<PAGE>   1
 
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                      ------------------------------------
 
                                   Form 10-K
                Annual Report Pursuant to Section 13 or 15(d) of
                      the Securities Exchange Act of 1934
 
                  For the fiscal year ended November 30, 1998
 
   
                        Commission file number 333-49957
    
                      ------------------------------------
   
                         EAGLE-PICHER INDUSTRIES, INC.
    
 
   
                              An Ohio Corporation
    
 
                         I.R.S. Employer Identification
   
                                 NO. 31-0268670
    
                      ------------------------------------
 
    250 EAST FIFTH STREET, SUITE 500, P. O. BOX 779, CINCINNATI, OHIO 45201
 
              Registrant's telephone number, including area code:
                                  513-721-7010
                      ------------------------------------
 
     Securities registered pursuant to Section 12(b) of the Act: None
 
     Securities registered pursuant to Section 12(g) of the Act: None
 
     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
 
Yes [X]  No [ ]
 
     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
 
     No voting stock is held by non-affiliates of the registrant.
 
   
     Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
    
 
   
Yes [X]  No [ ]
    
 
   
     100 shares of common capital stock, no par value, were outstanding at
February 24, 1999.
    
<PAGE>   2
 
                        TABLE OF ADDITIONAL REGISTRANTS
 
<TABLE>
<CAPTION>
                                                     JURISDICTION       COMMISSION      IRS EMPLOYER
                                                   OF INCORPORATION        FILE        IDENTIFICATION
                      NAME                         OR ORGANIZATION        NUMBER           NUMBER
                      ----                         ----------------    ------------    --------------
<S>                                                <C>                 <C>             <C>
Eagle-Picher Holdings, Inc.......................      Delaware        333-49957-01      13-3989553
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 Fluid Systems, Inc..................      Michigan        333-49957-05      31-1452637
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
Michigan Automotive Research Corp................      Michigan        333-49957-08      38-2185909
</TABLE>
 
   
\
    
<PAGE>   3
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
ITEM                                                                PAGE
----                                                                ----
<C>   <S>                                                           <C>
                                 PART I
  1.  Business....................................................    3
  2.  Properties..................................................    8
  3.  Legal Proceedings...........................................    9
  4.  Submission of Matters to a Vote of Security Holders.........   14
 
                                PART II
  5.  Market for the Registrant's Common Equity and Related
      Stockholder Matters.........................................   14
  6.  Selected Financial Data.....................................   14
  7.  Management's Discussion and Analysis of Financial Condition
      and Results of Operations...................................   15
 7a.  Quantitative and Qualitative Disclosures About Market
      Risk........................................................   24
  8.  Financial Statements and Supplementary Data.................   26
  9.  Changes In and Disagreements with Accountants on Accounting
      and Financial Disclosure....................................   67
 
                                PART III
 10.  Directors and Executive Officers of the Registrant..........   67
 11.  Executive Compensation......................................   69
 12.  Security Ownership of Certain Beneficial Owners and
      Management..................................................   76
 13.  Certain Relationships and Related Transactions..............   77
 
                                PART IV
 14.  Exhibits, Financial Statement Schedules, and Reports on Form
      8-K.........................................................   78
      Signatures..................................................
      Exhibit Index...............................................
</TABLE>
<PAGE>   4
 
                                     PART I
 
ITEM 1. BUSINESS.
 
  General Development of Business
 
     Eagle-Picher Industries, Inc. ("Company"), a diversified manufacturing,
mining and technology company, was incorporated in 1867 under the laws of the
State of Ohio as an outgrowth of a business enterprise founded in Cincinnati,
Ohio in 1843. The Company was acquired by Eagle-Picher Holdings, Inc.
("Parent"), a majority-owned subsidiary of Granaria Industries B.V., on February
24, 1998 from the Eagle-Picher Industries, Inc. Personal Injury Settlement Trust
("PI Trust") ("Acquisition") for $702.5 million.
 
     On November 18, 1996, the U.S. Bankruptcy Court together with the U.S.
District Court for the Southern District of Ohio issued an order confirming the
Third Amended Plan of Reorganization ("Plan") of the Company and seven of its
domestic subsidiaries, which became effective November 29, 1996. The Company had
filed for protection under chapter 11 of the U.S. Bankruptcy Code in 1991 as a
consequence of a cash shortfall resulting from the Company's inability to
satisfy certain immediate asbestos litigation liabilities. The order confirming
the Plan contains a permanent injunction which precludes holders of present and
future asbestos or lead-related personal injury claims from pursuing their
claims against the reorganized Company and the Company has no further liability
in connection with such claims. Those claims will be channeled to the PI Trust,
which is an independently administered qualified settlement trust which was
established to resolve and satisfy those claims. Under the terms of the Plan,
all of the then outstanding common stock of the Company was canceled and all of
the newly issued common stock of the reorganized Company was contributed to the
PI Trust, together with certain notes and cash.
 
     The Company conducts its business through both unincorporated divisions and
separately incorporated subsidiaries, both of which are referred to herein as
divisions.
 
  Financial Information About Industry Segments.
 
     The Company's major industry segments are:
 
          1. Automotive;
          2. Machinery; and
          3. Industrial.
 
     Industry Segment Data is included in Item 8 below, the Company's
Consolidated Financial Statements for the nine months ended November 30, 1998,
the three months ended February 28, 1998 and the years ended November 20, 1997
and 1996. (See Note Q.)
 
  Narrative Description of Business
 
THE AUTOMOTIVE GROUP
 
     The Automotive Group is primarily engaged in the production and sale of
mechanical parts for passenger cars, trucks, vans and sport utility vehicles
primarily to the major automotive manufacturers and their suppliers in North
America, Europe and Asia. The Automotive Group is composed of the following
product groups: Precision Machined Components, Rubber Coated Metal Products and
Other Automotive Products and Services which consists of Fluid Systems Products,
Molded Rubber Products, Aluminum Casting Products and Automotive Services.
 
                                        3
<PAGE>   5
 
     The following table sets forth the percentage of the Company's revenue
contributed by each product line:
 
<TABLE>
<CAPTION>
                                                              1998    1997    1996
                                                              ----    ----    ----
<S>                                                           <C>     <C>     <C>
Precision Machined Components...............................  28.2%   22.7%   20.4%
Rubber Coated Metal Products................................   9.2     8.9     9.4
Other Automotive Products and Services......................  10.6     8.9     8.0
Divested Automotive Products................................   3.0     7.6    11.5
                                                              ----    ----    ----
          Total.............................................  51.0%   48.1%   49.3%
                                                              ====    ====    ====
</TABLE>
 
     Precision Machined Components. The Hillsdale Tool Division specializes in
the design, manufacture and distribution of precision-machined aluminum and
steel parts. Typical machined parts would include transmission pump assemblies,
vibration dampening devices and a variety of other precision machined castings
and forgings which are designed and engineered for engine, transmission and
driveline applications. These parts are also produced in Mexico and the United
Kingdom. The market for precision machined components tends to have a few strong
and well-positioned competitors, including the original equipment manufacturers
("OEM's") themselves. The Automotive Group competes in this market primarily on
the basis of price, delivery, quality and service.
 
     Rubber Coated Metal Products. The Wolverine Gasket Division coats steel and
aluminum with elastomeric compounds and produces materials that are particularly
suitable for high compression and high temperature applications. These materials
are typically used in sealing and insulating products such as compressor gaskets
for air conditioning units, brake noise insulators and powertrain applications
such as head gaskets. Many of these parts are also manufactured in Germany. The
market for rubber coated metal products is highly fragmented. While the
Automotive Group competes against a variety of different companies in the
geographical areas it supplies, it has no primary competitor in this market.
 
     Other Automotive Products and Services. The Fluid Systems Divisions,
located both in the United States and the United Kingdom, employ the elastomeric
extrusion process to produce multi-layered tubing and hose assemblies for fuel,
emission, brake, clutch and suspension systems. The Company is developing new
products to meet new environmental fuel, fluid and emission requirements.
Customers include some of the world's major OEM's and Tier I suppliers.
 
     The Rubber Molding Division manufactures small precision injection molded
rubber parts used in sealing shock absorbing and noise reduction applications.
Similar parts are manufactured at a plant in Spain. Although the Company is one
of the top three suppliers for many of the seals it produces, the market for
these products is highly fragmented. In niche markets in which the Company
competes, it competes primarily on the basis of quality and cost.
 
     The Ross Aluminum Foundries Division produces aluminum turbocharger
components, primarily for diesel engines, and other engine and specialty
automotive components. The Company believes it is a relatively small participant
in the market for automotive castings in aluminum.
 
     The Michigan Automotive Research Corporation offers vehicle and vehicle
system manufacturers a comprehensive range of testing programs for engines,
power trains and power train components. Its customers include the OEM's, their
suppliers and manufacturers of other types of vehicles.
 
     The Automotive Group distributes its products primarily through internal
sales personnel. The Group also has sales and engineering offices in Japan and
Europe to serve those markets. Generally, competitive conditions for this Group
are characterized by a decreasing amount of competitors, an increasing amount of
foreign competition, an increased emphasis on quality and intense pricing
pressures from major customers.
 
     Consolidated sales to the Ford Motor Company amounted to $121.0 million in
the nine months ended November 30, 1998, $39.8 million in the three months ended
February 28, 1998, $170.5 million in 1997 and $167.7 million in 1996. No other
customer in the Automotive Group or any other Group accounted for 10% or more of
consolidated net sales.
 
                                        4
<PAGE>   6
 
THE MACHINERY GROUP
 
     The Machinery Group is involved in manufacturing products for various
industrial markets. Its products can be segregated into three product lines:
Special Purpose Batteries, Construction Equipment and Other Machinery Products.
The following table sets forth the percentage of the Company's total net sales
contributed by each product line:
 
<TABLE>
<CAPTION>
                                                              1998    1997    1996
                                                              ----    ----    ----
<S>                                                           <C>     <C>     <C>
Special Purpose Batteries...................................  15.0%   14.4%   12.2%
Construction Equipment......................................  12.8    10.7    10.7
Other Machinery Products....................................   3.4     3.3     4.0
Divested Machinery Products.................................    --     1.4     2.0
                                                              ----    ----    ----
          Total.............................................  31.2%   29.8%   28.9%
                                                              ====    ====    ====
</TABLE>
 
     Special Purpose Batteries. The Machinery Group designs, manufactures and
tests special purpose batteries for advanced value-added products for
telecommunications, aerospace and defense applications, such as satellites,
launch vehicles and missiles. Major customers for these batteries include the
U.S. Government, satellite builders and aircraft manufacturers. The Company is a
recognized leader in this business. It bids competitively for numerous fixed
price government contracts for special purpose batteries and competes primarily
on the basis of quality, performance and cost. It has a few competitors for some
highly technological products, but many large and small competitors for its
other products such as lead-acid batteries, which are used in toys and emergency
lighting systems.
 
     Construction Equipment. The Construction Equipment Division manufactures
primarily three construction equipment products: wheel tractor scrapers,
heavy-duty industrial forklift trucks and component parts for construction
machinery. The Company is the exclusive source of certain models of wheel
tractor scrapers to Caterpillar, Inc. The Company sells its own branded line of
heavy-duty industrial forklift trucks, which are primarily sold to independent
rental fleets and also to paper and automotive manufacturers. The industrial
forklift market is highly fragmented, however, the Company participates in niche
markets, such as the rough terrain market, where it enjoys significant market
share.
 
     Other Machinery Products. The Cincinnati Industrial Machinery Division
produces high-volume metal cleaning and finishing systems for industrial
applications, including specialized high-volume can washing and coating
machinery for the manufacturers of two-piece cans for the food and beverage
industry. Other products produced by this Group include complex aluminum
castings.
 
THE INDUSTRIAL GROUP
 
     The Industrial Group produces a variety of products for industrial markets,
principally manufacturers of consumer products. It is composed of Specialty
Materials and Other Industrial Products. The following table sets forth the
percentage of the Company's total net sales contributed by each product line:
 
<TABLE>
<CAPTION>
                                                              1998    1997    1996
                                                              ----    ----    ----
<S>                                                           <C>     <C>     <C>
Specialty Materials.........................................   9.5%   11.3%    9.9%
Other Industrial Products...................................   8.3     7.5     7.5
Divested Industrial Products................................    --     3.3     4.4
                                                              ----    ----    ----
          Total.............................................  17.8%   22.1%   21.8%
                                                              ====    ====    ====
</TABLE>
 
     Specialty Materials. The Company manufactures and tests high-purity
specialty material compounds for a wide range of services and products. The
Company is a major source for high purity isotopically enriched boron compounds
used in nuclear applications. The boron isotope produced by the Company is a
material that absorbs neutrons and is used as a moderator in nuclear reactors.
There are few competitors in this market, but there is competition from products
made from alternate materials. This Division also refines rare metals, such as
high purity germanium compounds. Germanium is used in satellite applications
such as substrates for solar cells which are used to power satellites. The major
customers for germanium products include satellite builders and other
 
                                        5
<PAGE>   7
 
aerospace companies. The Industrial Group also manufactures bulk pharmaceutical
products and industrial chemicals, and produces a wide range of super-clean
containers, which meet strict EPA protocols, for environmental sampling.
 
     Other Industrial Products. The Minerals Division mines and refines
diatomaceous earth products and perlite filter aid products, which are used in
high purity filtration applications primarily by the food and beverage industry
and as industrial absorbents. The Minerals Division is second to the Allegheny
Corporation in the sale of certain filter aid products that are sold both
directly and through distributors to many large and small customers. In the
North American market for industrial absorbents, the Company has a variety of
competitors due to a number of other materials, such as clay, which are also
being used for this purpose. The Industrial Group also manufactures injection
molded rubber parts used in plumbing and packaging applications.
 
DIVESTED DIVISIONS
 
     During the fiscal year ended November 30, 1997, the Company sold a number
of divisions to fund repayment of notes issued during the reorganization
process. These divisions were the Plastics Division, Fabricon Products Division
and the Transicoil Division. The Company received net cash proceeds of $39.0
million and the aggregate loss on these transactions was $2.4 million. In June
1997, the assets of the former Suspension Systems Division were contributed to a
joint venture ("E-P-Boge") with Fichtel & Sachs Industries, Inc. ("F & S"). The
Company maintained a 45% interest in E-P-Boge, however F & S exercised its
option to purchase the Company's interest in E-P-Boge in November 1998 for $5.0
million. At the same time, the Company's $2.8 million note from E-P-Boge was
repaid. The Company sold its Trim Division as of October 31, 1998 for $14.5
million, however the transaction was held in escrow until certain conditions
were met in December 1998.
 
OTHER INFORMATION
 
     Raw Materials. The prices of raw materials are subject to volatility. The
Company's principal raw materials are rubber, steel, zinc, nickel, germanium,
boron and aluminum. These raw materials are commodities that are widely
available. Although the Company has alternate sources for most of its raw
materials, the Company's policy is to establish arrangements with select
vendors, based upon price, quality and delivery terms. By limiting the number of
its suppliers, the Company believes that it obtains materials of consistently
high quality at favorable prices.
 
     Intellectual Property. The Company holds more than 50 patents, primarily in
the United States. Many of the Company's 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. Accordingly, no one patent or group of related
patents is material to the Company's business. The Company also has numerous
trademarks, including the Eagle-Picher name, and considers the Eagle-Picher name
to be material to its business.
 
     Backlog. At November 30, 1998 and 1997, the Company's order backlog was
approximately $200.0 million and $250.0 million, respectively. The decline in
backlog is due primarily to a decline in demand for special purpose batteries
and semiconductor materials due to the completion of a major satellite project.
The Company expects the order backlog outstanding at November 30, 1998 to be
filled within the 1999 fiscal year. As is customary in the automotive industry,
the Company enters into blanket purchase orders with its customers with respect
to specific product orders. From time to time, the customer, depending on its
needs, will provide the Company with releases on a blanket purchase order for a
specified amount of products. As a result, the backlog for the Automotive Group
is not significant.
 
     Government Contracts. The Company's Industrial and Machinery Groups have
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, the Company is entitled to be
reimbursed for allowable costs and profits to the date of the termination
relating to authorized work performed to such date. U.S. Government contracts
are also subject to reduction or modification in the event of changes in
Government requirements or budgetary constraints.
 
                                        6
<PAGE>   8
 
     Research and Development. The Company spent approximately $14.1 million on
research and development activities, primarily for the development of new
products or the improvement of existing products in 1998. Comparable costs were
$14.8 million in 1997 and $18.0 million in 1996. Amounts have declined due to
the divestiture of divisions in 1997.
 
     Environmental Regulatory Compliance. The Company had capital expenditures
of $.8 million and operating expenses (excluding depreciation) of approximately
$9.8 million in the year ended November 30, 1998 for environmental matters. The
Company estimates that its capital expenditures and operating expenses,
including expenses for remedial activities, will be approximately $1.5 million
and $13.3 million, respectively, in 1999. As of November 30, 1998, the Company
has reserved $9.5 million in connection with environmental matters, and believes
such reserves to be adequate under the circumstances. See Item 3.(c) for
information with respect to various other environmental proceedings.
 
     Employees. As of November 30, 1998, the Company employed approximately
6,600 persons in its operations, of whom approximately 1,650 were salaried
employees and 4,950 were hourly employees. Approximately 18% of the Company's
hourly employees are represented by one of six labor organizations. The Company
believes that its relations with its employees are generally good.
 
  Financial Information about Foreign and Domestic Operations and Export Sales
 
     Financial information about Foreign and Domestic Operations and Export
Sales is included in Item 8 below, the Company's Consolidated Financial
Statements for the nine months ended November 30, 1998, the three months ended
February 28, 1998 and the years ended November 30, 1997 and 1996. (See Note Q.)
 
                                        7
<PAGE>   9
 
ITEM 2. PROPERTIES.
 
     The principal fixed assets of the Company consist of its manufacturing,
processing and storage facilities and its transportation and plant vehicles.
Substantially all of the Company's owned properties and assets are pledged as
collateral under its syndicated senior loan facility. The following sets forth
selected information regarding the Company's active manufacturing and processing
facilities:
 
<TABLE>
<CAPTION>
                                                                                     DESCRIPTION OF
    BUSINESS GROUP                              LOCATION                            PROPERTY INTEREST
    --------------                              --------                            -----------------
<S>                     <C>                                                         <C>
AUTOMOTIVE
  Domestic              Ann Arbor, Michigan                                         owned
                        Blacksburg, Virginia (2 plant locations)                    owned
                        Brighton, Michigan                                          leased
                        Hillsdale, Michigan (4 plant locations)                     owned
                        Hamilton, Indiana                                           owned
                        Inkster, Michigan                                           owned
                        Jonesville, Michigan                                        owned
                        Leesburg, Florida                                           owned
                        Manchester, Tennessee                                       leased(1)
                        Norwich, Connecticut                                        owned
                        Pine Bluff, Arkansas                                        leased
                        Sidney, Ohio (2 plant locations)                            owned
                        Stratford, Connecticut                                      owned
                        Vassar, Michigan                                            leased
  International         Market Harborough, England                                  owned
                        Ohringen, Germany                                           owned
                        San Luis Potosi, Mexico                                     owned
                        Soria, Spain                                                owned
                        Tamworth, England                                           owned
MACHINERY
  Domestic              Colorado Springs, Colorado (2 plant locations)              owned & leased
                        Grove, Oklahoma                                             owned
                        Joplin, Missouri (5 plant locations)                        owned & leased
                        Lubbock, Texas                                              owned
                        Seneca, Missouri                                            owned
                        Sharonville, Ohio                                           owned
                        Stella, Missouri                                            owned
  International         Acuna, Coahuila, Mexico                                     owned
INDUSTRIAL(2)
  Domestic              Clark Station, Nevada                                       owned
                        Galena, Kansas                                              owned
                        Harrisonville, Missouri                                     owned
                        Joplin, Missouri                                            owned
                        Lenexa, Kansas                                              owned
                        Lovelock, Nevada                                            owned
                        Miami, Oklahoma (3 plant locations)                         owned & leased
                        Quawpaw, Oklahoma (2 plant locations)                       owned
                        Vale, Oregon                                                leased(1)
</TABLE>
 
---------------
 
(1) The Company will become owner of each property upon payment in full of all
    existing industrial revenue bond obligations in connection with such
    property.
 
(2) In addition to the facilities listed, the Company's Minerals Division has
    mining locations and numerous claims in Nevada, Oregon and California.
 
                                        8
<PAGE>   10
 
     The Company owns or leases additional office space, including its corporate
headquarters in Cincinnati, Ohio and sales offices in Europe and Asia, and
warehouse space for certain of its operations. The Company's properties are
adequate and suitable for its business and generally have capacity for expansion
of existing buildings on owned real estate. Substantially all of its buildings
have been well maintained and are in sound operating condition and regular use.
 
     Mining. The Industrial Group's Minerals Division owns and leases
diatomaceous earth and perlite mining locations as well as numerous claims in
Nevada, Oregon and California ("mining properties"). Not all of the mining
properties are currently being mined. The Company continually evaluates
potential mining properties, and additional mining properties may be acquired in
the future. The Minerals Division extracts diatomaceous earth and perlite
through open-pit mining using bulldozers and wheel tractor scrapers. The
extracted materials are transported by truck to separate processing facilities.
As ore deposits are depleted, the Company reclaims the land in accordance with
reclamation plans approved by the relevant federal, state and local regulators.
 
     A total of approximately 321,000 tons of materials were extracted from the
Company's active mining properties in fiscal year 1998. The Company believes its
diatomaceous earth reserves to range from 15 to 75 years and its perlite
reserves to be in excess of 50 years at the current levels of extraction based
on estimates prepared by its mining and exploration personnel.
 
ITEM 3. LEGAL PROCEEDINGS.
 
  (A) Chapter 11 Proceedings.
 
   
     On January 7, 1991 ("Petition Date"), the Company and seven of its domestic
subsidiaries each filed a voluntary petition for relief under chapter 11 of the
United States Bankruptcy Code in the United States Bankruptcy Court for the
Southern District of Ohio, Western Division, in Cincinnati, Ohio ("Bankruptcy
Court"). The subsidiaries that filed chapter 11 petitions are Daisy Parts, Inc.,
Transicoil Inc., Michigan Automotive Research Corporation ("MARCO"), EDI, Inc.,
Eagle-Picher Minerals, Inc., Eagle-Picher Europe, Inc., and Hillsdale Tool &
Manufacturing Co. On November 30, 1991, substantially all of the assets of EDI,
Inc. were sold pursuant to authority granted by the Bankruptcy Court. In August
1997, all of the Company's shares of Transicoil Inc. were sold. All of the
chapter 11 cases were consolidated for procedural purposes only under the
caption: "In re Eagle-Picher Industries, Inc., et al.," Consolidated Case No.
1-91-00100, before the Honorable Burton Perlman, United States Bankruptcy Judge.
    
 
   
     In August 1996, the Company, together with the Injury Claimants' Committee
and the Representative for Future Claimants who was appointed by the Bankruptcy
Court, proposed the Plan. The Bankruptcy Court and the United States District
Court for the Southern District of Ohio (the "Ohio District Court") jointly
issued an order (the "Order") confirming the Plan on November 18, 1996 (the
"Confirmation Date"). The Plan became effective and was consummated on November
29, 1996 (the "Consummation Date"). The major component of the Plan was a
settlement of the Company's liability for present and future asbestos-related
and lead-related personal injury claims arising out of business operations prior
to the Petition Date. Under the Plan, it was agreed that these claims had a
total value of $2 billion. Pursuant to the Plan, (i) the PI Trust was
established and the Company contributed assets to the PI Trust valued at
approximately $730 million in the aggregate (representing an approximately 37%
distribution upon the $2 billion allowed claim of the asbestos and lead
claimants, as unsecured creditors), consisting of $51.3 million in cash, $250
million in the 10% Debentures, $69.1 million in Tax Refund Notes, $18.1 million
in Divestiture Notes and 10,000,000 shares of Common Stock (representing all
outstanding shares of Common Stock), and (ii) a trust for the benefit of
property damage claimants ("PD Trust") is to be established with $3 million in
cash, an obligation of the Company which has been fully funded and is set aside
pending establishment of the PD Trust.
    
 
   
     Pursuant to the Plan, the asbestos-related and lead-related claims were
discharged and the Company has no further liability in connection with such
claims. As a result, the Company was relieved of the burden of defending more
than 150,000 asbestos-related, as well as any lead-related, claims that had
been, as well as any such claims that may in the future be, filed against the
Company. In addition, the Order includes an injunction (the "Injunction"), which
prohibits claimants with asbestos-related or lead-related claims from bringing
actions against the Company, and instead requires these claimants to assert such
claims only against the PI Trust or, as to
    
                                        9
<PAGE>   11
 
   
asbestos-related property damage claims, against the PD Trust, each of which
was, or in the case of the PD Trust, will be, funded by the Company pursuant to
the Plan. Under the Plan, the PI Trust assumed all liability and responsibility
for asbestos-related and lead-related personal injury claims against the
Company, and the PD Trust will assume all liability and responsibility for
asbestos-related property damage claims. The Company believes that the Plan, the
Injunction and the Bankruptcy Code together will enjoin any claims against the
Company with respect to any past, present, or future asbestos-related or
lead-related liabilities arising from or based upon business operations prior to
the petition date.
    
 
   
     Following confirmation of the Plan, notices of appeal of the Order were
filed by one general unsecured creditor (the "Creditor Appellant") and the
Unofficial Committee of Co-Defendants (the "Co-Defendants"), a group of former
manufacturers and distributors of asbestos-containing products that have been
named as co-defendants with the Company in asbestos personal injury lawsuits and
have asserted claims against the Company for contribution, indemnity and
subrogation. The allowance of contribution claims against the Company is subject
to Section 502(e) of the Bankruptcy Code which states that a claim for
contribution asserted by an entity that is liable with a chapter 11 debtor shall
be disallowed to the extent such contribution claim is contingent as of the time
of allowance or disallowance of such claim. Neither the Creditor Appellant nor
the Co-Defendants requested that the Order be stayed pending appeal. The
Creditor Appellant withdrew its notice of appeal by a stipulation dated January
24, 1997.
    
 
   
     The Co-Defendants appealed the Order directly to the United States Circuit
Court of Appeals for the Sixth Circuit (the "Sixth Circuit") (the "Confirmation
Order Appeal"), raising a variety of objections to the Plan and to the Trust's
procedures for processing, allowing and paying the Co-Defendants' claims. The
Co-Defendants also asserted, among other things, that Section 524(g) of the
Bankruptcy Code, which authorizes courts to issue injunctions to channel
asbestos claims away from a reorganized company to a personal injury trust
established by such company, is unconstitutional. The Sixth Circuit, in a
decision and order issued December 21, 1998, affirmed the Order and dismissed
the subject appeal as moot. Although the Co-Defendants could seek a review of
the Sixth Circuit decision by the United States Supreme Court, the Company
believes the likelihood of such an appeal is remote. As a result, the Order is
expected to be final and nonappealable as of March 23, 1999.
    
 
     The Bankruptcy Court and the Ohio District Court entered the Injunction
pursuant to Section 524(g) of the Bankruptcy Code. Section 524(g) of the
Bankruptcy Code was enacted by Congress in 1994 to provide a statutory
safe-harbor for asbestos manufacturing companies faced with numerous
asbestos-related personal injury claims. Section 524(g) grants bankruptcy courts
express statutory authority to issue injunctions that prohibit present and
future asbestos claimants from suing a reorganized debtor; provided that a trust
is established and funded to pay asbestos-related claims through procedures that
reasonably assure that claimants with similar injuries will receive similar
payments and other specific statutory requirements are satisfied.
 
     Under Section 524(g), if the injunction is issued or affirmed by a district
court with jurisdiction over the reorganization, the injunction will be
permanent and not subject to modification by any court once the injunction
becomes final and nonappealable. In confirming the Plan and issuing the
Injunction, the Bankruptcy Court and the Ohio District Court determined that the
PI Trust and the PD Trust each satisfied the requirements of Section 524(g) and
that they had jurisdiction to issue the Injunction under both Section 524(g) of
the Bankruptcy Code and their more general powers under the Bankruptcy Code to
issue orders that are necessary or appropriate in bankruptcy cases.
 
   
     While Section 524(g) specifically addresses trusts created to resolve
asbestos-related litigation and injunctions issued in connection therewith, it
does not specifically address whether an injunction directing claims to a trust
that will pay both asbestos-related and non-asbestos-related claims, as in this
case, is protected under Section 524(g). While there is a theoretical
possibility that the Injunction would not apply to future lead-related claimants
because lead-related claims are not addressed in Section 524(g), the Company
believes that the Injunction would be upheld and enforced against lead-related
claimants if challenged. That belief is based on the fact that the Bankruptcy
Court and Ohio District Court, in confirming the Plan and entering the
Injunction, specifically ruled that Section 524(g) does not prohibit channeling
of non-asbestos related claims along with asbestos-related claims. In the event
that Section 524(g) does not operate to protect the Injunction's channeling of
lead-related claims, such channeling could be upheld as a necessary or
appropriate order under Section 105(a) of
    
 
                                       10
<PAGE>   12
 
the Bankruptcy Code. Although the filing of future lead-related lawsuits cannot
be predicted, the Company believes that this risk is limited because to date,
only approximately 125 lead-related claims have been asserted against the
Company (as compared to the tens of thousands of asbestos-related claims
asserted against the Company).
 
     On and shortly after the Consummation Date, the Company made distributions
(the "Initial Distribution") under the Plan totaling approximately $800 million
in cash, common stock and debt securities (including the approximately $730
million contributed to the PI Trust, $3.0 million set aside for the PD Trust and
the remainder in connection with various other allowed claims including the
environmental claims described below). Final distributions under the Plan will
not be made until all remaining unresolved claims (other than asbestos-related
and lead-related claims) are resolved (the "Final Distribution"). Two claims
asserted during the chapter 11 proceeding remain unresolved, an environmental
claim and a product liability claim. As of November 30, 1998, the Company
recorded a reserve on the Company's balance sheet in the amount of approximately
$11.1 million for the Final Distribution (the "Final Distribution Reserve").
Although there can be no assurance as to the amount required to resolve the
remaining claims, the Company expects those claims, together with any other
claims not paid in the Initial Distribution, to be resolved, exclusive of
administrative expenses, for an amount not in excess of the Final Distribution
Reserve.
 
   
     Although a bankruptcy plan of reorganization generally serves to resolve
all claims that arose prior to the chapter 11 proceedings, courts in a number of
cases have limited the types of environmental obligations that can be discharged
by bankruptcy (concluding, for example, that an order to conduct an
environmental clean-up of a site may not be a "claim" or that an environmental
claim did not "arise" before the bankruptcy). The Company has entered into the
Environmental Settlement, discussed below, which is intended to relieve the
Company of the burden of defending against certain claims asserted under
Environmental Laws relating to conditions occurring prior to the date of the
bankruptcy petition. The Environmental Settlement also governs certain
environmentally related claims that have been or may yet be asserted against the
Company after the Consummation Date relating to conditions occurring prior to
the date of the bankruptcy petition. See " -- Environmental Matters."
Nevertheless, due to the limitations on the types of environmental obligations
that can be discharged by bankruptcy, the Company may have obligations relating
to historical noncompliance with environmental laws with respect to sites owned
by the Company as of the Confirmation Date that were not asserted in the chapter
11 proceedings. See " -- Environmental Matters."
    
 
  (B) Other.
 
