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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-K

|ý                                       |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)                                           
|--------------------------------------- |  | ----------------------------------------------------------------------------------------
|For the fiscal year ended June 30, 2003
|OR                                     
|o                                       |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition
period                to

Commission file number 0-7903

QUIXOTE CORPORATION(Exact name of registrant as specified in its charter)

|DELAWARE(State or other jurisdiction of
incorporation or organization)           |  | 36-2675371(I.R.S. Employer
Identification No.)
|-------------------------------------------------------------------------------- |  | ----------------------------------------------
|ONE EAST WACKER DRIVE, CHICAGO, ILLINOIS(Address of principal executive offices) |  | 60601(Zip Code)                               

Registrant's telephone number including area code:(312) 467-6755

Securities Registered Pursuant to Section 12(g) of the Act:

Common Stock ($.01-2/3 Par Value)(Title of Class)

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days.    Yes  ý    No  o

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    ý

Indicate
by check mark whether the registrant is an accelerated filer as defined by Rule 12b-2 of the Securities Exchange Act of
1934.    Yes  ý    No  o

State
the aggregate market value of the voting stock held by non-affiliates of the registrant. The aggregate market value shall be computed by reference to the price at which the stock
was sold, or the average bid and asked prices of such stock, as of the last business day of the registrant's most recently completed second fiscal quarter.

$132,319,480
as of December 31, 2002

Indicate
the number of share outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

8,360,193
shares of the Company's Common Stock ($.01-2/3 par value) were outstanding as of September 16, 2003.

DOCUMENTS INCORPORATED BY REFERENCE

The Registrant's Definitive Proxy Statement for the Annual Meeting of Stockholders to be held on November 13, 2003 which will be filed with the Commission
on or about October 1, 2003 is incorporated by reference at Part III.

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TABLE OF CONTENTS

|           |          |    |                                                                                       | PAGE
|---------- | -------- | -- | ------------------------------------------------------------------------------------- | ----
|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 Auditors 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 Transactions                                        |     
|           | Item 14. |    | Principal Accountant Fees and Services                                                |     
|PART IV   
|           | Item 15. |    | Exhibits, Financial Statement Schedule and Reports on Form 8-K                        |     
|SIGNATURES |          | 47

2

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PART I  THE COMPANY

Quixote Corporation was originally incorporated under the laws of the State of Delaware in 1969 as Energy Absorption Systems, Inc. In June 1980,
Energy Absorption Systems, Inc. changed its name to Quixote Corporation. Unless otherwise indicated herein, the terms "Quixote" and the "Company" refer to Quixote Corporation and its
subsidiaries.

Item 1.    Business

Quixote Corporation and its subsidiaries develop, manufacture and market highway and transportation safety products to protect, direct and inform motorists and
highway workers in both domestic and international markets. These products include energy-absorbing highway crash cushions, flexible post delineators, electronic wireless measuring and sensing
devices, weather information systems and forecasting services, variable message signs, highway advisory radios, intelligent intersection control devices and other highway and transportation safety
devices.

As
of June 30, 2003, Quixote Corporation and its subsidiaries employed approximately 1,250 people.

Description of Business

The Company's operations are comprised of two reportable segments within the highway and transportation safety industry, concentrating on safety problems and
designing products to provide solutions for the highways. The Company's two reportable segments arethe manufacture and sale of highway and transportation safety products which "Protect
and Direct", and the manufacture and sale of products and services which "Inform" that are often referred to as Intelligent Transportation Systems (ITS) products. The Company's Protect and Direct
segment provides solutions for improving safety on the roads either by minimizing the severity of crashes that occur or by preventing crashes from occurring by directing or guiding traffic. The
Company's Inform segment provides solutions for improving traffic flow and safety on roads and runways by providing information. The Company's products are sold by both a direct sales force and a
distribution network to customers
in the highway construction and safety business, state departments of transportation and other governmental transportation agencies.

Protect and Direct Segment

In the category of products which reduce the severity of crashes within the Protect and Direct segment, the Company's patented highway crash cushions were first
conceived and developed in 1969 in response to the high number of fatalities and serious injuries suffered by occupants of errant vehicles in collisions with roadside hazards, such as bridge
abutments, overpass piers, overhead sign supports, lane dividers, traffic islands and toll booths. Since that time, various types of highway crash cushions have been installed in front of thousands of
life-threatening roadside hazards. The Federal Highway Administration (FHWA) endorses the installation of highway crash cushions as an effective safety program.

The
Company develops, manufactures and markets lines of patented highway crash cushion systems and other barriers which absorb and dissipate the force of impact in collisions between
vehicles and fixed roadside objects or slow moving highway construction vehicles. The product lines utilize the principles of momentum transfer and kinetic energy to safely decelerate errant vehicles.
Energy absorption or energy dissipation is accomplished by using different combinations of water, aluminum, steel, urethane foam systems, cardboard, plastic structures, elastometric cylinders and
sand. The Company also manufactures and sells products that prevent crashes and help control the flow of traffic by directing or guiding. These products consist of a line of flexible sign and guide
post systems

3

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(delineators)
and a glare screen system. The guide posts are used to delineate a travel way, channel vehicles or mark the location of an object. The post features a patented, in-ground
anchor system that permits inexpensive repair and replacement techniques. The glare screen system, also made from polyethylene, is installed on top of median barriers to eliminate the distraction of
lights from oncoming vehicles. The Company's products within the Protect and Direct segment also include a crashworthy barrier arm for use at areas such as railroad crossings, tollroads and as
security for access ways, driveways and parking lots. In addition, the Company markets a FreezeFree anti-icing system which automatically or manually dispenses deicing liquids
in advance of ice formation on bridges, roads and overpasses.

