
|Operating income (loss)                           |  |               | 8,639   |    |  |    | 5,162   |    |  |   | 692     |   |  |   | (10,215 | )
|Loss from continuing operations                   |  |               | (498    | )  |  |    | (3,337  | )  |  |   | (5,103  | ) |  |   | (12,960 | )
|Net loss                                          |  |               | (17,430 | )  |  |    | (6,262  | )  |  |   | (10,603 | ) |  |   | (19,676 | )
|Diluted loss per share from continuing operations |  |               | (3.67   | )  |  |    | (6.77   | )  |  |   | (8.58   | ) |  |   | (16.78  | )
|Diluted net loss per share                        |  |               | (20.80  | )  |  |    | (9.74   | )  |  |   | (14.18  | ) |  |   | (23.75  | )

During the second quarter of 2002 our operating
income (loss) was significantly impacted as a result of
recording $5.5 million in restructuring charges related to
exiting our Gallium business within our Technologies Segment,
approximately $5.9 million of losses related to
divestitures for divisions sold in prior years, a
$3.1 million charge in our Technologies Segment primarily
related to inventories damaged in a fire, and $4.8 million
of legal and settlement charges, included in Selling and
Administrative expenses as described under Legal Matters in
Note M.

During the fourth quarter of 2002, our domestic
operations changed from the LIFO to the FIFO method of inventory
valuation. This change in accounting principle was made to
provide a better matching of revenue and expenses and to be
consistent with prevalent industry practice. This accounting
change resulted in a credit to Cost of Products Sold of
approximately $1.0 million in the fourth quarter of 2002.

During the fourth quarter of 2001, our operating
income (loss) was significantly impacted as a result of
recording $14.1 million in restructuring charges related to
our Technologies Segments operations and the relocation of
our corporate headquarters to Phoenix, Arizona.



|   |                                                             
|-- | ------------------------------------------------------------
|Q. | Restatement for Transportation Costs Billed to
    Customers

In the fourth quarter of fiscal 2002, we restated
the 2001 and 2000 financial statements to reflect the
appropriate adoption of EITF 00-10, Accounting for
Shipping and Handling Fees and Costs. We should have
adopted EITF 00-10 in the fourth quarter of 2001.
EITF 00-10 states that all amounts billed to a customer in
a sale transaction related to shipping and handling represent
revenues earned for the goods

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EAGLE-PICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

provided and should be classified as revenue.
Prior to the adoption of EITF 00-10, some of the costs
billed to customers for shipping and handling costs (our
transportation expenses) were included as an offset to our
costs. This restatement had no impact on operating income, net
income, or cash flows. The impacts to the financial statements
for the years ended November 30, 2001 and 2000 are shown
below (in thousands of dollars):

|                                                                             |  |      |         |      |  |   |         | 
|---------------------------------------------------------------------------- |  | ---- | ------- | ---- |  | - | ------- | 
|                                                                             |  | 2001 |         | 2000
|                                                                             |  |      |         |     
|Net Sales as originally reported                                             |  | $    | 692,450 |      |  | $ | 754,966 | 
|Increase in Net Sales                                                        |  |      | 16,300  |      |  |   | 15,500  | 
|                                                                             |  |      |         |      |  |   |         | 
|Restated Net Sales                                                           |  | $    | 708,750 |      |  | $ | 770,466 | 
|                                                                             |  |      |         |      |  |   |         | 
|Cost of Products Sold (exclusive of depreciation)
    as originally reported |  | $    | 558,693 |      |  | $ | 593,658 | 
|Increase in Cost of Products Sold (exclusive of
    depreciation)            |  |      | 16,300  |      |  |   | 15,500  | 
|                                                                             |  |      |         |      |  |   |         | 
|Restated Cost of Products Sold (exclusive of
    depreciation)               |  | $    | 574,993 |      |  | $ | 609,158 | 
|                                                                             |  |      |         |      |  |   |         | 

74



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##### Table of Contents






Item 9.     Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

Not applicable.




PART III




Item 10.     Directors
and Executive Officers of the Registrant

The information required by this Item will be
provided by us in an amendment to this Annual Report on
Form 10-K or an Information Statement filed with the
Securities and Exchange Commission.




Item 11.     Executive
Compensation

The information required by this Item will be
provided by us in an amendment to this Annual Report on
Form 10-K or an Information Statement filed with the
Securities and Exchange Commission.




Item 12.     Security
Ownership of Certain Beneficial Owners and
Management

The information required by this Item will be
provided by us in an amendment to this Annual Report on
Form 10-K or an Information Statement filed with the
Securities and Exchange Commission.




Item 13.     Certain
Relationships and Related Party Transactions

The information required by this Item will be
provided by us in an amendment to this Annual Report on
Form 10-K or an Information Statement filed with the
Securities and Exchange Commission.




PART IV




Item 14.     Controls
and Procedures

Our management, including our Chief Executive
Officer and our Chief Financial Officer, conducted an evaluation
of our disclosure controls and procedures within 90 days of
the filing of this report as required by the rules of the
Securities and Exchange Commission. Based on that evaluation,
our Chief Executive Officer and our Chief Financial Officer have
concluded that our disclosure controls and procedures are
effective in ensuring that all material information required to
be filed in this report has been made known to them in a timely
manner. There have been no significant changes in our internal
controls or in other factors that could significantly affect
these controls subsequent to the date our Chief Executive
Officer and our Chief Financial Officer completed their
evaluation.

As previously reported in our Quarterly Report on
Form 10-Q for the quarter ended August 31, 2002, based
on a prior evaluation, our Chief Executive Officer and our Chief
Financial Officer concluded that there were several weaknesses
in our Information Technology area (IT), including access
security, network monitoring, IT procurement and IT inventory
management. Since that time we have addressed those weaknesses
by changing all external firewalls, reauthenticating all network
users, updating all security and anti-virus software, changing
our network services provider and increasing the level of
network monitoring and enhancing security in all network
routers, and implementing a dual approval system for IT
procurement.




Item 15.     Exhibits
and Reports on Form 8-K

| |       |  |  |   |  |                                                                     
| | ----- |  |  | - |  | --------------------------------------------------------------------
| | (a)1. |  |  |   |  | All Financial Statements:                                           
| |       |  |  |  |  | Financial Statements  Included in
    Item 8 in this Report        
| |       |  |  |  |  | Independent Auditors Report 
    Included in Item 8 in this Report
| | 2.    |  |  |   |  | Financial Statement Schedules                                       
| |       |  |  |  |  | None                                                                