   
     On January 25, 1996, Richard Darrell Peoples, a former employee of the
Company, filed a Qui Tam suit under seal in the United States District Court for
the Western District of Missouri (the "Missouri Court"). A Qui Tam suit is a
lawsuit brought by a private individual pursuant to federal statute, allegedly
on behalf of the U.S. Government. The U.S. Government, which has the ability to
intervene in, and take control of, a Qui Tam suit, has declined the opportunity
to intervene or take control of this Qui Tam suit. The Company became aware of
the suit on October 20, 1997, when it was served on the Company, after it had
been unsealed. The suit involves allegations of irregularities in accounting,
manufacturing and testing procedures in connection with certain U.S. Government
contracts. The allegations are similar to allegations made by the former
employee, and investigated by outside counsel for the Company, prior to the
filing of the Qui Tam suit. Outside counsel's investigation found no evidence to
support any of the employee's allegations, except for some inconsequential
expense account matters. The Company, which believes that the U.S. Government
did not incur any expense as a result of these matters, reported to the U.S.
government the employee's allegations and the results of outside counsel's
investigation. The employee also initiated a different action against the
Company in 1996 for wrongful termination, in which he alleged many of the same
acts complained of in the Qui Tam suit. That action was dismissed with prejudice
by the Missouri Court in October 1996. On June 16, 1998, the Missouri Court
granted the Company's Motion to Dismiss the Qui Tam suit. The Court, however,
allowed Mr. Peoples to amend his complaint. Mr. Peoples filed an amended
complaint, and Company's Motion to Dismiss the Amended Complaint was denied on
January 20, 1999. The Company intends to contest this suit vigorously. The
Company does not believe that resolution of this suit will have a material
adverse effect on the Company's financial condition, results of operations or
cash flows.
    
 
                                       11
<PAGE>   13
 
     On May 8, 1997, Caradon Doors and Windows, Inc. ("Caradon"), filed suit
against the Company in the United States District Court for the Northern
District of Georgia (the "Georgia Court") alleging breach of contract, negligent
misrepresentation, and contributory infringement and seeking contribution and
indemnification in an amount not less than $10 million (the "Caradon suit"). The
Caradon 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 amount
believed to be almost $10 million. In June 1997, the Company filed a Motion with
the Bankruptcy Court seeking an order enforcing the Plan and the Confirmation
Order against Caradon, and enjoining the Caradon suit from going forward. The
Bankruptcy Court in a decision entered on December 24, 1997, held that the
Caradon suit did violate the Plan and the Confirmation Order and enjoined
Caradon from pursuing the Caradon suit. Caradon appealed the Bankruptcy Court's
decision to the United States District Court for the Southern District of Ohio
(the "District Court"), and in a decision entered on February 3, 1999, the
District Court reversed and remanded the matter back to the Bankruptcy Court.
The Company intends to contest this suit vigorously. The Company does not
believe that resolution of this suit will have a material adverse effect on the
Company's financial condition, results of operations or cash flows.
 
     On May 29, 1997, Therma-Tru Corporation ("Therma-Tru") sought leave to file
an amended complaint (the "Amended Complaint") adding the Company as a defendant
in a suit filed by Therma-Tru in January 1997 (the "Therma-Tru suit") against
Pease Industries, Inc. ("Pease") in the United States District Court for the
Eastern District of Michigan (the "Michigan Court"). The Therma-Tru suit
involves allegations of infringement by Pease for doors manufactured by Pease
using fiber-reinforced plastic exterior skins supplied by the Company or its
successor. In June 1997, the Company filed a Motion with the Bankruptcy Court
seeking an order enforcing the Plan and the Confirmation Order against
Therma-Tru, and enjoining the Therma-Tru suit from going forward as against the
Company. The Bankruptcy Court in a decision entered on December 24, 1997, held
that the Amended Complaint would violate the Confirmation Order only insofar as
the Amended Complaint seeks relief for acts of the Company preceding the
Confirmation Date. The Bankruptcy Court did not enjoin the prosecution of the
Amended Complaint insofar as it related to acts of the Company after the
Confirmation Date. Therma-Tru has appealed the Bankruptcy Court's decision with
regard to the Company's acts prior to the Confirmation Date. That appeal remains
pending. On September 15, 1997, Therma-Tru filed a separate amended complaint in
the Therma-Tru suit adding Cambridge Industries, Inc. ("Cambridge") as an
additional defendant. Cambridge was the purchaser of the Company's former
Plastics Division and the Company is obligated to defend the Therma-Tru suit as
it relates to Cambridge pursuant to an indemnity the Company gave to Cambridge
when the Company sold its Plastics Division. That indemnity was for any door
skins sold through October 31, 1997, that were later found to infringe on the
Therma-Tru patent. The Company is vigorously defending the Therma-Tru suit as it
proceeds against both the Company and Cambridge for sales of door skins after
the Confirmation Date. The Company does not believe that resolution of this suit
will have a material adverse effect on the Company's financial condition results
of operations or cash flows.
 
     The Company is also involved in various other proceedings incidental to the
ordinary conduct of its business. The Company believes that none of these other
proceedings will have a material adverse effect on the Company's financial
condition, results of operations or cash flows.
 
  (C) Environmental Matters.
 
     During the pendency of the chapter 11 proceedings, the Company entered into
a settlement agreement (the "Environmental Settlement") with the United States
Environmental Protection Agency (the "EPA"), the United States Department of the
Interior and the states of Arizona, Michigan and Oklahoma (together, the
"Settling Parties"), addressing all known and unknown environmentally-related
claims that were or could have been asserted by those entities against the
Company in the bankruptcy proceeding. The Environmental Settlement resolved the
majority of the approximately 1,100 environmental liability-related claims filed
against the Company in the chapter 11 proceedings. In addition to resolving
those claims filed in the chapter 11 proceedings, the Environmental Settlement
provided that any additional claims by the Settling Parties against the Company
in connection with pre-petition activities at any site not owned by the Company
(the "Additional Sites"), shall be resolved as if they had been asserted during
the chapter 11 proceedings. Accordingly, if the Company is found
 
                                       12
<PAGE>   14
 
liable or settles any Additional Site claim, payment is limited to approximately
37% of the liability or settlement amount.
 
     Since entering into the Environmental Settlement, the Company has received
notice from one or more of the Settling Parties that the Company may have
liability in connection with 21 Additional Sites. The Company may be insured for
a portion of these claims. The Company believes that its potential liability at
19 of these Additional Sites is not material to the Company's financial
condition, results of operations or cash flows. The remaining two Additional
Sites may require significant expenditures by the Company: the Henryetta Smelter
Site at Henryetta, Oklahoma, and the RSR Smelter Site at Dallas, Texas.
 
          Henryetta Smelter Site. The Company received a notice from the EPA in
     1997, alleging liability for remediation expenses at the site of a former
     zinc smelting facility owned and operated by the Company at Henryetta,
     Oklahoma, and for the removal and disposal from surrounding residential
     locations of contaminated soil and gravel that originated from the facility
     and from other companies operating in the area. The Company operated the
     facility for approximately 50 years, until it was shut down in 1968. The
     EPA performed remedial activities at the site at a cost of approximately
     $6.3 million. The Company expects to settle this claim with the EPA for
     some portion of that amount, and has offered to settle this claim for
     approximately $3.8 million.
 
          RSR Smelter Site. The Company received a notice from the EPA in 1996,
     alleging that it may be a Potentially Responsible Party ("PRP") regarding
     liability for remediation expenses at a secondary lead smelting facility in
     Dallas, Texas. The Company allegedly leased the facility, which was in
     operation until a date in or about 1984, for a period of at least one year
     in the early 1950s. The EPA has conducted and continues to conduct
     extensive remedial activities at this site, and the EPA's total expenses
     may amount to $60 million or more. The Company is one of more than 1,000
     PRPs identified by the EPA in connection with this site and is not
     identified by the EPA as one of the 14 significant PRPs. The Company and
     the EPA have agreed in principle to settle this claim for $2.1 million.
 
          The Company does not expect that its total costs associated with these
     sites will have a material adverse effect on the Company's financial
     condition, results of operations or cash flows. Because each site is an
     Additional Site under the Environmental Settlement, the Company will be
     required to pay only approximately 37% of any amount for which it may be
     found liable or settle the claim. The Company expects that, pursuant to the
     terms of the Plan, such payments will be credited against the Final
     Distribution.
 
     The Company is undertaking remedial actions at a number of its current and
former facilities and properties which are not covered under the Environmental
Settlement Agreement. In connection with certain sales of its assets, including
the Plastics and Transicoil Divisions sold in 1997 and the Bearings Division
sold in 1989, the Company has agreed to undertake remedial actions or to
indemnify the respective purchasers of particular assets for certain liabilities
under the Environmental Laws relating to that asset's operations or activities
prior to the sale. The Company believes that neither these remedial actions nor
any claims under these indemnity provisions will have a material adverse effect
on the Company's financial condition, results of operations or cash flows.
 
     The Company is undertaking closure and corrective actions under RCRA at two
of its current permitted hazardous waste facilities. At the Joplin, Missouri,
facility, consistent with the requirements of its RCRA permit, the Company is
investigating the nature and extent of contamination from two closed hazardous
waste impoundments and over 100 former solid waste management units formerly in
use during the 130-year operating history of this property. The Company's
investigation has identified areas of soil and groundwater contamination or
suspected contamination, certain of which likely will require the Company to
undertake remedial activities. Following completion of its investigation, the
Company, in conjunction with federal and state regulators, will determine what,
if any, corrective actions are appropriate at this property. At the Colorado
Springs, Colorado, facility, the Company has entered into a Compliance Order on
Consent with the State of Colorado's Department of Public Health and Environment
effective January 28, 1999 (the "Consent Order"). Pursuant to the Consent Order,
the Company will complete the closure of four former hazardous waste
impoundments and evaluate appropriate remedial actions to address contaminated
groundwater and soil at and around the facility. The Company does not believe
that it will be assessed any penalty in connection with the remediation of these
sites, although there can be no assurance that one will not be imposed.
                                       13
<PAGE>   15
 
     The Company does not believe, based on current information and taking into
account reserves established for environmental matters, that costs associated
with compliance with and remediation under Environmental Laws will have a
material adverse effect on its financial condition, results of operations or
cash flows.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
 
     No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
 
                                    PART II
 
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
 
                                [NOT APPLICABLE]
 
ITEM 6. SELECTED FINANCIAL DATA.
 
<TABLE>
<CAPTION>
                                NINE MONTHS    THREE MONTHS
                                   ENDED           ENDED
                                NOVEMBER 30     FEBRUARY 28
                                    1998           1998            1997            1996            1995            1994
                                ------------   -------------   -------------   -------------   -------------   -------------
                                               PREDECESSOR A   PREDECESSOR A   PREDECESSOR B   PREDECESSOR B   PREDECESSOR B
                                                                        (UNAUDITED)
                                                        (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE)
<S>                             <C>            <C>             <C>             <C>             <C>             <C>
Net sales(A)..................  $    645,984    $  205,842      $   906,077     $   891,287     $   848,548     $   756,741
Operating income(B)...........        15,470        11,027           45,558          62,106          63,087          58,281
Adjustment for asbestos
  litigation..................            --            --               --         502,197      (1,005,511)             --
Fresh-start revaluation(C)....            --            --               --         118,684              --              --
Interest expense..............       (36,313)       (6,940)         (31,261)         (3,083)         (1,926)         (1,809)
Income (loss) before taxes,
  extraordinary items and
  accounting changes..........       (19,064)        4,907           14,046         674,656        (934,871)         53,749
Income (loss) before
  extraordinary items and
  accounting changes..........       (14,364)          807           (3,854)        622,086        (944,171)         48,749
Extraordinary items and
  accounting changes(D).......            --            --               --       1,524,305              --              --
Net income (loss).............       (14,364)          807           (3,854)      2,146,391        (944,171)         48,749
EBITDA(E).....................        87,436        26,969          104,080          94,931          94,193          85,676
Basic earnings (loss) per
  common share:
  Income (loss) before
    extraordinary items and
    accounting change.........   (143,640.00)         0.08            (0.39)          56.34          (85.51)           4.42
  Extraordinary items and
    accounting changes........            --            --               --          138.06              --              --
  Basic earnings (loss) per
    common share..............   (143,640.00)         0.08            (0.39)         194.40          (85.51)           4.42
Weighted average number of
  common shares outstanding...           100     9,555,560       10,000,000      11,040,932      11,040,932      11,040,932
Dividends per share...........            --            --               --              --              --              --
Total assets..................       816,327           N/A          746,881         848,880         580,073         521,107
Total long-term debt(F).......       484,356           N/A          273,397         386,439          20,628          21,622
</TABLE>
 
---------------
 
(A) Includes net sales attributed to Divested Divisions of $18,600 in the nine
    months ended November 30, 1998, $7,076 in the three months ended February
    28, 1998, $111,294 in 1997, $159,777 in 1996, $166,082 in 1995, and $157,009
    in 1994.
 
(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
    both Predecessor A and Predecessor B were derived using different bases.
    (See Management's Discussion and Analysis Effects of the Acquisition and
    Reorganization on Operations and Financial Condition.)
 
                                       14
<PAGE>   16
 
(C) Fresh-start revaluation gain of $118,684 reflects transactions related to
    emergence from bankruptcy and reorganization in accordance with Statement of
    Position 90-7, "Financial Reporting by Entities in Reorganization under the
    Bankruptcy Code" (SOP 90-7").
 
(D) Reflects a gain of $1,525,540 in 1996 related to emergence from bankruptcy
    and reorganization in accordance with SOP 90-7 and a loss of $1,235 in 1996
    due to an accounting change of the method used for computing LIFO
    inventories of boron, germanium and other rare metals.
 
(E) EBITDA as used herein is defined as earnings before interest expense, income
    taxes, depreciation and amortization, certain one-time management
    compensation expenses, gain (loss) on sale of divisions, reorganization
    items and other non-cash charges. EBITDA is presented because management
    believes it is an indicator of a company's ability to service and incur
    debt. Includes EBITDA attributable to Divested Divisions of $446 in the nine
    months ended November 30, 1998, $(185) in the three months ended February
    28, 1998, $4,302 in 1997, $5,543 in 1996, $11,252 in 1995 and $12,898 in
    1994.
 
(F) Long-term debt of $62,000 in 1995 and 1994 was included in liabilities
    subject to compromise.
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
 
  Results of Operations
 
     The following table sets forth certain sales and operating data, net of all
inter-segment transactions for the Company's businesses for the periods
indicated:
 
<TABLE>
<CAPTION>
                                          NINE MONTHS     THREE MONTHS        YEAR ENDED NOVEMBER 30,
                                             ENDED            ENDED        ------------------------------
                                         NOV. 30, 1998    FEB. 28, 1998        1996             1997
                                         -------------    -------------    -------------    -------------
       (IN MILLIONS OF DOLLARS)                           PREDECESSOR A    PREDECESSOR A    PREDECESSOR B
<S>                                      <C>              <C>              <C>              <C>
Net sales by segment:
  Automotive...........................     $330.6           $103.7           $435.2           $439.6
  Machinery............................      201.8             64.4            270.8            257.6
  Industrial...........................      113.6             37.7            200.1            194.1
                                            ------           ------           ------           ------
          Total........................     $646.0           $205.8           $906.1           $891.3
                                            ======           ======           ======           ======
EBITDA(1) by segment:
  Automotive...........................     $ 49.6           $ 15.4           $ 59.4           $ 57.7
  Machinery............................       29.6              7.7             30.6             28.7
  Industrial...........................       23.2              6.7             29.8             27.8
  Corporate overhead...................      (15.0)            (2.8)           (15.7)           (19.3)
                                            ------           ------           ------           ------
          Total........................     $ 87.4           $ 27.0           $104.1           $ 94.9
                                            ======           ======           ======           ======
</TABLE>
 
---------------
 
(1) For these purposes, EBITDA is defined as earnings before interest expense,
    income taxes, depreciation and amortization, certain one-time management
    compensation expenses in 1998, gain (loss) on sale of divisions,
    reorganization items in 1996 and certain non-cash charges.
 
EFFECTS OF THE ACQUISITION AND REORGANIZATION ON OPERATIONS AND FINANCIAL
CONDITION
 
     The Acquisition of Eagle-Picher Industries, Inc. ("Company") by
Eagle-Picher Holdings, Inc. ("Parent") was accounted for as a purchase. The
purchase price has been allocated to the assets and liabilities of the Company
based on their respective fair values as determined primarily by independent
appraisals. The excess of the purchase price over the assessed values of the net
assets acquired was allocated to excess of acquired net assets over cost, which
is being amortized over 15 years. The reorganization value in excess of amounts
allocable to identifiable assets, which was the intangible asset created during
the Company's emergence from bankruptcy (described below), was assigned no
value. Consequently, the results of operations after the Acquisition are not
comparable to those in the three months ended February 28, 1998 and in 1997
("Predecessor A") primarily due to depreciation being calculated on an increased
asset base and the difference in amortization of the intangible assets.
 
                                       15
<PAGE>   17
 
     Upon emergence from bankruptcy on November 29, 1996 ("Reorganization"), the
Company applied the "fresh-start" provisions of the American Institute of
Certified Public Accountants Statement of Position No. 90-7, "Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code" ("SOP 90-7").
In accordance with SOP 90-7, the assets and liabilities of the Company were
restated at their fair value and a valuation of equity was made based on the
appraised reorganization value of the business. The reorganization value in
excess of amounts allocable to identifiable assets was capitalized and amortized
using a four year life. Consequently, results of operations in 1996
("Predecessor B") and 1997 are not comparable, primarily due to the increased
depreciation on the property plant and equipment and amortization of the
reorganization value in excess of amounts allocable to identifiable assets
resulting from the fresh-start adjustments.
 
     Interest expense was minimal in 1996 because interest expense was not
recorded on unsecured debt or undersecured debt during the duration of the
bankruptcy proceedings. Interest expense increased by $28.2 million in 1997,
primarily due to the debt issued to the PI Trust and unsecured creditors upon
the Company's emergence from bankruptcy. Any of the debt that had been issued
when the Company emerged from bankruptcy that was still outstanding was repaid
at the time of the Acquisition. Interest expense increased substantially in
1998, after the Acquisition, due to the issuance of debt totaling $524.1 million
related to the Acquisition.
 
     Adjusting the assets and liabilities to fair value in the Reorganization
resulted in the fresh-start revaluation gain of $118.7 million in 1996. Other
reorganization items in 1996 were the costs of the reorganization process, net
of the interest income earned on accumulated cash balances.
 
     The plan of reorganization which was approved by the Bankruptcy Court,
included a settlement of $2.0 billion for the Company's aggregate liability on
account of present and future asbestos-related personal injury claims. An
adjustment of $502.2 million was made to the consolidated financial statements
in 1996 to reflect this settlement. The order confirming the Plan contains a
permanent injunction which precludes holders of present or future asbestos or
lead-related personal injury claims from pursuing their claims against the
reorganized Company. Those claims will be channeled to the PI Trust, which is an
independently administered qualified settlement trust established to resolve and
satisfy those claims.
 
     The Company's Reorganization resulted in an extraordinary gain of $1.5
billion on the discharge of pre-petition liabilities, including the asbestos
liability. The value of consideration distributed and expected to be distributed
to the PI Trust and other unsecured creditors is approximately 37% of the amount
of the allowed claims.
 
     In 1997, the Company received Federal tax refunds totaling $69.1 million
resulting from net operating losses ("NOL's") carried back to recover taxes paid
in prior years. The majority of the NOL's were created when the Company
contributed cash and securities to the PI Trust in the Reorganization. Losses
remaining after the carryback were carried forward to reduce taxable income in
future years and were capitalized at the statutory rates as deferred tax assets.
Other items that were deductible in the future, such as the debt issued in
conjunction with the Company's Reorganization which was deductible when it was
repaid, were also included in deferred tax assets which totaled $128.5 million
at November 30, 1996. These deferred tax benefits were used to reduce taxable
income (and, as a result, income taxes paid) in 1997 and the period in 1998
prior to the Acquisition. They were also used to absorb the tax gain resulting
from the sale of the Company. Any of the deferred tax benefits that were not
absorbed by Predecessor A in 1997, the period in 1998 prior to the Acquisition
or by the tax gain on the transaction itself were lost and are not available to
reduce taxable income of the Company going forward.
 
     In addition to the effects of the Acquisition and the Reorganization,
another factor affecting comparability of operations is the sale of the
Plastics, Transicoil and Fabricon Products Divisions in 1997. The Company also
contributed the assets of its former Suspension Systems Division to
Eagle-Picher-Boge, L.L.C., a joint venture in which the Company had a 45%
interest, in 1997. In 1998, the majority partner exercised its option to
purchase the Company's interest in the joint venture. The Company also sold its
Trim Division effective October 31, 1998, although the transaction was held in
escrow until certain conditions were met in December 1998. The effects of these
transactions on the results of operations were not material.
 
                                       16
<PAGE>   18
 
1998 COMPARED TO 1997
 
     Net Sales. Sales for the nine months ended November 30, 1998 and the three
months ended February 28, 1998 were $646.0 million and $205.8 million,
respectively, (a total of $851.8 million) compared to $906.1 million for the
year ended November 30, 1997, a decrease of 6.0% for the year. However, sales
for the years ended November 30, 1998 and 1997 were $826.1 million and $794.8
million, respectively, or an increase of 3.9%, after excluding the Divested
Divisions (Plastics, Transicoil, Fabricon Products, Trim, Suspension Systems and
the Orthane divisions). Net sales for the Automotive Group, excluding those of
Divested Divisions, increased 11.6%. The increase in sales is due to a strong
automotive build in North America and increased market penetration of
precision-machined transmission and drive train components and multi-layer fuel
transfer systems, many of which are used in light trucks, vans and sport utility
vehicles, the popularity of which remains strong. Since the 1980's, original
equipment manufacturers ("OEM's") such as the Ford Motor Company and the General
Motors Corporation ("GM") have been outsourcing an increasing percentage of
their production requirements. OEM's benefit from outsourcing because outside
suppliers generally have significantly lower cost structures and can assist in
shortening development periods for new products. The Company expects to continue
to benefit from the trend toward outsourcing. In the Machinery Group, net sales
increased 3.2%, excluding net sales of Divested Divisions. Increases in demand
for construction equipment and parts and material handling equipment were
partially offset by declines in demand for special purpose batteries due to the
completion of a major satellite project late last year. In the Industrial Group,
net sales, excluding net sales of Divested Divisions, declined 11.3%. The
decrease in sales is due primarily to the decreased sales of the metal
germanium. Sales of germanium products have been affected by lower market prices
which resulted from increased supplies, the completion of a major satellite
project and the increased use of recycled germanium by the Company's customers.
Customers have increased their recycling of germanium in response to sharp
increases in germanium prices which took place in 1996. Revenues have declined
since the Company has shifted more toward being a toll refiner of germanium
rather than a buyer and seller of the material.
 
     Cost of Products Sold. Cost of products sold (excluding depreciation
expense) was $503.0 million for the nine months ended November 30, 1998 and
$162.8 million for the three months ended February 28, 1998 (a total of $665.8
million) compared to $725.0 million in 1997. Excluding the cost of products sold
of Divested Divisions, cost of products sold as a percentage of net sales was
77.8% in 1998 and 78.7% in 1997. Reasons for the decline include improved
performance at certain start-up operations, increased efficiencies and changes
in product mix involving the special purpose batteries.
 
     Since the Company expects strong price pressure to continue across all
product lines, particularly in the Automotive Group, the Company will continue
to pursue productivity improvements and material cost reductions to mitigate
such price pressure.
 
     Selling and Administrative. Selling and administrative expenses were $58.5
million and $17.1 million in the nine months ended November 30, 1998 and the
three months ended February 28, 1998, respectively (a total of $75.6 million),
compared to $77.1 million in 1997. Excluding the Divested Divisions, these
expenses increased 5.1% from $69.4 million in 1997 to $72.9 million in 1998.
Besides a general increase due to activity relating to increased sales volumes,
items contributing to the increase of selling and administrative expenses
include management fees now payable to Granaria Holdings B.V. and a retention
program for mid-level managers.
 
     Management Compensation -- Special. The special management compensation
expenses are one-time items related to the Acquisition. See Executive
Compensation.
 
     Depreciation and Amortization. See comments above regarding the effects of
the Acquisition.
 
     EBITDA. Due to the increased depreciation and amortization resulting from
the Acquisition, a comparison of 1997 and 1998 operating income is not
meaningful. The Company's EBITDA, as defined above, was $87.4 million in the
nine months ended November 30, 1998 and $27.0 million in the three months ended
February 28, 1998 (a total of $114.4 million), compared to $104.1 million for
the year ended November 30,1997, an increase of $10.3 million or 9.9%. However,
EBITDA for the years ended November 30, 1998 and 1997 was $114.1 million and
$99.9 million, respectively, or an increase of 14.2%, after excluding the
Divested Divisions.
 
                                       17
<PAGE>   19
 
     The EBITDA of the Automotive Group, excluding Divested Divisions, increased
10.8%. The increased volumes of sales described above resulted in better
absorption of fixed costs and EBITDA increased accordingly. However, these
increases were slightly offset by the impact on divisions in the Automotive
Group of the strike against GM in 1998. The Trim Division, which is one of the
Divested Divisions, was impacted the most significantly of the divisions in the
Automotive Group by the strike. EBITDA for the Machinery Group, excluding
Divested Divisions, increased 27.2% from 1997 to 1998. Although volumes of
special purpose batteries declined in 1998, a shift in product mix contributed
to the increase in EBITDA. Other contributing factors include the increase in
volumes at the operations manufacturing construction and material handling
equipment. The increase in EBITDA of the Industrial Group, excluding results of
Divested Divisions, was 7.2%. Although net sales of germanium products have
declined, margins on these products have remained consistent.
 
     Interest Expense. Interest expense was $36.3 million in the nine months
ended November 30, 1998 and $6.9 million in the three months ended February 28,
1998 (a total of $43.2 million) as compared to $31.3 million in 1997. The
increase is due to the increased debt related to the Acquisition as discussed
above.
 
1997 COMPARED TO 1996
 
     Net Sales. The Company's net sales increased $14.8 million, or 1.7%, from
$891.3 million in 1996 to $906.1 million in 1997. Included are sales of the
Divested Divisions which, if excluded for both periods, would reflect an
increase of 8.6%. In 1996 and 1997, the Divested Divisions contributed net sales
of approximately $159.8 million and $111.3 million, respectively.
 
     Net sales for the Automotive Group, excluding Divested Divisions, increased
8.6% in 1997. The sales volume increases were primarily in precision machining
and trim operations. The precision machining operations produce a variety of
parts used on light trucks, vans and sport utility vehicles which have grown in
popularity. Several new programs at the Trim division, which had been delayed by
customers, began to reach satisfactory volumes. The Company was notified by a
major customer of the Automotive Group that such customer was discontinuing
certain lines of business with one of the operations. The first program was
discontinued in December 1997, and other programs are being discontinued at
various times through March 1999. The total amount of annual revenue these
programs have contributed is $19.4 million. This revenue has been replaced by
new programs currently being implemented. In the Machinery Group, sales
increased 7.7%, excluding net sales by Divested Divisions. These increases were
due primarily to increased demand for batteries used in satellite applications.
Net sales for the Industrial Group, excluding those of Divested Divisions,
increased 10.2% primarily due to increased demand for germanium products used in
aerospace applications, such as solar cell substrates for satellites.
 
     Cost of Products Sold. Cost of products sold (excluding depreciation
expense) increased by $8.1 million, or 1.1%, from $716.9 million in 1996 to
$725.0 million in 1997. Excluding the cost of products sold of the Divested
Divisions, cost of products sold as a percentage of net sales remained
consistent at 78.7% in 1997 and 78.6% in 1996.
 
     Selling and Administrative. Selling and administrative expenses decreased
$4.4 million, or 5.4%, from $81.5 million in 1996 to $77.1 million in 1997.
Excluding the expenses of the Divested Divisions, selling and administrative
expenses remained constant from 1996 to 1997.
 
     Depreciation and Amortization. See comments above regarding the effects of
the Reorganization.
 
     Loss on Sale of Divisions. In 1997, the Company sold the Plastics,
Transicoil and Fabricon Products divisions to fund the repayment of certain
notes issued in the reorganization process. The aggregate net cash proceeds from
and loss on the transactions were $39.0 million and $2.4 million, respectively.
The injection molding operations of the Orthane Division were sold in 1996 for
$4.2 million. The effect of this transaction on the results of operations was
not material.
 
     EBITDA. EBITDA increased from $94.9 million in 1996 to $104.1 million in
1997, or 9.7%. If the results of the Divested Divisions are excluded, EBITDA was
$89.4 million in 1996 and $99.9 million in 1997, an increase of 11.7%.
 
                                       18
<PAGE>   20
 
     The EBITDA of the Automotive Group, excluding Divested Divisions, increased
4.5%. The increased volumes of sales described above resulted in better
absorption of fixed costs and EBITDA increased accordingly. Currency exchange
differences offset volume gains in the European operations, therefore, results
of these operations appeared relatively flat. The increased sales volumes of
batteries accounted for the majority of the increase in EBITDA, excluding
Divested Divisions, of 8.5% for the Machinery Group. Although sales of
operations manufacturing heavy-duty forklift trucks and construction equipment
were flat, these operations posted operating gains due to increased efficiencies
which also contributed to increased EBITDA. The increase in EBITDA of the
Industrial Group, excluding results of Divested Divisions, was 8.2%, due
primarily to the strength of demand for germanium products. The price of
germanium itself stabilized in 1997 after increasing sharply in 1996. In
addition, the operation that processes diatomaceous earth products had increased
EBITDA due to non-recurring charges taken in 1996.
 
     Interest Expense. Interest expense increased by $28.2 million from $3.1
million in fiscal year 1996 to $31.3 million in 1997 for reasons discussed above
related to the effects of the Reorganization on the Company's results.
 
  Financial Condition
 
OPERATING ACTIVITIES
 
     Cash flows provided by operations in the nine months ended November 30,
1998 were $75.5 million and cash flows used in operations in the three months
ended February 28, 1998 were $9.1 million, for a net total of cash provided from
operations of $66.4 million in 1998. Comparable amounts in 1997 and 1996 were
cash provided by operations of $147.9 million and $72.9 million, respectively.
In 1997, $69.1 million of the $147.9 million resulted from the tax refund due to
NOL carrybacks previously discussed. Cash flows provided by operations in 1997,
excluding the tax refund, were $78.8 million.
 
     EBITDA was $87.4 million in the nine months November 30, 1998, $27.0
million in the three months ended February 28, 1998 (totaling $114.4 million in
1998), $104.1 million in 1997 and $94.9 million in 1996. EBITDA, as defined
above, with certain adjustments, could be used as an approximation of cash flows
provided by operations before interest and taxes. The following table set forth
a reconciliation of EBITDA to cash provided by (used in) operations for the
years ended November 30:
 
<TABLE>
<CAPTION>
                  (DOLLARS IN MILLIONS)                     1998      1997     1996
                  ---------------------                    ------    ------    -----
<S>                                                        <C>       <C>       <C>
EBITDA per above.........................................  $114.4    $104.1    $94.9
Management compensation -- special.......................   (28.9)       --       --
Interest paid............................................   (35.3)    (31.0)    (2.8)
Income taxes paid -- net.................................    (3.1)     (4.3)   (17.3)
Proceeds from insurance settlements......................    14.8        --       --
Working capital and other................................     4.5      10.0     (1.9)
                                                           ------    ------    -----
Cash provided by operating activities (net of tax refund
  in 1997)...............................................  $ 66.4    $ 78.8    $72.9
                                                           ======    ======    =====
</TABLE>
 
     In 1998, the management compensation is related to the Acquisition and is
non-recurring. (See Executive Compensation.) Interest paid increased in 1997 due
to the Reorganization and in 1998 due to the Acquisition as previously
discussed. Income taxes paid declined in 1997 due to the NOL's resulting from
the Reorganization that were available to reduce taxable income as previously
discussed. These NOL's were available only through the Acquisition date in 1998
and are not available to the Company on a going forward basis. The proceeds from
insurance settlements in 1998 related to pre-Acquisition contingencies. In 1998,
the increase in cash provided by operating activities attributable to working
capital was due primarily to the use of cash in an employee benefits trust to
pay for such benefits, rather than using the Company's cash. This resulted in a
decrease in the use of cash to the Company of approximately $8.0 million. The
difference is attributable to increases in working capital due to growth of the
business. In 1997, the increase in cash provided by operating activities
attributable to working
 
                                       19
<PAGE>   21
 
capital was due to certain divisions being able to negotiate better terms on
their accounts payable after emerging from bankruptcy.
 
