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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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Form 10-K

FOR ANNUAL AND TRANSITION REPORTS


PURSUANT TO SECTIONS 13 OR 15(d) OF THE


SECURITIES EXCHANGE ACT OF 1934


|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR
    15(d) OF THE SECURITIES EXCHANGE ACT OF 1934*   
|          
|           |  | For the fiscal year ended November 30,
    2003                                             
|          
|or        
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13
    OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|          
|           |  | For the transition period
    from           to           .                                 

Commission file number 333-49957-01



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EaglePicher Holdings, Inc.

A Delaware Corporation


I.R.S. Employer Identification

No. 13-3989553




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3402 East University Drive, Phoenix, Arizona
85034

Registrants telephone number, including
area code:

602-794-9600




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

None


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

None




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

Indicate
by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Act of 1934 during the preceding 12 months, and
(2) has been subject to such filing requirements for the
past
90 days.     Yes o          No þ     (See
explanatory note immediately above.)

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

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

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

1,000,000 shares
of common capital stock, $0.01 par value each, were outstanding
at February 12, 2004



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##### Table of Contents



TABLE OF ADDITIONAL REGISTRANTS

|                                            |  |                  |          |                 |  |  |            | 
|------------------------------------------- |  | ---------------- | -------- | --------------- |  |  | ---------- | 
|                                            |  | State or Other   |          |                
|                                            |  | Jurisdiction of  |          | I.R.S. Employer
|                                            |  | Incorporation or |          | Identification 
|Name of Registrant                          |  | Organization     |          | Number         
|                                            |  |                  |          |                
|EaglePicher Incorporated                    |  |                  | Ohio     |                 |  |  | 31-0268670 | 
|Carpenter Enterprises, Inc.                 |  |                  | Michigan |                 |  |  | 38-2752092 | 
|Daisy Parts, Inc.                           |  |                  | Michigan |                 |  |  | 38-1406772 | 
|Eagle-Picher Far East, Inc.                 |  |                  | Delaware |                 |  |  | 31-1235685 | 
|EaglePicher Filtration & Minerals,
    Inc. |  |                  | Nevada   |                 |  |  | 31-1188662 | 
|EaglePicher Technologies, LLC               |  |                  | Delaware |                 |  |  | 31-1587660 | 
|EaglePicher Automotive, Inc.                |  |                  | Michigan |                 |  |  | 38-0946293 | 
|EaglePicher Pharmaceutical Services, LLC    |  |                  | Delaware |                 |  |  | 74-3071334 | 



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TABLE OF CONTENTS



|             |                                                                                               |  |  |  |  |  |  | 
|------------ | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I      
|             | Item 1. Business                                                                             
|             | Item 2. Properties                                                                           
|             | Item 3. Legal Proceedings                                                                    
|             | Item 4. Submission of Matters to a Vote of Security Holders                                  
|PART II     
|             | Item 5. Market for the Registrants Common Equity and Related Stockholder Matters            
|             | Item 6. Selected Financial Data                                                              
|             | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
|             | Item 7a. Quantitative and Qualitative Disclosures About Market Risk                          
|             | Item 8. Financial Statements and Supplementary Data                                          
|             | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
|             | Item 9a. Controls and Procedures                                                             
|PART III    
|             | Item 10. Directors and Executive Officers of the Registrant                                  
|             | Item 11. Executive Compensation                                                              
|             | Item 12. Security Ownership of Certain Beneficial Owners and Management                      
|             | Item 13. Certain Relationships and Related Party Transactions                                
|             | Item 14. Principle Accountant Fees and Services                                              
|PART IV     
|             | Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K                     
|SIGNATURES  
|EXHIBIT 12.1
|EXHIBIT 21.1
|EXHIBIT 24.1
|EXHIBIT 24.2
|EXHIBIT 24.3
|EXHIBIT 31.1
|EXHIBIT 31.2
|EXHIBIT 32.1
|EXHIBIT 32.2



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TABLE OF CONTENTS

|         |  |                                                                                           |  |      |    | 
|-------- |  | ----------------------------------------------------------------------------------------- |  | ---- | -- | 
|Item     |  |                                                                                           |  | Page
|         |  |                                                                                           |  |     
|PART I  
|1.       |  | Business                                                                                  |  |      | 1  | 
|2.       |  | Properties                                                                                |  |      | 9  | 
|3.       |  | Legal Proceedings                                                                         |  |      | 12 | 
|4.       |  | Submission of Matters to a Vote of Security
    Holders                                   |  |      | 13 | 
|PART II 
|5.       |  | Market for the Registrants Common Equity
    and Related Stockholder Matters             |  |      | 13 | 
|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                            |  |      | 37 | 
|8.       |  | Financial Statements and Supplementary Data                                               |  |      | 40 | 
|9.       |  | Changes In and Disagreements with Accountants on
    Accounting and Financial Disclosure  |  |      | 82 | 
|9a.      |  | Controls and Procedures                                                                   |  |      | 82 | 
|PART III
|10.      |  | Directors and Executive Officers of the Registrant                                        |  |      | 82 | 
|11.      |  | Executive Compensation                                                                    |  |      | 82 | 
|12.      |  | Security Ownership of Certain Beneficial Owners
    and Management                        |  |      | 82 | 
|13.      |  | Certain Relationships and Related Transactions                                            |  |      | 82 | 
|14.      |  | Principle Accountant Fees and Services                                                    |  |      | 82 | 
|PART IV 
|15.      |  | Exhibits, Financial Statement Schedules, and
    Reports on Form 8-K                      |  |      | 82 | 
|         |  | Signatures                                                                                |  |      | 88 | 
|         |  | Exhibit Index                                                                             |  |      | 97 | 

DISCLOSURE REGARDING FORWARD-LOOKING
STATEMENTS

Certain of the matters discussed in this report
may constitute forward-looking statements. Forward-looking
statements can be identified by the use of forward-looking words
such as believes, expects,
may, will, should,
seeks, approximately,
intends, plans, estimates or
anticipates or the negative of these terms or other
comparable words, or by discussions of strategy, plans or
intentions. Statements in this report which are not historical
facts are forward-looking statements. Without limiting the
generality of the preceding statement, all statements in this
report concerning or relating to estimated and projected
earnings, margins, costs, expenditures, cash flows, growth rates
and financial results are forward-looking statements. In
addition, we, through our senior management, from time to time
make forward-looking public statements concerning our expected
future operations and performance and other developments. Such
forward-looking statements are necessarily estimates reflecting
our judgment based upon current information and involve a number
of risks and uncertainties. Other factors may affect the
accuracy of these forward-looking statements and our actual
results may differ materially from the results anticipated in
these forward-looking statements.

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PART I




Item 1.     Business

General

We are a diversified manufacturer of advanced
technology and industrial products that are used in the
automotive, defense, aerospace, environmental testing, medical
implant devices, pharmaceutical services, nuclear energy and
food and beverage industries, in addition to other industrial
arenas. Our long history of innovation in technology and
engineering has helped us become a leader in certain markets in
which we compete. Headquartered in Phoenix, Arizona, we have
domestic operations throughout the United States and
international operations in Mexico, Germany, Canada and Asia.

Our business consists of three operating
segments: the Automotive Segment, the Technologies Segment and
the Filtration and Minerals Segment.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Our Automotive Segment is operated under two
    separate divisions, the Hillsdale division and the Wolverine
    division. The Hillsdale division produces Noise, Vibration,
    Harshness (NVH) dampers for engine crankshafts and
    drivelines, yokes and flanges, transmission and engine pumps,
    automatic transmission filtration products, chassis corners and
    knuckle assemblies and other precision machined components. The
    Wolverine division produces rubber-coated materials and gaskets
    for automotive and non-automotive applications.
|
| |  | Our Technologies Segment develops and
    commercializes advanced power systems for defense, aerospace and
    commercial applications; produces boron isotopes for nuclear
    radiation containment; supplies ultra-clean scientific
    containers for pharmaceutical and environmental testing; and
    provides contract pharmaceutical services.                                                                                                                                                                                                                  
|
| |  | Our Filtration and Minerals Segment mines,
    processes and markets diatomaceous earth and perlite for use as
    a filtration aid, absorbent, performance additive and soil
    amendment.                                                                                                                                                                                                                                                                                                                                                                            

For the fiscal year ended November 30, 2003,
we generated $685.4 million of net sales. Our Automotive
Segment, Technologies Segment and Filtration and Minerals
Segment generated 60%, 28%, and 12%, respectively, of our total
net sales for the fiscal year ended November 30, 2003.

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The following table sets forth the primary
product groups that each of our business segments develop and
manufacture, the current markets for each of these product
groups and the major customers for each product group:

|                                |  |                                                                                                                                                                                                    |  |                                                                                      |  |                                                                                                                                                      
|------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------
|Business Segment                |  | Products                                                                                                                                                                                           |  | Current Market(s)                                                                    |  | Major Customers                                                                                                                                      
|                                |  |                                                                                                                                                                                                    |  |                                                                                      |  |                                                                                                                                                      
|Automotive Segment              |  |                                                                                                                                                                                                    |  |                                                                                      |  |                                                                                                                                                      
|Hillsdale Division              |  | NVH dampers, driveline yokes, flanges,
    transmission and engine pumps, automatic transmission filtration
    products, chassis corners and knuckles and other precision
    machined components |  | Automotive OEMs and Tier 1 automotive parts
    suppliers                            |  | Allison, American Axle, DaimlerChrysler, Delphi,
    Ford, GM, Honda, Mitsubishi, Nissan, Toyota, Visteon                                            
|                               
|Wolverine Division              |  | Rubber-coated materials and gaskets                                                                                                                                                                |  | Automotive OEMs and Tier 1 and Tier 2 automotive
    parts suppliers                 |  | Akebono, Ambrake, Dana, Delhi, DaimlerChrysler,
    Federal Mogul, Ford, Freudenberg-NOK, Honeywell, GM, Ishikawa
    MACI, TND, Toyota, UTX, Visteon
|Technologies Segment            |  |                                                                                                                                                                                                    |  |                                                                                      |  |                                                                                                                                                      
|Power Group                     |  | Batteries and power systems                                                                                                                                                                        |  | Defense, aerospace, medical, telecommunications,
    and other commercial industries |  | Boeing, CECOM (US Army), Guidant, Lockheed
    Martin, Loral, Raytheon, TRW                                                                          
|                               
|Specialty Materials Group       |  | Specialty materials, such as boron isotopes, and
    ultra-clean scientific containers                                                                                                             |  | Nuclear energy, environmental testing and
    pharmaceutical testing                 |  | Dow Chemical, Fisher Scientific, Gemeinschaft,
    Transnuclear, Tennessee Valley Authority, WWR International,
    Westinghouse                     
|                               
|Pharmaceutical Services Group   |  | Drugs and drug active ingredients for clinical
    trials, low volume drugs and radioisotopic tagging                                                                                              |  | Pharmaceutical                                                                       |  | Celegene, Elkins-Sinn, Immunogen, Phoenix
    Scientific, Wyeth                                                                                      
|                               
|Filtration and Minerals Segment |  | Filter aid products, fine mineral additives, and
    chemical and moisture absorbents                                                                                                              |  | Food and beverage chemicals, plastics,
    pharmaceuticals, architectural coatings   |  | ADM, Bayshore, Canandaigua Wine, Cargill,
    Chevron, Heineken, Pfizer Roquette, Valspar                                                            

Business Segments

Automotive
Segment

General

Our Automotive Segment, consisting of the
Hillsdale and Wolverine divisions, supplies the global
automotive market with a diverse range of products. Together
these two divisions produce systems,

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components and materials for sport utility
vehicles, trucks, vans and passenger cars. We sell these
products to major automotive manufacturers and Tier 1 and Tier 2
suppliers in North America, Europe and Asia.


Hillsdale
Division

The Hillsdale division provides NVH dampening
solutions to the worldwide automotive market. The Hillsdale
division also supplies complex machined components for engine,
transmission, axle/driveline and chassis/suspension
applications. The Hillsdale division has a diverse customer base
with over 64% of its sales made directly to automotive vehicle
manufacturers. The Hillsdale division utilizes its manufacturing
facilities located throughout the United States and Mexico to
produce its diverse product line. It employs complex
manufacturing and quality control systems such as robotic
material handling and assembly, lean manufacturing and six sigma
methodologies to produce high quality and often custom
automotive components and systems. The Hillsdale division is
expanding the use of low cost production in Mexico and sourcing
from China and Southeast Asia to remain competitive across its
product lines.

For the fiscal year ended November 30, 2003,
approximately 36% of the Hillsdale divisions sales were to
Japanese operators in North America and approximately 19% to
General Motors for use in light truck and SUV platforms. Sales
to Honda represented approximately 24% of the Hillsdale
divisions net sales and approximately 12% of our
consolidated net sales in fiscal year 2003. We believe the
Hillsdale division is North Americas leading torsional
vibration damper manufacturer. Although competitive conditions
are intense in the automotive parts industry, the Hillsdale
divisions primary product groups are incorporated into
automotive products that typically run for four to eight years.
However, these programs are not contractually guaranteed, and
generally customers have the right to re-source products at any
time.

Major
Products



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Dampers.Dampers are
    vibration control devices which reduce the torsional stress
    vibrations caused by internal combustion engine systems, thereby
    alleviating the stress on shafts and relaxing the flex points.
    Dampers reduce fatigue and prevent cracking thereby enhancing
    the durability of engines and their components. We believe the
    Hillsdale division is widely recognized as North Americans
    leading manufacturer of torsional vibration damper devices for
    use in engine and drivetrain applications, with custom rubber
    compounding and manufacturing capabilities.                                                                                                                                                                                                                                                                                                                                   
|
| |  | Precision Machined Components.The Hillsdale division also
    manufactures a wide array of precision machined metal
    components. These parts, made of iron, aluminum, steel and
    magnesium, include flanges and yokes, connecting rods,
    driveshaft support brackets, front engine covers and pump
    housings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | Chassis Corners and Knuckles.Corners and knuckles are structural
    components of vehicle chassis and suspension systems. The
    Hillsdale divisions corner and knuckle products include
    front and rear steering knuckles and damper forks.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Pumps.The Hillsdale
    division also designs and manufactures both fixed and variable
    pressure style pumps for engines and transmissions. Its products
    include complete pump components and complete oil pump
    assemblies. Although one of its major pump programs with Ford is
    being phased out, the Hillsdale division believes that certain
    market trends present new business opportunities for its pump
    products. We believe that increased fuel efficiency requirements
    for motor vehicles will drive the market towards a larger demand
    for variable displacement pumps. To achieve improved fuel
    efficiency, vehicle manufacturers are developing vehicles that
    idle at lower revolutions per minute (RPMs) requiring either a
    larger and more burdensome pump or a variable displacement pump.
    The Hillsdale division currently is exploring new technologies
    to address this market trend.

Wolverine
Division

We believe our Wolverine division is among the
worlds largest and most diversified suppliers of
rubber-coated metal and gasket material, designed for superior
performance under extreme conditions, for sealing,

4



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sound dampening and other applications in the
automotive, industrial and consumer markets. The Wolverine
division pioneered and perfected the technology to produce
rubber-coated paper and metal using the line coating process.
Typical applications include sealing systems (i.e.,
gaskets) for engines, transmissions and compressors. These
materials are also used as an NVH suppressant for brakes, a
product in which we believe Wolverine is the global market
leader. The Wolverine division manufactures the rubber-coated
materials in the United States. Certain sealing and insulating
products, such as compressor gaskets for air conditioning units
and brake noise insulators, are stamped out of the rubber-coated
materials both in the United States and in Germany. Wolverine
has installed additional manufacturing capacity and is focused
on several growth initiatives, including new market
opportunities in the brake aftermarket and small engines
markets, as well as increased penetration of the global market.


The Wolverine division sells primarily to Tier 1
and Tier 2 suppliers, with nearly 85% of its fiscal year 2003
sales to the automotive end-market (OEM and OEM replacement
parts). The Wolverine division has a diverse customer base with
over 250 customers.

Major
Products



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Brake products.The
    Wolverine divisions brake product segment focuses on the
    design, manufacture and sale of shims and sound damping
    materials for disc brakes and replacement part markets. The
    Wolverine division combines substrates, elastomer coatings,
    attachment options and adhesive layers in different formulations
    to arrive at economical products to meet a wide range of
    application demands. The Wolverine divisions aftermarket
    products accounted for approximately 5% of its fiscal year 2003
    brake product sales and it plans to continue to penetrate this
    market to mitigate the impact of vehicle production cycles.                                                                 
|
| |  | Gasket and gasket
    materials.The Wolverine division
    supplies a wide range of rubber-coated metals for sealing and
    sound damping and other applications in the automotive OEM and
    aftermarket, and industrial and consumer markets. The Wolverine
    divisions gaskets and gasket materials are used in many
    automotive applications including cylinder head and various
    other engine, fuel system, and transmission gaskets. The
    increased demand for more fuel efficient vehicles and reduced
    warranty expense has led to an increased demand for more
    sophisticated sealing applications. Aftermarket applications now
    account for nearly 6% of all of the Wolverine divisions
    gasket related sales.
|
| |  | Compressor gaskets.The Wolverine divisions compressor gaskets focus on the
    design, manufacture and sale of gaskets and gasket materials for
    industrial and consumer product applications including small
    engines, industrial air compressor systems, air power tools,
    commercial and residential air conditioning systems and fluid
    pumps and pneumatic applications. The Wolverine division plans
    to further penetrate these higher margin applications by
    leveraging its reputation and market leading position as a
    premier supplier of gasket products and materials.                                                                                                                                          

Technologies
Segment

General

Our Technologies Segment consists of a diverse
group of businesses with a broad spectrum of technologies and
capabilities and operates these businesses through the following
three divisions: the Power Group, the Specialty Materials Group,
and the Pharmaceutical Services Group. These divisions provide
innovative advanced technology products for aerospace, defense,
and commercial power, nuclear energy, environmental and
pharmaceutical applications.



| |            
| | -----------
| | Power Group

The Power Group supplies batteries and power
systems for aerospace, defense, medical implant and other
specialty commercial applications. It has been providing the
aerospace and defense industries with high quality, reliable
batteries for more than 50 years. Nickel hydrogen and other
types of batteries manufactured by the Power Group provide power
for commercial and government satellites and spacecraft, serve
as launch

5



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batteries in booster rockets and support a
variety of military applications, including missiles,
smart weapon munitions and mobile radio
communications.


Our batteries power a significant number of the
United States most advanced communications and
surveillance satellites. Our batteries have been on every United
States manned space flight, and our silver zinc batteries
provided the power for the safe return to earth of the famed
Apollo 13 flight crew.

The Power Group also manufactures a line of
batteries sold commercially for use in items such as medical
implants, industrial fire and burglary alarm systems,
telecommunications backup systems and remote global positioning
units.

Defense and space power products.Over 90% of the Power Groups
revenue comes from military or space applications. Major
customers include Raytheon, Lockheed Martin, Boeing and the
United States Army.

Commercial power products.The Power Group, through its
Commercial Power division, produces batteries for commercial
applications in various high growth market segments. Its
commercial line of batteries include Carefree® batteries
and KeeperTM II batteries. Carefree® cells and
batteries, based upon lead acid, nickel cadmium, nickel metal
hydride and lithium-ion chemistries, are long-life rechargeable
batteries. Common applications for these batteries include
emergency lighting, fire and security systems, handheld power
tools, telecommunications back-up systems and wheelchairs and
scooters. KeeperTM II cells and batteries, based upon
lithium thionyl chloride, lithium manganese dioxide and lithium
sulfur dioxide chemistries, are non-rechargeable batteries.
Common applications include automotive toll tags, memory back-up
for computer servers and radio frequency transponders. The Power
Group is looking to expand its presence in the commercial market
through joint ventures, licensing, and other technology
development initiatives. These new market opportunities
presently include high performance lead-acid batteries, medical
implant medical device batteries, fast battery chargers, and
long life batteries for remote applications.



| |                          
| | -------------------------
| | Specialty Materials Group

The Specialty Materials Group manufactures and
markets high purity specialty material compounds for a wide
range of services and products. The Specialty Materials Group
supplies isotopically enriched boron and isotopically purified
zinc, which are used in nuclear power plants for radioactive
absorption and containment. The Specialty Materials Group also
supplies ultra-clean containers for use in pharmaceutical and
environmental testing.

Boron and related products.The Specialty Materials Group uses
sophisticated manufacturing processes to produce isotopically
pure boron, which involves the separation of boron into its
isotopes, and to produce high purity enriched boron compounds.
The Specialty Materials Group maintains a strong commitment to
delivering innovative products such as BondAidsTM, a
ceramic concrete product based on technology licensed from the
Argonne National Laboratory with radiation absorption qualities
that is used in containers for radioactive and hazardous waste.
This product is in the initial commercialization phase. The
Specialty Materials Group also produces depleted zinc and
lithium products for nuclear containment applications.

Environmental Sciences & Technology.Our Environmental Sciences &
Technology (ESAT) division is the leading resource for glassware
and plasticware cleaning and treating services. This division
supports the pharmaceutical/ biotech, semiconductor and
environmental industries globally with off-the-shelf and
customized solutions.



| |                              
| | -----------------------------
| | Pharmaceutical Services Group

The Pharmaceutical Services Group manufactures
drug active ingredients for pharmaceutical companies principally
in small batches for clinical trials and low volume prescription
drugs. The Pharmaceutical Services Group has manufactured
hundreds of new drug candidates for use in pre-clinical studies,
toxicology studies, clinical trials and commercial use. The
manufacturing of these drugs require specially designed
facilities and operating systems to ensure safe handling and to
prevent cross-contamination with other drugs. Our high level
facility in Harrisonville, Missouri provides the rigorous
controls necessary to develop and manufacture both

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new and existing anticancer drugs and other high
potency compounds. We believe this facility is one of only a few
facilities worldwide specifically designed to manufacture this
class of drugs.




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



| |        
| | -------
| | General

Our Filtration and Minerals Segment mines,
processes and markets diatomaceous earth and perlite products.
The primary uses of its products are as a filtration aid for
removing solids and impurities, as a fine mineral additive for
enhancing the performance of plastics and coatings, and as a
liquid absorbent. Filtration aids are used in processing food
sweeteners, beer, wine, fruit juices, chemicals,
pharmaceuticals, lube oils, and in swimming pool filtration
systems. Fine mineral additives are used in plastic film and
architectural paints. Diatomaceous earth absorbents are used as
oil, chemical and water absorbents in auto shops and industrial
and chemical plants and as a soil enhancements in golf courses,
sports fields and agricultural applications. The Filtration and
Minerals Segment serves over 35 markets and more than 2,000
customers around the globe with its various products.



| |               
| | --------------
| | Major products

Diatomaceous earth, or diatomite, is a natural
material that is odorless, tasteless and highly stable. With its
natural honeycomb structure, strength and low bulk density,
diatomite is an ideal medium for filtration and absorption
applications. Perlite is a mineral of volcanic origin, also with
natural qualities that make it valuable as a filter aid. The
Filtration and Minerals Segment sells its filter aid and
additive products under the trademark CELATOM® both
directly and through distributors to many customers. The
Filtration and Minerals Segment also sells products known as
FLOOR DRYTM, AXISTM, PLAY
BALLTM, Celabrite®, Celabrew®,
CelaBloc®.

Competition

Our three business segments collectively
manufacture hundreds of products for customers worldwide. The
economic and competitive conditions at any given time in the
markets we serve are likely to vary significantly from market to
market. Our competitive position for our products varies
substantially across product lines and geographies.

Automotive Segment.Our Automotive Segment competes with
other automotive parts suppliers as well as OEMs themselves.
Competition in the automotive parts industry is intense on a
global basis but varies along product lines. Generally,
competitive conditions in the automotive parts industry are
characterized by a decreasing number of competitors with
increasing foreign competition, particularly from Asia, an
increased emphasis on quality, and intense pricing pressures
from automotive manufacturers.

Technologies Segment.Our Technologies Segment competes in
several industries and industry sub-segments. The Power
Groups battery and power products serve several industries
including defense, aerospace and specialty commercial industries
and competes with many different companies. The Power Group
supplies batteries and power components for use in defense and
aerospace applications in North America. SAFT, a subsidiary of
Alcatel, is the Power Groups leading competitor with
respect to these products. The Specialty Materials Group
supplies enriched boron, which is used in nuclear power plants
for radioactive absorption and containment. Its enriched boron
products compete primarily on the basis of cost versus natural
boron, although there are a few smaller competitors in the
enriched boron market. The Pharmaceutical Services Group has
numerous small competitors in a highly fragmented, high margin
market.

Filtration and Minerals Segment.Our Filtration and Minerals Segment
competes primarily on the basis of price in a market with
relatively few competitors, one of which is significantly larger
than us. The primary competitor is World Minerals Inc., a
subsidiary of Alleghany Corporation.

7



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Corporate Structure

We are a majority-controlled subsidiary of
Granaria Holdings B.V. of The Netherlands. Our corporate
headquarters is located in Phoenix, Arizona with operations in
the United States, Mexico, Canada, and Germany. We were founded
in 1843 as a manufacturer of paint pigments which were marketed
under the brand name Eagle White Lead. In 1876, the Picher
family of Joplin, Missouri formed the Picher Lead Mining
Company. The two firms merged in 1916 forming the Eagle-Picher
Lead Company. In 2003, we were renamed EaglePicher Holdings,
Inc. to reflect our ongoing diversification into other
industries.

Recent Acquisitions and Divestures

During 2003, we sold certain assets of our
Hillsdale UK Automotive operation for cash of $1.1 million
and recognized an after-tax loss of approximately
$4.3 million. In addition, during 2003, we sold certain
assets of our Germanium-based business in our Technologies
Segment for cash of approximately $15.0 million and
recognized an after-tax gain of approximately $0.5 million.
These divestitures were accounted for as discontinued
operations. Accordingly, our financial statements have been
restated to exclude their results.

During 2002, we sold certain assets and
liabilities of our Precision Products business for cash of
$3.1 million and recognized a pre-tax loss of approximately
$2.8 million.

Effective December 14, 2001, we sold certain
of the assets of our former Construction Equipment Division,
which represented our entire former Machinery Segment. The sale
price was $6.1 million in cash plus the assumption of
$6.7 million of liabilities. We recognized an after tax
loss of $30.4 million. This divestiture was accounted for
as a discontinued operation. Accordingly, our financial
statements have been restated to exclude its results.

During 2000, we completed the sale of our Ross
Aluminum Foundries, Fluid Systems, Michigan Automotive Research
Corporation, Rubber Molding, and Cincinnati Industrial Machinery
divisions for aggregate net proceeds of $85.0 million, and
recognized a pre-tax gain of approximately $17.1 million.

On June 30, 2000, our Technologies Segment
acquired the stock of BlueStar Battery Systems Corporation for
$4.9 million in cash. Immediately following the transaction
the name of the corporation was changed to Eagle-Picher Energy
Products Corp. (EPEP). EPEP manufactures batteries
using lithium based technology, which is of strategic importance
to the battery manufacturing operations in our Technologies
Segment. Substantially all of EPEPs products are sold to
the United States Army.

On December 1, 1999, our Technologies
Segment acquired the depleted zinc distribution business of
Isonics Corporation for approximately $8.2 million.

Our Hillsdale Division acquired Carpenter
Enterprises Limited as of March 1, 1999 for a purchase
price of approximately $73.0 million. Carpenter is a
supplier of precision machined components to the automotive
industry with operations, products and a customer base
complimentary to those of our Hillsdale Division.

Backlog

Our backlog was $168.6 million at
November 30, 2003, an increase of $37.5 million, or
28.6%, from $131.1 million at November 30, 2002. We
expect 90% of our order backlog outstanding at November 30,
2003 to be filled during fiscal 2004.

Within our Technologies Segment, we are a
supplier of U.S. Government contracts. The
U.S. Government backlog is limited to amounts obligated to
contracts. Normally, the U.S. Government funds its major
programs only to the dollar level appropriated annually by
Congress, even though the total estimated program values are
considerably greater. Accordingly, our backlog represents only
that amount which has been appropriated and against which we can
be reimbursed for work performed. Non-appropriated backlog at
November 30, 2003, totaled $19.0 million and at
November 30, 2002 was not material.

As is customary in the automotive industry, we
enter into blanket purchase orders with our customers with
respect to specific product orders. From time to time, the
customer, depending on their needs, will

8



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provide us with releases on a blanket purchase
order for a specified amount of products. As a result, the
backlog for the Automotive Segment is not significant.


Raw Materials

The prices of our raw materials are subject to
volatility. Our principal raw materials consist of rubber,
steel, zinc, nickel, boron, and aluminum. In addition, due to
their manufacturing processes, our Filtration and Minerals
Segment and our Wolverine division consume large amounts of
natural gas. Generally, these raw materials are commodities that
are widely available. Although we have alternate sources for
these commodities, our policy is to establish arrangements with
select vendors based upon price, quality and delivery terms. We
also are looking to further diversify our supplier base and
increase the percentage of our materials purchased in lower cost
regions, such as Asia, Mexico, and Eastern Europe.

Intellectual Property

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

Government Contracts

Our Technologies Segment has contracts, directly
or indirectly, with the United States government that have
standard termination provisions permitting the United States
government to terminate the contracts at its convenience.
However, if contracts are terminated, we are entitled to be
reimbursed for allowable costs and profits through the date of
the contract termination. The United States government contracts
are also subject to reduction or modification in the event of
changes in Government requirements or budgetary constraints.
During fiscal year 2003, a majority of our Technologies
Segments sales were directly with the United States
government or with other companies where the United States
government was the end customer.

Research and Development

We spent approximately $10.4 million in
fiscal year 2001, $9.8 million in fiscal year 2002 and
$13.2 million in fiscal year 2003 on research and
development activities, primarily for the development of new
products or the improvement of existing products. These amounts
were offset by customer sponsored research activities of
$9.3 million in fiscal year 2001, $8.8 million in
fiscal year 2002 and $11.0 million in fiscal year 2003.

Employees

As of November 30, 2003, we employed
approximately 3,900 persons and as of November 30, 2002, we
employed approximately 3,600 persons. At both periods,
approximately 45% of our employees were represented by labor
organizations. We believe that our relations with our employees
are generally good.

Environmental Matters

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

We are involved in various stages of
investigation and remediation of soil and groundwater at
approximately 15 sites as a result of past and present
operations, including currently owned and formerly

9



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owned plants. Also, we have received notice that
we may have liability under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, as
a potentially responsible party at approximately 22 additional
sites, but we believe that any potential liability would not be
material to our financial position or results of operations.


The ultimate cost of site remediation is
difficult to predict given the uncertainties regarding the
extent of the required remediation, the interpretation of
applicable laws and regulations and alternative remediation
methods. Based on our available information and experience with
environmental remediation matters, we have accrued reserves for
our best estimate of remediation costs, and we do not believe
that remediation activities will have a material adverse impact
on our financial condition, results of operations or cash flows.
In addition, in the course of our bankruptcy, we obtained an
agreement with the United States Environmental Protection Agency
and Department of Interior and the states of Arizona, Michigan
and Oklahoma whereby we have limited responsibility to them for
response costs and natural resource damages for environmental
contamination of sites not owned by us that is attributable to
pre-bankruptcy activities. We retain all of our defenses, legal
or factual, at such sites. However, if we are found liable for
such contamination at any of these sites, our liability is
capped at approximately 37%.

We incurred environmental compliances expenses of
$7.9 million in 2001, $8.7 million in 2002, and
$8.3 million in 2003. We expect to incur approximately
$7.8 million in 2004.

In addition, we made capital expenditures for
environmental compliance and remediation of $0.3 million in
2001, $0.6 million in 2002 and $0.6 million in 2003.
We expect to incur approximately $2.3 million in 2004.

We had total remediation expenditures of
$1.1 million in 2001, $1.2 million in 2002, and
$3.3 million 2003, of which $1.1 million in 2001,
$1.2 million in 2002 and $2.8 million in 2003 were
charged to our accrued environmental reserves. As of
November 30, 2002, we had $17.7 million, and as of
November 30, 2003, we had $9.3 million accrued for
sold divisions and businesses related to legal and environmental
matters. In addition, as of November 30, 2002, we had
$2.4 million, and as of November 30, 2003, we had
$1.6 million accrued in other accrued liabilities related
to environmental liabilities for our on-going businesses.

Financial Information about Foreign and
Domestic Operations and Export Sales

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

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

Our principal fixed assets consist of our
manufacturing, processing and storage facilities, and our
transportation and plant vehicles. We have pledged substantially
all of our owned properties and assets as collateral under our
existing senior secured credit agreement. The following table
sets forth selected information regarding our manufacturing and
processing facilities:

|                           |  |                                          |  |                   |                | 
|-------------------------- |  | ---------------------------------------- |  | ----------------- | -------------- | 
|                           |  |                                          |  | Description of   
|Business Segment           |  | Location                                 |  | Property Interest
|                           |  |                                          |  |                  
|Automotive                 |  |                                          |  |                   |                | 
|Domestic                   |  | Blacksburg, Virginia (2 plant locations) |  |                   | owned          | 
|                           |  | Hillsdale, Michigan (4 plant locations)  |  |                   | owned          | 
|                           |  | Hamilton, Indiana                        |  |                   | owned          | 
|                           |  | Inkster, Michigan                        |  |                   | owned          | 
|                           |  | Jonesville, Michigan                     |  |                   | owned          | 
|                           |  | Leesburg, Florida                        |  |                   | owned          | 
|                           |  | Manchester, Tennessee                    |  |                   | leased         | 
|                           |  | Mount Pleasant, Michigan                 |  |                   | owned          | 
|                           |  | Traverse City, Michigan                  |  |                   | owned          | 
|                           |  | Vassar, Michigan                         |  |                   | leased         | 
|International              |  | Ohringen, Germany                        |  |                   | owned          | 
|                           |  | San Luis Potosi, Mexico                  |  |                   | owned          | 
|Technologies(1)            |  |                                          |  |                   |                | 
|Domestic                   |  | Colorado Springs, Colorado               |  |                   | owned          | 
|                           |  | Galena, Kansas                           |  |                   | owned          | 
|                           |  | Harrisonville, Missouri                  |  |                   | owned          | 
|                           |  | Joplin, Missouri (6 plant locations)     |  |                   | owned & leased | 
|                           |  | Lenexa, Kansas                           |  |                   | owned          | 
|                           |  | Miami, Oklahoma (3 plant locations)      |  |                   | owned & leased | 
|                           |  | Phoenix, Arizona                         |  |                   | leased         | 
|                           |  | Quawpaw, Oklahoma (2 plant locations)    |  |                   | owned          | 
|                           |  | Seneca, Missouri                         |  |                   | owned          | 
|                           |  | Stella, Missouri                         |  |                   | owned          | 
|International              |  | Vancouver, Canada                        |  |                   | leased         | 
|Filtration and Minerals(2) |  |                                          |  |                   |                | 
|Domestic                   |  | Clark Station, Nevada                    |  |                   | owned          | 
|                           |  | Lovelock, Nevada                         |  |                   | owned          | 
|                           |  | Vale, Oregon                             |  |                   | owned          | 
|Other                      |  |                                          |  |                   |                | 
|Domestic                   |  | Lubbock, Texas                           |  |                   | owned          | 



---



|    |                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In addition to the facilities listed, the
    Technologies Segment leases office space in Phoenix, Arizona.                                                               
|   
|(2) | In addition to the facilities listed, the
    Filtration and Minerals Segment has office space in Reno,
    Nevada, and mining locations in California, Nevada and Oregon.

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

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

Mining

Our Filtration and Minerals Segment owns and
leases diatomaceous earth and perlite mining locations as well
as numerous claims in Nevada, Oregon and California. Our owned
and leased mining properties, including those not currently
being mined, comprise a total of approximately 12,000 acres in
Storey, Lyon, Pershing and Churchill Counties in Nevada and
5,000 acres in Malhuer and Harney Counties in Oregon, as well as
rights on 2,200 acres not currently being mined in Siskiyou
County in California. We continually evaluate potential mining
properties, and additional mining properties may be acquired in
the future. The Filtration and Minerals Segment extracts
diatomaceous earth and perlite through open-pit mining using a
combination of bulldozers, wheel type tractor scrapers,
excavators and articulated trucks. We transport extracted
materials by truck to separate processing facilities. A total of
approximately 263,000 tons of diatomaceous earth and perlite
were extracted from the companies mining properties in Nevada
and Oregon in fiscal 2003. On average, we have extracted a total
of approximately 400,000 tons of diatomaceous earth and perlite
from our Nevada and Oregon properties each year for the past
seven years. As ore deposits are depleted, we reclaim the land
in accordance with plans approved by the relevant Federal, state
and local regulators.

The following mining properties are of major
significance to our mining operations.

Nevada.Our diatomaceous earth mining
operations in Nevada commenced in 1945 in Storey County and are
referred to as Clark Station. We commenced perlite-mining
operations in Churchill County in 1993. We extracted a total of
approximately 163,000 tons of diatomaceous earth and perlite
from Nevada mining properties in fiscal 2003 and, on average,
have extracted a total of approximately 250,000 tons of
diatomaceous earth and perlite from Nevada mining properties
each year for the past seven years, or approximately 62% of our
total diatomaceous earth and perlite production (and including
100% of our perlite production). Diatomaceous earth from Storey,
Churchill and Lyon mining properties is processed at our Clark
Station, Nevada facility. Clark Station holds approximately
4,884 acres of owned and leased property. We are mining
approximately 265 acres in Storey County, where mining
activities commenced 58 years ago, and approximately 62
acres in the Counties of Lyon and Churchill for diatomaceous
earth. We believe our proven reserves of diatomaceous earth in
the Counties of Storey, Churchill and Lyon, including mining
properties not actively being mined, are approximately 3,000,000
tons based on estimates by our mining and exploration personnel.
Diatomaceous earth extractions from the Pershing mining
properties, which commenced more than 43 years ago, are
processed at the Lovelock, Nevada facility, Colado Operations.
Colado Operations, located in Pershing County, hold
approximately 7,145 acres of owned and leased lands.
Approximately 975 acres are actively being mined for
diatomaceous earth in Pershing County. We believe our proven
reserves of diatomaceous earth in Pershing County, including
mining properties not actively being mined, are approximately
2,000,000 tons based on estimates prepared by our mining and
exploration personnel. Access to the Nevada holdings is via
public roads, highways and non-exclusive rights of way
appurtenant to specific properties. Beginning in 1993, we have
actively mined approximately 25 acres in Churchill County for
perlite, which is processed at the Lovelock, Nevada facility. We
believe our probable reserves of perlite in Churchill County,
including mining properties not actively mined, are
approximately 1,400,000 tons based upon estimates prepared by
our mining and exploration personnel.

Oregon.We commenced mining diatomaceous earth
in Oregon in 1985 at our mining properties in Harney and Malhuer
Counties called Celatom Operations. Diatomaceous earth extracted
from these mines is processed at our Vale, Oregon facility.
Celatom Operations hold approximately 4,978 acres of owned and
leased property. We are mining approximately 88 acres in Harney
County and 80 acres in Malhuer County for diatomaceous earth. We
extracted approximately 100,000 tons of diatomaceous earth from
the Harney County and Malhuer County mining properties during
fiscal 2003 and on average, have extracted approximately 150,000
tons of diatomaceous earth each year for the past seven years
from these mining properties, or

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approximately 38% of our total diatomaceous earth
and perlite production. We believe our proven reserves of
diatomaceous earth in Harney County and Malhuer County,
including mining properties not actively being mined, are
approximately 11,000,000 tons based on estimates prepared by our
mining and exploration personnel. Access to the Oregon holdings
is via public roads, highways and non-exclusive rights of way
appurtenant to specific properties.





Item 3.     Legal
Proceedings

On January 25, 1996, Richard Darrell
Peoples, a former employee, filed a lawsuit in the United States
District Court for the Western District of Missouri claiming
that we violated the federal False Claims Act based on alleged
irregularities in testing procedures in connection with certain
United States Government contracts. Mr. Peoples filed this
lawsuit under a procedure which gives a private individual the
right to file a lawsuit for a violation of a Federal statute and
be awarded up to 30% of any recovery. The government has the
right to intervene and take control of such a lawsuit. Following
an extensive investigation, the United States Government
declined the opportunity to intervene or take control of this
suit. The allegations in the lawsuit are similar to allegations
made by Mr. Peoples, and investigated by our outside
counsel, prior to the filing of the lawsuit. Our outside
counsels investigation found no evidence to support any of
Mr. Peoples allegations, except for some
inconsequential expense account matters. In early 2003, the
court disqualified Mr. Peoples lawyer from the case
after he read some of our attorney-client privileged documents
that Mr. Peoples took from our lawyers offices
without authorization. In December 2003, the court dismissed
this lawsuit for failure to prosecute.

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

In March 2002, a purported class action on behalf
of approximately 3,000 homeowners was filed in state court in
Colorado against us and a company with a facility adjacent to
our facility in Colorado Springs, Colorado seeking property
damages, testing and remediation costs and punitive damages
arising out of chlorinated solvents and nitrates in the
groundwater alleged to arise out of activities at our facility
and the adjacent facility. The case has been removed to federal
court and there has been no decision whether to certify a class.
In September 2002, as amended in May 2003, a trust purportedly
the assignee of approximately 200 property owners filed suit
against us and the same co-defendant in Colorado state court,
which was subsequently removed to Federal District Court in
Colorado. This lawsuit seeks unspecified damages to provide for
remediation of the groundwater contamination as well as
unspecified punitive damages. The owner of the adjacent
facility, which is upgradient from our facility, is operating a
remediation system aimed at chlorinated solvents in the
groundwater originating from its facility under a compliance
order on consent with the Colorado Department of Public Health
and Environment (CDPHE). We are operating a
remediation system for nitrates in the groundwater originating
from our facility, also under a compliance order on consent with
CDPHE. We do not believe that nitrates in groundwater materially
affect any of the properties related to

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the plaintiffs in these lawsuits. Neither the
United States Environmental Protection Agency nor the CDPHE has
ever required us to undertake a cleanup for chlorinated
solvents. In November 2003, we settled the purported class
action lawsuit for $0.3 million, conditioned on the
courts certification of the purported class. In November
2003, we also settled the lawsuit brought by the trust, and
claims of certain other individuals, for $0.3 million,
conditioned on at least 90% of the 440 individuals covered
by the settlement executing releases.


On December 10, 2003, a purported class
action on behalf of approximately 600 members of the Quapaw
Tribe of Oklahoma owning or possessing lands within the Quapaw
Reservation was filed in the United States District Court for
the Northern District of Oklahoma against us and six other
corporations. The lawsuit alleges liability for property damage
resulting from historical mining activities prior to 1959. We
believe that any possible liability to members of the Quapaw
Tribe was discharged in connection with our bankruptcy
reorganization in 1996. We intend to contest this lawsuit
vigorously and do not believe that the resolution of this suit
will have a material adverse effect on our financial condition,
results of operations, or cash flows.

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




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

None.




PART II




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

Not Applicable.

14



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##### Table of Contents








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

|                                                                           |  |                                                 |         |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|-------------------------------------------------------------------------- |  | ----------------------------------------------- | ------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                                                           |  | 1999                                            |         | 2000 |  | 2001 |         | 2002 |  | 2003
|                                                                           |  |                                                 |         |      |  |      |         |      |  |     
|                                                                           |  |                                                
|                                                                           |  | (In thousands except ratios and per share data)
|Statements of Income (Loss) Data:                                          |  |                                                 |         |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|Net sales(1)                                                               |  | $                                               | 797,152 |      |  | $    | 724,676 |      |  | $    | 657,324 |   |  | $ | 668,143 |   |  | $ | 685,426 |  
|Costs of products sold (exclusive of depreciation)                         |  |                                                 | 625,184 |      |  |      | 570,796 |      |  |      | 532,165 |   |  |   | 521,821 |   |  |   | 522,277 |  
|                                                                           |  |                                                 |         |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|Gross profit                                                               |  |                                                 | 171,968 |      |  |      | 153,880 |      |  |      | 125,159 |   |  |   | 146,322 |   |  |   | 163,149 |  
|Selling and administrative                                                 |  |                                                 | 67,221  |      |  |      | 59,214  |      |  |      | 52,468  |   |  |   | 63,731  |   |  |   | 63,211  |  
|Depreciation and amortization                                              |  |                                                 | 43,300  |      |  |      | 39,974  |      |  |      | 41,601  |   |  |   | 46,510  |   |  |   | 48,069  |  
|Goodwill amortization                                                      |  |                                                 | 15,437  |      |  |      | 15,437  |      |  |      | 15,385  |   |  |   | 15,392  |   |  |   |        |  
|Restructuring                                                              |  |                                                 |        |      |  |      |        |      |  |      | 14,163  |   |  |   | 5,898   |   |  |   |        |  
|Losses (gains) from divestitures                                           |  |                                                 | 21,407  |      |  |      | (3,149  | )    |  |      | 2,105   |   |  |   | 6,497   |   |  |   |        |  
|Insurance (gains) losses(2)                                                |  |                                                 |        |      |  |      | (16,000 | )    |  |      |        |   |  |   | 3,100   |   |  |   | (8,279  | )
|                                                                           |  |                                                 |         |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|Operating income (loss)                                                    |  |                                                 | 24,603  |      |  |      | 58,404  |      |  |      | (563    | ) |  |   | 5,194   |   |  |   | 60,148  |  
|Interest expense(3)                                                        |  |                                                 | (40,462 | )    |  |      | (38,739 | )    |  |      | (35,406 | ) |  |   | (36,812 | ) |  |   | (36,511 | )
|Preferred stock dividends accrued(4)                                       |  |                                                 |        |      |  |      |        |      |  |      |        |   |  |   |        |   |  |   | (4,169  | )
|Other income (expense), net                                                |  |                                                 | 3,893   |      |  |      | 624     |      |  |      | 3,566   |   |  |   | 1,516   |   |  |   | (1,583  | )
|Write-off of deferred financing costs                                      |  |                                                 |        |      |  |      |        |      |  |      |        |   |  |   |        |   |  |   | (6,327  | )
|                                                                           |  |                                                 |         |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|Income (loss) from continuing operations before
    taxes                  |  |                                                 | (11,966 | )    |  |      | 20,289  |      |  |      | (32,403 | ) |  |   | (30,102 | ) |  |   | 11,558  |  
|Income tax (provision) benefit                                             |  |                                                 | 56      |      |  |      | (9,325  | )    |  |      | 10,171  |   |  |   | (1,938  | ) |  |   | (2,837  | )
|                                                                           |  |                                                 |         |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|Income (loss) from continuing operations                                   |  |                                                 | (11,910 | )    |  |      | 10,964  |      |  |      | (22,232 | ) |  |   | (32,040 | ) |  |   | 8,721   |  
|Discontinued operations, net(5)                                            |  |                                                 | (5,677  | )    |  |      | (5,354  | )    |  |      | (31,739 | ) |  |   | (4,792  | ) |  |   | (5,878  | )
|                                                                           |  |                                                 |         |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|Net income (loss)                                                          |  | $                                               | (17,587 | )    |  | $    | 5,610   |      |  | $    | (53,971 | ) |  | $ | (36,832 | ) |  | $ | 2,843   |  
|                                                                           |  |                                                 |         |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|Basic and diluted net loss per share applicable
    to common shareholders |  | $                                               | (28.16  | )    |  | $    | (6.26   | )    |  | $    | (68.51  | ) |  | $ | (53.60  | ) |  | $ | (9.71   | )
|                                                                           |  |                                                 |         |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|Balance Sheet Data (at end of
    period):                                 |  |                                                 |         |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|Cash and cash equivalents                                                  |  | $                                               | 10,071  |      |  | $    | 7,467   |      |  | $    | 24,620  |   |  | $ | 31,522  |   |  | $ | 67,320  |  
|Working capital                                                            |  |                                                 | 124,795 |      |  |      | 83,730  |      |  |      | 62,776  |   |  |   | 18,624  |   |  |   | 97,905  |  
|Property, plant and equipment, net                                         |  |                                                 | 214,825 |      |  |      | 216,072 |      |  |      | 206,144 |   |  |   | 173,658 |   |  |   | 151,894 |  
|Total assets                                                               |  |                                                 | 833,947 |      |  |      | 767,699 |      |  |      | 728,934 |   |  |   | 613,041 |   |  |   | 663,538 |  
|Total debt(6)                                                              |  |                                                 | 540,275 |      |  |      | 456,118 |      |  |      | 440,989 |   |  |   | 373,725 |   |  |   | 421,870 |  
|Preferred stock                                                            |  |                                                 | 97,956  |      |  |      | 109,804 |      |  |      | 123,086 |   |  |   | 137,973 |   |  |   | 154,416 |  
|Shareholders equity (deficit)                                             |  |                                                 | 49,311  |      |  |      | 39,197  |      |  |      | (33,655 | ) |  |   | (87,578 | ) |  |   | (90,207 | )
|Other Data:                                                                |  |                                                 |         |      |  |      |         |      |  |      |         |   |  |   |         |   |  |   |         |  
|Ratio of earnings to fixed charges and preferred
    stock dividends(7)    |  |                                                 | N/A     |      |  |      | 1.16x   |      |  |      | N/A     |   |  |   | N/A     |   |  |   | N/A     |  



---



|    |                                                                                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Net sales includes $146.1 million in the
    year ended November 30, 1999; $56.2 million in the
    year ended November 30, 2000; $10.2 million in the
    year ended November 30, 2001; and $3.4 million in the
    year ended November 30, 2002 which is attributed to certain
    divested or sold businesses.                      
|   
|(2) | In 2000, we received $16.0 million from
    insurance companies as a result of the settlement of certain
    claims relating primarily to environmental remediation. In the
    second quarter of 2002, we recorded a provision of
    $3.1 million primarily related to a dispute with an
    insurance carrier over the coverage on a

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | fire which occurred at one of our facilities
    during 2001. During the third quarter of 2003, we recorded a
    $2.8 million gain related to the settlement of this claim.
    In 2003, we recorded a $5.5 million gain primarily related
    to the settlement of a claim with our insurance carrier over the
    coverage on a fire during 2002 at a non-operating facility.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|(3) | Interest expense excludes $8.6 million in
    the year ended November 30, 1999; $8.6 million in the
    year ended November 30, 2000; $8.0 million in the year
    ended November 30, 2001; $4.3 million in the year
    ended November 30, 2002; and $2.3 million in the year
    ended November 30, 2003 which has been allocated to
    discontinued operations (see footnote 5).                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|(4) | Effective September 1, 2003, we adopted SFAS
    No. 150, Accounting for Certain Financial Instruments
    with Characteristics of both Liabilities and Equity which
    requires that certain instruments be classified as liabilities
    in our balance sheet. The effect of the adoption was that, as of
    September 1, 2003, we reclassified the current redemption
    value plus unpaid dividends on our preferred stock to long-term
    liabilities and the accrual of dividends payable for the period
    September 1, 2003 through November 30, 2003 has been
    recorded as a component of non-operating expenses in our
    consolidated statements of income.                                                                                                                                                                            
|   
|(5) | In 2001, we discontinued the operations of our
    former Construction Equipment Division, which represented our
    entire former Machinery Segment. We completed this sale on
    December 14, 2001, effective November 30, 2001. In
    addition, during the second quarter of 2003, we discontinued the
    operations of our Hillsdale UK automotive operation. We sold our
    Hillsdale UK automotive operation on June 11, 2003.
    Finally, in the third quarter of 2003, we discontinued the
    operations of certain assets of our Germanium-based business in
    our Technologies Segment. We sold this business in July 2003.                                                                                                                                                                                                                
|   
|(6) | Total debt excludes $3.8 million at
    November 30, 1999; $1.8 million at November 30,
    2000; and $2.1 million at November 30, 2001, which has
    been allocated to discontinued operations (see footnote 5).
    In addition, total debt excludes $46.5 million at
    November 30, 2002, which represents amounts advanced under
    our unconsolidated accounts receivable asset-backed
    securitization.                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(7) | For purposes of determining the ratio of earnings
    to fixed charges and preferred stock dividends,
    earnings consist of income from continuing
    operations before provision (benefit) for income taxes and fixed
    charges from continuing operations. Fixed charges
    consist of interest expense (including amortization of deferred
    financing costs) and approximately 30% of our rental expense,
    representing that portion of interest expense deemed to be
    representative of the interest factor. Earnings were
    insufficient to cover fixed charges and preferred stock
    dividends by $22.5 million in the year ended
    November 30, 1999; $45.7 million in the year ended
    November 30, 2001; $45.0 million in the year ended
    November 30, 2002; and $0.7 million in the year ended
    November 30, 2003.