75



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##### Table of Contents



| |       |  |  |   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ----- |  |  | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 3.    |  |  |   |  | Exhibits (numbers keyed to Item 601,
    Regulation S-K)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | 2.1   |  |  |  |  | Third Amended Plan of Reorganization of
    Eagle-Picher Industries, Inc. (EPI)(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | 2.2   |  |  |  |  | Exhibits to Third Amended Plan of Reorganization
    of EPI(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | 3.1   |  |  |  |  | Articles of Incorporation of EPI, as amended(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | 3.2   |  |  |  |  | Regulations of EPI(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | 3.3   |  |  |  |  | Amended and Restated Certificate of Incorporation
    of Eagle-Picher Holdings, Inc. (the Company)(1)                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | 3.4   |  |  |  |  | Bylaws of the Company(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | 3.5   |  |  |  |  | Articles of Incorporation of Daisy Parts, Inc.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | 3.6   |  |  |  |  | Bylaws of Daisy Parts, Inc.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | 3.7   |  |  |  |  | Certificate of Incorporation of Eagle-Picher
    Development Company, Inc.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | 3.8   |  |  |  |  | Bylaws of Eagle-Picher Development Company,
    Inc.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | 3.9   |  |  |  |  | Certificate of Incorporation of Eagle-Picher Far
    East, Inc.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | 3.10  |  |  |  |  | Bylaws of Eagle-Picher Far East, Inc.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | 3.11  |  |  |  |  | Articles of Incorporation of Eagle-Picher Fluid
    Systems, Inc.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | 3.12  |  |  |  |  | Bylaws of Eagle-Picher Fluid Systems, Inc.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | 3.13  |  |  |  |  | Articles of Incorporation of Eagle-Picher
    Minerals, Inc.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | 3.14  |  |  |  |  | Bylaws of Eagle-Picher Minerals, Inc.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | 3.15  |  |  |  |  | Certificate of Formation of Eagle-Picher
    Technologies, LLC(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | 3.16  |  |  |  |  | Operating Agreement of Eagle-Picher Technologies,
    LLC(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | 3.16a |  |  |  |  | Amended and Restated Limited Liability Company
    Agreement of Eagle-Picher Technologies, LLC (3)                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | 3.17  |  |  |  |  | Articles of Incorporation of Hillsdale Tool &
    Manufacturing Co.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | 3.18  |  |  |  |  | Bylaws of Hillsdale Tool & Manufacturing
    Co.(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | 3.19  |  |  |  |  | Restated Articles of Incorporation of EPMR
    Corporation (f/k/a Michigan Automotive Research Corporation) (8)                                                                                                                                                                                                                                                                                                                                                                                                                            
| | 3.20  |  |  |  |  | Bylaws of EPMR Corporation (f/k/a Michigan
    Automotive Research Corporation)(8)                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | 3.21  |  |  |  |  | Certificate of Amendment of Amended and Restated
    Certificate of Incorporation of the Company filed with the
    Secretary of State of Delaware on August 31, 2001(14)                                                                                                                                                                                                                                                                                                                                                                  
| | 3.22  |  |  |  |  | Amended and Restated Bylaws of Daisy Parts, Inc.
    as of November 16, 2001 (15)                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | 3.23  |  |  |  |  | Amended and Restated Bylaws of Hillsdale Tool
    & Manufacturing Co. as of November 16, 2001(15)                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | 3.24  |  |  |  |  | Amendment to the Bylaws of Eagle-Picher Minerals,
    Inc. as of November 16, 2001(15)                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | 4.1   |  |  |  |  | Indenture, dated as of February 24, 1998,
    between EPI, the Company as a Guarantor, subsidiary guarantors
    (Daisy Parts, Inc. Eagle-Picher Development Company, Inc.,
    Eagle-Picher Far East, Inc., Eagle-Picher Fluid Systems, Inc.,
    Eagle-Picher Minerals, Inc., Eagle-Picher Technologies, LLC,
    Hillsdale Tool & Manufacturing Co., Michigan Automotive
    Research Corporation (together, the Subsidiary
    Guarantors or the Domestic Subsidiaries), and
    The Bank of New York as Trustee (the Trustee)(1)
| | 4.2   |  |  |  |  | Cross Reference Table showing the location in the
    Indenture of the provisions of Sections 310 through 318(a),
    inclusive, of the Trust Indenture Act of 1939(1)                                                                                                                                                                                                                                                                                                                                                                     
| | 4.3   |  |  |  |  | First Supplemental Indenture dated as of
    February 24, 1998, between EPI and the Trustee(1)                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | 4.4   |  |  |  |  | Form of Global Note (attached as Exhibit A
    to the Indenture filed as Exhibit 4.1)(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | 4.5   |  |  |  |  | Certified Copy of the Certificate of
    Designations, Preferences and Rights of 11.75% Series A
    Cumulative Redeemable Exchangeable Preferred Stock and 11.75%
    Series B Cumulative Redeemable Exchangeable Preferred Stock
    of the Company(1)                                                                                                                                                                                                                                                                                   

76



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| |       |  |  |   |  |                                                                                                                                                                                                                                                                                                                                        
| | ----- |  |  | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 4.6   |  |  |  |  | Form of Certificate and Global Share of 11,75%
    Series A Cumulative Redeemable Exchangeable Preferred Stock
    and 11.75% Series B Cumulative Redeemable Exchangeable
    Preferred Stock (attached as Exhibit A to the Certificate
    of Designations filed as Exhibit 4.5)(1)                                                   
| | 4.7   |  |  |  |  | Form of Exchange Debentures Indenture relating to
    11.75% Exchange Debentures due 2008 of the Company(1)                                                                                                                                                                                                                            
| | 4.8   |  |  |  |  | Cross Reference Table showing the location in the
    Exchange Debentures Indenture of the provisions of
    Sections 310 through 318(a), inclusive, of the Trust
    Indenture Act of 1939(1)                                                                                                                                         
| | 4.9   |  |  |  |  | Form of 11.75% Exchange Debenture due 2008
    (attached as Exhibit A to the Exchange Debentures Indenture
    filed as Exhibit 4.7)(1)                                                                                                                                                                                                
| | 9.1   |  |  |  |  | Voting Trust Agreement dated November , 1998
    with owners of Class A (Voting) Common Stock of the
    Company(4)                                                                                                                                                                                                                    
| | 10.1  |  |  |  |  | Merger Agreement, dated as of December 23,
    1997, among EPI, the Eagle-Picher Industries, Inc. Personal
    Injury Settlement Trust, the Company and E-P Acquisition, Inc.(1)                                                                                                                                                       
| | 10.2  |  |  |  |  | Amendment No. 1 to the Merger Agreement,
    dated as of February 23, 1998, among EPI, the Eagle-Picher
    Industries, Inc. Personal Injury Settlement Trust, the Company
    and E-P Acquisition, Inc.(1)                                                                                                                            
| | 10.3  |  |  |  |  | Supplemental Executive Retirement Plan of EPI(2)                                                                                                                                                                                                                                                                                       
| | 10.4  |  |  |  |  | Notes Purchase Agreement, dated February 19,
    1998, among E-P Acquisition, Inc., EPI, The Company, SBC Warburg
    Dillon Read and ABN AMRO Incorporated(1)                                                                                                                                                                         
| | 10.5  |  |  |  |  | Assumption Agreement for the Notes Purchase
    Agreement, dated as of February 24, 1998, between EPI and
    the Subsidiary Guarantors(1)                                                                                                                                                                                             
| | 10.6  |  |  |  |  | Registration Rights Agreement, dated as of
    February 24, 1998, between E-P Acquisition, Inc., SBC
    Warburg Dillon Read and ABN AMRO Incorporated(1)                                                                                                                                                                              
| | 10.7  |  |  |  |  | Assumption Agreement for the Registration Rights
    Agreement, dated as of February 24, 1998, of EPI(1)                                                                                                                                                                                                                               
| | 10.8  |  |  |  |  | Credit Agreement, dated as of February 19,
    1998, among E-P Acquisition, Inc. (merged with and into EPI),
    Various Lenders from time to time party thereto, ABN AMRO Bank
    N.V., as Agent (the Agent), PNC Bank, National
    Association, as Documentation Agent and DLJ Capital Funding,
    Inc., as Syndication Agent(1)
| | 10.9  |  |  |  |  | Assumption Agreement dated as of
    February 24, 1998, between EPI and the Agent(1)                                                                                                                                                                                                                                                   
| | 10.10 |  |  |  |  | Security Agreement, dated as of February 24,
    1998, among EPI, the Agent and the Domestic Subsidiaries(1)                                                                                                                                                                                                                           
| | 10.11 |  |  |  |  | Holdings Pledge Agreement, dated as of
    February 24, 1998, between the Company and the Agent(1)                                                                                                                                                                                                                                     
| | 10.12 |  |  |  |  | Borrower and Subsidiary Pledge Agreement, dated
    as of February 24, 1998, among EPI, Eagle-Picher
    Development Company, Eagle-Picher Minerals, Inc. and the Agent(1)                                                                                                                                                             
| | 10.13 |  |  |  |  | Holdings Guaranty Agreement, dated as of
    February 24, 1998, by the Company, accepted and agreed by
    the Agent(1)                                                                                                                                                                                                                
| | 10.14 |  |  |  |  | Subsidiary Guaranty Agreement, dated as of
    February 24, 1998, by the Domestic Subsidiaries, accepted
    and agreed by the Agent(1)                                                                                                                                                                                                
| | 10.15 |  |  |  |  | Trademark Collateral Agreement, dated
    February 24, 1998, between EPI and the Agent(1)                                                                                                                                                                                                                                              
| | 10.16 |  |  |  |  | Patent Collateral Agreement, dated
    February 24, 1998, between EPI and the Agent(1)                                                                                                                                                                                                                                                 
| | 10.17 |  |  |  |  | Copyright Collateral Agreement, dated
    February 24, 1998, between EPI and the Agent(1)                                                                                                                                                                                                                                              
| | 10.18 |  |  |  |  | Subordination Agreement, dated as of
    February 24, 1998, among E-P Acquisition, Inc., EPI and the
    Domestic Subsidiaries(2)                                                                                                                                                                                                      
| | 10.19 |  |  |  |  | Management Agreement dated as of
    February 24, 1998, between EPI and Granaria Holdings B.V.(1)                                                                                                                                                                                                                                      