INVESTING ACTIVITIES
 
     Capital expenditures totaled $32.0 million in year ended November 30, 1998.
These expenditures included small expansions to plants that manufacture
construction machinery and bulk pharmaceuticals, equipment needed for new
programs in the Automotive Group and maintenance capital. Capital expenditures
were $51.3 million in 1997. Major additions included two new plants to
manufacture precision-machined parts, one in Manchester, Tennessee and the other
in Tamworth, England. Construction on the new diatomaceous earth processing unit
in Vale, Oregon, which commenced in 1996, was completed in 1997. Capital
expenditures were $45.0 million in 1996. In addition to amounts spent on
construction of the facility in Vale, Oregon in 1996 and the addition of a new
coating line for the manufacture of gasket materials in 1995, significant
expenditures have been made in recent years to increase machine capacity at
existing facilities or improve processes, particularly in the Automotive Group.
The Company does not have any plans for major expansions to existing facilities
in the short-term.
 
     The Company has signed a letter of intent to acquire the stock of
Charterhouse Automotive Group, Inc., a holding company whose only operating
subsidiary is Carpenter Enterprises, Ltd. ("Carpenter"), a manufacturer of
precision-machined automotive parts, for approximately $41.0 million in cash. It
is expected that Carpenter will have approximately $32.0 million of debt at the
closing, of which $20.0 million will be refinanced from the Company's revolving
credit facility and the remainder will be assumed. The Acquisition will be
accounted for as a purchase. The transaction is expected to be consummated at
the end of the first quarter of 1999, subject to the results of a due diligence
investigation and various conditions including negotiation of a mutually
acceptable stock purchase agreement.
 
     The Company sold its Trim Division as of October 31, 1998, however the
transaction remained in escrow until certain conditions were met in December
1998. At that time, the Company received $12.4 million cash and a $2.1 million
note due in 2000 which is secured by a first mortgage on the real estate. In
1997, The Company contributed the assets of its former Suspension Systems
Division to Eagle-Picher -- Boge, L.L.C., a joint venture in which the Company
had a 45% interest, and received a note from the joint venture in the amount of
$2.8 million. In 1998, the majority partner exercised its option to purchase the
Company's interest in the joint venture. At that time, the note was also repaid
resulting in proceeds totaling $7.9 million. The Company sold the Plastics,
Fabricon Products and the Transicoil Divisions in 1997. The net cash proceeds of
these transactions, totaled $39.0 million. The injection molding operations of
the Orthane Division were sold in 1996 for $4.2 million.
 
     The Company intends to sell its Ross Aluminum Division. The Company
anticipates the transaction would close late in the second quarter of 1999. The
Company does not anticipate a loss on this transaction. No other divestitures
have been announced or committed to at this time.
 
FINANCING ACTIVITIES
 
     To finance the Acquisition, the Company issued $180.0 million in common
stock to the Parent. The Company also issued $220.0 million of publicly traded
senior subordinated notes and borrowed $225.0 million in term loans and $79.1
million in revolving loans under a syndicated senior bank loan facility ("Credit
Agreement"). At the time of the Acquisition, the Company repaid the $250.0
million Senior Sinking Fund Debentures that had been issued to the PI Trust at
the time of the Reorganization.
 
     As of November 30, 1998, $5.2 million of the term loans had been repaid. In
1999, scheduled payments of the term loans are $10.3 million, however, the
Credit Agreement requires the Company to make mandatory prepayments of 60% of
annual excess cash flow as defined by the Credit Agreement, the net proceeds
from sales of assets (subject to certain conditions), the net proceeds of new
debt issued and 50% of the net proceeds of any equity securities issued.
Pursuant to these terms, the Company will make additional payments on the term
loans of $8.5 million in the first quarter of 1999. Scheduled payments under the
Credit Agreement for 2000 and 2001 are $15.3 million and $20.3 million,
respectively.
                                       20
<PAGE>   22
 
     The Company's revolving credit facility ("Facility") under the Credit
Agreement is $160.0 million and is available for both borrowings and the
issuance of letters of credit. At November 30, 1998, the Company had outstanding
borrowings and letters of credit under the Facility of $19.8 million and $26.3
million, respectively, leaving the Company with available borrowing capacity of
$113.9 million. Subsequent to November 30, 1998, all borrowings under the
Facility have been repaid. However, it is anticipated that more than $60.0
million would be drawn to finance the Carpenter acquisition. In addition, in the
first quarter of 1999, it is anticipated the Company will issue approximately
$14.0 million in additional letters of credit associated with existing
environmental remediation that are necessitated by financial assurance
requirements set forth by the United States Environmental Protection Agency.
While these transactions will significantly reduce the available liquidity of
the Company, the Company does not expect to need more borrowing capacity than
will be available to it to fund normal operations.
 
     The Company's European operations also have several lines of credit
totaling $28.7 million at November 30, 1998, of which $6.7 million was borrowed,
leaving $22.0 million in borrowing capacity at that date. These lines of credit
contain financial covenants, with which the Company is in compliance. The
Company believes that the European operations should generate enough cash
through operations and borrowings on lines of credit to finance growth in the
near-term.
 
     The Company used the proceeds of the tax refunds totaling $69.1 million
received in 1997 to redeem the $69.1 million Tax Refund Notes which were issued
to the PI Trust in connection with the Reorganization. The $50.0 million of
Divestiture Notes, which were issued to the PI Trust and other unsecured
creditors in connection with the bankruptcy, were also repaid in 1997, primarily
with the proceeds from the divestiture of divisions. In addition, secured notes
totaling $6.8 million at November 30, 1996 were repaid in full in 1997 due, in
certain cases, to the sale of the assets which secured the notes. The Company
issued an $8.0 million Industrial Revenue Bond to finance the new facility in
Manchester, Tennessee and incurred $5.0 million debt in Europe to finance
expansion activities.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     Cash and cash equivalents were $13.7 million at November 30, 1998 compared
to $53.7 million and $32.7 million at November 30, 1997 and 1996, respectively.
The Company estimates that it needs approximately $10.0 million to $12.0 million
in cash for operations. The Company's liquidity needs are primarily for debt
service and capital maintenance. The Company believes that its cash flows from
operations and available borrowings under its bank credit facilities will be
sufficient to fund its anticipated liquidity requirements for the next twelve
months. In the event that the foregoing sources are not sufficient to fund the
Company's expenditures and service its indebtedness, the Company would be
required to raise additional funds.
 
  Other
 
YEAR 2000 READINESS DISCLOSURE
 
     The Year 2000 problem arose because many existing computer programs use
only the last two digits to refer to a year. Therefore, these computer programs
do not properly recognize a year that begins with "20." If not corrected, many
computer programs could fail or cause erroneous results. Failures of this nature
could cause interruptions to manufacturing processes, business and financial
functions and communications with customers and suppliers.
 
     Due to the diverse nature of the Company's operations, each operating
division has its own discrete computer systems. The Company currently has a Year
2000 program in place which includes a comprehensive review to identify areas of
concern in each of the systems affected by the Year 2000 issue and follows up
with design and implementation of measures to address those issues. The Company
is assessing its information technology systems such as business computing
systems, end user computer systems and technical infrastructure, as well as
embedded systems commonly found in manufacturing and service equipment, testing
equipment and environmental operations. The assessments also include the
Company's products and evaluations of the readiness of its suppliers and service
providers.
 
                                       21
<PAGE>   23
 
     The Company's Year 2000 program involves a five step process applied to
each of eight different application areas within each operation, and at the
corporate level. The Company first inventories areas of potential risk based on
a comparison to guidelines published by the Automotive Industry Action Group
("AIAG"). Each component identified in the inventory is then evaluated for its
risk of failure and the impact of potential failure to the Company's operations
and its customers. Once the risks are assessed, remediation is commenced.
Options for remediation may include replacement, modification or continued use
depending on information gathered during the inventory and assessment stages.
The remediated system is then tested and reviewed before the determination is
made as to the readiness of the system. A project committee meets regularly to
review the status of the investigation into and resolution of Year 2000 issues.
 
     Most of the Company's divisions have completed the inventory and assessment
phases and are working on remediation and testing. The remaining divisions have
the inventory and assessment phases underway. The Company expects that all
divisions will have completed the inventory and assessment phases by March 31,
1999 and will have implemented initial remediation attempts and testing thereof
by June 30, 1999. The final step of the program is review by the Company's
outside consultant for Year 2000 readiness, a review that is ongoing. The
Company maintains a record of its progress to date for each of its domestic
divisions, and publishes those reports on its web site at www.epcorp.com.
 
     The Company's remaining costs to remediate the Year 2000 problem are not
expected to exceed $3.5 million. Of this amount, approximately $1.0 million will
be spent in the form of capital for systems replacement and approximately $1.5
million will be incremental costs. The remaining costs relate to the
redeployment of the Company's existing resources to assess and remediate the
Year 2000 problem. Projects being deferred by this issue include items such as
system enhancements that would improve performance or functionality. To date,
the Company estimates it has spent approximately $2.5 million in assessing and
remediating the Year 2000 problem, of which $1.0 million was for capital
equipment, $.8 million related to incremental costs and $.7 million related to
the redeployment of the Company's resources.
 
     The Company believes its greatest risk lies within its financial computer
systems and Electronic Data Interchange ("EDI") capabilities with its customers
and suppliers. The Company relies on customer requirements and outside services
for most of its EDI capabilities and therefore is dependent on such parties
addressing Year 2000 issues. If these systems were to fail, the Company would
encounter difficulty performing functions such as compiling financial data,
invoicing customers, accepting electronic customer orders or informing customers
of shipment electronically. While some of these functions could be performed
manually, the Company presently is not certain what the extent of the impact on
operations would be. There is also risk associated with certain suppliers,
including utility companies, over which the Company has little control.
 
     The Company is presently working on contingency plans on a case by case
basis to address issues related to potential failures of critical systems due to
Year 2000 problems identified in the risk assessment phase, and it expects to
have those plans in place by May 31, 1999. The Company believes that the most
likely worst case scenario will be limited to isolated disruptions that will
affect individual business processes, facilities, suppliers or customers for a
relatively short time.
 
     The Company presently believes that through the planned modification to
existing systems and conversion to new systems, as well as ongoing
correspondence with suppliers and customers, the Year 2000 issue will not
materially impair the Company's ability to conduct business.
 
EURO CONVERSION
 
     On January 1, 1999, eleven members of the European Union adopted the euro
as their common legal currency and established fixed conversion rates between
their existing local currencies and the euro. During the transition period,
which runs from January 1, 1999 through December 31, 2002, transactions may take
place using either the euro or a local currency. However, conversion rates will
no longer be computed directly from one local currency to another, but be
converted from one local currency into an amount denominated in euro, then be
converted from the euro denominated amount into the second local currency. On
July 1, 2002, the local currencies will no longer be legal tender for any
transactions.
 
                                       22
<PAGE>   24
 
     The Company has both operating divisions and domestic export customers
located in Europe. In 1998, combined revenues from these sources were
approximately 15% of total revenues. The Company has operations in Germany, the
Netherlands, France and Spain, which are participating in the euro conversion,
and the United Kingdom, which has elected not to participate at this time. The
affected operations plan to make the euro the functional currency sometime
during the transition period, although certain of the Company's European
operations have already entered into euro-based transactions, such as bank
borrowing and collection of accounts receivable.
 
     It is difficult to assess the competitive impact of the euro conversion on
the Company's operations, both in Europe and in the United States. In markets
where sales are made in U.S. dollars, there may be pressures to denominate sales
in the euro, however, exchange risks resulting from these transactions could be
mitigated through hedging. Pressures to price products in euro may be more
urgent for operations located in the United Kingdom, particularly in the
automotive industry, as the European automotive industry is somewhat dominated
by German companies. The currency risk to the operations located in the United
Kingdom could also be hedged, however the risk is greater on a regional level
that the hedging could result in additional costs that could harm the cost
competitiveness of those operations. It is not anticipated that changes to
information technology and other systems which are necessary for the euro
conversion will be material. The Company is currently assessing the impact the
euro conversion may have on items such as taxation and other issues.
 
RECENTLY ISSUED ACCOUNTING STANDARDS
 
     The following three new accounting standards will be effective for the
fiscal year ended November 30, 1999:
 
     In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income," which establishes standards for reporting and display of
comprehensive income and its components. This statement requires the Company to
report the components of comprehensive income, a measure of performance that
includes all non-owner sources of changes in equity, such as unrealized gains
and losses on securities available for sale and foreign currency translation
adjustments.
 
     In June 1997, the FASB also issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." The standard requires that
companies disclose "operating segments" based on the way management
disaggregates the company for making internal operating decisions, regardless of
how a company defines its operating segments.
 
     In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures
about Pensions and Other Postretirement Benefits." This standard does not change
the measurement or recognition of those plans, but standardizes disclosure
requirements for such plans.
 
     The Company believes that although these standards may require expanded
disclosure for the Company's consolidated financial statements, the impact of
these standards is not expected to be material.
 
     In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which addresses the accounting for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the balance sheet
and measure those instruments at fair value. The accounting for gains and losses
resulting from changes in the fair value of a derivative depends on the its
intended use and the resulting designation. The provisions of this statement are
effective for the first quarter of the fiscal year ending November 30, 2000. The
Company has not yet determined the impact this statement will have on its
financial position or the results of its operations.
 
FORWARD-LOOKING STATEMENTS
 
     This Form 10-K contains statements which, to the extent that they are not
recitations of historical fact, constitute "forward-looking statements" within
the meaning of Section 21E of the Securities and Exchange Act of 1934. The words
"estimate," "anticipate," "project," "intend," "believe," "expect," and similar
expressions are intended to identify forward-looking statements. Such forward
looking information involves important risks
                                       23
<PAGE>   25
 
and uncertainties that could materially alter results in the future from those
expressed in any forward-looking statements made by, or on behalf of, the
Company. These risks and uncertainties include, but are not limited to, the
ability of the Company to maintain existing relationships with customers; the
ability of the Company to successfully implement productivity improvements, cost
reduction initiatives and facilities expansion; the ability of the Company to
develop, market and sell new products and the ability of the Company to continue
to comply with environmental laws, rules and regulations. Other risks and
uncertainties include uncertainties relating to economic conditions,
acquisitions and divestitures, government and regulatory policies, technological
developments and changes in the competitive environment in which the Company
operates. Persons reading this Form 10-K are cautioned that such forward-looking
statements are only predictions and that actual events or results may differ
materially. In evaluating such statements, readers should specifically consider
the various factors which could cause actual events or results to differ
materially from those indicated by such forward-looking statements.
 
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
 
     The Company is exposed to market risk, including changes in interest rates,
currency exchange rates, and commodity prices. To manage the volatility relating
to these exposures, the Company enters into hedging instruments pursuant to the
Company's policies. The financial impacts of these instruments are offset by
corresponding changes in the underlying exposures being hedged. The Company does
not hold or issue derivative financial instruments for trading purposes.
 
  Interest Rate Management
 
     The Company's policy is to manage interest cost using a mix of fixed and
variable rate debt. To manage this mix in a cost-efficient manner, the Company
has entered into an interest rate swap, in which the Company agrees to exchange,
at specified intervals, the difference between fixed and variable interest
amounts calculated by reference to a notional principal amount of $150.0
million. This swap is designed to hedge a majority of the underlying Term Loan
Facility ($219.8 million balance at November 30, 1998). For all interest rate
hedges, the rate differential is reflected in current interest expense over the
life of the swaps.
 
     The remaining $69.8 million of the Term Loan Facility bears interest at the
variable rates described in Note F to the Consolidated Financial Statements. In
addition, the Company has a Revolving Loan Facility with a balance at November
30, 1998 of $19.8 million which also bears interest at the variable rates
described in Note F to the Consolidated Financial Statements. Accordingly, the
combined effect of a 1% increase in an applicable index rate would result in
additional interest expense of approximately $.9 million per year.
 
     The following table presents information for all dollar-denominated
interest rate instruments. In addition, the Company has several working capital
facilities denominated in deutchmark and pound sterling (see Note F to the
Consolidated Financial Statements). The fair value presented below approximates
the cost to settle the outstanding contract.
 
<TABLE>
<CAPTION>
                                                                     EXPECTED MATURITY DATE
                                           --------------------------------------------------------------------------
                                           1999    2000    2001     2002    2003    THEREAFTER    TOTAL    FAIR VALUE
                                           ----    ----    -----    ----    ----    ----------    -----    ----------
                                                                    (IN MILLIONS OF DOLLARS)
<S>                                        <C>     <C>     <C>      <C>     <C>     <C>           <C>      <C>
LIABILITIES
Long-Term Debt
  Variable Rate Debt ($).................  18.8    15.3     20.3    25.3    21.6      156.3       257.6      257.6
    Average Interest Rate................  6.83%   6.65%    6.50%   6.44%   6.53%      6.99%       6.65%
  Fixed Rate ($).........................   --      --        --     --      --       220.0       220.0      206.6
    Average Interest Rate................  9.38%   9.38%    9.38%   9.38%   9.38%      9.38%       9.38%
INTEREST RATE DERIVATIVES
Interest Rate Swaps
  Variable to Fixed ($)..................   --      --     150.0     --      --          --       150.0      (2.5)
    Average Pay Rate.....................  5.81%   5.81%    5.81%                                  5.81%
    Average Receive Rate.................  5.03%   5.03%    5.03%                                  5.03%
</TABLE>
 
                                       24
<PAGE>   26
 
  Currency Rate Management
 
     The Company manufactures and sells its products in a number of countries
throughout the world and, as a result, is exposed to movements in foreign
currency exchange rates. The major foreign currency exposures involve the
markets in Western Europe. The primary purpose of the Company's foreign currency
hedging activities is to protect against the volatility associated with: (1)
foreign currency purchases of materials and other assets; (2) foreign currency
sales of goods; and (3) intercompany purchase transactions. The Company utilizes
forward exchange contracts with duration of generally less than 12 months.
 
     Gains and losses related to hedges of foreign currency firm commitments or
anticipated transactions are included in the basis of the underlying
transactions. To the extent an anticipated transaction is no longer likely to
occur, the related hedge is closed with gains or losses charged to earnings on a
current basis.
 
     In the cases of (1) and (2) above, the Company places contracts on a
transaction-by-transaction basis matching foreign currency supply with
requirements. As such, the Company believes these contracts to be perfected
hedges. In the case of (3) above, the Company has several foreign operations
that purchase material from domestic divisions. The Company will place foreign
exchange contracts to cover a portion of anticipated yearly purchase
requirements for these foreign operations. At year end the Company had foreign
currency instruments of this type in notional amounts totaling $9.2 million.
Gains or losses on these instruments were not material.
 
  Credit Risk
 
     Credit risk arising from the inability of a counterparty to meet the terms
of the Company's financial instrument contracts is generally limited to the
amounts, if any, by which the counterparty's obligations exceed the obligations
of the Company. It is the Company's policy to enter into financial instruments
with a diversity of creditworthy counterparties. Therefore, the Company does not
expect to incur material credit losses on its risk management or other financial
instruments.
 
                                       25
<PAGE>   27
 
ITEM 8. FINANCIAL STATEMENTS
                         EAGLE-PICHER INDUSTRIES, INC.
 
                    CONSOLIDATED STATEMENTS OF INCOME (LOSS)
 
<TABLE>
<CAPTION>
                                                        THREE MONTHS
                                        NINE MONTHS         ENDED           YEAR ENDED NOVEMBER 30,
                                           ENDED        FEBRUARY 28,     ------------------------------
                                        NOVEMBER 30,        1998             1997             1996
                                            1998        PREDECESSOR A    PREDECESSOR A    PREDECESSOR B
                                        ------------    -------------    -------------    -------------
                                               (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<S>                                     <C>             <C>              <C>              <C>
Net Sales.............................  $    645,984      $205,842         $906,077        $  891,287
                                        ------------      --------         --------        ----------
OPERATING COSTS AND EXPENSES
Cost of products sold (exclusive of
  depreciation shown separately
  below)..............................       502,973       162,796          725,010           716,926
Selling and administrative............        58,460        17,141           77,109            81,505
Management compensation -- special....        26,808         2,056               --                --
Depreciation..........................        29,926         8,983           39,671            30,338
Amortization of intangibles...........        12,317         3,839           16,318               412
Loss on sale of divisions or assets...            30            --            2,411                --
                                        ------------      --------         --------        ----------
                                             630,514       194,815          860,519           829,181
                                        ------------      --------         --------        ----------
OPERATING INCOME......................        15,470        11,027           45,558            62,106
Adjustment for asbestos litigation....            --            --               --           502,197
Provision for other claims............            --            --               --            (4,244)
Interest expense (contractual interest
  of $9,889 in 1996)..................       (36,313)       (6,940)         (31,261)           (3,083)
Other income (expense)................         1,779           820             (251)            1,345
                                        ------------      --------         --------        ----------
INCOME (LOSS) BEFORE REORGANIZATION
  ITEMS, TAXES, EXTRAORDINARY ITEM AND
  CUMULATIVE EFFECT OF ACCOUNTING
  CHANGE..............................       (19,064)        4,907           14,046           558,321
Fresh start revaluation...............            --            --               --           118,684
Reorganization items..................            --            --               --            (2,349)
                                        ------------      --------         --------        ----------
INCOME (LOSS) BEFORE TAXES,
  EXTRAORDINARY ITEM AND CUMULATIVE
  EFFECT OF ACCOUNTING CHANGE.........       (19,064)        4,907           14,046           674,656
INCOME TAXES (BENEFIT)................        (4,700)        4,100           17,900            52,570
                                        ------------      --------         --------        ----------
INCOME (LOSS) BEFORE EXTRAORDINARY
  ITEM AND CUMULATIVE EFFECT OF
  ACCOUNTING CHANGE...................       (14,364)          807           (3,854)          622,086
EXTRAORDINARY ITEM -- GAIN ON
  DISCHARGE OF PRE-PETITION
  LIABILITIES.........................            --            --               --         1,525,540
CUMULATIVE EFFECT OF CHANGE IN
  ACCOUNTING FOR INVENTORIES..........            --            --               --            (1,235)
                                        ------------      --------         --------        ----------
  NET INCOME (LOSS)...................  $    (14,364)     $    807         $ (3,854)       $2,146,391
                                        ============      ========         ========        ==========
BASIC EARNINGS (LOSS) PER COMMON
  SHARE:
  INCOME (LOSS) BEFORE EXTRAORDINARY
     ITEM AND CUMULATIVE EFFECT OF
     ACCOUNTING CHANGE................  $(143,640.00)     $    .08         $   (.39)       $    56.34
  EXTRAORDINARY ITEM -- GAIN ON
     DISCHARGE OF PRE-PETITION
     LIABILITIES......................            --            --               --            138.17
  CUMULATIVE EFFECT OF CHANGE IN
     ACCOUNTING FOR INVENTORIES.......            --            --               --              (.11)
                                        ------------      --------         --------        ----------
BASIC EARNINGS (LOSS) PER COMMON
  SHARE...............................  $(143,640.00)     $    .08         $   (.39)       $   194.40
                                        ============      ========         ========        ==========
</TABLE>
 
          See accompanying notes to consolidated financial statements.
                                       26
<PAGE>   28
 
                         EAGLE-PICHER INDUSTRIES, INC.
 
                          CONSOLIDATED BALANCE SHEETS
 
                                  NOVEMBER 30
 
<TABLE>
<CAPTION>
                                                                              1997
                                                                1998      PREDECESSOR A
                                                              --------    -------------
                                                              (IN THOUSANDS OF DOLLARS)
<S>                                                           <C>         <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents...................................  $ 13,680      $ 53,739
Receivables, less allowances of $1,529 in 1998 and $1,614 in
  1997......................................................   144,844       133,952
Inventories.................................................    88,873        92,196
Prepaid expenses............................................     8,338         8,290
Deferred income taxes.......................................    10,851        13,793
                                                              --------      --------
          Total Current Assets..............................   266,586       301,970
                                                              --------      --------
PROPERTY, PLANT AND EQUIPMENT
Land and land improvements..................................    18,288        19,832
Buildings...................................................    62,868        65,289
Machinery and equipment.....................................   182,003       173,909
Construction in progress....................................    15,902        20,817
                                                              --------      --------
                                                               279,061       279,847
Less accumulated depreciation...............................    30,524        36,309
                                                              --------      --------
          Net Property, Plant and Equipment.................   248,537       243,538
                                                              --------      --------
DEFERRED INCOME TAXES.......................................        --        98,991
                                                              --------      --------
EXCESS OF ACQUIRED NET ASSETS OVER COST, net of accumulated
  amortization of $12,300...................................   228,910            --
                                                              --------      --------
REORGANIZATION VALUE IN EXCESS OF AMOUNTS ALLOCABLE TO
  IDENTIFIABLE ASSETS, net of accumulated amortization of
  $16,284 in 1997...........................................        --        48,837
                                                              --------      --------
OTHER ASSETS................................................    72,293        53,545
                                                              --------      --------
          TOTAL ASSETS......................................  $816,326      $746,881
                                                              ========      ========
</TABLE>
 
          See accompanying notes to consolidated financial statements.
                                       27
<PAGE>   29
 
                         EAGLE-PICHER INDUSTRIES, INC.
 
                          CONSOLIDATED BALANCE SHEETS
 
                                  NOVEMBER 30
 
<TABLE>
<CAPTION>
                                                                               1997
                                                                1998      PREDECESSOR A
                                                              ---------   --------------
                                                              (IN THOUSANDS OF DOLLARS,
                                                                EXCEPT PER SHARE DATA)
<S>                                                           <C>         <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable............................................  $ 50,307       $ 52,886
Compensation and employee benefits..........................    32,761         22,630
Long-term debt - current portion............................    25,173          3,403
Income taxes................................................     6,282          2,294
Reorganization items........................................    12,480         13,128
Other accrued liabilities...................................    29,019         19,661
                                                              --------       --------
          Total Current Liabilities.........................   156,022        114,002
                                                              --------       --------
LONG-TERM DEBT, less current portion........................   459,183        269,994
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS.................    17,590         21,681
DEFERRED INCOME TAXES.......................................     8,304             --
OTHER LONG-TERM LIABILITIES.................................     7,229          5,087
                                                              --------       --------
          TOTAL LIABILITIES.................................   648,328        410,764
                                                              --------       --------
SHAREHOLDER'S EQUITY
Common stock - no par value: authorized 20,000,000 shares;
  issued and outstanding 100 and 10,000,000 shares..........   180,005        341,807
Deficit.....................................................   (14,364)        (3,854)
Foreign currency translation gain (loss)....................     2,357         (1,836)
                                                              --------       --------
          TOTAL SHAREHOLDER'S EQUITY........................   167,998        336,117
                                                              --------       --------
          TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY........  $816,326       $746,881
                                                              ========       ========
</TABLE>
 
          See accompanying notes to consolidated financial statements.
                                       28
<PAGE>   30
 
                         EAGLE-PICHER INDUSTRIES, INC.
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                  THREE MONTHS
                                                   NINE MONTHS        ENDED          YEAR ENDED NOVEMBER 30,
                                                      ENDED       FEBRUARY 28,    -----------------------------
                                                   NOVEMBER 30,       1998            1997            1996
                                                       1998       PREDECESSOR A   PREDECESSOR A   PREDECESSOR B
                                                   ------------   -------------   -------------   -------------
                                                                    (IN THOUSANDS OF DOLLARS)
<S>                                                <C>            <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)..............................    $(14,364)      $    807        $ (3,854)      $2,146,391
  Adjustments to reconcile net income (loss) to
     net cash provided by (used in) operating
     activities:
       Changes due to reorganization activities:
          Extraordinary gain on discharge of
            pre-petition liabilities.............          --             --              --       (1,525,540)
          Fresh start revaluation................          --             --              --         (118,684)
       Adjustment for asbestos litigation........          --             --              --         (502,197)
       Provision for other claims................          --             --              --            4,244
       Cumulative effect of accounting change....          --             --              --            1,235
       Depreciation and amortization.............      44,309         12,822          55,989           30,750
       Proceeds from insurance settlements.......      14,784             --              --               --
       Loss on sale of divisions.................          --             --           2,411               --
       Changes in assets and liabilities, net of
          effects of divestitures:
            Receivables..........................       2,690         (4,705)        (14,562)          (7,664)
            Income tax refunds receivable........         736          1,024          70,695            3,535
            Inventories..........................       4,378         (2,235)         (3,393)          (6,283)
            Deferred income taxes................     (11,900)         2,600          15,700           29,170
            Accounts payable.....................       1,522         (2,787)         16,351              657
            Accrued liabilities..................      25,983         (5,488)          7,698            3,167
            Other................................       7,409        (11,121)            848           14,080
                                                     --------       --------        --------       ----------
            Net cash provided by (used in)
               operating activities..............      75,547         (9,083)        147,883           72,861
                                                     --------       --------        --------       ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sale of divisions................       7,872             --          39,007            4,248
  Capital expenditures...........................     (26,260)        (5,692)        (51,324)         (44,957)
  Other..........................................       1,770         (1,042)         (1,510)          (1,061)
                                                     --------       --------        --------       ----------
            Net cash used in investing
               activities........................     (16,618)        (6,734)        (13,827)         (41,770)
                                                     --------       --------        --------       ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Issuance of long-term debt.....................       2,094        445,000          12,997               --
  Reduction of long-term debt....................      (5,600)      (250,360)       (126,039)          (3,198)
  Borrowings (repayments) under revolving credit
     agreement...................................     (59,275)        79,100              --               --
  Redemption of common stock.....................          --       (446,638)             --               --
  Issuance of common stock.......................          --        180,005              --               --
  Debt issuance costs............................      (1,435)       (26,062)             --               --
                                                     --------       --------        --------       ----------
            Net cash used in financing
               activities........................     (64,216)       (18,955)       (113,042)          (3,198)
                                                     --------       --------        --------       ----------
CASH PAYMENTS ON EFFECTIVE DATE OF PLAN OF
  REORGANIZATION.................................          --             --              --          (88,498)
                                                     --------       --------        --------       ----------
Net increase (decrease) in cash and cash
  equivalents....................................      (5,287)       (34,772)         21,014          (60,605)
                                                     --------       --------        --------       ----------
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD...      18,967         53,739          32,725           93,330
                                                     --------       --------        --------       ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD.........    $ 13,680       $ 18,967        $ 53,739       $   32,725
                                                     ========       ========        ========       ==========
</TABLE>
 
          See accompanying notes to consolidated financial statements.
                                       29
<PAGE>   31
 
                         EAGLE-PICHER INDUSTRIES, INC.
 
           CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
 
   NINE MONTHS ENDED NOVEMBER 30, 1998, THREE MONTHS ENDED FEBRUARY 28, 1998
                   AND YEARS ENDED NOVEMBER 30, 1997 AND 1996
 
<TABLE>
<CAPTION>
                                                                         UNREALIZED       FOREIGN                       TOTAL
                                            ADDITIONAL                   GAIN (LOSS)      CURRENCY                  SHAREHOLDERS'
                                COMMON       PAID-IN                         ON         TRANSLATIONS    TREASURY       EQUITY
                                 STOCK       CAPITAL        DEFICIT      INVESTMENTS    GAIN (LOSS)      STOCK        (DEFICIT)
  (IN THOUSANDS OF DOLLARS)    ---------    ----------    -----------    -----------    ------------    --------    -------------
<S>                            <C>          <C>           <C>            <C>            <C>             <C>         <C>
BALANCE NOVEMBER 30, 1995....  $  13,906     $36,378      $(2,261,289)      $333           $1,277       $(1,913)     $(2,211,308)
  Net income.................         --          --        2,146,391         --               --            --        2,146,391
  Foreign currency
    translation..............         --          --               --         --              129            --              129
  Unrealized loss on
    investment...............         --          --               --       (141)              --            --             (141)
  Cancellation of the former
    common shares per the
    Plan of Reorganization...    (13,906)    (36,378)          48,371         --               --         1,913               --
  Issuance of the new common
    shares per the Plan of
    Reorganization...........    341,807          --               --         --               --            --          341,807
  Fresh-start revaluation....         --          --           66,527       (192)          (1,406)           --           64,929
                               ---------     -------      -----------       ----           ------       -------      -----------
BALANCE NOVEMBER 30, 1996....    341,807          --               --         --               --            --          341,807
  Net loss...................         --          --           (3,854)        --               --            --           (3,854)
  Foreign currency
    translation..............         --          --               --         --           (1,836)           --           (1,836)
                               ---------     -------      -----------       ----           ------       -------      -----------
BALANCE NOVEMBER 30, 1997....    341,807          --           (3,854)        --           (1,836)           --          336,117
  Net income.................         --          --              807         --               --            --              807
  Foreign currency
    translation..............         --          --               --         --           (1,809)           --           (1,809)
  Redemption of common
    stock....................   (341,807)         --         (104,831)        --               --            --         (446,638)
  Issuance of common stock...    180,005          --               --         --               --            --          180,005
  Revaluation of net assets
    due to effects of the
    Acquisition..............         --          --          107,878         --            3,645            --          111,523
                               ---------     -------      -----------       ----           ------       -------      -----------
BALANCE FEBRUARY 28, 1998....    180,005          --               --         --               --            --          180,005
  Net loss...................         --          --          (14,364)        --               --            --          (14,364)
  Foreign currency
    translation..............         --          --               --         --            2,357            --            2,357
BALANCE NOVEMBER 30, 1998....  $ 180,005          --      $   (14,364)      $ --           $2,357       $    --      $   167,998
                               =========     =======      ===========       ====           ======       =======      ===========
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                       30
<PAGE>   32
 
                         EAGLE-PICHER INDUSTRIES, INC.
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 NINE MONTHS ENDED NOVEMBER 30, 1998, THREE MONTHS ENDED FEBRUARY 28, 1998 AND
                     YEARS ENDED NOVEMBER 30, 1997 AND 1996
 
              (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
 
A. SIGNIFICANT ACCOUNTING POLICIES
 
  Purchase Accounting
 
     Eagle-Picher Holdings, Inc. ("Parent") acquired Eagle-Picher Industries,
Inc. ("Company") on February 24, 1998 ("Acquisition") (See Note B). The Company,
which is the operating entity, is a wholly-owned subsidiary of the Parent, which
was formed as an acquisition vehicle.
 
     The Acquisition was accounted for as a purchase. The purchase price has
been allocated to the assets and liabilities of the Company based on their
respective fair values as determined primarily by independent appraisals. The
excess of the purchase price over the assessed values of the net assets was
allocated to Excess of Acquired Net Assets Over Cost and is being amortized over
15 years. If it becomes apparent that additional purchase price allocations are
necessary, such adjustments would be made before February 24, 1999. It is not
expected that additional adjustments would be material. A vertical black line is
shown in the consolidated financial statements to separate operations after the
Acquisition from those prior to the Acquisition since such financial statements
have not been prepared on a comparable basis. Periods prior to the Acquisition
are labeled with certain "Predecessor" designations, as described below.
 
  Reporting for Reorganization
 
     The Company accounted for all transactions related to its chapter 11
proceedings and reorganization in accordance with Statement of Position 90-7
("SOP 90-7"), "Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code" (See Note C). The Company emerged from reorganization November
29, 1996 ("Effective Date") and, in accordance with SOP 90-7, adopted
fresh-start reporting. Fresh-start reporting requires valuation of assets and
liabilities at fair value and valuation of equity based on the appraised
reorganization value of the ongoing business, which resulted in a fresh-start
revaluation gain of $118,684 in 1996. The adjustments to reflect the Company's
emergence from bankruptcy and fresh-start reporting have been reflected in the
accompanying consolidated financial statements. Accordingly, a vertical black
line is shown in the consolidated financial statements to separate
post-emergence operations from those prior to November 29, 1996 since they have
not been prepared on a comparable basis.
 
     The consolidated financial statements for the periods prior to the
Acquisition but subsequent to the Effective Date are labeled "Predecessor A" to
indicate they were prepared after adopting fresh-start reporting. The
consolidated financial statements for the year ended November 30, 1996 are
labeled "Predecessor B."
 
  Principles of Consolidation
 
     The consolidated financial statements of the Company include the accounts
of the Company's subsidiaries which are more than 50% owned and controlled.
Intercompany accounts and transactions have been eliminated. Investments in
unconsolidated affiliates which are at least 20% owned and over which the
Company exercises significant influence are accounted for using the equity
method.
 
  Revenue Recognition
 
     Sales are recognized primarily upon shipment of products except for a
division of the Company that sells products under contracts and subcontracts
with various United States Government agencies and aerospace and defense
contractors. On cost-reimbursable contracts, sales are recognized as costs are
incurred and include a portion of the total estimated earnings to be realized in
the ratio that costs incurred relate to total estimated costs. On fixed-price
contracts, sales are recognized using the percentage of completion method, when
deliveries are
 
                                       31
<PAGE>   33
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
made or upon completion of specified tasks. Contract losses are provided for in
their entirety in the period they become known, without regard to the
percentage-of-completion.
 
  Use of Estimates
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.
 
  Cash and Cash Equivalents
 
     Marketable securities with original maturities of three months or less are
considered to be cash equivalents.
 
  Financial Instruments
 
     The Company's 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
carrying values of these financial instruments, with the exception of long-term
debt and preferred stock, approximate fair value (See Notes F and G).
 
     Financial instruments, which potentially expose the Company to
concentrations of credit risk, consist primarily of cash and cash equivalents
and trade accounts receivable. The Company's customer base includes all
significant automotive manufacturers and their first tier suppliers in North
America and Europe. Although the Company is directly affected by the well-being
of the automotive industry, management does not believe significant credit risk
existed at November 30, 1998.
 
  Inventories
 
     Inventories are valued at the lower of cost or market, which approximates
current replacement cost. A substantial portion of domestic inventories are
valued using the last-in first-out ("LIFO") method while the balance of the
Company's inventories are valued using the first-in first-out method.
 
  Property, Plant and Equipment
 
     The Company records its investment in property, plant and equipment at
cost. The Company provides for depreciation of plant and equipment using the
straight-line method over the estimated lives of the assets which are generally
20 to 40 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. In
accordance with purchase accounting, property, plant and equipment in service at
February 24, 1998 were stated at fair value, based on independent appraisals, as
of that date.
 
  Intangible Assets
 
     The excess of acquired net assets over cost is being 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 amount. The reorganization value in excess of amounts allocable to
identifiable assets was being amortized using the straight-line method over four
years.
 
  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.
 
                                       32
<PAGE>   34
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
  Environmental Remediation Costs
 
     The Company accrues for environmental expenses resulting from existing
conditions relating to past operations when the costs are probable and
reasonably estimable. The estimated liabilities are not discounted or reduced
for possible recoveries from insurance carriers.
 
  Income Taxes
 
     Income taxes are provided 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 using existing tax rates.
 
  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 generally are excluded from the results of operations
and accumulated in a separate component of Shareholders' Equity. Gains and
losses from foreign currency transactions are included in the determination of
net income (loss) and were not material.
 
  Reclassifications
 
     Certain prior year amounts have been reclassified to conform with the 1998
consolidated financial statement presentation.
 
  New Accounting Standards
 
     In 1998, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings per Share." Adoption of SFAS No. 128, which revised
the manner in which earnings per share is calculated, did not impact the
Company's previously reported earnings per share.
 
     The following three new accounting standards will be effective for the
fiscal year ended November 30, 1999:
 
     In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 130, "Reporting Comprehensive Income," which established standards for
reporting and display of comprehensive income and its components. This statement
requires the Company to report, for each period presented, the components of
comprehensive income, a measure of performance that includes all non-owner
sources of changes in equity. In addition to net income, comprehensive income
would include unrealized gains and losses on securities available for sale and
foreign currency translation adjustments.
 
     In June 1997, the FASB also issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." The standard requires that
companies disclose "operating segments" based on the way management
disaggregates the company for making internal operating decisions, regardless of
how a company defines its operating segments.
 
     In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures
about Pensions and Other Postretirement Benefits." This standard does not change
the measurement or recognition of those plans, but standardizes disclosure
requirements for such plans.
 
     The Company believes that although these standards may require expanded
disclosure for the Company's consolidated financial statements, the impact of
these standards is not expected to be material.
 
     In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which addresses the accounting for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the balance sheet
and measure those instruments at fair value. The accounting for changes
                                       33
<PAGE>   35
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
in the fair value of a derivative (that is gains and losses) depends on the
intended use of the derivative and the resulting designation. The provisions of
this statement are effective for the first quarter of the fiscal year ending
November 30, 2000. The Company has not yet determined the effects this standard
will have on its financial position or the results of its operations.
 
B. ACQUISITION OF EAGLE-PICHER INDUSTRIES, INC.
 
     On February 24, 1998 ("Closing Date"), the Parent, which is a
majority-owned subsidiary of Granaria Industries B.V. ("Granaria Industries"),
acquired the Company from the Eagle-Picher Industries, Inc. Personal Injury
Settlement Trust ("PI Trust"). The PI Trust was established pursuant to the
Company's Plan of Reorganization upon its emergence from bankruptcy (See Note
C).
 
     The PI Trust was paid $702,500 in consideration, of which $255,900 was for
repayment of the Senior Sinking Fund Debentures ("Debentures"), held by the PI
Trust, with interest. The Company issued 100 shares of common stock to the
Parent, the total proceeds of which were $180,005. The Company issued $220,000
of 9 3/8% Senior Subordinated Notes ("Subordinated Notes") and borrowed $225,000
in term loans and $79,100 in revolving loans under a syndicated senior loan
facility (See Note F).
 
     Fees and expenses related to the Acquisition and the related financing
transactions were approximately $27,500, including fees paid to Granaria
Holdings B.V. ("Granaria Holdings"), which owns a majority of the outstanding
common stock of Granaria Industries (See Note P). Shortly after the Acquisition,
the Company also funded a trust established for the benefit of certain members
of Senior Management (See Note J).
 
     The consolidated financial statements as of and for the three months ended
February 28, 1998 include the effects of the Acquisition as of February 24,
1998. Accordingly, the consolidated statement of income (loss) for the three
months ended February 28, 1998 includes results of operations from (1) December
1, 1997 through February 24, 1998 of the Company prior to the consummation of
the Acquisition (for clarity, sometimes referred to herein as the "Predecessor
Company A") and (2) the four days ended February 28, 1998 of the Company, which
have been reflected as Predecessor Company A due to their immaterial impact of
the results of operations and cash flows.
 
     The following pro forma information for the years ended November 30, 1998
and 1997 gives effect to the Acquisition as if it had been consummated on
December 1, 1997 and 1996, respectively. This information is not necessarily
indicative of either the future results of operations or the results of
operations that would have occurred if those events had been consummated on the
indicated dates.
 
<TABLE>
<CAPTION>
                                                       1998            1997
                                                   ------------    ------------
                                                           (UNAUDITED)
<S>                                                <C>             <C>
Net Sales........................................  $    851,826    $    906,077
Net income (loss)................................  $    (16,637)   $    (26,931)
Net income (loss) per share......................  $(166,370.00)   $(269,310.00)
Average number of shares outstanding.............           100             100
</TABLE>
 
C. REORGANIZATION AND EMERGENCE FROM CHAPTER 11
 
     On November 18, 1996, the U.S. Bankruptcy Court for the Southern District
of Ohio, Western Division ("Bankruptcy Court"), together with the U.S. District
Court for the Southern District of Ohio, Western Division issued an order
("Confirmation Order") confirming the Third Amended Consolidated Plan of
Reorganization ("Plan") of the Company and seven of its domestic subsidiaries,
which became effective on November 29, 1996 ("Effective Date"). The order
confirming the Plan contains a permanent injunction which precludes holders of
present and future asbestos or lead-related personal injury claims from pursuing
their claims against the
 
                                       34
<PAGE>   36
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
reorganized Company. Those claims will be channeled to the PI Trust, which is an
independently administered qualified settlement trust which was established to
resolve and satisfy those claims.
 
     The Plan was based on a settlement of $2,000,000 for the Company's
liability for present and future asbestos-related personal injury claims. As a
result of the settlement, which was reached in the third quarter of 1996, an
adjustment was made to the consolidated financial statements to reduce the
asbestos liability subject to compromise from $2,502,197, the amount the
Bankruptcy Court had previously estimated as the Company's liability for
asbestos-related personal injury claims.
 
     The Plan resulted in the discharge of pre-petition liabilities through the
distribution of cash and securities to the PI Trust and the other creditors. The
Company's then-existing shareholders received no distribution and their shares
were canceled. The value of the consideration distributed and expected to be
distributed to the PI Trust and other unsecured creditors was less than the
amount of the allowed claims resulting in an extraordinary gain of $1,525,540.
 
     It is anticipated that a final distribution will be made to the PI Trust
and all unsecured claimants, other than those holding convenience claims ("Final
Distribution"), when all claims asserted in the chapter 11 cases prior to the
Confirmation Order (other than those channeled to the PI Trust and a separate
trust to be established to resolve property damage claims) are resolved. Based
on certain assumptions, the Company anticipates that holders of general
unsecured claims will ultimately receive consideration having a value equal to
approximately 37% of their allowed claims.
 
     The Unofficial Asbestos Co-Defendants' Committee filed an appeal with
respect to the Confirmation Order. On December 22, 1998, the United States Court
of Appeals for the Sixth Circuit affirmed the Confirmation Order.
 
D. INVENTORIES
 
     Inventories consisted of:
 
<TABLE>
<CAPTION>
                                                          1998          1997
                                                         -------    -------------
                                                                    PREDECESSOR A
<S>                                                      <C>        <C>
Raw materials and supplies.............................  $52,657       $51,797
Work-in-process........................................   20,839        25,932
Finished goods.........................................   15,873        14,840
                                                         -------       -------
                                                          89,369        92,569
Adjustment to state inventory at LIFO value............     (496)         (373)
                                                         -------       -------
                                                         $88,873       $92,196
                                                         =======       =======
</TABLE>
 
     The percentage of inventories valued using the LIFO method was 81% in 1998
and 1997. In conjunction with purchase accounting and fresh-start reporting, new
LIFO base layers were established based on inventory levels at both March 1,
1998 and December 1, 1996, respectively. The effects of liquidations of LIFO
inventory quantities carried at lower costs prevailing in prior years were not
material.
 
     Effective December 1, 1995, the Company changed its method of computing
LIFO inventories of boron, germanium and other rare metals from a
double-extension method to an index method. The Company believes that the index
method results in better matching of revenues and expenses. The cumulative
effect of the change on prior years was $1,200 on an after tax basis. The effect
of this change was to increase net income $8,100 in fiscal year 1996.
 
                                       35
<PAGE>   37
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
E. OTHER ASSETS
 
     Other assets consisted of:
 
<TABLE>
<CAPTION>
                                                          1998          1997
                                                         -------    -------------
                                                                    PREDECESSOR A
<S>                                                      <C>        <C>
Prepaid pension cost -- Note K.........................  $42,813       $36,621
Debt issuance costs, net of accumulated amortization of
  $2,066...............................................   22,430            --
Investments in and receivables from unconsolidated
  affiliates...........................................      461         8,732
Notes receivable -- Note O.............................    3,601         3,920
Other..................................................    2,988         4,272
                                                         -------       -------
                                                         $72,293       $53,545
                                                         =======       =======
</TABLE>
 
     The debt issuance costs are being amortized on a straight-line basis over
the term of the related debt.
 
     On June 1, 1997, the Company contributed certain of the assets of the
former Suspension Systems Division totaling $5,100 to a joint venture,
Eagle-Picher-Boge, L.L.C. ("E-P-Boge"). The Company retained a 45% interest in
E-P-Boge and recorded no gain or loss on this transaction. The Company accounted
for this investment in accordance with the equity method. The Company also
received a note from E-P-Boge in the amount of $2,827. On November 30, 1998, the
note was repaid and the majority partner exercised its option to purchase the
Company's interest in E-P-Boge. The impact of this transaction on the
consolidated net loss was not material. Included in the Consolidated Statements
of Income (Loss) are the following results of the former Suspension Systems
Division:
 
<TABLE>
<CAPTION>
                                                          1997             1996
                                                      -------------    -------------
                                                      PREDECESSOR A    PREDECESSOR B
<S>                                                   <C>              <C>
Net Sales...........................................     $10,577          $19,606
                                                         =======          =======
Operating Income (Loss).............................     $    96          $  (998)
                                                         =======          =======
</TABLE>
 
F. LONG-TERM DEBT, SHORT TERM BORROWINGS AND LEASE COMMITMENTS
 
     On the Closing Date, the Company's existing $60,000 unsecured committed
revolving credit facility was terminated. It was replaced by a syndicated senior
secured loan facility ("Credit Agreement") which provided $225,000 in term loans
("Term Loans") and a $160,000 revolving credit facility ("Facility"), of which
$79,100 was drawn at the time of closing. The Facility is also available for
issuance of letters of credit. At November 30, 1998, letters of credit totaling
$26,300 were outstanding, which together with borrowings of $19,800, left the
Company with $113,900 of borrowing capacity.
 
     The Credit Agreement is guaranteed by the Parent and the United States
subsidiaries of the Company. It is secured by the capital stock of the Company
and its United States subsidiaries, up to 65% of the capital stock of foreign
subsidiaries and substantially all other property of the Company and its United
States subsidiaries. The Credit Agreement contains covenants which restrict or
limit the Company's 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 the Company to meet certain minimum
financial coverages. The Company was in compliance with all covenants at
November 30, 1998.
 
                                       36
<PAGE>   38
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     Long-term debt consisted of:
 
<TABLE>
<CAPTION>
                                                                1998          1997
                                                              --------    -------------
                                                                          PREDECESSOR A
<S>                                                           <C>         <C>
New Credit Agreement:
  Revolving Credit Facility.................................  $ 19,825      $     --
     7.28%, due 2004
  Term Loans:
     Traunche A.............................................    95,000            --
       7.28%, due 2003
     Traunche B.............................................    49,900            --
       7.66%, due 2005
     Traunche C.............................................    74,900            --
       7.91%, due 2006
Senior Subordinated Notes...................................   220,000            --
  9 3/8%, due 2008
Senior Unsecured Sinking Fund Debentures....................        --       250,000
  10%, due 2006
Industrial Revenue Bonds....................................    18,000        18,400
  3.6 % to 5.0 %, due 2005 and 2012
Debt of Foreign Subsidiaries................................     6,731         4,997
                                                              --------      --------
                                                               484,356       273,397
Less current portion........................................    25,173         3,403
                                                              --------      --------
Long-term debt, less current portion........................  $459,183      $269,994
                                                              ========      ========
</TABLE>
 
     The Facility bears interest, at the Company's option, of an adjusted LIBOR
rate plus 2 1/4% or the bank's prime rate plus 1 1/4%. There is a commitment fee
equal to  1/2% per annum on the undrawn portion of the Facility and fees for
letters of credit are equal to 2 1/4% per annum. If the Company meets certain
financial benchmarks, the interest rate spreads and commitment fees may be
reduced.
 
     The Term Loans bear interest, at the Company's option, of an adjusted LIBOR
rate plus spreads varying from 2 1/4% to 2 7/8% or the bank's prime rate plus
spreads varying from 1 1/4% to 1 7/8%. If the Company meets certain financial
benchmarks, the interest rate spreads may be reduced. In addition to regularly
scheduled payments, the Company is required to make mandatory prepayments, which
are applied on a pro rata basis to the Term Loans, of 60% 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 new debt issued and
50% of the net proceeds of any equity securities issued. For the year ended
November 30, 1998, the excess cash flow payment, which will be applied in the
first quarter of 1999, was calculated to be $8,477.
 
     To manage its variable interest rate exposure on the Term Loans, the
Company entered into a three year interest rate swap agreement ("Swap
Agreement"), in which the Company agreed to exchange, at specified intervals,
the difference between fixed and variable interest amounts based on a notional
principal amount of $150,000. The Swap Agreement effectively fixes the interest
rate on $150,000 of the Terms Loans at a weighted rate of 8.35%. The difference
between the amount of interest to be paid and the amount of interest to be
received under the Swap Agreement due to changing interest rates is charged or
credited to interest expense over the life of the agreement. The fair value of
the Swap Agreement, which was determined using discounted cash flow analysis
based on current rates offered for similar issues of debt, is approximately
$(2,550). As interest rates on the remaining Term Loans and the outstanding
amounts under the Facility are not fixed, the effect of a one percent
 
                                       37
<PAGE>   39
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
increase in the applicable index rate would result in approximately $900 in
additional interest expense annually, based on balances outstanding at November
30, 1998.
 
     The Subordinated Notes, which are unsecured, are redeemable at the option
of the Company, in whole or in part, any time after February 28, 2003 at set
redemption prices. The Company may also redeem up to 35% of the aggregate
principal amount of the Subordinated Notes prior to March 1, 2001 at a set
redemption price provided certain conditions are met. The Company is also
required to offer to purchase the Subordinated Notes at a set redemption price
should there be a change in control of the Company. The Indenture for the
Subordinated Notes contains covenants which restrict or limit the Subsidiary's
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. The Subordinated Notes are also guaranteed by the Parent and the United
States Subsidiaries of the Company.
 
     The Company issued the Debentures to the PI Trust on the Effective Date in
the amount of $250,000. The Debentures were repaid in conjunction with the
Acquisition.
 
     The Company's industrial revenue bonds bear interest at variable rates
based on the market for similar issues and are secured by letters of credit.
 
     Several of the Company's foreign subsidiaries have entered into agreements
with various banks which provide lines of credit totaling approximately $28,700
at November 30, 1998. At November 30, 1998, $6,700 of borrowings were
outstanding leaving $22,000 in borrowing capacity. These agreements, of which
the substantial majority is unsecured, are either committed lines of credit
expiring in 2001 and 2002 or short-term money market or overdraft facilities,
generally due on demand or within a year. The annual rates of interest on these
lines of credit generally range from .75% to 1.5% over the banks' base rates.
The commitment fees range from .25% to .35% per annum on the unused portion of
the committed facilities. These agreements also contain covenants which include
minimum financial requirements. The Company is in compliance with these
covenants at November 30, 1998.
 
     Long term debt had an estimated fair value of approximately $471,000 and
$287,000 at November 30, 1998 and 1997, respectively. The estimated fair value
of long-term debt was calculated based on market prices for publicly traded
issues and was calculated using discounted cash flow analysis based on current
rates offered for similar issues for all other long-term debt.
 
     The Company paid interest of $28,886 in the nine months ended November 30,
1998 and $6,390, which included the interest paid on the Debentures at the time
of the Acquisition, during the three months ended February 28, 1998, $31,044 in
1997 and $2,767 in 1996.
 
     Long-term debt is scheduled to mature over the next five years as follows:
$25,173 in 1999, $15,300 in 2000, $20,635 in 2001, $25,300 in 2002 and $21,600
in 2003.
 
SUBSEQUENT EVENT
 
     In the first quarter of 1999, the Company will require an additional
$14,100 in letters of credit over and above the $26,300 that existed at November
30, 1998. The new letters of credit are associated with existing environmental
remediation and are necessitated by financial assurance requirements set forth
by the United States Environmental Protection Agency. These additional letters
of credit will reduce available borrowing capacity.
 
LEASE COMMITMENTS
 
     Future minimum rental commitments over the next five years as of November
30, 1998 under noncancellable operating leases, which expire at various dates,
are as follows: $3,100 in 1999, $2,500 in 2000, $1,300 in 2001, $600 in 2002 and
$400 in 2003. Rental expense was approximately $3,700 in the nine months ended
November 30, 1998, $1,200 in the three months ended February 28, 1998, and
$4,900 and $5,000 in 1997 and 1996, respectively.
                                       38
<PAGE>   40
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
G. SUPPLEMENTAL GUARANTOR INFORMATION (UNAUDITED)
 
     Both the Credit Agreement and the Subordinated Notes are guaranteed on a
full, unconditional, and joint and several basis by certain of the Company's
wholly-owned domestic subsidiaries and the Parent ("Guarantors"). Management has
determined that full financial statements of the Guarantors would not be
material to investors and such financial statements are not presented. The
following unaudited supplemental condensed combining financial statements
present information regarding the Company ("Issuer"), subsidiary Guarantors and
the subsidiaries that did not guarantee the debt.
 
                                       39
<PAGE>   41
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
          SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF INCOME (LOSS)
 
                      NINE MONTHS ENDED NOVEMBER 30, 1998
 
<TABLE>
<CAPTION>
                                                                 NON-GUARANTORS
                                                    SUBSIDIARY      FOREIGN
                                          ISSUER    GUARANTORS    SUBSIDIARIES    ELIMINATIONS    TOTAL
                                         --------   ----------   --------------   ------------   --------
                                                                   (UNAUDITED)
<S>                                      <C>        <C>          <C>              <C>            <C>
Net Sales
     Customers.........................  $195,851    $374,337       $75,796         $     --     $645,984
     Intercompany......................    11,183       6,491         5,157          (22,831)          --
Operating Costs and Expenses
     Cost of products sold.............   154,001     303,620        68,074          (22,722)     502,973
     Selling and administrative........    33,481      17,439         7,672             (132)      58,460
     Management compensation...........    26,808          --            --               --       26,808
     Intercompany charges..............    (5,919)      5,919          (132)             132           --
     Depreciation......................     8,810      18,196         3,142             (222)      29,926
     Amortization of intangibles.......     4,259       7,317           741               --       12,317
     Loss on sale of assets............       (25)         18            37               --           30
                                         --------    --------       -------         --------     --------
          Total........................   221,415     352,509        79,534          (22,944)     630,514
                                         --------    --------       -------         --------     --------
Operating Income (Loss)................   (14,381)     28,319         1,419              113       15,470
Other Income (Expense)
     Interest expense..................   (35,888)         --          (425)              --      (36,313)
     Other income (expense)............       978         313           490               (2)       1,779
                                         --------    --------       -------         --------     --------
Income (Loss) Before Taxes.............   (49,291)     28,632         1,484              111      (19,064)
Income Taxes...........................   (14,353)      7,803         1,850               --       (4,700)
                                         --------    --------       -------         --------     --------
Net Income (Loss)......................  $(34,938)   $ 20,829       $  (366)        $    111     $(14,364)
                                         ========    ========       =======         ========     ========
</TABLE>
 
                                       40
<PAGE>   42
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
          SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF INCOME (LOSS)
 
                      THREE MONTHS ENDED FEBRUARY 28, 1998
 
                                 PREDECESSOR A
 
<TABLE>
<CAPTION>
                                                                 NON-GUARANTORS
                                                    SUBSIDIARY      FOREIGN
                                          ISSUER    GUARANTORS    SUBSIDIARIES    ELIMINATIONS    TOTAL
                                          -------   ----------   --------------   ------------   --------
                                                                    (UNAUDITED)
<S>                                       <C>       <C>          <C>              <C>            <C>
Net Sales
  Customers.............................  $61,071    $123,181       $21,590         $    --      $205,842
  Intercompany..........................    3,381       2,421         1,451          (7,253)           --
Operating Costs and Expenses
  Cost of products sold.................   48,329     102,771        18,772          (7,076)      162,796
  Selling and administrative............    9,673       5,167         2,301              --        17,141
  Management compensation...............    2,056          --            --              --         2,056
  Intercompany charges..................   (2,172)      2,172            --              --            --
  Depreciation..........................    2,823       5,220           940              --         8,983
  Amortization of intangibles...........      765       3,064            10              --         3,839
                                          -------    --------       -------         -------      --------
     Total..............................   61,474     118,394        22,023          (7,076)      194,815
                                          -------    --------       -------         -------      --------
Operating Income (Loss).................    2,978       7,208         1,018            (177)       11,027
Other Income (Expense)
  Interest expense......................   (6,844)         --           (96)             --        (6,940)
  Other income (expense)................      812         333          (325)             --           820
                                          -------    --------       -------         -------      --------
Income (Loss) Before Taxes..............   (3,054)      7,541           597            (177)        4,907
Income Taxes............................    1,083       2,486           531              --         4,100
                                          -------    --------       -------         -------      --------
Net Income (Loss).......................  $(4,137)   $  5,055       $    66         $  (177)     $    807
                                          =======    ========       =======         =======      ========
</TABLE>
 
                                       41
<PAGE>   43
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
                 SUPPLEMENTAL CONDENSED COMBINED BALANCE SHEETS
 
                            AS OF NOVEMBER 30, 1998
 
<TABLE>
<CAPTION>
                                                                  NON-GUARANTORS
                                                     SUBSIDIARY      FOREIGN
                                           ISSUER    GUARANTORS    SUBSIDIARIES    ELIMINATIONS    TOTAL
                                          --------   ----------   --------------   ------------   --------
                                                                    (UNAUDITED)
<S>                                       <C>        <C>          <C>              <C>            <C>
ASSETS
Cash and cash equivalents...............  $  7,464    $    712       $ 5,125        $     379     $ 13,680
Receivables.............................    55,611      74,292        14,941               --      144,844
Intercompany accounts receivable........        --          --         7,442           (7,442)          --
Inventories.............................    30,755      43,708        15,785           (1,375)      88,873
Prepaid expenses........................     4,073       3,614           651               --        8,338
Deferred income taxes...................    10,851          --            --               --       10,851
                                          --------    --------       -------        ---------     --------
     Total current assets...............   108,754     122,326        43,944           (8,438)     266,586
Property, Plant and Equipment...........    66,500     143,872        38,165               --      248,537
Investment in Subsidiaries..............    87,019       6,252            --          (93,271)          --
Excess of Assets Acquired Over Cost.....    78,838     136,253        13,819               --      228,910
Other Assets............................    54,187      17,675           431               --       72,293
                                          --------    --------       -------        ---------     --------
     Total Assets.......................  $395,298    $426,378       $96,359        $(101,709)    $816,326
                                          ========    ========       =======        =========     ========
LIABILITIES AND SHAREHOLDER'S EQUITY
Accounts payable........................  $ 15,149    $ 24,664       $10,494        $      --     $ 50,307
Intercompany accounts payable...........        --          --         7,662           (7,662)          --
Long-term debt -- current portion.......    18,777          --         6,396               --       25,173
Income taxes............................     5,296          --           986               --        6,282
Other current liabilities...............    45,744      24,464         4,052               --       74,260
                                          --------    --------       -------        ---------     --------
     Total current liabilities..........    84,966      49,128        29,590           (7,662)     156,022
Long-term Debt -- less current
  portion...............................   458,848          --           335               --      459,183
Deferred Income Taxes...................     8,304          --            --               --        8,304
Other Liabilities.......................    24,819          --            --               --       24,819
                                          --------    --------       -------        ---------     --------
     Total liabilities..................   576,937      49,128        29,925           (7,662)     648,328
Intercompany Accounts...................  (326,706)    309,571        29,768          (12,633)          --
Shareholder's Equity....................   145,067      67,679        36,666          (81,414)     167,998
                                          --------    --------       -------        ---------     --------
     Total Liabilities and Shareholder's
       Equity...........................  $395,298    $426,378       $96,359        $(101,709)    $816,326
                                          ========    ========       =======        =========     ========
</TABLE>
 
                                       42
<PAGE>   44
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
           SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF CASH FLOWS
 