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

Critical Accounting Policies

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



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

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

16



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We are involved in various stages of
investigation and remediation of soil and groundwater at
approximately 15 sites as a result of past and present
operations, including currently owned and formerly owned plants.
Also, we have received notice that we may have liability under
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, as a potentially responsible
party at approximately 22 additional sites, but we believe that
any potential liability would not be material to our financial
position or results of operations.

The ultimate cost of site remediation is
difficult to predict given the uncertainties regarding the
extent of the required remediation, the interpretation of
applicable laws and regulations and alternative remediation
methods. Based on our available information and experience with
environmental remediation matters, we have accrued reserves for
our best estimate of remediation costs, and we do not believe
that remediation activities will have a material adverse impact
on our financial condition, results of operations or cash flows.
In addition, in the course of our bankruptcy, we obtained an
agreement with the United States Environmental Protection Agency
and Department of Interior and the states of Arizona, Michigan
and Oklahoma whereby we have limited responsibility to them for
response costs and natural resource damages for environmental
contamination of sites not owned by us that is attributable to
pre-bankruptcy activities. We retain all of our defenses, legal
or factual, at such sites. However, if we are found liable for
such contamination at any of these sites, our liability is
capped at approximately 37%.

We incurred environmental compliances expenses of
$7.9 million in 2001, $8.7 million in 2002, and
$8.3 million in 2003. We expect to incur approximately
$7.8 million in 2004.

In addition, we made capital expenditures for
environmental compliance and remediation of $0.3 million in
2001, $0.6 million in 2002 and $0.6 million in 2003.
We expect to incur approximately $2.3 million in 2004.

We had total remediation expenditures of
$1.1 million in 2001, $1.2 million in 2002, and
$3.3 million 2003, of which $1.1 million in 2001,
$1.2 million in 2002 and $2.8 million in 2003 were
charged to our accrued environmental reserves. As of
November 30, 2002, we had $17.7 million, and as of
November 30, 2003, we had $9.3 million accrued for
sold divisions and businesses related to legal and environmental
matters. In addition, as of November 30, 2002, we had
$2.4 million, and as of November 30, 2003, we had
$1.6 million accrued in other accrued liabilities related
to environmental liabilities for our on-going businesses.



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

We review for impairment the carrying value of
our long-lived assets held for use and assets to be disposed of.
For assets held for use, the carrying value of a long-lived
asset is considered impaired if the sum of the undiscounted cash
flows is less than the carrying value of the asset. If this
occurs, an impairment charge is recorded for the amount by which
the carrying value of the long-lived assets exceeds its fair
value. For assets to be disposed of, the recorded amount is the
lower of the carrying value or fair value less cost to sell. For
goodwill, we no longer record amortization expense and are
required to complete an annual impairment test. These
evaluations require us to forecast our future cash flows or
current fair values, which require significant judgment. As of
November 30, 2002 and November 30, 2003, we had
recorded $159.6 million of goodwill. In addition, as of
November 30, 2002, we had recorded $173.7 million of
property, plant, and equipment, net (our primary long-lived
asset), and as of November 30, 2003, we had recorded
$151.9 million of property, plant, and equipment, net.



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

We recognize revenue when persuasive evidence of
an arrangement exists, delivery has occurred, the fee is fixed
and determinable, and collectibility is reasonably assured.
These conditions are met at the time we ship our products to our
customers. Net Sales and Cost of Products Sold include
transportation costs that are billed to customers. For certain
products sold under fixed-price contracts and subcontracts with
various United States Government agencies and aerospace and
defense contractors, we utilize the percentage-of-completion
method of accounting. When we use the percentage-of-completion
method, we measure our percent complete based on total costs
incurred to date as compared to our best estimate of total costs
to be incurred. Under the percentage-of-completion method,
contract costs include direct material, labor costs, and those
indirect costs

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related to contract performance, such as indirect
labor, supplies, tools and repairs. Selling and administrative
expenses are charged to expense as incurred. Provisions for
estimated losses on uncompleted contracts are made in the period
in which such losses are determined. Changes to job performance,
job conditions, and estimated profitability may result in
revisions to contract revenue and costs and are recognized in
the period in which the revisions are made.


As noted above, the United States Government has
the right to terminate contracts at its convenience. If the
United States Government were to terminate one or more of our
contracts, we may be required to write-off a portion of our
asset called costs and estimated earnings in excess of billings.

We provided for estimated losses on uncompleted
contracts of $0.5 million at November 30, 2002 and
$0.2 million at November 30, 2003. The percentage of
completion method requires a higher degree of judgment and use
of estimates than other revenue recognition methods. The primary
judgments and estimates involved include our ability to
accurately estimate the contracts percent complete and the
reasonableness of the estimated costs to complete as of each
financial reporting period.



| |                                                         
| | --------------------------------------------------------
| | Off-Balance Sheet Qualifying Special
    Purposes Entity

We have an off-balance sheet accounts receivable
asset-backed qualifying special purpose entity to assist us in
our capital resources and liquidity. Under this arrangement, we
sell to the off-balance sheet entity certain receivables, which
in turn sells an interest in the revolving pool of receivables
to a major U.S. financial institution. We account for the
securitization of these sold receivables in accordance with SFAS
No. 140, Accounting for Transfers and Servicing of
Financial Assets and Extinguishment of Liabilities  a
Replacement of FASB Statement No. 125. Under this
guidance, at the time the receivables are sold, the balances are
removed from our financial statements. We continue to service
sold receivables and receive a monthly servicing fee of
approximately 1% per annum of the receivable pools average
balance. The accounting for qualifying special purpose entities
is a complex and evolving area of accounting. In the event the
accounting is modified in the future, we may be forced to
consolidate the off-balance sheet special purpose entity which
could have a significant impact on our financial position. As of
November 30, 2003, our retained interest in the off-balance
sheet entity, which is recorded as an asset on our balance
sheet, was $63.3 million and the revolving pool of
receivables that the off-balance sheet entity owned and we
serviced totaled $64.9 million. At November 30, 2003,
the outstanding balance of the interest sold to the financial
institution recorded on the off-balance sheet special purpose
entities financial statements was zero.



| |                                      
| | -------------------------------------
| | Pension Benefit Plans
    Assumptions

We sponsor pension plans covering substantially
all employees who meet certain eligibility requirements. Several
statistical and other factors that attempt to anticipate future
events are used in calculating the expense and liability related
to these plans. These factors include key assumptions, such as
discount rate, expected return on plan assets and rate of future
compensation increases. In addition, our actuarial consultants
also use subjective factors such as withdrawal and mortality
rates to estimate these factors. The actuarial assumptions we
use may differ materially from actual results due to changing
market and economic conditions, higher or lower withdrawal rates
or longer or shorter life spans of participants. These
differences may result in a significant impact to the amount of
pension benefit expenses we have recorded or may record in the
future. Assuming a constant employee base, we estimate that as
of November 30, 2003, a 25 basis point change in the
discount rate, would change the annual pension expense by
approximately $0.3 million and change our pension benefit
obligation by $7.6 million. Additionally, a 25 basis point
change in the expected return on plan assets would change the
annual pension expense by approximately $0.6 million. Based
on our asset values as of November 30, 2003, a 100 basis
point change would increase or decrease our asset values by
$2.5 million.

In 2004, we will consider, at the advice of our
actuary, adopting a more recently issued actuarial mortality
table, which will have the impact of increasing our pension plan
benefit obligations by approximately $13.0 million
(assuming all assumptions at November 30, 2003 are held
constant), and increasing our annual expense by approximately
$2.0 million. If we elect to adopt this more recent
actuarial mortality table and if our plan assets do not increase
more than the liabilities, our pension plans may become
underfunded. If this

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occurs, we would be forced to write-off
substantially all of our $56.9 million prepaid pension asset as
of November 30, 2003 and record an additional minimum
pension liability for the unfunded amount by a non-cash charge
to other comprehensive income (OCI), resulting in an
increased deficit in our shareholders equity.


The write-off to OCI of the prepaid pension asset
and the accrual for the pension liability are all non-cash items
that are required under United States generally accepted
accounting principles (GAAP). The accounting
treatment under GAAP is different from the funding requirements
mandated by the Employee Retirement Income Security Act of 1974
(ERISA). Accordingly, we do not expect these
non-cash charges to OCI to impact the need for potential cash
contributions to our pension plans. Under the pension funding
assumptions currently being evaluated, we do not anticipate a
requirement for any cash contributions during the next several
years. However, at our discretion, we may make voluntary
contributions from time to time, based on our cash position,
deductibility limits, and overall financial status, and the
potential to further strengthen the funded status of the plans
over the long-term.



| |                         
| | ------------------------
| | Deferred Stripping Costs

In our Filtration and Minerals Segment, we
generally charge our mining costs to Cost of Products Sold as
sales occur. However, we defer and amortize certain mining costs
on a units-of-production basis over the estimated life of the
particular section of a mine, based on estimated recoverable
cubic yards of ore in that section. These mining costs, which
are commonly referred to as deferred stripping
costs, are incurred in mining activities that are normally
associated with the removal of waste rock. The deferred
stripping accounting method is generally accepted in the mining
industry where mining operations have diverse grades and
waste-to-ore ratios; however industry practice does vary. By
deferring stripping costs, we match the costs of production when
the sale of the ore occurs with an appropriate amount of waste
removal cost. If we were to expense deferred stripping costs as
incurred, there could be greater volatility in our
period-to-period operating results. Deferred stripping costs are
included in Other Assets, net, in our accompanying balance
sheets and totaled $3.7 million at November 30, 2002
and $4.8 million at November 30, 2003.



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

We are a defendant in numerous litigation and
regulatory matters including those involving environmental law,
employment law and patent law, as discussed in Note R of
our November 30, 2003 financial statements included
elsewhere in this report. As required by SFAS No. 5, we
determine whether an estimated loss from a loss contingency
should be accrued by assessing whether a loss is deemed probable
and can be reasonably estimated. We analyze our litigation and
regulatory matters based on available information to assess
potential liability. We develop our views on estimated losses in
consultation with outside counsel and environmental experts
handling our defense in these matters, which involves an
analysis of potential results, assuming a combination of
litigation and settlement strategies. Should these matters
result in an adverse judgment or be settled for significant
amounts, they could have a material adverse effect on our
results of operations, cash flows and financial position in the
period or periods in which such judgment or settlement occurs.



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

Over the last several years we have engaged in
significant restructuring actions and divestitures, which have
required us to develop formalized plans as they relate to exit
activities. These plans have required us to utilize significant
estimates related to salvage values of assets that were made
redundant or obsolete. In addition, we have had to record
estimated expenses for severance and other employee separation
costs, lease cancellation and other exit costs. Given the
significance and the timing of the execution of such actions,
this process is complex and involves periodic reassessment of
estimates made at the time the original decisions were made. Our
policies, as supported by current authoritative guidance,
require us to continually evaluate the adequacy of the remaining
liabilities under our restructuring initiatives. As we continue
to evaluate the business, there may be supplemental charges for
new plan initiatives as well as changes in estimates to amounts
previously recorded as payments are made or actions are
completed. As of November 30, 2003, we

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had recorded on our balance sheet
$4.4 million in assets of discontinued operations,
$1.0 million of liabilities of discontinued operations,
$9.3 million of accrued costs for sold divisions and
businesses related to legal and environmental matters, and
$0.9 million in restructuring reserves.




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

We record the estimated future tax effects of
temporary differences between the tax bases of assets and
liabilities and amounts reported in our balance sheets, as well
as operating loss and tax credit carryforwards. We follow very
specific and detailed guidelines in each tax jurisdiction
regarding the recoverability of any tax assets recorded on the
balance sheet and provide necessary valuation allowances as
required. We regularly review our deferred tax assets for
recoverability based on historical taxable income, projected
future taxable income, the expected timing of the reversals of
existing temporary differences and tax planning strategies. If
we continue to operate at a loss in certain jurisdictions or are
unable to generate sufficient future taxable income, or if there
is a material change in the actual effective tax rates or time
period within which the underlying temporary differences become
taxable or deductible, we could be required to increase the
valuation allowance against all or a significant portion of our
deferred tax assets resulting in a substantial increase in our
effective tax rate and a material adverse impact on our reported
results. Conversely, if we generate positive pre-tax income, as
we did in 2003, and maintain a trend of positive reported
results, we could be required to reduce our existing valuation
allowance on a portion or all of our deferred tax assets
resulting in a substantial decrease in our effective tax rate
and a material positive impact on our reported results. As of
November 30, 2003, our gross deferred tax assets were
approximately $52.3 million and our gross deferred tax
liabilities were approximately $25.7 million. These amounts
were reduced by a valuation allowance of $18.6 million for
a net deferred tax asset of $8.0 million.



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

Other significant accounting policies, not
involving the same level of uncertainties as those discussed
above, are nevertheless important to an understanding of our
financial statements. See Note B to the November 30,
2003 consolidated financial statements included elsewhere in
this report which discusses our other significant accounting
policies.

20



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##### Table of Contents



Results of Operations

The following summary financial information about
our industry segment data is presented to gain a better
understanding of the narrative discussion below about our
business segments. See Note T in our November 30, 2003
consolidated financial statements for additional financial
information by segment. All references herein to years are to
our fiscal year ending November 30 unless otherwise
indicated (in thousands of dollars).

|                                                |              |      |         |         |  |      |         |              |  |              |         |         |  |   |        |        |   |  |        |      |   |   |         |        |   |  |         |      |  
|----------------------------------------------- | ------------ | ---- | ------- | ------- |  | ---- | ------- | ------------ |  | ------------ | ------- | ------- |  | - | ------ | ------ | - |  | ------ | ---- | - | - | ------- | ------ | - |  | ------- | ---- | -
|                                                |              |      |         |         |  |      |         |              |  |             
|                                                |              |      |         |         |  |      |         | 2001 to 2002 |  | 2002 to 2003
|                                                |              |      |         |         |  |      |         |              |  |             
|                                                |              | 2001 |         | 2002    |  | 2003 |         | Change       |  | %            |         | Change  |  | %
|                                                |              |      |         |         |  |      |         |              |  |              |         |         |  |  
|Net Sales                                       |              |      |         |         |  |      |         |              |  |              |         |         |  |   |        |        |   |  |        |      |   |   |         |        |   |  |         |     
|Hillsdale                                       |              | $    | 334,172 |         |  | $    | 342,678 |              |  | $            | 323,838 |         |  | $ | 8,506  |        |   |  | 2.5    |      |   | $ | (18,840 | )      |   |  | (5.5    | )   
|Wolverine                                       |              |      | 74,100  |         |  |      | 79,367  |              |  |              | 89,852  |         |  |   | 5,267  |        |   |  | 7.1    |      |   |   | 10,485  |        |   |  | 13.2    |     
|                                                |              |      |         |         |  |      |         |              |  |              |         |         |  |   |        |        |   |  |        |      |   |   |         |        |   |  |         |     
|                                                | Automotive   |      |         | 408,272 |  |      |         | 422,045      |  |              |         | 413,690 |  |   |        | 13,773 |   |  |        | 3.4  |   |   |         | (8,355 | ) |  |         | (2.0 | )
|                                                |              |      |         |         |  |      |         |              |  |              |         |         |  |   |        |        |   |  |        |      |   |   |         |        |   |  |         |     
|Power Group                                     |              |      | 100,788 |         |  |      | 104,620 |              |  |              | 143,858 |         |  |   | 3,832  |        |   |  | 3.8    |      |   |   | 39,238  |        |   |  | 37.5    |     
|Precision Products  divested
    July 17, 2002 |              |      | 10,214  |         |  |      | 3,435   |              |  |              |        |         |  |   | (6,779 | )      |   |  | (66.4  | )    |   |   | (3,435  | )      |   |  | (100.0  | )   
|Specialty Materials Group                       |              |      | 43,132  |         |  |      | 42,714  |              |  |              | 40,223  |         |  |   | (418   | )      |   |  | (1.0   | )    |   |   | (2,491  | )      |   |  | (5.8    | )   
|Pharmaceutical Services                         |              |      | 13,714  |         |  |      | 13,200  |              |  |              | 9,088   |         |  |   | (514   | )      |   |  | (3.7   | )    |   |   | (4,112  | )      |   |  | (31.2   | )   
|                                                |              |      |         |         |  |      |         |              |  |              |         |         |  |   |        |        |   |  |        |      |   |   |         |        |   |  |         |     
|                                                | Technologies |      |         | 167,848 |  |      |         | 163,969      |  |              |         | 193,169 |  |   |        | (3,879 | ) |  |        | (2.3 | ) |   |         | 29,200 |   |  |         | 17.8 |  
|                                                |              |      |         |         |  |      |         |              |  |              |         |         |  |   |        |        |   |  |        |      |   |   |         |        |   |  |         |     
|Filtration and Minerals                         |              |      | 82,004  |         |  |      | 82,129  |              |  |              | 78,567  |         |  |   | 125    |        |   |  | 0.2    |      |   |   | (3,562  | )      |   |  | (4.3    | )   
|                                                |              |      |         |         |  |      |         |              |  |              |         |         |  |   |        |        |   |  |        |      |   |   |         |        |   |  |         |     
|Corporate/ Intersegment                         |              |      | (800    | )       |  |      |        |              |  |              |        |         |  |   | 800    |        |   |  | 100.0  |      |   |   |        |        |   |  |        |     
|                                                |              |      |         |         |  |      |         |              |  |              |         |         |  |   |        |        |   |  |        |      |   |   |         |        |   |  |         |     
|                                                |              | $    | 657,324 |         |  | $    | 668,143 |              |  | $            | 685,426 |         |  | $ | 10,819 |        |   |  | 1.6    |      |   | $ | 17,283  |        |   |  | 2.6     |     
|                                                |              |      |         |         |  |      |         |              |  |              |         |         |  |   |        |        |   |  |        |      |   |   |         |        |   |  |         |     
|Operating Income (Loss)                         |              |      |         |         |  |      |         |              |  |              |         |         |  |   |        |        |   |  |        |      |   |   |         |        |   |  |         |     
|Automotive                                      |              | $    | 7,487   |         |  | $    | 10,501  |              |  | $            | 21,488  |         |  | $ | 3,014  |        |   |  | 40.3   |      |   | $ | 10,987  |        |   |  | 104.6   |     
|Technologies                                    |              |      | (2,153  | )       |  |      | (2,570  | )            |  |              | 36,687  |         |  |   | (417   | )      |   |  | (19.4  | )    |   |   | 39,257  |        |   |  | N/A     |     
|Filtration and Minerals                         |              |      | 4,730   |         |  |      | 8,078   |              |  |              | 5,285   |         |  |   | 3,348  |        |   |  | 70.8   |      |   |   | (2,793  | )      |   |  | (34.6   | )   
|Divested Divisions                              |              |      | (2,105  | )       |  |      | (6,497  | )            |  |              |        |         |  |   | (4,392 | )      |   |  | (208.6 | )    |   |   | 6,497   |        |   |  | 100.0   |     
|Corporate/ Intersegment                         |              |      | (8,522  | )       |  |      | (4,318  | )            |  |              | (3,312  | )       |  |   | 4,204  |        |   |  | 49.3   |      |   |   | 1,006   |        |   |  | 23.3    |     
|                                                |              |      |         |         |  |      |         |              |  |              |         |         |  |   |        |        |   |  |        |      |   |   |         |        |   |  |         |     
|                                                |              | $    | (563    | )       |  | $    | 5,194   |              |  | $            | 60,148  |         |  | $ | 5,757  |        |   |  | N/A    |      |   | $ | 54,954  |        |   |  | 1,058.0 |     
|                                                |              |      |         |         |  |      |         |              |  |              |         |         |  |   |        |        |   |  |        |      |   |   |         |        |   |  |         |     

2003 Compared to 2002



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

Sales in our Automotive Segment decreased
$8.4 million, or 2.0%, to $413.7 million in 2003 from
$422.0 million in 2002. This decline in sales was less than
the estimated 4.0%-4.5% decline in the industry-wide North
American light vehicle production levels in 2003 due to
significant sales growth in our Wolverine division.

Our Wolverine divisions sales increased
$10.5 million, or 13.2%, to $89.9 million in 2003 from
$79.4 million in 2002. This increase is due to a 6.3%
volume increase despite lower overall North American automotive
production levels and 6.8% favorable foreign currency exchange
rates as a result of the strengthening of the Euro.
Approximately 40% of our Wolverine divisions sales are
European. Wolverines volume increases were driven by
increased gasket material sales primarily as a result of new
program wins in North America, and increased brake programs with
original equipment manufacturers in Europe, as well as other new
programs with original equipment manufacturers.

Offsetting our Wolverine divisions sales
increase was a decrease in our Hillsdale divisions sales
of $18.8 million, or 5.5%, to $323.8 million in 2003
from $342.7 million in 2002. The lower Hillsdale sales are

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primarily related to the 4.0%-4.5% decrease in
overall North American light vehicle production levels in 2003
and the phase-out of three programs. The decision to not select
Hillsdale on the successor platforms for these three programs
was made well before the current management team joined in 2002.
The sales decrease for the three program phase-outs totaled
$31.1 million, including $10.5 million for a Ford
Motor Company transmission pump, $9.6 million for a General
Motors connecting rod program, and $11.0 million for an
Acura knuckle program. Partially offsetting these program losses
was $5.0 million related to a new technology
micro-filtration transmission program and a Mitsubishi knuckle
program. Hillsdales customer/platform mix compares
favorably to the industry composite sales performance, which
also contributed to partially offsetting the overall North
American light vehicle production decrease and the decreases
from the three program phase-outs. Approximately 36% of
Hillsdale sales are to U.S. operations of Japanese
automakers and 19% are related to General Motors light trucks
and SUVs, which continue to outperform the overall industry
growth rate.


The North American automotive market remains a
highly competitive market that is subject to potentially
significant volume changes. We expect these competitive
pressures to continue and possibly intensify. There are
indications that our customers are consolidating their supplier
base, increasing international sourcing and intensifying
pressure for price reductions. We have been and will continue to
respond to these pressures by (a) continually improving
productivity through Lean manufacturing, six sigma, and
increased sourcing from lower cost international suppliers,
(b) improving our technology positions, including designing
products to be manufactured at a lower cost, and
(c) achieving cost reductions from our existing supplier
base.

The Automotive Segments operating income
increased $11.0 million, or 104.6%, to $21.5 million
in 2003 from $10.5 million in 2002. This $11.0 million
improvement in operating income was primarily due to the
following favorable/ (unfavorable) items:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. $8.8 million reduction in costs due
    to productivity and cost improvements;                                                                                                                                                                                                                                                                                                                                                                        
|
| | b. ($2.9) million in price decreases;                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | c. ($4.0) million of increased costs
    primarily related to the a supplier related quality issue
    ($1.0 million), increased start-up costs primarily related
    to a new Visteon program ($1.0 million), expedited freight
    costs due to production schedule issues ($0.9 million), and
    other higher operating costs ($1.1 million), primarily
    related to higher energy, and wage and benefits expenses at our
    unionized facilities;
|
| | d. $8.0 million reduction in goodwill
    amortization expense in 2003 compared to 2002 (due to the
    adoption of SFAS No. 142, Goodwill and Other Intangible
    Assets, which no longer requires the amortization of goodwill);                                                                                                                                                                                                                      
|
| | e. $1.1 million in additional
    depreciation expense recorded in 2002 related to adjustments to
    bring the estimated useful lives of certain equipment within
    this segment in line with estimated periods of active production.                                                                                                                                                                                                                 

The Automotive Segments decrease in margin
associated with the volume changes discussed above was more than
offset by favorable sales mix and favorable foreign currency
exchange rates as a result of the strengthening of the Euro.



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

Sales in our Technologies Segment increased
$29.2 million, or 17.8%, to $193.2 million in 2003
from $164.0 million in 2002. Excluding sales from our
Precision Products business, which we divested in July 2002,
this segments sales increased $32.6 million, or 20.3%.

Sales in the Power Group, which represent 74% of
this segments sales, increased $39.2 million, or
37.5%. The increase in our Power Group sales is primarily
related to new contracts, improved pricing, and increased
defense spending. Growth was particularly strong in battery
sales to Boeing Corporation for the JDAM (Joint Direct Attack
Munitions) Programs, the U.S Army CECOM (Communications
Electronic Command)

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mobile communications program, telecommunication
battery sales, and customer funded product development
contracts. We were awarded several significant military and
space battery contracts that, in addition to being a factor in
our 2003 sales growth, resulted in an increase in backlog of
$36.4 million, or 32%, as of November 30, 2003 for our
Technologies Segment. In addition, we have an additional
$19.0 million space station contract that has been awarded
to us but is not included in the backlog number above because it
has not yet been appropriated by the United States Congress. We
expect this award to be appropriated during 2004, which would
increase Technologies November 30, 2003 year-over-year
backlog amount by 50%. The remaining increased backlog is
primarily related to the CECOM program and certain guided
munitions and missile programs. We are in the process of
implementing additional capacity and automated production lines
to ensure sufficient capacity and to significantly reduce
production costs for these programs.


Partially offsetting the strong increase in our
Power Group sales were declines in our Specialty Materials Group
and our Pharmaceutical Services businesses. In our Specialty
Materials Group, sales decreased $2.5 million, or 5.8%,
primarily related to $1.5 million from two relatively small
businesses that we exited during 2003, and $0.7 million due
to a decrease in boron sales, which are generally larger value
orders that are not consistent in timing. In our Pharmaceutical
Services business, sales decreased $4.1 million, or 31.2%.
A fire in the third quarter of 2001 disrupted operations at our
primary pharmaceutical facility and resulted in customer
concerns as to the potential impact on quality and sourcing
capability. This led to the non-renewal of some contracts and
general softening in orders due to customer concerns. Recently,
a Federal Drug Administration (FDA) quality audit
was successfully completed with very favorable results, which
have been communicated to our customers. We have recently seen
new orders being placed by customers that were lost after the
disruptive impact of the fire.

The Technologies Segments operating income
improved $39.3 million to income of $36.7 million in
2003 from a loss of $2.6 million in 2002. Included in the
2002 amount were the following unusual items that reduced 2002
operating income by $12.0 million and affect the
comparability of 2002 and 2003.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. $5.7 million of legal expenses and
    legal settlement charges recorded in the first six months of
    2002 in Selling and Administrative expenses;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | b. $3.1 million loss for an insurance
    receivable recorded in the second quarter of 2002 primarily
    related to inventories damaged in a fire during the third
    quarter of 2001 at our Missouri bulk pharmaceutical
    manufacturing plant;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | c. $5.5 million charge in restructuring
    expense recorded in the second quarter of 2002 associated with
    our decision to exit our Gallium-based specialty material
    business due to continued soft demand from customers in the
    telecommunications and semi-conductor markets. The
    $5.5 million restructuring charge included an inventory
    write-down of $2.9 million, representing the estimated loss
    incurred from the liquidation of current inventory. An
    additional $2.4 million was recorded in other accrued
    liabilities primarily related to the estimated loss of inventory
    to be purchased under a firm purchase commitment. Finally, a
    $0.2 million asset impairment charge was recorded against
    property, plant and equipment;
|
| | d. $0.4 million of officer severance
    compensation during the third quarter of 2002 included in
    Selling and Administrative expense;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | e. $1.2 million of income recorded in
    the second quarter of 2002 related to the reversal of a portion
    of our fourth quarter 2001 Restructuring expense for severance
    payments made by our pension plan; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | f. $1.5 million of income from an
    inventory adjustment to adjust inventory values to equal actual
    physical counts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

Included in the 2003 amount were the following
unusual items that increased 2003 operating income by
$11.3 million and affect the comparability of 2002 and 2003.



| |                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. $2.6 million of expense primarily
    related to the settlement of environmental and legal issues at
    our Colorado Springs facility as discussed in the Item 3,
    Legal Proceeding, included elsewhere in this report;

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| |                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b. $2.1 million of depreciation expense
    as we accelerated our depreciation schedule for assets in
    businesses that we are exiting or restructuring;                
|
| | c. $0.4 million related to a reserve on
    receivables from Loral Corporation, a customer who has filed for
    bankruptcy;                                              
|
| | d. $9.0 million of insurance gains in
    2003 related to the settlement of fire insurance claims; and                                                                    
|
| | e. $7.4 million in 2003 of lower
    goodwill amortization expense due to our adoption of SFAS
    No. 142, Goodwill and Other Intangible Assets, on
    December 1, 2002.

In addition, the following
favorable/(unfavorable) items, with a net favorable total of
$16.0 million in 2003, contributed to the improvement in
operating income:



| |                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. $8.2 million related to productivity
    initiatives from better management of our supply chain
    ($5.8 million) and six sigma production techniques
    ($2.4 million);
|
| | b. $12.4 million related to increased
    volumes ($6.2 million) and improved pricing
    ($6.2 million);                                                                    
|
| | c. ($3.0) million primarily related to
    management infrastructure expense investments made to launch our
    commercial power products growth initiatives;                
|
| | d. $1.4 million of business consulting
    expenses in 2002 to develop a strategy for our Power Group
    business and;                                                      
|
| | e. ($3.0) for other general net cost
    increases, primarily selling related costs to support the
    increase in net sales, and wage and benefit cost increases.           



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

Sales in our Filtration and Minerals Segment
decreased $3.6 million, or 4.3%, to $78.6 million in
2003 from $82.1 million 2002. This decrease was due
primarily to lower volumes and a change from acting as a
distributor to a sales agent for the sale of a certain product.
During the fourth quarter of 2002, we were, but are no longer,
exploring the possible sale of our Filtration and Minerals
business. This potential sale diverted a significant amount of
divisional management attention from operational focus, which
had a negative impact on 2003 performance. During 2003, a new
divisional leadership team was put in place, including a
divisional president and functional leaders for sales and
marketing, finance, human resources, and operations.

The Filtration and Minerals Segments
operating income decreased $2.8 million, or 34.6%, to
$5.3 million in 2003 from $8.1 million in 2002. The
decreased earnings were primarily due to lower volumes
($1.7 million), higher energy costs ($1.0 million),
higher severance and recruiting costs related to restructuring
the segments management team ($1.2 million), and
additional freight costs largely related to the resolution of
disputed freight claims with a former carrier
($0.8 million). These negative factors were partially
offset by favorable foreign currency exchange rates as a result
of the strengthening of the Euro and lower per ton mining costs.



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

Net sales.Net Sales
increased $17.3 million, or 2.6%, to $685.4 in 2003 from
$668.1 in 2002. Excluding sales from our Precision Products
business within our Technologies Segment, which we divested in
July 2002, net sales increased $20.7 million, or 3.1%. This
increase was due to strong increases of 37.5% in our
Technologies Segments Power Group and 13.2% in our
Automotive Segments Wolverine business, partially offset
by decreases of 5.5% in our Automotive Segments Hillsdale
business and 4.3% in our Filtration and Minerals Segment. See
above for a discussion of the individual segments results.

Cost of products sold (exclusive of
depreciation).Costs of products sold
increased $0.5 million, or 0.1%, to $522.3 million in
2003 from $521.8 million in 2002. Our gross margin
increased $16.8 million to $163.1 million in 2003 from
$146.3 million in 2002, and the gross margin percentage
increased 1.9 points from 21.9% to 23.8%, despite an
increase in energy costs which represent a significant component
of the operating costs of our Automotive Segments
Wolverine business and Filtration and Minerals Segment. This
margin rate

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improvement is primarily the result of
productivity improvements in our Automotive and Technologies
Segments, price increases in our Technologies Segment, improved
sales mix in our Automotive Segment, and favorable foreign
currency exchange rates as a result of the strengthening of the
Euro in the Automotive and Filtration and Minerals Segments.


Selling and
administrative.Selling and
administrative expenses decreased $0.5 million, or 0.8%, to
$63.2 million in 2003 from $63.7 million in 2002. The
decreased expenses are primarily related to the following
favorable/ (unfavorable) items:

a. $3.1 million of decreased expenses
related to environmental and legal matters;

b. $3.5 million in reduced officer
severance costs and Supplemental Executive Retirement Plan
expenses in 2003 compared to 2002;

c. $1.4 million of business consulting
expenses in 2002 to develop a strategy for our Power Group
business,

d. ($4.2) million of increased costs
related to (a) strengthening our management team,
(b) investing in the development of our commercial power
products growth initiatives within our Technologies Segment, and
(c) pursuing international sourcing opportunities primarily
in our Hillsdale division;

e. ($1.2) million higher severance and
recruiting costs related to restructuring our Filtration and
Minerals Segments management team; and

f. ($2.1) million in other general net cost
increases.

Depreciation and
amortization.Depreciation and
amortization expense increased $1.6 million, or 3.4%, to
$48.1 million in 2003 from $46.5 million 2002. The
increase in depreciation and amortization expense was primarily
the result of accelerating our depreciation schedule for assets
in businesses that we are exiting or restructuring.

Goodwill
amortization.Due to the adoption of
SFAS No. 142, Goodwill and Other Intangible Assets, no
goodwill amortization expense was recorded in 2003 while 2002
included $15.4 million of expense. This new accounting
standard required that we cease the amortization of goodwill,
effective December 1, 2002, and complete an annual
impairment test to determine if an impairment charge has
occurred. We did not recognize any impairment charges in 2003.

Restructuring.During 2002, we recorded $5.9 million of restructuring
expense, which was primarily related to our announcement on
May 31, 2002 to exit our Gallium business in our
Technologies Segment, due to the downturn in the fiber-optic,
telecommunication and semiconductor markets. This resulted in a
$5.5 million charge recorded in restructuring expense
during the second quarter of 2002. This charge primarily
represents the liquidation of existing inventories and an
accrual for inventory to be purchased under firm purchase
commitments. There were no restructuring charges in 2003.

Loss from
divestitures.All amounts recorded in
loss from divestitures expense relate to operations that were
sold or that were divested prior to November 30, 2002.
During 2002, we completed the sale of our Precision Products
business in our Technologies Segment to a group of former
employees and divisional management personnel. We recorded a
$2.8 million loss on this sale in the second quarter of
2002. Also, during the second quarter of 2002, we recorded
$3.4 million in accruals related to costs for certain
litigation issues and environmental remediation costs. The
remaining amounts related to workers compensation claims
for employees of our sold divisions. There was no loss from
divestitures during 2003.

Insurance related
losses/(gains).During the second
quarter of 2002, we recorded a $3.1 million loss for an
insurance receivable primarily related to inventories damaged in
a fire during the third quarter of 2001 at our Missouri bulk
pharmaceutical manufacturing plant. We recorded this charge to
fully reserve the receivable because the insurance underwriter
was contesting the coverage on these assets. We were disputing
the insurance carriers position and were vigorously
pursuing efforts to collect on our claims. In the third quarter
of 2003, we recorded a $2.8 million gain related to our
final settlement with this insurance carrier. In addition, in

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the second quarter of 2003, we recorded a
$5.5 million gain primarily related to the settlement of a
claim with our insurance carrier over the coverage on a fire
during 2002 at our Seneca, Missouri non-operating facility.


Interest expense.Interest expense was $36.5 million in 2003 compared to
$36.8 million in 2002 (excluding $2.3 million in 2003
and $4.3 million in 2002 which was allocated to
discontinued operations as required by GAAP). Included in 2002
was $1.5 million in fees and other costs, primarily related
to establishing our accounts receivable asset-backed
securitization. Including the interest allocated to discontinued
operations and the one-time fees related to our accounts
receivable asset-backed securitization, our reduced interest
expense is due to lower average debt levels. As a result of our
August 2003 refinancings, we incurred an additional
$39.5 million of debt ($250.0 million of senior
unsecured notes were issued to redeem $210.5 million of our
existing $220.0 million of senior subordinated notes).
These additional proceeds were used to reduce lower rate bank
debt and the obligations of our accounts receivable asset-backed
securitization. Assuming interest rates are constant or
increase, this will result in increased interest expense in 2004.

Preferred stock dividends accrued.Effective September 1, 2003, we
adopted SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities
and Equity which requires that certain instruments be
classified as liabilities in our balance sheet. The effect of
the adoption was that, as of September 1, 2003, we
reclassified the current redemption value plus unpaid dividends
on our redeemable preferred stock to long-term liabilities and
the accrual of dividends payable for the period
September 1, 2003 through November 30, 2003 has been
recorded as a component of non-operating expenses in our
consolidated statements of income.

Other income (expense), net.Other income (expense), net decreased
$3.1 million to expense of $1.6 million in 2003 from
income of $1.5 million in 2002. This decrease is primarily
related to losses on foreign currency exchange rate forward
contract hedges in the Corporate Segment which are entered into
to offset foreign currency exchange rate exposures in the
operating segments.

Write-off of deferred financing costs.During the third quarter of 2003, we
wrote-off $6.3 million of deferred financing costs in
connection with the retirement of our former senior secured
credit facility and the redemption of approximately 95% of our
senior subordinated notes.

Income (loss) from continuing operations
before taxes.Income (loss) from
continuing operations before taxes improved $41.7 million
from a loss of $30.1 million in 2002 to income of
$11.6 million in 2003. This change was primarily the result
of the following favorable/ (unfavorable) unusual items (in
million of dollars):

|                                                                   |  |   |      |  
|------------------------------------------------------------------ |  | - | ---- | -
|a. Loss from divestitures in 2002                                  |  | $ | 6.5  |  
|b. Restructuring in 2002                                           |  |   | 5.9  |  
|c. Insurance related gains in 2003 and
    losses in 2002          |  |   | 11.4 |  
|d. Write-off of deferred financing costs in
    2003               |  |   | (6.3 | )
|e. Goodwill amortization expense (no longer
    amortized in 2003) |  |   | 15.4 |  

The remaining $8.8 million represents
$13.0 million of operating improvements as a result of
increased sales and productivity initiatives partially offset by
$4.2 million of preferred stock dividend accruals.

Income tax provision
(benefit). Income tax provision
(benefit) was $2.8 million in 2003 and
$1.9 million in 2002 (excluding $0.6 million tax
benefit in 2003 and $0.7 million tax provision in 2002
which was allocated to discontinued operations). These
provisions relate to the allocation of income and loss between
the United States and foreign jurisdictions and primarily
represent the estimated tax that will be due in certain
non-U.S. jurisdictions where no tax benefit can be assured
from utilizing previous losses. There was no U.S. Federal
tax benefit or provision recorded during 2003 and 2002.

Discontinued operations.During the second quarter of 2003, we
accounted for our Hillsdale U.K. Automotive operation as a
discontinued operation. During the third quarter of 2003, we
accounted for the sale of certain assets of our Germanium-based
business in our Technologies Segment as a discontinued operation.

26



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Accordingly, we have restated our prior period
financial statements to conform to the discontinued operations
presentation.


Net income (loss).Net income (loss) improved
$39.7 million to net income of $2.8 million in 2003
from a net loss of $36.8 million in 2002 as a result of the
items discussed above.

2002 Compared to 2001



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

Sales in our Automotive Segment increased
$13.8 million, or 3.4%, to $422.0 million in 2002 from
$408.3 million in 2001. Our Hillsdale divisions net
sales increased $8.5 million, or 2.5%, to
$342.7 million in 2002 from $334.2 million in 2001.
This increase is a result of increased North American automotive
builds in 2002 compared to 2001. Our Wolverine divisions
sales increased $5.3 million, or 7.1%, to
$79.4 million in 2002 from $74.1 million in 2001. This
increase was a result of the increased North American automotive
build in 2002 compared to 2001, as well as the initial
penetration in the United States aftermarket business.

The Automotive Segments operating income
increased $3.0 million, or 40.3%, to $10.5 million in
2002 from $7.5 million in 2001. This improved performance
resulted primarily from slightly higher sales volumes, improved
sales mix, and productivity improvements. Unusual expenses,
totaling $1.8 million in 2002 were incurred for severance,
recruiting and relocation related to strengthening the
Automotive Segments management team and workforce-related
consulting fees that further dampened our profitability. An
additional $1.1 million in depreciation expense was
recorded in the second quarter of 2002 related to adjustments to
bring the estimated useful lives of certain equipment within
this segment in line with estimated periods of active production.



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

Sales in our Technologies Segment decreased
$3.9 million, or 2.3%, to $164.0 million in 2002 from
$167.8 million in 2001. Excluding sales from our Precision
Products business, which we divested in July 2002, this
segments sales increased $2.9 million, or 1.8%. Sales
in the Power Group increased $3.8 million, or 3.8%, during
2002 compared to 2001, which was offset by a decrease of
$0.4 million, or 1.0%, in our Specialty Materials Group.
Within the Specialty Materials Group, the demand for
gallium-based products, was significantly impacted by the
extremely weak demand which led to our decision to exit the
business. The decrease in gallium sales was partially offset by
an increase of $5.5 million, or 33.5%, in sales of enriched
boric acid products sold to nuclear power reactor facilities.

The Technologies Segments operating results
decreased $0.4 million to an operating loss of
$2.6 million in 2002 from $2.2 million in 2001. The
decrease in 2002 operating results included provisions of
$15.7 million in unusual charges, detailed below, versus
$8.7 million of restructuring charges recorded in our 2001
earnings. These 2002 unusual charges, detailed below, impact the
comparability with 2001. The following items detail the
$15.7 million of unusual charges charges in 2002:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | $5.7 million of legal expenses and legal
    settlement charges recorded in Selling and Administrative
    expenses during the first half of 2002;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | $3.1 million loss for an insurance
    receivable primarily related to inventories damaged in a fire
    during the third quarter of 2001 at our Missouri bulk
    pharmaceutical manufacturing plant;                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | $1.4 million in expense for business
    consulting fees to develop a strategy for our Power Group
    business; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | $5.5 million charge in restructuring expense
    in the second quarter of 2002 associated with our decision to
    exit our gallium-based specialty material business due to
    continued soft demand from customers in the telecommunications
    and semi-conductor markets. The $5.5 million restructuring
    charge during the second quarter of 2002 included an inventory
    write-down of $2.9 million, representing the estimated loss
    incurred from the liquidation of current inventory. An
    additional $2.4 million was recorded in other accrued
    liabilities primarily related to the estimated loss of inventory
    to be purchased under a firm

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| |  |                                                                                                                                 
| |  | --------------------------------------------------------------------------------------------------------------------------------
| |  | purchase commitment. Finally, a $0.2 million
    asset impairment charge was recorded against property, plant and
    equipment.



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

Sales in our Filtration and Minerals Segment
increased $0.1 million, or 0.2%, to $82.1 million in
2002 from $82.0 million in 2001. The sales increase during
2002 was primarily the result of improved pricing and sales mix,
partially offset by decreased volumes.

The Filtration and Minerals Segments
operating income increased $3.3 million, or 70.8%, to
$8.1 million in 2002 from $4.7 million in 2001.
Improved profitability was primarily attributable to lower
energy costs, favorable product mix and pricing, improved
production efficiencies and favorable foreign currency exchange
rates due to the strengthening of the Euro during 2002.



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

Net sales.Net sales
of $668.1 million in 2002 increased $10.8 million, or
1.6%, from $657.3 million in 2001. Excluding the sale in
July 2002 of our Precision Products business included in our
Technologies Segment, our net sales increased
$17.6 million, or 2.7% in 2002 compared to 2001.

Cost of products sold (exclusive of
depreciation).Our gross margins
increased 2.9 points to 21.9% in 2002 from 19.0% in 2001.
The improved sales mix primarily related to increased sales in
our Technologies Segments Power Group and our Automotive
Segments Wolverine operation, and productivity
improvements in all our businesses contributed to the increased
gross margins. Our Technologies Segment was also favorably
impacted by the restructuring actions initiated in the fourth
quarter of 2001, while our Filtration and Minerals Segment
benefited from improved pricing and significantly lower energy
costs, which were high in 2001 when the Western United States
experienced an energy crisis.

Selling and administrative.Selling and administrative expenses
increased $11.3 million, or 21.5%, to $63.7 million in
2002 from $52.5 million in 2001. The increased costs in
2002 were primarily related to:



| |                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. $6.0 million of legal expenses and
    legal settlement charges recorded in Selling and Administrative
    expenses during the first half of 2002;                                                   
|
| | b. $1.4 million in our Technologies
    Segment for business consulting fees to develop a strategy for
    our Power Group business;                                                                    
|
| | c. $3.7 million in severance,
    recruiting, relocation costs, and workforce-related consulting
    fees as we continued our investment in restructuring and
    strengthening our leadership team; and
|
| | d. $1.2 million in increased
    compensation costs related to a recently adopted long-term bonus
    plan for certain corporate and divisional management executives.                                  

Depreciation and amortization (including
Goodwill Amortization).Depreciation
and amortization expenses increased $4.9 million, or 8.6%,
to $61.9 million in 2002 from $57.0 million in 2001.
The increase is primarily attributable to higher depreciation
costs as a result of capital expenditures in 2001, primarily for
new automotive programs, and an adjustment for an additional
$1.1 million in expense in the second quarter of 2002 to
bring the estimated useful lives of certain equipment in the
Automotive Segment in line with estimated periods of active
production on existing automotive programs.

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

During 2001, we recorded asset write-downs and
other charges totaling $14.1 million in connection with a
restructuring plan (the Plan) announced in November
2001. The Plan primarily relocated our corporate

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headquarters from Cincinnati, Ohio to Phoenix,
Arizona and closed three plants in the Technologies Segment as a
result of the elimination of certain product lines in the Power
Group business. The costs related to the Plan, which were
recognized as a separate component of operating expenses during
2001, included $5.4 million related to the facilities,
$5.0 million related to severance of approximately 165
employees and $3.7 million in other costs to exit business
activities.


The facility costs of $5.4 million include a
non-cash adjustment of $1.3 million to write down the
carrying value of the three plants to their estimated fair value
in holding them for sale, a non-cash charge of $2.2 million
on the loss of abandoning the machinery and equipment and other
assets at the plant locations and at corporate headquarters, and
a $1.9 million charge for future lease commitments, net of
estimated proceeds received from subleasing the various spaces.
The asset impairment adjustments are recorded against Property
Plant and Equipment in our balance sheets. The other shutdown
costs to exit the business consist primarily of a
$3.0 million non-cash charge related to inventory.

Loss from divestitures.All amounts recorded in divestitures
expense relate to operations that were sold or that were
divested prior to November 30, 2002. During 2002, we
completed the sale of our Precision Products business in our
Technologies Segment to a group of former employees and
divisional management personnel. We recorded in the second
quarter of 2002 a $2.8 million loss on this sale. Also,
during the second quarter of 2002, we recorded $3.4 million
in accruals related to costs for certain litigation issues and
environmental remediation costs. The remaining amounts related
to workers compensation claims for employees of our sold
divisions, and additional accruals related to litigation and
environmental remediation costs. The amounts recorded in 2001
related to costs of divestitures in previous years.

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

Interest expense.Interest expense was
$36.8 million in 2002 and $35.4 million in 2001
(excluding interest allocated to discontinued operations in 2002
of $4.3 million and in 2001 of $8.0 million). Also
included in interest expense in 2002 are $1.5 million in
fees and other costs, primarily related to our unconsolidated
accounts receivable asset-backed securitization. Excluding these
$1.5 million in fees and other costs and including the
interest allocated to discontinued operations, our interest
expense decreased due to lower interest rates and lower debt
levels.

Income (loss) from continuing operations
before taxes.Loss from continuing
operations before taxes decreased $2.3 million, or 7.1%, to
$30.1 million in 2002 from $32.4 million in 2001. The
following items represent charges by segment that affect the
comparability between loss from continuing operations before
taxes for 2001 and 2002 (in millions).

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|                                                                                |  |      |      |      |  |         |      |  |  |  |                    | 
|------------------------------------------------------------------------------- |  | ---- | ---- | ---- |  | ------- | ---- |  |  |  | ------------------ | 
|                                                                                |  | 2001 |      | 2002 |  | Segment
|                                                                                |  |      |      |      |  |        
|Selling and administrative  severance
    and other workforce related expenses |  | $    | 3.1  |      |  | $       | 3.3  |  |  |  | Corporate          | 
|Selling and administrative  severance
    and other workforce related expenses |  |      |     |      |  |         | 1.3  |  |  |  | Technologies       | 
|Selling and administrative  severance
    and other workforce related expenses |  |      |     |      |  |         | 2.5  |  |  |  | Automotive         | 
|Loss from divestitures                                                          |  |      | 2.1  |      |  |         | 6.5  |  |  |  | Divested Divisions | 
|Restructuring  exiting of the gallium
    business                             |  |      |     |      |  |         | 5.5  |  |  |  | Technologies       | 
|Restructuring                                                                   |  |      | 5.4  |      |  |         | 0.4  |  |  |  | Corporate          | 
|Restructuring                                                                   |  |      | 8.7  |      |  |         |     |  |  |  | Technologies       | 
|Selling and administrative  legal and
    settlement costs                     |  |      |     |      |  |         | 5.7  |  |  |  | Technologies       | 
|Selling and administrative  legal and
    settlement costs                     |  |      |     |      |  |         | 0.3  |  |  |  | Corporate          | 
|Insurance related losses                                                        |  |      |     |      |  |         | 3.1  |  |  |  | Technologies       | 
|Depreciation adjustment related to equipment
    useful lives                   |  |      |     |      |  |         | 1.1  |  |  |  | Automotive         | 
|                                                                                |  |      |      |      |  |         |      |  |  |  |                    | 
|                                                                                |  | $    | 19.3 |      |  | $       | 29.7 |  |  |  |                    | 
|                                                                                |  |      |      |      |  |         |      |  |  |  |                    | 

In addition, during 2002, we incurred
$1.4 million of expense in our Technologies Segment for
business consulting fees to develop a strategy for our Power
Group.