77



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| |       |  |  |   |  |                                                                                                                                                                                                                                                         
| | ----- |  |  | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 10.20 |  |  |  |  | Eagle-Picher Management Trust made
    February 17, 1998, among Granaria Industries B.V. and
    Thomas E. Petry, Andries Ruijssenaars and Joel Wyler as trustees
    (the E-P Management Trust)(2)                                                   
| | 10.21 |  |  |  |  | Incentive Stock Plan of EPI, effective as of
    February 25, 1998(2)                                                                                                                                                                                   
| | 10.22 |  |  |  |  | Employment Agreements dated November 29,
    1996, between EPI and each Named Executive Officer as defined in
    EPIs Form S-4 filed in 1998, as amended
    (Messrs. Petry, Ruijssenaars, Hall, Wickens, Curless and
    Ralston)(2)                 
| | 10.23 |  |  |  |  | Amendments dated August 5, 1997, to
    Employment Agreements between EPI and each Named Executive
    Officer as defined in EPIs Form S-4(2)                                                                                                          
| | 10.24 |  |  |  |  | Sales Incentive Program of EPI(2)                                                                                                                                                                                                                       
| | 10.25 |  |  |  |  | Letter Agreements dated August 5, 1997,
    between EPI and each Named Executive Officer as defined in
    EPIs Form S-4 regarding Short Term Sale Program(2)                                                                                          
| | 10.26 |  |  |  |  | Letter Agreement dated September 12, 1997,
    between EPI and Carroll D. Curless regarding Sale Incentive
    Bonus(2)                                                                                                                                 
| | 10.27 |  |  |  |  | Letter Agreements dated February 18, 1998,
    between EPI and each Named Executive Officer as defined in
    EPIs Form S-4 regarding Short Term Sale Program(2)                                                                                       
| | 10.28 |  |  |  |  | Side Letter, dated February 23, 1998,
    regarding Amendments to the Short Term Sale Program(2)                                                                                                                                                        
| | 10.29 |  |  |  |  | Preferred Stock Purchase Agreement, dated
    February 19, 1998, between the Company and the initial
    purchasers(1)                                                                                                                                  
| | 10.30 |  |  |  |  | Preferred Stock Registration Rights Agreement,
    dated as of February 24, 1998, between the Company and the
    initial purchasers(1)                                                                                                                 
| | 10.31 |  |  |  |  | Transfer Agency Agreement, dated as of
    February 24, 1998, between the Company and The Bank of New
    York, as Transfer Agent(2)                                                                                                                    
| | 10.32 |  |  |  |  | The Company Incentive Stock Plan for Outside
    Directors effective January 1, 1999(4)                                                                                                                                                                 
| | 10.33 |  |  |  |  | Amended and Restated Incentive Stock Plan of
    EPI(4)                                                                                                                                                                                                 
| | 10.34 |  |  |  |  | Second Amended and Restated Incentive Stock Plan
    of EPI(4)                                                                                                                                                                                          
| | 10.35 |  |  |  |  | Shareholders Agreement dated October 15,
    1998, among Granaria Holdings B.V., Granaria Industries B.V.,
    the Company and EPI(4)                                                                                                                   
| | 10.36 |  |  |  |  | Voting Trust Agreement dated as of
    November 16, 1998, by and among certain shareholders of the
    Company and Granaria Holdings B.V.(5)                                                                                                            
| | 10.37 |  |  |  |  | Stock Purchase Agreement dated April 8,
    1999, between Hillsdale Tool & Manufacturing Co.,
    Charterhouse Automotive Group Inc. and the Shareholders of
    Charterhouse Automotive Group, Inc.(6)                                                 
| | 10.38 |  |  |  |  | Shareholders Agreement dated April 12, 1999,
    among Granaria Holdings B.V., the Company, EPI, and certain
    shareholders of the Company(5)                                                                                                         
| | 10.39 |  |  |  |  | Voting Trust Agreement dated April 13, 1999,
    between certain shareholders of the Company and Granaria
    Holdings B.V. as voting trustee(5)                                                                                                        
| | 10.40 |  |  |  |  | Amendment to Credit Agreement and Consent, dated
    as of May 18, 1999, among EPI, the lenders party thereto,
    ABN AMRO Bank N.V., as Agent, PNC Bank, National Association, as
    Documentation Agent, and NBD Bank, N.A., as Syndication Agent(5)
| | 10.41 |  |  |  |  | Receivables Loan Agreement dated as of
    May 18, 1999, among Eagle-Picher Acceptance Corporation,
    EPI, ABN AMRO Bank N.V., the Lender Agents, the Related Bank
    Lenders, Amsterdam Funding Corporation and the Other Conduit
    Lenders(5)    
| | 10.42 |  |  |  |  | Receivables Purchase Agreement dated as of
    May 18, 1999, between EPI and Eagle-Picher Acceptance
    Corporation(5)                                                                                                                                 
| | 10.43 |  |  |  |  | Receivables Purchase Agreement dated as of
    May 18, 1999, between Carpenter Enterprises Limited and
    Eagle-Picher Acceptance Corporation(5)                                                                                                       
| | 10.44 |  |  |  |  | Receivables Purchase Agreement dated as of
    May 18, 1999, between Daisy Parts, Inc. and Eagle-Picher
    Acceptance Corporation(5)                                                                                                                   

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| |       |  |  |   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ----- |  |  | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 10.45 |  |  |  |  | Receivables Purchase Agreement dated as of
    May 18, 1999, between Eagle-Picher Development Company and
    Eagle-Picher Acceptance Corporation(5)                                                                                                                                                                                                                                                                                            
| | 10.46 |  |  |  |  | Receivables Purchase Agreement dated as of
    May 18, 1999, between Eagle-Picher Fluid Systems, Inc. and
    Eagle-Picher Acceptance Corporation(5)                                                                                                                                                                                                                                                                                            
| | 10.47 |  |  |  |  | Receivables Purchase Agreement dated as of
    May 18, 1999, between Eagle-Picher Minerals, Inc. and
    Eagle-Picher Acceptance Corporation(5)                                                                                                                                                                                                                                                                                                 
| | 10.48 |  |  |  |  | Receivables Purchase Agreement dated as of
    May 18, 1999, between Eagle-Picher Technologies, LLC and
    Eagle-Picher Acceptance Corporation(5)                                                                                                                                                                                                                                                                                              
| | 10.49 |  |  |  |  | Receivables Purchase Agreement dated as of
    May 18, 1999, between Hillsdale Tool & Manufacturing
    Co. and Eagle-Picher Acceptance Corporation(5)                                                                                                                                                                                                                                                                                          
| | 10.50 |  |  |  |  | Receivables Purchase Agreement dated as of
    May 18, 1999, between Michigan Automotive Research
    Corporation and Eagle-Picher Acceptance Corporation(5)                                                                                                                                                                                                                                                                                    
| | 10.51 |  |  |  |  | Share Appreciation Plan of EPI(7)                                                                                                                                                                                                                                                                                                                                                                                                               
| | 10.52 |  |  |  |  | Amendment to Credit Agreement and Consent dated
    as of August 1, 2000, among EPI, the lenders party thereto,
    ABN AMRO Bank N.V. as Agent, PNC Bank, National Association as
    Documentation Agent, and Bank One, Indiana, N.A. as Syndication
    Agent(9)                                                                                                                                                                             
| | 10.53 |  |  |  |  | Resignation, Release and Severance Pay Agreement
    dated May 31, 2000 between EPI and Wayne R. Wickens(10)                                                                                                                                                                                                                                                                                                                                    
| | 10.54 |  |  |  |  | Executive Employment Agreement dated
    November 7, 2000 between EPI and Andries Ruijssenaars(10)                                                                                                                                                                                                                                                                                                                                              
| | 10.55 |  |  |  |  | Supplemental Executive Retirement Plan (as
    amended and restated effective March 27, 2001)(11)                                                                                                                                                                                                                                                                                                                                               
| | 10.56 |  |  |  |  | Fourth Amendment to Credit Agreement and Consent
    dated as of May 31, 2001, among the Company, the lenders
    party hereto, ABN AMRO Bank N.V., as Agent, PNC Bank, National
    Association, as Documentation Agent and NBD Bank, N.A., as
    Syndication Agent(12)                                                                                                                                                                       
| | 10.57 |  |  |  |  | Fifth Amendment to Receivables Loan Agreement
    dated as of June 29, 2001 among the Company, EPAC,
    Amsterdam Funding Corporation, as a Conduit Lender and as the
    administrative agent for the Lenders, ABN AMRO Bank N.V., as the
    Amsterdam Lender Agent, Market Street Funding Corporation, as a
    Conduit Lender, PNC Bank, National Association, as the Market
    Lender Agent and the Related Bank Lenders party hereto(12)
| | 10.58 |  |  |  |  | Resignation Agreement effective July 6, 2001
    between EPI and Michael E. Aslanian(13)                                                                                                                                                                                                                                                                                                                                                        
| | 10.59 |  |  |  |  | Executive Employment Agreement effective
    July 15, 2001 between EPI and John H. Weber(14)                                                                                                                                                                                                                                                                                                                                                    
| | 10.60 |  |  |  |  | Separation Agreement effective November 1,
    2001 between EPI and Philip F. Schultz (15)                                                                                                                                                                                                                                                                                                                                                      
| | 10.61 |  |  |  |  | Supplemental Indenture among EPI, the Guarantors
    (Daisy Parts, Inc., Eagle-Picher Development Company, Inc.,
    Eagle-Picher Holdings, Inc., Eagle-Picher Far East, Inc.,
    Eagle-Picher Minerals, Inc., Eagle-Picher Technologies, LLC,
    Hillsdale Tool & Manufacturing Co., EPMR Corporation and
    Carpenter Enterprises Limited) and The Bank of New York, as
    Trustee, dated December 14, 2001.(15)                          
| | 10.62 |  |  |  |  | Receivables Sales Agreement dated January 8,
    2002 by and among Eagle-Picher Funding Corporation and each of
    the Originators defined therein which include EPI,
    Carpenter Enterprises Limited, Daisy Parts, Inc., Eagle-Picher
    Minerals, Inc., Eagle-Picher Technologies, LLC, and Hillsdale
    Tool & Manufacturing Co.(15)                                                                                                  
| | 10.63 |  |  |  |  | Receivables Sales and Servicing Agreement dated
    January 8, 2002 by and among Eagle-Picher Funding
    Corporation, Redwood Receivables Corporation, Eagle-Picher
    Industries, Inc. and General Electric Capital Corporation.(15)                                                                                                                                                                                                         
| | 10.64 |  |  |  |  | Annex X to Receivables Sales Agreement at
    Exhibit 10.62 and to Receivables Purchase and Servicing
    Agreement at Exhibit 10.63  Definitions
    and Interpretations(15)                                                                                                                                                                                                                                                                
| | 10.65 |  |  |  |  | Asset Purchase Agreement, dated December 18,
    2001, between Eagle-Picher Industries, Inc. and Construction
    Equipment Direct, Inc.(16)                                                                                                                                                                                                                                                                                                    