Inform Segment

To expand the Company's business within the highway and transportation safety industry, in 1998 the Company began acquiring companies that manufacture ITS
products which provide information to prevent crashes from occurring, which comprise the Inform segment. Highway Information Systems, Inc. (HIS), acquired in April 1998, manufactures
highway advisory radio systems that help control the flow of traffic by informing motorists of accidents and traffic delays. In December 1998, the Company
acquired Nu-Metrics, Inc., which provides the Company with electronic wireless measuring and sensing devices that gather and use information to relieve traffic congestion. In
January 2001, the Company acquired National Signal, Inc. With this acquisition, the Company acquired mobile variable message signs, directional displays and warning lights for the
transportation industry. In August 2001, the Company acquired Surface Systems, Inc. This acquisition expands the Company's offering of pavement sensing equipment and specialized road and
runway weather stations and also gained both road condition and weather forecasting services. Effective May 16, 2003, the Company acquired U.S. Traffic Corporation (UST). The UST
business provided an extensive array of intelligent intersection control systems and other traffic control products.

The
Company's expanded highway and transportation safety products within the Inform segment include devices which can be used to measure distance and perform repetitive spacing to within
one inch per mile and include portable or permanent sensors that record volume, speed, and length classification of vehicles. These sensors also collect, analyze and store traffic and road surface
condition and freezing point data which can be relayed on a real-time basis for monitoring to a transportation department's base computer or control center via telephone, cellular link,
fiber optic connection or a wireless link. The Company also manufactures and markets road/runway traffic and weather information systems. Using a tower equipped with weather instruments and special
detectors, these systems can detect freezing conditions and provide valuable weather and traffic data to transportation departments or airports in order to dispatch salt trucks or automatically
activate anti-icing systems.    The Company's products within the Inform segment also include traffic controllers, in-ground vehicle detectors, permanently-mounted
and mobile variable message signs, directional displays, traffic and pedestrian signals, traffic uninterruptible power supply (UPS) systems, illuminated transportation signage and tunnel lighting.
Traffic controllers and detectors are devices that control traffic signal operations at intersections either with preset timers or with detectors that enable the signals to change in response to
variations in traffic. Permanently-mounted and mobile variable message signs provide advance warning and directional information to oncoming drivers to assist in diverting and controlling traffic
around areas of potential hazard. These LED signs and displays can be electronic, solar or diesel powered. UPS is a power supply system with battery backup that keeps a lighted intersection operating
either normally or in flash-mode during a power interruption. Traffic and pedestrian signals are LED or incandescent signals for intersection operations and pedestrian crossings which may
include countdown warnings before a signal changes. The Company also provides specialty lighting solutions for roadway and pedestrian tunnels, subways and other areas. The Company is a leading
manufacturer of highway advisory radio (HAR) systems that broadcast traffic information using an AM radio frequency. HAR systems, in conjunction with flashing lights and message signs, advise drivers
to tune into a particular

4

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AM
station to communicate messages about traffic, road conditions and weather with reception up to six miles from the unit. One of the Company's newly developed products is the
Intellizone® system which is designed to provide real-time information to motorists who are approaching construction zones by connecting traffic and/or weather sensors and
variable message signs through software.

The
Company also provides product education, selection and application assistance. The Company, in some cases, performs site preparation and installation services for its products. These
services are primarily performed by the Company's distributor/contractor network.

Financial
information relating to industry segments appears in Note 16 of the notes to Company's consolidated financial statements included herein.

Competition and Marketing

The Company's products are sold in all 50 U.S. states and internationally. Domestically, the Company sells either through a distribution network or through a
direct sales force. The distribution network consists of regional managers which supervise 49 domestic distributors and also make direct sales in areas not covered by distributors. The Company sells
its products principally to distributors, contractors (on behalf of state and local governments), state departments of transportation, state agencies, local governments, municipalities, and airports.
Although the federal government provides matching funds for the purchase of certain highway safety products made by state and local governmental agencies, the federal government is not a direct
purchaser of the Company's domestic products. For certain products, the Company sells through catalogs and inside sales personnel.

Many
foreign governments are now beginning to recognize the need for crash cushions and the Company's other highway safety products as a method of reducing traffic congestion and
fatalities. The Company's products are sold outside of the U.S through a network of 60 distributors who make sales to municipal and national governments and contractors who are responding to
bids from their respective governments.