Income tax provision (benefit).Income tax provision was
$1.9 million in 2002 compared to a benefit of
$10.2 million in 2001. Differences in the income taxes
recorded primarily relate to recording a tax benefit during 2001
on losses, to the extent those losses could be carried back to
prior fiscal years, and a refund could be obtained from the
taxing authority. For any amounts in excess of the carry back
amounts, we have elected to provide a valuation allowance as it
is more likely than not that some or all of the deferred tax
assets will not be realized. Accordingly, there is no tax
benefit recorded during 2002. The provision in 2002 relates to
the allocation of income and loss between the United States and
foreign jurisdictions and represents the estimated tax that will
be due in certain jurisdictions where no tax benefit can be
assured from utilizing our losses.

Discontinued operations.Throughout 2001, we accounted for our
former Machinery Segment as a discontinued operation and prior
periods have been restated to conform to the discontinued
operations presentation. On December 14, 2001, we completed
the sale of our Machinery Segment as of November 30, 2001.
Accordingly, there is no effect on our operations in 2002. In
addition, the accompanying 2001 and 2002 financial information
has been restated to reflect the accounting for the sale of our
Hillsdale UK Automotive operation and the sale of certain assets
in our Germanium-based business as discontinued operations. The
Hillsdale UK Automotive operation was sold on June 11,
2003, and certain assets in our Germanium-based business were
sold in July 2003.

Net loss.The net
loss decreased $17.1 million, or 31.8%, to
$36.8 million in 2002 from $54.0 million in 2001. The
decrease in net loss is the result of the items discussed above.

Liquidity and Capital Resources

Our cash flows from operations and availability
under our various credit facilities are considered adequate to
fund our short-term and long-term capital needs. As of
November 30, 2003, we had $114.1 million unused under
our various credit facilities. However, due to various financial
covenant limitations under our New Credit Agreement (as defined
under the Capitalization section below) measured at the end of
each quarter, on November 30, 2003, we could only incur an
additional $60.1 million of indebtedness.

In August 2003, we entered into the New Credit
Agreement which provides for an original term loan of
$150.0 million and a revolving credit facility of
$125.0 million. The proceeds of the New Term Loan (as
defined under the Capitalization section below) were used to
repay our prior credit agreement. In addition, we issued
$250.0 million of Senior Unsecured Notes due 2013 and
completed a tender offer for approximately

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95% of our existing Senior Subordinated Notes due
2008. These refinancings are expected to provide us sufficient
liquidity and capital resources to operate our business into the
future. See the Capitalization Section below for additional
details on the New Credit Agreement and the Senior Unsecured
Notes.


At November 30, 2003, we were in compliance
with all of our debt covenants. We expect to remain in
compliance with our debt covenants throughout fiscal year 2004.



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

Operating Activities.Operating activities used
$1.0 million in cash during 2003 compared to providing
$75.9 million in 2002. In 2002, cash flows from operating
activities were impacted by our net loss of $36.8 million,
which was offset by non-cash charges of $65.0 million from
depreciation and amortization, $6.5 million from losses
from divestitures, $6.1 million from deferred income taxes,
and $3.1 million from insurance related losses, which
results in cash sources of $43.9 million compared to a
similarly calculated amount in 2003 of $60.0 million. The
2003 amount of $60.0 million, an improvement of
$16.1 million, or 36.7%, over 2002, is comprised of our net
income of $2.8 million, and non-cash charges of
$50.8 million from depreciation and amortization,
$4.2 million for preferred stock dividends accrued,
$4.2 million from loss from discontinued operations, and
$6.3 million from the write-off of deferred financing
costs, partially offset by non-cash insurance gains of
$8.3 million.

The operating cash flow for 2002 was also
increased by $32.0 million due to changes in certain assets
and liabilities, resulting in net cash provided by operating
activities of $75.9 million, primarily due to
$46.5 million of proceeds from the sale of receivables to
our accounts receivable asset-backed securitization, which was
partially offset primarily by increases in our percentage of
completion accounting working capital needs and decreases in
accrued liabilities.

The operating cash flow for 2003 was reduced by
$61.0 million due to changes in certain assets and
liabilities, resulting in net cash used in operating activities
of $1.0 million. This was primarily due to:



| |                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. $46.5 million use of cash to pay off
    all the obligations of EaglePicher Funding Corporation;                                                                                                                                                                                      
|
| | b. $3.1 million of cash generated from
    the better management of the primary working capital areas of
    accounts receivable, inventories, and accounts payable;                                                                                                                     
|
| | c. $7.8 million of cash received from
    insurance settlements;                                                                                                                                                                                                                         
|
| | d. approximately $15.0 million for
    payments on restructuring and legal matters which were expensed
    in 2002; and                                                                                                                                                                  
|
| | e. $10.3 million increase in production
    on long-term defense contracts where costs are incurred before
    shipments or milestone billings are made and collected; this was
    primarily driven by a 37.5% increase in our Power Group revenues
    within our Technologies Segment.

Investing Activities.Investing activities used
$23.6 million in cash during 2003 compared to using
$7.9 million in 2002. The 2003 amount primarily includes
$16.2 million for capital expenditures and
$7.6 million for the purchase of intangibles and
investments in unconsolidated subsidiaries. The 2002 amount
primarily includes $16.3 million for capital expenditures,
which was partially offset by $6.9 million of proceeds from
the sale of our Construction Equipment Division, which
represented our former Machinery Segment, and $3.1 million
of proceeds from the sale of our Precision Products business. We
expect our capital expenditures to be between $35.0 million
to $40.0 million in 2004, and our investments in
unconsolidated or consolidated ventures to be between
$8.0 million and $10.0 million.

Financing Activities.Financing activities provided
$37.1 million of cash during 2003 compared to using
$67.4 million during 2002. During 2003, we completed a
tender offer on our senior subordinated notes and issued new
senior unsecured notes. In addition, we paid off our former
credit agreement and issued a new credit agreement. For a
detailed discussion of these transactions and the conditions of
the new instruments, see the Capitalization section below.
Accordingly, during 2003, we used $351.0 million of cash to
redeem our senior subordinated notes, pay-off our former credit
agreement, and make regularly scheduled debt payments,

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and we received $387.2 million, net of
financing costs, of cash from the issuance of the new senior
unsecured notes and the new credit agreement. In addition,
during 2003, we sold to our controlling common shareholder,
Granaria Holdings B.V., Bert Iedema, one of our directors and an
executive officer of Granaria Holdings B.V., and two of our
executive officers the 69,500 shares of common stock held in our
Treasury for $13.00 per share, or $0.9 million. During
2002, we used $34.7 million to reduce our revolving credit
facility, primarily from proceeds associated with the sale of
our receivables to our accounts receivable asset-backed
securitization. Also during 2002, regularly scheduled debt
payments and divestitures resulted in a $32.5 million
decline in our long-term debt.




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

Our capitalization, which excludes the
obligations of our accounts receivable asset-backed
securitization of $46.5 million at November 30, 2002
and zero at November 30, 2003, consisted of the following
at November 30, 2002 and November 30, 2003 (in
thousands of dollars):

|                                                                                   |                                                               |      |         |         |  |   |         |         | 
|---------------------------------------------------------------------------------- | ------------------------------------------------------------- | ---- | ------- | ------- |  | - | ------- | ------- | 
|                                                                                   |                                                               | 2002 |         | 2003   
|                                                                                   |                                                               |      |         |        
|New Credit Agreement:                                                              |                                                               |      |         |         |  |   |         |        
|                                                                                   | New revolving credit facility                                 |      | $       |        |  |   | $       |        | 
|                                                                                   | New term loan                                                 |      |         |        |  |   |         | 149,625 | 
|Former Credit Agreement:                                                           |                                                               |      |         |         |  |   |         |        
|                                                                                   | Former revolving credit facility, paid off in
    August 2003 |      |         | 121,500 |  |   |         |        | 
|                                                                                   | Former term loan, paid off in August 2003                     |      |         | 16,925  |  |   |         |        | 
|Senior Unsecured Notes, 9.75% interest, due 2013,
    net of $1.9 million discount |                                                               |      |        |         |  |   | 248,040 |        
|Senior Subordinated Notes, 9.375% interest, due
    2008                           |                                                               |      | 220,000 |         |  |   | 9,500   |        
|Industrial Revenue Bonds, 1.8% to 2.2% interest,
    due in 2004 and 2005          |                                                               |      | 15,300  |         |  |   | 13,600  |        
|Other                                                                              |                                                               |      |        |         |  |   | 1,105   |        
|                                                                                   |                                                               |      |         |         |  |   |         |        
|                                                                                   |                                                               |      | 373,725 |         |  |   | 421,870 |        
|Preferred Stock                                                                    |                                                               |      | 137,973 |         |  |   | 154,416 |        
|Shareholders Deficit                                                              |                                                               |      | (87,578 | )       |  |   | (90,207 | )      
|                                                                                   |                                                               |      |         |         |  |   |         |        
|                                                                                   |                                                               | $    | 424,120 |         |  | $ | 486,079 |        
|                                                                                   |                                                               |      |         |         |  |   |         |        

New Credit Agreement.We have a syndicated senior secured
loan facility (New Credit Agreement) providing an
original term loan (New Term Loan) of
$150.0 million and a $125.0 million revolving credit
facility (New Facility). The New Facility and the
New Term Loan bear interest, at our option, at a rate equal to
(i) LIBOR plus 350 basis points or (ii) an Alternate
Base Rate (which is equal to the highest of (a) the
agents prime rate, (b) the Federal funds effective
rate plus 50 basis points, or (c) the base CD rate plus
100 basis points) plus 250 basis points. Interest is
generally payable quarterly on the New Facility and New Term
Loan. We have entered into interest rate swap agreements to
manage our variable interest rate exposure. Our interest rate
swap agreements that were outstanding as of November 30,
2003 matured in December 2003. The New Credit Agreement also
contains certain fees. There are fees for letters of credit
equal to 3.5% per annum for all issued letters of credit, and
there is a commitment fee on the New Facility equal to 0.5% per
annum of the unused portion of the New Facility. If we meet
certain financial benchmarks, the interest rate spreads on the
borrowing, the commitment fees and the fees for letters of
credit may be reduced.

The New Term Loan will mature upon the earlier of
(i) August 7, 2009, (ii) 180 days prior to
the maturity of our Senior Subordinated Notes if more than
$5.0 million of aggregate principal amount of Senior
Subordinated Notes are outstanding, or (iii) 180 days
prior to the mandatory redemption of our 11.75% Cumulative
Redeemable Exchangeable Preferred Stock (Preferred
Stock) if more than $5.0 million of its aggregate
liquidation preference remains outstanding. The New Facility
will mature upon the earlier of

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(i) August 7, 2008,
(ii) 180 days prior to the maturity of our Senior
Subordinated Notes if more than $5.0 million of aggregate
principal amount of Senior Subordinated Notes are outstanding,
or (iii) 180 days prior to the mandatory redemption of
our Preferred Stock if more than $5.0 million of its
aggregate liquidation preference remains outstanding. Our Senior
Subordinated Notes mature and our Preferred Stock is scheduled
for mandatory redemption, on March 1, 2008.


At November 30, 2003, we had
$40.1 million in outstanding letters of credit under the
New Facility, which together with borrowings of zero, made our
available borrowing capacity of $84.9 million. However, due
to various financial covenant limitations under our New Credit
Agreement measured at the end of each quarter, on
November 30, 2003, we could only incur an additional
$60.1 million of indebtedness.

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

The New Credit Agreement contains covenants that
restrict our ability to declare dividends or redeem capital
stock, incur additional debt or liens, alter existing debt
agreements, make loans or investments, form or invest in joint
ventures, undergo a change in control or engage in mergers,
acquisitions or asset sales. These covenants also limit the
annual amount of capital expenditures and require us to meet
certain minimum financial ratios. For purposes of determining
outstanding debt under our New Credit Agreement, we include the
outstanding obligations of EPFC, our off-balance sheet special
purpose entity (see Note K for a detailed discussion of
EPFC). We were in compliance with all covenants at
November 30, 2003.

In addition to regularly scheduled payments on
the New Credit Agreement, we are required to make mandatory
prepayments equal to 50.0% of annual excess cash flow, as
defined in the New Credit Agreement, beginning with our fiscal
year ending November 30, 2004. The net proceeds from the
sale of assets (subject to certain conditions), the net proceeds
of certain new debt issuance, and 50.0% of the net proceeds of
any equity securities issuance are also subject to mandatory
prepayments on the New Credit Agreement.

Former Credit
Agreement.We had a syndicated senior
secured loan facility (Former Credit Agreement)
which provided for an original term loan (Former Term
Loan) of $75.0 million, as amended, and a
$220.0 million revolving credit facility (Former
Facility). We paid off the Former Credit Agreement with
the proceeds from our New Credit Agreement and Senior Unsecured
Notes in August 2003. The Former Facility and the Former Term
Loan bore interest, at our option, at LIBOR plus 275 basis
points, or the banks prime rate plus 150 basis
points. Interest was generally payable quarterly on the Former
Facility and Former Term Loan. The Former Credit Agreement also
contained certain fees.

Senior Unsecured
Notes.In August 2003, we issued
$250.0 million 9.75% Senior Unsecured Notes, due 2013, at a
price of 99.2% of par to yield 9.875%. Accordingly, the net
proceeds before issuance costs were $248.0 million. The
discount is being amortized over the life of the Senior
Unsecured Notes. The Senior Unsecured Notes require semi-annual
interest payments on September 1 and March 1,
beginning on March 1, 2004. The Senior Unsecured Notes are
redeemable at our option, in whole or in part, any time after
September 1, 2008 at set redemption prices. We are required
to offer to purchase the Senior Unsecured Notes at a set
redemption price should there be a change in control. The Senior
Unsecured Notes contain covenants which restrict or limit our
ability to declare or pay dividends, incur additional debt or
liens, issue stock, engage in affiliate transactions, undergo a
change in control or sell assets. We are in compliance with
these covenants at November 30, 2003. The Senior Unsecured
Notes are guaranteed by us and certain of our subsidiaries

Senior Subordinated Notes.Our Senior Subordinated Notes require
semi-annual interest payments on September 1 and
March 1. In connection with the issuance of the Senior
Unsecured Notes in August 2003, as described above, we
repurchased approximately 95% of the outstanding senior
subordinated notes at par and executed a supplemental indenture
on our Senior Subordinated Notes which eliminated substantially
all of the restrictive covenants in the Senior Subordinated
Notes that remain outstanding. We continue to be required to
make interest payments on the Senior Subordinated Notes and will
be required to pay the remaining aggregate principal amount
outstanding at maturity in 2008.

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Industrial Revenue
Bonds.Our industrial revenue bonds
require monthly interest payments at variable interest rates
based on the market for similar issues and are secured by
letters of credit issued under the New Facility described above.
In December 2003, we paid off $10.0 million of Industrial
Revenue Bonds and accordingly, our outstanding letters of credit
under the New Facility were reduced.

Preferred Stock.Our
preferred stock increased $16.4 million during 2003 as a
result of accretion of the liquidation preference and the
accrual of preferred dividends. The liquidation preference of
the Preferred Stock was fully accreted to $141.9 million in
the aggregate at March 1, 2003. Commencing March 1,
2003, dividends on our Preferred Stock became cash payable at
11.75% per annum of the liquidation preference if and when
declared by the Board of Directors; the first semiannual
dividend payment of $8.3 million was due September 1,
2003. The New Credit Agreement and the Senior Unsecured Notes
contain financial covenants that currently prohibit us from
paying dividends on the preferred stock. Our Board of Directors
did not declare a cash dividend as of September 1, 2003. If
we do not pay cash dividends on the Preferred Stock, the holders
of the Preferred Stock may become entitled to elect a majority
of our Board of Directors. Dakruiter S.A. and Harbourgate B.V.,
both companies controlled by Granaria Holdings B.V., our
controlling common shareholder, hold approximately 78% of our
Preferred Stock, and therefore Granaria Holdings B.V. would
continue to be able to elect our entire Board of Directors. The
election of a majority of the directors is the only remedy of
holders of the preferred stock for a failure to pay cash
dividends. Unpaid dividends are cumulative but do not bear
interest.

Shareholders
Deficit.Our shareholders
deficit increased $2.6 million during 2003 primarily due to
our comprehensive income of $8.7 million and the issuance
of common shares from our Treasury of $0.9 million, which
was more than offset by the accretion and accrual of preferred
stock dividends of $12.2 million.



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

During the first quarter of 2002, we entered into
an agreement with a major United States financial institution to
sell an interest in certain receivables through an
unconsolidated qualifying special purpose entity, EaglePicher
Funding Corporation (EPFC). The size of this
facility is $55.0 million, subject to certain financial
covenant limitations. Initially $47.0 million of proceeds
from this new facility were used primarily to payoff amounts
outstanding under our existing Receivables Loan Agreement with
our wholly owned subsidiary, EaglePicher Acceptance Corporation.
This agreement provides for the sale of certain receivables to
EPFC, which in turn sells an interest in a revolving pool of
receivables to the financial institution. EPFC has no recourse
against us for failure of the debtors to pay when due. In the
third quarter of 2003, we amended this agreement to extend the
receivables program until the earlier of (a) 90 days
prior to the maturity of our New Credit Agreement (as defined in
the Capitalization Section above) or (b) January 2008.

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

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

As of November 30, 2003, we reduced the
amount due to the financial institution by EPFC. Accordingly,
our retained interest in EPFC was $63.3 million and the
revolving pool of receivables that we serviced totaled
$64.9 million. At November 30, 2003, the outstanding
balance of the interest sold to the financial institution
recorded on EPFCs financial statements was zero. The
effective interest rate as of November 30, 2003 in the
securitization was approximately 2.95%.

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

In our New Credit Agreement, we have certain
financial covenants, as discussed below in Credit Agreement and
Accounts Receivable Asset-Backed Securitization Financial
Covenants, which we believe are significant and material in the
context of our capital structure. Credit Agreement EBITDA is
defined as earnings before interest, income taxes, depreciation,
amortization, and certain non-cash items, as defined in the New
Credit Agreement. We believe these financial covenants are a
material piece of information for the readers of our reports. To
support our readers understanding of these financial
covenants and our compliance with them, we have provided below a
reconciliation from Generally Accepted Accounting Principles
(GAAP) Net Income (Loss) to Credit Agreement EBITDA. For
purposes of calculating our credit agreement financial
covenants, Credit Agreement EBITDA is based on the last twelve
months of operating results, which is summarized below.

Credit Agreement EBITDA is also presented herein
because we believe it is a useful supplement to net income. We
use this measurement as part of our evaluation of core operating
results and underlying trends and therefore believe it is a key
measure of our performance. However, Credit Agreement EBITDA,
which does not represent operating income or net cash provided
by operating activities, as those items are defined by GAAP,
should not be considered by readers as an alternative to
operating income or cash flow from operations or indicative of
whether cash flows will be sufficient to fund our future cash
requirements. Funds depicted by Credit Agreement EBITDA are not
available for our discretionary use to the extent they are
required for debt service and other commitments. In addition,
Credit Agreement EBITDA may differ from and may not be
comparable to similarly titled measures used by other companies.

The following is a reconciliation from Net Income
(Loss) to our Credit Agreement EBITDA (in thousands of dollars):

|                                           |                                                                   |               |        |         |  |            |        |              |  |   |        |        |   |   |         |        |  
|------------------------------------------ | ----------------------------------------------------------------- | ------------- | ------ | ------- |  | ---------- | ------ | ------------ |  | - | ------ | ------ | - | - | ------- | ------ | -
|                                           |                                                                   |              
|                                           |                                                                   | Quarter Ended
|                                           |                                                                   |              
|                                           |                                                                   | February 28,  |        | May 31, |  | August 31, |        | November 30,
|                                           |                                                                   | 2003          |        | 2003    |  | 2003       |        | 2003        
|                                           |                                                                   |               |        |         |  |            |        |             
|Net Income (Loss)                          |                                                                   | $             | 1,168  |         |  | $          | 7,686  |              |  | $ | (4,226 | )      |   | $ | (1,785  | )     
|                                           | Loss from discontinued business, net                              |               |        | 928     |  |            |        | 542          |  |   |        | 213    |   |   |         |       |  
|                                           | Loss on disposal of discontinued business, net                    |               |        |        |  |            |        | 2,978        |  |   |        | 267    |   |   |         | 950    |  
|                                           | Income tax provision (benefit)                                    |               |        | 896     |  |            |        | 1,150        |  |   |        | 804    |   |   |         | (13    | )
|                                           | Interest expense                                                  |               |        | 8,373   |  |            |        | 8,319        |  |   |        | 9,249  |   |   |         | 10,570 |  
|                                           | Preferred stock dividends accrued                                 |               |        |        |  |            |        |             |  |   |        |       |   |   |         | 4,169  |  
|                                           | Depreciation and amortization                                     |               |        | 11,114  |  |            |        | 10,916       |  |   |        | 12,768 |   |   |         | 13,271 |  
|                                           | Long-term bonus and share appreciation plans
    expense (income) |               |        | 600     |  |            |        | 700          |  |   |        | 700    |   |   |         | (838   | )
|                                           | Pension plan expense (income), net                                |               |        | 177     |  |            |        | 505          |  |   |        | (1,500 | ) |   |         | (1,282 | )
|                                           | Write-off of deferred financing costs                             |               |        |        |  |            |        |             |  |   |        | 6,327  |   |   |         |       |  
|                                           | Other, net                                                        |               |        |        |  |            |        |             |  |   |        | (415   | ) |   |         | 181    |  
|                                           | EBITDA impact from discontinued operations                        |               |        | 601     |  |            |        | 939          |  |   |        | 100    |   |   |         |       |  
|                                           |                                                                   |               |        |         |  |            |        |              |  |   |        |        |   |   |         |       
|Quarterly Credit Agreement EBITDA          |                                                                   | $             | 23,857 |         |  | $          | 33,735 |              |  | $ | 24,287 |        |   | $ | 25,223  |       
|                                           |                                                                   |               |        |         |  |            |        |              |  |   |        |        |   |   |         |       
|Last Twelve Months Credit Agreement EBITDA |                                                                   |               |        |         |  |            |        |              |  |   |        |        |   | $ | 107,102 |       
|                                           |                                                                   |               |        |         |  |            |        |              |  |   |        |        |   |   |         |       



| |                                                                                             
| | --------------------------------------------------------------------------------------------
| | Credit Agreement and Accounts Receivable
    Asset-Backed Securitization Financial Covenants

There are three financial covenants contained in
our New Credit Agreement and the Accounts Receivable
Asset-Backed Securitization, as amended. They are a leverage
ratio (the ratio of total debt,

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including the obligations of our accounts
receivable asset-backed securitization, to Credit Agreement
EBITDA), an interest coverage ratio (the ratio of Credit
Agreement EBITDA to interest expense) and a fixed charge
coverage ratio (the ratio of Credit Agreement EBITDA minus
capital expenditures to the sum of interest expense plus
scheduled principal payments plus cash dividends paid plus
income taxes paid), all as defined in the New Credit Agreement
and the Accounts Receivable Asset-Backed Securitization, as
amended. As of November 30, 2003, we were in compliance
with the covenant calculations described above.


The following table presents the required ratios
under our New Credit Agreement and the actual ratios at
November 30, 2003.

|                  |          |                 |  |                  |  |                 |  |      |  |  |  |      | 
|----------------- | -------- | --------------- |  | ---------------- |  | --------------- |  | ---- |  |  |  | ---- | 
|                  |          |                 |  |                  |  | Minimum        
|                  |          | Maximum         |  | Minimum Interest |  | Fixed Charge   
|                  |          | Leverage Ratio  |  | Coverage Ratio   |  | Coverage Ratio 
|                  |          | (Not More Than) |  | (Not Less Than)  |  | (Not Less Than)
|                  |          |                 |  |                  |  |                
|November 30, 2003 |          |                 |  |                  |  |                 |  |      |  |  |  |     
|                  | Required |                 |  | 4.50             |  |                 |  | 2.25 |  |  |  | 1.25 | 
|                  | Actual   |                 |  | 3.94             |  |                 |  | 3.02 |  |  |  | 1.77 | 
|February 28, 2004 |          |                 |  |                  |  |                 |  |      |  |  |  |     
|                  | Required |                 |  | 4.50             |  |                 |  | 2.25 |  |  |  | 1.25 | 
|May 31, 2004,     |          |                 |  |                  |  |                 |  |      |  |  |  |     
|                  | Required |                 |  | 4.50             |  |                 |  | 2.25 |  |  |  | 1.25 | 
|August 31, 2004   |          |                 |  |                  |  |                 |  |      |  |  |  |     
|                  | Required |                 |  | 4.50             |  |                 |  | 2.25 |  |  |  | 1.25 | 
|November 30, 2004 |          |                 |  |                  |  |                 |  |      |  |  |  |     
|                  | Required |                 |  | 4.25             |  |                 |  | 2.35 |  |  |  | 1.25 | 

Based on our projections for 2004, we expect to
remain in compliance with all covenants. However, any adverse
changes in actual results from projections, along with the
contractual tightening of the covenants under the New Credit
Agreement, may place us at risk of not being able to comply with
all of the covenants of the New Credit Agreement. In the event
we cannot comply with the terms of the New Credit Agreement as
currently written, it would be necessary for us to obtain a
waiver or renegotiate our loan covenants, and there can be no
assurance that such negotiations will be successful. In
addition, EPFC would be in default under our accounts receivable
asset-backed securitization, described above, and we may need to
obtain a waiver. Any agreements to amend the covenants and/or
obtain waivers may likely require us to pay a fee and increase
the interest rate payable under the New Credit Agreement. The
amount of such fee and increase in interest rate would be
determined in the negotiations of the amendment.



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

The following table lists our contractual cash
obligation as of November 30, 2003 (in millions of dollars).

|                              |                             |                               |       |        |  |      |      |      |  |      |     |      |  |      |     |     |  |   |     |     |  |   |       |       |  |   |       |       | 
|----------------------------- | --------------------------- | ----------------------------- | ----- | ------ |  | ---- | ---- | ---- |  | ---- | --- | ---- |  | ---- | --- | --- |  | - | --- | --- |  | - | ----- | ----- |  | - | ----- | ----- | 
|                              |                             |                              
|                              |                             | Payments by Fiscal Period End
|                              |                             |                              
|                              |                             |                               |       | Beyond
|                              |                             | Total                         |       | 2004   |  | 2005 |      | 2006 |  | 2007 |     | 2008 |  | 2008
|                              |                             |                               |       |        |  |      |      |      |  |      |     |      |  |     
|Contractual Cash Obligations: |                             |                               |       |        |  |      |      |      |  |      |     |      |  |      |     |     |  |   |     |     |  |   |       |       |  |   |       |      
|                              | Long-term Debt              |                               | $     | 421.9  |  |      | $    | 13.3 |  |      | $   | 3.9  |  |      | $   | 1.8 |  |   | $   | 1.7 |  |   | $     | 1.5   |  |   | $     | 399.7 | 
|                              | Operating Lease Commitments |                               |       | 25.8   |  |      |      | 5.4  |  |      |     | 3.7  |  |      |     | 3.2 |  |   |     | 1.5 |  |   |       | 1.5   |  |   |       | 10.5  | 
|                              | Preferred Stock             |                               |       | 154.4  |  |      |      |     |  |      |     |     |  |      |     |    |  |   |     |    |  |   |       | 154.4 |  |   |       |      | 
|                              | Advisory Agreement          |                               |       | 7.6    |  |      |      | 1.8  |  |      |     | 1.8  |  |      |     | 1.8 |  |   |     | 1.8 |  |   |       | 0.4   |  |   |       |      | 
|                              | Environmental Liability     |                               |       | 6.9    |  |      |      | 4.9  |  |      |     | 0.5  |  |      |     | 0.9 |  |   |     | 0.3 |  |   |       | 0.3   |  |   |       |      | 
|                              |                             |                               |       |        |  |      |      |      |  |      |     |      |  |      |     |     |  |   |     |     |  |   |       |       |  |   |       |      
|                              |                             | $                             | 616.6 |        |  | $    | 25.4 |      |  | $    | 9.9 |      |  | $    | 7.7 |     |  | $ | 5.3 |     |  | $ | 158.1 |       |  | $ | 410.2 |      
|                              |                             |                               |       |        |  |      |      |      |  |      |     |      |  |      |     |     |  |   |     |     |  |   |       |       |  |   |       |      

For a discussion of our long-term debt and its
related provisions, see Note M in our November 30,
2003 consolidated financial statements included elsewhere in
this report. In the above table, we have included only principal
payments on long-term debt (interest expense is excluded).

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Our 11.75% Cumulative Mandatorily Redeemable
Exchangeable Preferred Stock is scheduled for redemption on
March 1, 2008. However, if we do not redeem the Preferred
Stock, the only remedy of holders is to elect a majority of our
board of directors. Holders of the Preferred Stock do not have a
right to obtain a judgment against us for the redemption amount
or to obtain equitable relief requiring us to redeem the
Preferred Stock. We have included in the above table the current
Preferred Stock balance on our balance sheet but have excluded
any future dividend accruals or payments, which are
approximately $16.7 million per year.

We have an advisory and consulting agreement with
a related party, Granaria Holdings B.V., our controlling common
shareholder, which requires an annual management fee of
$1.8 million. Included in the above table is the annual
$1.8 million management fee.

We are involved in various stages of
investigation and remediation related to environmental
remediation projects at a number of sites as a result of past
and present operations, including currently-owned and
formerly-owned plants. Also, we have received notice that we may
have liability under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 as a Potentially
Responsible Party at a number of sites. The ultimate cost of
site remediation is difficult to predict given the uncertainties
regarding the extent of the required remediation, the
interpretation of applicable laws and regulations and
alternative remediation methods. Based on our experience with
environmental remediation matters, we have accrued
$9.3 million in our Accrued Divestitures Reserve at
November 30, 2003 related to environmental remediation and
legal matters for sold divisions or businesses, and
$1.6 million is recorded in Other Accrued Liabilities
related to on-going businesses. There can be no assurances that
environmental laws and regulations will not become more
stringent in the future or that we will not incur significant
costs in the future to comply with such laws and regulations.
Accordingly, future information and developments will require us
to continually reassess the expected impact of these
environmental matters. We have included in the above table
$6.9 million of contractual cash commitments based on our
current remediation plans. The remaining commitments are not
contractually committed and therefore not included in the above
table.

The following table lists our other commercial
commitments as of November 30, 2003:

|                                   |  |       |      |      |  |                      |      |      |  |        |     |      |  |      |   |  |  |   |   |  |  |   |   |  |  |   |   | 
|---------------------------------- |  | ----- | ---- | ---- |  | -------------------- | ---- | ---- |  | ------ | --- | ---- |  | ---- | - |  |  | - | - |  |  | - | - |  |  | - | - | 
|                                   |  |       |      |      |  |                      |      |      |  |       
|                                   |  |       |      |      |  | Expiration by Period |      |      |  |       
|                                   |  |       |      |      |  |                      |      |      |  | Beyond
|Other Commercial Commitments:      |  | Total |      | 2004 |  | 2005                 |      | 2006 |  | 2007   |     | 2007 |  | 2007
|                                   |  |       |      |      |  |                      |      |      |  |        |     |      |  |     
|                                   |  |       |      |      |  |                      |      |      |  |       
|                                   |  |       |      |      |  | (In millions)        |      |      |  |       
|Third-party guarantee  Transicoil |  | $     | 2.6  |      |  | $                    | 1.4  |      |  | $      | 1.2 |      |  | $    |  |  |  | $ |  |  |  | $ |  |  |  | $ |  | 
|Stand-by letters of credit         |  |       | 40.1 |      |  |                      | 40.1 |      |  |        |    |      |  |      |  |  |  |   |  |  |  |   |  |  |  |   |  | 
|                                   |  |       |      |      |  |                      |      |      |  |        |     |      |  |      |   |  |  |   |   |  |  |   |   |  |  |   |   | 
|                                   |  | $     | 42.7 |      |  | $                    | 41.5 |      |  | $      | 1.2 |      |  | $    |  |  |  | $ |  |  |  | $ |  |  |  | $ |  | 
|                                   |  |       |      |      |  |                      |      |      |  |        |     |      |  |      |   |  |  |   |   |  |  |   |   |  |  |   |   | 

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

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

In addition, we are engaged in various litigation
matters as further described in Note R of our
November 30, 2003 consolidated financial statements
included elsewhere in this report. It is not possible to
quantify an estimate of the cost of such litigation matters at
this time and accordingly they have not been included as other
commercial commitments.

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

During 2003, our earnings were insufficient to
cover fixed charges and preferred stock dividends by
$0.7 million and during 2002, our earnings were
insufficient to cover fixed charges and preferred stock
dividends by $45.0 million. The improvement from 2002 to
2003 is primarily related to our improved operating performance,
less unusual charges in 2003 compared to 2002, and our adoption
of SFAS No. 142 on December 1, 2002, which no longer
requires the amortization of goodwill

Recently Issued Accounting
Pronouncements

In September 2001, the FASB issued
SFAS No. 144, Accounting for the Impairment or
Disposal of Long Lived Assets, which superceded
SFAS No. 121, Accounting for the Impairment of
Long Lived Assets and for Long Lived Assets to Be Disposed
of. The primary difference is that goodwill and certain
intangibles with indefinite lives have been removed from the
scope of SFAS No. 144, as they are covered by
SFAS No. 142. It also broadens the presentation of
discontinued operations to include a component of an entity
rather than a segment of a business. A component of an entity
comprises operations and cash flows that can clearly be
distinguished operationally and for financial accounting
purposes from the rest of the entity. We adopted
SFAS No. 144 on December 1, 2002 and accounted
for the sale of our Hillsdale U.K. Automotive operation and the
sale of certain assets of our Germanium-based business in our
Technologies Segment in accordance with this statement.

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

In November 2002, the FASB issued Interpretation
No. 45 (FIN 45) Guarantors
Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN 45
elaborates on the existing disclosure requirements for most
guarantees, including loan guarantees. It also clarifies that at
the time a company issues a guarantee, the company must
recognize an initial liability for the fair value, or market
value, of the obligations it assumes under that guarantee.
However, the provisions related to recognizing a liability at
inception of the guarantee for the fair value of the
guarantors obligations does not apply to product
warranties or to guarantees accounted for as derivatives. The
initial recognition and measurement provisions apply on a
prospective basis to guarantees issued or modified after
December 31, 2002. The disclosure requirements of FIN 45
are effective for financial statements of interim or annual
periods ending after December 15, 2002. FIN 45 does
not affect the accounting for guarantees issued prior to the
effective date, unless the guarantee is modified subsequent to
December 31, 2002. We adopted the disclosure requirements
on December 1, 2002, and the initial recognition and
measurement provisions in our February 28, 2003 financial
statements. The adoption of this interpretation did not have a
material impact on our financial condition or results of
operations.

In November 2002, the EITF issued
EITF 00-21, Revenue Arrangements with Multiple
Deliverables. EITF 00-21 prescribes a method to
account for contracts that have multiple elements or
deliverables. It provides guidance on how to allocate the value
of a contract to its different deliverables, as well as guidance
on when to recognize revenue allocated to each deliverable over
its performance period. We adopted EITF 00-21 during the
fourth quarter of our fiscal year 2003. The adoption of
EITF 00-21 did not have a material impact on our financial
condition or results of operations.

In January 2003, the FASB issued Interpretation
No. 46 (FIN 46) Consolidation of
Variable Interest Entities. Until this interpretation, a
company generally included another entity in its consolidated
financial statements only if it controlled the entity through
voting interests. FIN 46 requires a variable interest
entity to be consolidated by a company if that company is
subject to a majority of the risk of loss from the variable
interest entitys activities or entitled to receive a
majority of the entitys residual returns. FIN 46
applies to

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variable interest entities created after
January 31, 2003, and to variable interest entities in
which an enterprise obtains an interest in after that date. A
public entity with a variable interest in a variable interest
entity created before February 1, 2003, shall apply the
provisions of this interpretation (other than the transition
disclosure provisions in paragraph 26) to that entity no
later than the beginning of the first interim or annual
reporting period beginning after December 15, 2003. The
related disclosure requirements were effective immediately. The
impact of this interpretation is not expected to have a material
impact on our financial condition or results of operations.


On April 30, 2003, the FASB issued
SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. This
statement amends and clarifies accounting for derivative
instruments, including certain derivative instruments embedded
in other contracts, and for hedging activities under
SFAS No. 133. This statement is effective for
contracts entered into or modified after June 30, 2003, for
hedging relationships designated after June 30, 2003, and
to certain preexisting contracts. We adopted
SFAS No. 149 on a prospective basis at its effective
date on July 1, 2003. The adoption of this statement did
not have a material impact on our financial condition or results
of operations.

In May 2003, the FASB issued
SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and
Equity. SFAS No. 150 changes the accounting for
certain financial instruments that, under previous guidance,
issuers could account for as equity and requires that those
instruments be classified as liabilities (or assets in certain
circumstances) in balance sheets. This statement affects the
issuers accounting for three types of freestanding
financial instruments including (1) mandatorily redeemable
shares that are required to be redeemed at a specified or
determinable date or upon an event certain to occur,
(2) put options and forward purchase contracts, which
involves financial instruments embodying an obligation that the
issuer must or could choose to settle by issuing a variable
number of its shares or other equity instruments based solely on
something other than the issuers own equity shares, and
(3) certain obligations that can be settled with shares,
the monetary value of which is (i) fixed, tied solely or
predominantly to a variable such as a market index, or
(ii) varies inversely with the value of the issuers
shares. For public companies, SFAS No. 150 became
effective at the beginning of the first interim period beginning
after June 15, 2003. As a result of SFAS No. 150,
effective September 1, 2003 we reclassified the current
redemption value plus unpaid dividends to on our preferred stock
to long-term liabilities in our consolidated balance sheet and
the accrual of dividends payable for the period
September 1, 2003 through November 30, 2003 has been
recorded as a component of non-operating expenses in our
consolidated statements of income.

In December 2003, the FASB issued FASB Statement
No. 132 (Revised 2003), Employers Disclosures
about Pensions and Other Postretirement Benefits. This
standard increases the existing disclosure requirements by
requiring more details about pension plan assets, benefit
obligations, cash flows, benefit costs and related information.
We will be required to segregate plan assets by category, such
as debt, equity and real estate, and to provide certain expected
rates of return and other informational disclosures. We will be
required to adopt the disclosure requirements of
SFAS No. 132(R) when we issue our November 30,
2004 financial statements, and we will be required to disclose
various elements of pension and postretirement benefit costs in
interim-period financial statements for quarters beginning after
December 15, 2003 (our second quarter of fiscal 2004 ending
May 31, 2004).






|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7a. | Quantitative and Qualitative Disclosures
    About Market Risk

Risk Management Activities

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

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| |                         
| | ------------------------
| | Interest Rate Management

Periodically, we use interest rate swap contracts
to adjust the proportion of our total debt that is subject to
variable interest rates. Under our interest rate swap contracts,
we agree to pay an amount equal to a specified fixed-rate of
interest for a certain notional amount and receive in return an
amount equal to a variable-rate. The notional amounts of the
contract are not exchanged. No other cash payments are made
unless the contract is terminated prior to maturity. Although no
collateral is held or exchanged for these contracts, interest
rate swap contracts are entered into with a major financial
institution in order to minimize our counterparty credit risk.
These interest rate swap contracts are designated as cash flow
hedges against changes in the amount of future cash flows
associated with our interest payments on variable-rate debt. The
effect of this accounting on our operating results is that
interest expense on a portion of variable-rate debt being hedged
is generally recorded based on fixed interest rates. At
November 30, 2002 and 2003, we had interest rate swap
contracts to pay fixed-rates of interest (average rate of 5.68%)
on $90.0 million notional amount of indebtedness. The
$90.0 million notional amount of outstanding contracts
matured in December 2003. As of November 30, 2003, we had
$0.7 million, net of tax, in unrealized losses which were
included in Accumulated Other Comprehensive Income (Loss) in our
balance sheets and represent the fair values of the interest
rate swap agreements as of those dates. The fair value of
interest rate swap contracts is based on quoted market prices
and third-party provided calculations, which reflect the present
values of the difference between estimated future variable-rate
receipts and future fixed-rate payments.

As of the filing date of this document, we do not
have any financial derivative instruments outstanding to hedge
our interest rate exposures. However, we periodically review the
need for such instruments and will enter into them when we
believe it is in our best interest to manage our interest rate
exposure.

The combined effect of a 1% increase in the
applicable index rates would result in additional interest
expense of approximately $0.7 million annually, assuming no
change in the level of borrowings.



| |                         
| | ------------------------
| | Currency Rate Management

We use foreign currency forward exchange
contracts to hedge the risk of cash flow fluctuations due to
changes in exchange rates on sales denominated in foreign
currencies. As part of our overall strategy to manage the level
of exposure to the risk of foreign currency exchange rate
fluctuations, we hedge a portion of our foreign currency
exchange rate exposures anticipated over the next twelve-months.
To hedge this exposure, we used foreign currency forward
exchange contracts that generally have maturities that
approximate the timing of the forecasted transactions. Foreign
currency forward exchange contracts are placed with a number of
major financial institutions in order to minimize our
counterparty credit risk. We record these foreign currency
forward exchange contracts at fair value in our balance sheets
and the related unrealized gains or losses on these contracts,
net of tax, are recorded as a component of Accumulated Other
Comprehensive Income (Loss) in our balance sheets. These
unrealized gains and losses are recognized in the income
statement in the period in which the related transactions being
hedged are recognized in the income statement. As of
November 30, 2003, we had outstanding foreign currency
forward exchange contracts with an aggregate notional amount of
$7.1 million, which represents approximately 19% of our net
foreign currency exchange rate exposures for fiscal 2004 based
on net sales. Net unrealized losses on these contracts, based on
prevailing financial market information, as of November 30,
2003, were $0.5 million, net of tax, and were included in
Accumulated Other Comprehensive Income (Loss) in our balance
sheets. The fair value of foreign current hedge contracts
represents the amount required to enter into offsetting
contracts with similar remaining maturities based on quoted
market prices.

Subsequent to November 30, 2003, we entered
into additional foreign currency forward exchange contracts
bringing the aggregate notional amount of forward contracts to
$39.9 million, which represents approximately 95% of our
net foreign currency exchange rate exposures for fiscal 2004
based on net sales.



| |            
| | -----------
| | Credit Risk

Our concentrations of credit risk consist
primarily of cash and cash equivalents, trade accounts
receivable, retained interest in EaglePicher Funding
Corporation, and sales concentrations with certain customers. As

40



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part of our ongoing control procedures, we
monitor concentrations of credit risk associated with financial
institutions with which we conduct business. Credit risk with
financial institutions is considered minimal as we utilize only
high quality financial institutions. We conduct periodic credit
evaluations of our customers financial condition and
generally do not require collateral. Our customer base includes
all significant automotive manufacturers and their first tier
suppliers in North America and Europe. Although we are directly
affected by the well-being of the automotive industry, we do not
believe significant credit risk existed at November 30,
2003. In addition, during 2002, we formed EaglePicher Funding
Corporation, an off balance-sheet qualifying special-purpose
entity, to sell an interest in certain receivables. We believe
that EaglePicher Funding Corporation assists in the management
of our credit risk related to trade receivables as it permits us
to sell an interest in our receivables on a non-recourse basis.




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

We use a variety of commodities in our
manufacturing processes. One of the significant commodities that
can be subject to volatility is natural gas. A 25% change in the
cost of natural gas would have increased (decreased) our
2003 expense by $1.5 million. We attempt to manage this
commodity risk utilizing various techniques, including
purchasing natural gas with other buyers to manage required
volumes and minimize costs, as well entering into forward hedges
requiring physical settlement to lock in costs and quantities
when we believe it is in our best interest.

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

INDEPENDENT AUDITORS REPORT

The Board of Directors

EaglePicher Holdings, Inc.:


We have audited the accompanying consolidated
balance sheets of EaglePicher Holdings, Inc. and subsidiaries as
of November 30, 2002 and 2003, and the related consolidated
statements of income (loss), shareholders equity
(deficit), and cash flows for each of the three years in the
period ended November 30, 2003. These consolidated
financial statements are the responsibility of the
Companys management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits.

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

In our opinion, the consolidated financial
statements referred to above present fairly, in all material
respects, the financial position of EaglePicher Holdings, Inc.
as of November 30, 2002 and 2003, and the results of its
operations and its cash flows for each of the three years in the
period ended November 30, 2003, in conformity with
accounting principles generally accepted in the United States of
America.