                      NINE MONTHS ENDED NOVEMBER 30, 1998
 
<TABLE>
<CAPTION>
                                                                  NON-GUARANTORS
                                                     SUBSIDIARY      FOREIGN
                                           ISSUER    GUARANTORS    SUBSIDIARIES    ELIMINATIONS    TOTAL
                                          --------   ----------   --------------   ------------   --------
                                                                    (UNAUDITED)
<S>                                       <C>        <C>          <C>              <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).......................  $(34,938)   $ 20,829       $  (366)        $   111      $(14,364)
Adjustments to reconcile net income
  (loss) to cash provided by (used in)
  operating activities:
  Depreciation and amortization.........    15,135      25,513         3,883            (222)       44,309
  Proceeds from insurance settlement....    14,784          --            --              --        14,784
  Change in assets and liabilities, net
     of effect of divestitures..........    18,960      13,808        (1,263)           (687)       30,818
                                          --------    --------       -------         -------      --------
       Net cash provided by (used in)
          operating activities..........    13,941      60,150         2,254            (798)       75,547
                                          --------    --------       -------         -------      --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of divisions.........     7,872          --            --              --         7,872
Capital expenditures....................    (7,793)    (10,062)       (8,405)             --       (26,260)
Other...................................    (2,793)        (53)        2,188           2,428         1,770
                                          --------    --------       -------         -------      --------
       Net cash provided by (used in)
          investing activities..........    (2,714)    (10,115)       (6,217)          2,428       (16,618)
                                          --------    --------       -------         -------      --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt..............        --          --         2,094              --         2,094
Reduction of long-term debt.............    (5,600)         --            --              --        (5,600)
Borrowings (repayments) on revolving
  credit agreement......................   (59,275)         --            --              --       (59,275)
Debt issue cost.........................    (1,435)         --            --              --        (1,435)
                                          --------    --------       -------         -------      --------
       Net cash provided by (used in)
          financing activities..........   (66,310)         --         2,094              --       (64,216)
                                          --------    --------       -------         -------      --------
Increase (decrease) in cash and cash
  equivalents...........................   (55,083)     50,035        (1,869)          1,630        (5,287)
Intercompany accounts...................    50,432     (50,468)        1,481          (1,445)           --
CASH AND CASH EQUIVALENTS, BEGINNING OF
  PERIOD................................    12,115       1,145         5,513             194        18,967
                                          --------    --------       -------         -------      --------
CASH AND CASH EQUIVALENTS, END OF
  PERIOD................................  $  7,464    $    712       $ 5,125         $   379      $ 13,680
                                          ========    ========       =======         =======      ========
</TABLE>
 
                                       43
<PAGE>   45
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
           SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF CASH FLOWS
 
                    FOR THREE MONTHS ENDED FEBRUARY 28, 1998
 
                                 PREDECESSOR A
 
<TABLE>
<CAPTION>
                                                                 NON-GUARANTORS
                                                    SUBSIDIARY      FOREIGN
                                         ISSUER     GUARANTORS    SUBSIDIARIES    ELIMINATIONS     TOTAL
                                        ---------   ----------   --------------   ------------   ---------
                                                                   (UNAUDITED)
<S>                                     <C>         <C>          <C>              <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).....................  $  (4,137)   $ 5,055        $    66          $ (177)     $     807
Adjustments to reconcile net income
  (loss) to cash provided by (used in)
  operating activities:
  Depreciation and amortization.......      3,588      8,284            950              --         12,822
  Changes in assets and liabilities,
     net of divestitures..............    (16,059)    (9,247)         2,019             575        (22,712)
                                        ---------    -------        -------          ------      ---------
       Net cash provided by (used in)
          operating activities........    (16,608)     4,092          3,035             398         (9,083)
                                        ---------    -------        -------          ------      ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures..................     (2,300)    (1,833)        (1,559)             --         (5,692)
Other.................................       (956)        65           (846)            695         (1,042)
                                        ---------    -------        -------          ------      ---------
       Net cash provided by (used in)
          investing activities........     (3,256)    (1,768)        (2,405)            695         (6,734)
                                        ---------    -------        -------          ------      ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt............    445,000         --             --              --        445,000
Reduction of long-term debt...........   (250,000)        --             --              --       (250,360)
Borrowings under revolving credit
  agreement...........................     79,100         --             --              --         79,100
Redemption of common stock............   (446,638)        --             --              --       (446,638)
Issuance of common stock..............    180,005         --             --              --        180,005
Debt issue cost.......................    (26,062)        --             --              --        (26,062)
                                        ---------    -------        -------          ------      ---------
       Net cash provided by (used in)
          financing activities........    (18,595)        --             --              --        (18,955)
                                        ---------    -------        -------          ------      ---------
Increase (decrease) in cash and cash
  equivalents.........................    (38,459)     2,324            630           1,093        (34,772)
Intercompany accounts.................      1,740     (1,740)           899            (899)            --
CASH AND CASH EQUIVALENTS, BEGINNING
  OF PERIOD...........................     48,834        561          4,344              --         53,739
                                        ---------    -------        -------          ------      ---------
CASH AND CASH EQUIVALENTS, END OF
  PERIOD..............................  $  12,115    $ 1,145        $ 5,873          $  194      $  18,967
                                        =========    =======        =======          ======      =========
</TABLE>
 
                                       44
<PAGE>   46
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
          SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF INCOME (LOSS)
 
                          YEAR ENDED NOVEMBER 30, 1997
 
                                 PREDECESSOR A
 
<TABLE>
<CAPTION>
                                                                NON-GUARANTORS
                                                           ------------------------
                                              SUBSIDIARY     FOREIGN      DIVESTED
                                    ISSUER    GUARANTORS   SUBSIDIARIES   DIVISIONS   ELIMINATIONS    TOTAL
                                   --------   ----------   ------------   ---------   ------------   --------
                                                                  (UNAUDITED)
<S>                                <C>        <C>          <C>            <C>         <C>            <C>
Net Sales
  Customers......................  $255,330    $489,304      $82,839       $78,604      $     --     $906,077
  Intercompany...................    12,345       9,512        5,775            29       (27,661)
Operating Costs and Expenses
  Cost of products sold..........   202,259     407,006       71,144        71,688       (27,087)     725,010
  Selling and administrative.....    42,766      22,280        7,756         4,624          (317)      77,109
  Intercompany charges...........   (11,015)      9,055           --         1,960            --           --
  Depreciation...................    11,523      21,001        3,609         3,538            --       39,671
  Amortization of intangibles....     3,254      13,030           34            --            --       16,318
  Loss on sale of divisions......       699       1,712           --            --            --        2,411
                                   --------    --------      -------       -------      --------     --------
          Total..................   249,486     474,084       82,543        81,810       (27,404)     860,519
                                   --------    --------      -------       -------      --------     --------
Operating Income (Loss)..........    18,189      24,732        6,071        (3,177)         (257)      45,558
Other Income (Expense)
  Interest expense...............   (30,932)       (131)        (202)           --             4      (31,261)
  Other income (expense).........     1,105         147         (231)          113        (1,385)        (251)
                                   --------    --------      -------       -------      --------     --------
Income (Loss) Before Taxes.......   (11,638)     24,748        5,638        (3,064)       (1,638)      14,046
Income taxes.....................     9,659       8,719         (636)          158            --       17,900
                                   --------    --------      -------       -------      --------     --------
Net Income (Loss)................  $(21,297)   $ 16,029      $ 6,274       $(3,222)     $ (1,638)    $ (3,854)
                                   ========    ========      =======       =======      ========     ========
</TABLE>
 
                                       45
<PAGE>   47
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
                 SUPPLEMENTAL CONDENSED COMBINED BALANCE SHEETS
 
                            AS OF NOVEMBER 30, 1997
 
                                 PREDECESSOR A
 
<TABLE>
<CAPTION>
                                                                  NON-GUARANTORS
                                                     SUBSIDIARY      FOREIGN
                                           ISSUER    GUARANTORS    SUBSIDIARIES    ELIMINATIONS    TOTAL
                                           ------    ----------   --------------   ------------    -----
                                                                    (UNAUDITED)
<S>                                       <C>        <C>          <C>              <C>            <C>
ASSETS
Cash and cash equivalents...............  $ 48,834    $    561       $ 4,344         $     --     $ 53,739
Receivables.............................    39,566      72,992        21,394               --      133,952
Intercompany accounts receivable........     2,982       3,295            --           (6,277)          --
Inventories.............................    32,309      48,830        12,432           (1,375)      92,196
Prepaid expenses........................     5,618       2,401           271               --        8,290
Deferred income taxes...................    13,793          --            --               --       13,793
                                          --------    --------       -------         --------     --------
     Total current assets...............   143,102     128,079        38,441           (7,652)     301,970
Property, Plant and Equipment...........    72,630     135,560        35,348               --      243,538
Investment in Subsidiaries..............    59,981       5,186            --          (65,167)          --
Deferred Income Taxes...................    98,991          --            --               --       98,991
Reorganization Value in Excess of
  Amounts Allocable to Identifiable
  Assets................................     9,746      39,091            --               --       48,837
Other Assets............................    36,395      16,462           688               --       53,545
                                          --------    --------       -------         --------     --------
     Total Assets.......................  $420,845    $324,378       $74,477         $(72,819)    $746,881
                                          ========    ========       =======         ========     ========
LIABILITIES AND SHAREHOLDER'S EQUITY
Accounts payable........................  $ 16,974    $ 28,257       $ 7,655         $     --     $ 52,886
Intercompany accounts payable...........        --          --         6,247           (6,247)          --
Long-term debt -- current portion.......        80          --         3,323               --        3,403
Income taxes............................     2,284          --            10               --        2,294
Other current liabilities...............    29,404      22,440         3,713             (138)      55,419
                                          --------    --------       -------         --------     --------
     Total current liabilities..........    48,742      50,697        20,948           (6,385)     114,002
Long-term Debt -- less current
  portion...............................   268,320          --         1,674               --      269,994
Other Liabilities.......................    26,768          --            --               --       26,768
                                          --------    --------       -------         --------     --------
     Total liabilities..................   343,830      50,697        22,622           (6,385)     410,764
Intercompany Accounts...................  (240,324)    210,930        16,895           12,499           --
Shareholder's Equity....................   317,339      62,751        34,960          (78,933)     336,117
                                          --------    --------       -------         --------     --------
     Total Liabilities and Shareholder's
       Equity...........................  $420,845    $324,378       $74,477         $(72,819)    $746,881
                                          ========    ========       =======         ========     ========
</TABLE>
 
                                       46
<PAGE>   48
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
           SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF CASH FLOWS
 
                          YEAR ENDED NOVEMBER 30, 1997
 
                                 PREDECESSOR A
 
<TABLE>
<CAPTION>
                                                              NON-GUARANTORS
                                                         ------------------------
                                            SUBSIDIARY     FOREIGN      DIVESTED
                                 ISSUER     GUARANTORS   SUBSIDIARIES   DIVISIONS   ELIMINATIONS     TOTAL
                                ---------   ----------   ------------   ---------   ------------   ---------
                                                                (UNAUDITED)
<S>                             <C>         <C>          <C>            <C>         <C>            <C>
CASH FLOWS FROM OPERATING
  ACTIVITIES:
Net Income (Loss).............  $ (21,297)   $ 16,029      $  6,274      $(3,222)     $(1,638)     $  (3,854)
Adjustments to reconcile net
  income (loss) to net cash
  provided by (used in)
  operating activities:
  Depreciation and
     amortization.............     14,777      34,031         3,643        3,538           --         55,989
  Loss on sale of divisions...        699       1,712            --           --           --          2,411
  Changes in assets and
     liabilities, net of
     effect of divestitures:
     Income tax refunds
       receivable.............     70,695          --            --           --           --         70,695
     Working capital and
       other..................     14,016       9,991        (5,655)       3,051        1,239         22,642
                                ---------    --------      --------      -------      -------      ---------
       Net cash provided by
          (used in) operating
          activities..........     78,890      61,763         4,262        3,367         (399)       147,883
                                ---------    --------      --------      -------      -------      ---------
CASH FLOWS FROM INVESTING
  ACTIVITIES:
Proceeds from sale of
  divisions...................     30,735       8,272            --           --                      39,007
Capital expenditures..........     (8,454)    (31,396)      (10,694)        (780)          --        (51,324)
Other.........................     (1,670)         50        (1,271)          (4)       1,385         (1,510)
                                ---------    --------      --------      -------      -------      ---------
       Net cash provided by
          (used in) investing
          activities..........     20,611     (23,074)      (11,965)        (784)       1,385        (13,827)
                                ---------    --------      --------      -------      -------      ---------
CASH FLOWS FROM FINANCING
  ACTIVITIES:
Issuance of long-term debt....      8,000          --         4,997           --           --         12,997
Reduction of long-term debt...   (126,039)         --            --           --           --       (126,039)
                                ---------    --------      --------      -------      -------      ---------
       Net cash provided by
          (used in) financing
          activities..........   (118,039)         --         4,997           --           --       (113,042)
                                ---------    --------      --------      -------      -------      ---------
Increase (decrease) in cash
  and cash equivalents........    (18,538)     38,689        (2,706)       2,583          986         21,014
Intercompany accounts.........     41,283     (38,681)        1,065       (2,681)        (986)            --
CASH AND CASH EQUIVALENTS,
  BEGINNING OF PERIOD.........     26,089         553         5,985           98           --         32,725
                                ---------    --------      --------      -------      -------      ---------
CASH AND CASH EQUIVALENTS, END
  OF PERIOD...................  $  48,834    $    561      $  4,344      $    --      $    --      $  53,739
                                =========    ========      ========      =======      =======      =========
</TABLE>
 
                                       47
<PAGE>   49
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
          SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF INCOME (LOSS)
 
                          YEAR ENDED NOVEMBER 30, 1996
 
                                 PREDECESSOR B
 
<TABLE>
<CAPTION>
                                                              NON-GUARANTORS
                                                         ------------------------
                                            SUBSIDIARY     FOREIGN      DIVESTED
                                 ISSUER     GUARANTORS   SUBSIDIARIES   DIVISIONS   ELIMINATIONS     TOTAL
                               ----------   ----------   ------------   ---------   ------------   ----------
                                                                (UNAUDITED)
<S>                            <C>          <C>          <C>            <C>         <C>            <C>
Net Sales
     Customers...............  $  242,537    $432,194      $78,440      $138,116      $     --     $  891,287
     Intercompany............      11,944       6,990        5,551            80       (24,565)            --
Operating Costs and Expenses
     Cost of products sold...     196,102     357,062       64,314       122,367       (22,919)       716,926
     Selling and
       administrative........      42,262      22,616        8,834         9,166        (1,373)        81,505
     Intercompany charges....     (10,010)      7,281           --         2,729            --             --
     Depreciation............       7,534      14,432        2,603         5,769            --         30,338
     Amortization of
       intangibles...........         325          74           --            13            --            412
                               ----------    --------      -------      --------      --------     ----------
          Total..............     236,213     401,465       75,751       140,044       (24,292)       829,181
                               ----------    --------      -------      --------      --------     ----------
Operating Income (Loss)......      18,268      37,719        8,240        (1,848)         (273)        62,106
Other Income (Expense)
     Interest expense........      (2,914)         --         (157)           --           (12)        (3,083)
     Other income
       (expense).............         574        (206)         939            26            12          1,345
     Asbestos litigation and
       other claims..........     497,953          --           --            --            --        497,953
                               ----------    --------      -------      --------      --------     ----------
Income (Loss) Before
  Reorganization Items,
  Taxes, Extraordinary Item
  and Cumulative Effect of
  Accounting Change..........     513,881      37,513        9,022        (1,822)         (273)       558,321
Reorganization items.........     116,335          --           --            --            --        116,335
Income taxes.................     (46,090)     (1,999)      (4,326)         (155)           --        (52,570)
                               ----------    --------      -------      --------      --------     ----------
Income (Loss) Before
  Extraordinary Item and
  Cumulative Effect of
  Accounting Change..........     584,126      35,514        4,696        (1,977)         (273)       622,086
Extraordinary Item --Gain on
  Discharge of Pre-petition
  Liabilities................   1,525,540          --           --            --            --      1,525,540
Cumulative Effect of Change
  in Accounting for
  Inventories................      (1,235)         --           --            --            --         (1,235)
                               ----------    --------      -------      --------      --------     ----------
Net Income (Loss)............  $2,108,431    $ 35,514      $ 4,696      $ (1,977)     $   (273)    $2,146,391
                               ==========    ========      =======      ========      ========     ==========
</TABLE>
 
                                       48
<PAGE>   50
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
           SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF CASH FLOWS
 
                          YEAR ENDED NOVEMBER 30, 1996
 
                                 PREDECESSOR B
 
<TABLE>
<CAPTION>
                                                                NON-GUARANTORS
                                                           ------------------------
                                              SUBSIDIARY     FOREIGN      DIVESTED
                                  ISSUER      GUARANTORS   SUBSIDIARIES   DIVISIONS   ELIMINATIONS      TOTAL
                                -----------   ----------   ------------   ---------   ------------   -----------
                                                                  (UNAUDITED)
<S>                             <C>           <C>          <C>            <C>         <C>            <C>
CASH FLOWS FROM OPERATING
  ACTIVITIES:
Net Income (Loss).............  $ 2,108,431    $ 35,514      $ 4,696       $(1,977)     $  (273)     $ 2,146,391
Adjustments to reconcile net
  income (loss) to net cash
  provided by (used in)
  operating activities:
  Non-cash adjustments
     relating to non-operating
     income items.............   (2,140,942)         --           --            --           --       (2,140,942)
  Depreciation and
     amortization.............        7,859      14,506        2,603         5,782           --           30,750
  Change in assets and
     liabilities, net of
     effect of divestitures...       46,214     (15,532)         636         6,505       (1,161)          36,662
                                -----------    --------      -------       -------      -------      -----------
       Net cash provided by
          (used in) operating
          activities..........       21,562      34,488        7,935        10,310       (1,434)          72,861
                                -----------    --------      -------       -------      -------      -----------
CASH FLOWS FROM INVESTING
  ACTIVITIES:
Proceeds from sale of
  divisions...................        4,248          --           --            --           --            4,248
Capital expenditures..........       (9,417)    (25,074)      (5,602)       (4,864)          --          (44,957)
Other.........................         (661)     (1,246)         108            44          694           (1,061)
                                -----------    --------      -------       -------      -------      -----------
       Net cash provided by
          (used in) investing
          activities..........       (5,830)    (26,320)      (5,494)       (4,820)         694          (41,770)
                                -----------    --------      -------       -------      -------      -----------
CASH FLOWS FROM FINANCING
  ACTIVITIES:
Reduction of long-term debt...       (1,520)         --       (1,678)           --           --           (3,198)
                                -----------    --------      -------       -------      -------      -----------
CASH PAYMENTS ON EFFECTIVE
  DATE OF PLAN OF
  REORGANIZATION..............      (88,498)         --           --            --           --          (88,498)
                                -----------    --------      -------       -------      -------      -----------
Increase (decrease) in cash
  and cash equivalents........      (74,286)      8,168          763         5,490         (740)         (60,605)
Intercompany accounts.........       13,409      (8,676)         196        (5,669)         740               --
CASH AND CASH EQUIVALENTS,
  BEGINNING OF PERIOD.........       86,966       1,061        5,026           277           --           93,330
                                -----------    --------      -------       -------      -------      -----------
CASH AND CASH EQUIVALENTS, END
  OF PERIOD...................  $    26,089    $    553      $ 5,985       $    98      $    --      $    32,725
                                ===========    ========      =======       =======      =======      ===========
</TABLE>
 
                                       49
<PAGE>   51
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
H. INCOME TAXES
 
     The following is a summary of the components of income taxes (benefit) from
operations and, in 1996, fresh start revaluation:
 
<TABLE>
<CAPTION>
                               NINE MONTHS ENDED    THREE MONTHS ENDED
                                 NOVEMBER 30,          FEBRUARY 28,
                                     1998                  1998               1997             1996
                               -----------------    ------------------    -------------    -------------
                                                      PREDECESSOR A       PREDECESSOR A    PREDECESSOR B
<S>                            <C>                  <C>                   <C>              <C>
Current:
  Federal....................      $  4,600               $  500             $ 1,000          $17,200
  Foreign....................         1,900                  550                (600)           4,350
  State and local............           700                  450               1,800            1,850
                                   --------               ------             -------          -------
                                      7,200                1,500               2,200           23,400
                                   --------               ------             -------          -------
Deferred:
  Federal....................       (11,900)               2,300              11,300           29,170
  State and local............            --                  300               4,400               --
                                   --------               ------             -------          -------
                                    (11,900)               2,600              15,700           29,170
                                   --------               ------             -------          -------
                                   $ (4,700)              $4,100             $17,900          $52,570
                                   ========               ======             =======          =======
</TABLE>
 
     Total net income tax benefit for the year ended November 30, 1996 of
$117,880 consisted of $52,570 tax expense from operations and the fresh-start
revaluation, $169,785 tax benefit from the extraordinary gain on the discharge
of pre-petition liabilities, and $665 tax benefit from the cumulative effect of
the change in accounting for inventories.
 
     The sources of income (loss) before income tax expense (benefit),
extraordinary gain on discharge of pre-petition liabilities and cumulative
effect of accounting change are as follows:
 
<TABLE>
<CAPTION>
                               NINE MONTHS ENDED    THREE MONTHS ENDED
                                 NOVEMBER 30,          FEBRUARY 28,
                                     1998                  1998               1997             1996
                               -----------------    ------------------    -------------    -------------
                                                      PREDECESSOR A       PREDECESSOR A    PREDECESSOR B
<S>                            <C>                  <C>                   <C>              <C>
United States................      $(21,822)              $4,328             $ 7,873         $665,907
Foreign......................         2,758                  579               6,173            8,749
                                   --------               ------             -------         --------
                                   $(19,064)              $4,907             $14,046         $674,656
                                   ========               ======             =======         ========
</TABLE>
 
                                       50
<PAGE>   52
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The differences between the total income tax expense from operations and
fresh start revaluation in 1996 and the income tax expense computed using the
Federal income tax rate were as follows:
 
<TABLE>
<CAPTION>
                                     NINE MONTHS ENDED   THREE MONTHS ENDED
                                       NOVEMBER 30,         FEBRUARY 28,
                                           1998                 1998              1997            1996
                                     -----------------   ------------------   -------------   -------------
                                                           PREDECESSOR A      PREDECESSOR A   PREDECESSOR B
<S>                                  <C>                 <C>                  <C>             <C>
Income tax expense (benefit) at
  Federal statutory rate...........       $(6,700)             $1,700            $ 4,900        $ 236,130
Change in valuation allowance......            --                  --              1,200         (187,950)
Foreign taxes rate differential....          (200)                300             (3,800)             900
State and local taxes, net of
  Federal benefit..................           500                 600              3,600            1,200
Non-deductible amortization of
  reorganization value in excess of
  amounts allocable to identifiable
  assets...........................            --               1,300              5,700               --
Non-deductible amortization and
  other items relating to excess of
  acquired net assets over cost....           600                  --                 --               --
Non-deductible management
  compensation.....................         1,300                  --                 --               --
Non-deductible fresh start items...            --                  --                 --            4,100
Expired tax credits................            --                  --              5,900               --
Other..............................          (200)                200                400           (1,810)
                                          -------              ------            -------        ---------
Total income tax expense
  (benefit)........................       $(4,700)             $4,100            $17,900        $  52,570
                                          =======              ======            =======        =========
</TABLE>
 
     Components of deferred tax balances as of November 30 are as follows:
 
<TABLE>
<CAPTION>
                                                          1998          1997
                                                        --------    -------------
                                                                    PREDECESSOR A
<S>                                                     <C>         <C>
Current deferred tax assets attributable to:
  Accrued liabilities.................................  $  8,042      $  12,576
  Net operating less carryforwards....................        --          2,000
  Other...............................................     2,809          1,948
  Valuation allowance.................................        --         (2,731)
                                                        --------      ---------
     Current deferred tax asset.......................    10,851         13,793
                                                        --------      ---------
Noncurrent deferred tax assets (liabilities)
  attributable to:
  Property, plant and equipment.......................     2,207        (46,331)
  Notes to former creditors...........................        --         87,500
  Net operating loss carryforwards....................        --         72,142
  Credit carryforwards................................        --         14,686
  Prepaid pension.....................................   (14,985)       (12,817)
  Postretirement benefit liability....................       497          7,588
  Amortization of intangibles.........................     1,001             --
  Other...............................................     2,976          1,734
  Valuation allowance.................................        --        (25,511)
                                                        --------      ---------
     Net noncurrent deferred tax asset (liability)....    (8,304)        98,991
                                                        --------      ---------
     Net deferred tax assets..........................  $  2,547      $ 112,784
                                                        ========      =========
</TABLE>
 
                                       51
<PAGE>   53
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     A tax election to treat the purchase of stock as a purchase of assets
("Election") was made in connection with the acquisition of the Company on
February 24, 1998. Accordingly, a deemed final tax return of the Predecessor
Company was filed for the tax period ended on the date of the Acquisition. On
this tax return, the total purchase price, for tax purposes, was allocated to
the assets of the Company to the extent of each asset's fair market value, and
gain was recognized on each asset as if sold at that price. As a result, going
forward, the assets were assigned the same value for book and tax purposes as of
the date of the Acquisition. The net operating loss carryforward of $178,147
from Predecessor Company's tax year ended November 30, 1997 and the deduction
resulting from the redemption of the Subordinated Notes were available to be
utilized against the resulting transaction gain.
 
     Any net operating loss carryforwards not absorbed by the gain were lost and
are not available to the Company. Additionally, tax credits which had been
carried forward totaling $9,708 at November 30, 1997 were lost as a result of
the transaction and are not available to the Company. The Company has no net
operating loss or tax credit carryforwards available to offset future taxable
income or tax liability, respectively, at November 30, 1998.
 
     The net operating loss carryforward at November 30, 1997 resulted from the
distribution of cash and stock to the PI Trust and other creditors on the
Effective Date and the redemption of notes, which were also distributed to the
PI Trust and other creditors on the Effective Date, in 1997. A portion of the
net operating loss generated on the Effective Date had been applied to prior
years taxable income to generate a Federal tax refund of $69,146 which was
received in 1997.
 
     As a result of the Acquisition, tax goodwill was established for the amount
by which the purchase price for tax purposes exceeded the fair market value of
the assets at the date of the Acquisition. The tax goodwill, the net amount of
which was $141,100 at November 30, 1998, is being amortized and deducted over
fifteen years, the same period over which the Excess of Acquired Net Assets over
Cost is being amortized in the Consolidated Financial Statements. Certain
liabilities assumed by the Company in the Acquisition, which are contingent for
tax purposes, will result in additional tax goodwill as they are paid. This
additional goodwill will also be amortized and deducted over the same period as
the Excess of Acquired Net Assets over Cost. The potential additional tax
goodwill, resulting from these liabilities, totaled $56,100 at November 30,
1998.
 
     In 1997, the Company's valuation allowance resulted from uncertainties
related to the reorganization process and tax credits that were expected to
expire unutilized. These items were related to the Predecessor Company and have
no bearing on deferred tax benefits in 1998. Based on its history of prior
years' operations and its expectations for the future, the Company has
determined that it is more likely than not that the results of future operations
will generate sufficient taxable income to realize the deferred tax benefits
recorded. Although the Automotive Segment is susceptible to economic cycles and
recessions, the Industrial and Machinery Segments of the Company consist of
certain businesses which are not impacted as significantly by economic
downturns.
 
     The Company paid income taxes (net of refunds received) of $5,400 in the
nine months ended November 30, 1998, $4,300 in 1997 (with the exception of the
Federal tax refund received of $69,146), and $17,300 in 1996. The Company
received refunds (net of taxes paid) of $2,300 in the three months ended
February 28, 1998.
 
I. 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 which was 100 for the nine months ended
November 30, 1998, 9,555,560 for the three months ended February 28, 1998,
10,000,000 in 1997 and 11,040,932 in 1996. No potential common stock was
outstanding during the three year period ended November 30, 1998.
 
                                       52
<PAGE>   54
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
J. MANAGEMENT COMPENSATION -- SPECIAL
 
     Management compensation expense consisted of the following items:
 
<TABLE>
<CAPTION>
                                                           NINE MONTHS     THREE MONTHS
                                                              ENDED            ENDED
                                                           NOVEMBER 30,    FEBRUARY 28,
                                                               1998            1998
                                                           ------------    -------------
                                                                           PREDECESSOR A
<S>                                                        <C>             <C>
Short Term Sale Program..................................    $ 8,110          $2,020
Management Trust -- Restricted Stock Award...............     12,580              --
Severance................................................      5,989              --
Other....................................................        129              36
                                                             -------          ------
          Total..........................................    $26,808          $2,056
                                                             =======          ======
</TABLE>
 
     The Company adopted a Short Term Sale Program ("STSP") pursuant to the
terms of which it would make payments to certain members of senior management
("Eligible Individuals"), in connection with a change in control of the Company.
The consummation of the Acquisition constituted such a change in control. The
STSP provided for a "stay-put" bonus equal to an eligible individual's fiscal
1997 base salary and a sales incentive bonus based on a multiple (ranging from
50% to 200%) of an eligible individual's fiscal 1997 base salary. The "stay-put"
bonus was payable in two equal parts, the first portion was paid in March 1998,
after the Acquisition, and the second is payable on the second anniversary of
such change in control, provided that the individual has remained an employee of
the Company or, if the individual was terminated by the Company other than for
cause, payable upon such termination. The Company has provided a total of $4,066
for the twelve months ended November 30, 1998 in connection with the "stay put"
bonus of which $1,611 remains unpaid. The sales incentive bonus is payable if
the present value of the after-tax proceeds to the PI Trust in connection with
the Acquisition meets a threshold amount set forth in the STSP. In the event
that the after-tax proceeds to the PI Trust exceed a specified target amount,
the multiple will increase on a straight-line basis. A final determination of
the after-tax proceeds to the PI Trust, and the consequent payment of the
balance of the sales incentive bonuses, will be made upon the final approval by
the Congressional Joint Committee on Taxation of an examination conducted by the
Internal Revenue Service of the tax return of the Company for the fiscal year
ended November 30, 1996. The Company has provided a total of $6,064 for the
twelve months ended November 30, 1998 in 1998 in connection with the sales
incentive bonus of which $981 remains unpaid.
 
     In 1998, the Company paid $10,000 to the Eagle-Picher Management Trust
("E-P Management Trust") for the benefit of certain senior management of the
Company. The $10,000 payment was effectively used by the E-P Management Trust to
acquire certain restricted stock of Granaria Industries. Subsequently, the stock
of Granaria Industries was later exchanged for the common stock of the Parent.
The shares of the Parent held by the E-P Management Trust were allocated to
certain members of senior management of the Company. The receipt of such shares
was taxable to the holders as income in an amount equal to the value of the
shares at the time of vesting. The Company also reimbursed the holders of the
shares for their tax obligations associated with the receipt of such shares. The
Company has recorded as compensation expense $12,580 for the restricted shares
and related tax reimbursements.
 
     The Company entered into employment agreements with six executive officers
("Employment Agreements") which became effective on November 29, 1996. Each was
amended in August 1997. The purpose of the Employment Agreements was to provide
the Company with continuity of management following its emergence from
bankruptcy. The Employment Agreements terminate on the later of the second
anniversary of any change of control occurring prior to December 31, 1998 or May
18, 1999. The consummation of the Acquisition did constitute a change of control
under the Employment Agreements. Three of the six executive officers of the
 
                                       53
<PAGE>   55
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
Company have received severance benefits pursuant to the Employment Agreements.
These payments, as well as severance payments to another former officer,
aggregated $5,989.
 
K. RETIREMENT BENEFIT PLANS
 
     Substantially all employees of the Company and its subsidiaries are covered
by various pension or profit sharing retirement plans. The cost of providing
retirement benefits, including the net periodic pension cost (income), was $900
for the twelve months ended November 30, 1998, $1,900 in 1997 and $2,300 in
1996. Amounts for a supplemental executive retirement plan to provide senior
management with benefits in excess of normal pension benefits are included in
the cost of providing retirement benefits. Under the plan, annuities are
purchased by the Company and distributed to participants on an annual basis. The
cost of these annuities was $1,314 for the twelve months ended November 30,
1998, $1,058 in 1997 and $1,279 in 1996.
 
     The Company's 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 typically are based on a dollar
unit multiplied by the number of service years.
 