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| |               |  |  |   |  |                                                                      
| | ------------- |  |  | - |  | ---------------------------------------------------------------------
| | 12.1          |  |  |  |  | Ratios of Earnings to Fixed Charges and Preferred
    Stock Dividends
| | 18.0          |  |  |  |  | Letter regarding change in accounting principle                      
| | 21.1          |  |  |  |  | Subsidiaries of EPI                                                  
| | 24(a),(b),(c) |  |  |  |  | Powers of Attorney                                                   



---



| |     |                                                                                                                                   
| | --- | ----------------------------------------------------------------------------------------------------------------------------------
| | (1) | Incorporated by reference to the Companys
    Form S-4 Registration Statement No. 333-49957-01 filed
    on April 11, 1998.      
|
| | (2) | Incorporated by reference to EPIs Amendment
    No. 1 to Form S-4 Registration Statement
    No. 333-49957 filed on May 20, 1998.
|
| | (3) | Incorporated by reference to EPIs Amendment
    No. 2 to Form S-4 Registration Statement
    No. 333-49957 filed on June 5, 1998.
|
| | (4) | Incorporated by reference to the Companys
    Form 10-K filed on March 1, 1999.                                                  
|
| | (5) | Incorporated by reference to the Companys
    Form 10-Q filed on June 30, 1999.                                                  
|
| | (6) | Incorporated by reference to the Companys
    Form 8-K filed on April 21, 1999.                                                  
|
| | (7) | Incorporated by reference to EPIs
    Form 10-Q filed on June 29, 1998.                                                          
|
| | (8) | Incorporated by reference to the Companys
    Form 10-Q filed on April 12, 2000.                                                 
|
| | (9) | Incorporated by reference to the Companys
    Form 10-Q filed on October 16, 2000.                                               



|     |                                                                                     
|---- | ------------------------------------------------------------------------------------
|(10) | Incorporated by reference to the Companys
    Form 10-K filed on February 28, 2001.
|    
|(11) | Incorporated by reference to the Companys
    Form 10-Q filed on April 10, 2001.   
|    
|(12) | Incorporated by reference to the Companys
    Form 8-K filed on July 9, 2001.      
|    
|(13) | Incorporated by reference to the Companys
    Form 10-Q filed on July 16, 2001.    
|    
|(14) | Incorporated by reference to the Companys
    Form 10-Q filed on October 12, 2001. 
|    
|(15) | Incorporated by reference to the Companys
    Form 10-K filed on February 15, 2002.
|    
|(16) | Incorporated by reference to the Companys
    Form 8-K filed on January 3, 2002.   



| |       |                    
| | ----- | -------------------
| | (b)1. | Reports on Form 8-K

 None filed during our fourth quarter
for the period covered by this report.

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SIGNATURES

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



| |                            
| | ---------------------------
| | EAGLE-PICHER HOLDINGS, INC.



| |    |                  
| | -- | -----------------
| | By | /s/ JOHN H. WEBER

| |                                          
| | -----------------------------------------
| |                                          
| | John H. Weber                            
| | President and Chief Executive
    Officer

Date: February 25, 2003

Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the
capacities and on the dates indicated.

|                                           |  |                                                                                         |  |                         |  | 
|------------------------------------------ |  | --------------------------------------------------------------------------------------- |  | ----------------------- |  | 
|                                           |  |                                                                                         |  |                         |  | 
|                                           |  | Title                                                                                   |  | Date                   
|Signature                                  |  |                                                                                         |  |                        
|                                           |  |                                                                                         |  |                        
|                                          
|/s/ JOHN H. WEBERJohn H. Weber             |  | President, Chief Executive Officer and Director                                         |  | Date: February 25, 2003
|                                          
|/s/ THOMAS R. PILHOLSKIThomas R. Pilholski |  | Senior Vice President and Chief Financial
    Officer
    (Principal Financial Officer) |  | Date: February 25, 2003
|                                          
|/s/ JOHN F. SULLIVANJohn F. Sullivan       |  | Vice President and
    Controller (Principal Accounting Officer)                        |  | Date: February 25, 2003
|                                          
|/s/ JOEL P. WYLER*Joel P. Wyler            |  | Director and
    Chairman of the Board                                                  |  | Date: February 25, 2003
|                                          
|/s/ DANIEL C. WYLER*Daniel C. Wyler        |  | Director                                                                                |  | Date: February 25, 2003
|                                          
|/s/ BERT IEDEMA*Bert Iedema                |  | Director                                                                                |  | Date: February 25, 2003
|                                          
|*By                                        |  | /s/ DAVID G. KRALLDavid G. Krall
    Attorney-in-Fact                                   |  |                         |  | 

81



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SIGNATURES

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



| |                              
| | -----------------------------
| | EAGLE-PICHER INDUSTRIES, INC.



| |    |                  
| | -- | -----------------
| | By | /s/ JOHN H. WEBER

| |                                          
| | -----------------------------------------
| |                                          
| | John H. Weber                            
| | President and Chief Executive
    Officer

Dated: February 25, 2003

Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Additional Registrant,
Eagle-Picher Holdings, Inc., and in the capacities and on the
dates indicated.

|                                           |  |                                                                                     |  |                         |  | 
|------------------------------------------ |  | ----------------------------------------------------------------------------------- |  | ----------------------- |  | 
|                                           |  |                                                                                     |  |                         |  | 
|                                           |  | Title                                                                               |  | Date                   
|Signature                                  |  |                                                                                     |  |                        
|                                           |  |                                                                                     |  |                        
|                                          
|/s/ JOHN H. WEBERJohn H. Weber             |  | President, Chief Executive Officer and Director
    (Principal Executive Officer)   |  | Date: February 25, 2003
|                                          
|                                          
|/s/ THOMAS R. PILHOLSKIThomas R. Pilholski |  | Senior Vice President and Chief Financial Officer
    (Principal Financial Officer) |  | Date: February 25, 2003
|                                          
|                                          
|/s/ JOHN F. SULLIVANJohn F. Sullivan       |  | Vice President and
    Controller (Principal Accounting Officer)                    |  | Date: February 25, 2003
|                                          
|                                          
|/s/ JOEL P. WYLER*Joel P. Wyler            |  | Director and
    Chairman of the Board                                              |  | Date: February 25, 2003
|                                          
|                                          
|/s/ DANIEL C. WYLER*Daniel C. Wyler        |  | Director                                                                            |  | Date: February 25, 2003
|                                          
|                                          
|/s/ BERT IEDEMA*Bert Iedema                |  | Director                                                                            |  | Date: February 25, 2003
|                                          
|                                          
|*By                                        |  | /s/ DAVID G. KRALLDavid G. Krall
    Attorney-in-Fact                               |  |                         |  | 

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SIGNATURES

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



| |                  
| | -----------------
| | DAISY PARTS, INC.



| |    |                       
| | -- | ----------------------
| | By | /s/ WILLIAM F. MACLEAN

| |                              
| | -----------------------------
| |                              
| | William F. Maclean           
| | President                    
| | (Principal Executive Officer)

Dated: February 25, 2003

Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Additional Registrant, Daisy
Parts, Inc., and in the capacities and on the dates
indicated.