As discussed in Note B to the consolidated
financial statements, effective December 1, 2002,
EaglePicher adopted Statement of Financial Accounting Standard
No. 142, Goodwill and Other Intangible Assets.



| |                          
| | -------------------------
| | /s/ DELOITTE & TOUCHE LLP

Cincinnati, Ohio

January 23, 2004


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EAGLEPICHER HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

November 30, 2002 and 2003


(In thousands of dollars, except share and per
share amounts)


|                                                                                                                                                                                                                                 |                                                                                                             |      |         |          |   |   |         |          |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------- | ---- | ------- | -------- | - | - | ------- | -------- | -
|                                                                                                                                                                                                                                 |                                                                                                             | 2002 |         | 2003    
|                                                                                                                                                                                                                                 |                                                                                                             |      |         |         
|ASSETS                                                                                                                                                                                                                          
|Current Assets:                                                                                                                                                                                                                  |                                                                                                             |      |         |          |   |   |         |         
|                                                                                                                                                                                                                                 | Cash and cash equivalents                                                                                   |      | $       | 31,522   |   |   | $       | 67,320   |  
|                                                                                                                                                                                                                                 | Receivables, net of doubtful accounts of $435 in
    2002 and $1,136 in 2003                                |      |         | 19,979   |   |   |         | 25,943   |  
|                                                                                                                                                                                                                                 | Retained interest in EaglePicher Funding
    Corporation, net of allowance of $700 in 2002 and $712 in 2003 |      |         | 29,400   |   |   |         | 63,335   |  
|                                                                                                                                                                                                                                 | Costs and estimated earnings in excess of billings                                                          |      |         | 16,942   |   |   |         | 28,433   |  
|                                                                                                                                                                                                                                 | Inventories                                                                                                 |      |         | 45,504   |   |   |         | 53,205   |  
|                                                                                                                                                                                                                                 | Assets of discontinued operations                                                                           |      |         | 28,899   |   |   |         | 4,441    |  
|                                                                                                                                                                                                                                 | Prepaid expenses and other assets                                                                           |      |         | 15,363   |   |   |         | 10,394   |  
|                                                                                                                                                                                                                                 | Deferred income taxes                                                                                       |      |         | 10,798   |   |   |         | 8,526    |  
|                                                                                                                                                                                                                                 |                                                                                                             |      |         |          |   |   |         |         
|                                                                                                                                                                                                                                 |                                                                                                             |      | 198,407 |          |   |   | 261,597 |         
|Property, Plant and Equipment, net                                                                                                                                                                                               |                                                                                                             |      | 173,658 |          |   |   | 151,894 |         
|Goodwill                                                                                                                                                                                                                         |                                                                                                             |      | 159,640 |          |   |   | 159,640 |         
|Prepaid Pension                                                                                                                                                                                                                  |                                                                                                             |      | 54,796  |          |   |   | 56,891  |         
|Other Assets, net                                                                                                                                                                                                                |                                                                                                             |      | 26,540  |          |   |   | 33,516  |         
|                                                                                                                                                                                                                                 |                                                                                                             |      |         |          |   |   |         |         
|                                                                                                                                                                                                                                 |                                                                                                             | $    | 613,041 |          |   | $ | 663,538 |         
|                                                                                                                                                                                                                                 |                                                                                                             |      |         |          |   |   |         |         
|LIABILITIES AND SHAREHOLDERS EQUITY
    (DEFICIT)                                                                                                                                                                              
|Current Liabilities:                                                                                                                                                                                                             |                                                                                                             |      |         |          |   |   |         |         
|                                                                                                                                                                                                                                 | Accounts payable                                                                                            |      | $       | 83,178   |   |   | $       | 89,274   |  
|                                                                                                                                                                                                                                 | Current portion of long-term debt                                                                           |      |         | 18,625   |   |   |         | 13,300   |  
|                                                                                                                                                                                                                                 | Compensation and employee benefits                                                                          |      |         | 18,689   |   |   |         | 15,783   |  
|                                                                                                                                                                                                                                 | Billings in excess of costs and estimated earnings                                                          |      |         | 944      |   |   |         | 2,098    |  
|                                                                                                                                                                                                                                 | Accrued divestiture reserve                                                                                 |      |         | 17,662   |   |   |         | 9,297    |  
|                                                                                                                                                                                                                                 | Liabilities of discontinued operations                                                                      |      |         | 4,305    |   |   |         | 956      |  
|                                                                                                                                                                                                                                 | Other accrued liabilities                                                                                   |      |         | 36,380   |   |   |         | 32,984   |  
|                                                                                                                                                                                                                                 |                                                                                                             |      |         |          |   |   |         |         
|                                                                                                                                                                                                                                 |                                                                                                             |      | 179,783 |          |   |   | 163,692 |         
|Long-term Debt, net of current portion                                                                                                                                                                                           |                                                                                                             |      | 355,100 |          |   |   | 408,570 |         
|Postretirement Benefits Other Than Pensions                                                                                                                                                                                      |                                                                                                             |      | 17,635  |          |   |   | 17,418  |         
|Other Long-Term Liabilities                                                                                                                                                                                                      |                                                                                                             |      | 10,128  |          |   |   | 9,649   |         
|11.75% Cumulative Redeemable Exchangeable
    Preferred Stock; 50,000,000 shares authorized;
    14,191 shares issued and outstanding (Mandatorily
    Redeemable at $10,000 per share on March 1, 2008) (See
    Notes A and N) |                                                                                                             |      |        |          |   |   | 154,416 |         
|                                                                                                                                                                                                                                 |                                                                                                             |      |         |          |   |   |         |         
|                                                                                                                                                                                                                                 |                                                                                                             |      | 562,646 |          |   |   | 753,745 |         
|                                                                                                                                                                                                                                 |                                                                                                             |      |         |          |   |   |         |         
|11.75% Cumulative Redeemable Exchangeable
    Preferred Stock; 50,000,000 shares authorized;
    14,191 shares issued and outstanding (Mandatorily
    Redeemable at $10,000 per share on March 1, 2008) (See
    Notes A and N) |                                                                                                             |      | 137,973 |          |   |   |        |         
|                                                                                                                                                                                                                                 |                                                                                                             |      |         |          |   |   |         |         
|Commitments and Contingencies                                                                                                                                                                                                    |                                                                                                             |      |         |          |   |   |         |         
|Shareholders Equity (Deficit):                                                                                                                                                                                                  |                                                                                                             |      |         |          |   |   |         |         
|                                                                                                                                                                                                                                 | Common stock; $0.01 par value each; 1,000,000
    shares authorized and issued                              |      |         | 10       |   |   |         | 10       |  
|                                                                                                                                                                                                                                 | Additional paid-in capital                                                                                  |      |         | 99,991   |   |   |         | 92,810   |  
|                                                                                                                                                                                                                                 | Accumulated deficit                                                                                         |      |         | (175,112 | ) |   |         | (184,543 | )
|                                                                                                                                                                                                                                 | Accumulated other comprehensive income (loss)                                                               |      |         | (4,376   | ) |   |         | 1,516    |  
|                                                                                                                                                                                                                                 | Treasury stock, at cost, 66,500 shares in 2002                                                              |      |         | (8,091   | ) |   |         |         |  
|                                                                                                                                                                                                                                 |                                                                                                             |      |         |          |   |   |         |         
|                                                                                                                                                                                                                                 |                                                                                                             |      | (87,578 | )        |   |   | (90,207 | )       
|                                                                                                                                                                                                                                 |                                                                                                             |      |         |          |   |   |         |         
|                                                                                                                                                                                                                                 |                                                                                                             | $    | 613,041 |          |   | $ | 663,538 |         
|                                                                                                                                                                                                                                 |                                                                                                             |      |         |          |   |   |         |         

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

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EAGLEPICHER HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF INCOME
(LOSS)

Years Ended November 30, 2001, 2002 and
2003


(In thousands of dollars, except share and per
share amounts)


|                                                                        |                                                                                                                   |      |         |         |   |      |         |         |   |   |         |         |  
|----------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | ---- | ------- | ------- | - | ---- | ------- | ------- | - | - | ------- | ------- | -
|                                                                        |                                                                                                                   | 2001 |         | 2002    |   | 2003
|                                                                        |                                                                                                                   |      |         |         |   |     
|Net Sales                                                               |                                                                                                                   | $    | 657,324 |         |   | $    | 668,143 |         |   | $ | 685,426 |        
|                                                                        |                                                                                                                   |      |         |         |   |      |         |         |   |   |         |        
|Operating Costs and Expenses:                                           |                                                                                                                   |      |         |         |   |      |         |         |   |   |         |        
|                                                                        | Cost of products sold (exclusive of depreciation)                                                                 |      |         | 532,165 |   |      |         | 521,821 |   |   |         | 522,277 |  
|                                                                        | Selling and administrative                                                                                        |      |         | 52,468  |   |      |         | 63,731  |   |   |         | 63,211  |  
|                                                                        | Depreciation and amortization                                                                                     |      |         | 41,601  |   |      |         | 46,510  |   |   |         | 48,069  |  
|                                                                        | Goodwill amortization                                                                                             |      |         | 15,385  |   |      |         | 15,392  |   |   |         |        |  
|                                                                        | Restructuring                                                                                                     |      |         | 14,163  |   |      |         | 5,898   |   |   |         |        |  
|                                                                        | Loss from divestitures                                                                                            |      |         | 2,105   |   |      |         | 6,497   |   |   |         |        |  
|                                                                        | Insurance related losses (gains)                                                                                  |      |         |        |   |      |         | 3,100   |   |   |         | (8,279  | )
|                                                                        |                                                                                                                   |      |         |         |   |      |         |         |   |   |         |        
|                                                                        |                                                                                                                   |      | 657,887 |         |   |      | 662,949 |         |   |   | 625,278 |        
|                                                                        |                                                                                                                   |      |         |         |   |      |         |         |   |   |         |        
|Operating Income (Loss)                                                 |                                                                                                                   |      | (563    | )       |   |      | 5,194   |         |   |   | 60,148  |        
|                                                                        | Interest expense                                                                                                  |      |         | (35,406 | ) |      |         | (36,812 | ) |   |         | (36,511 | )
|                                                                        | Preferred stock dividends accrued (See
    Notes A and N)                                                         |      |         |        |   |      |         |        |   |   |         | (4,169  | )
|                                                                        | Other income (expense), net                                                                                       |      |         | 3,566   |   |      |         | 1,516   |   |   |         | (1,583  | )
|                                                                        | Write-off of deferred financing costs                                                                             |      |         |        |   |      |         |        |   |   |         | (6,327  | )
|                                                                        |                                                                                                                   |      |         |         |   |      |         |         |   |   |         |        
|Income (Loss) from Continuing Operations Before
    Taxes               |                                                                                                                   |      | (32,403 | )       |   |      | (30,102 | )       |   |   | 11,558  |        
|                                                                        | Income Tax Provision (Benefit)                                                                                    |      |         | (10,171 | ) |      |         | 1,938   |   |   |         | 2,837   |  
|                                                                        |                                                                                                                   |      |         |         |   |      |         |         |   |   |         |        
|Income (Loss) from Continuing Operations                                |                                                                                                                   |      | (22,232 | )       |   |      | (32,040 | )       |   |   | 8,721   |        
|Discontinued Operations:                                                |                                                                                                                   |      |         |         |   |      |         |         |   |   |         |        
|                                                                        | Loss from operations of discontinued businesses,
    net of income tax provision (benefit) of $(745), $663 and $0 |      |         | (1,323  | ) |      |         | (4,792  | ) |   |         | (1,683  | )
|                                                                        | Loss on disposal of discontinued business, net of
    income tax benefit of $6,084 in 2001 and $600 in 2003       |      |         | (30,416 | ) |      |         |        |   |   |         | (4,195  | )
|                                                                        |                                                                                                                   |      |         |         |   |      |         |         |   |   |         |        
|Net Income (Loss)                                                       |                                                                                                                   |      | (53,971 | )       |   |      | (36,832 | )       |   |   | 2,843   |        
|Preferred Stock Dividends Accreted or Accrued
    (See Notes A and N)   |                                                                                                                   |      | (13,282 | )       |   |      | (14,887 | )       |   |   | (12,274 | )      
|                                                                        |                                                                                                                   |      |         |         |   |      |         |         |   |   |         |        
|Loss Applicable to Common Shareholders                                  |                                                                                                                   | $    | (67,253 | )       |   | $    | (51,719 | )       |   | $ | (9,431  | )      
|                                                                        |                                                                                                                   |      |         |         |   |      |         |         |   |   |         |        
|Basic and Diluted Loss per Share Applicable to
    Common Shareholders: |                                                                                                                   |      |         |         |   |      |         |         |   |   |         |        
|                                                                        | Loss from Continuing Operations                                                                                   |      | $       | (36.18  | ) |      | $       | (48.63  | ) |   | $       | (3.66   | )
|                                                                        | Loss from Discontinued Operations                                                                                 |      |         | (32.33  | ) |      |         | (4.97   | ) |   |         | (6.05   | )
|                                                                        |                                                                                                                   |      |         |         |   |      |         |         |   |   |         |        
|                                                                        | Net Loss                                                                                                          |      | $       | (68.51  | ) |      | $       | (53.60  | ) |   | $       | (9.71   | )
|                                                                        |                                                                                                                   |      |         |         |   |      |         |         |   |   |         |        
|Weighted Average Number of Common Shares                                |                                                                                                                   |      | 981,583 |         |   |      | 964,979 |         |   |   | 971,042 |        
|                                                                        |                                                                                                                   |      |         |         |   |      |         |         |   |   |         |        

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

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EAGLEPICHER HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS
EQUITY (DEFICIT)

Years Ended November 30, 2001, 2002 and
2003


(In thousands of dollars)


|                          |                                                                 |        |    |         |  |         |   |            |   |             |   |               |   |          |        |               |   |               |          |         |   |   |        |        |   |   |        |        |   |   |         |         |   |   |         |         |  
|------------------------- | --------------------------------------------------------------- | ------ | -- | ------- |  | ------- | - | ---------- | - | ----------- | - | ------------- | - | -------- | ------ | ------------- | - | ------------- | -------- | ------- | - | - | ------ | ------ | - | - | ------ | ------ | - | - | ------- | ------- | - | - | ------- | ------- | -
|                          |                                                                 |        |    |         |  |         |   |            |   |             |   | Accumulated   |   |          |        | Total         |   |              
|                          |                                                                 |        |    | Class A |  | Class B |   | Additional |   |             |   | Other         |   |          |        | Shareholders |   |              
|                          |                                                                 | Common |    | Common  |  | Common  |   | Paid-In    |   | Accumulated |   | Comprehensive |   | Treasury |        | Equity        |   | Comprehensive
|                          |                                                                 | Stock  |    | Stock   |  | Stock   |   | Capital    |   | Deficit     |   | Income (Loss) |   | Stock    |        | (Deficit)     |   | Income (Loss)
|                          |                                                                 |        |    |         |  |         |   |            |   |             |   |               |   |          |        |               |   |              
|Balance November 30, 2000 |                                                                 | $      |   |         |  | $       | 6 |            |   | $           | 4 |               |   | $        | 99,991 |               |   | $             | (56,140  | )       |   | $ | (2,293 | )      |   | $ | (2,371 | )      |   | $ | 39,197  |         |   |   |         |        
|                          | Net loss                                                        |        |    |        |  |         |   |           |   |             |   |              |   |          |        |              |   |               |          | (53,971 | ) |   |        |       |   |   |        |       |   |   |         | (53,971 | ) |   | $       | (53,971 | )
|                          | Foreign currency translation, net of tax of $134                |        |    |        |  |         |   |           |   |             |   |              |   |          |        |              |   |               |          |        |   |   |        | (248   | ) |   |        |       |   |   |         | (248    | ) |   |         | (248    | )
|                          | Gains (losses) on hedging derivatives, net of tax
    of $1,718 |        |    |        |  |         |   |           |   |             |   |              |   |          |        |              |   |               |          |        |   |   |        | (3,189 | ) |   |        |       |   |   |         | (3,189  | ) |   |         | (3,189  | )
|                          | Amendment to capital structure                                  |        |    | 10      |  |         |   | (6         | ) |             |   | (4            | ) |          |        |              |   |               |          |        |   |   |        |       |   |   |        |       |   |   |         |        |   |   |         |         |  
|                          | Purchase of treasury stock                                      |        |    |        |  |         |   |           |   |             |   |              |   |          |        |              |   |               |          |        |   |   |        |       |   |   |        | (2,162 | ) |   |         | (2,162  | ) |   |         |         |  
|                          | Preferred stock dividend accretion                              |        |    |        |  |         |   |           |   |             |   |              |   |          |        |              |   |               |          | (13,282 | ) |   |        |       |   |   |        |       |   |   |         | (13,282 | ) |   |         |         |  
|                          |                                                                 |        |    |         |  |         |   |            |   |             |   |               |   |          |        |               |   |               |          |         |   |   |        |        |   |   |        |        |   |   |         |         |   |   |         |        
|Balance November 30, 2001 |                                                                 |        | 10 |         |  |         |  |            |   |             |  |               |   |          | 99,991 |               |   |               | (123,393 | )       |   |   | (5,730 | )      |   |   | (4,533 | )      |   |   | (33,655 | )       |   | $ | (57,408 | )      
|                          |                                                                 |        |    |         |  |         |   |            |   |             |   |               |   |          |        |               |   |               |          |         |   |   |        |        |   |   |        |        |   |   |         |         |   |   |         |        
|                          | Net loss                                                        |        |    |        |  |         |   |           |   |             |   |              |   |          |        |              |   |               |          | (36,832 | ) |   |        |       |   |   |        |       |   |   |         | (36,832 | ) |   |         | (36,832 | )
|                          | Foreign currency translation, net of tax of ($624)              |        |    |        |  |         |   |           |   |             |   |              |   |          |        |              |   |               |          |        |   |   |        | 1,159  |   |   |        |       |   |   |         | 1,159   |   |   |         | 1,159   |  
|                          | Gains (loss) on hedging derivatives, net of tax
    of ($105)   |        |    |        |  |         |   |           |   |             |   |              |   |          |        |              |   |               |          |        |   |   |        | 195    |   |   |        |       |   |   |         | 195     |   |   |         | 195     |  
|                          | Purchase of treasury stock                                      |        |    |        |  |         |   |           |   |             |   |              |   |          |        |              |   |               |          |        |   |   |        |       |   |   |        | (3,558 | ) |   |         | (3,558  | ) |   |         |         |  
|                          | Preferred stock dividend accretion                              |        |    |        |  |         |   |           |   |             |   |              |   |          |        |              |   |               |          | (14,887 | ) |   |        |       |   |   |        |       |   |   |         | (14,887 | ) |   |         |         |  
|                          |                                                                 |        |    |         |  |         |   |            |   |             |   |               |   |          |        |               |   |               |          |         |   |   |        |        |   |   |        |        |   |   |         |         |   |   |         |        
|Balance November 30, 2002 |                                                                 |        | 10 |         |  |         |  |            |   |             |  |               |   |          | 99,991 |               |   |               | (175,112 | )       |   |   | (4,376 | )      |   |   | (8,091 | )      |   |   | (87,578 | )       |   | $ | (35,478 | )      
|                          |                                                                 |        |    |         |  |         |   |            |   |             |   |               |   |          |        |               |   |               |          |         |   |   |        |        |   |   |        |        |   |   |         |         |   |   |         |        
|                          | Net income                                                      |        |    |        |  |         |   |           |   |             |   |              |   |          |        |              |   |               |          | 2,843   |   |   |        |       |   |   |        |       |   |   |         | 2,843   |   |   |         | 2,843   |  
|                          | Foreign currency translation, net of tax of
    ($2,012)        |        |    |        |  |         |   |           |   |             |   |              |   |          |        |              |   |               |          |        |   |   |        | 3,909  |   |   |        |       |   |   |         | 3,909   |   |   |         | 3,909   |  
|                          | Gains (loss) on hedging derivatives, net of tax
    of ($825)   |        |    |        |  |         |   |           |   |             |   |              |   |          |        |              |   |               |          |        |   |   |        | 1,983  |   |   |        |       |   |   |         | 1,983   |   |   |         | 1,983   |  
|                          | Issuance of treasury stock                                      |        |    |        |  |         |   |           |   |             |   |              |   |          |        | (7,181        | ) |               |          |        |   |   |        |       |   |   |        | 8,091  |   |   |         | 910     |   |   |         |        |  
|                          | Preferred stock dividend accrual and accretion                  |        |    |        |  |         |   |           |   |             |   |              |   |          |        |              |   |               |          | (12,274 | ) |   |        |       |   |   |        |       |   |   |         | (12,274 | ) |   |         |        |  
|                          |                                                                 |        |    |         |  |         |   |            |   |             |   |               |   |          |        |               |   |               |          |         |   |   |        |        |   |   |        |        |   |   |         |         |   |   |         |        
|Balance November 30, 2003 |                                                                 | $      | 10 |         |  | $       |  |            |   | $           |  |               |   | $        | 92,810 |               |   | $             | (184,543 | )       |   | $ | 1,516  |        |   | $ |       |        |   | $ | (90,207 | )       |   | $ | 8,735   |        
|                          |                                                                 |        |    |         |  |         |   |            |   |             |   |               |   |          |        |               |   |               |          |         |   |   |        |        |   |   |        |        |   |   |         |         |   |   |         |        

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

45



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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH
FLOWS

Years Ended November 30, 2001, 2002 and
2003


(In thousands of dollars)


|                                                                            |                                                                                                            |                                                                        |                                                                                                                        |         |         |        |        |         |         |        |        |          |         |         |  
|--------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------- | ------- | ------- | ------ | ------ | ------- | ------- | ------ | ------ | -------- | ------- | ------- | -
|                                                                            |                                                                                                            | 2001                                                                   |                                                                                                                        | 2002    |         | 2003  
|                                                                            |                                                                                                            |                                                                        |                                                                                                                        |         |         |       
|Cash Flows From Operating Activities:                                       |                                                                                                            |                                                                        |                                                                                                                        |         |         |        |        |         |         |        |        |         
|                                                                            | Net income (loss)                                                                                          |                                                                        | $                                                                                                                      | (53,971 | )       |        | $      | (36,832 | )       |        | $      | 2,843    |        
|                                                                            | Adjustments to reconcile net income
    (loss) to net cash provided by (used in) operating
    activities: |                                                                        |                                                                                                                        |         |         |        |        |         |         |        |        |          |        
|                                                                            |                                                                                                            | Depreciation and amortization                                          |                                                                                                                        |         | 60,703  |        |        |         | 65,033  |        |        |          | 50,786  |        
|                                                                            |                                                                                                            | Preferred stock dividends accrued (See
    Notes A and N)              |                                                                                                                        |         |        |        |        |         |        |        |        |          | 4,169   |        
|                                                                            |                                                                                                            | Loss on disposal for discontinued operations                           |                                                                                                                        |         | 30,416  |        |        |         |        |        |        |          | 4,195   |        
|                                                                            |                                                                                                            | Loss from divestitures                                                 |                                                                                                                        |         | 2,105   |        |        |         | 6,497   |        |        |          |        |        
|                                                                            |                                                                                                            | Insurance related losses (gains)                                       |                                                                                                                        |         |        |        |        |         | 3,100   |        |        |          | (8,279  | )      
|                                                                            |                                                                                                            | Write-off of deferred financing costs                                  |                                                                                                                        |         |        |        |        |         |        |        |        |          | 6,327   |        
|                                                                            |                                                                                                            | Deferred income taxes                                                  |                                                                                                                        |         | (9,344  | )      |        |         | 6,147   |        |        |          | (79     | )      
|                                                                            |                                                                                                            | Changes in assets and liabilities, net of effects
    of divestitures: |                                                                                                                        |         |         |        |        |         |         |        |        |          |         |        
|                                                                            |                                                                                                            |                                                                        | Sale of receivables, net (See Note K)                                                                                  |         |         |       |        |         |         | 46,475 |        |          |         | (46,475 | )
|                                                                            |                                                                                                            |                                                                        | Receivables                                                                                                            |         |         | (3,169 | )      |         |         | (857   | )      |          |         | 6,576   |  
|                                                                            |                                                                                                            |                                                                        | Inventories                                                                                                            |         |         | 4,674  |        |         |         | (1,463 | )      |          |         | (7,701  | )
|                                                                            |                                                                                                            |                                                                        | Costs and estimated earnings in excess of
    billings and billings in excess of costs and estimated earnings,
    net |         |         | (412   | )      |         |         | (7,342 | )      |          |         | (10,337 | )
|                                                                            |                                                                                                            |                                                                        | Accounts payable                                                                                                       |         |         | 27,214 |        |         |         | (276   | )      |          |         | 4,242   |  
|                                                                            |                                                                                                            |                                                                        | Accrued liabilities                                                                                                    |         |         | 3,694  |        |         |         | (7,343 | )      |          |         | (14,467 | )
|                                                                            |                                                                                                            |                                                                        | Proceeds from insurance                                                                                                |         |         |       |        |         |         |       |        |          |         | 7,848   |  
|                                                                            |                                                                                                            |                                                                        | Other, net                                                                                                             |         |         | (1,803 | )      |         |         | 2,729  |        |          |         | (606    | )
|                                                                            |                                                                                                            |                                                                        |                                                                                                                        |         |         |        |        |         |         |        |        |         
|                                                                            | Net cash provided by (used in) operating
    activities                                                    |                                                                        |                                                                                                                        | 60,107  |         |        |        | 75,868  |         |        |        | (958     | )      
|                                                                            |                                                                                                            |                                                                        |                                                                                                                        |         |         |        |        |         |         |        |        |         
|Cash Flows From Investing Activities:                                       |                                                                                                            |                                                                        |                                                                                                                        |         |         |        |        |         |         |        |        |         
|                                                                            | Proceeds from sales of divisions                                                                           |                                                                        |                                                                                                                        |        |         |        |        | 10,027  |         |        |        |         |        
|                                                                            | Proceeds from the sale of property and equipment,
    and other, net                                       |                                                                        |                                                                                                                        |        |         |        |        | 639     |         |        |        | 238      |        
|                                                                            | Capital expenditures                                                                                       |                                                                        |                                                                                                                        | (34,184 | )       |        |        | (16,314 | )       |        |        | (16,269  | )      
|                                                                            | Purchase of intangibles (See Note H)                                                                       |                                                                        |                                                                                                                        |        |         |        |        |        |         |        |        | (3,172   | )      
|                                                                            | Investments in unconsolidated subsidiaries (See
    Note H)                                                |                                                                        |                                                                                                                        |        |         |        |        | (2,299  | )       |        |        | (4,426   | )      
|                                                                            | Other, net                                                                                                 |                                                                        |                                                                                                                        | (247    | )       |        |        |        |         |        |        |         |        
|                                                                            |                                                                                                            |                                                                        |                                                                                                                        |         |         |        |        |         |         |        |        |         
|                                                                            |                                                                                                            | Net cash used in investing activities                                  |                                                                                                                        |         | (34,431 | )      |        |         | (7,947  | )      |        |          | (23,629 | )      
|                                                                            |                                                                                                            |                                                                        |                                                                                                                        |         |         |        |        |         |         |        |        |         
|Cash Flows From Financing Activities:                                       |                                                                                                            |                                                                        |                                                                                                                        |         |         |        |        |         |         |        |        |         
|                                                                            | Reduction of long-term debt                                                                                |                                                                        |                                                                                                                        | (18,946 | )       |        |        | (32,527 | )       |        |        | (19,000  | )      
|                                                                            | Redemption of senior subordinated notes                                                                    |                                                                        |                                                                                                                        |        |         |        |        |        |         |        |        | (210,500 | )      
|                                                                            | Net borrowings (repayments) under revolving
    credit agreements                                          |                                                                        |                                                                                                                        | 6,229   |         |        |        | (34,736 | )       |        |        | (121,500 | )      
|                                                                            | Issuance (acquisition) of treasury stock                                                                   |                                                                        |                                                                                                                        | (2,162  | )       |        |        | (159    | )       |        |        | 910      |        
|                                                                            | Proceeds from the New Credit Agreement and Senior
    Unsecured Notes                                      |                                                                        |                                                                                                                        |        |         |        |        |        |         |        |        | 398,000  |        
|                                                                            | Payment of deferred financing costs                                                                        |                                                                        |                                                                                                                        |        |         |        |        |        |         |        |        | (10,844  | )      
|                                                                            | Other, net                                                                                                 |                                                                        |                                                                                                                        | (872    | )       |        |        |        |         |        |        |         |        
|                                                                            |                                                                                                            |                                                                        |                                                                                                                        |         |         |        |        |         |         |        |        |         
|                                                                            |                                                                                                            | Net cash (used in) provided by financing
    activities                |                                                                                                                        |         | (15,751 | )      |        |         | (67,422 | )      |        |          | 37,066  |        
|                                                                            |                                                                                                            |                                                                        |                                                                                                                        |         |         |        |        |         |         |        |        |         
|Net Cash Provided by Discontinued Operations                                |                                                                                                            |                                                                        | 7,476                                                                                                                  |         |         |        | 5,244  |         |         |        | 17,398 |         
|                                                                            |                                                                                                            |                                                                        |                                                                                                                        |         |         |        |        |         |         |        |        |         
|Effect of Exchange Rates on Cash                                            |                                                                                                            |                                                                        | (248                                                                                                                   | )       |         |        | 1,159  |         |         |        | 5,921  |         
|                                                                            |                                                                                                            |                                                                        |                                                                                                                        |         |         |        |        |         |         |        |        |         
|Net Increase in Cash and Cash Equivalents                                   |                                                                                                            |                                                                        | 17,153                                                                                                                 |         |         |        | 6,902  |         |         |        | 35,798 |         
|Cash and Cash Equivalents, beginning of year                                |                                                                                                            |                                                                        | 7,467                                                                                                                  |         |         |        | 24,620 |         |         |        | 31,522 |         
|                                                                            |                                                                                                            |                                                                        |                                                                                                                        |         |         |        |        |         |         |        |        |         
|Cash and Cash Equivalents, end of year                                      |                                                                                                            | $                                                                      | 24,620                                                                                                                 |         |         | $      | 31,522 |         |         | $      | 67,320 |         
|                                                                            |                                                                                                            |                                                                        |                                                                                                                        |         |         |        |        |         |         |        |        |         
|Supplemental Disclosure of Non-Cash Investing and
    Financing Activities: |                                                                                                            |                                                                        |                                                                                                                        |         |         |        |        |         |         |        |        |         
|                                                                            | Equipment acquisitions financed by capital leases                                                          |                                                                        | $                                                                                                                      |        |         |        | $      |        |         |        | $      | 1,105    |        
|                                                                            |                                                                                                            |                                                                        |                                                                                                                        |         |         |        |        |         |         |        |        |         
|                                                                            | Equipment acquired by accounts payable                                                                     |                                                                        | $                                                                                                                      |        |         |        | $      |        |         |        | $      | 1,854    |        
|                                                                            |                                                                                                            |                                                                        |                                                                                                                        |         |         |        |        |         |         |        |        |         
|Supplemental Cash Flow Information:                                         |                                                                                                            |                                                                        |                                                                                                                        |         |         |        |        |         |         |        |        |         
|                                                                            | Interest paid                                                                                              |                                                                        | $                                                                                                                      | 38,419  |         |        | $      | 34,585  |         |        | $      | 30,812   |        
|                                                                            |                                                                                                            |                                                                        |                                                                                                                        |         |         |        |        |         |         |        |        |         
|                                                                            | Income taxes refunded, net                                                                                 |                                                                        | $                                                                                                                      | 4,500   |         |        | $      | 4,036   |         |        | $      | 3,112    |        
|                                                                            |                                                                                                            |                                                                        |                                                                                                                        |         |         |        |        |         |         |        |        |         

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

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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003




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

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

We are a diversified manufacturer of advanced
technology and industrial products that are used in the
automotive, defense, aerospace, environmental testing, medical
implant devices, pharmaceutical services, nuclear energy and
food and beverage industries, in addition to other industrial
arenas. Our business consists of three operating segments: the
Automotive Segment, the Technologies Segment and the Filtration
and Minerals Segment.

Our Automotive Segment is operated under two
separate divisions, the Hillsdale division and the Wolverine
division. The Hillsdale division produces noise, vibration and
harshness (NVH) dampers for engine crankshafts and
drivelines, yokes and flanges, transmission and engine pumps,
automatic transmission filtration products, chassis corners and
knuckle assemblies and other precision machined components. The
Wolverine division produces rubber-coated materials and gaskets
for automotive and non-automotive applications.

Our Technologies Segment develops and
commercializes advanced power systems for defense, aerospace and
commercial applications; produces boron isotopes for nuclear
radiation containment; supplies ultra-clean scientific
containers for pharmaceutical and environmental testing; and
provides contract pharmaceutical services.

Our Filtration and Minerals Segment mines,
processes and markets diatomaceous earth and perlite for use as
a filtration aid, absorbent, performance additive and soil
amendment.



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



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

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



| |                                      
| | -------------------------------------
| | Consolidated Financial
    Statements

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



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

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



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

We recognize revenue when persuasive evidence of
an arrangement exists, delivery has occurred, the fee is fixed
and determinable, and collectibility is reasonably assured.
These conditions are met at the time we ship our products to our
customers. Net Sales and Cost of Products Sold include
transportation costs that are billed

47



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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


to customers. For certain products sold under
fixed-price contracts and subcontracts with various United
States Government agencies and aerospace and defense
contractors, we utilize the percentage-of-completion method of
accounting. When we use the percentage-of-completion method, we
measure our percent complete based on total costs incurred to
date as compared to our best estimate of total costs to be
incurred.

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

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



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

Our concentrations of credit risk consist
primarily of cash and cash equivalents, trade accounts
receivable, retained interest in EaglePicher Funding
Corporation, and sales concentrations with certain customers. As
part of our ongoing control procedures, we monitor
concentrations of credit risk associated with financial
institutions with which we conduct business. Credit risk with
financial institutions is considered minimal as we utilize only
high quality financial institutions. We conduct periodic credit
evaluations of our customers financial condition and
generally do not require collateral. Our customer base includes
all significant automotive manufacturers and their first tier
suppliers in North America and Europe. Although we are directly
affected by the well-being of the automotive industry, we do not
believe significant credit risk existed at November 30,
2003. In addition, during 2002, we formed EPFC, an off
balance-sheet qualifying special-purpose entity, to sell an
interest in certain receivables. See Note K for a
discussion of EPFC. We believe that EPFC assists in the
management of our credit risk related to trade receivables as it
permits us to sell an interest in our receivables on a
non-recourse basis.

Net sales to our largest customer were
$91.0 million in 2001, $84.2 million in 2002 and
$79.0 million in 2003. No other customer accounted for 10%
or more of consolidated sales for any period presented.



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

Our financial instruments consist primarily of
investments in cash and cash equivalents, receivables and
certain other assets, as well as obligations under accounts
payable, long-term debt and preferred stock. The carrying values
of these financial instruments, with the exception of long-term
debt and preferred stock, approximate their fair value due to
their short-term nature. See Note M for a discussion of the
fair value of the long-term debt and Note N for a
discussion of the fair value of preferred stock.



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

We account for derivative financial instruments
under SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, as amended by SFAS
No. 138, Accounting for Certain Derivative
Instruments and Certain Hedging Activities  an
Amendment of SFAS 133. Under this guidance, all derivative
instruments are recognized as assets or liabilities at their
fair value on the balance sheet. On the date a derivative
contract is entered into, we designate the derivative as either
a) a hedge of the fair value of a recognized asset or liability
(a fair value hedge), b) a hedge of a forecasted
transaction or as a hedge of the variability of cash flows to be
received or paid related to a recognized asset or liability (a
cash flow hedge), or c) as a hedge of a net investment in a
foreign operation (a net investment hedge). Changes in the fair
value of

48



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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


derivatives are either recognized in the income
statement or as a component of Accumulated Other Comprehensive
Income (Loss) in the balance sheet, depending on whether the
derivative is being used to hedge changes in fair value or cash
flows. The ineffective portion of derivatives that are
designated as hedges is recorded in the consolidated statements
of income. From time to time, we enter into interest rate swaps
and foreign currency forward exchange contracts to manage our
interest costs and foreign currency exchange rate exposures.



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

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



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

Inventories are stated at the lower of cost or
market using the first-in, first-out (FIFO) method. Until
2002, a substantial portion of domestic inventories were
accounted for at cost determined on a last-in, first-out
(LIFO) basis. In 2002, our domestic operations changed to
the FIFO method. This change in accounting principle was made to
provide a better matching of revenue and expenses and to be
consistent with prevalent industry practice. This accounting
change was not material to the financial statements on an annual
or quarterly basis, and accordingly, no retroactive restatement
of prior financial statements was made. We write down
inventories for estimated obsolescence or unmarketable inventory
to estimated market value based upon assumptions about future
demand and market conditions.



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

We record our investment in property, plant and
equipment at cost. We provide for depreciation on property,
plant and equipment using the straight-line method over the
estimated useful lives of the assets which are generally 20 to
30 years for buildings, 3 to 10 years for machinery
and equipment and 3 to 5 years for software. Leasehold
improvements are depreciated over the shorter of the lease term
or the estimated life of the improvement. Improvements which
extend the useful life of property are capitalized, while repair
and maintenance costs are charged to operations as incurred.
Property, plant and equipment acquired in the acquisition of a
business, are stated at fair value, based on independent
appraisal, as of the date of the acquisition.



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

Goodwill represents the excess of purchase price
paid over the fair value of assets acquired and liabilities
assumed in business combinations. This amount had been amortized
through November 30, 2002 on a straight-line basis over 15
years. The recoverability of the asset is evaluated periodically
as events or circumstances indicate a possible inability to
recover its carrying value. Effective December 1, 2002, we
adopted SFAS No. 142, Goodwill and Other Intangible
Assets which addresses goodwill and other intangible
assets that have indefinite useful lives and, as such,
prescribes that these assets will not be amortized, but rather
tested, at least annually, for impairment. This pronouncement
also provides specific guidance on performing the annual
impairment test for goodwill and intangibles with indefinite
lives. Under this new accounting standard, we no longer amortize
our goodwill and are required to complete an annual impairment
test. We have determined that we have six reporting units, as
defined in SFAS No. 142, within our three reportable
business segments. We completed our initial impairment test
required by this accounting

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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


standard and did not recognize an impairment
charge related to the adoption of this accounting standard in
2003.



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

We capitalize costs incurred during the
pre-production phase of new product launches for goods that will
be sold over future periods as specified by the customer,
primarily in our Automotive Segment. These costs consist
primarily of product development and validation costs. The costs
are amortized into Depreciation and Amortization over the life
of the related programs. The unamortized balance is included
Prepaid Expenses and Other Assets or Other Assets, net,
(Long-term) in the accompanying balance sheets.



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

We capitalize costs incurred to design and
develop tools for customers. We are typically reimbursed for
these costs when volume production commences at which point we
expense the associated costs. If the reimbursement is over the
life of the program, we amortize these costs into Depreciation
and Amortization expense. The unamortized balance is included
Prepaid Expenses and Other Assets or Other Assets, net,
(Long-term) in the accompanying balance sheets.



| |                         
| | ------------------------
| | Deferred Financing Costs

Deferred financing costs are amortized over the
term of the related debt using the effective interest method.
Deferred financing costs are included in Other Assets, net, in
the accompanying balance sheets.



| |            
| | -----------
| | Intangibles

Intangibles consist primarily of licensed
intellectual property. We record intangibles at cost and
amortize them using the straight-line method over their
estimated useful lives. Intangibles are included in Other
Assets, net, in the accompanying balance sheets



| |                   
| | ------------------
| | Deferred Stripping

In our Filtration and Minerals Segment, we
generally charge our mining costs to Cost of Products Sold as
sales occur. However, we defer and amortize certain mining costs
on a units-of-production basis over the estimated life of the
particular section of a mine, based on estimated recoverable
cubic yards of ore in that section. These mining costs, which
are commonly referred to as deferred stripping
costs, are incurred in mining activities that are normally
associated with the removal of waste rock. Deferred stripping
costs are included in Other Assets, net in our accompanying
balance sheets.



| |                                                        
| | -------------------------------------------------------
| | Evaluation of Long-Lived Assets with
    Definite Lives

In accordance with Financial Accounting Standards
Board (FASB) Statement of Financial Accounting
Standards (SFAS) No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets, we
evaluate the recoverability of property, plant and equipment and
intangibles with definite lives not held for sale by comparing
the carrying amount of the asset or group of assets against the
estimated undiscounted future cash flows expected to result from
the use of the asset or group of assets and their eventual
disposition. If the undiscounted cash flows are less than the
carrying value of the asset or group of assets being evaluated,
an impairment loss is recorded. These cash flows are evaluated
for objectivity by using weighted probability techniques and
also comparisons of past performance against projections. Assets
may also be evaluated by identifying independent market values.
The loss is measured as the difference between the fair value
and carrying value of the asset or group of assets being
evaluated. Assets to be disposed of are reported at the lower

50



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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


of the carrying amount or the fair value less
cost to sell. The estimated fair value is based on the best
information available under the circumstances, including prices
for similar assets or the results of valuation techniques,
including the present value of expected future cash flows using
a discount rate commensurate with the risks involved.



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

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



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

Research and development expenditures are
generally included in Cost of Products Sold as incurred.
Research and development expense was $10.4 million in 2001,
$9.8 million in 2002 and $13.2 million in 2003. These
amounts were offset by revenue recognized from customer
sponsored research activities of $9.3 million in 2001,
$8.8 million in 2002, and $11.0 million in 2003.



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

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



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

During 2003, we reclassified certain immaterial
amounts in our 2001 and 2002 financial statements to conform to
our 2003 presentation.



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

The calculation of net income (loss) per
share is based upon the average number of common shares
outstanding. No potentially dilutive shares were outstanding
during the three year period ended November 30, 2003.



| |                                         
| | ----------------------------------------
| | Recently Issued Accounting
    Standards

In September 2001, the FASB issued SFAS
No. 144, Accounting for the Impairment or Disposal of
Long Lived Assets, which superceded SFAS No. 121,
Accounting for the Impairment of Long Lived Assets and for
Long Lived Assets to Be Disposed of. The primary
difference is that goodwill and certain intangibles with
indefinite lives have been removed from the scope of SFAS
No. 144, as they are covered by SFAS No. 142. It also
broadens the presentation of discontinued operations to include
a component of an entity rather than a segment of a business. A
component of an entity comprises operations and cash flows that
can clearly be distinguished operationally and for financial
accounting purposes from the rest of the entity. We adopted SFAS
No. 144 on December 1, 2002 and accounted for the sale
of our Hillsdale U.K. Automotive operation and the sale of
certain assets of our Germanium-based business in our
Technologies Segment, as discussed in Note J, in accordance
with this statement.

In June 2002, the FASB issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal
Activities, which is effective for exit or disposal
activities initiated after December 31, 2002. SFAS
No. 146 addresses financial accounting and reporting for
costs associated with exit or disposal activities and nullifies
Emerging Issues Task Force (EITF) Issue
No. 94-3, Liability Recognition for Certain Employee

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EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a
Restructuring). The adoption of this statement did not
have a material impact on our financial condition or results of
operations.

In November 2002, the FASB issued Interpretation
No. 45 (FIN 45) Guarantors
Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN 45
elaborates on the existing disclosure requirements for most
guarantees, including loan guarantees. It also clarifies that at
the time a company issues a guarantee, the company must
recognize an initial liability for the fair value, or market
value, of the obligations it assumes under that guarantee.
However, the provisions related to recognizing a liability at
inception of the guarantee for the fair value of the
guarantors obligations does not apply to product
warranties or to guarantees accounted for as derivatives. The
initial recognition and measurement provisions apply on a
prospective basis to guarantees issued or modified after
December 31, 2002. The disclosure requirements of
FIN 45 are effective for financial statements of interim or
annual periods ending after December 15, 2002. FIN 45
does not affect the accounting for guarantees issued prior to
the effective date, unless the guarantee is modified subsequent
to December 31, 2002. We adopted the disclosure
requirements on December 1, 2002, and the initial
recognition and measurement provisions in our February 28,
2003 financial statements. The adoption of this interpretation
did not have a material impact on our financial condition or
results of operations.

In November 2002, the EITF issued
EITF 00-21, Revenue Arrangements with Multiple
Deliverables. EITF 00-21 prescribes a method to account
for contracts that have multiple elements or deliverables. It
provides guidance on how to allocate the value of a contract to
its different deliverables, as well as guidance on when to
recognize revenue allocated to each deliverable over its
performance period. We adopted EITF 00-21 during the fourth
quarter of our fiscal year 2003. The adoption of EITF 00-21
did not have a material impact on our financial condition or
results of operations.

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

On April 30, 2003, the FASB issued SFAS
No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. This
statement amends and clarifies accounting for derivative
instruments, including certain derivative instruments embedded
in other contracts, and for hedging activities under SFAS
No. 133. This statement is effective for contracts entered
into or modified after June 30, 2003, for hedging
relationships designated after June 30, 2003, and to
certain preexisting contracts. We adopted SFAS No. 149 on a
prospective basis at its effective date on July 1, 2003.
The adoption of this statement did not have a material impact on
our financial condition or results of operations.

In May 2003, the FASB issued SFAS No. 150,
Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity. SFAS
No. 150 changes the accounting for certain financial
instruments that, under previous guidance, issuers could account
for as equity and requires that those instruments be classified
as liabilities (or assets in certain circumstances) in balance
sheets. This statement

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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


affects the issuers accounting for three
types of freestanding financial instruments including
(1) mandatorily redeemable shares that are required to be
redeemed at a specified or determinable date or upon an event
certain to occur, (2) put options and forward purchase
contracts, which involves financial instruments embodying an
obligation that the issuer must or could choose to settle by
issuing a variable number of its shares or other equity
instruments based solely on something other than the
issuers own equity shares, and (3) certain
obligations that can be settled with shares, the monetary value
of which is (i) fixed, tied solely or predominantly to a
variable such as a market index, or (ii) varies inversely
with the value of the issuers shares. For public
companies, SFAS No. 150 became effective at the beginning
of the first interim period beginning after June 15, 2003.
As a result of SFAS No. 150, effective September 1,
2003 we reclassified the current redemption value and unpaid
dividends on preferred stock to long-term liabilities in our
consolidated balance sheet and the accrual of dividends payable
for the period September 1, 2003 through November 30,
2003 has been recorded as a component of non-operating expenses
in our consolidated statements of income.

In December 2003, the FASB issued FASB Statement
No. 132 (Revised 2003), Employers Disclosures
about Pensions and Other Postretirement Benefits. This
standard increases the existing disclosure requirements by
requiring more details about pension plan assets, benefit
obligations, cash flows, benefit costs and related information.
We will be required to segregate plan assets by category, such
as debt, equity and real estate, and to provide certain expected
rates of return and other informational disclosures. We will be
required to adopt the disclosure requirements of SFAS
No. 132® when we issue our November 30, 2004
financial statements, and we will be required to disclose
various elements of pension and postretirement benefit costs in
interim-period financial statements for quarters beginning after
December 15, 2003 (our second quarter of fiscal 2004 ending
May 31, 2004).

C.     Revenue
Recognition

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

|                                                   |  |      |          |      |  |   |          |  
|-------------------------------------------------- |  | ---- | -------- | ---- |  | - | -------- | -
|                                                   |  | 2002 |          | 2003
|                                                   |  |      |          |     
|Costs incurred on uncompleted contracts            |  | $    | 115,476  |      |  | $ | 167,091  |  
|Estimated earnings                                 |  |      | 21,664   |      |  |   | 45,606   |  
|                                                   |  |      |          |      |  |   |          |  
|                                                   |  |      | 137,140  |      |  |   | 212,697  |  
|Less: billings to date                             |  |      | (121,142 | )    |  |   | (186,362 | )
|                                                   |  |      |          |      |  |   |          |  
|                                                   |  | $    | 15,998   |      |  | $ | 26,335   |  
|                                                   |  |      |          |      |  |   |          |  
|Costs and estimated earnings in excess of billings |  | $    | 16,942   |      |  | $ | 28,433   |  
|Billings in excess of costs and estimated earnings |  |      | (944     | )    |  |   | (2,098   | )
|                                                   |  |      |          |      |  |   |          |  
|                                                   |  | $    | 15,998   |      |  | $ | 26,335   |  
|                                                   |  |      |          |      |  |   |          |  

We provided for estimated losses on uncompleted
contracts of $0.5 million at November 30, 2002 and
$0.2 million at November 30, 2003.

D.     Derivative
Financial Instruments

Periodically, we use interest rate swap contracts
to adjust the proportion of our total debt that is subject to
variable interest rates. Under our interest rate swap contracts,
we agree to pay an amount equal to a specified fixed-rate of
interest for a certain notional amount and receive in return an
amount equal to a variable-rate. The notional amounts of the
contract are not exchanged. No other cash payments are made
unless the contract is terminated prior to maturity. Although no
collateral is held or exchanged for these contracts, interest
rate swap contracts are entered into with a major financial
institution in order to minimize our

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EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


counterparty credit risk. These interest rate
swap contracts are designated as cash flow hedges against
changes in the amount of future cash flows associated with our
interest payments on variable-rate debt. The effect of this
accounting on our operating results is that interest expense on
a portion of variable-rate debt being hedged is generally
recorded based on fixed interest rates. At November 30,
2002 and 2003, we had interest rate swap contracts to pay
fixed-rates of interest (average rate of 5.68%) on
$90.0 million notional amount of indebtedness. The
$90.0 million notional amount of outstanding contracts
matures in December 2003. As of November 30, 2002, we had
$2.9 million, net of tax, and at November 30, 2003, we
had $0.7 million, net of tax, in unrealized losses which
were included in Accumulated Other Comprehensive Income (Loss)
in our balance sheets which represent the fair values of the
interest rate swap agreements as of those dates. The fair value
of interest rate swap contracts is based on quoted market prices
and third-party provided calculations, which reflect the present
values of the difference between estimated future variable-rate
receipts and future fixed-rate payments.

We use foreign currency forward exchange
contracts to hedge the risk of cash flow fluctuations due to
changes in exchange rates on sales denominated in foreign
currencies. As part of our overall strategy to manage the level
of exposure to the risk of foreign currency exchange rate
fluctuations, we hedge a portion of our foreign currency
exchange rate exposures anticipated over the next twelve-months.
To hedge this exposure, we used foreign currency forward
exchange contracts that generally have maturities that
approximate the timing of the forecasted transactions. Foreign
currency forward exchange contracts are placed with a number of
major financial institutions in order to minimize our
counterparty credit risk. We record these foreign currency
forward exchange contracts at fair value in our balance sheets
and the related unrealized gains or losses on these contracts,
net of tax, are recorded as a component of Accumulated Other
Comprehensive Income (Loss) in our balance sheets. These
unrealized gains and losses are recognized in the income
statement in the period in which the related transactions being
hedged are recognized in the income statement. As of
November 30, 2002, we had outstanding foreign currency
forward exchange contracts with an aggregate notional amount of
$13.5 million. Net unrealized losses on these contracts,
based on prevailing financial market information, as of
November 30, 2002 were $0.1 million, net of tax, and
were included in Accumulated Other Comprehensive Income (Loss)
in our balance sheets. As of November 30, 2003, we had
outstanding foreign currency forward exchange contracts with an
aggregate notional amount of $7.1 million, which represents
approximately 19% of our net foreign currency exchange rate
exposures for fiscal 2004 based on net sales. Net unrealized
losses on these contracts, based on prevailing financial market
information, as of November 30, 2003, were
$0.5 million, net of tax, and were included in Accumulated
Other Comprehensive Income (Loss) in our balance sheets. During
2001, we recognized $0.7 million in gains from foreign
currency hedge transactions, which were offset by losses of
$0.2 million. During 2002, we recognized $0.1 million
in gains from foreign currency hedge transactions, which were
offset by losses of $1.2 million. During 2003, we
recognized no gross gains from currency hedge transactions and
$3.2 million of gross losses. The fair value of foreign
currency hedge contracts represents the amount required to enter
into offsetting contracts with similar remaining maturities
based on quoted market prices. Subsequent to November 30,
2003, we entered into additional foreign currency forward
exchange contracts bringing the aggregate notional amount of
forward contracts to $39.9 million, which represents
approximately 95% of our net foreign currency exchange rate
exposures for fiscal 2004 based on net sales.

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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


E.     Inventories

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

|                           |  |      |        |      |  |   |        | 
|-------------------------- |  | ---- | ------ | ---- |  | - | ------ | 
|                           |  | 2002 |        | 2003
|                           |  |      |        |     
|Raw materials and supplies |  | $    | 24,522 |      |  | $ | 24,441 | 
|Work-in-process            |  |      | 10,680 |      |  |   | 13,784 | 
|Finished goods             |  |      | 10,302 |      |  |   | 14,980 | 
|                           |  |      |        |      |  |   |        | 
|                           |  | $    | 45,504 |      |  | $ | 53,205 | 
|                           |  |      |        |      |  |   |        | 

F.     Property,
Plant and Equipment, Net

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

|                               |  |      |          |      |  |   |          |  
|------------------------------ |  | ---- | -------- | ---- |  | - | -------- | -
|                               |  | 2002 |          | 2003
|                               |  |      |          |     
|Land and land improvements     |  | $    | 13,834   |      |  | $ | 13,305   |  
|Buildings                      |  |      | 61,702   |      |  |   | 65,332   |  
|Machinery and equipment        |  |      | 253,472  |      |  |   | 246,965  |  
|Construction in progress       |  |      | 10,733   |      |  |   | 7,610    |  
|                               |  |      |          |      |  |   |          |  
|                               |  |      | 339,741  |      |  |   | 333,212  |  
|Less: accumulated depreciation |  |      | (166,083 | )    |  |   | (181,318 | )
|                               |  |      |          |      |  |   |          |  
|                               |  | $    | 173,658  |      |  | $ | 151,894  |  
|                               |  |      |          |      |  |   |          |  

G.     Goodwill

The following goodwill amounts by reporting unit
were recorded as of November 30, 2002 and 2003 (in
thousands of dollars):

|                          |  |         |                         |        |  |   |         | 
|------------------------- |  | ------- | ----------------------- | ------ |  | - | ------- | 
|Reporting Unit            |  | Segment |                         | Amount
|                          |  |         |                         |       
|Hillsdale Division        |  |         | Automotive              |        |  | $ | 34,816  | 
|Wolverine Division        |  |         | Automotive              |        |  |   | 47,268  | 
|Power Group               |  |         | Technologies            |        |  |   | 44,486  | 
|Specialty Materials Group |  |         | Technologies            |        |  |   | 27,098  | 
|Pharmaceutical Services   |  |         | Technologies            |        |  |   | 2,929   | 
|Filtration and Minerals   |  |         | Filtration and Minerals |        |  |   | 3,043   | 
|                          |  |         |                         |        |  |   |         | 
|                          |  |         |                         |        |  | $ | 159,640 | 
|                          |  |         |                         |        |  |   |         | 

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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


The following pro forma disclosure presents our
income (loss) applicable to common shareholders and our basic
and diluted per share income (loss) applicable to common
shareholders for the years ended November 30, 2001, 2002
and 2003 as if SFAS No. 142 had been adopted on
December 1, 2001 (in thousands of dollars, except per share
amounts):

|                                                                                   |  |      |         |      |  |      |         |   |  |   |        |  
|---------------------------------------------------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------ | -
|                                                                                   |  | 2001 |         | 2002 |  | 2003
|                                                                                   |  |      |         |      |  |     
|Reported Loss Applicable to Common Shareholders                                    |  | $    | (67,253 | )    |  | $    | (51,719 | ) |  | $ | (9,431 | )
|Goodwill amortization                                                              |  |      | 15,385  |      |  |      | 15,392  |   |  |   |       |  
|                                                                                   |  |      |         |      |  |      |         |   |  |   |        |  
|As Adjusted Loss Applicable to Common Shareholders                                 |  | $    | (51,868 | )    |  | $    | (36,327 | ) |  | $ | (9,431 | )
|                                                                                   |  |      |         |      |  |      |         |   |  |   |        |  
|Reported Basic and Diluted Loss per share
    Applicable to Common Shareholders    |  | $    | (68.51  | )    |  | $    | (53.60  | ) |  | $ | (9.71  | )
|Goodwill amortization per share                                                    |  |      | 15.67   |      |  |      | 15.95   |   |  |   |       |  
|                                                                                   |  |      |         |      |  |      |         |   |  |   |        |  
|As Adjusted Basic and Diluted Loss per share
    Applicable to Common Shareholders |  | $    | (52.84  | )    |  | $    | (37.65  | ) |  | $ | (9.71  | )
|                                                                                   |  |      |         |      |  |      |         |   |  |   |        |  

H.     Other Assets,
Net

Other assets, net, consisted of the following at
November 30 (in thousands of dollars):

|                                                                                                                                     |  |      |        |      |  |   |        | 
|------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | ------ | ---- |  | - | ------ | 
|                                                                                                                                     |  | 2002 |        | 2003
|                                                                                                                                     |  |      |        |     
|Pre-production costs related to long-term supply
    arrangements and tooling costs incurred and held for customer
    reimbursement |  | $    | 5,700  |      |  | $ | 3,423  | 
|Deferred financing costs, net                                                                                                        |  |      | 11,100 |      |  |   | 13,216 | 
|Intangibles, net                                                                                                                     |  |      |       |      |  |   | 3,130  | 
|Deferred stripping                                                                                                                   |  |      | 3,700  |      |  |   | 4,824  | 
|Investments in unconsolidated subsidiaries                                                                                           |  |      | 3,616  |      |  |   | 7,010  | 
|Other                                                                                                                                |  |      | 2,424  |      |  |   | 1,913  | 
|                                                                                                                                     |  |      |        |      |  |   |        | 
|                                                                                                                                     |  | $    | 26,540 |      |  | $ | 33,516 | 
|                                                                                                                                     |  |      |        |      |  |   |        | 

Deferred financing costs have an original cost of
$25.4 million at November 30, 2002 and
$17.0 million at November 30, 2003. The related
accumulated amortization was $14.3 million at
November 30, 2002 and $3.8 million at
November 30, 2003. During 2003 we recognized a
$6.3 million expense for the write-off of certain deferred
financing costs related to our Former Credit Agreement and
Senior Subordinated Notes, as defined in Note M, and incurred
$10.8 million of costs related to our Senior Unsecured
Notes and New Credit Agreement, as defined in Note M.