The
Company does experience competition in many of its product lines. The Company believes it is a leading U.S. manufacturer of transportation safety products, however many of the
Company's competitors offer similar products to those supplied by the Company, and a few are better capitalized than the Company. Within the Protect and Direct segment, particularly in the sand
barrel, QuadGuard®, REACT 350® and TMA product lines, the Company competes in the U.S. market for crash cushions with Syro, Inc., a subsidiary of Trinity
Industries, Inc., (NYSE TRN), with TrafFix Devices, Inc. and with other smaller regional companies. No other company presently markets as broad a line of highway crash cushion systems
designed to shield as large a variety of fixed roadside hazards as the Company. A number of other companies manufacture flexible sign and guide post systems. Within the Inform segment, the Company
experiences rigorous competition in selling certain product lines as they are generally sold through a bidding process. These product lines may include the Company's road/runway traffic and weather
information systems, permanently-mounted and mobile variable message signs, traffic and detection controllers, traffic and pedestrian signals and lighting products. There are a few companies that
manufacture and sell highway advisory radio systems. The Company's traffic counters and sensors compete with many different companies which may sell sensors using different technologies including
microwave and infra-red sensors and machine-vision (video) that each offer certain advantages.

Competition
may have an adverse effect on the selling prices and profit margins of certain product lines, and depending on the product mix sold, can adversely affect the Company's
financial results. The Company believes that it has competed effectively through its own advanced product development and patent protection, quality and price, and the effectiveness of its strong
distribution network. The awarding of large contract orders by state departments of transportation and the timing of those awards

5

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also
has an effect on the Company's sales and may affect the Company's results in any one particular fiscal period.

Government Policies and Funding

The domestic market for highway and transportation safety products is directly affected by federal, state and local governmental policies. A portion of the
Company's sales is ultimately financed by funds provided to the states by the federal government. Historically, these funds have covered 75% to 90% of the cost of highway safety projects on roads
constructed or maintained with federal assistance. The current six-year federal highway bill (TEA-21) expires on September 30, 2003. The next highway bill (SAFETEA) is
currently under consideration by the federal government. The current federal legislation currently includes, and is expected to include, a guaranteed amount of funding for highway safety programs.
These federal funds are currently based on gasoline tax revenues. The states must currently set aside 10% of the federal funds received each year under TEA-21 for safety construction
activities such as hazard elimination. Many of the Company's products are approved as acceptable highway hardware according to procedures in the National Cooperative Highway Research Program number
230 or 350 that provide various test levels depending on the application. This approval is gained after a formal submission to the FHWA that makes the products eligible for federal funds for certain
highway projects. The Company is obligated to seek such approval for improvements or upgrades to such devices and for any new devices. Any change in the availability of federal funds and the timing of
the release of those funds to the state and local governments can have an adverse impact on the Company's financial results. In addition, the majority of states are currently operating at budget
deficits.

Foreign
government policies and funding vary by country in regard to highway and transportation safety. In many cases, local additional testing of the Company's products may be required
in order to obtain certification.

Backlog

As of June 30, 2003, 2002 and 2001, the Company had a backlog of unfilled orders for highway safety devices of $28,364,000, $12,667,000, and $7,986,000,
respectively. The backlog as of June 30, 2003
included $14,799,000 related to the UST acquisition. The Company can usually fill an order within two days to 8 weeks of receipt depending on the type of product.

Research and Development; Patents

Many of the Company's products have patented features and the Company conducts its own research, development and testing of new products before introducing them
to the marketplace. The expenditures for research and development activities were $2,356,000, $2,468,000 and $1,752,000 for the fiscal years 2003, 2002 and 2001, respectively. The Company maintains
its own crash test facility in California.

The
Company develops new products by working with federal, state and local highway officials to determine highway traffic safety needs, and then designs products to satisfy those needs.
The Company is also active in promoting cooperation among state highway agencies, contractors and engineers to encourage comprehensive repair and maintenance of roadside crash attenuating systems. In
addition to developing new products within the impact technology area, the Company is seeking to develop or to acquire new products which can be sold through its existing distribution networks to its
existing customers.

The
Company owns a number of U.S. and foreign patents covering its major products. It actively seeks patent and trademark protection for new developments.

6

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Raw Materials

The principal raw materials used in the production of highway safety devices are plastic and plastic resins, steel, aluminum and electronic components. These raw
materials are purchased from various suppliers and have been readily available throughout the last year. The Company believes that adequate supplies of these materials will continue to be available.

Major Customers

No single customer of the Company represents a significant portion of total revenues. However, approximately 12% and 10% of the Company's consolidated revenues
resulted from sales to customers
in the states of Texas and California, respectively, in fiscal 2003. Customers may consist of distributors, contractors, departments of transportation, state agencies, local governments or
municipalities. A change in policy in state spending could materially affect the Company's sales in that state.

Seasonality

The Company's sales are seasonal. The domestic highway maintenance and construction season tends to reach its peak in the Company's fourth and first fiscal
quarters. As a result, the Company's sales and earnings in these quarters are the strongest with weaker sales and earnings occurring in the second and third fiscal quarters.

Foreign and Domestic Operations and Revenues

The Company's business is conducted principally in the United States, with sales outside of the United States as follows: $13,545,000, $8,596,000 and $9,489,000
in 2003, 2002 and 2001 respectively.