     Net periodic pension expense for the Company's defined benefit plans
included the following components:
 
<TABLE>
<CAPTION>
                                            TWELVE MONTHS
                                                ENDED
                                            NOVEMBER 30,
                                                1998             1997             1996
                                            -------------    -------------    -------------
                                                             PREDECESSOR A    PREDECESSOR B
<S>                                         <C>              <C>              <C>
Service cost -- benefits earned during the
  period..................................    $  5,459         $  4,848         $  5,497
Interest cost on projected benefit
  obligations.............................      14,618           14,276           13,701
Actual gain on plan assets................     (21,959)         (36,544)         (29,296)
Net amortization and deferral.............         (28)          16,669           10,000
                                              --------         --------         --------
Net Periodic pension cost (income)........    $ (1,910)        $   (751)        $    (98)
                                              ========         ========         ========
</TABLE>
 
     In addition, in 1997, the Company recognized a curtailment gain of $1,662
due to the reduction in active participants in the Company's retirement plans
that resulted primarily from the divestiture of divisions.
 
     The plans' assets consist primarily of listed equity securities and
publicly traded notes and bonds. The actual net return on plan assets was 8.6%
for the twelve months November 30, 1998, 15.3% in 1997 and 13.5% in 1996, and
generally reflects the performance of the equity and bond markets.
 
                                       54
<PAGE>   56
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The following table sets forth the plans' funded status on the measurement
dates, November 30, 1998 and 1997, and amounts recognized in the Company's
Consolidated Balance Sheets as of those dates.
 
<TABLE>
<CAPTION>
                                                              1998           1997
                                                            ---------    -------------
                                                                         PREDECESSOR A
<S>                                                         <C>          <C>
Actuarial present value of:
  Vested benefit obligation...............................  $(196,668)     $(184,123)
                                                            =========      =========
  Accumulated benefit obligation..........................  $(203,391)     $(191,148)
                                                            =========      =========
  Projected benefit obligation............................  $(223,920)     $(209,701)
Plan assets at fair value.................................    259,522        250,036
                                                            ---------      ---------
Projected benefit obligation less than plan assets........     35,602         40,335
Unrecognized net (gain) loss..............................      7,211         (3,761)
Unrecognized prior service cost...........................         --             47
                                                            ---------      ---------
Prepaid pension cost recognized...........................  $  42,813      $  36,621
                                                            =========      =========
</TABLE>
 
     The discount rate and weighted average rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligation were 6.75% and 4.2%, and 7.0% and 4.2%,
respectively at November 30, 1998 and 1997, respectively. The assumption used
for the long-term rate of return on assets was 9.0% in 1998 and 1997. The effect
of the change in the discount rate was to increase the projected benefit
obligation by $7,183 at November 30, 1998.
 
     Upon the Acquisition, all unrecognized reconciling items as of February 24,
1998 were recognized and recorded on the Company's Consolidated Balance Sheet in
accordance with purchase accounting. The effect of the Acquisition was to
increase the prepaid pension cost recognized by $3,714 at February 24, 1998.
 
     The Company also offers 401(k) savings plans to its employees in the United
States. In most cases, the participants may contribute up to 15% of their
compensation of which 50% of their contribution up to 6% of their compensation
is matched by the Company. The cost of these plans to the Company was $1,641 in
the nine months ended November 30, 1998, $540 in the three months ended February
28, 1998, $2,344 in 1997 and $2,235 in 1996.
 
L. EMPLOYEE BENEFITS OTHER THAN PENSIONS
 
     In addition to providing pension retirement benefits, the Company makes
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 working for the Company. In most
cases, a retiree contribution for health insurance coverage is required. The
Company funds these benefit costs primarily on a pay-as-you-go basis. The net
amounts funded approximate $1,000 on an annual basis.
 
                                       55
<PAGE>   57
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The components of net periodic postretirement benefit cost were as follows:
 
<TABLE>
<CAPTION>
                                            TWELVE MONTHS
                                                ENDED
                                            NOVEMBER 30,
                                                1998             1997             1996
                                            -------------    -------------    -------------
                                                             PREDECESSOR A    PREDECESSOR B
<S>                                         <C>              <C>              <C>
Service cost -- benefits earned during the
  period..................................    $    534          $  554           $  710
Interest cost on accumulated
  postretirement benefit obligation.......       1,101           1,241            1,424
Amortization of unrecognized net gain.....          --             (93)              --
                                              --------          ------           ------
Net periodic postretirement benefit
  cost....................................    $  1,635          $1,702           $2,134
                                              ========          ======           ======
</TABLE>
 
     In addition, in 1997, the Company recognized a curtailment gain of $564 due
to the reduction in eligible employees that resulted primarily from the
divestiture of divisions.
 
     A reconciliation of the accumulated postretirement benefit obligation
measured as of November 30, 1998 and 1997 to amounts recognized in the
Consolidated Balance Sheets at those dates is as follows:
 
<TABLE>
<CAPTION>
                                                               1998          1997
                                                              -------    -------------
                                                                         PREDECESSOR A
<S>                                                           <C>        <C>
Retirees and dependents.....................................  $ 8,908       $10,670
Eligible active participants................................    1,609         2,074
Other active participants...................................    6,442         6,993
                                                              -------       -------
Accumulated postretirement benefit obligation...............   16,959        19,737
Unrecognized net gain.......................................      631         1,944
                                                              -------       -------
Accrued postretirement benefit costs........................  $17,590       $21,681
                                                              =======       =======
</TABLE>
 
     Upon the Acquisition, all unrecognized reconciling items as of February 24,
1998 were recognized and recorded on the Company's Consolidated Balance Sheet in
accordance with purchase accounting. The effect of the Acquisition was to
decrease the accrued postretirement benefit costs by $4,718.
 
     Benefit costs were estimated assuming retiree health care costs would
initially increase at a 9% annual rate which decreases to an ultimate rate of 6%
in 4 years. If this annual trend rate would increase by 1%, the accumulated
postretirement obligation as of November 30, 1998 would increase by $1,888 with
a corresponding increase of $247 in the postretirement benefit expense in 1998.
The discount rates used in determining the accumulated postretirement obligation
at November 30, 1998 and 1997 were 6.75% and 6.5%, respectively. The effect of
the change in the discount rate was not material to the accumulated
postretirement benefit obligation at November 30, 1998.
 
     In May 1998, the Company adopted a Stock Appreciation Rights Plan ("SAR
Plan") to reward those executives and managers whose individual performance and
effort will have a direct impact on achieving the Company's profit and growth
objectives. Shares of stock are not actually awarded, however participants are
awarded units on which appreciation is calculated based on the Company's equity
position. The units vest over five years and are payable any time during the
sixth through tenth year following the date of award. The expense related to the
SAR Plan was $640 in the nine months ended November 30,1998.
 
                                       56
<PAGE>   58
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
M. ASBESTOS LITIGATION CLAIMS
 
     As discussed in Note C, above, the Plan provides that all present and
future asbestos-related personal injury claims will be channeled to and resolved
by the PI Trust. Such claims result from exposure to asbestos-containing
industrial insulation products that the Subsidiary manufactured from 1934 to
1971. The Company expects that the claims that were filed pursuant to the bar
date for such claims, and such claims that will arise for several decades into
the future, will be administered and resolved by the PI Trust. In fact, the
Company has learned that the PI Trust began resolving and paying such claims in
fiscal 1997.
 
     Further, the Company expects that the channeling injunction provided by
section 524 of the Bankruptcy Code will prevent any such claimants from
prosecuting such claims against the reorganized Company. The Company is not
aware of any attempt by any asbestos-related personal injury claimant to nullify
the channeling injunction provided by section 524 of the Bankruptcy Code
subsequent to the entry of that injunction by the Bankruptcy Court and the
District Court in November 1996.
 
     In addition, the Plan also resolved and discharged all asbestos property
damage claims ("property claims") against the Company. The class of holders of
property claims voted to accept a settlement for such claims that was contained
in the Plan. Pursuant to the settlement, the Company has set aside $3,000 in
cash to fund a trust to resolve property claims. Certain of the holders of
property claims will appoint trustees to establish and administer such trust.
The Company expects that such trust will be established in due course. Further,
the Company expects that an injunction provided by the Plan, which orders all
holders of property claims to pursue those property claims solely against such
trust, will prevent any such claimants from prosecuting property claims against
the reorganized Company.
 
N. ENVIRONMENTAL AND OTHER LITIGATION CLAIMS
 
     Most of the pre-petition claims against the Company alleging a right to
payment due to environmental and litigation matters were resolved prior to the
Effective Date. The holders of those claims which were allowed have received a
proportionate distribution of the assets of the estate based on the amount of
their claims to the total liabilities of the Company.
 
     In addition to the items discussed below, the Company is involved in
routine litigation, environmental proceedings and claims pending with respect to
matters arising out of the normal course of business. As of November 30, 1998,
the Company has reserved $9,500 associated with environmental remediation
activities at some of its current and former sites. In management's opinion, the
ultimate liability resulting from all claims, individually or in the aggregate,
will not materially affect the Company's consolidated financial position,
results of operations or cash flows.
 
ENVIRONMENTAL
 
     The settlement agreement among the Company, the United States Environmental
Protection Agency ("US EPA") and the United States Department of Interior ("EPA
Settlement Agreement") which resolved the majority of the 1,102 proofs of claim
timely filed alleging a right to payment because of environmental matters, was
approved by the Bankruptcy Court in June 1996. Certain parties that may be
liable at certain of the sites resolved by the settlement appealed such
approval. In August 1997, the District Court affirmed the Bankruptcy Court's
approval of the settlement. The time within which such affirmance may be
appealed has expired without any further appeal having been taken. Thus, the
settlement has become final and binding on all parties.
 
     One of the significant features of the EPA Settlement Agreement is with
respect to "Additional Sites." Additional Sites are those superfund sites, not
owned by the Company, for which the Company's liability allegedly arises as a
result of pre-petition waste disposal or recycling. The Company retains all of
its defenses, legal or factual, at such sites. However, if the Company is found
liable at any Additional Sites or settles any claims for any Additional Sites,
the Company is required to pay as if such claims had been resolved in the
                                       57
<PAGE>   59
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
reorganization under chapter 11 of the bankruptcy code. Thus, the Company's
liability at Additional Sites will be paid at approximately 37% of any amount
due.
 
     As of November 30, 1998, the Company had received notice that it may have
liability under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 at a number of Additional Sites. The Company believes,
after an investigation of these claims, that it has only de minimis liability at
all but two of these sites described in the following two paragraphs.
 
     The Company received notice from the US EPA in 1997 alleging liability for
remediation expenses at the site of a former zinc smelting facility owned and
operated by the Company at Henryetta, Oklahoma, and for the removal and disposal
from surrounding residential locations of contaminated soil and gravel that
originated from the facility and from other companies operating in the area. The
Company operated the facility for approximately 50 years until it was shut down
in 1968. The US EPA performed remedial activities at the site at a cost of
approximately $5,000 to $6,000. The Company has offered to settle this claim for
$2,800 (payable at approximately 37%).
 
     The Company received a notice from the US EPA in 1996 alleging that it may
be a Potentially Responsible Party ("PRP") regarding liability for remediation
expenses at a secondary lead smelting facility in Dallas, Texas ("RSR"). The
Company allegedly leased the facility, which was in operation until about 1984,
for a period of at least one year in the early 1950s. The US EPA has conducted
and continues to conduct extensive remedial activities at this site, the total
expenses of which are estimated at approximately $55,000. The Company is one of
more that 1,000 PRP's identified by the US EPA in connection with this site and
is not identified by US EPA as one of the 14 significant PRPs. However, the
Company believes that it may be required to make some expenditure to resolve its
potential liability for remediation expenses in connection with this site. The
Company has offered to settle this claim for $1,800 (payable at approximately
37%).
 
     The Company believes that the settlements for the RSR and Henryetta sites
will be a deduction from the Final Distribution.
 
     In addition to the Additional Sites described above, the Company is
involved with the following environmental matters not covered by the EPA
Settlement Agreement.
 
     The Company is undertaking corrective actions under the Resource
Conservation and Recovery Act ("RCRA") at its Joplin, Missouri facility.
Consistent with the terms of its RCRA permit, the Company has been investigating
the nature and extent of contamination present as a result of manufacturing
activities during the 130-year operating history of this property. These
investigations have identified areas of soil and groundwater contamination,
certain of which will likely require the Company to undertake remedial
activities. The US EPA has indicated that these actions will likely be required
to take place over the next two years. Based on available information, the
Company anticipates that these actions will cost between $600 and $2,600.
 
     At the Company's Colorado Springs, Colorado facility the closure of four
former hazardous waste surface impoundments is being completed. Materials
formerly stored in these impoundments have contaminated groundwater and soils at
and around the facility. A groundwater remediation system was placed in service
in 1995 and continues in operation. The Company will enter into an Order on
Consent with the State of Colorado in 1999 to evaluate residual groundwater
contamination and soil contamination associated with the site, and to undertake
additional remedial actions as appropriate to remediate the contamination. Based
on available information, the Company anticipates that these actions will cost
approximately $1,800.
 
     In August, 1998, Fibrex, Inc., ("Fibrex") which purchased the Company's
fibers division in 1982, sent a letter demanding indemnification under the 1982
sale agreement for future environmental remediation costs. The amount of such
costs cannot be reliably estimated at this time. The Company filed a motion in
the Bankruptcy Court to enforce the Plan against Fibrex. The Company believes
that any liability it may have had to Fibrex was
 
                                       58
<PAGE>   60
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
discharged by the Plan and the Bankruptcy Court's Confirmation Order and intends
to contest any claim by Fibrex vigorously.
 
     In 1998, the Company received $14,784 from insurance companies in
settlement of certain claims relating primarily to environmental remediation,
with the offset to the Excess of Acquired Net Assets Over Cost because the claim
represented a pre-acquisition contingency.
 
LEAD CHEMICALS
 
     The Plan that was consummated on November 29, 1996 provides that all
lead-related personal injury claims that were pending on the Plan's Effective
Date and all future lead-related personal injury claims, will be channeled to
and resolved by the PI Trust discussed in Notes C and M, above. The Company
expects that the channeling injunction provided by section 524 of the Bankruptcy
Code will prevent any such claimants from prosecuting such claims against the
reorganized Company. The Company is not aware of any attempt by any lead-related
personal injury claimant to nullify the channeling injunction provided by
section 524 of the Bankruptcy Code subsequent to the entry of that injunction by
the Bankruptcy Court and the District Court in November 1996. All claims
asserting liability against the Company based on property damage from lead
chemicals allegedly manufactured and sold by the Company were disallowed during
the reorganization.
 
OTHER LITIGATION CLAIMS
 
     In May 1997, Caradon Doors and Windows, Inc. ("Caradon") filed a suit
against the Company in the U.S. District Court in Atlanta, Georgia alleging
breach of contract and asserting contribution rights against the Company. Prior
to this suit, Caradon had been found liable to Therma-Tru Corporation
("Therma-Tru") in the amount of approximately $8,800 for infringing a Therma-Tru
patent for plastic door components manufactured by the Company's now divested
Plastics Division. Caradon settled the litigation with Therma-Tru and was
seeking to recover some or all of its liability from the Company. In May 1997,
Therma-Tru also attempted to hold the Company liable for patent infringement for
plastic door components that the Plastics Division manufactured and sold to
Pease Industries, Inc. ("Pease"). Further, after the Company divested its
Plastics Division in July 1997, Therma-Tru attempted to hold the purchaser of
the Plastics Division, Cambridge Industries, Inc. ("Cambridge"), liable for
infringement for Cambridge's manufacture of door components for Pease after the
divestiture, but using the prior technology. The Company had agreed to indemnify
Cambridge for those sales. Thus, Therma-Tru's suit against Cambridge might also
be a liability of the Company. The Company estimates that the total damages that
Therma-Tru is seeking to recover, jointly and severally, from the Company and
Pease in these two suits is approximately $11,400. The Company asserted, in
separate motions filed to dismiss these claims, that all of Caradon's and
Therma-Tru's claims had been discharged in the Company's reorganization under
chapter 11. The Company believes that it has valid legal and factual defenses
and intends to contest vigorously all such claims.
 
O. ACQUISITIONS AND DIVESTITURES
 
     The Company has signed a letter of intent to acquire the stock of
Charterhouse Automotive Group, Inc., a holding company whose only operating
subsidiary is Carpenter Enterprises, Ltd. ("Carpenter"), a manufacturer of
precision-machined automotive parts, for approximately $41,000 in cash. It is
expected that Carpenter will have approximately $32,000 of debt at the closing,
of which approximately $20,000 will be refinanced from the Facility. The
acquisition will be accounted for as a purchase. The transaction is expected to
be consummated during the first quarter of 1999, subject to the results of a due
diligence investigation and various conditions including negotiation of a
mutually acceptable stock purchase agreement.
 
     The Company sold its Trim Division in November, 1998. The transaction was
held in escrow until certain conditions were met in December 1998, resulting in
a receivable on the Consolidated Balance Sheet of $14,500 at November 30, 1998.
In December 1998, the Company received a $2,100 note due in 2000 which is
secured by a
                                       59
<PAGE>   61
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
   
first mortgage on the real estate and the remainder of the proceeds in cash. The
impact of this transaction on net income (loss) was not material. The Company is
guarantor of tooling receivables due from both original equipment manufacturers
and their suppliers. The Company believes the likelihood of customer default of
these receivables to be remote.
    
 
   
     Pursuant to the Plan, in 1997, the Company sold its Plastics, Transicoil
and Fabricon Divisions to fund the repayment of the Divestiture Notes. The
Company received net cash proceeds of $39,007. The aggregate loss on these
transactions was $2,411.
    
 
   
     The Company received a note for $3,719 from the buyer of the Fabricon
Division, which is included in Other Assets. The note bears interest of 8% per
annum and is secured by accounts receivable and inventory. Payments of $300 are
required on the first and second anniversaries of the note with the balance due
on October 31, 2000. The first payment was received in accordance with these
terms.
    
 
   
     The Company remains as guarantor on the lease of the building in which the
former Transicoil Division is located, and is liable should the buyer not
perform on the lease. The remaining lease payments total approximately $9,000
over the lease term which expires in 2005. The Company believes the likelihood
of being liable for the lease to be remote.
    
 
   
     Included in the Consolidated Statements of Income (Loss) are the following
results of these divested divisions (excluding net loss on sale of divisions):
    
 
   
<TABLE>
<CAPTION>
                               NINE MONTHS     THREE MONTHS
                                  ENDED            ENDED
                               NOVEMBER 30,    FEBRUARY 28,
                                   1998            1998             1997             1996
                               ------------    -------------    -------------    -------------
                                               PREDECESSOR A    PREDECESSOR A    PREDECESSOR B
<S>                            <C>             <C>              <C>              <C>
Net sales....................    $18,600         $  7,076         $100,717         $140,169
                                 =======         ========         ========         ========
Operating Income (Loss)......    $  (744)        $    144         $   (552)        $    326
                                 =======         ========         ========         ========
</TABLE>
    
 
   
P. TRANSACTIONS WITH RELATED PARTIES
    
 
   
     In connection with the Acquisition, the Company paid Granaria Holdings a
transaction fee of $7,300 (approximately 1% of the transaction value) in
consideration for advisory services related to structuring and financing the
Acquisition. Granaria Holdings was also reimbursed for other costs incurred
related to the Acquisition, issuance of the Subordinated Notes and Preferred
Stock offering.
    
 
   
Q. INDUSTRY SEGMENT INFORMATION
    
 
   
     The Company is a diversified manufacturer serving global markets and many
industries.
    
 
   
     United States net sales include export sales to non-affiliated customers of
$70,800 in the nine months ended November 30, 1998, $23,600 in the three months
ended February 28, 1998, $113,600 in 1997 and $108,500 in 1996.
    
 
   
     A general description of the products manufactured and the markets served
by the Company's three industry segments (listed in order of the magnitude of
net sales) is:
    
 
   
AUTOMOTIVE
    
 
   
     The operations in the Automotive Segment provide mechanical, structural,
and trim parts for passenger cars, trucks, vans and sport utility vehicles for
the original equipment manufacturers and replacement markets. Resources are
concentrated in serving the North American, European and Pacific Rim markets.
    
 
                                       60
<PAGE>   62
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     Sales and operating income (loss) (excluding net loss on sale of
divisions), respectively, of divested operations and operations contributed to
the E-P-Boge joint venture, which were included in the Automotive Segment were
$18,600 and $(744) in the nine months ended November 30, 1998, $7,706 and $144
in the 3 months ended February 28, 1998, $68,973 and $(2,790) in 1997 and
$102,408 and $(2,614) in 1996.
 
     Consolidated sales to Ford Motor Company amounted to $121,100 in the nine
months ended November 30, 1998, $39,800 in the three months ended February 28,
1998, $170,500 in 1997 and $167,700 in 1996. No other customer accounted for 10%
or more of consolidated sales.
 
MACHINERY
 
     The Machinery Segment serves the commercial aerospace, food and beverage
and other industrial markets globally and the construction market in the United
States. Its products include earth moving machines, heavy-duty forklift trucks,
aerospace and defense batteries and components, metal cleaning and finishing
systems and other industrial machinery. Divested operations included in this
segment had sales and operating income (excluding net loss on sale of
divisions), respectively, of $12,788 and $834 in 1997 and $18,023 and $934 in
1996.
 
INDUSTRIAL
 
     Diatomaceous earth products, rubber products, rare metals, fiberglass
reinforced plastic parts and industrial chemicals are produced by the Industrial
Segment operations serving the food and beverage, recreation, nuclear,
telecommunications, electronics and other industrial markets globally. Sales and
operating income (excluding net loss on sale of divisions), respectively, of
divested operations included in this Segment were $29,534 and $1,500 in 1997 and
$39,344 and $1,008 in 1996.
 
     Sales between segments were not material.
 
                                       61
<PAGE>   63
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
   
     The Company's foreign operations are located primarily in Europe and also
in Mexico. Intercompany transactions with foreign operations are made at
established transfer prices. Information regarding the Company's domestic and
foreign sales, operating income and identifiable assets follows:
    
 
   
<TABLE>
<CAPTION>
                                                                         TRANSFER SALES/
                                              UNITED STATES   FOREIGN     ELIMINATIONS      CONSOLIDATED
                                              -------------   -------    ---------------    ------------
<S>                                           <C>             <C>        <C>                <C>
NINE MONTHS ENDED NOVEMBER 30, 1998
SALES.......................................    $585,664      $80,953       $(20,633)         $645,984
                                                ========      =======       ========          ========
OPERATING INCOME............................    $ 13,939      $ 1,419       $    112          $ 15,470
                                                ========      =======       ========          ========
IDENTIFIABLE ASSETS.........................    $773,926      $96,359       $(53,958)         $816,327
                                                ========      =======       ========          ========
--------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED FEBRUARY 28, 1998
PREDECESSOR A
SALES.......................................    $189,305      $23,041       $ (6,504)         $205,842
                                                ========      =======       ========          ========
OPERATING INCOME............................    $ 10,186      $ 1,018       $   (177)         $ 11,027
                                                ========      =======       ========          ========
IDENTIFIABLE ASSETS.........................  N/A.......          N/A            N/A               N/A
                                                ========      =======       ========          ========
Year Ended November 30, 1997
Predecessor A
Sales.......................................    $842,195      $88,614       $(24,732)         $906,077
                                                ========      =======       ========          ========
Operating income............................    $ 39,744      $ 6,071       $   (257)         $ 45,558
                                                ========      =======       ========          ========
Identifiable assets.........................    $698,444      $74,477       $(26,040)         $746,881
                                                ========      =======       ========          ========
--------------------------------------------------------------------------------------------------------
Year Ended November 30, 1996
Predecessor B
Sales.......................................    $830,013      $83,991       $(22,717)         $891,287
                                                ========      =======       ========          ========
Operating income............................    $ 54,139      $ 8,240       $   (273)         $ 62,106
                                                ========      =======       ========          ========
Identifiable assets.........................    $807,508      $63,843       $(22,471)         $848,880
                                                ========      =======       ========          ========
</TABLE>
    
 
                                       62
<PAGE>   64
                         EAGLE-PICHER INDUSTRIES, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
   
                          INDUSTRY SEGMENT INFORMATION
    
   
<TABLE>
<CAPTION>
                                      INDUSTRIAL                                   MACHINERY
                       -----------------------------------------   -----------------------------------------
                       9 MONTHS   3 MONTHS                         9 MONTHS   3 MONTHS
                        ENDED      ENDED                            ENDED      ENDED
                       NOV. 30,   FEB. 28,                         NOV. 30,   FEB. 28,
                         1998       1998       1997       1996       1998       1998       1997       1996
                       --------   --------   --------   --------   --------   --------   --------   --------
                                  PRED. A    PRED. A    PRED. B               PRED. A    PRED. A    PRED. B
                                                     (IN MILLIONS OF DOLLARS)
<S>                    <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Sales................   $113.6     $37.7      $200.1     $194.1     $201.8     $64.4      $270.8     $257.6
                        ======     =====      ======     ======     ======     =====      ======     ======
Operating Income.....     12.9       3.2        15.0       20.6       19.5       5.4        20.0       22.5
                        ======     =====      ======     ======     ======     =====      ======     ======
Depreciation and
  amortization.......      9.5       3.4        14.4        6.9        9.9       2.3        10.3        5.0
                        ======     =====      ======     ======     ======     =====      ======     ======
Capital
  expenditures.......      3.8       0.4        10.6       10.8        8.8       1.3         5.9        4.5
                        ======     =====      ======     ======     ======     =====      ======     ======
Identifiable Assets..    159.1       N/A       138.1      146.3      210.0       N/A       122.3      136.0
                        ======     =====      ======     ======     ======     =====      ======     ======
 
<CAPTION>
                                        AUTOMOTIVE
                       --------------------------------------------
                        9 MONTHS     3 MONTHS
                          ENDED       ENDED
                        NOV. 30,     FEB. 28,
                          1998         1998       1997       1996
                       -----------   --------   --------   --------
                                     PRED. A    PRED. A    PRED. B
                                 (IN MILLIONS OF DOLLARS)
<S>                    <C>           <C>        <C>        <C>
Sales................    $330.6       $103.7     $435.2     $439.6
                         ======       ======     ======     ======
Operating Income.....      26.5          8.2       29.7       38.5
                         ======       ======     ======     ======
Depreciation and
  amortization.......      22.7          7.1       30.9       18.7
                         ======       ======     ======     ======
Capital
  expenditures.......      13.5          3.8       34.6       29.5
                         ======       ======     ======     ======
Identifiable Assets..     333.8          N/A      274.0      292.8
                         ======       ======     ======     ======
</TABLE>
    
   
<TABLE>
<CAPTION>
                                     SEGMENT TOTAL                                  CORPORATE
                        ---------------------------------------   ---------------------------------------------
                        9 MONTHS   3 MONTHS                       9 MONTHS    3 MONTHS
                         ENDED      ENDED                          ENDED        ENDED
                        NOV. 30,   FEB. 28,                       NOV. 30,    FEB. 28,
                          1998       1998      1997      1996       1998        1998          1997       1996
                        --------   --------   -------   -------   --------   -----------   ----------   -------
                                                                               PRED. A      PRED. A
                                   PRED. A    PRED. A   PRED. B              (IN MILLIONS OF DOLLARS)   PRED. B
<S>                     <C>        <C>        <C>       <C>       <C>        <C>           <C>          <C>
Sales.................   $646.0     $205.8    $906.1    $891.3     $    -       $  -_        $    -     $     -
                         ======     ======    ======    ======     ======       =====        ======     =======
Operating Income
  (loss)..............     58.9       16.8      64.7      81.6      (43.4)       (5.8)        (19.1)      (19.5)
                         ======     ======    ======    ======     ======       =====        ======     =======
Adjustment for
  asbestos
  litigation..........                                                 --          --            --       502.2
Interest expense......                                              (36.3)       (6.9)        (31.3)       (3.1)
Other income
  (expense)...........                                                1.8          .8          (0.3)       (2.9)
Reorganization
  items...............                                                 --          --            --       116.3
                                                                   ======       =====        ======     =======
Income (loss) before
  taxes...............
Depreciation and
  amortization........     42.1       12.8      55.6      30.6        2.2          --           0.4         0.2
                         ======     ======    ======    ======     ======       =====        ======     =======
Capital
  expenditures........     26.1        5.5      51.1      44.8        0.2         0.2           0.2         0.2
                         ======     ======    ======    ======     ======       =====        ======     =======
Identifiable assets...    702.9        N/A     534.4     575.1      113.4         N/A         212.5       273.8
                         ======     ======    ======    ======     ======       =====        ======     =======
 
<CAPTION>
                                          TOTAL
                        ------------------------------------------
                         9 MONTHS     3 MONTHS
                           ENDED       ENDED
                         NOV. 30,     FEB. 28,
                           1998         1998      1997      1996
                        -----------   --------   -------   -------
 
                                      PRED. A    PRED. A   PRED. B
<S>                     <C>           <C>        <C>       <C>
Sales.................    $646.0       $205.8    $906.1    $891.3
                          ======       ======    ======    ======
Operating Income
  (loss)..............      15.5         11.0      45.6      62.1
                          ======       ======    ======    ======
Adjustment for
  asbestos
  litigation..........        --           --        --     502.2
Interest expense......     (36.3)        (6.9)    (31.3)     (3.1)
Other income
  (expense)...........       1.8           .8      (0.3)     (2.9)
Reorganization
  items...............        --           --        --     116.3
                          ------       ------    ------    ------
Income (loss) before
  taxes...............     (19.0)         4.9      14.0     674.6(1)
                          ======       ======    ======    ======
Depreciation and
  amortization........      44.3         12.8      56.0      30.8
                          ======       ======    ======    ======
Capital
  expenditures........      26.3          5.7      51.3      45.0
                          ======       ======    ======    ======
Identifiable assets...     816.3          N/A     746.9     848.9
                          ======       ======    ======    ======
</TABLE>
    
 
---------------
 
   
(1) Before extraordinary gain and cumulative effect of accounting change.
    
 
                                       63
<PAGE>   65
 
                              REPORT OF MANAGEMENT
 
     The Company's management is responsible for the preparation and
presentation of the consolidated financial statements. The consolidated
financial statements have been prepared in conformity with generally accepted
accounting principles and as such include amounts based on judgements and
estimates made by management.
 
     The Company's system of internal accounting controls is designed to provide
reasonable assurance at reasonable cost that assets are safeguarded from loss or
unauthorized use, and that the financial records may be relied upon for the
preparation of the consolidated financial statements.
 
     The consolidated financial statements have been audited by our independent
auditors, Deloitte and Touche LLP. Their audit is conducted in accordance with
generally accepted auditing standards and provides an independent assessment as
to the fair presentation, in all material respects, of the Company's
consolidated financial statements.
 
     The Audit Committee of the Board of Directors meets periodically with
management and the independent auditors to review internal accounting controls
and the quality of financial reporting. Financial management and the independent
auditors have full and free access to the Audit Committee.
 
/s/ ANDRIES RUIJSSENAARS
Andries Ruijssenaars
President and Chief Executive Officer
 
/s/ CARROLL D. CURLESS
Carroll D. Curless
Vice President and Controller
 
Cincinnati, Ohio
January 18, 1999
 
                                       64
<PAGE>   66
 
   
                          INDEPENDENT AUDITORS' REPORT
    
 
   
The Board of Directors
    
   
Eagle-Picher Industries, Inc.:
    
 
   
     We have audited the accompanying consolidated balance sheet of Eagle-Picher
Industries, Inc. (a wholly-owned subsidiary of Eagle-Picher Holdings, Inc.) and
subsidiaries as of November 30, 1998 (Successor Company balance sheet), and the
related consolidated statements of income (loss), shareholders' equity, and cash
flows for the nine month period ended November 30, 1998 (Successor Company
operations). In addition, we have audited the accompanying consolidated balance
sheet of Eagle-Picher Industries, Inc. and subsidiaries as of November 30, 1997
(Predecessor Company balance sheet under fresh-start accounting), and the
related consolidated statements of income (loss), shareholders' equity, and cash
flows for the year ended November 30, 1997 and the three month period ended
February 28, 1998 (Predecessor Company operations under fresh-start accounting).
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. The Predecessor Company's consolidated
statements of income (loss), shareholder's equity and cash flows for the year
ended November 30, 1996, were audited by other auditors whose report, dated
February 5, 1997, expressed an unqualified opinion on those statements and
included explanatory paragraphs related to the Company emerging from Chapter 11
of the United States Bankruptcy Code, described in Notes A and C to the
consolidated financial statements, and the Predecessor Company's change in
computing LIFO for certain inventories described in Note D to the consolidated
financial statements.
    