|                                         |  |                                                           |  |                         |  | 
|---------------------------------------- |  | --------------------------------------------------------- |  | ----------------------- |  | 
|                                         |  |                                                           |  |                         |  | 
|                                         |  | Title                                                     |  | Date                   
|Signature                                |  |                                                           |  |                        
|                                         |  |                                                           |  |                        
|                                        
|/s/ WILLIAM F. MACLEANWilliam F. Maclean |  | President
    (Principal Executive Officer)               |  | Date: February 25, 2003
|                                        
|                                        
|/s/ KEN HIGGINSKen Higgins               |  | Chief Financial Officer
    (Principal Financial Officer) |  | Date: February 25, 2003
|                                        
|                                        
|/s/ DANIEL SKIENDZIELDaniel Skiendziel   |  | Controller
    (Principal Accounting Officer)             |  | Date: February 25, 2003
|                                        
|                                        
|/s/ JOHN H. WEBERJohn H. Weber           |  | Director                                                  |  | Date: February 25, 2003

83



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SIGNATURES

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



| |                                   
| | ----------------------------------
| | EAGLE-PICHER DEVELOPMENT CO., INC.



| |    |                  
| | -- | -----------------
| | By | /s/ JOHN H. WEBER

| |                                               
| | ----------------------------------------------
| |                                               
| | John H. Weber                                 
| | President                                     
| | (Principal Executive Officer and
    Director)

Dated: February 25, 2003

Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Additional Registrant,
Eagle-Picher Development Co., Inc., and in the capacities and on
the dates indicated.

|                                           |  |                                                                                          |  |                         |  | 
|------------------------------------------ |  | ---------------------------------------------------------------------------------------- |  | ----------------------- |  | 
|                                           |  |                                                                                          |  |                         |  | 
|                                           |  | Title                                                                                    |  | Date                   
|Signature                                  |  |                                                                                          |  |                        
|                                           |  |                                                                                          |  |                        
|                                          
|/s/ JOHN H. WEBERJohn H. Weber             |  | President
    (Principal Executive Officer and Director)                                 |  | Date: February 25, 2003
|                                          
|                                          
|/s/ THOMAS R. PILHOLSKIThomas R. Pilholski |  | Senior Vice President
    (Principal Financial Officer and Principal Accounting Officer) |  | Date: February 25, 2003

84



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SIGNATURES

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



| |                                                 
| | ------------------------------------------------
| | EPMR CORPORATION                                
| | (f/k/a Michigan Automotive Research Corporation)



| |    |                  
| | -- | -----------------
| | By | /s/ JOHN H. WEBER

| |                                               
| | ----------------------------------------------
| |                                               
| | John H. Weber                                 
| | President                                     
| | (Principal Executive Officer and
    Director)

Dated: February 25, 2003

Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Additional Registrant, EPMR
Corporation, and in the capacities and on the dates
indicated.

|                                           |  |                                                                                          |  |                         |  | 
|------------------------------------------ |  | ---------------------------------------------------------------------------------------- |  | ----------------------- |  | 
|                                           |  |                                                                                          |  |                         |  | 
|                                           |  | Title                                                                                    |  | Date                   
|Signature                                  |  |                                                                                          |  |                        
|                                           |  |                                                                                          |  |                        
|                                          
|/s/ JOHN H. WEBERJohn H. Weber             |  | President
    (Principal Executive Officer and Director)                                 |  | Date: February 25, 2003
|                                          
|                                          
|/s/ THOMAS R. PILHOLSKIThomas R. Pilholski |  | Senior Vice President
    (Principal Financial Officer and Principal Accounting Officer) |  | Date: February 25, 2003

85



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SIGNATURES

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



| |                            
| | ---------------------------
| | EAGLE-PICHER FAR EAST, INC.



| |    |                  
| | -- | -----------------
| | By | /s/ JOHN H. WEBER

| |                                               
| | ----------------------------------------------
| |                                               
| | John H. Weber                                 
| | President                                     
| | (Principal Executive Officer and
    Director)

Dated: February 25, 2003


Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Additional Registrant,
Eagle-Picher Far East, Inc., and in the capacities and on the
dates indicated.

|                                           |  |                                                                                          |  |                         |  | 
|------------------------------------------ |  | ---------------------------------------------------------------------------------------- |  | ----------------------- |  | 
|                                           |  |                                                                                          |  |                         |  | 
|                                           |  | Title                                                                                    |  | Date                   
|Signature                                  |  |                                                                                          |  |                        
|                                           |  |                                                                                          |  |                        
|                                          
|/s/ JOHN H. WEBERJohn H. Weber             |  | President
    (Principal Executive Officer and Director)                                 |  | Date: February 25, 2003
|                                          
|/s/ THOMAS R. PILHOLSKIThomas R. Pilholski |  | Senior Vice President
    (Principal Financial Officer and Principal Accounting Officer) |  | Date: February 25, 2003

86



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SIGNATURES

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



| |                                   
| | ----------------------------------
| | HILLSDALE TOOL & MANUFACTURING CO.



| |    |                       
| | -- | ----------------------
| | By | /s/ WILLIAM F. MACLEAN

| |                              
| | -----------------------------
| |                              
| | William F. Maclean           
| | President                    
| | (Principal Executive Officer)

Dated: February 25, 2003


Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Additional Registrant,
Hillsdale Tool & Manufacturing Co., and in the
capacities and on the dates indicated.

|                                         |  |                                                           |  |                         |  | 
|---------------------------------------- |  | --------------------------------------------------------- |  | ----------------------- |  | 
|                                         |  |                                                           |  |                         |  | 
|                                         |  | Title                                                     |  | Date                   
|Signature                                |  |                                                           |  |                        
|                                         |  |                                                           |  |                        
|                                        
|/s/ WILLIAM F. MACLEANWilliam F. Maclean |  | President
    (Principal Executive Officer)               |  | Date: February 25, 2003
|                                        
|/s/ KEN HIGGINSKen Higgins               |  | Chief Financial Officer
    (Principal Financial Officer) |  | Date: February 25, 2003
|                                        
|/s/ DANIEL SKIENDZIELDaniel Skiendziel   |  | Controller
    (Principal Accounting Officer)             |  | Date: February 25, 2003
|                                        
|/s/ JOHN H. WEBERJohn H. Weber           |  | Sole Director                                             |  | Date: February 25, 2003

87



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SIGNATURES

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



| |                            
| | ---------------------------
| | EAGLE-PICHER MINERALS, INC.



| |    |                    
| | -- | -------------------
| | By | /s/ JAMES L. LAURIA

| |                              
| | -----------------------------
| |                              
| | James L. Lauria              
| | President                    
| | (Principal Executive Officer)

Dated: February 25, 2003


Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Additional Registrant,
Eagle-Picher Minerals, Inc., and in the capacities and on the
dates indicated.

|                                           |  |                                             |  |                         |  | 
|------------------------------------------ |  | ------------------------------------------- |  | ----------------------- |  | 
|                                           |  |                                             |  |                         |  | 
|                                           |  | Title                                       |  | Date                   
|Signature                                  |  |                                             |  |                        
|                                           |  |                                             |  |                        
|                                          
|/s/ JAMES L. LAURIAJames L. Lauria         |  | President
    (Principal Executive Officer) |  | Date: February 25, 2003
|                                          
|/s/ THOMAS R. PILHOLSKIThomas R. Pilholski |  | (Principal Accounting Officer)              |  | Date: February 25, 2003
|                                          
|/s/ JOHN H. WEBERJohn H. Weber             |  | Sole Director                               |  | Date: February 25, 2003

88



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SIGNATURES

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



| |                               
| | ------------------------------
| | EAGLE-PICHER TECHNOLOGIES, LLC



| |    |                  
| | -- | -----------------
| | By | /s/ CRAIG KITCHEN

| |                              
| | -----------------------------
| |                              
| | Craig Kitchen                
| | President                    
| | (Principal Executive Officer)

Dated: February 25, 2003


Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Additional Registrant,
Eagle-Picher Technologies, LLC, and in the capacities and on the
dates indicated.

|                                       |  |                                                                                                                |  |                         |  | 
|-------------------------------------- |  | -------------------------------------------------------------------------------------------------------------- |  | ----------------------- |  | 
|                                       |  |                                                                                                                |  |                         |  | 
|                                       |  | Title                                                                                                          |  | Date                   
|Signature                              |  |                                                                                                                |  |                        
|                                       |  |                                                                                                                |  |                        
|                                      
|/s/ GRANT T. HOLLETTGrant T. Hollett   |  | Chairman and Director                                                                                          |  | Date: February 25, 2003
|                                      
|/s/ CRAIG N. KITCHENCraig N. Kitchen   |  | President and Director
    (Principal Financial Officer)                                                       |  | Date: February 25, 2003
|                                      
|/s/ BRADLEY J. WATERSBradley J. Waters |  | Vice President, and Chief Financial Officer
    (Principal Financial Officer and Principal Accounting Officer) |  | Date: February 25, 2003
|                                      
|/s/ JOEL P. WYLER*Joel P. Wyler        |  | Director                                                                                                       |  | Date: February 25, 2003
|                                      
|/s/ JOHN H. WEBERJohn H. Weber         |  | Director                                                                                                       |  | Date: February 25, 2003
|                                      
|*By                                    |  | /s/ DAVID G. KRALLDavid G. Krall
    Attorney-in-Fact                                                          |  |                         |  | 