Other

Discontinued Operations

In fiscal years 1996 and 1997, the Company sold substantially all of the assets and transferred significant operating liabilities of Disc
Manufacturing, Inc. and its legal technologies businesses. During the year ended June 30, 2002, the Company recorded a gain of $927,000, or $0.11 per diluted share, which was net of
income tax provisions of $521,000, due to the adjustment of certain accruals related to contingencies which the Company no longer believes are probable and from the favorable outcome of a legal
settlement.

Available Information

The Company files annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K, special reports, proxy and information statements, and amendments to those reports, with the Securities and Exchange Commission (SEC). The SEC maintains an internet
website at http://www.sec.gov that contains access to filings of issuers that file electronically with the SEC. The Company also maintains an internet website at http://www.quixotecorp.com that
contains access to its public filings and other information regarding the Company. The Company makes its public filings available as soon as reasonably practicable after such material is filed, or
furnished, to the SEC. A copy of the Company's filings will also be furnished free of charge upon request of the Company.

7

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Item 2.    Properties

|Location                                              |  | Available Space |  | Purpose                                                                         |  | Owned or Leased
|----------------------------------------------------- |  | --------------- |  | ------------------------------------------------------------------------------- |  | ---------------
|One East Wacker Drive
Chicago, Illinois               |  | 19,000 sq. ft.  |  | Executive Offices**                                                             |  | Leased         
|35 East Wacker Drive
Chicago, Illinois                |  | 18,000 sq. ft.  |  | Executive Offices**                                                             |  | Leased         
|250 Bamberg Drive
Pell City, Alabama                  |  | 300,000 sq. ft. |  | Manufacture of Protect and Direct highway safety devices                        |  | Owned          
|3617 Cincinnati Avenue
Rocklin, California            |  | 22,000 sq. ft.  |  | Research and development facility for Protect and Direct highway safety devices |  | Owned          
|3300 N. Kenmore Street
South Bend, Indiana            |  | 81,000 sq. ft.  |  | Manufacture of Protect highway safety devices                                   |  | Owned          
|9603 John Street
Santa Fe Springs, CA                 |  | 183,000 sq. ft. |  | Sale and manufacture of Inform products                                         |  | Leased         
|Eucalipto y Nogal L4-7
Tecate, Baja California
Mexico |  | 68,000 sq. ft.  |  | Sale and manufacture of Mexico Inform products                                  |  | Leased         
|4021 Stirrup Creek Drive
Durham, North Carolina       |  | 13,000 sq. ft.  |  | Sale and manufacture of highway advisory radio equipment                        |  | Leased         
|Route 119 University Drive
Uniontown, Pennsylvania    |  | 26,000 sq. ft.  |  | Sale and manufacture of traffic sensing and distance measuring devices          |  | Owned          
|11612 Lilburn Park Road
St. Louis, Missouri           |  | 17,000 sq. ft.  |  | Sale and manufacture of sensing and weather forecasting products and services   |  | Leased         
|14657 Industry Circle
La Mirada, California           |  | 46,000 sq. ft.  |  | Sale and manufacture of variable message signs                                  |  | Leased         
|200 Corporate Pointe
Culver City, California          |  | 19,800 sq. ft.  |  | Sublet to a third party                                                         |  | Leased         

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The
Company believes that its principal plants are suitable and adequate for the manufacturing and other activities performed at those plants. In addition to the principal facilities
listed above, the Company has international locations used primarily for sales activities.

8

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Item 3.    Legal Proceedings

In October 2002, Energy Absorption Systems, Inc. was served in a matter entitled Bedlinger v. The Mills Corporation, Gaylord Entertainment and Safe-Hit
Corporation, State of Tennessee Circuit Court of Davidson County, No. 02C2832. The Complaint alleges that plaintiff was injured when she tripped over a surface mount twist-lock and post in a
parking lot and seeks judgment for $1,000,000 in damages The case has been forwarded to the Company's insurance carrier and discovery is proceeding.

The
Company is involved in other legal proceedings and claims arising out of the conduct of its business. The Company believes, after consultation with counsel, that the outcome of such
proceedings and claims will not have a material, adverse effect on the Company's consolidated financial condition or results of operations.

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

There were no matters submitted to a vote of security holders during the fourth quarter of fiscal 2003.

PART II

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

The Company's common stock is quoted on The Nasdaq Stock Market®, under the symbol QUIX. Set forth are the daily high and low sales prices for the
Company's common stock for the periods indicated, as reported by the Nasdaq.

Three Months Ending9/30

12/31

3/31

6/30FISCAL 2003:High

$
18.75

$
22.09

$
20.08

$
26.66Low


14.31


16.50


15.40


15.70FISCAL 2002:High

$
28.52

$
25.05

$
19.41

$
22.25Low


20.70


15.40


16.90


15.82


The current quoted price of the stock is listed daily inThe Wall Street Journalin the Nasdaq National Market
System section. As of September 16, 2003, there were 1,163 shareholders of record.

Dividend Policy

During 2003, the Company declared semi-annual cash dividends of sixteen cents per share and seventeen cents per share. During 2002, the Company declared
semi-annual cash dividends of sixteen cents per share each declaration.