The intangible asset as of November 30,
2003, consists primarily of an intangible owned by one of our
majority controlled and consolidated subsidiaries called EP NTZ
Micro Filtration, LLC (NTZ). NTZ is a venture that
manufactures and sells next generation micro-filtration products
and solutions for automotive suppliers. Intangible assets are
amortized over their useful lives. Intangible asset amortization
expense for the year ended November 30, 2003 was
$0.1 million and is included in Depreciation and
Amortization in the accompanying Statement of Income (Loss).
Intangible assets are net of accumulated amortization of

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EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


$0.1 million at November 30, 2003.
Estimated annual amortization expense through 2008 and
thereafter related to our intangible assets as of
November 30, 2003 is as follows (in thousands):

|           |  |   |       | 
|---------- |  | - | ----- | 
|2004       |  | $ | 318   | 
|2005       |  |   | 318   | 
|2006       |  |   | 318   | 
|2007       |  |   | 318   | 
|2008       |  |   | 318   | 
|Thereafter |  |   | 1,540 | 
|           |  |   |       | 
|           |  | $ | 3,130 | 
|           |  |   |       | 

In December 2003, we paid $3.5 million to
acquire an incremental interest in EaglePicher Horizon Batteries
LLC, one of our unconsolidated subsidiaries as of
November 30, 2003. Beginning December 1, 2003, we will
consolidate this subsidiary. EaglePicher Horizon Batteries LLC
manufactures and distributes next generation lead-acid woven
battery technology.

I.     Insurance
Related Losses (Gains)

In 2002, we recorded a provision of
$3.1 million related to a dispute with an insurance carrier
over the coverage on a fire which occurred at one of our
facilities during 2001 at our Harrisonville, Missouri bulk
pharmaceutical plant. During 2003, we recorded a
$2.8 million gain related to the settlement of this claim.

In 2003, we recorded a $5.5 million gain
primarily related to the settlement of a claim with our
insurance carrier over the coverage on a fire during 2002 at our
Seneca, Missouri non-operating facility.

J.     Divestitures
and Discontinued Operations



| |             
| | ------------
| | Divestitures

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

|                                                                  |  |      |        |      |  |      |       |  |  |   |   | 
|----------------------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ----- |  |  | - | - | 
|                                                                  |  | 2001 |        | 2002 |  | 2003
|                                                                  |  |      |        |      |  |     
|(Gain) loss on sale of divisions                                  |  | $    | (2,635 | )    |  | $    | 2,800 |  |  | $ |  | 
|Losses recognized related to divisions sold in
    previous years |  |      | 4,740  |      |  |      | 3,352 |  |  |   |  | 
|Losses recognized for medical and workers
    compensation        |  |      |       |      |  |      | 345   |  |  |   |  | 
|                                                                  |  |      |        |      |  |      |       |  |  |   |   | 
|                                                                  |  | $    | 2,105  |      |  | $    | 6,497 |  |  | $ |  | 
|                                                                  |  |      |        |      |  |      |       |  |  |   |   | 

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

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

During 2002, we sold certain assets and
liabilities of our Precision Products business in our
Technologies Segment to a group of former employees and
divisional management personnel. We received approximately

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EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


$3.1 million in proceeds and recorded a
$2.8 million loss on the sale. During 2002, based on new
information that became available, we also recorded additional
amounts totaling $3.4 million for various environmental and
litigation matters, and $0.3 million for medical and
workers compensation claims relating to previous
divestitures.

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

|                             |                                                  |   |        |        |  
|---------------------------- | ------------------------------------------------ | - | ------ | ------ | -
|Balance at November 30, 2000 |                                                  | $ | 15,000 |       
|                             | Additional amounts recorded                      |   |        | 4,740  |  
|                             | Amounts spent                                    |   |        | (1,930 | )
|                             |                                                  |   |        |       
|Balance at November 30, 2001 |                                                  |   | 17,810 |       
|                             | Additional amounts recorded                      |   |        | 3,697  |  
|                             | Amounts spent                                    |   |        | (6,757 | )
|                             | Amounts transferred from discontinued operations |   |        | 2,912  |  
|                             |                                                  |   |        |       
|Balance at November 30, 2002 |                                                  |   | 17,662 |       
|                             | Amounts spent                                    |   |        | (8,365 | )
|                             |                                                  |   |        |       
|Balance at November 30, 2003 |                                                  | $ | 9,297  |       
|                             |                                                  |   |        |       



| |                        
| | -----------------------
| | Discontinued Operations

Effective December 14, 2001, we sold certain
of the assets of our former Construction Equipment Division.
This division represented our entire former Machinery Segment.
The sale price was $6.1 million in cash, plus an estimated
working capital adjustment of $1.0 million, and the
assumption of approximately $6.7 million of current
liabilities. We retained the land and buildings of the
Construction Equipment Divisions main facility in Lubbock,
Texas and leased the facility to the buyer for a five year term.
The buyer has an option to buy the facility for
$2.5 million, increasing $0.1 million per year over
the term. We also retained approximately $0.9 million of
accounts receivable, and approximately $2.3 million of raw
materials inventory, which the buyer was required to purchase
within one year. The buyer failed to purchase $0.2 million
and in the fourth quarter of 2003, we wrote-off the remaining
balance in Loss from Discontinued Operations. However, we
continue to pursue collection efforts. The measurement date to
account for the Machinery Segment as a discontinued operation
was March 1, 2001. Accordingly, the results of the
Machinery Segments operations have been reported
separately as a discontinued operation in the accompanying
financial statements. Net sales from discontinued operations
were $65.1 million in 2001. During 2001, we recorded
provisions totaling $30.4 million, net of an income tax
benefit of $6.1 million. This provision included estimated
losses and costs to be incurred in connection with the
disposition of the Machinery Segment, including
$5.7 million in expected losses during the phase out period
from March 1, 2001 to December 14, 2001. An operating
loss of $1.7 million, net of a $0.9 million tax
benefit, was incurred in the first quarter of 2001.

During the second quarter of 2003, we reached an
agreement in principle for the sale of certain assets at our
Hillsdale U.K. Automotive operation (a former component of our
Automotive Segment) for cash of $1.1 million. The sale
closed on June 11, 2003. In addition, we wound down the
remaining operations of our Hillsdale U.K. Automotive operation
during 2003. Accordingly, effective in the second quarter of
2003, upon receipt of authority from our Board of Directors, we
discontinued the operations of our Hillsdale U.K. Automotive
operation and restated all prior period financial statements. We
have included in Loss from Operations of Discontinued Businesses
in our Statements of Income a gain/(loss) of $0.3 million
(net of a $0.2 million tax provision) in 2001,
($2.3) million in 2002, and ($0.4) million in 2003. In
addition, in the

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EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


second quarter of 2003, we recognized a Loss on
Disposal of Business of $3.0 million, which is net of a
$0.6 million tax benefit related to this sale, and during
the third and fourth quarters of 2003, we recognized an increase
of $1.3 million to that Loss on Disposal due to various
shutdown costs. We expect to incur an additional
$0.3 million of shutdown costs, such as one-time
termination benefits, contract termination costs and facility
closure costs during 2004, which have not accrued as of
November 30, 2003.

In July 2003, we completed the sale of certain
assets of our Germanium-based business in our Technologies
Segment for net cash proceeds of approximately
$14.0 million. These assets relate to the production of
Germanium-based products primarily used in the infrared optics
and fiber optics applications and do not include any of our
assets that are involved in the production of Germanium
substrates and wafers. We agreed that if the buyer is required
to divest the acquired business due to certain regulatory
proceedings commenced within one year of the sale, then we would
reimburse the buyer for 50% of the amount by which the sale
price is less than $15.0 million up to a maximum
reimbursement of $4.0 million, and we would receive 50% of
any excess of the sale price over the $15.0 million up to a
maximum of $4.0 million. We believe that the expected
present value of being required to make a payment pursuant to
these provisions is immaterial, and therefore, we have not
recorded a liability. During the third quarter of 2003, we
discontinued the operations of our Germanium-based business and
restated all prior period financial statements. We have included
in Loss from Operations of Discontinued Businesses in our
Statements of Income (Loss) a gain/ (loss) of $0.2 million
in 2001, ($2.5) million in 2002, and ($1.3) million in
2003. In addition, during the third quarter of 2003, we recorded
in Loss on Disposal of Discontinued Businesses a gain of
$0.5 million, which is net of zero tax provision (benefit).

At November 30, 2003, the remaining balance
in Assets of Discontinued Operations was primarily accounts
receivable, inventory, and property, plant, and equipment
related to our Hillsdale U.K. Automotive operation and an
insurance receivable related to an entity that was supposed to
provide a source of Germanium for the sale of certain assets
within our Germanium-based business. The balance in Liabilities
of Discontinued Operations was primarily accounts payable and
accrued liabilities related to our Hillsdale U.K. Automotive
operation.



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

During the first quarter of 2002, we entered into
an agreement with a major United States financial institution to
sell an interest in certain receivables through an
unconsolidated qualifying special purpose entity, EaglePicher
Funding Corporation (EPFC). The size of this
facility is $55.0 million, subject to certain financial
covenant limitations. Initially $47.0 million of proceeds
from this new facility were used primarily to payoff amounts
outstanding under our existing Receivables Loan Agreement with
our wholly owned subsidiary, EaglePicher Acceptance Corporation.
This agreement provides for the sale of certain receivables to
EPFC, which in turn sells an interest in a revolving pool of
receivables to the financial institution. EPFC has no recourse
against us for failure of the debtors to pay when due. In the
third quarter of 2003, we amended this agreement to extend the
receivables program until the earlier of (a) 90 days
prior to the maturity of our New Credit Agreement (as defined in
Note M) or (b) January 2008.

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

In conjunction with the initial transaction
during 2002, we sold $82.5 million of receivables to EPFC,
and we incurred charges of $1.5 million, which were
included in Interest Expense in the accompanying condensed
consolidated statements of income (loss) for the fiscal
year ended 2002. We continue to service sold

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EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


receivables and receive a monthly servicing fee
from EPFC of approximately 1% per annum of the receivable
pools average balance. As this servicing fee approximates
our cost to service, no servicing asset or liability has been
recorded at November 30, 2002 or 2003. The carrying value
of our retained interest is recorded at fair value, which is
estimated as its net realizable value due to the short duration
of the receivables transferred to EPFC. The net realizable value
considers the collection period and includes an estimated
provision for credit losses and returns and allowances, which is
based on our historical results and probable future losses.

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

As of November 30, 2003, we reduced the
amount due to the financial institution by EPFC. Accordingly,
our retained interest in EPFC was $63.3 million and the
revolving pool of receivables that we serviced totaled
$64.9 million. At November 30, 2003, the outstanding
balance of the interest sold to the financial institution
recorded on EPFCs financial statements was zero. During
the year ended November 30, 2003, we sold
$565.8 million of accounts receivable to EPFC, and during
the same period, EPFC collected $552.3 million of cash that
was reinvested in new securitizations. The effective interest
rate as of November 30, 2003 in the securitization was
approximately 2.95%.



|   |              
|-- | -------------
|L. | Restructuring

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

The facility costs of $5.4 million include a
non-cash adjustment of $1.3 million to write down the
carrying value of the three plants to their estimated fair value
in holding them for sale, a non-cash charge of $2.2 million
on the loss of abandoning the machinery and equipment and other
assets at the plant locations and at corporate headquarters, and
a $1.9 million charge for future lease commitments, net of
estimated proceeds received from subleasing the various spaces.
The asset impairment adjustments are recorded against Property
Plant and Equipment in our balance sheets. The other shutdown
costs to exit the business consist primarily of a
$3.0 million non-cash charge related to inventory.

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

In May 2002, we announced we would exit the
Gallium business in our Technologies Segment due to the downturn
in the fiber-optic, telecommunication and semiconductor markets,
the primary markets for our Gallium products. This action
resulted in a $5.5 million charge to restructuring expense.
This charge consists of an inventory impairment totaling
$2.9 million, representing the loss to be incurred from the
liquidation of current inventory. The charge also consists of an
accrual totaling $2.4 million representing primarily the
loss to

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EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


be incurred from the liquidation of inventory to
be purchased under firm purchase commitments. In addition, a
$0.2 million asset impairment charge was recorded against
Property, Plant and Equipment.

The remaining balance of $0.9 million as of
November 30, 2003, is included in Other Accrued Liabilities
in our balance sheets. An analysis of the facilities, severance
and other costs incurred related to restructuring reserves is as
follows (in thousands of dollars):

|                                                                 |  |            |       |           |  |             |        |       |  |   |        |   |  |   |        |  
|---------------------------------------------------------------- |  | ---------- | ----- | --------- |  | ----------- | ------ | ----- |  | - | ------ | - |  | - | ------ | -
|                                                                 |  | Facilities |       | Severance |  | Other Costs |        | Total
|                                                                 |  |            |       |           |  |             |        |      
|Original reserve in 2001                                         |  | $          | 1,850 |           |  | $           | 5,044  |       |  | $ | 694    |   |  | $ | 7,588  |  
|Amounts spent                                                    |  |            |      |           |  |             | (202   | )     |  |   |       |   |  |   | (202   | )
|                                                                 |  |            |       |           |  |             |        |       |  |   |        |   |  |   |        |  
|Balance at November 30, 2001                                     |  |            | 1,850 |           |  |             | 4,842  |       |  |   | 694    |   |  |   | 7,386  |  
|Amounts paid from prepaid pension assets                         |  |            |      |           |  |             | (3,080 | )     |  |   |       |   |  |   | (3,080 | )
|Additional amounts recorded for exiting the
    Gallium Business |  |            |      |           |  |             |       |       |  |   | 2,382  |   |  |   | 2,382  |  
|Additional provision for severance liability                     |  |            |      |           |  |             | 416    |       |  |   |       |   |  |   | 416    |  
|Amounts spent                                                    |  |            | (221  | )         |  |             | (1,864 | )     |  |   | (1,736 | ) |  |   | (3,821 | )
|                                                                 |  |            |       |           |  |             |        |       |  |   |        |   |  |   |        |  
|Balance at November 30, 2002                                     |  |            | 1,629 |           |  |             | 314    |       |  |   | 1,340  |   |  |   | 3,283  |  
|Amounts spent                                                    |  |            | (907  | )         |  |             | (314   | )     |  |   | (1,164 | ) |  |   | (2,385 | )
|                                                                 |  |            |       |           |  |             |        |       |  |   |        |   |  |   |        |  
|Balance at November 30, 2003                                     |  | $          | 722   |           |  | $           |       |       |  | $ | 176    |   |  | $ | 898    |  
|                                                                 |  |            |       |           |  |             |        |       |  |   |        |   |  |   |        |  



|   |               
|-- | --------------
|M. | Long-Term Debt

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

|                                                                                   |                                                               |      |         |         |  |   |         |         | 
|---------------------------------------------------------------------------------- | ------------------------------------------------------------- | ---- | ------- | ------- |  | - | ------- | ------- | 
|                                                                                   |                                                               | 2002 |         | 2003   
|                                                                                   |                                                               |      |         |        
|New Credit Agreement:                                                              |                                                               |      |         |         |  |   |         |        
|                                                                                   | New revolving credit facility                                 |      | $       |        |  |   | $       |        | 
|                                                                                   | New term loan                                                 |      |         |        |  |   |         | 149,625 | 
|Former Credit Agreement:                                                           |                                                               |      |         |         |  |   |         |        
|                                                                                   | Former revolving credit facility, paid off in
    August 2003 |      |         | 121,500 |  |   |         |        | 
|                                                                                   | Former term loan, paid off in August 2003                     |      |         | 16,925  |  |   |         |        | 
|Senior Unsecured Notes, 9.75% interest, due 2013,
    net of $1.9 million discount |                                                               |      |        |         |  |   | 248,040 |        
|Senior Subordinated Notes, 9.375% interest, due
    2008                           |                                                               |      | 220,000 |         |  |   | 9,500   |        
|Industrial Revenue Bonds, 1.8% to 2.2% interest,
    due in 2004 and 2005          |                                                               |      | 15,300  |         |  |   | 13,600  |        
|Other                                                                              |                                                               |      |        |         |  |   | 1,105   |        
|                                                                                   |                                                               |      |         |         |  |   |         |        
|                                                                                   |                                                               |      | 373,725 |         |  |   | 421,870 |        
|Less: current portion                                                              |                                                               |      | (18,625 | )       |  |   | (13,300 | )      
|                                                                                   |                                                               |      |         |         |  |   |         |        
|Long-term debt, net of current portion                                             |                                                               | $    | 355,100 |         |  | $ | 408,570 |        
|                                                                                   |                                                               |      |         |         |  |   |         |        

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EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


Aggregate maturities of long-term debt by each of
our fiscal year ends are as follows at November 30, 2003
(in thousands of dollars):

|           |  |   |         | 
|---------- |  | - | ------- | 
|2004       |  | $ | 13,300  | 
|2005       |  |   | 3,900   | 
|2006       |  |   | 1,800   | 
|2007       |  |   | 1,705   | 
|2008       |  |   | 1,500   | 
|Thereafter |  |   | 399,665 | 
|           |  |   |         | 
|           |  | $ | 421,870 | 
|           |  |   |         | 



| |                     
| | --------------------
| | New Credit Agreement

We have a syndicated senior secured loan facility
(New Credit Agreement) providing an original term
loan (New Term Loan) of $150.0 million and a
$125.0 million revolving credit facility (New
Facility). The New Facility and the New Term Loan bear
interest, at our option, at a rate equal to (i) LIBOR plus
350 basis points or (ii) an Alternate Base Rate (which
is equal to the highest of (a) the agents prime rate,
(b) the Federal funds effective rate plus 50 basis
points, or (c) the base CD rate plus 100 basis
points) plus 250 basis points. Interest is generally
payable quarterly on the New Facility and New Term Loan. We have
entered into interest rate swap agreements to manage our
variable interest rate exposure. Our interest rate swap
agreements that were outstanding as of November 30, 2003
matured in December 2003. The New Credit Agreement also contains
certain fees. There are fees for letters of credit equal to 3.5%
per annum for all issued letters of credit, and there is a
commitment fee on the New Facility equal to 0.5% per annum of
the unused portion of the New Facility. If we meet certain
financial benchmarks, the interest rate spreads on the
borrowing, the commitment fees and the fees for letters of
credit may be reduced.

The New Term Loan will mature upon the earlier of
(i) August 7, 2009, (ii) 180 days prior to the
maturity of our Senior Subordinated Notes if more than
$5.0 million of aggregate principal amount of Senior
Subordinated Notes are outstanding, or (iii) 180 days
prior to the mandatory redemption of our 11.75% Cumulative
Redeemable Exchangeable Preferred Stock (Preferred
Stock) if more than $5.0 million of its aggregate
liquidation preference remains outstanding. The New Facility
will mature upon the earlier of (i) August 7, 2008,
(ii) 180 days prior to the maturity of our Senior
Subordinated Notes if more than $5.0 million of aggregate
principal amount of Senior Subordinated Notes are outstanding,
or (iii) 180 days prior to the mandatory redemption of
our Preferred Stock if more than $5.0 million of its
aggregate liquidation preference remains outstanding. Our Senior
Subordinated Notes mature and our Preferred Stock is scheduled
for mandatory redemption, on March 1, 2008.

At November 30, 2003, we had
$40.1 million in outstanding letters of credit under the
New Facility, which together with borrowings of zero, made our
available borrowing capacity of $84.9 million. However, due
to various financial covenant limitations under our New Credit
Agreement measured at the end of each quarter, on
November 30, 2003, we could only incur an additional
$60.1 million of indebtedness.

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

The New Credit Agreement contains covenants that
restrict our ability to declare dividends or redeem capital
stock, incur additional debt or liens, alter existing debt
agreements, make loans or investments, form or

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EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


invest in joint ventures, undergo a change in
control or engage in mergers, acquisitions or asset sales. These
covenants also limit the annual amount of capital expenditures
and require us to meet certain minimum financial ratios. For
purposes of determining outstanding debt under our New Credit
Agreement, we include the outstanding obligations of EPFC, our
off-balance sheet special purpose entity (see Note K for a
detailed discussion of EPFC). We were in compliance with all
covenants at November 30, 2003.

In addition to regularly scheduled payments on
the New Credit Agreement, we are required to make mandatory
prepayments equal to 50.0% of annual excess cash flow, as
defined in the New Credit Agreement, beginning with our fiscal
year ending November 30, 2004. The net proceeds from the
sale of assets (subject to certain conditions), the net proceeds
of certain new debt issuance, and 50.0% of the net proceeds of
any equity securities issuance are also subject to mandatory
prepayments on the New Credit Agreement.



| |                        
| | -----------------------
| | Former Credit Agreement

We had a syndicated senior secured loan facility
(Former Credit Agreement) which provided for an
original term loan (Former Term Loan) of
$75.0 million, as amended, and a $220.0 million
revolving credit facility (Former Facility). We paid
off the Former Credit Agreement with the proceeds from our New
Credit Agreement and Senior Unsecured Notes in August 2003. The
Former Facility and the Former Term Loan bore interest, at our
option, at LIBOR plus 275 basis points, or the banks
prime rate plus 150 basis points. Interest was generally
payable quarterly on the Former Facility and Former Term Loan.
The Former Credit Agreement also contained certain fees.



| |                       
| | ----------------------
| | Senior Unsecured Notes

In August 2003, we issued $250.0 million
9.75% Senior Unsecured Notes, due 2013, at a price of 99.2% of
par to yield 9.875%. Accordingly, the net proceeds before
issuance costs were $248.0 million. The discount is being
amortized over the life of the Senior Unsecured Notes. The
Senior Unsecured Notes require semi-annual interest payments on
September 1 and March 1, beginning on March 1,
2004. The Senior Unsecured Notes are redeemable at our option,
in whole or in part, any time after September 1, 2008 at
set redemption prices. We are required to offer to purchase the
Senior Unsecured Notes at a set redemption price should there be
a change in control. The Senior Unsecured Notes contain
covenants which restrict or limit our ability to declare or pay
dividends, incur additional debt or liens, issue stock, engage
in affiliate transactions, undergo a change in control or sell
assets. We are in compliance with these covenants at
November 30, 2003. The Senior Unsecured Notes are
guaranteed by us and certain of our subsidiaries (see
Subsidiary Guarantors and Non-Guarantors below).



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

Our Senior Subordinated Notes require semi-annual
interest payments on September 1 and March 1. In
connection with the issuance of the Senior Unsecured Notes in
August 2003, as described above, we repurchased approximately
95% of the outstanding senior subordinated notes at par and
executed a supplemental indenture on our Senior Subordinated
Notes that eliminated substantially all of the restrictive
covenants in the Senior Subordinated Notes which remain
outstanding. We continue to be required to make interest
payments on the Senior Subordinated Notes and will be required
to pay the remaining aggregate principal amount outstanding at
maturity in 2008.



| |                                          
| | -----------------------------------------
| | Write-off of Deferred Financing
    Costs

In connection with refinancing our Former Credit
Agreement and redeeming a portion of our Senior Subordinated
Notes, we recognized a $6.3 million expense in the third
quarter of 2003.

63



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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)




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

Our industrial revenue bonds require monthly
interest payments at variable interest rates based on the market
for similar issues and are secured by letters of credit issued
under the New Facility described above. In December 2003, we
paid off $10.0 million of Industrial Revenue Bonds and
accordingly, our outstanding letters of credit under the New
Facility were reduced.



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

Our effective interest rate under our outstanding
debt at November 30, 2002 was 8.53% and at
November 30, 2003 was 8.69% (including the effect of the
interest rate swaps). Our debt had an estimated fair value of
$303.3 million at November 30, 2002, and
$436.2 million at November 30, 2003. The estimated
fair value of our debt, except for our Senior Unsecured Notes
and Senior Subordinated Notes, was calculated based on using
discounted cash flow analysis based on current rates offered for
similar issues of other debt. For our Senior Unsecured Notes and
Senior Subordinated Notes, we were provided the fair market
value by the primary market maker of these instruments, who
based the amount on the current market conditions at
November 30, 2002 and 2003 as there is generally no
significant trading activity in these securities.



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

Our Senior Unsecured Notes and Senior
Subordinated Notes were issued by our wholly owned subsidiary,
EaglePicher Incorporated (EPI), and are guaranteed
on a full, unconditional, and joint and several basis by us and
certain of our wholly owned United States subsidiaries
(Subsidiary Guarantors). We have determined that
full financial statements and other disclosures concerning EPI
or the Subsidiary Guarantors would not be material to investors,
and such financial statements are not presented. EPI is subject
to restrictions on the payment of dividends under the terms of
both the New Credit Agreement and the Senior Unsecured Notes.
The following supplemental condensed combining financial
statements present information regarding EPI, as the Issuer, the
Subsidiary Guarantors and Non-Guarantor Subsidiaries. We only
accrue interest income and expense on intercompany loans once a
year in our fourth fiscal quarter.

As part of executing the supplemental indenture
to the Senior Subordinated Notes, as described above, we removed
all reporting obligations to those note holders. Accordingly, we
have only included supplemental guarantor and non-guarantor
financial statements for Subsidiary Guarantors of the Senior
Unsecured Notes. Therefore, the enclosed supplemental condensed
combining financial statements may not be comparable from one
period to the next. There are only minor differences between the
presentation of these two sets of guarantor and non-guarantor
financial statements.

64



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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


EAGLEPICHER HOLDINGS, INC.

SUPPLEMENTAL CONDENSED COMBINING BALANCE
SHEETS


As of November 30, 2002


|                                                   |                                                    |                           |          |                |  |            |         |                |  |              |         |        |   |   |         |        |  |   |          |         |   |   |         |        | 
|-------------------------------------------------- | -------------------------------------------------- | ------------------------- | -------- | -------------- |  | ---------- | ------- | -------------- |  | ------------ | ------- | ------ | - | - | ------- | ------ |  | - | -------- | ------- | - | - | ------- | ------ | 
|                                                   |                                                    |                           |          |                |  |            |         |                |  |             
|                                                   |                                                    |                           |          | Guarantors     |  |            |         |                |  |             
|                                                   |                                                    |                           |          |                |  |            |         |                |  |             
|                                                   |                                                    |                           |          | EaglePicher    |  | Subsidiary |         | Non-Guarantors |  |              |         |       
|                                                   |                                                    | Issuer                    |          | Holdings, Inc. |  | Guarantors |         | Subsidiaries   |  | Eliminations |         | Total 
|                                                   |                                                    |                           |          |                |  |            |         |                |  |              |         |       
|                                                   |                                                    |                          
|                                                   |                                                    | (In thousands of dollars)
|ASSETS                                            
|Current Assets:                                    |                                                    |                           |          |                |  |            |         |                |  |              |         |        |   |   |         |        |  |   |          |         |   |   |         |       
|                                                   | Cash and cash equivalents                          |                           | $        | 27,694         |  |            | $       | 1              |  |              | $       | (4,895 | ) |   | $       | 7,902  |  |   | $        | 820     |   |   | $       | 31,522 | 
|                                                   | Receivables and retained interest, net             |                           |          | 2,535          |  |            |         |               |  |              |         | 29,978 |   |   |         | 16,866 |  |   |          |        |   |   |         | 49,379 | 
|                                                   | Costs and estimated earnings in excess of billings |                           |          |               |  |            |         |               |  |              |         | 16,942 |   |   |         |       |  |   |          |        |   |   |         | 16,942 | 
|                                                   | Intercompany accounts receivable                   |                           |          | 1,997          |  |            |         |               |  |              |         | 6,228  |   |   |         | 2,037  |  |   |          | (10,262 | ) |   |         |       | 
|                                                   | Inventories                                        |                           |          | 3,957          |  |            |         |               |  |              |         | 30,780 |   |   |         | 12,683 |  |   |          | (1,916  | ) |   |         | 45,504 | 
|                                                   | Assets of discontinued operations                  |                           |          | 643            |  |            |         |               |  |              |         | 18,925 |   |   |         | 9,331  |  |   |          |        |   |   |         | 28,899 | 
|                                                   | Prepaid expenses and other assets                  |                           |          | 7,840          |  |            |         |               |  |              |         | 4,681  |   |   |         | 4,456  |  |   |          | (1,614  | ) |   |         | 15,363 | 
|                                                   | Deferred income taxes                              |                           |          | 10,798         |  |            |         |               |  |              |         |       |   |   |         |       |  |   |          |        |   |   |         | 10,798 | 
|                                                   |                                                    |                           |          |                |  |            |         |                |  |              |         |        |   |   |         |        |  |   |          |         |   |   |         |       
|                                                   |                                                    |                           | 55,464   |                |  |            | 1       |                |  |              | 102,639 |        |   |   | 53,275  |        |  |   | (12,972  | )       |   |   | 198,407 |       
|Property, Plant and Equipment, net                 |                                                    |                           | 24,016   |                |  |            |        |                |  |              | 125,575 |        |   |   | 24,067  |        |  |   |         |         |   |   | 173,658 |       
|Investment in Subsidiaries                         |                                                    |                           | 239,864  |                |  |            | 58,509  |                |  |              | 18,286  |        |   |   |        |        |  |   | (316,659 | )       |   |   |        |       
|Goodwill                                           |                                                    |                           | 37,339   |                |  |            |        |                |  |              | 112,286 |        |   |   | 13,154  |        |  |   | (3,139   | )       |   |   | 159,640 |       
|Prepaid Pension                                    |                                                    |                           | 54,796   |                |  |            |        |                |  |              |        |        |   |   |        |        |  |   |         |         |   |   | 54,796  |       
|Other Assets, net                                  |                                                    |                           | 14,296   |                |  |            | (8,091  | )              |  |              | 20,778  |        |   |   | 11,070  |        |  |   | (11,513  | )       |   |   | 26,540  |       
|                                                   |                                                    |                           |          |                |  |            |         |                |  |              |         |        |   |   |         |        |  |   |          |         |   |   |         |       
|                                                   |                                                    | $                         | 425,775  |                |  | $          | 50,419  |                |  | $            | 379,564 |        |   | $ | 101,566 |        |  | $ | (344,283 | )       |   | $ | 613,041 |       
|                                                   |                                                    |                           |          |                |  |            |         |                |  |              |         |        |   |   |         |        |  |   |          |         |   |   |         |       
|LIABILITIES AND SHAREHOLDERS EQUITY
    (DEFICIT)
|Current Liabilities:                               |                                                    |                           |          |                |  |            |         |                |  |              |         |        |   |   |         |        |  |   |          |         |   |   |         |       
|                                                   | Accounts payable                                   |                           | $        | 15,398         |  |            | $       |               |  |              | $       | 52,708 |   |   | $       | 14,252 |  |   | $        | 820     |   |   | $       | 83,178 | 
|                                                   | Intercompany accounts payable                      |                           |          | 3,171          |  |            |         |               |  |              |         | 5,887  |   |   |         | 1,184  |  |   |          | (10,242 | ) |   |         |       | 
|                                                   | Current portion of long-term debt                  |                           |          | 18,625         |  |            |         |               |  |              |         |       |   |   |         |       |  |   |          |        |   |   |         | 18,625 | 
|                                                   | Liabilities of discontinued operations             |                           |          |               |  |            |         |               |  |              |         | 888    |   |   |         | 3,417  |  |   |          |        |   |   |         | 4,305  | 
|                                                   | Other accrued liabilities                          |                           |          | 45,113         |  |            |         |               |  |              |         | 24,683 |   |   |         | 3,879  |  |   |          |        |   |   |         | 73,675 | 
|                                                   |                                                    |                           |          |                |  |            |         |                |  |              |         |        |   |   |         |        |  |   |          |         |   |   |         |       
|                                                   |                                                    |                           | 82,307   |                |  |            |        |                |  |              | 84,166  |        |   |   | 22,732  |        |  |   | (9,422   | )       |   |   | 179,783 |       
|Long-term Debt, net of current portion             |                                                    |                           | 355,100  |                |  |            |        |                |  |              |        |        |   |   | 11,491  |        |  |   | (11,491  | )       |   |   | 355,100 |       
|Postretirement Benefits Other Than Pensions        |                                                    |                           | 17,635   |                |  |            |        |                |  |              |        |        |   |   |        |        |  |   |         |         |   |   | 17,635  |       
|Other Long-term Liabilities                        |                                                    |                           | 9,887    |                |  |            |        |                |  |              |        |        |   |   | 216     |        |  |   | 25       |         |   |   | 10,128  |       
|                                                   |                                                    |                           |          |                |  |            |         |                |  |              |         |        |   |   |         |        |  |   |          |         |   |   |         |       
|                                                   |                                                    |                           | 464,929  |                |  |            |        |                |  |              | 84,166  |        |   |   | 34,439  |        |  |   | (20,888  | )       |   |   | 562,646 |       
|Intercompany Accounts                              |                                                    |                           | (282,707 | )              |  |            | 24      |                |  |              | 267,578 |        |   |   | 25,925  |        |  |   | (10,820  | )       |   |   |        |       
|Preferred Stock                                    |                                                    |                           |         |                |  |            | 137,973 |                |  |              |        |        |   |   |        |        |  |   |         |         |   |   | 137,973 |       
|Shareholders Equity (Deficit)                     |                                                    |                           | 243,553  |                |  |            | (87,578 | )              |  |              | 27,820  |        |   |   | 41,202  |        |  |   | (312,575 | )       |   |   | (87,578 | )     
|                                                   |                                                    |                           |          |                |  |            |         |                |  |              |         |        |   |   |         |        |  |   |          |         |   |   |         |       
|                                                   |                                                    | $                         | 425,775  |                |  | $          | 50,419  |                |  | $            | 379,564 |        |   | $ | 101,566 |        |  | $ | (344,283 | )       |   | $ | 613,041 |       
|                                                   |                                                    |                           |          |                |  |            |         |                |  |              |         |        |   |   |         |        |  |   |          |         |   |   |         |       

65



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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


EAGLEPICHER HOLDINGS, INC.

SUPPLEMENTAL CONDENSED COMBINING BALANCE
SHEETS


As of November 30, 2003


|                                                   |                                                    |                           |          |                |  |            |         |                |  |              |         |        |   |   |         |        |  |   |          |         |   |   |         |        | 
|-------------------------------------------------- | -------------------------------------------------- | ------------------------- | -------- | -------------- |  | ---------- | ------- | -------------- |  | ------------ | ------- | ------ | - | - | ------- | ------ |  | - | -------- | ------- | - | - | ------- | ------ | 
|                                                   |                                                    |                           |          |                |  |            |         |                |  |             
|                                                   |                                                    |                           |          | Guarantors     |  |            |         |                |  |             
|                                                   |                                                    |                           |          |                |  |            |         |                |  |             
|                                                   |                                                    |                           |          | EaglePicher    |  | Subsidiary |         | Non-Guarantors |  |              |         |       
|                                                   |                                                    | Issuer                    |          | Holdings, Inc. |  | Guarantors |         | Subsidiaries   |  | Eliminations |         | Total 
|                                                   |                                                    |                           |          |                |  |            |         |                |  |              |         |       
|                                                   |                                                    |                          
|                                                   |                                                    | (In thousands of dollars)
|ASSETS                                            
|Current Assets:                                    |                                                    |                           |          |                |  |            |         |                |  |              |         |        |   |   |         |        |  |   |          |         |   |   |         |       
|                                                   | Cash and cash equivalents                          |                           | $        | 52,478         |  |            | $       | 1              |  |              | $       | (2,732 | ) |   | $       | 17,573 |  |   | $        |        |   |   | $       | 67,320 | 
|                                                   | Receivables and retained interest, net             |                           |          | 62,937         |  |            |         |               |  |              |         | 4,668  |   |   |         | 21,673 |  |   |          |        |   |   |         | 89,278 | 
|                                                   | Costs and estimated earnings in excess of billings |                           |          |               |  |            |         |               |  |              |         | 17,386 |   |   |         | 11,047 |  |   |          |        |   |   |         | 28,433 | 
|                                                   | Intercompany accounts receivable                   |                           |          | 1,764          |  |            |         |               |  |              |         | 7,476  |   |   |         | 1,852  |  |   |          | (11,092 | ) |   |         |       | 
|                                                   | Inventories                                        |                           |          | 5,762          |  |            |         |               |  |              |         | 37,949 |   |   |         | 11,595 |  |   |          | (2,101  | ) |   |         | 53,205 | 
|                                                   | Assets of discontinued operations                  |                           |          |               |  |            |         |               |  |              |         | 4,093  |   |   |         | 348    |  |   |          |        |   |   |         | 4,441  | 
|                                                   | Prepaid expenses and other assets                  |                           |          | 2,218          |  |            |         |               |  |              |         | 4,301  |   |   |         | 3,875  |  |   |          |        |   |   |         | 10,394 | 
|                                                   | Deferred income taxes                              |                           |          | 8,526          |  |            |         |               |  |              |         |       |   |   |         |       |  |   |          |        |   |   |         | 8,526  | 
|                                                   |                                                    |                           |          |                |  |            |         |                |  |              |         |        |   |   |         |        |  |   |          |         |   |   |         |       
|                                                   |                                                    |                           | 133,685  |                |  |            | 1       |                |  |              | 73,141  |        |   |   | 67,963  |        |  |   | (13,193  | )       |   |   | 261,597 |       
|Property, Plant and Equipment, net                 |                                                    |                           | 24,823   |                |  |            |        |                |  |              | 103,234 |        |   |   | 23,837  |        |  |   |         |         |   |   | 151,894 |       
|Investment in Subsidiaries                         |                                                    |                           | 288,465  |                |  |            | 68,121  |                |  |              | 30,455  |        |   |   |        |        |  |   | (387,041 | )       |   |   |        |       
|Goodwill                                           |                                                    |                           | 37,339   |                |  |            |        |                |  |              | 112,286 |        |   |   | 13,154  |        |  |   | (3,139   | )       |   |   | 159,640 |       
|Prepaid Pension                                    |                                                    |                           | 56,891   |                |  |            |        |                |  |              |        |        |   |   |        |        |  |   |         |         |   |   | 56,891  |       
|Other Assets, net                                  |                                                    |                           | 11,366   |                |  |            | 2,472   |                |  |              | 23,809  |        |   |   | 24,190  |        |  |   | (28,321  | )       |   |   | 33,516  |       
|                                                   |                                                    |                           |          |                |  |            |         |                |  |              |         |        |   |   |         |        |  |   |          |         |   |   |         |       
|                                                   |                                                    | $                         | 552,569  |                |  | $          | 70,594  |                |  | $            | 342,925 |        |   | $ | 129,144 |        |  | $ | (431,694 | )       |   | $ | 663,538 |       
|                                                   |                                                    |                           |          |                |  |            |         |                |  |              |         |        |   |   |         |        |  |   |          |         |   |   |         |       
|LIABILITIES AND SHAREHOLDERS EQUITY
    (DEFICIT)
|Current Liabilities:                               |                                                    |                           |          |                |  |            |         |                |  |              |         |        |   |   |         |        |  |   |          |         |   |   |         |       
|                                                   | Accounts payable                                   |                           | $        | 22,125         |  |            | $       |               |  |              | $       | 56,412 |   |   | $       | 10,737 |  |   | $        |        |   |   | $       | 89,274 | 
|                                                   | Intercompany accounts payable                      |                           |          |               |  |            |         |               |  |              |         | 1,840  |   |   |         | 9,252  |  |   |          | (11,092 | ) |   |         |       | 
|                                                   | Current portion of long-term debt                  |                           |          | 13,300         |  |            |         |               |  |              |         |       |   |   |         |       |  |   |          |        |   |   |         | 13,300 | 
|                                                   | Liabilities of discontinued operations             |                           |          |               |  |            |         |               |  |              |         |       |   |   |         | 956    |  |   |          |        |   |   |         | 956    | 
|                                                   | Other accrued liabilities                          |                           |          | 29,347         |  |            |         |               |  |              |         | 22,470 |   |   |         | 8,345  |  |   |          |        |   |   |         | 60,162 | 
|                                                   |                                                    |                           |          |                |  |            |         |                |  |              |         |        |   |   |         |        |  |   |          |         |   |   |         |       
|                                                   |                                                    |                           | 64,772   |                |  |            |        |                |  |              | 80,722  |        |   |   | 29,290  |        |  |   | (11,092  | )       |   |   | 163,692 |       
|Long-term Debt, net of current portion             |                                                    |                           | 423,295  |                |  |            |        |                |  |              | 720     |        |   |   | 15,318  |        |  |   | (30,763  | )       |   |   | 408,570 |       
|Postretirement Benefits Other Than Pensions        |                                                    |                           | 17,418   |                |  |            |        |                |  |              |        |        |   |   |        |        |  |   |         |         |   |   | 17,418  |       
|Other Long-term Liabilities                        |                                                    |                           | 7,651    |                |  |            |        |                |  |              |        |        |   |   | 1,998   |        |  |   |         |         |   |   | 9,649   |       
|Preferred Stock                                    |                                                    |                           |         |                |  |            | 154,416 |                |  |              |        |        |   |   |        |        |  |   |         |         |   |   | 154,416 |       
|                                                   |                                                    |                           |          |                |  |            |         |                |  |              |         |        |   |   |         |        |  |   |          |         |   |   |         |       
|                                                   |                                                    |                           | 513,136  |                |  |            | 154,416 |                |  |              | 81,442  |        |   |   | 46,606  |        |  |   | (41,855  | )       |   |   | 753,745 |       
|Intercompany Accounts                              |                                                    |                           | (216,625 | )              |  |            | 10,790  |                |  |              | 181,907 |        |   |   | 29,234  |        |  |   | (5,306   | )       |   |   |        |       
|Shareholders Equity (Deficit)                     |                                                    |                           | 256,058  |                |  |            | (94,612 | )              |  |              | 79,576  |        |   |   | 53,304  |        |  |   | (384,533 | )       |   |   | (90,207 | )     
|                                                   |                                                    |                           |          |                |  |            |         |                |  |              |         |        |   |   |         |        |  |   |          |         |   |   |         |       
|                                                   |                                                    | $                         | 552,569  |                |  | $          | 70,594  |                |  | $            | 342,925 |        |   | $ | 129,144 |        |  | $ | (431,694 | )       |   | $ | 663,538 |       
|                                                   |                                                    |                           |          |                |  |            |         |                |  |              |         |        |   |   |         |        |  |   |          |         |   |   |         |       

66



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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


EAGLEPICHER HOLDINGS, INC.

SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF
INCOME (LOSS)


Year Ended November 30, 2001


|                                                          |                                                              |                           |         |                |   |            |         |                |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |         |  
|--------------------------------------------------------- | ------------------------------------------------------------ | ------------------------- | ------- | -------------- | - | ---------- | ------- | -------------- | - | ------------ | ------- | ------- | - | - | ------ | ------ | - | - | ------- | ------- | - | - | ------- | ------- | -
|                                                          |                                                              |                           |         |                |   |            |         |                |   |             
|                                                          |                                                              |                           |         | Guarantors     |   |            |         |                |   |             
|                                                          |                                                              |                           |         |                |   |            |         |                |   |             
|                                                          |                                                              |                           |         | EaglePicher    |   | Subsidiary |         | Non-Guarantors |   |              |         |        
|                                                          |                                                              | Issuer                    |         | Holdings, Inc. |   | Guarantors |         | Subsidiaries   |   | Eliminations |         | Total  
|                                                          |                                                              |                           |         |                |   |            |         |                |   |              |         |        
|                                                          |                                                              |                          
|                                                          |                                                              | (In thousands of dollars)
|Net Sales:                                                |                                                              |                           |         |                |   |            |         |                |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|                                                          | Customers                                                    |                           | $       | 47,892         |   |            | $       |               |   |              | $       | 539,462 |   |   | $      | 69,970 |   |   | $       |        |   |   | $       | 657,324 |  
|                                                          | Intercompany                                                 |                           |         | 15,398         |   |            |         |               |   |              |         | 15,185  |   |   |        |       |   |   |         | (30,583 | ) |   |         |        |  
|                                                          |                                                              |                           |         |                |   |            |         |                |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|                                                          |                                                              |                           | 63,290  |                |   |            |        |                |   |              | 554,647 |         |   |   | 69,970 |        |   |   | (30,583 | )       |   |   | 657,324 |        
|                                                          |                                                              |                           |         |                |   |            |         |                |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|Operating Costs and Expenses:                             |                                                              |                           |         |                |   |            |         |                |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|                                                          | Cost of products sold (exclusive of depreciation)            |                           |         | 35,492         |   |            |         |               |   |              |         | 470,091 |   |   |        | 57,165 |   |   |         | (30,583 | ) |   |         | 532,165 |  
|                                                          | Selling and administrative                                   |                           |         | 24,752         |   |            |         | 5              |   |              |         | 21,163  |   |   |        | 6,548  |   |   |         |        |   |   |         | 52,468  |  
|                                                          | Intercompany charges                                         |                           |         | (6,329         | ) |            |         |               |   |              |         | 6,537   |   |   |        | (208   | ) |   |         |        |   |   |         |        |  
|                                                          | Depreciation and amortization of intangibles                 |                           |         | 3,749          |   |            |         |               |   |              |         | 35,053  |   |   |        | 2,799  |   |   |         |        |   |   |         | 41,601  |  
|                                                          | Goodwill amortization                                        |                           |         | 3,736          |   |            |         |               |   |              |         | 10,660  |   |   |        | 989    |   |   |         |        |   |   |         | 15,385  |  
|                                                          | Other                                                        |                           |         | 8,997          |   |            |         |               |   |              |         | 7,375   |   |   |        | (93    | ) |   |         | (11     | ) |   |         | 16,268  |  
|                                                          |                                                              |                           |         |                |   |            |         |                |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|                                                          |                                                              |                           | 70,397  |                |   |            | 5       |                |   |              | 550,879 |         |   |   | 67,200 |        |   |   | (30,594 | )       |   |   | 657,887 |        
|                                                          |                                                              |                           |         |                |   |            |         |                |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|Operating Income (Loss)                                   |                                                              |                           | (7,107  | )              |   |            | (5      | )              |   |              | 3,768   |         |   |   | 2,770  |        |   |   | 11      |         |   |   | (563    | )      
|Other Income (Expense):                                   |                                                              |                           |         |                |   |            |         |                |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|                                                          | Interest (expense) income                                    |                           |         | (35,406        | ) |            |         |               |   |              |         | (3,043  | ) |   |        | (282   | ) |   |         | 3,325   |   |   |         | (35,406 | )
|                                                          | Other income (expense), net                                  |                           |         | 151            |   |            |         |               |   |              |         | 8,689   |   |   |        | 2,440  |   |   |         | (7,714  | ) |   |         | 3,566   |  
|                                                          | Equity in earnings (losses) of consolidated
    subsidiaries |                           |         | 9,952          |   |            |         | (53,966        | ) |              |         | (27,303 | ) |   |        |       |   |   |         | 71,317  |   |   |         |        |  
|                                                          |                                                              |                           |         |                |   |            |         |                |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|Income (Loss) from Continuing Operations Before
    Taxes |                                                              |                           | (32,410 | )              |   |            | (53,971 | )              |   |              | (17,889 | )       |   |   | 4,928  |        |   |   | 66,939  |         |   |   | (32,403 | )      
|Income Taxes (Benefit)                                    |                                                              |                           | (12,689 | )              |   |            |        |                |   |              | (116    | )       |   |   | 2,634  |        |   |   |        |         |   |   | (10,171 | )      
|                                                          |                                                              |                           |         |                |   |            |         |                |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|Income (Loss) from Continuing Operations                  |                                                              |                           | (19,721 | )              |   |            | (53,971 | )              |   |              | (17,773 | )       |   |   | 2,294  |        |   |   | 66,939  |         |   |   | (22,232 | )      
|Discontinued Operations                                   |                                                              |                           | (32,073 | )              |   |            |        |                |   |              | 107     |         |   |   | 227    |        |   |   |        |         |   |   | (31,739 | )      
|                                                          |                                                              |                           |         |                |   |            |         |                |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|Net Income (Loss)                                         |                                                              | $                         | (51,794 | )              |   | $          | (53,971 | )              |   | $            | (17,666 | )       |   | $ | 2,521  |        |   | $ | 66,939  |         |   | $ | (53,971 | )      
|                                                          |                                                              |                           |         |                |   |            |         |                |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        

67



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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


EAGLEPICHER HOLDINGS, INC.

SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF
INCOME (LOSS)


Year Ended November 30, 2002


|                                                          |                                                              |                           |         |                |   |            |         |                |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |         |  
|--------------------------------------------------------- | ------------------------------------------------------------ | ------------------------- | ------- | -------------- | - | ---------- | ------- | -------------- | - | ------------ | ------- | ------- | - | - | ------ | ------ | - | - | ------- | ------- | - | - | ------- | ------- | -
|                                                          |                                                              |                           |         |                |   |            |         |                |   |             
|                                                          |                                                              |                           |         | Guarantors     |   |            |         |                |   |             
|                                                          |                                                              |                           |         |                |   |            |         |                |   |             
|                                                          |                                                              |                           |         | EaglePicher    |   | Subsidiary |         | Non-Guarantors |   |              |         |        
|                                                          |                                                              | Issuer                    |         | Holdings, Inc. |   | Guarantors |         | Subsidiaries   |   | Eliminations |         | Total  
|                                                          |                                                              |                           |         |                |   |            |         |                |   |              |         |        
|                                                          |                                                              |                          
|                                                          |                                                              | (In thousands of dollars)
|Net Sales:                                                |                                                              |                           |         |                |   |            |         |                |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|                                                          | Customers                                                    |                           | $       | 50,879         |   |            | $       |               |   |              | $       | 539,297 |   |   | $      | 77,967 |   |   | $       |        |   |   | $       | 668,143 |  
|                                                          | Intercompany                                                 |                           |         | 16,411         |   |            |         |               |   |              |         | 13,628  |   |   |        | 4      |   |   |         | (30,043 | ) |   |         |        |  
|                                                          |                                                              |                           |         |                |   |            |         |                |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|                                                          |                                                              |                           | 67,290  |                |   |            |        |                |   |              | 552,925 |         |   |   | 77,971 |        |   |   | (30,043 | )       |   |   | 668,143 |        
|                                                          |                                                              |                           |         |                |   |            |         |                |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|Operating Costs and Expenses:                             |                                                              |                           |         |                |   |            |         |                |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|                                                          | Cost of products sold (exclusive of depreciation)            |                           |         | 36,167         |   |            |         |               |   |              |         | 453,123 |   |   |        | 62,574 |   |   |         | (30,043 | ) |   |         | 521,821 |  
|                                                          | Selling and administrative                                   |                           |         | 27,511         |   |            |         | 5              |   |              |         | 30,449  |   |   |        | 5,766  |   |   |         |        |   |   |         | 63,731  |  
|                                                          | Intercompany charges                                         |                           |         | (6,322         | ) |            |         |               |   |              |         | 6,322   |   |   |        |       |   |   |         |        |   |   |         |        |  
|                                                          | Depreciation and amortization of intangibles                 |                           |         | 5,434          |   |            |         |               |   |              |         | 38,660  |   |   |        | 2,416  |   |   |         |        |   |   |         | 46,510  |  
|                                                          | Goodwill amortization                                        |                           |         | 3,736          |   |            |         |               |   |              |         | 10,670  |   |   |        | 986    |   |   |         |        |   |   |         | 15,392  |  
|                                                          | Other                                                        |                           |         | 6,212          |   |            |         |               |   |              |         | 9,283   |   |   |        |       |   |   |         |        |   |   |         | 15,495  |  
|                                                          |                                                              |                           |         |                |   |            |         |                |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|                                                          |                                                              |                           | 72,738  |                |   |            | 5       |                |   |              | 548,507 |         |   |   | 71,742 |        |   |   | (30,043 | )       |   |   | 662,949 |        
|                                                          |                                                              |                           |         |                |   |            |         |                |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|Operating Income (Loss)                                   |                                                              |                           | (5,448  | )              |   |            | (5      | )              |   |              | 4,418   |         |   |   | 6,229  |        |   |   |        |         |   |   | 5,194   |        
|Other Income (Expense):                                   |                                                              |                           |         |                |   |            |         |                |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|                                                          | Interest (expense) income                                    |                           |         | (36,812        | ) |            |         |               |   |              |         | (1,418  | ) |   |        | (470   | ) |   |         | 1,888   |   |   |         | (36,812 | )
|                                                          | Other income (expense), net                                  |                           |         | 235            |   |            |         |               |   |              |         | 2,549   |   |   |        | 541    |   |   |         | (1,809  | ) |   |         | 1,516   |  
|                                                          | Equity in earnings (losses) of consolidated
    subsidiaries |                           |         | 18,014         |   |            |         | (19,557        | ) |              |         | (47,551 | ) |   |        |       |   |   |         | 49,094  |   |   |         |        |  
|                                                          |                                                              |                           |         |                |   |            |         |                |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|Income (Loss) from Continuing Operations Before
    Taxes |                                                              |                           | (24,011 | )              |   |            | (19,562 | )              |   |              | (42,002 | )       |   |   | 6,300  |        |   |   | 49,173  |         |   |   | (30,102 | )      
|Income Taxes (Benefits)                                   |                                                              |                           | 146     |                |   |            |        |                |   |              | 12      |         |   |   | 1,780  |        |   |   |        |         |   |   | 1,938   |        
|                                                          |                                                              |                           |         |                |   |            |         |                |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|Income (Loss) from Continuing Operations                  |                                                              |                           | (24,157 | )              |   |            | (19,562 | )              |   |              | (42,014 | )       |   |   | 4,520  |        |   |   | 49,173  |         |   |   | (32,040 | )      
|Discontinued Operations                                   |                                                              |                           |        |                |   |            |        |                |   |              | (2,527  | )       |   |   | (2,265 | )      |   |   |        |         |   |   | (4,792  | )      
|                                                          |                                                              |                           |         |                |   |            |         |                |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        
|Net Income (Loss)                                         |                                                              | $                         | (24,157 | )              |   | $          | (19,562 | )              |   | $            | (44,541 | )       |   | $ | 2,255  |        |   | $ | 49,173  |         |   | $ | (36,832 | )      
|                                                          |                                                              |                           |         |                |   |            |         |                |   |              |         |         |   |   |        |        |   |   |         |         |   |   |         |        

68



---



##### Table of Contents



EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


EAGLEPICHER HOLDINGS, INC.

SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF
INCOME (LOSS)


Year Ended November 30, 2003


|                                                          |                                                              |                           |        |                |   |            |       |                |   |              |         |         |   |   |         |         |   |   |         |         |   |   |         |         |  
|--------------------------------------------------------- | ------------------------------------------------------------ | ------------------------- | ------ | -------------- | - | ---------- | ----- | -------------- | - | ------------ | ------- | ------- | - | - | ------- | ------- | - | - | ------- | ------- | - | - | ------- | ------- | -
|                                                          |                                                              |                           |        |                |   |            |       |                |   |             
|                                                          |                                                              |                           |        | Guarantors     |   |            |       |                |   |             
|                                                          |                                                              |                           |        |                |   |            |       |                |   |             
|                                                          |                                                              |                           |        | EaglePicher    |   | Subsidiary |       | Non-Guarantors |   |              |         |        
|                                                          |                                                              | Issuer                    |        | Holdings, Inc. |   | Guarantors |       | Subsidiaries   |   | Eliminations |         | Total  
|                                                          |                                                              |                           |        |                |   |            |       |                |   |              |         |        
|                                                          |                                                              |                          
|                                                          |                                                              | (In thousands of dollars)
|Net Sales:                                                |                                                              |                           |        |                |   |            |       |                |   |              |         |         |   |   |         |         |   |   |         |         |   |   |         |        
|                                                          | Customers                                                    |                           | $      | 53,204         |   |            | $     |               |   |              | $       | 510,478 |   |   | $       | 121,744 |   |   | $       |        |   |   | $       | 685,426 |  
|                                                          | Intercompany                                                 |                           |        | 20,886         |   |            |       |               |   |              |         | 16,468  |   |   |         | 2,871   |   |   |         | (40,225 | ) |   |         |        |  
|                                                          |                                                              |                           |        |                |   |            |       |                |   |              |         |         |   |   |         |         |   |   |         |         |   |   |         |        
|                                                          |                                                              |                           | 74,090 |                |   |            |      |                |   |              | 526,946 |         |   |   | 124,615 |         |   |   | (40,225 | )       |   |   | 685,426 |        
|                                                          |                                                              |                           |        |                |   |            |       |                |   |              |         |         |   |   |         |         |   |   |         |         |   |   |         |        
|Operating Costs and Expenses:                             |                                                              |                           |        |                |   |            |       |                |   |              |         |         |   |   |         |         |   |   |         |         |   |   |         |        
|                                                          | Cost of products sold (exclusive of depreciation)            |                           |        | 45,459         |   |            |       |               |   |              |         | 419,705 |   |   |         | 97,338  |   |   |         | (40,225 | ) |   |         | 522,277 |  
|                                                          | Selling and administrative                                   |                           |        | 22,271         |   |            |       | 5              |   |              |         | 32,416  |   |   |         | 8,764   |   |   |         | (245    | ) |   |         | 63,211  |  
|                                                          | Intercompany charges                                         |                           |        | (6,690         | ) |            |       |               |   |              |         | 6,397   |   |   |         | 293     |   |   |         |        |   |   |         |        |  
|                                                          | Depreciation and amortization of intangibles                 |                           |        | 5,620          |   |            |       |               |   |              |         | 37,341  |   |   |         | 5,108   |   |   |         |        |   |   |         | 48,069  |  
|                                                          | Insurance related losses (gains)                             |                           |        | 724            |   |            |       |               |   |              |         | (9,003  | ) |   |         |        |   |   |         |        |   |   |         | (8,279  | )
|                                                          |                                                              |                           |        |                |   |            |       |                |   |              |         |         |   |   |         |         |   |   |         |         |   |   |         |        
|                                                          |                                                              |                           | 67,384 |                |   |            | 5     |                |   |              | 486,856 |         |   |   | 111,503 |         |   |   | (40,470 | )       |   |   | 625,278 |        
|                                                          |                                                              |                           |        |                |   |            |       |                |   |              |         |         |   |   |         |         |   |   |         |         |   |   |         |        
|Operating Income (Loss)                                   |                                                              |                           | 6,706  |                |   |            | (5    | )              |   |              | 40,090  |         |   |   | 13,112  |         |   |   | 245     |         |   |   | 60,148  |        
|Other Income (Expense):                                   |                                                              |                           |        |                |   |            |       |                |   |              |         |         |   |   |         |         |   |   |         |         |   |   |         |        
|                                                          | Interest (expense) income                                    |                           |        | (36,916        | ) |            |       | (198           | ) |              |         | 1,107   |   |   |         | (504    | ) |   |         |        |   |   |         | (36,511 | )
|                                                          | Preferred stock dividends accrued                            |                           |        |               |   |            |       | (4,169         | ) |              |         |        |   |   |         |        |   |   |         |        |   |   |         | (4,169  | )
|                                                          | Other income (expense), net                                  |                           |        | (1,971         | ) |            |       |               |   |              |         | 1,340   |   |   |         | 869     |   |   |         | (1,821  | ) |   |         | (1,583  | )
|                                                          | Write-off of deferred financing costs                        |                           |        | (6,327         | ) |            |       |               |   |              |         |        |   |   |         |        |   |   |         |        |   |   |         | (6,327  | )
|                                                          | Equity in earnings (losses) of consolidated
    subsidiaries |                           |        | 48,601         |   |            |       | 9,612          |   |              |         | 12,169  |   |   |         |        |   |   |         | (70,382 | ) |   |         |        |  
|                                                          |                                                              |                           |        |                |   |            |       |                |   |              |         |         |   |   |         |         |   |   |         |         |   |   |         |        
|Income (Loss) from Continuing Operations Before
    Taxes |                                                              |                           | 10,093 |                |   |            | 5,240 |                |   |              | 54,706  |         |   |   | 13,477  |         |   |   | (71,958 | )       |   |   | 11,558  |        
|Income Taxes (Benefit)                                    |                                                              |                           | 262    |                |   |            |      |                |   |              | 45      |         |   |   | 2,530   |         |   |   |        |         |   |   | 2,837   |        
|                                                          |                                                              |                           |        |                |   |            |       |                |   |              |         |         |   |   |         |         |   |   |         |         |   |   |         |        
|Income (Loss) from Continuing Operations                  |                                                              |                           | 9,831  |                |   |            | 5,240 |                |   |              | 54,661  |         |   |   | 10,947  |         |   |   | (71,958 | )       |   |   | 8,721   |        
|Discontinued Operations                                   |                                                              |                           | (219   | )              |   |            |      |                |   |              | (910    | )       |   |   | (4,749  | )       |   |   |        |         |   |   | (5,878  | )      
|                                                          |                                                              |                           |        |                |   |            |       |                |   |              |         |         |   |   |         |         |   |   |         |         |   |   |         |        
|Net Income (Loss)                                         |                                                              | $                         | 9,612  |                |   | $          | 5,240 |                |   | $            | 53,751  |         |   | $ | 6,198   |         |   | $ | (71,958 | )       |   | $ | 2,843   |        
|                                                          |                                                              |                           |        |                |   |            |       |                |   |              |         |         |   |   |         |         |   |   |         |         |   |   |         |        

69



---



##### Table of Contents



EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


EAGLEPICHER HOLDINGS, INC.

SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF
CASH FLOWS


Year Ended November 30, 2001


|                                                                                         |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |   |   |         |        |   |   |         |         |   |   |         |        |  
|---------------------------------------------------------------------------------------- | ---------------------------------------------------------------------- | ------------------------- | ------- | -------------- | - | ---------- | ------- | -------------- |  | ------------ | ------- | ------ | - | - | ------- | ------ | - | - | ------- | ------- | - | - | ------- | ------ | -
|                                                                                         |                                                                        |                           |         |                |   |            |         |                |  |             
|                                                                                         |                                                                        |                           |         | Guarantors     |   |            |         |                |  |             
|                                                                                         |                                                                        |                           |         |                |   |            |         |                |  |             
|                                                                                         |                                                                        |                           |         | EaglePicher    |   | Subsidiary |         | Non-Guarantors |  |              |         |       
|                                                                                         |                                                                        | Issuer                    |         | Holdings, Inc. |   | Guarantors |         | Subsidiaries   |  | Eliminations |         | Total 
|                                                                                         |                                                                        |                           |         |                |   |            |         |                |  |              |         |       
|                                                                                         |                                                                        |                          
|                                                                                         |                                                                        | (In thousands of dollars)
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |   |   |         |        |   |   |         |         |   |   |         |       
|Net income (loss)                                                                        |                                                                        | $                         | (51,794 | )              |   | $          | (53,971 | )              |  | $            | (17,666 | )      |   | $ | 2,521   |        |   | $ | 66,939  |         |   | $ | (53,971 | )     
|Adjustments to reconcile net income
    (loss) to cash provided by operating activities: |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |   |   |         |        |   |   |         |         |   |   |         |       
|                                                                                         | Equity in (earnings) loss of consolidated
    subsidiaries             |                           |         | (9,952         | ) |            |         | 53,966         |  |              |         | 27,303 |   |   |         |       |   |   |         | (71,317 | ) |   |         |       |  
|                                                                                         | Depreciation and amortization                                          |                           |         | 11,192         |   |            |         |               |  |              |         | 45,723 |   |   |         | 3,788  |   |   |         |        |   |   |         | 60,703 |  
|                                                                                         | Provisions for discontinued operations                                 |                           |         | 30,416         |   |            |         |               |  |              |         |       |   |   |         |       |   |   |         |        |   |   |         | 30,416 |  
|                                                                                         | Loss from divestitures                                                 |                           |         | 2,105          |   |            |         |               |  |              |         |       |   |   |         |       |   |   |         |        |   |   |         | 2,105  |  
|                                                                                         | Deferred income taxes                                                  |                           |         | (9,344         | ) |            |         |               |  |              |         |       |   |   |         |       |   |   |         |        |   |   |         | (9,344 | )
|                                                                                         | Changes in assets and liabilities, net of effect
    of non-cash items |                           |         | 12,850         |   |            |         | 5              |  |              |         | (5,821 | ) |   |         | (4,965 | ) |   |         | 28,129  |   |   |         | 30,198 |  
|                                                                                         |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |   |   |         |        |   |   |         |         |   |   |         |       
|                                                                                         |                                                                        |                           | (14,527 | )              |   |            |        |                |  |              | 49,539  |        |   |   | 1,344   |        |   |   | 23,751  |         |   |   | 60,107  |       
|                                                                                         |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |   |   |         |        |   |   |         |         |   |   |         |       
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |   |   |         |        |   |   |         |         |   |   |         |       
|Capital expenditures                                                                     |                                                                        |                           | (7,208  | )              |   |            |        |                |  |              | (14,942 | )      |   |   | (12,034 | )      |   |   |        |         |   |   | (34,184 | )     
|Other, net                                                                               |                                                                        |                           | 26      |                |   |            |        |                |  |              | 3,753   |        |   |   | (4,026  | )      |   |   |        |         |   |   | (247    | )     
|                                                                                         |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |   |   |         |        |   |   |         |         |   |   |         |       
|                                                                                         |                                                                        |                           | (7,182  | )              |   |            |        |                |  |              | (11,189 | )      |   |   | (16,060 | )      |   |   |        |         |   |   | (34,431 | )     
|                                                                                         |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |   |   |         |        |   |   |         |         |   |   |         |       
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |   |   |         |        |   |   |         |         |   |   |         |       
|Reduction of long-term debt                                                              |                                                                        |                           | (20,795 | )              |   |            |        |                |  |              |        |        |   |   | 1,849   |        |   |   |        |         |   |   | (18,946 | )     
|Net borrowings (repayments) under revolving
    credit agreements                        |                                                                        |                           | 36,340  |                |   |            |        |                |  |              | (28,500 | )      |   |   | (1,611  | )      |   |   |        |         |   |   | 6,229   |       
|Acquisition of treasury stock                                                            |                                                                        |                           | (2,162  | )              |   |            |         |                |  |              |        |        |   |   |        |        |   |   |        |         |   |   | (2,162  | )     
|Other, net                                                                               |                                                                        |                           | 2,593   |                |   |            |        |                |  |              |        |        |   |   | (3,465  | )      |   |   |        |         |   |   | (872    | )     
|                                                                                         |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |   |   |         |        |   |   |         |         |   |   |         |       
|                                                                                         |                                                                        |                           | 15,976  |                |   |            |        |                |  |              | (28,500 | )      |   |   | (3,227  | )      |   |   |        |         |   |   | (15,751 | )     
|                                                                                         |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |   |   |         |        |   |   |         |         |   |   |         |       
|Net cash provided by discontinued operations                                             |                                                                        |                           | 4,322   |                |   |            |        |                |  |              | 1,724   |        |   |   | 1,430   |        |   |   |        |         |   |   | 7,476   |       
|                                                                                         |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |   |   |         |        |   |   |         |         |   |   |         |       
|Effect of exchange rates on cash                                                         |                                                                        |                           |        |                |   |            |        |                |  |              |        |        |   |   | (248    | )      |   |   |        |         |   |   | (248    | )     
|                                                                                         |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |   |   |         |        |   |   |         |         |   |   |         |       
|Net increase (decrease) in cash and cash
    equivalents                                 |                                                                        |                           | (1,411  | )              |   |            |        |                |  |              | 11,574  |        |   |   | (16,761 | )      |   |   | 23,751  |         |   |   | 17,153  |       
|Intercompany accounts                                                                    |                                                                        |                           | 15,754  |                |   |            |        |                |  |              | (11,642 | )      |   |   | 20,889  |        |   |   | (25,001 | )       |   |   |        |       
|Cash and cash equivalents, beginning of period                                           |                                                                        |                           | 2,802   |                |   |            | 1       |                |  |              | 539     |        |   |   | 2,808   |        |   |   | 1,317   |         |   |   | 7,467   |       
|                                                                                         |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |   |   |         |        |   |   |         |         |   |   |         |       
|Cash and cash equivalents, end of period                                                 |                                                                        | $                         | 17,145  |                |   | $          | 1       |                |  | $            | 471     |        |   | $ | 6,936   |        |   | $ | 67      |         |   | $ | 24,620  |       
|                                                                                         |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |   |   |         |        |   |   |         |         |   |   |         |       

70



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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


EAGLEPICHER HOLDINGS, INC.

SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF
CASH FLOWS


Year Ended November 30, 2002


|                                                                                                   |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |  |   |        |        |   |   |         |         |   |   |         |        | 
|-------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------- | ------------------------- | ------- | -------------- | - | ---------- | ------- | -------------- |  | ------------ | ------- | ------ |  | - | ------ | ------ | - | - | ------- | ------- | - | - | ------- | ------ | 
|                                                                                                   |                                                                        |                           |         |                |   |            |         |                |  |             
|                                                                                                   |                                                                        |                           |         | Guarantors     |   |            |         |                |  |             
|                                                                                                   |                                                                        |                           |         |                |   |            |         |                |  |             
|                                                                                                   |                                                                        |                           |         | EaglePicher    |   | Subsidiary |         | Non-Guarantors |  |              |         |       
|                                                                                                   |                                                                        | Issuer                    |         | Holdings, Inc. |   | Guarantors |         | Subsidiaries   |  | Eliminations |         | Total 
|                                                                                                   |                                                                        |                           |         |                |   |            |         |                |  |              |         |       
|                                                                                                   |                                                                        |                          
|                                                                                                   |                                                                        | (In thousands of dollars)
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                              |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |  |   |        |        |   |   |         |         |   |   |         |       
|Net income (loss)                                                                                  |                                                                        | $                         | (24,157 | )              |   | $          | (19,562 | )              |  | $            | (44,541 | )      |  | $ | 2,255  |        |   | $ | 49,173  |         |   | $ | (36,832 | )     
|Adjustments to reconcile net income
    (loss) to cash provided by (used in) operating activities: |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |  |   |        |        |   |   |         |         |   |   |         |       
|                                                                                                   | Equity in (earnings) loss of consolidated
    subsidiaries             |                           |         | (18,014        | ) |            |         | 19,557         |  |              |         | 47,551 |  |   |        |       |   |   |         | (49,094 | ) |   |         |       | 
|                                                                                                   | Depreciation and amortization                                          |                           |         | 12,301         |   |            |         |               |  |              |         | 49,330 |  |   |        | 3,402  |   |   |         |        |   |   |         | 65,033 | 
|                                                                                                   | Loss from divestitures                                                 |                           |         | 3,325          |   |            |         |               |  |              |         | 3,172  |  |   |        |       |   |   |         |        |   |   |         | 6,497  | 
|                                                                                                   | Insurance related losses                                               |                           |         |               |   |            |         |               |  |              |         | 3,100  |  |   |        |       |   |   |         |        |   |   |         | 3,100  | 
|                                                                                                   | Deferred income taxes                                                  |                           |         | 6,147          |   |            |         |               |  |              |         |       |  |   |        |       |   |   |         |        |   |   |         | 6,147  | 
|                                                                                                   | Changes in assets and liabilities, net of effect
    of non-cash items |                           |         | 35,372         |   |            |         | 5              |  |              |         | 49,864 |  |   |        | (6,629 | ) |   |         | (46,689 | ) |   |         | 31,923 | 
|                                                                                                   |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |  |   |        |        |   |   |         |         |   |   |         |       
|                                                                                                   |                                                                        |                           | 14,974  |                |   |            |        |                |  |              | 108,476 |        |  |   | (972   | )      |   |   | (46,610 | )       |   |   | 75,868  |       
|                                                                                                   |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |  |   |        |        |   |   |         |         |   |   |         |       
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                              |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |  |   |        |        |   |   |         |         |   |   |         |       
|Proceeds from sales of divisions                                                                   |                                                                        |                           | 6,927   |                |   |            |        |                |  |              | 3,100   |        |  |   |       |        |   |   |        |         |   |   | 10,027  |       
|Capital expenditures                                                                               |                                                                        |                           | (980    | )              |   |            |        |                |  |              | (13,483 | )      |  |   | (1,851 | )      |   |   |        |         |   |   | (16,314 | )     
|Investments in unconsolidated subsidiaries                                                         |                                                                        |                           | (1,499  | )              |   |            |        |                |  |              | (800    | )      |  |   |       |        |   |   |        |         |   |   | (2,299  | )     
|Other, net                                                                                         |                                                                        |                           | 639     |                |   |            |        |                |  |              |        |        |  |   |       |        |   |   |        |         |   |   | 639     |       
|                                                                                                   |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |  |   |        |        |   |   |         |         |   |   |         |       
|                                                                                                   |                                                                        |                           | 5,087   |                |   |            |        |                |  |              | (11,183 | )      |  |   | (1,851 | )      |   |   |        |         |   |   | (7,947  | )     
|                                                                                                   |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |  |   |        |        |   |   |         |         |   |   |         |       
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                              |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |  |   |        |        |   |   |         |         |   |   |         |       
|Reduction of long-term debt                                                                        |                                                                        |                           | (32,515 | )              |   |            |        |                |  |              |        |        |  |   | (12    | )      |   |   |        |         |   |   | (32,527 | )     
|Net borrowings (repayments) under revolving
    credit agreements                                  |                                                                        |                           | 21,966  |                |   |            |        |                |  |              | (56,702 | )      |  |   |       |        |   |   |        |         |   |   | (34,736 | )     
|Acquisition of treasury stock                                                                      |                                                                        |                           | (159    | )              |   |            |         |                |  |              |        |        |  |   |       |        |   |   |        |         |   |   | (159    | )     
|                                                                                                   |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |  |   |        |        |   |   |         |         |   |   |         |       
|                                                                                                   |                                                                        |                           | (10,708 | )              |   |            |        |                |  |              | (56,702 | )      |  |   | (12    | )      |   |   |        |         |   |   | (67,422 | )     
|                                                                                                   |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |  |   |        |        |   |   |         |         |   |   |         |       
|Cash provided by (used in) discontinued operations                                                 |                                                                        |                           |        |                |   |            |        |                |  |              | 7,040   |        |  |   | (1,796 | )      |   |   |        |         |   |   | 5,244   |       
|                                                                                                   |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |  |   |        |        |   |   |         |         |   |   |         |       
|Effect of exchange rates on cash                                                                   |                                                                        |                           |        |                |   |            |        |                |  |              |        |        |  |   | 1,159  |        |   |   |        |         |   |   | 1,159   |       
|                                                                                                   |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |  |   |        |        |   |   |         |         |   |   |         |       
|Net increase (decrease) in cash and cash
    equivalents                                           |                                                                        |                           | 9,353   |                |   |            |        |                |  |              | 47,631  |        |  |   | (3,472 | )      |   |   | (46,610 | )       |   |   | 6,902   |       
|Intercompany accounts                                                                              |                                                                        |                           | 1,196   |                |   |            |        |                |  |              | (52,997 | )      |  |   | 4,438  |        |   |   | 47,363  |         |   |   |        |       
|Cash and cash equivalents, beginning of period                                                     |                                                                        |                           | 17,145  |                |   |            | 1       |                |  |              | 471     |        |  |   | 6,936  |        |   |   | 67      |         |   |   | 24,620  |       
|                                                                                                   |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |  |   |        |        |   |   |         |         |   |   |         |       
|Cash and cash equivalents, end of period                                                           |                                                                        | $                         | 27,694  |                |   | $          | 1       |                |  | $            | (4,895  | )      |  | $ | 7,902  |        |   | $ | 820     |         |   | $ | 31,522  |       
|                                                                                                   |                                                                        |                           |         |                |   |            |         |                |  |              |         |        |  |   |        |        |   |   |         |         |   |   |         |       

71



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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


EAGLEPICHER HOLDINGS, INC.

SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF
CASH FLOWS


Year Ended November 30, 2003


|                                                                                                   |                                                                        |                           |          |                |   |            |       |                |   |              |         |         |   |   |         |       |   |   |         |        |   |   |          |         |  
|-------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------- | ------------------------- | -------- | -------------- | - | ---------- | ----- | -------------- | - | ------------ | ------- | ------- | - | - | ------- | ----- | - | - | ------- | ------ | - | - | -------- | ------- | -
|                                                                                                   |                                                                        |                           |          |                |   |            |       |                |   |             
|                                                                                                   |                                                                        |                           |          | Guarantors     |   |            |       |                |   |             
|                                                                                                   |                                                                        |                           |          |                |   |            |       |                |   |             
|                                                                                                   |                                                                        |                           |          | EaglePicher    |   | Subsidiary |       | Non-Guarantors |   |              |         |        
|                                                                                                   |                                                                        | Issuer                    |          | Holdings, Inc. |   | Guarantors |       | Subsidiaries   |   | Eliminations |         | Total  
|                                                                                                   |                                                                        |                           |          |                |   |            |       |                |   |              |         |        
|                                                                                                   |                                                                        |                          
|                                                                                                   |                                                                        | (In thousands of dollars)
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                              |                                                                        |                           |          |                |   |            |       |                |   |              |         |         |   |   |         |       |   |   |         |        |   |   |          |        
|Net income (loss)                                                                                  |                                                                        | $                         | 9,612    |                |   | $          | 5,240 |                |   | $            | 53,751  |         |   | $ | 6,198   |       |   | $ | (71,958 | )      |   | $ | 2,843    |        
|Adjustments to reconcile net income
    (loss) to cash provided by (used in) operating activities: |                                                                        |                           |          |                |   |            |       |                |   |              |         |         |   |   |         |       |   |   |         |        |   |   |          |        
|                                                                                                   | Equity in (earnings) loss of consolidated
    subsidiaries             |                           |          | (48,601        | ) |            |       | (9,612         | ) |              |         | (12,169 | ) |   |         |      |   |   |         | 70,382 |   |   |          |        |  
|                                                                                                   | Depreciation and amortization                                          |                           |          | 8,337          |   |            |       |               |   |              |         | 37,341  |   |   |         | 5,108 |   |   |         |       |   |   |          | 50,786  |  
|                                                                                                   | Preferred stock dividends accrued                                      |                           |          |               |   |            |       | 4,169          |   |              |         |        |   |   |         |      |   |   |         |       |   |   |          | 4,169   |  
|                                                                                                   | Loss on disposal of discontinued operations                            |                           |          | 219            |   |            |       |               |   |              |         | (342    | ) |   |         | 4,318 |   |   |         |       |   |   |          | 4,195   |  
|                                                                                                   | Insurance related (gains) losses                                       |                           |          | 724            |   |            |       |               |   |              |         | (9,003  | ) |   |         |      |   |   |         |       |   |   |          | (8,279  | )
|                                                                                                   | Write-off of deferred financing costs                                  |                           |          | 6,327          |   |            |       |               |   |              |         |        |   |   |         |      |   |   |         |       |   |   |          | 6,327   |  
|                                                                                                   | Deferred income taxes                                                  |                           |          | (2,837         | ) |            |       |               |   |              |         |        |   |   |         | 2,758 |   |   |         |       |   |   |          | (79     | )
|                                                                                                   | Changes in assets and liabilities, net of effect
    of non-cash items |                           |          | (73,110        | ) |            |       |               |   |              |         | 14,273  |   |   |         | (172  | ) |   |         | (1,911 | ) |   |          | (60,920 | )
|                                                                                                   |                                                                        |                           |          |                |   |            |       |                |   |              |         |         |   |   |         |       |   |   |         |        |   |   |          |        
|                                                                                                   |                                                                        |                           | (99,329  | )              |   |            | (203  | )              |   |              | 83,851  |         |   |   | 18,210  |       |   |   | (3,487  | )      |   |   | (958     | )      
|                                                                                                   |                                                                        |                           |          |                |   |            |       |                |   |              |         |         |   |   |         |       |   |   |         |        |   |   |          |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                              |                                                                        |                           |          |                |   |            |       |                |   |              |         |         |   |   |         |       |   |   |         |        |   |   |          |        
|Proceeds from sales of property and equipment and
    other                                        |                                                                        |                           |         |                |   |            |      |                |   |              | 238     |         |   |   |        |       |   |   |        |        |   |   | 238      |        
|Capital expenditures                                                                               |                                                                        |                           | (2,411   | )              |   |            |      |                |   |              | (10,044 | )       |   |   | (3,814  | )     |   |   |        |        |   |   | (16,269  | )      
|Purchases of intangibles                                                                           |                                                                        |                           |         |                |   |            |      |                |   |              | (672    | )       |   |   | (2,500  | )     |   |   |        |        |   |   | (3,172   | )      
|Investments in unconsolidated subsidiaries                                                         |                                                                        |                           |         |                |   |            |      |                |   |              |        |         |   |   | (4,426  | )     |   |   |        |        |   |   | (4,426   | )      
|                                                                                                   |                                                                        |                           |          |                |   |            |       |                |   |              |         |         |   |   |         |       |   |   |         |        |   |   |          |        
|                                                                                                   |                                                                        |                           | (2,411   | )              |   |            |      |                |   |              | (10,478 | )       |   |   | (10,740 | )     |   |   |        |        |   |   | (23,629  | )      
|                                                                                                   |                                                                        |                           |          |                |   |            |       |                |   |              |         |         |   |   |         |       |   |   |         |        |   |   |          |        
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                              |                                                                        |                           |          |                |   |            |       |                |   |              |         |         |   |   |         |       |   |   |         |        |   |   |          |        
|Reduction of long-term debt                                                                        |                                                                        |                           | (19,000  | )              |   |            |      |                |   |              |        |         |   |   |        |       |   |   |        |        |   |   | (19,000  | )      
|Redemption of senior subordinated notes                                                            |                                                                        |                           | (210,500 | )              |   |            |      |                |   |              |        |         |   |   |        |       |   |   |        |        |   |   | (210,500 | )      
|Net borrowings (repayments) under revolving
    credit agreements                                  |                                                                        |                           | (121,500 | )              |   |            |      |                |   |              |        |         |   |   |        |       |   |   |        |        |   |   | (121,500 | )      
|Issuance of treasury stock                                                                         |                                                                        |                           |         |                |   |            | 910   |                |   |              |        |         |   |   |        |       |   |   |        |        |   |   | 910      |        
|Proceeds from the New Credit Agreement and Senior
    Unsecured Notes                              |                                                                        |                           | 398,000  |                |   |            |      |                |   |              |        |         |   |   |        |       |   |   |        |        |   |   | 398,000  |        
|Payment of deferred financing costs                                                                |                                                                        |                           | (10,844  | )              |   |            |      |                |   |              |        |         |   |   |        |       |   |   |        |        |   |   | (10,844  | )      
|                                                                                                   |                                                                        |                           |          |                |   |            |       |                |   |              |         |         |   |   |         |       |   |   |         |        |   |   |          |        
|                                                                                                   |                                                                        |                           | 36,156   |                |   |            | 910   |                |   |              |        |         |   |   |        |       |   |   |        |        |   |   | 37,066   |        
|                                                                                                   |                                                                        |                           |          |                |   |            |       |                |   |              |         |         |   |   |         |       |   |   |         |        |   |   |          |        
|Cash provided by discontinued operations                                                           |                                                                        |                           |         |                |   |            |      |                |   |              | 16,150  |         |   |   | 1,248   |       |   |   |        |        |   |   | 17,398   |        
|                                                                                                   |                                                                        |                           |          |                |   |            |       |                |   |              |         |         |   |   |         |       |   |   |         |        |   |   |          |        
|Effect of exchange rates on cash                                                                   |                                                                        |                           |         |                |   |            |      |                |   |              |        |         |   |   | 5,921   |       |   |   |        |        |   |   | 5,921    |        
|                                                                                                   |                                                                        |                           |          |                |   |            |       |                |   |              |         |         |   |   |         |       |   |   |         |        |   |   |          |        
|Net increase (decrease) in cash and cash
    equivalents                                           |                                                                        |                           | (65,584  | )              |   |            | 707   |                |   |              | 89,523  |         |   |   | 14,639  |       |   |   | (3,487  | )      |   |   | 35,798   |        
|Intercompany accounts                                                                              |                                                                        |                           | 90,368   |                |   |            | (707  | )              |   |              | (87,360 | )       |   |   | (4,968  | )     |   |   | 2,667   |        |   |   |         |        
|Cash and cash equivalents, beginning of period                                                     |                                                                        |                           | 27,694   |                |   |            | 1     |                |   |              | (4,895  | )       |   |   | 7,902   |       |   |   | 820     |        |   |   | 31,522   |        
|                                                                                                   |                                                                        |                           |          |                |   |            |       |                |   |              |         |         |   |   |         |       |   |   |         |        |   |   |          |        
|Cash and cash equivalents, end of period                                                           |                                                                        | $                         | 52,478   |                |   | $          | 1     |                |   | $            | (2,732  | )       |   | $ | 17,573  |       |   | $ |        |        |   | $ | 67,320   |        
|                                                                                                   |                                                                        |                           |          |                |   |            |       |                |   |              |         |         |   |   |         |       |   |   |         |        |   |   |          |        

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N.     11.75%
Cumulative Mandatorily Redeemable Exchangeable Preferred
Stock

We have outstanding 14,191 shares of our
11.75% Cumulative Mandatorily Redeemable Exchangeable Preferred
Stock. The Preferred Stock had an initial liquidation preference
at February 24, 1998 of $5,637.70 per share which accreted
during the first five years after issuance at 11.75% per annum,
compounded semiannually, ultimately reaching $10,000 per share
on March 1, 2003. Commencing March 1, 2003, dividends
on our Preferred Stock became cash payable in arrears,
semiannually, at 11.75% per annum of the liquidation preference
if and when declared by the Board of Directors; the first
semiannual dividend payment of $8.3 million was due
September 1, 2003. The New Credit Agreement and the Senior
Unsecured Notes contain financial covenants that currently
prohibit us from paying dividends on the Preferred Stock. Our
Board of Directors did not declare a cash dividend as of
September 1, 2003. If we do not pay cash dividends on the
Preferred Stock, then holders of the Preferred Stock may become
entitled to elect a majority of our Board of Directors.
Dakruiter S.A. and Harbourgate B.V., both companies controlled
by Granaria Holdings B.V., our controlling common shareholder,
hold approximately 78% of our preferred stock, and therefore
Granaria Holdings B.V. would continue to be able to elect our
entire Board of Directors. The election of a majority of the
directors is the only remedy of holders of the preferred stock
for a failure to pay cash dividends. Unpaid dividends are
cumulative but do not bear interest. During 2003 preferred
dividends of $16.4 million were accrued. Future dividends
on the Preferred Stock are as follows (in thousands of dollars):

|            |  |           |        | 
|----------- |  | --------- | ------ | 
|Fiscal Year |  | Dividends
|            |  |          
|2004        |  | $         | 16,674 | 
|2005        |  |           | 16,674 | 
|2006        |  |           | 16,674 | 
|2007        |  |           | 16,674 | 
|2008        |  |           | 4,167  | 
|            |  |           |        | 
|            |  | $         | 70,863 | 
|            |  |           |        | 

The Preferred Stock is mandatorily redeemable by
us on March 1, 2008 or earlier under certain circumstances,
but may be redeemed at our option, in whole or in part, at any
time after February 28, 2003, at set redemption prices. The
only effect of a failure to redeem the Preferred Stock on
March 1, 2008 is that holders of the Preferred Stock would
become entitled to elect a majority of our Board of Directors.
We are required to offer to purchase the Preferred Stock should
there be a change in control. Holders of the Preferred Stock
have no voting rights except in certain circumstances. The
amounts recorded in the financial statements represent the
current redemption value plus unpaid dividends of the Preferred
Stock as there is no actively traded public market for this
instrument. Effective September 1, 2003, we adopted SFAS
No. 150, Accounting for Certain Financial Instruments
with Characteristics of both Liabilities and Equity which
requires that certain instruments be classified as liabilities
in our balance sheet. The effect of the adoption was that, as of
September 1, 2003, we reclassified the current redemption
value plus unpaid dividends of our preferred stock to long-term
liabilities and the accrual of the dividends payable for the
period September 1, 2003 through November 30, 2003
have been recorded as a component of non-operating expenses in
our consolidated statements of income. In accordance with this
statement, the prior period financial statements have not been
reclassified.

O.     Shareholders
Equity (Deficit)

Common
Stock

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

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Stock and each share of the Class B Common
Stock outstanding immediately prior to the effective time was
reclassified as one share of Common Stock.


During the second quarter of 2003, we sold to our
controlling common shareholder, Granaria Holdings B.V., Bert
Iedema, one of our directors and an executive officer of
Granaria Holdings B.V., and two of our executive officers the
69,500 shares of common stock held in our Treasury for
$13.00 per share, or $0.9 million. In connection with this
stock issuance, we reclassified the balance in our Treasury, or
$7.2 million, to Additional Paid in Capital in our
accompanying balance sheets.

Accumulated
Other Comprehensive Income (Loss)

At November 30, 2002, Accumulated Other
Comprehensive Income (Loss) consisted of a net foreign currency
translation loss of $1.4 million, which is net of a tax
benefit of $0.6 million and a net loss on hedging
derivatives of $3.0 million, which is net of a tax benefit
of $1.5 million. Accumulated Other Comprehensive Income
(Loss) at November 30, 2003 consisted of a net foreign
currency translation gain of $2.7 million, which is net of
a tax provision of $1.5 million, and a net loss on hedging
derivatives of $1.2 million, which is net of a tax benefit
of $0.6 million.

P.     Income
Taxes

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

|              |  |      |         |      |  |      |         |   |  |   |        |  
|------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------ | -
|              |  | 2001 |         | 2002 |  | 2003
|              |  |      |         |      |  |     
|United States |  | $    | (39,552 | )    |  | $    | (38,285 | ) |  | $ | (1,826 | )
|Foreign       |  |      | 7,149   |      |  |      | 8,183   |   |  |   | 13,384 |  
|              |  |      |         |      |  |      |         |   |  |   |        |  
|              |  | $    | (32,403 | )    |  | $    | (30,102 | ) |  | $ | 11,558 |  
|              |  |      |         |      |  |      |         |   |  |   |        |  

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

|         |                 |      |         |        |   |      |        |        |   |   |       |       | 
|-------- | --------------- | ---- | ------- | ------ | - | ---- | ------ | ------ | - | - | ----- | ----- | 
|         |                 | 2001 |         | 2002   |   | 2003
|         |                 |      |         |        |   |     
|Current: |                 |      |         |        |   |      |        |        |   |   |       |      
|         | Federal         |      | $       | (5,174 | ) |      | $      | (5,956 | ) |   | $     |      | 
|         | Foreign         |      |         | 2,700  |   |      |        | 2,455  |   |   |       | 2,916 | 
|         | State and local |      |         | (700   | ) |      |        | (45    | ) |   |       |      | 
|         |                 |      |         |        |   |      |        |        |   |   |       |      
|         |                 |      | (3,174  | )      |   |      | (3,546 | )      |   |   | 2,916 |      
|Deferred |                 |      | (6,997  | )      |   |      | 5,484  |        |   |   | (79   | )    
|         |                 |      |         |        |   |      |        |        |   |   |       |      
|         |                 | $    | (10,171 | )      |   | $    | 1,938  |        |   | $ | 2,837 |      
|         |                 |      |         |        |   |      |        |        |   |   |       |      

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EAGLEPICHER HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


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

|                                                                      |  |      |         |      |  |      |         |   |  |   |        |  
|--------------------------------------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------ | -
|                                                                      |  | 2001 |         | 2002 |  | 2003
|                                                                      |  |      |         |      |  |     
|Income tax expense (benefit) at Federal
    statutory rate            |  | $    | (11,341 | )    |  | $    | (11,420 | ) |  | $ | 4,045  |  
|Foreign taxes rate differential                                       |  |      | 49      |      |  |      | 66      |   |  |   | 142    |  
|State and local taxes, net of the Federal benefit                     |  |      | (100    | )    |  |      | (29     | ) |  |   |       |  
|Non-deductible amortization relating to goodwill                      |  |      | 700     |      |  |      | 992     |   |  |   |       |  
|Non-deductible preferred stock dividends                              |  |      |        |      |  |      |        |   |  |   | 1,459  |  
|Valuation allowance                                                   |  |      |        |      |  |      | 13,813  |   |  |   | (2,882 | )
|Effect of Discontinued Operations of Hillsdale
    U.K.               |  |      |        |      |  |      |        |   |  |   | 2,334  |  
|Foreign income offset by previously unrecorded
    losses and credits |  |      |        |      |  |      |        |   |  |   | (3,049 | )
|Other                                                                 |  |      | 521     |      |  |      | (1,484  | ) |  |   | 788    |  
|                                                                      |  |      |         |      |  |      |         |   |  |   |        |  
|                                                                      |  | $    | (10,171 | )    |  | $    | 1,938   |   |  | $ | 2,837  |  
|                                                                      |  |      |         |      |  |      |         |   |  |   |        |  

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

|                                                                   |                                                                    |      |        |         |   |   |       |         |  
|------------------------------------------------------------------ | ------------------------------------------------------------------ | ---- | ------ | ------- | - | - | ----- | ------- | -
|                                                                   |                                                                    | 2002 |        | 2003   
|                                                                   |                                                                    |      |        |        
|Current deferred tax assets attributable to:                       |                                                                    |      |        |         |   |   |       |        
|                                                                   | Accrued divestiture reserve                                        |      | $      | 6,182   |   |   | $     | 3,254   |  
|                                                                   | Accrued liabilities                                                |      |        | 9,437   |   |   |       | 9,314   |  
|                                                                   | Other                                                              |      |        | 1,429   |   |   |       | 896     |  
|                                                                   |                                                                    |      |        |         |   |   |       |        
|                                                                   | Current deferred tax asset                                         |      |        | 17,048  |   |   |       | 13,464  |  
|                                                                   | Valuation allowance                                                |      |        | (6,250  | ) |   |       | (4,938  | )
|                                                                   |                                                                    |      |        |         |   |   |       |        
|                                                                   | Current deferred tax asset, net of valuation
    allowance         |      |        | 10,798  |   |   |       | 8,526   |  
|                                                                   |                                                                    |      |        |         |   |   |       |        
|Non-current deferred tax assets
    (liabilities) attributable to: |                                                                    |      |        |         |   |   |       |        
|                                                                   | Property, plant and equipment                                      |      |        | (7,321  | ) |   |       | (3,440  | )
|                                                                   | Prepaid pension                                                    |      |        | (19,177 | ) |   |       | (19,912 | )
|                                                                   | Net operating loss carryforwards                                   |      |        | 32,363  |   |   |       | 33,532  |  
|                                                                   | Amortization of intangibles                                        |      |        | 5,177   |   |   |       | 1,539   |  
|                                                                   | Postretirement benefits                                            |      |        | 2,793   |   |   |       | 3,766   |  
|                                                                   | Other                                                              |      |        | 228     |   |   |       | (2,340  | )
|                                                                   |                                                                    |      |        |         |   |   |       |        
|                                                                   | Non-current deferred tax asset                                     |      |        | 14,063  |   |   |       | 13,145  |  
|                                                                   | Valuation allowance                                                |      |        | (14,063 | ) |   |       | (13,631 | )
|                                                                   |                                                                    |      |        |         |   |   |       |        
|                                                                   | Non-current deferred tax liability, net of
    valuation allowance |      |        |        |   |   |       | (486    | )
|                                                                   |                                                                    |      |        |         |   |   |       |        
|Net deferred tax asset                                             |                                                                    | $    | 10,798 |         |   | $ | 8,040 |        
|                                                                   |                                                                    |      |        |         |   |   |       |        

The long-term deferred tax liability of
$0.5 million as of November 30, 2003 is included in
Other Long-Term Liabilities in the accompanying Balance Sheet.
As of November 30, 2003 we had net operating loss
carryforwards of $95.8 million in the United States
available to offset future taxable income that will begin to
expire in 2021.

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SFAS No. 109 requires a valuation allowance
to be recorded when it is more likely than not that some or all
of the deferred tax assets will not be realized. As of
November 30, 2002 and 2003, we recorded a valuation
allowance to reduce our deferred tax assets to an amount that is
more likely than not to be realized. In estimating levels of
future taxable income, we have considered historical results of
operations in recent years and the implementation of prudent and
feasible tax planning strategies to generate future taxable
income. If future taxable income is less than the amount that
has been assumed in determining the deferred tax asset, then an
increase in the valuation reserve will be required, with a
corresponding charge against income. On the other hand, if
future taxable income exceeds the level that has been assumed in
calculating the deferred tax asset, the valuation reserve could
be reduced, with a corresponding credit to income.

U.S. income and foreign withholding taxes have
not been provided on certain unremitted earnings of foreign
operations which we consider to be permanent investments. The
cumulative amount of unremitted income for which U.S. income and
foreign withholding taxes have not been provided totaled
$37.1 million at November 30, 2003. Determination of
the amount of any unrecognized deferred income tax liability on
these unremitted earnings is not practicable.



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



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

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

Plan benefits for salaried employees were based
primarily on an employees highest five consecutive
years earnings during the last ten years of employment.
Plan benefits for hourly employees were typically based on a
dollar unit multiplied by the number of service years. In
December 2002, our board of directors authorized us to change
from a final average pay plan, as described above,
to a cash-balance pension plan effective January 1, 2004.
All benefits earned through December 31, 2003, will be
unchanged. This will apply to all salaried and certain hourly
employees.

Effective January 1, 2003, our board of
directors terminated our Supplemental Executive Retirement Plan
(the SERP). The Compensation Committee of the board
of directors approved the replacement of the SERP with a
Pension Restoration Plan which allows certain
employees whose compensation is greater than $0.2 million
per year to receive pension benefits, which are currently
limited primarily by governmental regulations. In addition,
certain key executives receive an additional 5% of compensation
per year in lieu of the prior SERP benefits. These are unfunded
and unsecured obligations.

In addition to providing pension retirement
benefits, we make health care and life insurance benefits
available to certain retired employees. Generally, the medical
plans pay a stated percentage of medical expenses reduced by
deductibles and other coverages. Eligible employees may receive
these health and life insurance benefits if they reach early or
normal retirement age while employed by us. During 2003, we
began to enforce for all non-union retirees our existing policy
of collecting 100% of the costs for these postretirement
benefits.

During 2003, the United States Congress passed
the Medicare Prescription Drug, Improvement and Modernization
Act of 2003, which established a voluntary prescription drug
benefit under the new Part D of the Social Security
Act. The accompanying financial statements do not include any
adjustments related to the benefits provided under this new
legislation. We do not believe that the benefits under this
legislation will have a material impact on our financial
position or results of operations as our postretirement benefit
plans are designed for retirees to pay 100% of the costs.
Accordingly, any benefit realized as a result of this
legislation will be a reduction in the costs to the retirees.