89



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CERTIFICATIONS

I, John H. Weber, President and Chief
Executive Officer, certify that:



| |                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1.     I have reviewed
    this annual report on Form 10-K of Eagle-Picher Holdings,
    Inc. , Eagle-Picher Industries, Inc., Daisy Parts, Inc.,
    Eagle-Picher Development Co., Inc., Eagle-Picher Far East, Inc.,
    Eagle-Picher Minerals, Inc., Eagle-Picher Technologies, LLC,
    Hillsdale Tool & Manufacturing Co. and EPMR Corporation;   
|
| | 2.     Based on my
    knowledge, this annual report does not contain any untrue
    statement of a material fact or omit to state a material fact
    necessary to make the statements made, in light of the
    circumstances under which such statements were made, not
    misleading with respect to the period covered by this annual
    report;
|
| | 3.     Based on my
    knowledge, the financial statements, and other financial
    information included in this annual report, fairly present in
    all material respects the financial condition, results of
    operations and cash flows of the registrant as of, and for, the
    periods presented in this annual report;                       
|
| | 4.     The
    registrants other certifying officers and I are
    responsible for establishing and maintaining disclosure controls
    and procedures (as defined in Exchange Act Rules 13a-14 and
    15d-14) for the registrant and we have:                                                                                                       



| |                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this annual report is being prepared;
|
| | b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | c) presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5.     The
    registrants other certifying officers and I have
    disclosed, based on our most recent evaluation, to the
    registrants auditors and the audit committee of the
    registrants board of directors (or persons performing the
    equivalent function):



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    



| |                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6.     The
    registrants other certifying officers and I have indicated
    in this annual report whether or not there were significant
    changes in internal controls or in other factors that could
    significantly affect internal controls subsequent to the date of
    our most recent evaluation, including any corrective actions
    with regard to significant deficiencies and material weaknesses.



| |                                          
| | -----------------------------------------
| | /s/ JOHN H. WEBER                        
| |                                          
| | John H. Weber                            
| | President and Chief Executive
    Officer

Date: February 25, 2003

90



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##### Table of Contents



I, Thomas R. Pilholski, Senior Vice
President and Chief Financial Officer, certify that:



| |                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1.     I have reviewed
    this annual report on Form 10-K of Eagle-Picher Holdings,
    Inc. , Eagle-Picher Industries, Inc., Daisy Parts, Inc.,
    Eagle-Picher Development Co., Inc., Eagle-Picher Far East, Inc.,
    Eagle-Picher Minerals, Inc., Eagle-Picher Technologies, LLC,
    Hillsdale Tool & Manufacturing Co. and EPMR Corporation;   
|
| | 2.     Based on my
    knowledge, this annual report does not contain any untrue
    statement of a material fact or omit to state a material fact
    necessary to make the statements made, in light of the
    circumstances under which such statements were made, not
    misleading with respect to the period covered by this annual
    report;
|
| | 3.     Based on my
    knowledge, the financial statements, and other financial
    information included in this annual report, fairly present in
    all material respects the financial condition, results of
    operations and cash flows of the registrant as of, and for, the
    periods presented in this annual report;                       
|
| | 4.     The
    registrants other certifying officers and I are
    responsible for establishing and maintaining disclosure controls
    and procedures (as defined in Exchange Act Rules 13a-14 and
    15d-14) for the registrant and we have:                                                                                                       



| |                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this annual report is being prepared;
|
| | b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | c) presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5.     The
    registrants other certifying officers and I have
    disclosed, based on our most recent evaluation, to the
    registrants auditors and the audit committee of the
    registrants board of directors (or persons performing the
    equivalent function):



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    



| |                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6.     The
    registrants other certifying officers and I have indicated
    in this annual report whether or not there were significant
    changes in internal controls or in other factors that could
    significantly affect internal controls subsequent to the date of
    our most recent evaluation, including any corrective actions
    with regard to significant deficiencies and material weaknesses.



| |                                                      
| | -----------------------------------------------------
| | /s/ THOMAS R. PILHOLSKI                              
| |                                                      
| | Thomas R. Pilholski                                  
| | Senior Vice President and Chief Financial
    Officer

Date: February 25, 2003

91



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EXHIBIT INDEX

|        |       |  |  |   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------- | ----- |  |  | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |  |  
|Number  |       |  |  |  
|        |       |  |  |  
|        | 2.1   |  |  |  |  | Third Amended Plan of Reorganization of
    Eagle-Picher Industries, Inc. (EPI)*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 2.2   |  |  |  |  | Exhibits to Third Amended Plan of Reorganization
    of EPI*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | 3.1   |  |  |  |  | Articles of Incorporation of EPI, as amended*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 3.2   |  |  |  |  | Regulations of EPI*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        | 3.3   |  |  |  |  | Amended and Restated Certificate of Incorporation
    of Eagle-Picher Holdings, Inc. (the Company)*                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|        | 3.4   |  |  |  |  | Bylaws of the Company*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        | 3.5   |  |  |  |  | Articles of Incorporation of Daisy Parts, Inc.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 3.6   |  |  |  |  | Bylaws of Daisy Parts, Inc.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | 3.7   |  |  |  |  | Certificate of Incorporation of Eagle-Picher
    Development Company, Inc.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        | 3.8   |  |  |  |  | Bylaws of Eagle-Picher Development Company, Inc.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | 3.9   |  |  |  |  | Certificate of Incorporation of Eagle-Picher Far
    East, Inc.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        | 3.10  |  |  |  |  | Bylaws of Eagle-Picher Far East, Inc.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        | 3.11  |  |  |  |  | Articles of Incorporation of Eagle-Picher Fluid
    Systems, Inc.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 3.12  |  |  |  |  | Bylaws of Eagle-Picher Fluid Systems, Inc.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        | 3.13  |  |  |  |  | Articles of Incorporation of Eagle-Picher
    Minerals, Inc.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 3.14  |  |  |  |  | Bylaws of Eagle-Picher Minerals, Inc.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        | 3.15  |  |  |  |  | Certificate of Formation of Eagle-Picher
    Technologies, LLC*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 3.16  |  |  |  |  | Operating Agreement of Eagle-Picher Technologies,
    LLC*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | 3.16a |  |  |  |  | Amended and Restated Limited Liability Company
    Agreement of Eagle-Picher Technologies, LLC*                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 3.17  |  |  |  |  | Articles of Incorporation of Hillsdale Tool &
    Manufacturing Co.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | 3.18  |  |  |  |  | Bylaws of Hillsdale Tool & Manufacturing Co.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 3.19  |  |  |  |  | Restated Articles of Incorporation of EPMR
    Corporation (f/k/a Michigan Automotive Research Corporation)*                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | 3.20  |  |  |  |  | Bylaws of EPMR Corporation (f/k/a Michigan
    Automotive Research Corporation)*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        | 3.21  |  |  |  |  | Certificate of Amendment of Amended and Restated
    Certificate of Incorporation of the Company filed with the
    Secretary of State of Delaware on August 31, 2001*                                                                                                                                                                                                                                                                                                                                                                                              
|        | 3.22  |  |  |  |  | Amended and Restated Bylaws of Daisy Parts, Inc.
    as of November 16, 2001*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 3.23  |  |  |  |  | Amended and Restated Bylaws of Hillsdale Tool
    & Manufacturing Co. as of November 16, 2001*                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | 3.24  |  |  |  |  | Amendment to the Bylaws of Eagle-Picher Minerals,
    Inc. as of November 16, 2001*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        | 4.1   |  |  |  |  | Indenture, dated as of February 24, 1998,
    between E-P Acquisition, Inc., the Company as a Guarantor, the
    subsidiary guarantors (Daisy Parts, Inc., Eagle-Picher
    Development Company, Inc., Eagle-Picher Far East, Inc.,
    Eagle-Picher Fluid Systems, Inc., Eagle-Picher Minerals, Inc.,
    Eagle-Picher Technologies, LLC, Hillsdale Tool &
    Manufacturing Co., Michigan Automotive Research Corporation
    (together, the Subsidiary Guarantors or the
    Domestic Subsidiaries), and The Bank of New York as
    Trustee (the Trustee)*
|        | 4.2   |  |  |  |  | Cross Reference Table showing the location in the
    Indenture of the provisions of Sections 310 through 318(a),
    inclusive, of the Trust Indenture Act of 1939*                                                                                                                                                                                                                                                                                                                                                                                                
|        | 4.3   |  |  |  |  | First Supplemental Indenture dated as of
    February 24, 1998, between EPI and the Trustee*                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        | 4.4   |  |  |  |  | Form of Global Note (attached as Exhibit A
    to the Indenture filed as Exhibit 4.1)*                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        | 4.5   |  |  |  |  | Certified Copy of the certificate of
    Designations, Preferences and Rights of 11.75% Series A
    Cumulative Redeemable Exchangeable Preferred Stock and 11.75%
    Series B Cumulative Redeemable Exchangeable Preferred Stock
    of the Company*                                                                                                                                                                                                                                                                                                              