Equity Compensation Plan Information

As of June 30, 2003, the Company has two outstanding stock option plans which were approved by the shareholders of the Company in November 2001. Additional
information relating to the Company's stock option plans appears in Note 8 to the Company's consolidated financial statements included herein.

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The following table details information regarding the Company's equity compensation plans as of June 30, 2003:

|Plan Category                                              |  | (a)
Number of securities to be issued upon exercise of outstanding options, warrants and rights |  | (b)
Weighted-average
exercise price of
outstanding options,
warrants and rights |       | (c)
Number of securities remaining for future issuance under equity plans (excluding securities reflected in column(a))
|---------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------- | ----- | -----------------------------------------------------------------------------------------------------------------------
|Equity compensation plans approved by security holders     |  | 1,256,230                                                                                       |  | $                                                                               | 15.90 |                                                                                                                        
|Equity compensation plans not approved by security holders |  | -0-                                                                                             |  |                                                                                 | -0-   |                                                                                                                        
|                                                           |  |                                                                                                 |  |                                                                                 |       |                                                                                                                        
|                                                           |  | 1,256,230                                                                                       |  | $                                                                               | 15.90 |                                                                                                                        
|                                                           |  |                                                                                                 |  |                                                                                 |       |                                                                                                                        

Recent Sales of Unregistered Securities

Effective May 16, 2003, in connection with the acquisition of U.S Traffic Corporation (UST), the Company issued 558,534 shares of the Company's
common stock to the sellers of UST. The Company registered the resale of those shares by filing a Form S-3 on July 9, 2003.

Item 6.    Selected Financial Data

|                                                                 |  | For the years ended June 30,
|---------------------------------------------------------------- |  | ----------------------------
|
|
|Operating Results:                                               |  |                             
|Net sales                                                        |  | $                           
|Gross profit                                                     |  |                             
|Selling and administrative expenses                              |  |                             
|Research and development expenses                                |  |                             
|Other expense                                                    |  |                             
|Earnings from continuing operations                              |  |                             
|Net earnings                                                     |  |                             
|Cash dividends per common share                                  |  |                             
|Per Share Data:                                                  |  |                             
|Basic EPS:                                                       |  |                             
|Earnings from continuing operations                              |  | $                           
|Net earnings                                                     |  | $                           
|Weighted average common shares outstanding                       |  |                             
|Diluted EPS:                                                     |  |                             
|Earnings from continuing operations                              |  | $                           
|Net earnings                                                     |  | $                           
|Weighted average common and common equivalent shares outstanding |  |                             
|Financial Position:                                              |  |                             
|Total assets                                                     |  | $                           
|Working capital                                                  |  |                             
|Property, plant and equipment, net                               |  |                             
|Long-term debt, net                                              |  |                             
|Shareholders' equity                                             |  |                             
|Book value per common share                                      |  |                             

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Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

2003 COMPARED TO 2002

The Company's sales increased 27% to $114,310,000 in 2003 from $89,694,000 for 2002 due to organic sales growth for both segments as well as sales growth from an
acquisition completed during the year. Organic sales for 2002 were unusually low as the Company believes it was affected by both generally weak economic conditions and state budgetary positions. Sales
for the Protect and Direct segment for 2003 increased 15% to $77,243,000 from $67,225,000 for 2002. Sales increased across the Company's Protect and Direct product lines with the exception of sales of
parts, sand-filled barrels and the FreezeFree anti-icing system. Sales of truck-mounted attenuator (TMA) products increased 66% and sales of permanent crash
cushions increased 19%. Sales for the Inform segment for 2003 increased 65% to $37,067,000 from $22,469,000 for fiscal 2002 primarily due to the acquisition of U.S. Traffic (UST) in May 2003
and Surface Systems, Inc. (SSI) in August 2001. These two acquisitions added $6,891,000 of sales in fiscal 2003 not comparable to the prior year. Organic sales for this segment increased
34% due to higher sales across the Company's Inform product lines. The growth in sales of advanced sensing systems and variable message signs was due to shipments of two large contracts, including
$2,800,000 in Ohio to supply weather and traffic sensing systems and $1,248,000 in variable message signs and arrowboards in California. Geographically, the Company's increase in sales was helped by
strong international sales which increased $4,949,000, or 58%, to $13,545,000 in 2003 compared to $8,596,000 for 2002. Of the increase, $1,193,000 was due to an increase in sales of the Triton
Barrier® product in Australia related to new legislation passed in Australia requiring positive protection for all highway work zones. Domestic sales increased 24% due principally to the
acquisition of UST. Organic domestic sales increased 16% due to the sales increases across both segments mentioned earlier.

The
gross profit margin for 2003 was 40.5% compared to 40.1% for 2002. The modest increase in gross profit margin was due to an increase in gross profit margin for the Protect and Direct
segment partially offset by a decrease in the gross profit margin for the Inform segment. The increase in the gross profit margin for the Protect and Direct segment was due to the volume efficiencies
associated with the higher level of sales offset by an adverse change in product sales mix with higher sales of the lower margin TMA product line. The decrease in the gross profit margin for the
Inform segment was primarily due to an adverse change in product sales mix with higher sales of lower margin large contract shipments. Also contributing to the decline in gross profit margin for the
Inform segment was the impact of the acquisitions of UST and SSI as those gross profit margins are lower than the
segment's historical gross profit margin. The Company estimates its consolidated gross profit margins to be in the range of 38% to 40% for fiscal 2004.