 
   
     We conducted our audits in accordance with generally accepted auditing
standards. 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 Successor Company consolidated financial statements
referred to above present fairly, in all material respects, the financial
position of the Successor Company as of November 30, 1998, and the results of
its operations and its cash flows for the nine month period then ended. Further,
in our opinion, the Predecessor Company consolidated financial statements under
fresh-start accounting referred to above present fairly, in all material
respects, the financial position of the Predecessor Company as of November 30,
1997, and the results of its operations and its cash flows for the year ended
November 30, 1997, and the three months ended February 28, 1998, in conformity
with generally accepted accounting principles.
    
 
   
     As discussed in Note A and C to the consolidated financial statements,
effective November 29, 1996, the Company emerged from Chapter 11 of the United
States Bankruptcy Code and adopted "fresh-start" reporting principles in
accordance with the American Institute of Certified Public Accountants Statement
of Position 90-7, "Financial Reporting by Entities in Reorganization Under the
Bankruptcy Code." As a result, the consolidated financial statements for the
period subsequent to the adoption of fresh-start reporting are presented on a
different cost basis than that for prior periods and, therefore, are not
comparable.
    
 
   
     As discussed in Notes A and B to the consolidated financial statements,
Eagle-Picher Industries, Inc. was acquired on February 24, 1998 by Eagle-Picher
Holdings, Inc., a majority-owned subsidiary of Granaria Industries B.V. As a
result, the consolidated financial statements as of and for the three month
period ended February 28, 1998 include the effects of such acquisition as of
February 24, 1998 and, therefore, are not comparable to consolidated financial
statements prepared subsequent to February 28, 1998.
    
 
   
/s/ DELOITTE & TOUCHE LLP
    
   
Cincinnati, Ohio
    
   
January 18, 1999
    
                                       65
<PAGE>   67
 
                          INDEPENDENT AUDITORS' REPORT
 
The Board of Directors
Eagle-Picher Industries, Inc.:
 
     We have audited the accompanying consolidated statements of income (loss),
shareholders equity (deficit), and cash flows of Eagle-Picher Industries, Inc.
and subsidiaries for the year ended November 30, 1996. 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 audit.
 
     We conducted our audit in accordance with generally accepted auditing
standards. 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 audit provides a reasonable basis for our opinion.
 
     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the results of operations of
Eagle-Picher Industries, Inc. and subsidiaries and their cash flows for the year
ended November 30, 1996 in conformity with generally accepted accounting
principles.
 
     As discussed in Note A and C to the consolidated financial statements,
effective November 29, 1996, the Company emerged from chapter 11 of the United
States Bankruptcy Code and adopted "fresh-start" reporting principles in
accordance with the American Institute of Certified Public Accountants'
Statement of Position 90-7, Financial Reporting by Entities in Reorganization
under the Bankruptcy Code.
 
     As discussed in Note D to the consolidated financial statements, the
Company changed its method of computing LIFO for inventories of boron, germanium
and other rare metals in 1996.
 
                                          /s/ KPMG LLP
 
Cincinnati, Ohio
February 5, 1997
 
                                       66
<PAGE>   68
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
 
     None.
 
                                    PART III
 
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
 
     The following table sets forth the name, age and position with the Company
of the individuals who serve as directors and executive officers of the Company.
Directors will hold their positions until the annual meeting of the stockholders
at which their term expires or until their respective successors are elected and
qualified. Executive officers will hold their positions until the annual meeting
of the Board of Directors or until their respective successors are elected and
qualified.
 
<TABLE>
<CAPTION>
               NAME                  AGE                 POSITION
               ----                  ---                 --------
<S>                                  <C>    <C>
Joel P. Wyler......................  49     Director, Chairman of the Board
Daniel C. Wyler....................  47     Director
Thomas E. Petry....................  59     Director
Dr. Wendelin Wiedeking.............  46     Director
Andries Ruijssenaars...............  56     Director, President and Chief
                                            Executive Officer
Wayne R. Wickens...................  52     Senior Vice President
Michael E. Aslanian................  44     Group Vice President
Carroll D. Curless.................  60     Vice President and Controller
David G. Krall.....................  37     Vice President, General Counsel and
                                            Secretary
</TABLE>
 
     Mr. Joel P. Wyler became a Director of the Company and Chairman of its
Board upon consummation of the Acquisition. Mr. Wyler has been the Chairman of
the Board of Directors of Granaria Holdings B.V. since 1982.
 
     Mr. Daniel C. Wyler was appointed as a Director of the Company in January
1999. He has been the Chief Executive Officer of Granaria Holdings B.V. since
1989.
 
     Mr. Petry has been a Director of the Company since 1981. Upon consummation
of the Acquisition, Mr. Petry resigned as Chairman of the Board of Directors, a
position he held since 1989, and as Chief Executive Officer, a position he held
since 1982. Mr. Petry is also a director of Cinergy Corp., Firstar Corp., Union
Central Life Insurance Co. and The Wm. Powell Company.
 
     Mr. Wiedeking was appointed as a Director of the Company in January 1999.
He has been the Chairman of the Board of Porsche AG since 1993 where he is also
President and Chief Executive Officer.
 
     Mr. Ruijssenaars has been President and a Director of the Company since
1994, and upon consummation of the Acquisition, he also became the Company's
Chief Executive Officer. He was Senior Vice President of the Company from 1989
until December 1994. Mr. Ruijssenaars was first employed by the Company in 1980
as General Manager of Eagle-Picher Industries GmbH in Ohringen, Germany, and has
also served as Executive Vice President and then President of the Company's Ohio
Rubber Company Division.
 
     Mr. Wickens has been Senior Vice President of the Company since September
1998. Prior to that time, beginning in December 1994, he was Senior Vice
President -- Automotive. From 1990 until December 1994, he was Division
President of the Company's Hillsdale Tool & Manufacturing Co. Mr. Wickens joined
the Company in 1976 as a management trainee with the Company's former Fabricon
Automotive Division, and was promoted to Plant Manager, Vice President and then
President of Fabricon Automotive. Subsequently, Mr. Wickens served as President
of the Wolverine Gasket Division and then as Vice President of the Automotive
Group.
 
                                       67
<PAGE>   69
 
     Mr. Aslanian has been Group Vice President since September 1998. From 1994
until September 1998, he was Division President of the Company's Hillsdale Tool
& Manufacturing Co. Mr. Aslanian joined the Company in 1974 with the Company's
former Fabricon Automotive Division where he was Production Manager, Plant
Manager, and ultimately in 1989 Division Manager of the then newly-formed Trim
Division. In 1990, he moved to the Hillsdale Tool & Manufacturing Co. as Vice
President of Manufacturing and became President there in 1994.
 
     Mr. Curless was first employed by the Company in 1964. He became Assistant
Controller in 1978 and Controller in 1984. He has been Vice President and
Controller since 1986. Mr. Curless is also currently serving as the Company's
interim Chief Financial Officer.
 
     Mr. Krall joined the Company in June 1998. Prior to coming to the Company,
he had been with Taft, Stettinius & Hollister LLP, a legal firm based in
Cincinnati, Ohio, since 1986 and had been a partner there since 1994.
 
     Mr. Joel P. Wyler and Mr. Daniel C. Wyler are brothers.
 
                                       68
<PAGE>   70
 
ITEM 11. EXECUTIVE COMPENSATION.
 
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
 
     The following Summary Compensation Table sets forth the compensation for
the last three fiscal years of those persons who served as (i) the Company's
Chief Executive Officer during fiscal 1998, (ii) the Company's four most highly
compensated executive officers other than the Chief Executive Officer who were
serving as executive officers of the Company at the end of fiscal 1998, and
(iii) one additional individual who was among the Company's four most highly
compensated executive officers other than the Chief Executive Officer, but was
not serving as an executive officer of the Company at the end of fiscal 1998
(collectively, the "Named Executive Officers"):
 
                           SUMMARY COMPENSATION TABLE
 
<TABLE>
<CAPTION>
                                                                                                    LONG TERM
                                                                 ANNUAL COMPENSATION              COMPENSATION
                                                        -------------------------------------   -----------------
                                                                                 OTHER ANNUAL      RESTRICTED        ALL OTHER
                                          FISCAL YEAR                            COMPENSATION    STOCK AWARDS(S)    COMPENSATION
      NAME AND PRINCIPAL POSITION            ENDED      SALARY ($)   BONUS ($)      ($)(1)           ($)(2)            ($)(3)
      ---------------------------         -----------   ----------   ---------   ------------   -----------------   ------------
<S>                                       <C>           <C>          <C>         <C>            <C>                 <C>
Andries Ruijssenaars(4).................   11/30/98      575,000      380,000     1,818,286         1,705,500        1,411,852
  President and Chief Executive Officer    11/30/97      525,000      205,000       179,244                --          208,006
                                           11/30/96      425,000      160,000       174,171                --          201,233
 
Thomas E. Petry(5)......................   11/30/98      208,333           --     1,032,134                --        4,049,790
  Former Chairman and Chief Executive      11/30/97      625,000      278,000       232,737                --          261,903
    Officer
                                           11/30/96      625,000      239,000       218,919                --          246,873
 
Wayne R. Wickens........................   11/30/98      360,000      150,000       606,154           568,500          807,044
  Senior Vice President                    11/30/97      325,000      109,000        77,942                --           93,311
                                           11/30/96      295,000       72,000        99,564                --          118,199
 
Michael E. Aslanian(6)..................   11/30/98      211,750      130,000       312,540           337,500          269,584
  Group Vice President                     11/30/97      180,000       77,000         8,852                --           17,049
                                           11/30/96      172,000       61,000         9,228                --           17,553
 
Carroll D. Curless......................   11/30/98      250,000      130,000       321,332           284,250          488,229
  Vice President and Controller            11/30/97      240,000       67,000       116,456                --          134,611
                                           11/30/96      230,000       86,000        78,715                --           93,870
 
David G. Krall(7).......................   11/30/98       85,000       65,000        62,582            67,500              132
  Vice President, General                  11/30/97           --           --            --                --               --
  Counsel and Secretary                    11/30/96           --           --            --                --               --
 
David N. Hall(8)........................   11/30/98      307,500           --       932,806           284,250        2,648,334
  Former Senior Vice                       11/30/97      375,000      126,000       166,629                --          189,963
    President -- Finance
                                           11/30/96      360,000      107,000       146,980                --          167,786
</TABLE>
 
---------------
(1) This column includes nothing for perquisites since in no case did
    perquisites exceed the reporting thresholds (the lesser of 10% of salary
    plus bonus or $50,000). For fiscal 1996 and 1997, the column is comprised of
    amounts for the payment of taxes on purchases of annuities under the
    Company's Supplemental Executive
 
                                       69
<PAGE>   71
 
   
Retirement Plan (the "SERP") for each of the Named Officers. In fiscal 1998, the
column includes the following:
    
 
   
<TABLE>
<CAPTION>
                                     PAYMENT OF TAXES ON PURCHASES OF    PAYMENT OF TAXES ON SHARES AWARDED
       NAMED EXECUTIVE OFFICER         ANNUITIES UNDER THE SERP ($)      UNDER THE INCENTIVE STOCK PLAN ($)
       -----------------------       --------------------------------    ----------------------------------
    <S>                              <C>                                 <C>
    Andries Ruijssenaars.........                 272,780                            1,545,506
    Thomas E. Petry..............               1,032,134                                   --
    Wayne R. Wickens.............                 105,228                              500,926
    Michael E. Aslanian..........                  13,276                              299,264
    Carroll D. Curless...........                  66,128                              255,204
    David G. Krall...............                      --                               62,582
    David N. Hall................                 675,362                              257,444
</TABLE>
    
 
   
(2) The amounts in this column represent the dollar value of restricted stock
    awards granted to the Named Executive Officers during fiscal 1998 under the
    Company's Incentive Stock Plan (as described below), of shares of Class A
    Common Stock of Parent. Such awards were originally subject to periods of
    vesting but, pursuant to an amendment to the Incentive Stock Plan, all of
    such awards were fully vested on or before November 19, 1998 (see
    "-- Incentive Stock Plan," below). The amounts in this column, which
    comprise the entire aggregate holdings of each of the Named Executive
    Officers, represent the following numbers of shares: Mr. Ruijssenaars,
    30,000 shares; Mr. Wickens, 10,000 shares; Mr. Aslanian, 6,250 shares; Mr.
    Curless, 5,000 shares; Mr. Krall, 1,250 shares; and Mr. Hall, 5,000 shares.
    The total aggregate dollar value of all stock awards under the Incentive
    Stock Plan is $4,651,500, which represents a total of 83,500 shares, all of
    which were fully vested on or before November 19, 1998. The EP Management
    Trust holds us of February 24, 1999, 9,250 unawarded shares of the Parent's
    Class A Common Stock, (See Note J to the Company's Consolidated Financial
    Statements at Item 8.) Dividends on the restricted stock, if any are
    declared, would be payable on the restricted stock. Parent, however, has no
    obligation to declare dividends and, pursuant to the terms of Parent's
    Preferred Stock, certain restrictions exist on Parent's ability to declare
    dividends on the Class A Common Stock.
    
 
                                       70
<PAGE>   72
 
   
(3) This column includes the following amounts:
    
 
   
<TABLE>
<CAPTION>
                                                                                         AMOUNTS
                                                         COMPANY          VALUE OF         PAID
                                         COST OF     CONTRIBUTIONS TO     COMPANY      PURSUANT TO    AMOUNTS PAID IN
                              FISCAL     ANNUITY       EAGLE-PICHER      PAID LIFE      SHORT-TERM    CONNECTION WITH
                               YEAR       UNDER      SALARIED 401(K)     INSURANCE         SALE       TERMINATION OF
    NAMED EXECUTIVE OFFICER   ENDED      SERP ($)        PLAN ($)       PREMIUMS ($)   PROGRAM ($)    EMPLOYMENT ($)    TOTAL ($)
    -----------------------  --------   ----------   ----------------   ------------   ------------   ---------------   ---------
    <S>                      <C>        <C>          <C>                <C>            <C>            <C>               <C>
    Andries Ruijssenaars...  11/30/98     302,552         5,000            1,800       1,102,500                --      1,411,852
                             11/30/97     201,456         4,750            1,800             --                 --        208,006
                             11/30/96     195,331         4,750            1,152             --                 --        201,233
    Thomas E. Petry.......   11/30/98   1,132,002         4,688              600       1,625,000         1,250,000      4,012,290
                             11/30/97     255,353         4,750            1,800             --                 --        261,903
                             11/30/96     240,323         4,750            1,800             --                 --        246,873
    Wayne R. Wickens......   11/30/98     118,152         5,000            1,392        682,500                 --        807,044
                             11/30/97      87,169         4,750            1,392             --                 --         93,311
                             11/30/96     111,607         4,750            1,842             --                 --        118,199
    Michael E. Aslanian...   11/30/98      16,329         5,000              408        234,000                 --        255,737
                             11/30/97      11,891         4,750              408             --                 --         17,049
                             11/30/96      12,395         4,750              408             --                 --         17,553
    Carroll D. Curless....   11/30/98      72,829         5,000            2,400        408,000                 --        488,229
                             11/30/97     127,461         4,750            2,400             --                 --        134,611
                             11/30/96      86,720         4,750            2,400             --                 --         93,870
    David G. Krall........   11/30/98          --            --              132             --                 --            132
                             11/30/97          --            --               --             --                 --             --
                             11/30/96          --            --               --             --                 --             --
    David N. Hall.........   11/30/98     745,684         5,000            1,350       1,116,300           780,000      2,648,334
                             11/30/97     183,413         4,750            1,800             --                 --        189,963
                             11/30/96     161,236         4,750            1,800             --                 --        167,786
</TABLE>
    
 
---------------
 
   
     In addition, for fiscal 1998, this column includes $37,500 paid to Mr.
     Petry as a director's fee (see "-- Compensation of Directors" below) and
     $13,847 paid to Mr. Aslanian for relocation expenses.
    
 
   
(4) Mr. Ruijssenaars became Chief Executive Officer effective February 24, 1998.
    Prior to that time, he was President and Chief Operating Officer of the
    Company.
    
 
   
(5) Mr. Petry resigned as Chairman of the Board and Chief Executive Officer
    effective February 24, 1998. Since that time, Mr. Petry has served as a
    Director of the Company.
    
 
   
(6) Mr. Aslanian assumed his present position on September 1, 1998; prior to
    that time, he was President of Hillsdale Tool & Manufacturing Co., a
    wholly-owned subsidiary of the Company.
    
 
   
(7) Mr. Krall was first employed by the Company on June 1, 1998, in his present
    capacity. The amount shown in the "salary" column for Mr. Krall represents
    amounts actually paid to Mr. Krall during fiscal 1998 based upon his annual
    salary of $170,000.
    
 
   
(8) Mr. Hall's employment with the Company ended on August 31, 1998.
    
 
   
LONG-TERM INCENTIVE PLAN
    
 
   
     The following table sets forth information as to awards to the following
Named Executive Officer during fiscal 1998 under the Company's Share
Appreciation Plan (the "LTIP"), a long-term incentive plan. No other Named
Executive Officer received an award under the LTIP in fiscal 1998.
    
 
                                       71
<PAGE>   73
 
   
              LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
    
 
   
<TABLE>
<CAPTION>
                                                                                   ESTIMATED FUTURE PAYOUTS UNDER
                                                                                    NON-STOCK PRICE-BASED PLANS
     NAME         NUMBER OF UNITS(#)(1)    PERIOD UNTIL MATURATION OR PAYOUT(2)             TARGET($)(3)
     ----         ---------------------    ------------------------------------    ------------------------------
<S>               <C>                      <C>                                     <C>
David G.                 50,000                          6/1/2004                             250,000
  Krall.......
</TABLE>
    
 
---------------
 
   
(1) The Named Executive Officer has been granted units under the LTIP which
    represent the right to receive a cash payment from the Company based on a
    share of the increase in the Company's "Capitalized Earnings Value" (as
    defined in the LTIP) above a baseline. "Capitalized Earnings Value" is a
    formula-derived value considering the Company's EBITDA and cash position,
    the debt levels of Parent and Company and the total outstanding obligations
    of Parent with respect to its Preferred Stock, each at the end of each
    fiscal year.
    
 
   
(2) The units will vest at a rate of 20% on each of the first five anniversaries
    of the award date (except that the units of a participant who dies or is
    incapacitated while employed by the Company are immediately 100% vested, as
    are the units of a participant who is employed by the Company on a date in
    which control of the Company effectively changes). They are exercisable, if
    the individual remains employed by the Company, after the sixth anniversary
    of the award date but no later than the tenth anniversary of the award date.
    Upon termination of employment, all unvested units are forfeited and vested
    but unexercised units are deemed to have been immediately exercised.
    
 
   
(3) The target amount reported is based on the Company's projection of
    "Capitalized Earnings Value" assuming a growth rate consistent with
    historical trends (without considering periods of either extraordinary
    growth or recession or the effect on earnings of events relating to the
    Company's chapter 11 proceedings). The estimated target payment is provided
    only for the purposes of this table and is not intended to forecast actual
    appreciation, if any, in the "Capitalized Earnings Value" of the Company.
    The LTIP does not provide for a minimum (threshold), target or maximum
    payout.
    
 
   
RETIREMENT BENEFITS
    
 
   
     The following table shows the estimated total combined annual benefits to
the Named Executive Officers upon retirement at age 62 payable under Social
Security, the Salaried Plan (as defined herein), and the SERP:
    
 
   
<TABLE>
<CAPTION>
                                                               YEARS OF SERVICE
                                           --------------------------------------------------------
             REMUNERATION                     15          20          25          30          35
             ------------                  --------    --------    --------    --------    --------
<S>                                        <C>         <C>         <C>         <C>         <C>
$ 250,000..............................    $ 90,000    $120,000    $150,000    $150,000    $150,000
  300,000..............................     108,000     144,000     180,000     180,000     180,000
  350,000..............................     126,000     168,000     210,000     210,000     210,000
  400,000..............................     144,000     192,000     240,000     240,000     240,000
  450,000..............................     162,000     216,000     270,000     270,000     270,000
  500,000..............................     180,000     240,000     300,000     300,000     300,000
  550,000..............................     198,000     264,000     330,000     330,000     330,000
  600,000..............................     216,000     288,000     360,000     360,000     360,000
  650,000..............................     234,000     312,000     390,000     390,000     390,000
  700,000..............................     252,000     336,000     420,000     420,000     420,000
  750,000..............................     270,000     360,000     450,000     450,000     450,000
  800,000..............................     288,000     384,000     480,000     480,000     480,000
  850,000..............................     306,000     408,000     510,000     510,000     510,000
  900,000..............................     324,000     432,000     540,000     540,000     540,000
  950,000..............................     342,000     456,000     570,000     570,000     570,000
 1,000,000.............................     360,000     480,000     600,000     600,000     600,000
 1,050,000.............................     378,000     504,000     630,000     630,000     630,000
 1,100,000.............................     396,000     528,000     660,000     660,000     660,000
 1,150,000.............................     414,000     552,000     690,000     690,000     690,000
</TABLE>
    
 
                                       72
<PAGE>   74
 
   
     The Eagle-Picher Salaried Plan (the "Salaried Plan" and, together with the
SERP, the "Retirement Plans") is a non-contributory defined benefit pension plan
in which the Named Executive Officers are participants. The SERP, in which the
Named Executive Officers are also participants, provides retirement benefits in
addition to the benefits available under the Salaried Plan. The Retirement Plans
provide benefits after retirement based on the highest average monthly
compensation during five consecutive years of the last ten years preceding
retirement. For purposes of the Retirement Plans, compensation includes base
salary, bonuses, commissions and severance payments; salary, bonus and severance
payments that would be included in the Retirement Plans are as reported in the
Summary Compensation Table, and commissions, if there had been any, would have
been included in that Table. The payments pursuant to the Short Term Sale
Program (discussed below) are not included in such compensation. The benefits
shown by the Pension Plan Table above include amounts payable under Social
Security as well as those payable under the Salaried Plan and the SERP. Benefits
are computed on the basis of straight-life annuity amounts.
    
 
   
     The estimated credited years of service with the Company for the Named
Executive Officers at age 62 will be:
    
 
   
<TABLE>
<S>                                                             <C>
Andries Ruijssenaars........................................     24
Thomas E. Petry.............................................     30(A)
Wayne R. Wickens............................................     32
Michael E. Aslanian.........................................     41
Carroll D. Curless..........................................     36
David G. Krall..............................................     25
David N. Hall...............................................     21(A)
</TABLE>
    
 
---------------
   
(A) Represents final credited years of service for purposes of calculating
    benefits under the Retirement Plans for Mr. Petry and Mr. Hall.
    
 
   
COMPENSATION OF DIRECTORS
    
 
   
     Directors who are not employees of the Company are paid an annual retainer
of $50,000, payable in calendar quarters, with no additional fees for attendance
or committee membership. The Company does not pay any director retainers or
attendance fees (including committee membership fees) to directors who are also
employees of the Company.
    
 
   
     Effective January 1, 1999, Parent adopted an Incentive Stock Plan for
outside Directors. Pursuant to that plan, directors of the Company that are also
directors of Parent may receive shares of Class A Common Stock of Parent in lieu
of a directors' fee.
    
 
   
     Joel P. Wyler, as a named Director of Parent and Company, provides services
on behalf of and pursuant to his employment by Granaria Holdings B.V. All
directors' fees due as a result of Mr. Wyler's services as a named Director are
paid to Granaria Holdings B.V.
    
 
   
     Directors who were not also employees of the Company who retired with ten
or more years of service as members of the Board and who were elected or
appointed members of the Board prior to April 14, 1997, are paid an annual
advisory fee for life in the amount equal to the annual retainer paid to active
directors immediately prior to the time of their retirement.
    
 
   
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
    
 
   
     In fiscal 1998, until February 24, 1998, Darius W. Gaskins (Committee
Chairman), Robert B. Steinberg and Will M. Storey, directors of the Company
during that time, constituted the Compensation Committee. None of Messrs.
Gaskins, Steinberg and Storey has ever been an employee of the Company or any of
its subsidiaries. Since February 24, 1998, there has been no compensation
committee of the Board of the Directors. Decisions regarding compensation are
passed upon by the Board of Directors as a whole. In fiscal 1998, Joel P. Wyler,
Chairman of Granaria Holdings B.V. and Chairman of Parent and the Company, Mr.
Ruijssenaars, the Chief
    
 
                                       73
<PAGE>   75
 
   
Executive Officer of Parent and the Company and Mr. Petry, the former Chief
Executive Officer of the Company, constituted the entire Board of Directors
during the period beginning on February 24, 1998.
    
 
   
INDEMNIFICATION PROVISIONS FOR OFFICERS AND DIRECTORS
    
 
   
     Pursuant to Article 5 of the Company's Regulations, the Company will
indemnify its officers and directors to the fullest extent permitted by law
against all expenses, liability, loss or costs (including attorneys fees) in
connection with any action, lawsuit or other proceeding brought or threatened
against such officer or director by reason of the fact that he or she is or was
an officer or director of the Company. The Company has purchased directors and
officers liability insurance in favor of the Company and its officers and
directors covering up to $15.0 million in losses, including any indemnity
payment made by the Company to an officer or director, for a wrongful act of an
officer or director. In addition, under the Merger Agreement, Parent and the
Company have agreed, for a period of six years after February 24, 1998, to
indemnify all officers and directors of the Company who served as such prior to
February 24, 1998, and to purchase directors and officers liability insurance in
their favor.
    
 
   
EMPLOYMENT AGREEMENTS; SEVERANCE
    
 
   
     The Company entered into employment agreements, which became effective on
November 29, 1996 (the Consummation Date of the Company's Consolidated Plan of
Reorganization), with Messrs. Ruijssenaars, Petry, Wickens, Curless and Hall, as
well as with James A. Ralston, the Company's former Vice President, General
Counsel and Secretary. Each of the employment agreements was amended in August
1997. The purpose of the employment agreements was to provide the Company with
continuity of management following its emergence from bankruptcy. Other than the
description of the duties of each of such officers, the employment agreements
are substantially identical in their terms. The employment agreements terminate
on February 24, 2000.
    
 
   
     The employment agreements provide that each officer will maintain his
then-current duties and responsibilities and will not be relocated from his
then-current geographical location. The employment agreements provide for salary
continuation at the officer's then-current rate plus customary annual increases
and bonuses and discretionary bonuses, as determined by the Board of Directors
of the Company (and which are shown in the Summary Compensation Table, above).
In addition, the employment agreements provide that each officer participate in
the Company's employee and executive benefit and short-term and long-term
incentive plans as may be in effect from time to time (including retirement or
pension plans, health plans, death or disability plans, the STSP and the Stock
Incentive Plan).
    
 
   
     If the employment of any such officer is terminated by the Company for
Cause (defined as the commission of (i) a felony or (ii) a fraud upon the
Company or willful failure to perform job duties in all material respects) or by
such officer without Good Reason (as defined below), such officer will receive
accrued and unpaid salary, payment in lieu of unused vacation and accrued
benefits, if any (including the right to receive pension or retirement benefits
in accordance with the Company's retirement and pension benefit plans as set
forth in "-- Retirement Benefits") (all such payments, including salary, the
"Accrued Benefits"). If the employment of any such officer is terminated due to
death or long term disability, such officer or his dependents or estate will
receive, in addition to the Accrued Benefits, certain continuing health care
benefits for a period of 30 months. If the employment of any such officer is
terminated by the Company other than for Cause, or by such officer for Good
Reason (defined as material diminution of duties, diminution of salary or
benefits, relocation, substantial increase in travel requirements or material
breach by the Company of such officer's employment agreement) such officer is
entitled to receive, in addition to the Accrued Benefits, a lump-sum severance
benefit equivalent to two years' current base salary.
    
 
   
     In fiscal 1998, each of Messrs. Petry, Hall and Ralston received payments
pursuant to their employment agreements in connection with the termination of
their employment with the Company. Mr. Petry, who resigned as Chairman of the
Board and Chief Executive Officer, received in connection with his resignation a
lump-sum severance benefit of $1,250,000. In addition, Mr. Petry received a
payment in cash pursuant to the SERP of $741,874 in lieu of the Company's
purchase of an annuity and the Company paid $676,424 for the benefit of Mr.
Petry for related tax obligations. Mr. Hall received a severance payment in the
amount of $780,000. In
    
 
                                       74
<PAGE>   76
 
   
addition, the Company purchased an annuity for the benefit of Mr. Hall pursuant
to the SERP, the cost of which was $592,062 and made a payment of $536,227 for
the benefit of Mr. Hall for related tax obligations. Mr. Ralston received a
severance payment in the amount of $480,000. In addition, Mr. Ralston received a
payment in cash pursuant to the SERP of $281,459 in lieu of the Company's
purchase of an annuity and the Company paid $255,358 for the benefit of Mr.
Ralston for related tax obligations.
    
 
   
SHORT TERM SALE PROGRAM
    
 
   
     The Company adopted a Short Term Sale Program (the "STSP") pursuant to the
terms of which the Company was obligated to make payments to certain members of
senior management (the "eligible individuals"), in connection with the
consummation of the Acquisition. The STSP provided for (i) a "stay-put" bonus
equal to an eligible individual's fiscal 1997 base salary and (ii) a sales
incentive bonus based on a multiple (ranging from 50% to 200%) of an eligible
individual's fiscal 1997 base salary ("Sales Incentive"). The stay-put bonus is
payable in two equal parts, the first ("First Stay-Put") was payable shortly
after the Acquisition, and the second ("Second Stay-Put") is payable on the
second anniversary of the Acquisition, provided that the individual has remained
employed by the Company or, if the individual was terminated by the Company
other than for cause, is payable upon such termination. The Sales Incentive,
which was payable only if the present value of the after-tax proceeds to the
Trust in connection with the Acquisition met a threshold amount set forth in the
STSP, increased on a straight-line basis in the event that the Trust's after-tax
proceeds exceeded a specified target amount. Based upon estimates of the present
value of after-tax proceeds to the Trust in connection with the Acquisition, the
Company made payments under the STSP in fiscal 1998 in the aggregate amount of
approximately $8.3 million. The Company expects to make an additional payment of
approximately $1.6 million on the second anniversary of the Closing Date for the
Second Stay-Put. The Company expects to make additional payments under the STSP
in connection with the Sales Incentive depending on the final determination of
the present value of the after-tax proceeds to the Trust. The Company does not
expect such payment to exceed $1.0 million. Payments made pursuant to the STSP
are not included in compensation for purposes of the Salaried Plan and the SERP.
In addition, the STSP provides that any severance protection that an eligible
individual may have will continue for two years following a change in control.
    
 
   
     Upon adoption of the STSP in August 1997, the Company began to accrue an
expense for the First Stay-Put, which, according to its terms, was earned from
the date of adoption of the STSP until the earlier of (i) 30 days after a change
in control of the Company, or (ii) June 30, 1998. The total expense recorded in
1997 was approximately $.7 million, while $4.1 million was recorded in 1998. The
STSP provides that the Sales Incentive was earned from the date of the
Acquisition through 30 days thereafter. Accordingly, no accrual was made for the
Sales Incentive in 1997 and an expense of approximately $6.1 million was
recorded in 1998.
    