92



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##### Table of Contents



|        |       |  |  |   |  |                                                                                                                                                                                                                                                                                                                                      
|------- | ----- |  |  | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |  |  
|Number  |       |  |  |  
|        |       |  |  |  
|        | 4.6   |  |  |  |  | Form of Certificate and Global Share of 11.75%
    Series A Cumulative Redeemable Exchangeable Preferred Stock
    and 11.75% Series B Cumulative Redeemable Exchangeable
    Preferred Stock (attached as Exhibit A to the Certificate
    of Designations filed as Exhibit 4.5)*                                                   
|        | 4.7   |  |  |  |  | Form of Exchange Debentures Indenture relating to
    11.75% Exchange Debentures due 2008 of Registrant*                                                                                                                                                                                                                             
|        | 4.8   |  |  |  |  | Cross Reference Table showing the location in the
    Exchange Debentures Indenture of the provisions of
    Sections 310 through 318(a), inclusive, of the Trust
    Indenture Act of 1939*                                                                                                                                         
|        | 4.9   |  |  |  |  | Form of 11.75% Exchange Debenture due 2008
    (attached as Exhibit A to the Exchange Debentures Indenture
    filed as Exhibit 4.7)*                                                                                                                                                                                                
|        | 9.1   |  |  |  |  | Voting Trust Agreement dated November 16,
    1998, with owners of Class A (Voting) Common Stock of the
    Company*                                                                                                                                                                                                                 
|        | 10.1  |  |  |  |  | Merger Agreement, dated as of December 23,
    1997, among EPI, the Eagle-Picher Industries, Inc. Personal
    Injury Settlement Trust, the Company and E-P Acquisition, Inc.*                                                                                                                                                       
|        | 10.2  |  |  |  |  | Amendment No. 1 to the Merger Agreement,
    dated as of February 23, 1998, among EPI, the Eagle-Picher
    Industries, Inc. Personal Injury Settlement Trust, the Company
    and E-P Acquisition, Inc.*                                                                                                                            
|        | 10.3  |  |  |  |  | Supplemental Executive Retirement Plan of EPI*                                                                                                                                                                                                                                                                                       
|        | 10.4  |  |  |  |  | Notes Purchase Agreement, dated February 19,
    1998, among E-P Acquisition, Inc., EPI, the Company, SBC Warburg
    Dillon Read and ABN AMRO Incorporated*                                                                                                                                                                         
|        | 10.5  |  |  |  |  | Assumption Agreement for the Notes Purchase
    Agreement, dated as of February 24, 1998, between EPI and
    the Subsidiary Guarantors*                                                                                                                                                                                             
|        | 10.6  |  |  |  |  | Registration Rights Agreement, dated as of
    February 24, 1998, between E-P Acquisition, Inc., SBC
    Warburg Dillon Read and ABN AMRO Incorporated*                                                                                                                                                                              
|        | 10.7  |  |  |  |  | Assumption Agreement for the Registration Rights
    Agreement, dated as of February 24, 1998, of EPI*                                                                                                                                                                                                                               
|        | 10.8  |  |  |  |  | Credit Agreement, dated as of February 19,
    1998, among E-P Acquisition, Inc. (merged with and into EPI),
    Various Lenders from time to time party thereto, ABN AMRO Bank
    N.V., as Agent (the Agent), PNC Bank, National
    Association, as Documentation Agent and DLJ Capital Funding,
    Inc., as Syndication Agent*
|        | 10.9  |  |  |  |  | Assumption Agreement dated as of
    February 24, 1998, between EPI and the Agent*                                                                                                                                                                                                                                                   
|        | 10.10 |  |  |  |  | Security Agreement, dated as of February 24,
    1998, among EPI, the Agent and the Domestic Subsidiaries*                                                                                                                                                                                                                           
|        | 10.11 |  |  |  |  | Holdings Pledge Agreement, dated as of
    February 24, 1998, between the Company and the Agent*                                                                                                                                                                                                                                     
|        | 10.12 |  |  |  |  | Borrower and Subsidiary Pledge Agreement, dated
    as of February 24, 1998, among EPI, Eagle-Picher
    Development Company, Eagle-Picher Minerals, Inc. and the Agent*                                                                                                                                                             
|        | 10.13 |  |  |  |  | Holdings Guaranty Agreement, dated as of
    February 24, 1998, by the Company, accepted and agreed by
    the Agent*                                                                                                                                                                                                                
|        | 10.14 |  |  |  |  | Subsidiary Guaranty Agreement, dated as of
    February 24, 1998, by the Domestic Subsidiaries, accepted
    and agreed by the Agent*                                                                                                                                                                                                
|        | 10.15 |  |  |  |  | Trademark Collateral Agreement, dated
    February 24, 1998, between EPI and the Agent*                                                                                                                                                                                                                                              
|        | 10.16 |  |  |  |  | Patent Collateral Agreement, dated
    February 24, 1998, between EPI and the Agent*                                                                                                                                                                                                                                                 
|        | 10.17 |  |  |  |  | Copyright Collateral Agreement, dated
    February 24, 1998, between EPI and the Agent*                                                                                                                                                                                                                                              
|        | 10.18 |  |  |  |  | Subordination Agreement, dated as of
    February 24, 1998, among E-P Acquisition, Inc., EPI and the
    Domestic Subsidiaries*                                                                                                                                                                                                      
|        | 10.19 |  |  |  |  | Management Agreement dated as of
    February 24, 1998, between EPI and Granaria Holdings B.V.*                                                                                                                                                                                                                                      

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|        |       |  |  |   |  |                                                                                                                                                                                                                                                       
|------- | ----- |  |  | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |  |  
|Number  |       |  |  |  
|        |       |  |  |  
|        | 10.20 |  |  |  |  | Eagle-Picher Management Trust made
    February 17, 1998, among Granaria Industries B.V. and
    Thomas E. Petry, Andries Ruijssenaars and Joel Wyler as trustees
    (the E-P Management Trust)*                                                   
|        | 10.21 |  |  |  |  | Incentive Stock Plan of EPI, effective as of
    February 25, 1998*                                                                                                                                                                                   
|        | 10.22 |  |  |  |  | Employment Agreements dated November 29,
    1996, between EPI and each Named Executive Officer as defined in
    EPIs Form S-4 filed in 1998, as amended
    (Messrs. Petry, Ruijssenaars, Hall, Wickens, Curless and
    Ralston)*                 
|        | 10.23 |  |  |  |  | Amendments dated August 5, 1997 to
    Employment Agreements between EPI and each Named Executive
    Officer as defined in EPIs Form S-4*                                                                                                           
|        | 10.24 |  |  |  |  | Sales Incentive Program of EPI*                                                                                                                                                                                                                       
|        | 10.25 |  |  |  |  | Letter Agreements dated August 5, 1997,
    between EPI and each Named Executive Officer as defined in
    EPIs Form S-4 regarding Short Term Sale Program*                                                                                          
|        | 10.26 |  |  |  |  | Letter Agreement dated September 12, 1997,
    between EPI and Carroll D. Curless regarding Sale Incentive
    Bonus*                                                                                                                                 
|        | 10.27 |  |  |  |  | Letter Agreements dated February 18, 1998,
    between EPI and each Named Executive Officer as defined in
    EPIs Form S-4 regarding Short Term Sale Program*                                                                                       
|        | 10.28 |  |  |  |  | Side Letter, dated February 23, 1998,
    regarding Amendments to the Short Term Sale Program*                                                                                                                                                        
|        | 10.29 |  |  |  |  | Preferred Stock Purchase Agreement, dated
    February 19, 1998, between the Company and the initial
    purchasers*                                                                                                                                  
|        | 10.30 |  |  |  |  | Preferred Stock Registration Rights Agreement,
    dated as of February 24, 1998, between the Company and the
    initial purchasers*                                                                                                                 
|        | 10.31 |  |  |  |  | Transfer Agency Agreement, dated as of
    February 24, 1998, between the Company and The Bank of New
    York, as Transfer Agent*                                                                                                                    
|        | 10.32 |  |  |  |  | The Company Incentive Stock Plan for Outside
    Directors effective January 1, 1999*                                                                                                                                                                 
|        | 10.33 |  |  |  |  | Amended and Restated Incentive Stock Plan of EPI*                                                                                                                                                                                                     
|        | 10.34 |  |  |  |  | Second Amended and Restated Incentive Stock Plan
    of EPI*                                                                                                                                                                                          
|        | 10.35 |  |  |  |  | Shareholders Agreement dated October 15,
    1998, among Granaria Holdings B.V., Granaria Industries B.V.,
    the Company, EPI*                                                                                                                      
|        | 10.36 |  |  |  |  | Voting Trust Agreement dated as of
    November 16, 1998, by and among certain shareholders of the
    Company and Granaria Holdings B.V.*                                                                                                            
|        | 10.37 |  |  |  |  | Stock Purchase Agreement dated April 8,
    1999, between Hillsdale Tool & Manufacturing Co.,
    Charterhouse Automotive Group Inc. and the Shareholders of
    Charterhouse Automotive Group, Inc.*                                                 
|        | 10.38 |  |  |  |  | Shareholders Agreement dated April 12, 1999,
    among Granaria Holdings B.V., the Company, EPI, and certain
    shareholders of the Company*                                                                                                         
|        | 10.39 |  |  |  |  | Voting Trust Agreement dated April 13, 1999,
    between certain shareholders of the Company and Granaria
    Holdings B.V. as voting trustee*                                                                                                        
|        | 10.40 |  |  |  |  | Amendment to Credit Agreement and Consent, dated
    as of May 18, 1999, among EPI, the lenders party thereto,
    ABN AMRO Bank N.V., as Agent, PNC Bank, National Association, as
    Documentation Agent, and NBD Bank, N.A., as Syndication Agent*
|        | 10.41 |  |  |  |  | Receivables Loan Agreement dated as of
    May 18, 1999, among Eagle-Picher Acceptance Corporation,
    EPI, ABN AMRO Bank N.V., the Lender Agents, the Related Bank
    Lenders, Amsterdam Funding Corporation and the Other Conduit
    Lenders*    
|        | 10.42 |  |  |  |  | Receivables Purchase Agreement dated as of
    May 18, 1999, between EPI and Eagle-Picher Acceptance
    Corporation*                                                                                                                                 
|        | 10.43 |  |  |  |  | Receivables Purchase Agreement dated as of
    May 18, 1999, between Carpenter Enterprises Limited and
    Eagle-Picher Acceptance Corporation*                                                                                                       