Selling
and administrative expenses for 2003 increased 20% or $4,755,000 to $28,730,000 from $23,975,000 for 2002. Selling and administrative expenses decreased as a percentage of sales
to 25.1% of sales for 2003 from 26.7% of sales for 2002. The decrease in the percentage of sales was due to the fixed component of many of the Company's expenses. Also contributing to the decrease in
percentage was the acquisition of UST with significantly lower selling and administrative expenses as a percentage of sales than the Company's historical percentage. The increase in dollars was due to
the increase in sales and to the inclusion of selling and administrative expenses from UST and SSI which added approximately $1,452,000 in expenses for the year. The Company estimates selling and
administrative expense as a percentage of sales to be in the range of 23% to 25% of sales for fiscal 2004.

Research
and development expenditures were $2,356,000 for 2003 compared to $2,468,000 for 2002. The Company continued with its work on new products as well as upgrades and modifications
to existing products including enhancements to its existing line of FreezeFree anti-icing systems, TMA products and the Triton Barrier® product. The Company also
successfully tested its QuadGuard® CEN

11

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family
of crash cushions under European standards at speeds of 80, 100 and 110 km/h and at all hazard widths.

Operating
profit increased 60% to $15,154,000 in 2003 from $9,489,000 for 2002.

Interest
expense was $906,000 for 2003 compared to $1,184,000 for 2002. Interest expense decreased due to the lower weighted average level of long-term debt outstanding and
to lower interest rates for 2003. The Company estimates interest expense to be less than $2 million for fiscal 2004.

The
Company's effective income tax rate for 2003 was 34% compared to an effective income tax rate of 36% for 2002. The decrease in the effective rate was due in part to the continued
expected utilization of certain tax planning strategies. The Company estimates its effective income tax rate for fiscal year 2004 will increase to approximately 36% primarily due to higher state taxes
related to the acquisition of UST.

Earnings
from continuing operations for 2003 were $9,472,000, or $1.17 per diluted share, compared to $5,897,000, or $0.73 per diluted share, for 2002. Net earnings were $9,472,000, or
$1.17 per diluted share, for the year compared to $6,824,000, or $0.84 per diluted share, for 2002. Net earnings for 2002
included a gain from discontinued operations of $927,000, or $0.11 per diluted share, which was net of income tax provisions of $521,000.

2002 COMPARED TO 2001

The Company's sales decreased 4% to $89,694,000 in 2002 from $93,554,000 for 2001 primarily due to the delay of highway safety construction spending for the
Company's products by many states as a result of their revenue collection shortfalls and budget deficits. Sales for the Protect and Direct segment decreased 14% to $67,225,000 from $78,499,000 for
2001. Sales declined across the Company's Protect and Direct product lines with the exception of sales of parts, the Triton Barrier® product and the FreezeFree
anti-icing system. Sales of the water-filled Triton Barrier product outpaced 2001 as interest grew in the product's functionality as a portable security barrier. The Company began to see
interest in one of its newer products, the FreezeFree anti-icing system, with $768,000 in sales for fiscal 2002. Sales for the Inform segment increased 49% to $22,469,000 from
$15,055,000 for fiscal 2001, primarily due to the acquisitions of SSI in August 2001 and National Signal, Inc. (NSI) in January 2001. These two acquisitions added $11,033,000 of
sales in fiscal 2002 not comparable to the prior year. Organic sales for this segment decreased 24% as a result of decreased sales of advanced sensing products and highway advisory radios principally
due to the more discretionary demand for these products. Geographically, international sales declined 9% to $8,596,000 in 2002 compared to $9,489,000 for 2001 due to lower sales of the Company's lines
of permanent crash cushions and TMA products. Domestic sales decreased 5% and organic domestic sales decreased 16% due to the sales decreases across both segments mentioned earlier.

The
gross profit margin for 2002 was 40.1% compared to 47.0% for 2001. This decline in gross profit margin was principally due to volume inefficiencies associated with the lower level of
organic sales for the Protect and Direct and for the Inform segments. The gross profit margin for the Protect and Direct segment declined to a lesser extent as a result of an adverse change in product
sales mix with lower sales of the higher margin permanent crash cushions. Contributing to the decline in gross profit margin for the Inform segment was the impact of the acquisitions of SSI and NSI as
those gross profit margins are lower than the segment's historical gross profit margin.

Selling
and administrative expenses for 2002 increased 3% or $676,000 to $23,975,000 from $23,299,000 for 2001. Selling and administrative expenses increased as a percentage of sales to
27% of sales for 2002 from 25% of sales for 2001. The increase in the percentage of sales was due to the fixed component of many of the Company's expenses. The increase in dollars was due to the
inclusion of selling and administrative expenses from SSI and NSI which added approximately $3,329,000 in

12

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expenses
for the year. Organic selling and administrative expenses for the year decreased $2,653,000, or 11%, due to the decline in both sales and amortization expense as well as cost containment
initiatives.