 
   
     The following table shows the payments to the Named Executive Officers
under the STSP shortly after consummation of the Acquisition:
    
 
   
<TABLE>
<CAPTION>
                NAMED EXECUTIVE OFFICER                     SALES INCENTIVE    FIRST STAY-PUT
                -----------------------                     ---------------    --------------
<S>                                                         <C>                <C>
Andries Ruijssenaars....................................      $  840,000          $262,500
Thomas E. Petry.........................................       1,000,000           625,000(A)
Wayne R. Wickens........................................         520,000           162,500
Michael E. Aslanian.....................................         144,000            90,000
Carroll D. Curless......................................         288,000           120,000
David G. Krall..........................................              --                --
David N. Hall...........................................         741,300(B)        375,000(A)
</TABLE>
    
 
---------------
   
     (A) This amount represents 100% of the stay-put bonus of each of Messrs.
         Petry and Hall.
    
 
   
     (B) This amount represents 100% of the estimated Sales Incentive bonus of
         Mr. Hall. Each of the other Named Executive Officers (other than Mr.
         Krall, who was not a participant in the STSP) is expected to receive an
         additional payment in connection with the Sales Incentive upon the
         final determination of the present value of the after-tax proceeds to
         the Trust.
    
 
                                       75
<PAGE>   77
 
   
     The Company expects to pay the Second Stay-Put to each of the Named
Executive Officers, other than Messrs. Petry, Hall and Krall, on February 24,
2000, in an amount equal to the First Stay-Put indicated in the above table. Mr.
Petry received 100% of his stay-put bonus at the time of his resignation from
the Company and, accordingly, he will not receive any additional payment in
connection with the stay-put bonus. Mr. Hall received his Second Stay-Put
payment at the time his employment with the Company ended. Mr. Krall was not a
participant in the STSP.
    
 
   
INCENTIVE STOCK PLAN
    
 
   
     Shortly after the Acquisition, the Company paid approximately $10.0 million
to the E-P Management Trust for the benefit of certain members of senior
management of the Company. The $10.0 million payment was used by the E-P
Management Trust to satisfy a loan from Granaria Holdings B.V., the proceeds of
which were used by the E-P Management Trust to acquire 16% of the Common Stock
of Granaria Industries B.V. The stock of Granaria Industries B.V. was
subsequently exchanged for shares of Class A Common Stock of Parent. Pursuant to
the Incentive Stock Plan, the shares of Parent held by the E-P Management Trust
were allocated to certain members of senior management of the Company (including
certain of the Named Executive Officers). The Incentive Stock Plan as originally
adopted provided that restricted stock would vest over a period of years.
However, the Plan was amended during 1998 to provide for immediate vesting such
that all shares were fully vested on or before November 19, 1998. The receipt of
such shares was taxable to the holders as income in an amount equal to the value
of the shares at the time of vesting. Pursuant to the Incentive Stock Plan, the
Company made payments in the amount of approximately $4.3 million for the
benefit of holders of the shares in connection with their tax obligations
associated with their receipt of such shares. The transfer of compensatory
property to senior management and the tax payments to the holders of the shares
will result in an income tax deduction to the Company in the amount of
approximately $8.9 million.
    
 
   
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
    
 
   
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
    
 
   
     The following table sets forth certain information regarding the beneficial
ownership of the Parent's Class A Common Stock as of February 24, 1999, by each
person known by the Company to own beneficially 5% or more of the Parent's
voting Class A Common Stock, the Parent's only voting security.
    
 
   
<TABLE>
<CAPTION>
                                                                   SHARES BENEFICIALLY OWNED
                                                                --------------------------------
                                                                  NUMBER OF       PERCENTAGE OF
NAME                                                            CLASS A SHARES    CLASS A SHARES
----                                                            --------------    --------------
<S>                                                             <C>               <C>
Granaria Holdings B.V.......................................        615,751            98.5%
  Lange Voorhout 16
  P.O. Box 233
  2501 CE The Hague
  The Netherlands(1)(2)(3)
Joel P. Wyler...............................................        625,001           100.0%
  Lange Voorhout 16
  P.O. Box 233
  2501 CE The Hague
  The Netherlands(4)(5)
Daniel C. Wyler.............................................        615,751            98.5%
  Lange Voorhout 16
  P.O. Box 233
  2501 CE The Hague
  The Netherlands(4)
</TABLE>
    
 
   
SECURITY OWNERSHIP OF MANAGEMENT
    
 
   
     The following table sets forth certain information as of February 24, 1999,
regarding management's ownership of the Parent's Class A Common Stock, the only
voting equity security issued by the Parent (with all
    
 
                                       76
<PAGE>   78
 
   
of the equity securities of the Company being held by the Parent) and the only
equity security of the Parent held by the Company's directors or executive
officers. All shares are subject both to a Voting Trust Agreement that allows
the shares to be voted by Granaria Industries B.V. and to a Shareholders
Agreement that restricts their disposition.
    
 
   
<TABLE>
<CAPTION>
                                                                 SHARES BENEFICIALLY OWNED
                                                              --------------------------------
                                                                NUMBER OF       PERCENTAGE OF
NAME                                                          CLASS A SHARES    CLASS A SHARES
----                                                          --------------    --------------
<S>                                                           <C>               <C>
Joel P. Wyler(4),(5)........................................     625,001            100.0%
Daniel C. Wyler(4)..........................................     615,751             98.5%
Andries Ruijssenaars(5).....................................      39,250              6.3%
Wayne R. Wickens............................................      10,000              1.6%
Thomas E. Petry(5)..........................................       9,250              1.5%
Michael E. Aslanian.........................................       6,250              1.0%
Carroll D. Curless..........................................       5,000                *
David G. Krall..............................................       1,250                *
David N. Hall...............................................       5,000                *
Dr. Wendelin Wiedeking(6)...................................       2,500                *
All directors and executive officers as a group (seven
  persons)..................................................     625,001            100.0%
</TABLE>
    
 
---------------
   
(*) Less than 1.0%.
    
 
   
(1) Granaria Holdings B.V. is 100% owned by Wijler Holding B.V., a Dutch
    Antilles company, 50.1% of which is owned by Joel P. Wyler and 49.9% of
    which is owned by Daniel C. Wyler.
    
 
   
(2) Includes 525,001 shares held by Granaria Industries B.V., which is majority
    owned by Granaria Holdings B.V.
    
 
   
(3) Includes 82,750 shares held by Granaria Holdings B.V. as voting trustee for
    certain members of management.
    
 
   
(4) Includes shares held by Granaria Holdings B.V.
    
 
   
(5) Includes 9,250 shares held the by E-P Management Trust, of which Messrs.
    Joel P. Wyler, Andries Ruijssenaars and Thomas E. Petry are trustees.
    
 
   
(6) Represents shares the Parent has agreed to grant Dr. Wiedeking in March
    1999.
    
 
   
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS.
    
 
   
     In connection with the Acquisition, the Company paid Granaria Holdings B.V.
("Granaria Holdings") a transaction fee of $7.3 million (approximately 1% of the
transaction value) in consideration for advisory services related to structuring
and financing the Acquisition. Granaria Holdings was also paid $1.1 million to
reimburse them for third party costs incurred related to the Acquisition and
issuance of the 9 3/8% Senior Subordinated Notes and the 11 3/4% Cumulative
Redeemable Exchangeable Preferred Stock.
    
 
     The Company has an advisory and consulting agreement with Granaria Holdings
pursuant to which the Company will pay Granaria Holdings an annual management
fee of $1.75 million annually plus out-of-pocket expenses. Fees and expenses
relating to these services amounted to $1.5 million in the nine months ended
November 30, 1998, of which $.6 million is due Granaria Holdings at November 30,
1998.
 
   
     The Company adopted a Short Term Sale Program ("STSP") prior to the
Acquisition which provided for payments to certain executive officers and
members of senior management in the event of a change of control. The
Acquisition constituted such a change of control. (See Executive Compensation
-Short Term Sale Program.) The Company recorded an expense of $10.1 million in
the year ended November 30, 1998 in connection with the STSP, of which $2.6
million remains unpaid.
    
 
     In 1998, the Company paid $10.0 million to the Eagle-Picher Management
Trust ("E-P Management Trust") for the benefit of certain executive officers of
the Company. The $10.0 million payment was effectively
 
                                       77
<PAGE>   79
 
   
used to acquire certain restricted stock of Granaria Industries B.V. which was
later exchanged for common stock of the Parent. Certain of the shares of the
Parent held by the E-P Management Trust have been allocated to certain members
of senior management of the Company. The Company also reimbursed the holders of
the shares for their tax obligations associated with receipt of such shares.
(See Executive Compensation - Incentive Stock Plan.) The Company has recorded
compensation expense of $12.6 million for the restricted shares and related tax
reimbursements. Granaria Holdings B.V. has elected to purchase the shares of the
Company which were forfeited by former members of management for $.7 million.
This amount is due the Company at November 30, 1998.
    
 
   
     The Company entered into employment agreements with six executive officers
("Employment Agreements") which became effective November 29, 1996. Each was
amended in August 1997. The purpose of the Employment Agreements was to provide
the Company with continuity of management following its emergence from
bankruptcy. (See Executive Compensation -- Employment Agreements Severance.)
Three of the six executive officers of the Company have received severance
benefits pursuant to the Employment Agreements. These payments, as well as
payments to another former officer, aggregated $6.0 million.
    
 
                                       78
<PAGE>   80
 
   
                                    PART IV
    
 
   
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
    
 
   
<TABLE>
<C>      <S>
(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
    3.   Exhibits (numbers keyed to Item 601, Regulation S-K)
</TABLE>
    
 
   
<TABLE>
<C>       <S>  <C>
  2.1     --   Third Amended Plan of Reorganization of Eagle-Picher
               Industries, Inc. (the "Company")(1)
  2.2     --   Exhibits to Third Amended Plan of Reorganization of the
               Company(1)
  3.1     --   Articles of Incorporation of the Company, as amended(1)
  3.2     --   Regulations of the Company(1)
  3.3     --   Amended and Restated Certificate of Incorporation of
               Eagle-Picher Holdings, Inc.(1)
  3.4     --   Bylaws of Eagle-Picher Holdings, Inc.(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    --   Articles of Incorporation of Michigan Automotive Research
               Corporation(2)
  3.20    --   Bylaws of Michigan Automotive Research Corporation(2)
  4.1     --   Indenture, dated as of February 24, 1998, between E-P
               Acquisition, Inc., Eagle-Picher Holdings, Inc. 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")(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 the Company and the Trustee(1)
  4.4     --   Form of Global Note (attached as Exhibit A to the Indenture
               filed as Exhibit 4.1 to the Registration Statement)(1)
  9.1     --   Voting Trust Agreement dated November 16, 1998 with owners
               of Class A (Voting) Common Stock of the Parent
 10.1     --   Merger Agreement, dated as of December 23, 1997, among the
               Company, the Eagle-Picher Industries, Inc. Personal Injury
               Settlement Trust, Eagle-Picher Holdings, Inc. and E-P
               Acquisition, Inc.(1)
</TABLE>
    
 
                                       79
<PAGE>   81
   
<TABLE>
<C>       <S>  <C>
 10.2     --   Amendment No. 1 to the Merger Agreement, dated as of
               February 23, 1998, among the Company, the Eagle-Picher
               Industries, Inc. Personal Injury Settlement Trust,
               Eagle-Picher Holdings, Inc. and E-P Acquisition, Inc.(1)
 10.3     --   Supplemental Executive Retirement Plan of the Company(2)
 10.4     --   Notes Purchase Agreement, dated February 19, 1998, among E-P
               Acquisition, Inc. the Company, Eagle-Picher Holdings, 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 the Company and the
               Subsidiary Guarantors(1)
 10.6     --   Registration Rights Agreement, dated as of February 24,
               1998, between E-P Acquisition, 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 the Company(1)
 10.8     --   Credit Agreement, dated as of February 19, 1998, among E-P
               Acquisition, Inc. (merged with and into the Company),
               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
               the Company and the Agent(1)
 10.10    --   Security Agreement, dated as of February 24, 1998, among the
               Company, the Agent and the Domestic Subsidiaries(1)
 10.11    --   Holdings Pledge Agreement, dated as of February 24, 1998,
               between Eagle-Picher Holdings, Inc. and the Agent(1)
 10.12    --   Borrower and Subsidiary Pledge Agreement, dated as of
               February 24, 1998, among the Company, E-P Development, E-P
               Minerals and the Agent(1)
 10.13    --   Holdings Guaranty Agreement, dated as of February 24, 1998,
               by Eagle-Picher Holdings, Inc., 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 the Company and the Agent(1)
 10.16    --   Patent Collateral Agreement, dated February 24, 1998,
               between the Company and the Agent(1)
 10.17    --   Copyright Collateral Agreement, dated February 24, 1998,
               between the Company and the Agent(1)
 10.18    --   Subordination Agreement, dated as of February 24, 1998,
               among E-P Acquisition, Inc., the Company and the Domestic
               Subsidiaries(2)
 10.19    --   Management Agreement dated as of February 24, 1998 between
               the Company and Granaria Holdings B.V.(1)
 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 Eagle-Picher Industries, Inc.,
               effective as of February 25, 1998(2)
 10.22    --   Employment Agreements dated November 29, 1996 between
               Registrant and each Named Executive Officer as defined in
               the Company'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 the Company and each Named Executive Officer as
               defined in the Company's Form S-4(2)
 10.24    --   Sales Incentive Program of the Company(2)
 10.25    --   Letter Agreements dated August 5, 1997 between the Company
               and each Named Executive Officer as defined in the Company's
               Form S-4 regarding Short Term Sale Program(2)
 10.26    --   Letter Agreement dated September 12, 1997 between the
               Company and Carroll D. Curless regarding Sale Incentive
               Bonus(2)
 10.27    --   Letter Agreements dated February 18, 1998 between the
               Company and each Named Executive Officer as defined in the
               Company'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)
</TABLE>
    
 
                                       80
<PAGE>   82
 
   
<TABLE>
<C>        <S>        <C>
    10.29  --         Eagle-Picher Holdings, Inc. (the "Parent") Incentive Stock Plan for Outside Directors effective
                      January 1, 1999
    10.30  --         Amended and Restated Incentive Stock Plan for Eagle-Picher Industries, Inc. (the "Company")
    10.31  --         Second Amended and Restated Incentive Stock Plan for Eagle-Picher Industries, Inc. (the "Company")
    10.32  --         Shareholders Agreement dated October 15, 1998 among Granaria Holdings B.V., Granaria Industries B.V.,
                      Eagle-Picher Holdings, Inc. (the "Parent") and Eagle-Picher Industries, Inc. (the "Company")
    10.33  --         Share Appreciation Plan of the Company(4)
    21.1   --         Subsidiaries of the Company
    23.1   --         Consent of Deloitte & Touche LLP
    23.2   --         Consent of KPMG LLP
    27.1   --         Financial Data Schedule (submitted electronically to the SEC for its information)
</TABLE>
    
 
---------------
   
(1) Incorporated by reference to the Company's Form S-4 Registration Statement
    No. 333-49957 filed on April 10, 1998.
    
 
   
(2) Incorporated by reference to the Company's Amendment No. 1 to Form S-4
    Registration Statement No. 333-49957 filed on May 20, 1998.
    
 
   
(3) Incorporated by reference to the Company'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-Q filed on June 29, 1998.
    
---------------
 
   
<TABLE>
<C>         <S>  <C>
 (b) 1.     Reports on Form 8-K
            --   None filed in the Company's fourth quarter for the period
                 covered by the report.
</TABLE>
    
 
                                       81
<PAGE>   83
 
                                   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 INDUSTRIES, INC.
    
 
                                                 /s/ ANDRIES RUIJSSENAARS
                                          By:
                                          --------------------------------------
 
                                                    Andries Ruijssenaars
                                               President and Chief Executive
                                                           Officer
 
Date: February 25, 1999
 
     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.
 
   
<TABLE>
<C>                                                            <S>
                 /s/ ANDRIES RUIJSSENAARS                      Date: February 25, 1999
-----------------------------------------------------------
             Andries Ruijssenaars, President,
           Chief Executive Officer and Director
 
                  /s/ CARROLL D. CURLESS                       Date: February 25, 1999
-----------------------------------------------------------
     Carroll D. Curless, Vice President and Controller
             (Principal Financial Officer and
               Principal Accounting Officer)
 
                     /s/ JOEL P. WYLER                         Date: February 25, 1999
-----------------------------------------------------------
                Joel P. Wyler, Director and
                   Chairman of the Board
 
                    /s/ THOMAS E. PETRY                        Date: March 1, 1999
-----------------------------------------------------------
                 Thomas E. Petry, Director
</TABLE>
    
<PAGE>   84
 
                                   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 HOLDINGS, INC.
 
                                                 /s/ ANDRIES RUIJSSENAARS
                                          By:
                                          --------------------------------------
 
                                                    Andries Ruijssenaars
                                               President and Chief Executive
                                                           Officer
                                               (Principal Executive Officer)
 
Dated: February 25, 1999
 
     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.
 
<TABLE>
<C>                                                            <S>
                 /s/ ANDRIES RUIJSSENAARS                      Date: February 25, 1999
-----------------------------------------------------------
             Andries Ruijssenaars, President,
           Chief Executive Officer and Director
               (Principal Executive Officer)
 
                  /s/ CARROLL D. CURLESS                       Date: February 25, 1999
-----------------------------------------------------------
     Carroll D. Curless, Vice President and Controller
               (Principal Financial Officer
             and Principal Accounting Officer)
 
                     /s/ JOEL P. WYLER                         Date: February 25, 1999
-----------------------------------------------------------
                Joel P. Wyler, Director and
                   Chairman of the Board
 
                    /s/ THOMAS E. PETRY                        Date: March 1, 1999
-----------------------------------------------------------
                 Thomas E. Petry, Director
</TABLE>
<PAGE>   85
 
                                   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.
 
                                                  /s/ WILLIAM D. OETERS
                                          By:
                                          --------------------------------------
 
                                                     William D. Oeters
                                                         President
                                               (Principal Executive Officer)
 
Dated: February 25, 1999
 
     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.
 
<TABLE>
<C>                                                            <S>
                   /s/ WILLIAM D. OETERS                       Date: February 25, 1999
-----------------------------------------------------------
               William D. Oeters, President
               (Principal Executive Officer)
 
                    /s/ GARY M. FREYTAG                        Date: February 25, 1999
-----------------------------------------------------------
              Gary M. Freytag, Vice President
                       and Treasurer
               (Principal Financial Officer)
 
                    /s/ DAVID P. KELLEY                        Date: February 25, 1999
-----------------------------------------------------------
                David P. Kelley, Controller
              (Principal Accounting Officer)
 
                    /s/ DAVID N. EVANS                         Date: February 25, 1999
-----------------------------------------------------------
                 David N. Evans, Director
 
                    /s/ DAVID G. KRALL                         Date: February 25, 1999
-----------------------------------------------------------
                 David G. Krall, Director
</TABLE>
<PAGE>   86
 
                                   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.
 
                                                 /s/ ANDRIES RUIJSSENAARS
                                          By:
                                          --------------------------------------
 
                                                    Andries Ruijssenaars
                                                         President
                                               (Principal Executive Officer)
 
Dated: February 25, 1999
 
     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.
 
<TABLE>
<C>                                                            <S>
                 /s/ ANDRIES RUIJSSENAARS                      Date: February 25, 1999
-----------------------------------------------------------
       Andries Ruijssenaars, Director and President
               (Principal Executive Officer)
 
                    /s/ GARY M. FREYTAG                        Date: February 25, 1999
-----------------------------------------------------------
       Gary M. Freytag, Vice President and Treasurer
             (Principal Financial Officer and
               Principal Accounting Officer)
 
                    /s/ DAVID G. KRALL                         Date: February 25, 1999
-----------------------------------------------------------
                 David G. Krall, Director
</TABLE>
<PAGE>   87
 
                                   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.
 
                                                   /s/ SADAO TAKAHASHI
                                          By:
                                          --------------------------------------
 
                                                      Sadao Takahashi
                                                         President
                                               (Principal Executive Officer)
 
Dated: February 25, 1999
 
     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.
 
<TABLE>
<C>                                                            <S>
                    /s/ SADAO TAKAHASHI                        Date: February 25, 1999
-----------------------------------------------------------
                Sadao Takahashi, President
               (Principal Executive Officer)
 
                    /s/ GARY M. FREYTAG                        Date: February 25, 1999
-----------------------------------------------------------
       Gary M. Freytag, Vice President and Treasurer
             (Principal Financial Officer and
               Principal Accounting Officer)
 
                    /s/ DAVID N. EVANS                         Date: February 25, 1999
-----------------------------------------------------------
                 David N. Evans, Director
 
                    /s/ DAVID G. KRALL                         Date: February 25, 1999
-----------------------------------------------------------
                 David G. Krall, Director
</TABLE>
<PAGE>   88
 
                                   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 FLUID SYSTEMS, INC.
 
                                                    /s/ SCOTT F. MALY
                                          By:
                                          --------------------------------------
 
                                                       Scott F. Maly
                                                         President
                                               (Principal Executive Officer)
 
Dated: February 25, 1999
 
     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 FLUID SYSTEMS, INC., AND IN THE CAPACITIES
AND ON THE DATES INDICATED.
 
<TABLE>
<C>                                                            <S>
                     /s/ SCOTT F. MALY                         Date: February 25, 1999
-----------------------------------------------------------
                 Scott F. Maly, President
               (Principal Executive Officer)
 
                    /s/ GARY M. FREYTAG                        Date: February 25, 1999
-----------------------------------------------------------
                Gary M. Freytag, Treasurer
               (Principal Financial Officer)
 
                    /s/ DANIEL T. HOAG                         Date: February 25, 1999
-----------------------------------------------------------
                Daniel T. Hoag, Controller
              (Principal Accounting Officer)
 
                    /s/ DAVID G. KRALL                         Date: February 25, 1999
-----------------------------------------------------------
                 David G. Krall, Director
</TABLE>
<PAGE>   89
 
                                   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.
 
                                                    /s/ WESLEY D. LEE
                                          By:
                                          --------------------------------------
 
                                                       Wesley D. Lee
                                                         President
                                               (Principal Executive Officer)
 
Date: March 1, 1999
 
     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.
 
<TABLE>
<C>                                                            <S>
                     /s/ WESLEY D. LEE                         Date: March 1, 1999
-----------------------------------------------------------
                 Wesley D. Lee, President
               (Principal Executive Officer)
 
                    /s/ GARY M. FREYTAG                        Date: February 25, 1999
-----------------------------------------------------------
       Gary M. Freytag, Vice President and Treasurer
               (Principal Financial Officer)
 
                     /s/ NANCY C. REED                         Date: March 1, 1999
-----------------------------------------------------------
                 Nancy C. Reed, Controller
              (Principal Accounting Officer)
 
                    /s/ DAVID N. EVANS                         Date: February 25, 1999
-----------------------------------------------------------
                 David N. Evans, Director
 
                    /s/ DAVID G. KRALL                         Date: February 25, 1999
-----------------------------------------------------------
                 David G. Krall, Director
</TABLE>
<PAGE>   90
 
                                   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
 
                                                   /s/ WILLIAM E. LONG
                                          By:
                                          --------------------------------------
 
                                                      William E. Long
                                                         President
                                               (Principal Executive Officer)
 
Dated: February 24, 1999
 
     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.
 
<TABLE>
<C>                                                            <S>
                    /s/ WILLIAM E. LONG                        Date: February 24, 1999
-----------------------------------------------------------
          William E. Long, President and Director
               (Principal Executive Officer)
 
                     /s/ J. D. SELLER                          Date: February 25, 1999
-----------------------------------------------------------
        J. D. Seller, Vice President and Controller
               (Principal Financial Officer
             and Principal Accounting Officer)
 
                     /s/ JOEL P. WYLER                         Date: February 24, 1999
-----------------------------------------------------------
                  Joel P. Wyler, Director
 
                 /s/ ANDRIES RUIJSSENAARS                      Date: February 24, 1999
-----------------------------------------------------------
              Andries Ruijssenaars, Director
</TABLE>
<PAGE>   91
 
                                   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.
 
                                                  /s/ WILLIAM D. OETERS
                                          By:
                                          --------------------------------------
 
                                                     William D. Oeters
                                               President (Principal Executive
                                                           Officer)
 
Dated: February 25, 1999
 
     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.
 
<TABLE>
<C>                                                            <S>
                   /s/ WILLIAM D. OETERS                       Date: February 25, 1999
-----------------------------------------------------------
               William D. Oeters, President
               (Principal Executive Officer)
 
                    /s/ GARY M. FREYTAG                        Date: February 25, 1999
-----------------------------------------------------------
       Gary M. Freytag, Vice President and Treasurer
               (Principal Financial Officer)
 
                    /s/ DAVID P. KELLEY                        Date: February 25, 1999
-----------------------------------------------------------
                David P. Kelley, Controller
              (Principal Accounting Officer)
 
                    /s/ DAVID N. EVANS                         Date: February 25, 1999
-----------------------------------------------------------
                 David N. Evans, Director
 
                    /s/ DAVID G. KRALL                         Date: February 25, 1999
-----------------------------------------------------------
                 David G. Krall, Director
</TABLE>
<PAGE>   92
 
                                   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.
                                          MICHIGAN AUTOMOTIVE RESEARCH
                                          CORPORATION
 
                                                  /s/ MICHAEL J. BOERMA
                                          By:
                                          --------------------------------------
 
                                                     Michael J. Boerma
                                               President (Principal Executive
                                                           Officer)
 
Dated: February 25, 1999
 
     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, MICHIGAN AUTOMOTIVE RESEARCH CORPORATION, AND IN THE
CAPACITIES AND ON THE DATES INDICATED.
 
<TABLE>
<C>                                                            <S>
                   /s/ MICHAEL J. BOERMA                       Date: February 25, 1999
-----------------------------------------------------------
         Michael J. Boerma, President and Director
               (Principal Executive Officer)
 
                  /s/ TERENCE J. RHOADES                       Date: February 25, 1999
-----------------------------------------------------------
        Terence J. Rhoades, Secretary and Treasurer
             (Principal Financial Officer and
               Principal Accounting Officer)
 
                    /s/ DAVID G. KRALL                         Date: February 25, 1999
-----------------------------------------------------------
                 David G. Krall, Director
</TABLE>
<PAGE>   93
 
   
                                 EXHIBIT INDEX
    
 
   
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-------
<C>       <C>  <S>
  2.1     --   Third Amended Plan of Reorganization of Eagle-Picher
               Industries, Inc. (the "Company")*
  2.2     --   Exhibits to Third Amended Plan of Reorganization of the
               Company*
  3.1     --   Articles of Incorporation of the Company, as amended*
  3.2     --   Regulations of the Company*
  3.3     --   Amended and Restated Certificate of Incorporation of
               Eagle-Picher Holdings, Inc.*
  3.4     --   Bylaws of Eagle-Picher Holdings, Inc.*
  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    --   Articles of Incorporation of Michigan Automotive Research
               Corporation*
  3.20    --   Bylaws of Michigan Automotive Research Corporation*
  4.1     --   Indenture, dated as of February 24, 1998, between E-P
               Acquisition, Inc., Eagle-Picher Holdings, Inc. 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 the Company and the Trustee*
  4.4     --   Form of Global Note (attached as Exhibit A to the Indenture
               filed as Exhibit 4.1 to the Registration Statement)*
  9.1     --   Voting Trust Agreement dated November 16, 1998 with owners
               of Class A (Voting) Common Stock of the Parent
 10.1     --   Merger Agreement, dated as of December 23, 1997, among the
               Company, the Eagle-Picher Industries, Inc. Personal Injury
               Settlement Trust, Eagle-Picher Holdings, Inc. and E-P
               Acquisition, Inc.*
</TABLE>
    
<PAGE>   94
 
   
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-------
<C>       <C>  <S>
 10.2     --   Amendment No. 1 to the Merger Agreement, dated as of
               February 23, 1998, among the Company, the Eagle-Picher
               Industries, Inc. Personal Injury Settlement Trust,
               Eagle-Picher Holdings, Inc. and E-P Acquisition, Inc.*
 10.3     --   Supplemental Executive Retirement Plan of the Company*
 10.4     --   Notes Purchase Agreement, dated February 19, 1998, among E-P
               Acquisition, Inc. the Company, Eagle-Picher Holdings, SBC
               Warburg Dillon Read and ABN AMRO Incorporated*
 10.5     --   Assumption Agreement for the Notes Purchase Agreement, dated
               as of February 24, 1998, between the Company and the
               Subsidiary Guarantors*
 10.6     --   Registration Rights Agreement, dated as of February 24,
               1998, between E-P Acquisition, SBC Warburg Dillon Read and
               ABN AMRO Incorporated*
 10.7     --   Assumption Agreement for the Registration Rights Agreement,
               dated as of February 24, 1998, of the Company*
 10.8     --   Credit Agreement, dated as of February 19, 1998, among E-P
               Acquisition, Inc. (merged with and into the Company),
               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
               the Company and the Agent*
 10.10    --   Security Agreement, dated as of February 24, 1998, among the
               Company, the Agent and the Domestic Subsidiaries*
 10.11    --   Holdings Pledge Agreement, dated as of February 24, 1998,
               between Eagle-Picher Holdings, Inc. and the Agent*
 10.12    --   Borrower and Subsidiary Pledge Agreement, dated as of
               February 24, 1998, among the Company, E-P Development, E-P
               Minerals and the Agent*
 10.13    --   Holdings Guaranty Agreement, dated as of February 24, 1998,
               by Eagle-Picher Holdings, Inc., 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 the Company and the Agent*
 10.16    --   Patent Collateral Agreement, dated February 24, 1998,
               between the Company and the Agent*
 10.17    --   Copyright Collateral Agreement, dated February 24, 1998,
               between the Company and the Agent*
 10.18    --   Subordination Agreement, dated as of February 24, 1998,
               among E-P Acquisition, Inc., the Company and the Domestic
               Subsidiaries*
 10.19    --   Management Agreement dated as of February 24, 1998 between
               the Company and Granaria Holdings B.V.*
 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 Eagle-Picher Industries, Inc.,
               effective as of February 25, 1998*
 10.22    --   Employment Agreements dated November 29, 1996 between
               Registrant and each Named Executive Officer as defined in
               the Company'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 the Company and each Named Executive Officer as
               defined in the Company's Form S-4*
 10.24    --   Sales Incentive Program of the Company*
 10.25    --   Letter Agreements dated August 5, 1997 between the Company
               and each Named Executive Officer as defined in the Company's
               Form S-4 regarding Short Term Sale Program*
</TABLE>
    
<PAGE>   95
 
   
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-------
<C>       <C>  <S>
 10.26    --   Letter Agreement dated September 12, 1997 between the
               Company and Carroll D. Curless regarding Sale Incentive
               Bonus*
 10.27    --   Letter Agreements dated February 18, 1998 between the
               Company and each Named Executive Officer as defined in the
               Company'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    --   Eagle-Picher Holdings, Inc. (the "Parent") Industries Stock
               Plan for Outside Directors effective January 1, 1999
 10.30    --   Amended and Restated Incentive Stock Plan for Eagle-Picher
               Industries, Inc. (the "Company")
 10.31    --   Second Amended and Restated Incentive Stock Plan for
               Eagle-Picher Industries, Inc. (the "Company")
 10.32    --   Shareholders Agreement dated October 15, 1998 among Granaria
               Holdings B.V., Granaria Industries B.V., Eagle-Picher
               Holdings, Inc. (the "Parent") Eagle-Picher Industries, Inc.
               (the "Company")
 10.33    --   Share Appreciation Plan of the Company*
 21.1     --   Subsidiaries of the Company
 23.1     --   Consent of Deloitte & Touche LLP
 23.2     --   Consent of KPMG LLP
 27.1     --   Financial Data Schedule (submitted electronically to the SEC
               for its information)
</TABLE>
    
 
---------------
 
   
* Incorporated by reference. See Item 14 above.