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|        |       |  |  |   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------- | ----- |  |  | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |  |  |  
|Number  |       |  |  |  
|        |       |  |  |  
|        | 10.44 |  |  |  |  | Receivables Purchase Agreement dated as of
    May 18, 1999, between Daisy Parts, Inc. and Eagle-Picher
    Acceptance Corporation*                                                                                                                                                                                                                                                                                                           
|        | 10.45 |  |  |  |  | Receivables Purchase Agreement dated as of
    May 18, 1999, between Eagle-Picher Development Company and
    Eagle-Picher Acceptance Corporation*                                                                                                                                                                                                                                                                                            
|        | 10.46 |  |  |  |  | Receivables Purchase Agreement dated as of
    May 18, 1999, between Eagle-Picher Fluid Systems, Inc. and
    Eagle-Picher Acceptance Corporation*                                                                                                                                                                                                                                                                                            
|        | 10.47 |  |  |  |  | Receivables Purchase Agreement dated as of
    May 18, 1999, between Eagle-Picher Minerals, Inc. and
    Eagle-Picher Acceptance Corporation*                                                                                                                                                                                                                                                                                                 
|        | 10.48 |  |  |  |  | Receivables Purchase Agreement dated as of
    May 18, 1999, between Eagle-Picher Technologies, LLC and
    Eagle-Picher Acceptance Corporation*                                                                                                                                                                                                                                                                                              
|        | 10.49 |  |  |  |  | Receivables Purchase Agreement dated as of
    May 18, 1999, between Hillsdale Tool & Manufacturing
    Co. and Eagle-Picher Acceptance Corporation*                                                                                                                                                                                                                                                                                          
|        | 10.50 |  |  |  |  | Receivables Purchase Agreement dated as of
    May 18, 1999, between Michigan Automotive Research
    Corporation and Eagle-Picher Acceptance Corporation*                                                                                                                                                                                                                                                                                    
|        | 10.51 |  |  |  |  | Share Appreciation Plan of EPI*                                                                                                                                                                                                                                                                                                                                                                                                               
|        | 10.52 |  |  |  |  | Amendment to Credit Agreement and Consent dated
    as of August 1, 2000, among EPI, the lenders party thereto,
    ABN AMRO Bank N.V. as Agent, PNC Bank, National Association as
    Documentation Agent, and Bank One, Indiana, N.A. as Syndication
    Agent.*                                                                                                                                                                            
|        | 10.53 |  |  |  |  | Resignation, Release and Severance Pay Agreement
    dated May 31, 2000 between EPI and Wayne R. Wickens*                                                                                                                                                                                                                                                                                                                                     
|        | 10.54 |  |  |  |  | Executive Employment Agreement dated
    November 7, 2000 between EPI and Andries Ruijssenaars*                                                                                                                                                                                                                                                                                                                                               
|        | 10.55 |  |  |  |  | Supplemental Executive Retirement Plan (as
    amended and restated effective March 27, 2001).*                                                                                                                                                                                                                                                                                                                                               
|        | 10.56 |  |  |  |  | Fourth Amendment to Credit Agreement and Consent
    dated as of May 31, 2001, among the Company, the lenders
    party hereto, ABN AMRO Bank N.V., as Agent, PNC Bank, National
    Association, as Documentation Agent and NBD Bank, N.A., as
    Syndication Agent.*                                                                                                                                                                       
|        | 10.57 |  |  |  |  | Fifth Amendment to Receivables Loan Agreement
    dated as of June 29, 2001 among the Company, EPAC,
    Amsterdam Funding Corporation, as a Conduit Lender and as the
    administrative agent for the Lenders, ABN AMRO Bank N.V., as the
    Amsterdam Lender Agent, Market Street Funding Corporation, as a
    Conduit Lender, PNC Bank, National Association, as the Market
    Lender Agent and the Related Bank Lenders party hereto.*
|        | 10.58 |  |  |  |  | Resignation Agreement effective July 6, 2001
    between EPI and Michael E. Aslanian.*                                                                                                                                                                                                                                                                                                                                                        
|        | 10.59 |  |  |  |  | Executive Employment Agreement effective
    July 15, 2001 between EPI and John H. Weber.*                                                                                                                                                                                                                                                                                                                                                    
|        | 10.60 |  |  |  |  | Separation Agreement effective November 1,
    2001 between EPI and Philip F. Schultz*                                                                                                                                                                                                                                                                                                                                                        
|        | 10.61 |  |  |  |  | Supplemental Indenture among EPI, the Guarantors
    (Daisy Parts, Inc., Eagle-Picher Development Company, Inc.,
    Eagle-Picher Holdings, Inc., Eagle-Picher Far East, Inc.,
    Eagle-Picher Minerals, Inc., Eagle-Picher Technologies, LLC,
    Hillsdale Tool & Manufacturing Co., EPMR Corporation and
    Carpenter Enterprises Limited) and The Bank of New York, as
    Trustee, dated December 14, 2001*                            
|        | 10.62 |  |  |  |  | Receivables Sales Agreement dated January 8,
    2002 by and among Eagle-Picher Funding Corporation and each of
    the Originators defined therein which include EPI,
    Carpenter Enterprises Limited, Daisy Parts, Inc., Eagle-Picher
    Minerals, Inc., Eagle-Picher Technologies, LLC, and Hillsdale
    Tool & Manufacturing Co.*                                                                                                   
|        | 10.63 |  |  |  |  | Receivables Sales and Servicing Agreement dated
    January 8, 2002 by and among Eagle-Picher Funding
    Corporation, Redwood Receivables Corporation, Eagle-Picher
    Industries, Inc. and General Electric Capital Corporation*                                                                                                                                                                                                           

95



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##### Table of Contents



|                                   |       |  |  |   |  |                                                                                                                                                                            
|---------------------------------- | ----- |  |  | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit                            |       |  |  |  
|Number                             |       |  |  |  
|                                   |       |  |  |  
|                                   | 10.64 |  |  |  |  | Annex X to Receivables Sales Agreement at
    Exhibit 10.62 and to Receivables Purchase and Servicing
    Agreement at Exhibit 10.63Definitions and
    Interpretations*
|                                   | 10.65 |  |  |  |  | Asset Purchase Agreement, dated December 18,
    2001, between Eagle-Picher Industries, Inc. and Construction
    Equipment Direct, Inc.*                                  
|                                   | 12.1  |  |  |  |  | Ratio of Earnings to Fixed Charges and Preferred
    Stock Dividends                                                                                                       
|                                   | 18.0  |  |  |  |  | Letter Regarding Change in Accounting Principle                                                                                                                            
|                                   | 21.1  |  |  |  |  | Subsidiaries of EPI                                                                                                                                                        
|24(a),(b),(c)  Powers of Attorney



---



|  |                                              
|- | ---------------------------------------------
|* | Incorporated by reference. See Item 15 above.

96