Research
and development expenditures were $2,468,000 for 2002 compared to $1,752,000 for 2001. The increase was due to greater expenditures for upgrades and modifications to existing
products like the recently introduced Safe-Stop® 180° TMA with an innovative, more compact design including a tilt feature for easy storage and the
QuadGuard® HS crash cushion for impacts up to 70 mph. The Company also worked on developing other new products including wider models of the REACT 350® crash cushion and
advanced pavement sensors and software to provide an integrated system solution for collecting and providing traffic information.

Operating
profit decreased to $9,489,000 in 2002 from $18,887,000 for 2001.

Interest
expense was $1,184,000 for 2002 compared to $1,479,000 for 2001. Interest expense decreased due to the lower interest rates for the current year, offset partially by the higher
level of average long-term debt outstanding due to the acquisition of SSI.

Other
income was $830,000 for 2002 related to the gain on the sale of the Company's non-highway plastic product line.

The
Company's effective income tax rate for 2002 was 36% compared to an effective income tax rate of 38% for 2001. The decrease in the effective rate was due in part to the utilization
of certain tax planning strategies.

Earnings
from continuing operations for 2002 were $5,897,000 compared to $10,843,000 for 2001. Net earnings were $6,824,000, or $0.84 per diluted share, for the year compared to
$10,843,000, or $1.35 per diluted share, for 2001. Net earnings for 2002 included a gain from discontinued operations of $927,000, or $0.11 per diluted share, which was net of income tax provisions of
$521,000, due to the adjustment of certain accruals related to contingencies which the Company no longer believes are probable of occurring and from the favorable outcome of a legal settlement.

LIQUIDITY AND CAPITAL RESOURCES

The Company had cash and cash equivalents of $3,753,000 and access to additional cash of $22,756,000 as of June 30, 2003 under its bank credit facility as
described in Note 7 to the consolidated financial statements. The Company believes that this three-year unsecured credit facility is an important source of liquidity. The credit
agreement provides for a $50 million revolving credit facility and $20 million term loan agreement. The facility contains both fixed and floating interest rate options, at the prime rate
or LIBOR rate, plus a margin. It contains affirmative and negative covenants including requirements that the Company maintain certain financial ratios and be profitable each year. The agreement may be
renewed one additional year on each anniversary date upon mutual consent of
the Company and the banks. The Company currently is in compliance with all covenants of this agreement.

Operating
activities were a source of cash for the Company for fiscal 2003 providing $16,156,000.

Investing
activities used cash of $22,660,000 during fiscal 2003 including $20,158,000 for the purchase of UST. Capital expenditures in 2003 were $2,257,000 and patent expenditures were
$445,000. Offsetting these expenditures somewhat, the Company received payments on a note receivable in the amount of $200,000 related to the sale of the Company's non-highway plastic
product line during fiscal 2002.

Financing
activities provided cash of $8,422,000 during 2003. The Company borrowed $20,000,000 on a term loan for the acquisition of UST. The Company made net payments of $6,000,000
against its outstanding revolving credit facility. The payment of the Company's semi-annual cash dividend used cash of $2,489,000. In addition, the Company used cash of $953,000 for the
payment of notes payable due in connection with the acquisitions of Roadway Safety Service, Inc., Nu-Metrics, Inc. and NSI. The

13

---

Company
also paid $3,024,000 to repurchase 164,000 of its own common shares for the treasury under its share repurchase authorization program. Offsetting these cash payments, the Company received cash
of $888,000 from the exercise of common stock options.

For
fiscal 2004, the Company anticipates needing approximately $5,000,000 in cash for capital expenditures. The Company may also need additional cash as it considers acquiring businesses
that complement its existing operations. Also, the Company will require additional investments in working capital to maintain growth. The Company may also need additional funds to repurchase its own
common stock from time to time. These expenditures will be financed either through the Company's invested cash, cash generated from its operations or from borrowings available under the Company's bank
credit facility. The Company believes its existing cash, cash generated from operations and funds available under its existing credit facility are sufficient for all planned operating and capital
requirements.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements.
Management's estimates also affect the reported
amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Note 2 to the Company's consolidated financial statements includes a summary of
the significant accounting policies, methods and estimates used in the preparation of the Company's consolidated financial statements. In the opinion of management, the Company does not have any
individual accounting policy and does not use any individual estimate that is critical to the preparation of its consolidated financial statements. In most instances, the Company must use an
accounting policy or method because it is the only policy or method permitted under U.S. GAAP. The following is a summary of the more significant accounting policies and methods used by the Company:

REVENUE RECOGNITIONRevenues are recognized when either services have been rendered or both title and risk of loss of
products have been transferred to unaffiliated customers, with provision for estimated uncollectible amounts.