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EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


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

|                                                              |  |                  |         |                         |  |      |         |      |  |      |         |      |  |   |       |  |  |   |       |  |  |   |       |  
|------------------------------------------------------------- |  | ---------------- | ------- | ----------------------- |  | ---- | ------- | ---- |  | ---- | ------- | ---- |  | - | ----- |  |  | - | ----- |  |  | - | ----- | -
|                                                              |  |                  |         |                        
|                                                              |  | Pension Benefits |         | Postretirement Benefits
|                                                              |  |                  |         |                        
|                                                              |  | 2001             |         | 2002                    |  | 2003 |         | 2001 |  | 2002 |         | 2003
|                                                              |  |                  |         |                         |  |      |         |      |  |      |         |     
|Service cost  benefits earned during
    the period          |  | $                | 4,790   |                         |  | $    | 3,933   |      |  | $    | 3,880   |      |  | $ | 546   |  |  | $ | 463   |  |  | $ | 254   |  
|Interest cost on projected benefit obligations                |  |                  | 15,314  |                         |  |      | 15,652  |      |  |      | 15,279  |      |  |   | 1,271 |  |  |   | 1,187 |  |  |   | 1,085 |  
|Expected return on plan assets                                |  |                  | (23,600 | )                       |  |      | (23,705 | )    |  |      | (19,767 | )    |  |   |      |  |  |   |      |  |  |   |      |  
|Recognized actuarial loss                                     |  |                  |        |                         |  |      |        |      |  |      | 1,500   |      |  |   |      |  |  |   |      |  |  |   | 142   |  
|Net amortization and deferral                                 |  |                  | 210     |                         |  |      | 327     |      |  |      | 8       |      |  |   |      |  |  |   |      |  |  |   | (318  | )
|                                                              |  |                  |         |                         |  |      |         |      |  |      |         |      |  |   |       |  |  |   |       |  |  |   |       |  
|Net periodic cost (income)                                    |  |                  | (3,286  | )                       |  |      | (3,793  | )    |  |      | 900     |      |  | $ | 1,817 |  |  | $ | 1,650 |  |  | $ | 1,163 |  
|                                                              |  |                  |         |                         |  |      |         |      |  |      |         |      |  |   |       |  |  |   |       |  |  |   |       |  
|Effect of the SERP termination                                |  |                  |        |                         |  |      |        |      |  |      | (3,105  | )    |  |   |       |  |  |   |       |  |  |   |       |  
|Special termination benefits                                  |  |                  |        |                         |  |      | 3,674   |      |  |      | 100     |      |  |   |       |  |  |   |       |  |  |   |       |  
|Other retirement plans                                        |  |                  | 1,131   |                         |  |      | 937     |      |  |      | 735     |      |  |   |       |  |  |   |       |  |  |   |       |  
|                                                              |  |                  |         |                         |  |      |         |      |  |      |         |      |  |   |       |  |  |   |       |  |  |   |       |  
|Total cost of (income from) providing retirement
    benefits |  | $                | (2,155  | )                       |  | $    | 818     |      |  | $    | (1,370  | )    |  |   |       |  |  |   |       |  |  |   |       |  
|                                                              |  |                  |         |                         |  |      |         |      |  |      |         |      |  |   |       |  |  |   |       |  |  |   |       |  

During 2002, we recognized special termination
benefits as a result of determining that a portion of assets in
our over-funded pension plan at November 30, 2001 could be
made available to pay severance costs. Accordingly, we have
amended our pension plans and have provided new or amended
severance plans to allow for such payments. Approximately
$3.8 million had been paid out of the pension plans and was
recorded as special termination benefits in 2002 and 2003. Of
this amount, $2.7 million in 2001 and $0.4 million in
2002 is included in Restructuring expense in our statements of
income (loss).

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

The following tables set forth the plans
changes in benefit obligation, plan assets and funded status on
the measurement dates, November 30, 2002 and 2003, and
amounts recognized in our consolidated balance sheets as of
those dates (in thousands of dollars).

|                                      |                                  |                  |         |                         |   |      |         |         |   |   |        |        |   |   |        |        |  
|------------------------------------- | -------------------------------- | ---------------- | ------- | ----------------------- | - | ---- | ------- | ------- | - | - | ------ | ------ | - | - | ------ | ------ | -
|                                      |                                  |                  |         |                        
|                                      |                                  | Pension Benefits |         | Postretirement Benefits
|                                      |                                  |                  |         |                        
|                                      |                                  | 2002             |         | 2003                    |   | 2002 |         | 2003   
|                                      |                                  |                  |         |                         |   |      |         |        
|Changes in Benefit Obligations:       |                                  |                  |         |                         |   |      |         |         |   |   |        |        |   |   |        |       
|Benefit Obligation, beginning of year |                                  | $                | 219,816 |                         |   | $    | 232,014 |         |   | $ | 16,509 |        |   | $ | 18,638 |       
|                                      | Service cost                     |                  |         | 3,933                   |   |      |         | 3,880   |   |   |        | 463    |   |   |        | 254    |  
|                                      | Interest cost                    |                  |         | 15,652                  |   |      |         | 15,279  |   |   |        | 1,187  |   |   |        | 1,085  |  
|                                      | Amendments                       |                  |         | 2,305                   |   |      |         | (6,413  | ) |   |        |       |   |   |        | (9,190 | )
|                                      | Actuarial (gain)/loss            |                  |         | 3,397                   |   |      |         | 25,235  |   |   |        | 2,367  |   |   |        | 4,119  |  
|                                      | Effect of SERP Termination       |                  |         |                        |   |      |         | (3,105  | ) |   |        |       |   |   |        |       |  
|                                      | Plan participants contributions |                  |         |                        |   |      |         |        |   |   |        | 776    |   |   |        | 911    |  
|                                      | Special termination benefits     |                  |         | 3,674                   |   |      |         | 100     |   |   |        |       |   |   |        |       |  
|                                      | Benefits paid                    |                  |         | (16,763                 | ) |      |         | (14,718 | ) |   |        | (2,664 | ) |   |        | (2,291 | )
|                                      |                                  |                  |         |                         |   |      |         |         |   |   |        |        |   |   |        |       
|Benefit Obligation, end of year       |                                  |                  | 232,014 |                         |   |      | 252,272 |         |   |   | 18,638 |        |   |   | 13,526 |       
|                                      |                                  |                  |         |                         |   |      |         |         |   |   |        |        |   |   |        |       

77



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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


|                                                                    |                                              |                  |         |                         |   |      |         |         |   |   |         |        |   |   |         |        |  
|------------------------------------------------------------------- | -------------------------------------------- | ---------------- | ------- | ----------------------- | - | ---- | ------- | ------- | - | - | ------- | ------ | - | - | ------- | ------ | -
|                                                                    |                                              |                  |         |                        
|                                                                    |                                              | Pension Benefits |         | Postretirement Benefits
|                                                                    |                                              |                  |         |                        
|                                                                    |                                              | 2002             |         | 2003                    |   | 2002 |         | 2003   
|                                                                    |                                              |                  |         |                         |   |      |         |        
|Change in Plan Assets:                                              |                                              |                  |         |                         |   |      |         |         |   |   |         |        |   |   |         |       
|                                                                    | Fair Value of Plan Assets, beginning of year |                  |         | 264,104                 |   |      |         | 232,901 |   |   |         |       |   |   |         |       |  
|                                                                    | Actual return (loss) on plan assets          |                  |         | (14,440                 | ) |      |         | 33,749  |   |   |         |       |   |   |         |       |  
|                                                                    | Employer contributions                       |                  |         |                        |   |      |         |        |   |   |         | 1,888  |   |   |         | 1,380  |  
|                                                                    | Plan participants contributions             |                  |         |                        |   |      |         |        |   |   |         | 776    |   |   |         | 911    |  
|                                                                    | Benefits paid                                |                  |         | (16,763                 | ) |      |         | (14,718 | ) |   |         | (2,664 | ) |   |         | (2,291 | )
|                                                                    |                                              |                  |         |                         |   |      |         |         |   |   |         |        |   |   |         |       
|Fair Value of Plan Assets, end of year                              |                                              |                  | 232,901 |                         |   |      | 251,932 |         |   |   |        |        |   |   |        |       
|                                                                    |                                              |                  |         |                         |   |      |         |         |   |   |         |        |   |   |         |       
|Funded Status                                                       |                                              |                  | 887     |                         |   |      | (340    | )       |   |   | (18,638 | )      |   |   | (13,526 | )     
|Unrecognized Actuarial (Gain)/ Loss                                 |                                              |                  | 49,205  |                         |   |      | 58,948  |         |   |   | 1,003   |        |   |   | 4,980   |       
|Unrecognized Prior Service Cost                                     |                                              |                  | 4,704   |                         |   |      | (1,717  | )       |   |   |        |        |   |   | (8,872  | )     
|                                                                    |                                              |                  |         |                         |   |      |         |         |   |   |         |        |   |   |         |       
|Net Prepaid Benefit Cost (Accrued Benefit
    Liability) Recognized |                                              | $                | 54,796  |                         |   | $    | 56,891  |         |   | $ | (17,635 | )      |   | $ | (17,418 | )     
|                                                                    |                                              |                  |         |                         |   |      |         |         |   |   |         |        |   |   |         |       

As of November 30, 2003, our unfunded status
of $0.3 million included $1.7 million of over-funded
positions in our qualified hourly and salary pension plans and
$2.0 million of under-funded positions in our non-qualified
Pension Restoration Plan.

Weighted average assumptions as of
November 30 are:

|                                       |  |          |      |                |  |      |      |      |  |  |      |   |  |  |      |  
|-------------------------------------- |  | -------- | ---- | -------------- |  | ---- | ---- | ---- |  |  | ---- | - |  |  | ---- | -
|                                       |  |          |      |               
|                                       |  | Pension  |      | Postretirement
|                                       |  | Benefits |      | Benefits      
|                                       |  |          |      |               
|                                       |  | 2002     |      | 2003           |  | 2002 |      | 2003
|                                       |  |          |      |                |  |      |      |     
|Discount rate                          |  |          | 6.95 | %              |  |      | 6.07 | %    |  |  | 6.95 | % |  |  | 6.07 | %
|Expected rate of return on plan assets |  |          | 9.25 | %              |  |      | 8.75 | %    |  |  | N/A  |   |  |  | N/A  |  
|Rate of compensation increase          |  |          | 3.00 | %              |  |      | 3.00 | %    |  |  | N/A  |   |  |  | N/A  |  

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

During 2003, plan amendments reduced our
projected pension benefit obligation by $6.4 million due to
adopting the provisions of our cash-balance plan effective
January 1, 2004, as discussed above. Also during 2003, plan
amendments reduced our projected postretirement welfare plan
obligation by $9.2 million due to enforcing for our non-union
retirees our existing policy of collecting 100% of the costs for
these postretirement benefits.

Postretirement benefit costs were estimated
assuming retiree health care costs would initially increase at a
11% annual rate. The rate was assumed to decrease 1% per year
until it reaches 5% and then remain at that level thereafter. If
this annual trend rate would increase by 1%, the accumulated
postretirement obligation as of November 30, 2003 would
increase by $0.9 million with a corresponding increase of
$0.2 million in the postretirement benefit expense in 2003.
A 1% decrease in this annual trend rate would decrease the
accumulated postretirement benefit obligation by
$0.8 million and the postretirement benefit expense by
$0.1 million in 2003.

78



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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)




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

We also offer 401(k) savings plans to certain
employees. Participants may contribute a portion of their
earnings, of which 50% of their contribution, up to 6% of their
earnings, is matched by us. Our matching cost for these plans
was $2.1 million in 2001 and $1.6 million in 2002 and
2003. Our board of directors adopted a 401(k) Restoration
Plan, effective January 1, 2003, for all employees
whose base compensation is greater than $0.2 million per
year. This allows all employees to maximize our matching policy
without being limited by governmental regulations related to
maximum employee contributions into a 401(k) plan. These are
unfunded and unsecured obligations.

We have a Share Appreciation Plan (SAP
Plan) to reward certain executives and managers whose
individual performance and effort will have a direct impact on
achieving our profit and growth objectives. Shares of stock are
not actually awarded, however participants are awarded units on
which appreciation is calculated based upon a formula of the
prior years earnings before interest, taxes, depreciation,
and amortization (EBITDA) minus net debt and
preferred stock. The units vested over five years and are
payable any time during the sixth through tenth year following
the date of award. We recognized income of $1.0 million
related to this plan in the fourth quarter of 2001 because the
calculated value of the units at November 30, 2001 was
below the base price; the units had no value at the end of
November 30, 2003 as well. It is our intent to no longer
grant units under the SAP Plan.

In June 2002, we adopted a Long-Term Bonus
Program, effective December 1, 2001. This plan
provides for the grant of units to certain members of
management. Individuals are rewarded based on the growth of a
units value over time. The unit value is determined based
on a multiple (6.54x) of our annual EBITDA less net debt and
preferred stock, as defined and as adjusted for certain items in
the agreement. The units vest ratably over three years and can
be redeemed by the individuals after the vesting period and up
to five years, which is when the units expire. No award payments
can be made until the earlier of a) September 2004, or b)
Dakruiter S.A., a company controlled by Granaria Holdings B.V.,
our controlling common shareholder, selling all shares of our
preferred stock owned by it. Additionally, the potential annual
payment of any vested units is limited to certain conditions to
prevent any undue financial stress. During 2002 and 2003, we
expensed $1.2 million during each year in Selling and
Administrative expense in the statements of income
(loss) for the cost associated with this plan. If all the
units outstanding under the Long-term Bonus Program were
vested and exercisable as of November 30, 2003, we would be
obligated to pay approximately $2.8 million to the
participants.

The following is a detail of the units granted,
expired/forfeited and exercised under the plan:

|                           |  |  |         |  
|-------------------------- |  |  | ------- | -
|Balance, November 30, 2001 |  |  |        |  
|Granted                    |  |  | 419,150 |  
|Expired/forfeited          |  |  |        |  
|Exercised                  |  |  |        |  
|                           |  |  |         |  
|Balance, November 30, 2002 |  |  | 419,150 |  
|Granted                    |  |  | 510,950 |  
|Expired/forfeited          |  |  | (60,833 | )
|Exercised                  |  |  |        |  
|                           |  |  |         |  
|Balance, November 30, 2003 |  |  | 869,267 |  
|                           |  |  |         |  

79



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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


R.     Commitments
and Contingencies



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

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

We are involved in various stages of
investigation and remediation of soil and groundwater at
approximately 15 sites as a result of past and present
operations, including currently owned and formerly owned plants.
Also, we have received notice that we may have liability under
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, as a potentially responsible
party at approximately 22 additional sites, but we believe that
any potential liability would not be material to our financial
position or results of operations.

The ultimate cost of site remediation is
difficult to predict given the uncertainties regarding the
extent of the required remediation, the interpretation of
applicable laws and regulations and alternative remediation
methods. Based on our available information and experience with
environmental remediation matters, we have accrued reserves for
our best estimate of remediation costs, and we do not believe
that remediation activities will have a material adverse impact
on our financial condition, results of operations or cash flows.
In addition, in the course of our bankruptcy, we obtained an
agreement with the United States Environmental Protection Agency
and Department of Interior and the states of Arizona, Michigan
and Oklahoma whereby we have limited responsibility to them for
response costs and natural resource damages for environmental
contamination of sites not owned by us that is attributable to
pre-bankruptcy activities. We retain all of our defenses, legal
or factual, at such sites. However, if we are found liable for
such contamination at any of these sites, our liability is
capped at approximately 37%.

As of November 30, 2002, we had
$17.7 million, and as of November 30, 2003, we had
$9.3 million accrued for sold divisions and businesses
related to legal and environmental matters. In addition, as of
November 30, 2002, we had $2.4 million, and as of
November 30, 2003, we had $1.6 million accrued in
other accrued liabilities related to environmental liabilities
for our on-going businesses.



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

On January 25, 1996, Richard Darrell
Peoples, a former employee, filed a lawsuit in the United States
District Court for the Western District of Missouri claiming
that we violated the federal False Claims Act based on alleged
irregularities in testing procedures in connection with certain
United States Government contracts. Mr. Peoples filed this
lawsuit under a procedure which gives a private individual the
right to file a lawsuit for a violation of a Federal statute and
be awarded up to 30% of any recovery. The government has the
right to intervene and take control of such a lawsuit. Following
an extensive investigation, the United States Government
declined the opportunity to intervene or take control of this
suit. The allegations in the lawsuit are similar to allegations
made by Mr. Peoples, and investigated by our outside
counsel, prior to the filing of the lawsuit. Our outside
counsels investigation found no evidence to support any of
Mr. Peoples allegations, except for some
inconsequential expense account matters. In early 2003, the
court disqualified Mr. Peoples lawyer from the case
after he read some of our attorney-client privileged documents
that Mr. Peoples took from our lawyers offices
without authorization. In December 2003, the court dismissed
this lawsuit for failure to prosecute.

80



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EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


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

In March 2002, a purported class action on behalf
of approximately 3,000 homeowners was filed in state court in
Colorado against us and a company with a facility adjacent to
our facility in Colorado Springs, Colorado seeking property
damages, testing and remediation costs and punitive damages
arising out of chlorinated solvents and nitrates in the
groundwater alleged to arise out of activities at our facility
and the adjacent facility. The case has been removed to federal
court and there has been no decision whether to certify a class.
In September 2002, as amended in May 2003, a trust purportedly
the assignee of approximately 200 property owners filed
suit against us and the same co-defendant in Colorado state
court, which was subsequently removed to Federal District Court
in Colorado. This lawsuit seeks unspecified damages to provide
for remediation of the groundwater contamination as well as
unspecified punitive damages. The owner of the adjacent
facility, which is upgradient from our facility, is operating a
remediation system aimed at chlorinated solvents in the
groundwater originating from its facility under a compliance
order on consent with the Colorado Department of Public Health
and Environment (CDPHE). We are operating a
remediation system for nitrates in the groundwater originating
from our facility, also under a compliance order on consent with
CDPHE. We do not believe that nitrates in groundwater materially
affect any of the properties related to the plaintiffs in these
lawsuits. Neither the United States Environmental Protection
Agency nor the CDPHE has ever required us to undertake a cleanup
for chlorinated solvents. In November 2003, we settled the
purported class action lawsuit for $0.3 million,
conditioned on the courts certification of the purported
class. In November 2003, we also settled the lawsuit brought by
the trust, and claims of certain other individuals, for
$0.3 million, conditioned on at least 90% of the
440 individuals covered by the settlement executing
releases.

On December 10, 2003, a purported class
action on behalf of approximately 600 members of the Quapaw
Tribe of Oklahoma owning or possessing lands within the Quapaw
Reservation was filed in the United States District Court for
the Northern District of Oklahoma against us and six other
corporations. The lawsuit alleges liability for property damage
resulting from historical mining activities prior to 1959. We
believe that any possible liability to members of the Quapaw
Tribe was discharged in connection with our bankruptcy
reorganization in 1996. We intend to contest this lawsuit
vigorously and do not believe that the resolution of this suit
will have a material adverse effect on our financial condition,
results of operations, or cash flows.

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

81



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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)




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

Future minimum rental commitments over the next
five years as of November 30, 2003, under noncancellable
operating leases, which expire at various dates, are as follows:
$5.4 million in 2004, $3.7 million in 2005,
$3.2 million in 2006, $1.5 million in 2007,
$1.5 million in 2008 and $10.5 million thereafter.
Rent expense was $5.7 million in 2001, $6.4 million in
2002 and $5.5 million in 2003.



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

We are the guarantor on the lease of a building
that was owned by one of our former subsidiaries. We believe the
likelihood of being liable for the lease is remote. The original
term of the lease expires in 2005; however, there are two
five-year renewal terms that we have also guaranteed. The rent
for the two five-year renewals is based upon the Consumer Price
Index, at the time of renewal, should the buyer of the former
subsidiary not exercise its purchase option on the building. The
amount of the guarantee is $2.6 million at
November 30, 2003; however, this amount excludes any
guarantee on the two five-year renewals as those amounts can not
be determined as of November 30, 2003.



|   |                           
|-- | --------------------------
|S. | Related Party Transactions

We have an advisory and consulting agreement with
Granaria Holdings B.V., our controlling common shareholder,
pursuant to which we pay Granaria Holdings B.V. an annual
management fee of $1.8 million. The agreement terminates on
the earlier of February 24, 2008 or the end of the fiscal
year in which Granaria Holdings, B.V. and its affiliates, in the
aggregate, beneficially owns less than 10% of our outstanding
common stock. Fees and expenses relating to these services
amounted to $2.1 million in 2001, $2.2 million in 2002
and $2.0 million in 2003. At November 30, 2002 and
2003, $0.6 million was accrued in Other Accrued Liabilities
in the accompanying balance sheet relating to these fees and
expenses.

During 2002, we paid $0.8 million which is
included in Other Assets, in our balance sheets to a start-up
technology manufacturing company for the exclusive right to
manufacture the start-up companys battery technology.
During the third quarter of 2003, we converted this exclusive
right to manufacture into a 6.0% interest in such start-up
company. In addition, an entity affiliated with Granaria
Holdings, B.V., our controlling common shareholder, invested
$1,975,000 (including $75,000 from Mr. Bert Iedema, one of
our directors) for a 14.8125% interest, and Thomas R. Pilholski,
our Senior Vice President and Chief Financial Officer invested
$200,000 for a 1.5% interest. In addition, John H. Weber, our
President and Chief Executive Officer, invested $20,000 and
David G. Krall, our Senior Vice President and General Counsel,
invested $5,000. Mr. Weber and Mr. Krall received less than
1% interest for their investments. In September 2003, we paid an
additional $426,667 to this start-up technology manufacturing
company for an incremental 2.7560% interest (our total interest
in this entity is 8.7560%). Granaria Holdings B.V. through an
affiliate invested an additional $1,053,333 for an incremental
6.8038% interest (including $36,744 from Mr. Iedema), and
Mr. Pilholski invested an additional $106,667 for an
incremental 0.6890% interest. Mr. Weber invested an
additional $10,667 and Mr. Krall invested an additional
$2,667. Mr. Weber and Mr. Krall continue to own less
than 1%. We, the affiliates of Granaria Holdings B.V., and
Messrs. Weber, Pilholski and Krall will also receive a
priority distribution of 60% of the any cash distributed until
they have received three times their total investment. In
addition, Noel Longuemare, a director of our wholly-owned
subsidiary, EaglePicher Technologies, LLC, holds a 4.2687%
interest in this start-up company.

Granaria Holdings, B.V., our controlling common
shareholder, controls approximately 78% of our outstanding
11.75% Cumulative Mandatorily Redeemable Exchangeable Preferred
Stock.

82



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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


On August 31, 2003, Bert Iedema, one of our
directors and an executive officer of Granaria Holdings, B.V.,
our controlling common shareholder, purchased 5,000 shares of
our common stock from one of our former officers.

Certain of our directors and current and former
officers have entered into a voting trust agreement with
Granaria Holdings, B.V., our controlling common shareholder,
pursuant to which Granaria Holdings B.V. is the voting trustee
and holder of record of the shares of our common stock that are
beneficially owned by these directors and officers. These
directors and officers also have executed a shareholders
agreement, which, among other things, contains transfer
restrictions regarding the directors and officers
ability to transfer their beneficial interests in our common
stock.

During 2003, we sold to our controlling common
shareholder, Granaria Holdings B.V., Bert Iedema, one of our
directors and an executive officer of Granaria Holdings B.V.,
and two of our executive officers the 69,500 shares of common
stock held in our Treasury for $13.00 per share, or
$0.9 million. In connection with this stock issuance, we
reclassified the balance in our Treasury, or $7.2 million,
to Additional Paid in Capital in our accompanying balance sheets.



|   |                             
|-- | ----------------------------
|T. | Business Segment Information

Our business consists of three operating
segments: the Automotive Segment, the Technologies Segment and
the Filtration and Minerals Segment.

Sales between segments were not material.

Our foreign operations are located primarily in
Canada, Europe and Mexico. Our subsidiary guarantor and
non-guarantor disclosure included in Note M discloses the
approximate amount of net sales and long-lived asset amounts by
geographic region. In that note, the columns marked as Issuer,
EaglePicher Holdings, Inc., and Subsidiary Guarantors primarily
represent our United States operations, and the column marked
Non-Guarantor Subsidiaries primarily represents our foreign
operations. Net sales and long-lived assets included in
Note M are based on where the sale originates, and where
the long-lived assets reside. Included in the Issuer and
Subsidiary Guarantors are United States export sales to
non-affiliated customers of $76.7 million in 2001, and
$78.6 million in 2002 and $65.1 million in 2003.
Intercompany transactions with foreign operations are made at
established transfer prices.

83



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##### Table of Contents



EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


The following data represents financial
information about our reportable business segments (in thousands
of dollars).

|                                                                    |              |      |         |         |  |      |         |         |  |   |         |         | 
|------------------------------------------------------------------- | ------------ | ---- | ------- | ------- |  | ---- | ------- | ------- |  | - | ------- | ------- | 
|                                                                    |              | 2001 |         | 2002    |  | 2003
|                                                                    |              |      |         |         |  |     
|Net Sales                                                           |              |      |         |         |  |      |         |         |  |   |         |        
|Hillsdale                                                           |              | $    | 334,172 |         |  | $    | 342,678 |         |  | $ | 323,838 |        
|Wolverine                                                           |              |      | 74,100  |         |  |      | 79,367  |         |  |   | 89,852  |        
|                                                                    |              |      |         |         |  |      |         |         |  |   |         |        
|                                                                    | Automotive   |      |         | 408,272 |  |      |         | 422,045 |  |   |         | 413,690 | 
|                                                                    |              |      |         |         |  |      |         |         |  |   |         |        
|Power Group                                                         |              |      | 100,788 |         |  |      | 104,620 |         |  |   | 143,858 |        
|Precision Products-divested July 17, 2002                           |              |      | 10,214  |         |  |      | 3,435   |         |  |   |        |        
|Specialty Materials Group                                           |              |      | 43,132  |         |  |      | 42,714  |         |  |   | 40,223  |        
|Pharmaceutical Services                                             |              |      | 13,714  |         |  |      | 13,200  |         |  |   | 9,088   |        
|                                                                    |              |      |         |         |  |      |         |         |  |   |         |        
|                                                                    | Technologies |      |         | 167,848 |  |      |         | 163,969 |  |   |         | 193,169 | 
|                                                                    |              |      |         |         |  |      |         |         |  |   |         |        
|Filtration and Minerals                                             |              |      | 82,004  |         |  |      | 82,129  |         |  |   | 78,567  |        
|                                                                    |              |      |         |         |  |      |         |         |  |   |         |        
|Corporate/ Intersegment                                             |              |      | (800    | )       |  |      |        |         |  |   |        |        
|                                                                    |              |      |         |         |  |      |         |         |  |   |         |        
|                                                                    |              | $    | 657,324 |         |  | $    | 668,143 |         |  | $ | 685,426 |        
|                                                                    |              |      |         |         |  |      |         |         |  |   |         |        
|Operating Income (Loss)                                             |              |      |         |         |  |      |         |         |  |   |         |        
|Automotive                                                          |              | $    | 7,487   |         |  | $    | 10,501  |         |  | $ | 21,488  |        
|Technologies                                                        |              |      | (2,153  | )       |  |      | (2,570  | )       |  |   | 36,687  |        
|Filtration and Minerals                                             |              |      | 4,730   |         |  |      | 8,078   |         |  |   | 5,285   |        
|Divested Divisions                                                  |              |      | (2,105  | )       |  |      | (6,497  | )       |  |   |        |        
|Corporate/ Intersegment                                             |              |      | (8,522  | )       |  |      | (4,318  | )       |  |   | (3,312  | )      
|                                                                    |              |      |         |         |  |      |         |         |  |   |         |        
|                                                                    |              | $    | (563    | )       |  | $    | 5,194   |         |  | $ | 60,148  |        
|                                                                    |              |      |         |         |  |      |         |         |  |   |         |        
|Depreciation and Amortization (including
    Goodwill Amortization) |              |      |         |         |  |      |         |         |  |   |         |        
|Automotive                                                          |              | $    | 37,851  |         |  | $    | 42,994  |         |  | $ | 33,706  |        
|Technologies                                                        |              |      | 13,435  |         |  |      | 13,127  |         |  |   | 8,393   |        
|Filtration and Minerals                                             |              |      | 5,482   |         |  |      | 5,276   |         |  |   | 5,060   |        
|Corporate/ Intersegment                                             |              |      | 218     |         |  |      | 505     |         |  |   | 910     |        
|                                                                    |              |      |         |         |  |      |         |         |  |   |         |        
|                                                                    |              | $    | 56,986  |         |  | $    | 61,902  |         |  | $ | 48,069  |        
|                                                                    |              |      |         |         |  |      |         |         |  |   |         |        
|Capital Expenditures                                                |              |      |         |         |  |      |         |         |  |   |         |        
|Automotive                                                          |              | $    | 27,167  |         |  | $    | 11,340  |         |  | $ | 7,181   |        
|Technologies                                                        |              |      | 3,973   |         |  |      | 1,806   |         |  |   | 6,387   |        
|Filtration and Minerals                                             |              |      | 2,600   |         |  |      | 1,969   |         |  |   | 1,794   |        
|Corporate/ Intersegment                                             |              |      | 444     |         |  |      | 1,199   |         |  |   | 907     |        
|                                                                    |              |      |         |         |  |      |         |         |  |   |         |        
|                                                                    |              | $    | 34,184  |         |  | $    | 16,314  |         |  | $ | 16,269  |        
|                                                                    |              |      |         |         |  |      |         |         |  |   |         |        

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EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


|                                                 |  |      |  |      |  |      |         |  |  |   |         | 
|------------------------------------------------ |  | ---- |  | ---- |  | ---- | ------- |  |  | - | ------- | 
|                                                 |  | 2001 |  | 2002 |  | 2003
|                                                 |  |      |  |      |  |     
|Identifiable Assets                              |  |      |  |      |  |      |         |  |  |   |         | 
|Automotive                                       |  |      |  |      |  | $    | 278,936 |  |  | $ | 286,380 | 
|Technologies                                     |  |      |  |      |  |      | 169,909 |  |  |   | 180,990 | 
|Filtration and Minerals                          |  |      |  |      |  |      | 48,721  |  |  |   | 54,254  | 
|Corporate/ Intersegment/ Discontinued Operations |  |      |  |      |  |      | 115,475 |  |  |   | 141,914 | 
|                                                 |  |      |  |      |  |      |         |  |  |   |         | 
|                                                 |  |      |  |      |  | $    | 613,041 |  |  | $ | 663,538 | 
|                                                 |  |      |  |      |  |      |         |  |  |   |         | 

U.     Quarterly
Financial Results (Unaudited)

The following table summarizes the unaudited
consolidated quarterly financial results of operations for 2002
and 2003, which we believe include all necessary adjustments for
a fair presentation of our interim results.

|                                                  |                                          |               |         |        |   |    |         |         |   |   |         |        |   |   |         |        |  
|------------------------------------------------- | ---------------------------------------- | ------------- | ------- | ------ | - | -- | ------- | ------- | - | - | ------- | ------ | - | - | ------- | ------ | -
|                                                  |                                          |              
|                                                  |                                          | 2002 Quarters
|                                                  |                                          |              
|                                                  |                                          | Q1            |         | Q2     |   | Q3 |         | Q4     
|                                                  |                                          |               |         |        |   |    |         |        
|Net sales                                         |                                          | $             | 154,603 |        |   | $  | 177,787 |         |   | $ | 167,352 |        |   | $ | 168,401 |       
|Cost of products sold (exclusive of depreciation) |                                          |               | 122,719 |        |   |    | 137,510 |         |   |   | 130,101 |        |   |   | 131,491 |       
|Selling and administrative                        |                                          |               | 13,116  |        |   |    | 23,062  |         |   |   | 14,246  |        |   |   | 13,307  |       
|Depreciation and amortization                     |                                          |               | 10,665  |        |   |    | 11,826  |         |   |   | 11,830  |        |   |   | 12,189  |       
|Goodwill amortization                             |                                          |               | 3,846   |        |   |    | 3,846   |         |   |   | 3,846   |        |   |   | 3,854   |       
|Restructuring                                     |                                          |               |        |        |   |    | 2,998   |         |   |   |        |        |   |   | 2,900   |       
|Loss from divestitures                            |                                          |               | 125     |        |   |    | 5,845   |         |   |   | 161     |        |   |   | 366     |       
|Insurance related losses                          |                                          |               |        |        |   |    | 3,100   |         |   |   |        |        |   |   |        |       
|                                                  |                                          |               |         |        |   |    |         |         |   |   |         |        |   |   |         |       
|                                                  | Operating income (loss)                  |               |         | 4,132  |   |    |         | (10,400 | ) |   |         | 7,168  |   |   |         | 4,294  |  
|Interest expense                                  |                                          |               | (9,931  | )      |   |    | (10,055 | )       |   |   | (8,610  | )      |   |   | (8,216  | )     
|Other income (expense), net                       |                                          |               | 451     |        |   |    | 467     |         |   |   | 413     |        |   |   | 185     |       
|Income tax provision (benefit)                    |                                          |               | 385     |        |   |    | 820     |         |   |   | 750     |        |   |   | (17     | )     
|                                                  |                                          |               |         |        |   |    |         |         |   |   |         |        |   |   |         |       
|                                                  | Income (loss) from continuing operations |               | $       | (5,733 | ) |    | $       | (20,808 | ) |   | $       | (1,779 | ) |   | $       | (3,720 | )
|                                                  |                                          |               |         |        |   |    |         |         |   |   |         |        |   |   |         |       
|                                                  | Net loss                                 |               | $       | (6,207 | ) |    | $       | (21,968 | ) |   | $       | (3,571 | ) |   | $       | (5,086 | )
|                                                  |                                          |               |         |        |   |    |         |         |   |   |         |        |   |   |         |       
|Diluted loss per share from continuing operations |                                          | $             | (9.55   | )      |   | $  | (25.43  | )       |   | $ | (5.71   | )      |   | $ | (7.95   | )     
|                                                  |                                          |               |         |        |   |    |         |         |   |   |         |        |   |   |         |       
|Diluted net loss per share                        |                                          | $             | (10.04  | )      |   | $  | (26.63  | )       |   | $ | (7.57   | )      |   | $ | (9.37   | )     
|                                                  |                                          |               |         |        |   |    |         |         |   |   |         |        |   |   |         |       

85



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EAGLEPICHER HOLDINGS, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended November 30, 2001, 2002 and
2003  (Continued)


|                                                                   |                                          |               |         |        |  |    |         |        |  |   |         |        |   |   |         |        |  
|------------------------------------------------------------------ | ---------------------------------------- | ------------- | ------- | ------ |  | -- | ------- | ------ |  | - | ------- | ------ | - | - | ------- | ------ | -
|                                                                   |                                          |              
|                                                                   |                                          | 2003 Quarters
|                                                                   |                                          |              
|                                                                   |                                          | Q1            |         | Q2     |  | Q3 |         | Q4    
|                                                                   |                                          |               |         |        |  |    |         |       
|Net sales                                                          |                                          | $             | 164,039 |        |  | $  | 175,047 |        |  | $ | 165,844 |        |   | $ | 180,496 |       
|Cost of products sold (exclusive of depreciation)                  |                                          |               | 127,756 |        |  |    | 132,848 |        |  |   | 127,001 |        |   |   | 134,672 |       
|Selling and administrative                                         |                                          |               | 14,128  |        |  |    | 16,093  |        |  |   | 15,615  |        |   |   | 17,375  |       
|Depreciation and amortization                                      |                                          |               | 11,114  |        |  |    | 10,916  |        |  |   | 12,768  |        |   |   | 13,271  |       
|Insurance related losses (gains)                                   |                                          |               |        |        |  |    | (5,736  | )      |  |   | (2,774  | )      |   |   | 231     |       
|                                                                   |                                          |               |         |        |  |    |         |        |  |   |         |        |   |   |         |       
|                                                                   | Operating income                         |               |         | 11,041 |  |    |         | 20,926 |  |   |         | 13,234 |   |   |         | 14,947 |  
|Interest expense                                                   |                                          |               | (8,373  | )      |  |    | (8,319  | )      |  |   | (9,249  | )      |   |   | (10,570 | )     
|Preferred stock dividends accrued                                  |                                          |               |        |        |  |    |        |        |  |   |        |        |   |   | (4,169  | )     
|Other income (expense), net                                        |                                          |               | 324     |        |  |    | (251    | )      |  |   | (600    | )      |   |   | (1,056  | )     
|Write-off of deferred financing costs                              |                                          |               |        |        |  |    |        |        |  |   | (6,327  | )      |   |   |        |       
|Income tax provision (benefit)                                     |                                          |               | 896     |        |  |    | 1,150   |        |  |   | 804     |        |   |   | (13     | )     
|                                                                   |                                          |               |         |        |  |    |         |        |  |   |         |        |   |   |         |       
|                                                                   | Income (loss) from continuing operations |               | $       | 2,096  |  |    | $       | 11,206 |  |   | $       | (3,746 | ) |   | $       | (835   | )
|                                                                   |                                          |               |         |        |  |    |         |        |  |   |         |        |   |   |         |       
|                                                                   | Net income (loss)                        |               | $       | 1,168  |  |    | $       | 7,686  |  |   | $       | (4,226 | ) |   | $       | (1,785 | )
|                                                                   |                                          |               |         |        |  |    |         |        |  |   |         |        |   |   |         |       
|Diluted net income (loss) per share from
    continuing operations |                                          | $             | (1.98   | )      |  | $  | 7.38    |        |  | $ | (7.91   | )      |   | $ | 0.84    |       
|                                                                   |                                          |               |         |        |  |    |         |        |  |   |         |        |   |   |         |       
|Diluted net income (loss) per share                                |                                          | $             | (2.98   | )      |  | $  | 3.69    |        |  | $ | (8.39   | )      |   | $ | (1.79   | )     
|                                                                   |                                          |               |         |        |  |    |         |        |  |   |         |        |   |   |         |       

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

86



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

Not applicable.






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

Our management, including our Chief Executive
Officer and our Chief Financial Officer, conducted an evaluation
of our disclosure controls and procedures as of the end of the
period covered by this report as required by the rules of the
Securities and Exchange Commission. Based on that evaluation,
our Chief Executive Officer and our Chief Financial Officer have
concluded that our disclosure controls and procedures are
effective in ensuring that all material information required to
be filed in this report has been made known to them in a timely
manner.




PART III






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

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






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

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






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

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






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

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






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

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




PART IV






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

(A) Exhibits

|        |     |  |  |                  |  |                                                                                                                                                       |  |  |      | 
|------- | --- |  |  | ---------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---- | 
|Exhibit |     |  |  |                  |  |                                                                                                                                                      
|Number  |     |  |  | Title of Exhibit |  | Note                                                                                                                                                 
|        |     |  |  |                  |  |                                                                                                                                                      
|        | 2.1 |  |  |                 |  | Third Amended Consolidated Plan of Reorganization
    of EaglePicher Incorporated (f/k/a Eagle-Picher Industries,
    Inc.) dated August 28, 1996     |  |  | (1)  | 
|        | 2.2 |  |  |                 |  | Exhibits to Third Amended Consolidated Plan of
    Reorganization of EaglePicher Incorporated                                                         |  |  | (1)  | 
|        | 3.1 |  |  |                 |  | Articles of Incorporation of EaglePicher
    Incorporated, as amended                                                                                 |  |  | (1)  | 
|        | 3.2 |  |  |                 |  | Certificate of Amendment by Shareholders or
    Members of Articles of Incorporation of EaglePicher
    Incorporated, as amended, dated April 1, 2003 |  |  | (18) | 
|        | 3.3 |  |  |                 |  | Regulations of the EaglePicher Incorporated                                                                                                           |  |  | (1)  | 

87



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|        |      |  |  |                  |  |                                                                                                                                              |  |  |      | 
|------- | ---- |  |  | ---------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---- | 
|Exhibit |      |  |  |                  |  |                                                                                                                                             
|Number  |      |  |  | Title of Exhibit |  | Note                                                                                                                                        
|        |      |  |  |                  |  |                                                                                                                                             
|        | 3.4  |  |  |                 |  | Amended and Restated Certificate of Incorporation
    of EaglePicher Holdings, Inc. (f/k/a Eagle-Picher Holdings, Inc.)                      |  |  | (1)  | 
|        | 3.5  |  |  |                 |  | Certificate of Amendment of Amended and Restated
    Certificate of Incorporation of EaglePicher Holdings, Inc.,
    dated August 31, 2001   |  |  | (13) | 
|        | 3.6  |  |  |                 |  | Certificate of Amendment of Certificate of
    Incorporation of EaglePicher Holdings, Inc., dated April 1,
    2003                          |  |  | (18) | 
|        | 3.7  |  |  |                 |  | Bylaws of EaglePicher Holdings, Inc.                                                                                                         |  |  | (1)  | 
|        | 3.8  |  |  |                 |  | Restated Articles of Incorporation of Daisy
    Parts, Inc.                                                                                  |  |  | (2)  | 
|        | 3.9  |  |  |                 |  | Amended and Restated Bylaws of Daisy Parts, Inc.,
    dated as of November 16, 2001                                                          |  |  | (14) | 
|        | 3.10 |  |  |                 |  | Certificate of Incorporation of Eagle-Picher
    Development Company, Inc.                                                                   |  |  | (2)  | 
|        | 3.11 |  |  |                 |  | Bylaws of Eagle-Picher Development Company, Inc.                                                                                             |  |  | (2)  | 
|        | 3.12 |  |  |                 |  | Certificate of Incorporation of Eagle-Picher Far
    East, Inc.                                                                              |  |  | (2)  | 
|        | 3.13 |  |  |                 |  | Bylaws of Eagle-Picher Far East, Inc.                                                                                                        |  |  | (2)  | 
|        | 3.14 |  |  |                 |  | Articles of Incorporation of EaglePicher
    Filtration & Minerals, Inc. (f/k/a Eagle-Picher
    Minerals, Inc.)                             |  |  | (2)  | 
|        | 3.15 |  |  |                 |  | Certificate of Amendment to Articles of
    Incorporation of EaglePicher Filtration & Minerals,
    Inc., dated October 21, 2002             |  |  | (18) | 
|        | 3.16 |  |  |                 |  | Certificate of Amendment to Articles of
    Incorporation of EaglePicher Filtration & Minerals,
    Inc., dated February 25, 2003            |  |  | (18) | 
|        | 3.17 |  |  |                 |  | Certificate of Amendment to Articles of
    Incorporation of EaglePicher Filtration & Minerals,
    Inc., dated February 27, 2003            |  |  | (18) | 
|        | 3.18 |  |  |                 |  | Certificate of Amendment to Articles of
    Incorporation of EaglePicher Filtration & Minerals,
    Inc., dated April 21, 2003               |  |  | (18) | 
|        | 3.19 |  |  |                 |  | Bylaws of EaglePicher Filtration &
    Minerals, Inc.                                                                                        |  |  | (2)  | 
|        | 3.20 |  |  |                 |  | Amendment to the Bylaws of EaglePicher
    Filtration & Minerals, Inc., dated as of
    November 16, 2001                                    |  |  | (14) | 
|        | 3.21 |  |  |                 |  | Certificate of Formation of EaglePicher
    Technologies, LLC (f/k/a Eagle-Picher Technologies, LLC).                                        |  |  | (2)  | 
|        | 3.22 |  |  |                 |  | Amended and Restated Limited Liability Company
    Agreement of EaglePicher Technologies, LLC.                                               |  |  | (3)  | 
|        | 3.23 |  |  |                 |  | Certificate of Amendment of Certificate of
    Formation of EaglePicher Technologies, LLC, dated April 1,
    2003                           |  |  | (18) | 
|        | 3.24 |  |  |                 |  | Restated Articles of Incorporation of EaglePicher
    Automotive, Inc. (f/k/a Hillsdale Tool & Manufacturing
    Co.).                       |  |  | (18) | 
|        | 3.25 |  |  |                 |  | Certificate of Amendment to the Articles of
    Incorporation of EaglePicher Automotive, Inc., dated
    August 1, 2003                      |  |  | (18) | 
|        | 3.26 |  |  |                 |  | Amended and Restated Bylaws of EaglePicher
    Automotive, Inc., dated as of November 16, 2001                                               |  |  | (14) | 
|        | 3.27 |  |  |                 |  | Restated Articles of Incorporation of EPMR
    Corporation (f/k/a Michigan Automotive Research Corporation)                                  |  |  | (7)  | 
|        | 3.28 |  |  |                 |  | Bylaws of EPMR Corporation                                                                                                                   |  |  | (7)  | 
|        | 3.29 |  |  |                 |  | Articles of Incorporation of Eagle-Picher
    Acceptance Corporation (f/k/a Eagle-Picher Acceptance Corp.)                                   |  |  | (18) | 
|        | 3.30 |  |  |                 |  | Certificate of Amendment by Shareholders to the
    Articles of Incorporation of Eagle-Picher Acceptance
    Corporation, dated May 14, 1999 |  |  | (18) | 
|        | 3.31 |  |  |                 |  | Code of Regulations of Eagle-Picher Acceptance
    Corporation                                                                               |  |  | (18) | 
|        | 3.32 |  |  |                 |  | Articles of Incorporation of Cincinnati
    Industrial Machinery Sales Company (f/k/a Cincinnati Industrial
    Machinery Company)           |  |  | (18) | 

88



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|        |      |  |  |                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |  |      | 
|------- | ---- |  |  | ---------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---- | 
|Exhibit |      |  |  |                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Number  |      |  |  | Title of Exhibit |  | Note                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        |      |  |  |                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | 3.33 |  |  |                 |  | Certificate of Amendment by Shareholders to the
    Articles of Incorporation of Cincinnati Industrial Machinery
    Sales Company, dated February 14, 1995                                                                                                                                                                                                                                                                                                           |  |  | (18) | 
|        | 3.34 |  |  |                 |  | Code of Regulations of Cincinnati Industrial
    Machinery Sales Company                                                                                                                                                                                                                                                                                                                                                                                              |  |  | (18) | 
|        | 3.35 |  |  |                 |  | Articles of Incorporation for Carpenter
    Enterprises Limited (f/k/a Charterhouse Acquisition Corporation)                                                                                                                                                                                                                                                                                                                                                          |  |  | (18) | 
|        | 3.36 |  |  |                 |  | Certificate of Amendment to the Articles of
    Incorporation of Carpenter Enterprises Limited, dated
    October 5, 1988                                                                                                                                                                                                                                                                                                                                             |  |  | (18) | 
|        | 3.37 |  |  |                 |  | Amended and Restated Bylaws of Carpenter
    Enterprises Limited                                                                                                                                                                                                                                                                                                                                                                                                      |  |  | (18) | 
|        | 3.38 |  |  |                 |  | Certificate of Formation of EaglePicher
    Pharmaceutical Services, LLC, as amended, dated March 4,
    2003                                                                                                                                                                                                                                                                                                                                                         |  |  | (18) | 
|        | 3.39 |  |  |                 |  | Limited Liability Company Amended and Restated
    Operating Agreement of EaglePicher Pharmaceutical Services, LLC,
    dated March 4, 2003                                                                                                                                                                                                                                                                                                                           |  |  | (18) | 
|        | 4.1  |  |  |                 |  | Indenture, dated as of February 24, 1998,
    between EaglePicher Incorporated, EaglePicher Holdings, Inc., as
    a guarantor, subsidiary guarantors (Daisy Parts, Inc.,
    Eagle-Picher Development Company, Inc., Eagle-Picher Far East,
    Inc., Eagle-Picher Fluid Systems, Inc., EaglePicher
    Filtration & Minerals, Inc., EaglePicher Technologies,
    LLC, EaglePicher Automotive, Inc., and EPMR Corporation), and
    The Bank of New York as trustee |  |  | (1)  | 
|        | 4.2  |  |  |                 |  | Cross Reference Table showing the location in the
    Indenture, dated as of February 24, 1998, of the provisions
    of Sections 310 through 318(a), inclusive, of the Trust
    Indenture Act of 1939, contained as part of the Indenture filed
    as Exhibit 4.1                                                                                                                                                                                                  |  |  | (1)  | 
|        | 4.3  |  |  |                 |  | First Supplemental Indenture, dated as of
    February 24, 1998, between EaglePicher Incorporated and the
    Bank of New York as trustee, supplementing the Indenture, dated
    as of February 24, 1998                                                                                                                                                                                                                                                             |  |  | (1)  | 
|        | 4.4  |  |  |                 |  | Form of Global Note for the Indenture, dated as
    of February 24, 1998 (attached as Exhibit A to the
    Indenture, dated as of February 24, 1998, filed as
    Exhibit 4.1)                                                                                                                                                                                                                                                                                        |  |  | (1)  | 
|        | 4.5  |  |  |                 |  | Certified Copy of the Certificate of
    Designations, Preferences and Rights of 11.75% Series A
    Cumulative Redeemable Exchangeable Preferred Stock and 11.75%
    Series B Cumulative Redeemable Exchangeable Preferred Stock
    of the EaglePicher Holdings, Inc., dated February 23, 1998                                                                                                                                                                     |  |  | (1)  | 
|        | 4.6  |  |  |                 |  | Form of Certificate and Global Share of 11.75%
    Series A Cumulative Redeemable Exchangeable Preferred Stock
    and 11.75% Series B Cumulative Redeemable Exchangeable
    Preferred Stock (attached as Exhibit A to the Certificate
    of Designations filed as Exhibit 4.5)                                                                                                                                                                                     |  |  | (18) | 
|        | 4.7  |  |  |                 |  | Form of Exchange Debentures Indenture relating to
    11.75% Exchange Debentures due 2008 of EaglePicher Holdings, Inc.                                                                                                                                                                                                                                                                                                                                               |  |  | (1)  | 
|        | 4.8  |  |  |                 |  | Cross Reference Table showing the location in the
    Exchange Debentures Indenture of the provisions of
    Sections 310 through 318(a), inclusive, of the Trust
    Indenture Act of 1939                                                                                                                                                                                                                                                                           |  |  | (1)  | 
|        | 4.9  |  |  |                 |  | Form of 11.75% Exchange Debenture due 2008
    (attached as Exhibit A to the Exchange Debentures Indenture
    filed as Exhibit 4.7)                                                                                                                                                                                                                                                                                                                                  |  |  | (1)  | 
|        | 4.10 |  |  |                 |  | Cross Reference Table showing the location in the
    Indenture, dated as of August 7, 2003, of the provisions of
    Sections 310 through 318(a), inclusive, of the Trust
    Indenture Act of 1939, contained as part of the Indenture filed
    as Exhibit 10.70                                                                                                                                                                                                   |  |  | (18) | 
|        | 4.11 |  |  |                 |  | Second Supplemental Indenture, dated as of
    December 14, 2001, between EaglePicher Incorporated and the
    Bank of New York as trustee, supplementing the Indenture, dated
    as of February 24, 1998                                                                                                                                                                                                                                                            |  |  | (18) | 
|        | 4.12 |  |  |                 |  | Third Supplemental Indenture, dated as of
    July 22, 2003, between EaglePicher Incorporated and the
    Bank of New York as trustee, supplementing the Indenture, dated
    as of February 24, 1998                                                                                                                                                                                                                                                                 |  |  | (18) | 
|        | 4.13 |  |  |                 |  | Form of Global Note for the Indenture, dated as
    of August 7, 2003 (attached as Exhibit A-1 to the
    Indenture, dated as of August 7, 2003, filed as
    Exhibit 10.27)                                                                                                                                                                                                                                                                                          |  |  | (18) | 

89



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|        |       |  |  |                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |  |      | 
|------- | ----- |  |  | ---------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  |  | ---- | 
|Exhibit |       |  |  |                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Number  |       |  |  | Title of Exhibit |  | Note                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        |       |  |  |                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 4.14  |  |  |                 |  | Amendment to Certificate of Designations of the
    11.75% Preferred Stock of EaglePicher Holdings, Inc., dated
    August 5, 2003                                                                                                                                                                                                                                                                                                                     |  |  | (18) | 
|        | 9.1   |  |  |                 |  | Voting Trust Agreement dated November 16,
    1998 with owners of Class A (Voting) Common Stock of
    EaglePicher Holdings, Inc.                                                                                                                                                                                                                                                                                                                      |  |  | (4)  | 
|        | 10.1  |  |  |                 |  | Merger Agreement, dated as of December 23,
    1997, among EaglePicher Incorporated, the Eagle-Picher
    Industries, Inc. Personal Injury Settlement Trust, EaglePicher
    Holdings, Inc., and E-P Acquisition, Inc.                                                                                                                                                                                                                                 |  |  | (1)  | 
|        | 10.2  |  |  |                 |  | Amendment No. 1 to the Merger Agreement,
    dated as of February 23, 1998, among EaglePicher
    Incorporated, the Eagle-Picher Industries, Inc. Personal Injury
    Settlement Trust, EaglePicher Holdings, Inc., and E-P
    Acquisition, Inc.                                                                                                                                                                                                      |  |  | (1)  | 
|        | 10.3  |  |  |                 |  | Supplemental Executive Retirement Plan of
    EaglePicher Incorporated dated May 3, 1995                                                                                                                                                                                                                                                                                                                                                               |  |  |      | 
|        | 10.4  |  |  |                 |  | Notes Purchase Agreement, dated February 19,
    1998, among E-P Acquisition, Inc., EaglePicher Incorporated,
    EaglePicher Holdings, Inc., 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
    EaglePicher Incorporated and subsidiary guarantors Daisy Parts,
    Inc., Eagle-Picher Development Company, Inc., Eagle-Picher Far
    East, Inc., Eagle-Picher Fluid Systems, Inc., EaglePicher
    Filtration & Minerals, Inc., EaglePicher Technologies,
    LLC, EaglePicher Automotive, Inc., and EPMR Corporation                          |  |  | (1)  | 
|        | 10.6  |  |  |                 |  | Registration Rights Agreement, dated as of
    February 24, 1998, between E-P Acquisition, Inc., SBC
    Warburg Dillon Read and ABN AMRO Incorporated                                                                                                                                                                                                                                                                                                 |  |  | (1)  | 
|        | 10.7  |  |  |                 |  | Assumption Agreement for the Registration Rights
    Agreement, dated as of February 24, 1998, of EaglePicher
    Incorporated                                                                                                                                                                                                                                                                                                                         |  |  | (1)  | 
|        | 10.8  |  |  |                 |  | Management Agreement dated as of
    February 24, 1998, between EaglePicher Incorporated and
    Granaria Holdings B.V.                                                                                                                                                                                                                                                                                                                                |  |  | (2)  | 
|        | 10.9  |  |  |                 |  | Preferred Stock Purchase Agreement, dated
    February 19, 1998, between EaglePicher Holdings, Inc., and
    the initial purchasers                                                                                                                                                                                                                                                                                                                    |  |  | (1)  | 
|        | 10.10 |  |  |                 |  | Preferred Stock Registration Rights Agreement,
    dated as of February 24, 1998, between EaglePicher
    Holdings, Inc., and the initial purchasers                                                                                                                                                                                                                                                                                                   |  |  | (1)  | 
|        | 10.11 |  |  |                 |  | Transfer Agency Agreement, dated as of
    February 24, 1998, between EaglePicher Holdings, Inc., and
    The Bank of New York, as transfer agent                                                                                                                                                                                                                                                                                                      |  |  | (2)  | 
|        | 10.12 |  |  |                 |  | EaglePicher Holdings, Inc., Incentive Stock Plan
    for Outside Directors effective January 1, 1999                                                                                                                                                                                                                                                                                                                                                   |  |  | (4)  | 
|        | 10.13 |  |  |                 |  | Second Amended and Restated Incentive Stock Plan
    of EaglePicher Incorporated effective November 15, 1998                                                                                                                                                                                                                                                                                                                                           |  |  | (4)  | 
|        | 10.14 |  |  |                 |  | Shareholders Agreement dated October 15,
    1998, among Granaria Holdings B.V., Granaria Industries B.V.,
    EaglePicher Holdings, Inc., and EaglePicher Incorporated                                                                                                                                                                                                                                                                                |  |  | (4)  | 
|        | 10.15 |  |  |                 |  | Voting Trust Agreement dated as of
    November 16, 1998, by and among certain shareholders of
    EaglePicher Holdings, Inc. and Granaria Holdings B.V.                                                                                                                                                                                                                                                                                               |  |  | (5)  | 
|        | 10.16 |  |  |                 |  | Shareholders Agreement dated April 12, 1999,
    among Granaria Holdings B.V., the EaglePicher Holdings, Inc.,
    EaglePicher Incorporated, and certain shareholders of the Company                                                                                                                                                                                                                                                                   |  |  | (5)  | 
|        | 10.17 |  |  |                 |  | Voting Trust Agreement dated April 13, 1999,
    between certain shareholders of EaglePicher Holdings, Inc. and
    Granaria Holdings B.V. as voting trustee                                                                                                                                                                                                                                                                                           |  |  | (5)  | 
|        | 10.18 |  |  |                 |  | Share Appreciation Plan of EaglePicher
    Incorporated, effective May 5, 1998                                                                                                                                                                                                                                                                                                                                                                         |  |  | (5)  | 
|        | 10.19 |  |  |                 |  | Second Supplemental Indenture dated
    December 14, 2001, among EaglePicher Incorporated, the
    guarantors (Daisy Parts, Inc., Eagle-Picher Development Company,
    Inc., Eagle-Picher Holdings, Inc., Eagle-Picher Far East, Inc.,
    EaglePicher Filtration & Minerals, Inc., EaglePicher
    Technologies, LLC, EaglePicher Automotive, Inc., EPMR
    Corporation and Carpenter Enterprises Limited) and The Bank of
    New York, as trustee |  |  | (14) | 

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|        |       |  |  |                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |  |      | 
|------- | ----- |  |  | ---------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  |  | ---- | 
|Exhibit |       |  |  |                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Number  |       |  |  | Title of Exhibit |  | Note                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        |       |  |  |                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        | 10.20 |  |  |                 |  | Receivables Sale Agreement dated January 8,
    2002 by and among Eagle-Picher Funding Corporation and each of
    the Originators defined therein which include
    EaglePicher Incorporated, Carpenter Enterprises Limited, Daisy
    Parts, Inc., EaglePicher Filtration & Minerals, Inc.,
    EaglePicher Technologies, LLC, and EaglePicher Automotive, Inc.                                                                                          |  |  | (14) | 
|        | 10.21 |  |  |                 |  | Receivables Purchase and Servicing Agreement
    dated January 8, 2002 by and among Eagle-Picher Funding
    Corporation, Redwood Receivables Corporation, EaglePicher
    Incorporated and General Electric Capital Corporation.                                                                                                                                                                                                                            |  |  | (14) | 
|        | 10.22 |  |  |                 |  | Annex X to Receivables Sale Agreement at
    Exhibit 10.62 and to Receivables Purchase and Servicing
    Agreement at Exhibit 10.63  Definitions
    and Interpretations.                                                                                                                                                                                                                                                                                 |  |  | (14) | 
|        | 10.23 |  |  |                 |  | Asset Purchase Agreement, dated December 18,
    2001, between EaglePicher Incorporated and Construction
    Equipment Direct, Inc.                                                                                                                                                                                                                                                                                                                          |  |  | (15) | 
|        | 10.24 |  |  |                 |  | EaglePicher Incorporated 2002 Long-term Bonus
    Program.                                                                                                                                                                                                                                                                                                                                                                                                   |  |  | (16) | 
|        | 10.25 |  |  |                 |  | Purchase Agreement dated as of July 31, 2003
    between EaglePicher Incorporated and UBS Securities LLC, ABN
    AMRO Incorporated, Banc One Capital Markets, Inc., Harris
    Nesbitt Corp. and PNC Capital Markets, Inc.                                                                                                                                                                                                                                  |  |  | (17) | 
|        | 10.26 |  |  |                 |  | Registration Rights Agreement dated as of
    August 7, 2003 between EaglePicher Incorporated, certain of
    its subsidiaries and UBS Securities LLC, ABN AMRO Incorporated,
    Banc One Capital Markets, Inc., Harris Nesbitt Corp. and PNC
    Capital Markets, Inc.                                                                                                                                                                                     |  |  | (17) | 
|        | 10.27 |  |  |                 |  | Indenture dated as of August 7, 2003 between
    EaglePicher Incorporated, certain of its subsidiaries and Wells
    Fargo Bank, National Association, as trustee                                                                                                                                                                                                                                                                                            |  |  | (17) | 
|        | 10.28 |  |  |                 |  | Credit Agreement dated as of August 7, 2003
    among EaglePicher Holdings, Inc., EaglePicher Incorporated,
    certain of its subsidiaries, Harris Trust and Savings Bank, as
    administrative agent, ABN AMRO Incorporated and UBS Securities
    LLC, as co-syndication agents, Bank One, NA and PNC Bank,
    National Association, as co-documentation agents, GE Capital
    Corporation, as collateral agent, and various lenders party
    thereto |  |  | (17) | 
|        | 10.29 |  |  |                 |  | Guarantee and Collateral Agreement dated as of
    August 7, 2003 among EaglePicher Holdings, Inc.,
    EaglePicher Incorporated, certain of its subsidiaries and Harris
    Trust and Savings Bank, as administrative agent                                                                                                                                                                                                                                 |  |  | (17) | 
|        | 10.30 |  |  |                 |  | Amendment No. 3 to Receivables Purchase and
    Servicing Agreement dated as of August 7, 2003 among
    EaglePicher Incorporated, certain of its subsidiaries,
    EaglePicher Funding Corporation and General Electric Capital
    Corporation                                                                                                                                                                                                             |  |  | (17) | 
|        | 10.31 |  |  |                 |  | Amended and Restated Executive Employment
    Agreement dated as of April 9, 2003 between EaglePicher
    Incorporated and John H. Weber                                                                                                                                                                                                                                                                                                                     |  |  | (17) | 
|        | 12.1  |  |  |                 |  | Ratios of Earnings to Fixed Charges and Preferred
    Stock Dividends                                                                                                                                                                                                                                                                                                                                                                                        |  |  | *    | 
|        | 21.1  |  |  |                 |  | Subsidiaries of EaglePicher Incorporated                                                                                                                                                                                                                                                                                                                                                                                                                     |  |  | *    | 
|        | 24.1  |  |  |                 |  | Power of Attorney  Joel P. Wyler                                                                                                                                                                                                                                                                                                                                                                                                                            |  |  | *    | 
|        | 24.2  |  |  |                 |  | Power of Attorney  Daniel C. Wyler                                                                                                                                                                                                                                                                                                                                                                                                                          |  |  | *    | 
|        | 24.3  |  |  |                 |  | Power of Attorney  Bert Iedema                                                                                                                                                                                                                                                                                                                                                                                                                              |  |  | *    | 
|        | 31.1  |  |  |                 |  | Certification Pursuant to
    Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of
    1934, as Amended                                                                                                                                                                                                                                                                                                                                                |  |  | *    | 
|        | 31.2  |  |  |                 |  | Certification Pursuant to
    Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of
    1934, as Amended                                                                                                                                                                                                                                                                                                                                                |  |  | *    | 
|        | 32.1  |  |  |                 |  | Certification Pursuant to 18 U.S.C.
    Section 1350, as Adopted Pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                               |  |  | *    | 
|        | 32.2  |  |  |                 |  | Certification Pursuant to 18 U.S.C.
    Section 1350, as Adopted Pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                               |  |  | *    | 

91



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---



| |   |               
| | - | --------------
| | * | Filed herewith



| |     |                                                                                                                                         
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Incorporated by reference to EaglePicher
    Incorporateds S-4 Registration Statement (File
    No. 333-49957) filed on April 10, 1998.



|    |                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Incorporated by reference to EaglePicher
    Incorporateds Amendment No. 1 to Form S-4
    Registration Statement (File No. 333-49957) filed on
    May 20, 1998.
|   
|(3) | Incorporated by reference to EaglePicher
    Incorporateds Amendment No. 2 to Form S-4
    Registration Statement (File No. 333-49957) filed on
    June 5, 1998.
|   
|(4) | Incorporated by reference to EaglePicher
    Holdings, Inc.s Form 10-K filed on March 1, 1999.                                                                   
|   
|(5) | Incorporated by reference to the EaglePicher
    Holdings, Inc.s Form 10-Q filed on June 30, 1999.                                                               
|   
|(6) | Incorporated by reference to the EaglePicher
    Holdings, Inc.s Form 8-K filed on April 21, 1999.                                                               
|   
|(7) | Incorporated by reference to the EaglePicher
    Holdings, Inc.s Form 10-Q filed on April 12,
    2000.                                                          
|   
|(8) | Incorporated by reference to EaglePicher
    Holdings, Inc.s Form 10-Q filed on October 16,
    2000.                                                            
|   
|(9) | Incorporated by reference to EaglePicher
    Holdings, Inc.s Form 10-K filed on February 28,
    2001.                                                           



|     |                                                                                                                                            
|---- | -------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Incorporated by reference to EaglePicher
    Holdings, Inc.s Form 10-Q filed on April 10,
    2001.                                       
|    
|(11) | Incorporated by reference to EaglePicher
    Holdings, Inc.s Form 8-K filed on July 9, 2001.                                              
|    
|(12) | Incorporated by reference to EaglePicher
    Holdings, Inc.s Form 10-Q filed on July 16, 2001.                                            
|    
|(13) | Incorporated by reference to EaglePicher
    Holdings, Inc.s Form 10-Q filed on October 12,
    2001.                                     
|    
|(14) | Incorporated by reference to EaglePicher
    Holdings, Inc.s Form 10-K filed on February 15,
    2002.                                    
|    
|(15) | Incorporated by reference to EaglePicher
    Holdings, Inc.s Form 8-K filed on January 3,
    2002.                                       
|    
|(16) | Incorporated by reference to EaglePicher
    Holdings, Inc.s Form 10-Q filed on April 14,
    2003.                                       
|    
|(17) | Incorporated by reference to EaglePicher
    Holdings, Inc.s Form 10-Q filed on October 14,
    2003.                                     
|    
|(18) | Incorporated by reference to EaglePicher
    Incorporateds S-4 Registration Statement (File
    No. 333-110266) filed on November 5, 2003.

(B) Financial Statement Schedules

Schedules are omitted since the information
required to be submitted has been included in Item 8 of
this report.

(C) Reports on Form 8-K



| |   |                                                                                              
| | - | ---------------------------------------------------------------------------------------------
| |  | Form 8-K, filed September 14, 2003
    concerning our press releases dated September 14, 2003
|
| |  | Form 8-K, filed October 14, 2003
    concerning our press release dated October 14, 2003     

92



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SIGNATURES

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



| |                           
| | --------------------------
| | EAGLEPICHER HOLDINGS, INC.



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

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

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.

|                                           |  |                                                                                       |  | 
|------------------------------------------ |  | ------------------------------------------------------------------------------------- |  | 
|                                           |  |                                                                                      
|Signature                                  |  | Title                                                                                
|                                           |  |                                                                                      
|                                          
|/s/ JOHN H. WEBERJohn H. Weber             |  | President, Chief Executive Officer and
    Director
    (Principal Executive Officer)
|                                          
|/s/ THOMAS R. PILHOLSKIThomas R. Pilholski |  | Senior Vice President and Chief Financial Officer
    (Principal Financial Officer)  
|                                          
|/s/ DR. JOEL P. WYLERDr. Joel P. Wyler     |  | Director                                                                             
|                                          
|/s/ DANIEL C. WYLERDaniel C. Wyler         |  | Director                                                                             
|                                          
|/s/ BERT IEDEMABert Iedema                 |  | Director                                                                             

93



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



| |                         
| | ------------------------
| | EAGLEPICHER INCORPORATED



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

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



| |                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.

|                                           |  |                                                                                                    |  | 
|------------------------------------------ |  | -------------------------------------------------------------------------------------------------- |  | 
|                                           |  |                                                                                                   
|Signature                                  |  | Title                                                                                             
|                                           |  |                                                                                                   
|                                          
|/s/ JOHN H. WEBERJohn H. Weber             |  | President, Chief Executive Officer and
    Director
    (Principal Executive Officer)             
|                                          
|/s/ THOMAS R. PILHOLSKIThomas R. Pilholski |  | Senior Vice President and Chief Financial Officer
    (Principal Financial and Accounting Officer)
|                                          
|/s/ DR. JOEL P. WYLERDr. Joel P. Wyler     |  | Director                                                                                          
|                                          
|/s/ DANIEL C. WYLERDaniel C. Wyler         |  | Director                                                                                          
|                                          
|/s/ BERT IEDEMABert Iedema                 |  | Director                                                                                          

94



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



| |                            
| | ---------------------------
| | CARPENTER ENTERPRISES, INC.



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

| |                                          
| | -----------------------------------------
| |                                          
| | William F. Maclean                       
| | President and Chief Executive
    Officer

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

|                                         |  |                                                                                             |  | 
|---------------------------------------- |  | ------------------------------------------------------------------------------------------- |  | 
|                                         |  |                                                                                            
|Signature                                |  | Title                                                                                      
|                                         |  |                                                                                            
|                                        
|/s/ WILLIAM F. MACLEANWilliam F. Maclean |  | President and Chief Executive Officer
    (Principal Executive Officer)                    
|                                        
|/s/ DAVID R. REGINELLIDavid R. Reginelli |  | Vice President and Chief Financial Officer
    (Principal Financial and Accounting Officer)
|                                        
|/s/ JOHN H. WEBERJohn H. Weber           |  | Director                                                                                   

95



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



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



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

| |                                          
| | -----------------------------------------
| |                                          
| | William F. Maclean                       
| | President and Chief Executive
    Officer

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

|                                         |  |                                                                                             |  | 
|---------------------------------------- |  | ------------------------------------------------------------------------------------------- |  | 
|                                         |  |                                                                                            
|Signature                                |  | Title                                                                                      
|                                         |  |                                                                                            
|                                        
|/s/ WILLIAM F. MACLEANWilliam F. Maclean |  | President and Chief Executive Officer
    (Principal Executive Officer)                    
|                                        
|/s/ DAVID R. REGINELLIDavid R. Regnelli  |  | Vice President and Chief Financial Officer
    (Principal Financial and Accounting Officer)
|                                        
|/s/ JOHN H. WEBERJohn H. Weber           |  | Director                                                                                   

96



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



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



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

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

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.

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

97



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



| |                                            
| | -------------------------------------------
| | EAGLEPICHER FILTRATION & MINERALS,
    INC.



| |     |                      
| | --- | ---------------------
| | By: | /s/ DAVID S. KESELICA

| |                  
| | -----------------
| |                  
| | David S. Keselica
| | President        

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.

|                                       |  |                                                                          
|-------------------------------------- |  | -------------------------------------------------------------------------
|Signature                              |  | Title                                                                    
|                                       |  |                                                                          
|                                      
|/s/ DAVID S. KESELICADavid S. Keselica |  | President
    (Principal Executive Officer)                              
|                                      
|/s/ NANCY HUBERNancy Huber             |  | Vice President  Finance
    (Principal Financial and Accounting Officer)
|                                      
|/s/ JOHN H. WEBERJohn H. Weber         |  | Director                                                                 

98



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



| |                              
| | -----------------------------
| | EAGLEPICHER TECHNOLOGIES, LLC



| |     |                     
| | --- | --------------------
| | By: | /s/ CRAIG N. KITCHEN

| |                                                           
| | ----------------------------------------------------------
| | ______________________________________ 
     Craig Kitchen
| | Chairman, Chief Executive Officer and
    Director        

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.

|                                               |  |                                                                                 
|---------------------------------------------- |  | --------------------------------------------------------------------------------
|Signature                                      |  | Title                                                                           
|                                               |  |                                                                                 
|                                              
|/s/ CRAIG N. KITCHENCraig N. Kitchen           |  | Chairman, Chief Executive Officer and Director
    (Principal Executive Officer)
|                                              
|/s/ BRADLEY J. WATERSBradley J. Waters         |  | Chief Financial Officer
    (Principal Financial and Accounting Officer)        
|                                              
|/s/ DR. JOEL P. WYLERDr. Joel P. Wyler         |  | Director                                                                        
|                                              
|/s/ JOHN H. WEBERJohn H. Weber                 |  | Director                                                                        
|                                              
|/s/ GRANT T. HOLLETT, JR.Grant T. Hollett, Jr. |  | Director                                                                        

99



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##### Table of Contents



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



| |                             
| | ----------------------------
| | EAGLEPICHER AUTOMOTIVE, INC.



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

| |                                          
| | -----------------------------------------
| |                                          
| | William F. Maclean                       
| | President and Chief Executive
    Officer

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

|                                         |  |                                                                                            
|---------------------------------------- |  | -------------------------------------------------------------------------------------------
|Signature                                |  | Title                                                                                      
|                                         |  |                                                                                            
|                                        
|/s/ WILLIAM F. MACLEANWilliam F. Maclean |  | President and Chief Executive Officer
    (Principal Executive Officer)                    
|                                        
|/s/ DAVID R. REGINELLIDavid R. Regnelli  |  | Vice President and Chief Financial Officer
    (Principal Financial and Accounting Officer)
|                                        
|/s/ JOHN H. WEBERJohn H. Weber           |  | Director                                                                                   

100



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##### Table of Contents



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



| |                                             
| | --------------------------------------------
| | EAGLEPICHER PHARMACEUTICAL SERVICES,
    LLC



| |     |                       
| | --- | ----------------------
| | By: | /s/ STEVEN E. WESTFALL

| |                       
| | ----------------------
| |                       
| | Steven E. Westfall    
| | President and Director

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.

|                                         |  |                                                                                     
|---------------------------------------- |  | ------------------------------------------------------------------------------------
|Signature                                |  | Title                                                                               
|                                         |  |                                                                                     
|                                        
|/s/ STEVEN E. WESTFALLSteven E. Westfall |  | President and Director
    (Principal Executive Officer)                            
|                                        
|/s/ BRADLEY J. WATERSBradley J. Waters   |  | Chief Financial Officer
    (Principal Financial Officer and
    Accounting Officer)
|                                        
|/s/ LISA GRESSELLisa Gressel             |  | Director                                                                            

101



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##### Table of Contents



EXHIBIT INDEX

|        |      |  |  |                  |  |                                                                                                                                                       |  |     
|------- | ---- |  |  | ---------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|Exhibit |      |  |  |                  |  |                                                                                                                                                      
|Number  |      |  |  | Title of Exhibit |  | Note                                                                                                                                                 
|        |      |  |  |                  |  |                                                                                                                                                      
|        | 2.1  |  |  |                 |  | Third Amended Consolidated Plan of Reorganization
    of EaglePicher Incorporated (f/k/a Eagle-Picher Industries,
    Inc.) dated August 28, 1996     |  | (1) 
|        | 2.2  |  |  |                 |  | Exhibits to Third Amended Consolidated Plan of
    Reorganization of EaglePicher Incorporated                                                         |  | (1) 
|        | 3.1  |  |  |                 |  | Articles of Incorporation of EaglePicher
    Incorporated, as amended                                                                                 |  | (1) 
|        | 3.2  |  |  |                 |  | Certificate of Amendment by Shareholders or
    Members of Articles of Incorporation of EaglePicher
    Incorporated, as amended, dated April 1, 2003 |  | (18)
|        | 3.3  |  |  |                 |  | Regulations of the EaglePicher Incorporated                                                                                                           |  | (1) 
|        | 3.4  |  |  |                 |  | Amended and Restated Certificate of Incorporation
    of EaglePicher Holdings, Inc. (f/k/a Eagle-Picher Holdings, Inc.)                               |  | (1) 
|        | 3.5  |  |  |                 |  | Certificate of Amendment of Amended and Restated
    Certificate of Incorporation of EaglePicher Holdings, Inc.,
    dated August 31, 2001            |  | (13)
|        | 3.6  |  |  |                 |  | Certificate of Amendment of Certificate of
    Incorporation of EaglePicher Holdings, Inc., dated April 1,
    2003                                   |  | (18)
|        | 3.7  |  |  |                 |  | Bylaws of EaglePicher Holdings, Inc.                                                                                                                  |  | (1) 
|        | 3.8  |  |  |                 |  | Restated Articles of Incorporation of Daisy
    Parts, Inc.                                                                                           |  | (2) 
|        | 3.9  |  |  |                 |  | Amended and Restated Bylaws of Daisy Parts, Inc.,
    dated as of November 16, 2001                                                                   |  | (14)
|        | 3.10 |  |  |                 |  | Certificate of Incorporation of Eagle-Picher
    Development Company, Inc.                                                                            |  | (2) 
|        | 3.11 |  |  |                 |  | Bylaws of Eagle-Picher Development Company, Inc.                                                                                                      |  | (2) 
|        | 3.12 |  |  |                 |  | Certificate of Incorporation of Eagle-Picher Far
    East, Inc.                                                                                       |  | (2) 
|        | 3.13 |  |  |                 |  | Bylaws of Eagle-Picher Far East, Inc.                                                                                                                 |  | (2) 
|        | 3.14 |  |  |                 |  | Articles of Incorporation of EaglePicher
    Filtration & Minerals, Inc. (f/k/a Eagle-Picher Minerals,
    Inc.)                                      |  | (2) 
|        | 3.15 |  |  |                 |  | Certificate of Amendment to Articles of
    Incorporation of EaglePicher Filtration & Minerals,
    Inc., dated October 21, 2002                      |  | (18)
|        | 3.16 |  |  |                 |  | Certificate of Amendment to Articles of
    Incorporation of EaglePicher Filtration & Minerals,
    Inc., dated February 25, 2003                     |  | (18)
|        | 3.17 |  |  |                 |  | Certificate of Amendment to Articles of
    Incorporation of EaglePicher Filtration & Minerals, Inc.,
    dated February 27, 2003                     |  | (18)
|        | 3.18 |  |  |                 |  | Certificate of Amendment to Articles of
    Incorporation of EaglePicher Filtration & Minerals, Inc.,
    dated April 21, 2003                        |  | (18)
|        | 3.19 |  |  |                 |  | Bylaws of EaglePicher Filtration & Minerals,
    Inc.                                                                                                 |  | (2) 
|        | 3.20 |  |  |                 |  | Amendment to the Bylaws of EaglePicher Filtration
    & Minerals, Inc., dated as of November 16, 2001                                                 |  | (14)
|        | 3.21 |  |  |                 |  | Certificate of Formation of EaglePicher
    Technologies, LLC (f/k/a Eagle-Picher Technologies, LLC).                                                 |  | (2) 
|        | 3.22 |  |  |                 |  | Amended and Restated Limited Liability Company
    Agreement of EaglePicher Technologies, LLC.                                                        |  | (3) 
|        | 3.23 |  |  |                 |  | Certificate of Amendment of Certificate of
    Formation of EaglePicher Technologies, LLC, dated April 1,
    2003                                    |  | (18)
|        | 3.24 |  |  |                 |  | Restated Articles of Incorporation of EaglePicher
    Automotive, Inc. (f/k/a Hillsdale Tool & Manufacturing Co.).                                    |  | (18)



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##### Table of Contents



|        |      |  |  |                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |     
|------- | ---- |  |  | ---------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|Exhibit |      |  |  |                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Number  |      |  |  | Title of Exhibit |  | Note                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        |      |  |  |                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | 3.25 |  |  |                 |  | Certificate of Amendment to the Articles of
    Incorporation of EaglePicher Automotive, Inc., dated
    August 1, 2003                                                                                                                                                                                                                                                                                                                                               |  | (18)
|        | 3.26 |  |  |                 |  | Amended and Restated Bylaws of EaglePicher
    Automotive, Inc., dated as of November 16, 2001                                                                                                                                                                                                                                                                                                                                                                        |  | (14)
|        | 3.27 |  |  |                 |  | Restated Articles of Incorporation of EPMR
    Corporation (f/k/a Michigan Automotive Research Corporation)                                                                                                                                                                                                                                                                                                                                                           |  | (7) 
|        | 3.28 |  |  |                 |  | Bylaws of EPMR Corporation                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | (7) 
|        | 3.29 |  |  |                 |  | Articles of Incorporation of Eagle-Picher
    Acceptance Corporation (f/k/a Eagle-Picher Acceptance Corp.)                                                                                                                                                                                                                                                                                                                                                            |  | (18)
|        | 3.30 |  |  |                 |  | Certificate of Amendment by Shareholders to the
    Articles of Incorporation of Eagle-Picher Acceptance
    Corporation, dated May 14, 1999                                                                                                                                                                                                                                                                                                                          |  | (18)
|        | 3.31 |  |  |                 |  | Code of Regulations of Eagle-Picher Acceptance
    Corporation                                                                                                                                                                                                                                                                                                                                                                                                        |  | (18)
|        | 3.32 |  |  |                 |  | Articles of Incorporation of Cincinnati
    Industrial Machinery Sales Company (f/k/a Cincinnati Industrial
    Machinery Company)                                                                                                                                                                                                                                                                                                                                    |  | (18)
|        | 3.33 |  |  |                 |  | Certificate of Amendment by Shareholders to the
    Articles of Incorporation of Cincinnati Industrial Machinery
    Sales Company, dated February 14, 1995                                                                                                                                                                                                                                                                                                           |  | (18)
|        | 3.34 |  |  |                 |  | Code of Regulations of Cincinnati Industrial
    Machinery Sales Company                                                                                                                                                                                                                                                                                                                                                                                              |  | (18)
|        | 3.35 |  |  |                 |  | Articles of Incorporation for Carpenter
    Enterprises Limited (f/k/a Charterhouse Acquisition Corporation)                                                                                                                                                                                                                                                                                                                                                          |  | (18)
|        | 3.36 |  |  |                 |  | Certificate of Amendment to the Articles of
    Incorporation of Carpenter Enterprises Limited, dated
    October 5, 1988                                                                                                                                                                                                                                                                                                                                             |  | (18)
|        | 3.37 |  |  |                 |  | Amended and Restated Bylaws of Carpenter
    Enterprises Limited                                                                                                                                                                                                                                                                                                                                                                                                      |  | (18)
|        | 3.38 |  |  |                 |  | Certificate of Formation of EaglePicher
    Pharmaceutical Services, LLC, as amended, dated March 4,
    2003                                                                                                                                                                                                                                                                                                                                                         |  | (18)
|        | 3.39 |  |  |                 |  | Limited Liability Company Amended and Restated
    Operating Agreement of EaglePicher Pharmaceutical Services, LLC,
    dated March 4, 2003                                                                                                                                                                                                                                                                                                                           |  | (18)
|        | 4.1  |  |  |                 |  | Indenture, dated as of February 24, 1998,
    between EaglePicher Incorporated, EaglePicher Holdings, Inc., as
    a guarantor, subsidiary guarantors (Daisy Parts, Inc.,
    Eagle-Picher Development Company, Inc., Eagle-Picher Far East,
    Inc., Eagle-Picher Fluid Systems, Inc., EaglePicher Filtration
    & Minerals, Inc., EaglePicher Technologies, LLC, EaglePicher
    Automotive, Inc., and EPMR Corporation), and The Bank of New
    York as trustee |  | (1) 
|        | 4.2  |  |  |                 |  | Cross Reference Table showing the location in the
    Indenture, dated as of February 24, 1998, of the provisions
    of Sections 310 through 318(a), inclusive, of the Trust
    Indenture Act of 1939, contained as part of the Indenture filed
    as Exhibit 4.1                                                                                                                                                                                                  |  | (1) 
|        | 4.3  |  |  |                 |  | First Supplemental Indenture, dated as of
    February 24, 1998, between EaglePicher Incorporated and the
    Bank of New York as trustee, supplementing the Indenture, dated
    as of February 24, 1998                                                                                                                                                                                                                                                             |  | (1) 
|        | 4.4  |  |  |                 |  | Form of Global Note for the Indenture, dated as
    of February 24, 1998 (attached as Exhibit A to the
    Indenture, dated as of February 24, 1998, filed as
    Exhibit 4.1)                                                                                                                                                                                                                                                                                        |  | (1) 
|        | 4.5  |  |  |                 |  | Certified Copy of the Certificate of
    Designations, Preferences and Rights of 11.75% Series A
    Cumulative Redeemable Exchangeable Preferred Stock and 11.75%
    Series B Cumulative Redeemable Exchangeable Preferred Stock
    of the EaglePicher Holdings, Inc., dated February 23, 1998                                                                                                                                                                     |  | (1) 



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##### Table of Contents



|        |      |  |  |                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                               |  |     
|------- | ---- |  |  | ---------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|Exhibit |      |  |  |                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                              
|Number  |      |  |  | Title of Exhibit |  | Note                                                                                                                                                                                                                                                                                                                                                                                                                         
|        |      |  |  |                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                              
|        | 4.6  |  |  |                 |  | Form of Certificate and Global Share of 11.75%
    Series A Cumulative Redeemable Exchangeable Preferred Stock
    and 11.75% Series B Cumulative Redeemable Exchangeable
    Preferred Stock (attached as Exhibit A to the Certificate
    of Designations filed as Exhibit 4.5)                                                                                                                                             |  | (18)
|        | 4.7  |  |  |                 |  | Form of Exchange Debentures Indenture relating to
    11.75% Exchange Debentures due 2008 of EaglePicher Holdings, Inc.                                                                                                                                                                                                                                                                                                       |  | (1) 
|        | 4.8  |  |  |                 |  | Cross Reference Table showing the location in the
    Exchange Debentures Indenture of the provisions of
    Sections 310 through 318(a), inclusive, of the Trust
    Indenture Act of 1939                                                                                                                                                                                                                                   |  | (1) 
|        | 4.9  |  |  |                 |  | Form of 11.75% Exchange Debenture due 2008
    (attached as Exhibit A to the Exchange Debentures Indenture
    filed as Exhibit 4.7)                                                                                                                                                                                                                                                                                          |  | (1) 
|        | 4.10 |  |  |                 |  | Cross Reference Table showing the location in the
    Indenture, dated as of August 7, 2003, of the provisions of
    Sections 310 through 318(a), inclusive, of the Trust
    Indenture Act of 1939, contained as part of the Indenture filed
    as Exhibit 10.70                                                                                                                                                           |  | (18)
|        | 4.11 |  |  |                 |  | Second Supplemental Indenture, dated as of
    December 14, 2001, between EaglePicher Incorporated and the
    Bank of New York as trustee, supplementing the Indenture, dated
    as of February 24, 1998                                                                                                                                                                                                                    |  | (18)
|        | 4.12 |  |  |                 |  | Third Supplemental Indenture, dated as of
    July 22, 2003, between EaglePicher Incorporated and the
    Bank of New York as trustee, supplementing the Indenture, dated
    as of February 24, 1998                                                                                                                                                                                                                         |  | (18)
|        | 4.13 |  |  |                 |  | Form of Global Note for the Indenture, dated as
    of August 7, 2003 (attached as Exhibit A-1 to the
    Indenture, dated as of August 7, 2003, filed as
    Exhibit 10.27)                                                                                                                                                                                                                                                  |  | (18)
|        | 4.14 |  |  |                 |  | Amendment to Certificate of Designations of the
    11.75% Preferred Stock of EaglePicher Holdings, Inc., dated
    August 5, 2003                                                                                                                                                                                                                                                                                            |  | (18)
|        | 9.1  |  |  |                 |  | Voting Trust Agreement dated November 16,
    1998 with owners of Class A (Voting) Common Stock of
    EaglePicher Holdings, Inc.                                                                                                                                                                                                                                                                                             |  | (4) 
|        | 10.1 |  |  |                 |  | Merger Agreement, dated as of December 23,
    1997, among EaglePicher Incorporated, the Eagle-Picher
    Industries, Inc. Personal Injury Settlement Trust, EaglePicher
    Holdings, Inc., and E-P Acquisition, Inc.                                                                                                                                                                                                        |  | (1) 
|        | 10.2 |  |  |                 |  | Amendment No. 1 to the Merger Agreement,
    dated as of February 23, 1998, among EaglePicher
    Incorporated, the Eagle-Picher Industries, Inc. Personal Injury
    Settlement Trust, EaglePicher Holdings, Inc., and
    E-P Acquisition, Inc.                                                                                                                                                                             |  | (1) 
|        | 10.3 |  |  |                 |  | Supplemental Executive Retirement Plan of
    EaglePicher Incorporated dated May 3, 1995                                                                                                                                                                                                                                                                                                                                      |  |     
|        | 10.4 |  |  |                 |  | Notes Purchase Agreement, dated February 19,
    1998, among E-P Acquisition, Inc., EaglePicher
    Incorporated, EaglePicher Holdings, Inc., 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
    EaglePicher Incorporated and subsidiary guarantors Daisy Parts,
    Inc., Eagle-Picher Development Company, Inc., Eagle-Picher Far
    East, Inc., Eagle-Picher Fluid Systems, Inc., EaglePicher
    Filtration & Minerals, Inc., EaglePicher Technologies, LLC,
    EaglePicher Automotive, Inc., and EPMR Corporation |  | (1) 
|        | 10.6 |  |  |                 |  | Registration Rights Agreement, dated as of
    February 24, 1998, between E-P Acquisition, Inc., SBC
    Warburg Dillon Read and ABN AMRO Incorporated                                                                                                                                                                                                                                                                        |  | (1) 
|        | 10.7 |  |  |                 |  | Assumption Agreement for the Registration Rights
    Agreement, dated as of February 24, 1998, of EaglePicher
    Incorporated                                                                                                                                                                                                                                                                                                |  | (1) 



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##### Table of Contents



|        |       |  |  |                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |     
|------- | ----- |  |  | ---------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----
|Exhibit |       |  |  |                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Number  |       |  |  | Title of Exhibit |  | Note                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        |       |  |  |                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 10.8  |  |  |                 |  | Management Agreement dated as of
    February 24, 1998, between EaglePicher Incorporated and
    Granaria Holdings B.V.                                                                                                                                                                                                                                                                                                                                |  | (2) 
|        | 10.9  |  |  |                 |  | Preferred Stock Purchase Agreement, dated
    February 19, 1998, between EaglePicher Holdings, Inc., and
    the initial purchasers                                                                                                                                                                                                                                                                                                                    |  | (1) 
|        | 10.10 |  |  |                 |  | Preferred Stock Registration Rights Agreement,
    dated as of February 24, 1998, between EaglePicher
    Holdings, Inc., and the initial purchasers                                                                                                                                                                                                                                                                                                   |  | (1) 
|        | 10.11 |  |  |                 |  | Transfer Agency Agreement, dated as of
    February 24, 1998, between EaglePicher Holdings, Inc., and
    The Bank of New York, as transfer agent                                                                                                                                                                                                                                                                                                      |  | (2) 
|        | 10.12 |  |  |                 |  | EaglePicher Holdings, Inc., Incentive Stock Plan
    for Outside Directors effective January 1, 1999                                                                                                                                                                                                                                                                                                                                                   |  | (4) 
|        | 10.13 |  |  |                 |  | Second Amended and Restated Incentive Stock Plan
    of EaglePicher Incorporated effective November 15, 1998                                                                                                                                                                                                                                                                                                                                           |  | (4) 
|        | 10.14 |  |  |                 |  | Shareholders Agreement dated October 15,
    1998, among Granaria Holdings B.V., Granaria Industries B.V.,
    EaglePicher Holdings, Inc., and EaglePicher Incorporated                                                                                                                                                                                                                                                                                |  | (4) 
|        | 10.15 |  |  |                 |  | Voting Trust Agreement dated as of
    November 16, 1998, by and among certain shareholders of
    EaglePicher Holdings, Inc. and Granaria Holdings B.V.                                                                                                                                                                                                                                                                                               |  | (5) 
|        | 10.16 |  |  |                 |  | Shareholders Agreement dated April 12, 1999,
    among Granaria Holdings B.V., the EaglePicher Holdings, Inc.,
    EaglePicher Incorporated, and certain shareholders of the Company                                                                                                                                                                                                                                                                   |  | (5) 
|        | 10.17 |  |  |                 |  | Voting Trust Agreement dated April 13, 1999,
    between certain shareholders of EaglePicher Holdings, Inc. and
    Granaria Holdings B.V. as voting trustee                                                                                                                                                                                                                                                                                           |  | (5) 
|        | 10.18 |  |  |                 |  | Share Appreciation Plan of EaglePicher
    Incorporated, effective May 5, 1998                                                                                                                                                                                                                                                                                                                                                                         |  | (5) 
|        | 10.19 |  |  |                 |  | Second Supplemental Indenture dated
    December 14, 2001, among EaglePicher Incorporated, the
    guarantors (Daisy Parts, Inc., Eagle-Picher Development Company,
    Inc., Eagle-Picher Holdings, Inc., Eagle-Picher Far East, Inc.,
    EaglePicher Filtration & Minerals, Inc., EaglePicher
    Technologies, LLC, EaglePicher Automotive, Inc., EPMR
    Corporation and Carpenter Enterprises Limited) and The Bank of
    New York, as trustee |  | (14)
|        | 10.20 |  |  |                 |  | Receivables Sale Agreement dated January 8,
    2002 by and among Eagle-Picher Funding Corporation and each of
    the Originators defined therein which include
    EaglePicher Incorporated, Carpenter Enterprises Limited, Daisy
    Parts, Inc., EaglePicher Filtration & Minerals, Inc.,
    EaglePicher Technologies, LLC, and EaglePicher Automotive, Inc.                                                                                    |  | (14)
|        | 10.21 |  |  |                 |  | Receivables Purchase and Servicing Agreement
    dated January 8, 2002 by and among Eagle-Picher Funding
    Corporation, Redwood Receivables Corporation, EaglePicher
    Incorporated and General Electric Capital Corporation.                                                                                                                                                                                                                      |  | (14)
|        | 10.22 |  |  |                 |  | Annex X to Receivables Sale Agreement at
    Exhibit 10.62 and to Receivables Purchase and Servicing
    Agreement at Exhibit 10.63  Definitions
    and Interpretations.                                                                                                                                                                                                                                                                           |  | (14)
|        | 10.23 |  |  |                 |  | Asset Purchase Agreement, dated December 18,
    2001, between EaglePicher Incorporated and Construction
    Equipment Direct, Inc.                                                                                                                                                                                                                                                                                                                    |  | (15)
|        | 10.24 |  |  |                 |  | EaglePicher Incorporated 2002 Long-term Bonus
    Program.                                                                                                                                                                                                                                                                                                                                                                                             |  | (16)
|        | 10.25 |  |  |                 |  | Purchase Agreement dated as of July 31, 2003
    between EaglePicher Incorporated and UBS Securities LLC, ABN
    AMRO Incorporated, Banc One Capital Markets, Inc., Harris
    Nesbitt Corp. and PNC Capital Markets, Inc.                                                                                                                                                                                                                            |  | (17)
|        | 10.26 |  |  |                 |  | Registration Rights Agreement dated as of
    August 7, 2003 between EaglePicher Incorporated, certain of
    its subsidiaries and UBS Securities LLC, ABN AMRO Incorporated,
    Banc One Capital Markets, Inc., Harris Nesbitt Corp. and PNC
    Capital Markets, Inc.                                                                                                                                                                               |  | (17)



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##### Table of Contents



|        |       |  |  |                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |     
|------- | ----- |  |  | ---------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----
|Exhibit |       |  |  |                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Number  |       |  |  | Title of Exhibit |  | Note                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        |       |  |  |                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        | 10.27 |  |  |                 |  | Indenture dated as of August 7, 2003 between
    EaglePicher Incorporated, certain of its subsidiaries and Wells
    Fargo Bank, National Association, as trustee                                                                                                                                                                                                                                                                                            |  | (17)
|        | 10.28 |  |  |                 |  | Credit Agreement dated as of August 7, 2003
    among EaglePicher Holdings, Inc., EaglePicher Incorporated,
    certain of its subsidiaries, Harris Trust and Savings Bank, as
    administrative agent, ABN AMRO Incorporated and UBS Securities
    LLC, as co-syndication agents, Bank One, NA and PNC Bank,
    National Association, as co-documentation agents, GE Capital
    Corporation, as collateral agent, and various lenders party
    thereto |  | (17)
|        | 10.29 |  |  |                 |  | Guarantee and Collateral Agreement dated as of
    August 7, 2003 among EaglePicher Holdings, Inc.,
    EaglePicher Incorporated, certain of its subsidiaries and Harris
    Trust and Savings Bank, as administrative agent                                                                                                                                                                                                                                 |  | (17)
|        | 10.30 |  |  |                 |  | Amendment No. 3 to Receivables Purchase and
    Servicing Agreement dated as of August 7, 2003 among
    EaglePicher Incorporated, certain of its subsidiaries,
    EaglePicher Funding Corporation and General Electric Capital
    Corporation                                                                                                                                                                                                             |  | (17)
|        | 10.31 |  |  |                 |  | Amended and Restated Executive Employment
    Agreement dated as of April 9, 2003 between EaglePicher
    Incorporated and John H. Weber                                                                                                                                                                                                                                                                                                                     |  | (17)
|        | 12.1  |  |  |                 |  | Ratios of Earnings to Fixed Charges and Preferred
    Stock Dividends                                                                                                                                                                                                                                                                                                                                                                                        |  | *   
|        | 21.1  |  |  |                 |  | Subsidiaries of EaglePicher Incorporated                                                                                                                                                                                                                                                                                                                                                                                                                     |  | *   
|        | 24.1  |  |  |                 |  | Power of Attorney  Joel P. Wyler                                                                                                                                                                                                                                                                                                                                                                                                                            |  | *   
|        | 24.2  |  |  |                 |  | Power of Attorney  Daniel C. Wyler                                                                                                                                                                                                                                                                                                                                                                                                                          |  | *   
|        | 24.3  |  |  |                 |  | Power of Attorney  Bert Iedema                                                                                                                                                                                                                                                                                                                                                                                                                              |  | *   
|        | 31.1  |  |  |                 |  | Certification Pursuant to
    Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of
    1934, as Amended                                                                                                                                                                                                                                                                                                                                                |  | *   
|        | 31.2  |  |  |                 |  | Certification Pursuant to
    Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of
    1934, as Amended                                                                                                                                                                                                                                                                                                                                                |  | *   
|        | 32.1  |  |  |                 |  | Certification Pursuant to 18 U.S.C.
    Section 1350, as Adopted Pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                               |  | *   
|        | 32.2  |  |  |                 |  | Certification Pursuant to 18 U.S.C.
    Section 1350, as Adopted Pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                               |  | *   



---



| |   |               
| | - | --------------
| | * | Filed herewith



| |     |                                                                                                                                                                   
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Incorporated by reference to EaglePicher
    Incorporateds S-4 Registration Statement (File
    No. 333-49957) filed on April 10, 1998.                          
|
| | (2) | Incorporated by reference to EaglePicher
    Incorporateds Amendment No. 1 to Form S-4
    Registration Statement (File No. 333-49957) filed on
    May 20, 1998.
|
| | (3) | Incorporated by reference to EaglePicher
    Incorporateds Amendment No. 2 to Form S-4
    Registration Statement (File No. 333-49957) filed on
    June 5, 1998.
|
| | (4) | Incorporated by reference to EaglePicher
    Holdings, Inc.s Form 10-K filed on March 1, 1999.                                                                   
|
| | (5) | Incorporated by reference to the EaglePicher
    Holdings, Inc.s Form 10-Q filed on June 30, 1999.                                                               
|
| | (6) | Incorporated by reference to the EaglePicher
    Holdings, Inc.s Form 8-K filed on April 21, 1999.                                                               
|
| | (7) | Incorporated by reference to the EaglePicher
    Holdings, Inc.s Form 10-Q filed on April 12,
    2000.                                                          
|
| | (8) | Incorporated by reference to EaglePicher
    Holdings, Inc.s Form 10-Q filed on October 16,
    2000.                                                            
|
| | (9) | Incorporated by reference to EaglePicher
    Holdings, Inc.s Form 10-K filed on February 28,
    2001.                                                           



|     |                                                                                                     
|---- | ----------------------------------------------------------------------------------------------------
|(10) | Incorporated by reference to EaglePicher
    Holdings, Inc.s Form 10-Q filed on April 10,
    2001.
|    
|(11) | Incorporated by reference to EaglePicher
    Holdings, Inc.s Form 8-K filed on July 9, 2001.       



---



##### Table of Contents





|     |                                                                                                                                            
|---- | -------------------------------------------------------------------------------------------------------------------------------------------
|(12) | Incorporated by reference to EaglePicher
    Holdings, Inc.s Form 10-Q filed on July 16, 2001.                                            
|    
|(13) | Incorporated by reference to EaglePicher
    Holdings, Inc.s Form 10-Q filed on October 12,
    2001.                                     
|    
|(14) | Incorporated by reference to EaglePicher
    Holdings, Inc.s Form 10-K filed on February 15,
    2002.                                    
|    
|(15) | Incorporated by reference to EaglePicher
    Holdings, Inc.s Form 8-K filed on January 3,
    2002.                                       
|    
|(16) | Incorporated by reference to EaglePicher
    Holdings, Inc.s Form 10-Q filed on April 14,
    2003.                                       
|    
|(17) | Incorporated by reference to EaglePicher
    Holdings, Inc.s Form 10-Q filed on October 14,
    2003.                                     
|    
|(18) | Incorporated by reference to EaglePicher
    Incorporateds S-4 Registration Statement (File
    No. 333-110266) filed on November 5, 2003.