LONG-LIVED ASSETSLong-lived assets include such items as goodwill, patents, product rights and other
intangible assets. Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. For purposes of evaluating the recoverability of long-lived assets, the Company assesses the possibility of obsolescence, demand, new technology, competition, and other
pertinent economic factors and trends that may have an impact on the value or remaining lives of these assets. Additionally, goodwill and other indefinite-lived intangible assets are tested for
impairment at least annually using the discounted cash flow method. Patents and other finite-lived intangible assets are amortized on a straight-line basis over the life of the patent or
agreement. Amortization expense of $595,000, $398,000, and $1,835,000 was recognized for the years ended June 30, 2003, 2002, and 2001 respectively. Effective July 1, 2001, with the
adoption of Statement of Financial Accounting Standard (FAS) No. 142, the Company is no longer required to amortize goodwill and other indefinite-lived intangible assets.

INCOME TAXESThe Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events
that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and
tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. In addition, the amount of any future tax benefits are reduced by a
valuation allowance to the extent such benefits are not expected to be fully realized.

14

---

In
the preparation of the Company's financial statements, certain normal and recurring estimates are made including estimates in determining the allowance for doubtful accounts
receivable, inventory valuation reserves, valuation allowance on deferred tax assets and health care liabilities. These estimates are made using management's best judgment given relevant factors and
available data. These estimates may differ from actual results.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. 46, "Consolidation of Variable Interest Entities," which
establishes accounting standards for the consolidation of variable interest entities created after January 31, 2003. In April 2003, the FASB issued FAS No. 149, "Amendment of
Statement No. 133 on Derivative Instruments and Hedging Activities," which amends and clarifies financial accounting and reporting for derivative instruments and for hedging activities for
contracts entered into or modified after June 30, 2003. In May 2003, the FASB issued FAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity," which establishes standards for classification and measurement of certain financial instruments entered into or modified after May 31, 2003 with characteristics of both
liabilities and equity. As of June 30, 2003, the Company did not have entities or instruments that apply to these statements. In addition, the Company does not expect that these statements will
have a significant impact on fiscal 2004 financial results.

FUTURE OUTLOOK

The Company has been affected by the general slowdown in U.S. highway safety construction spending for the Company's products. The Company believes this is due
principally to revenue shortfalls and budget deficits at the state level where the majority of states are currently operating at a deficit. The current six-year federal highway bill
(TEA-21) expires on September 30, 2003. The next highway funding bill is currently under consideration by the federal government and it is uncertain what the future federal
governmental spending levels will be. Given the current uncertain economic conditions, the Company remains cautious about its prospects for 2004.

The
Company experiences fluctuation in its gross profit margin from quarter to quarter primarily due to sales volume related to seasonality, variability in product mix and changes in the
competitive environment. In addition, the Company has acquired complementary businesses over the past several years and, as part of its strategy, may continue to acquire complementary businesses. The
gross profit margins of certain acquired product lines are lower than the Company's historical gross profit margin, which is adversely affecting the Company's gross profit margin. Additional
acquisitions may have a continuing adverse impact on the Company's gross profit margin. The Company is also experiencing rigorous competition in its variable message sign and weather sensing system
product lines. The Company does not believe these trends will improve in the near future.

Item 7.A.    Quantitative and Qualitative Disclosures About Market Risk

The Company's market risk is primarily the potential loss arising from adverse changes in interest rates. The Company's long-term debt obligations are
primarily at variable LIBOR-associated rates and fixed interest rates and are denominated in U.S. dollars. In order to minimize the long-term costs of borrowing, the Company manages its
interest rate risk by monitoring trends in rates as a basis for determining whether to enter into fixed rate or variable rate agreements. The Company does not have any derivative instruments
associated with interest rates and is not a party to any transactions involving leveraged derivatives as of June 30, 2003. During July 2003, the Company entered into an interest rate
swap agreement to set a fixed interest rate relating to $20 million of its outstanding debt at variable interest rates. As described in Note 7 to the consolidated financial statements,
the amount of long-term debt outstanding as of June 30, 2003 and 2002 was $39,789,000 and $24,772,000, respectively. A

15

---

hypothetical
1% increase in interest rates would have adversely affected the Company's 2003 and 2002 net earnings and cash flows by approximately $147,000 and $160,000, respectively.

The
majority of the Company's business is transacted in U.S. dollars and the U.S. dollar is considered the primary currency for the majority of the Company's operations. Although the
Company continues to evaluate derivative financial instruments to manage foreign currency exchange rate changes, the Company did not hold such derivatives during 2003 or 2002. Assets, liabilities and
commitments that are to be settled in cash and are denominated in foreign currencies for transaction purposes are sensitive to changes in currency exchange rates. However, there were no significant
transaction gains or losses during 2003 or 2002 and the Company does not believe it is currently exposed to any material risk of loss from currency exchange fluctuations.

OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS

The Company is subject to certain debt obligations, guarantees, commitments and contingent liabilities further described in the notes to the consolidated
financial statements. The following table presents the Company's contractual obligations to make future payments under contracts, such as debt and lease agreements, as of June 30, 2003:

|                                   |       | Total |        | Less than 1 Year |   | 1-3 Years |       | 3-5 Years |       | More than 5 Years
|---------------------------------- | ----- | ----- | ------ | ---------------- | - | --------- | ----- | --------- | ----- | -----------------
|
|Long-term debt (Note 7)            |       | $     | 43,817 |                  | $ | 4,028     |       | $         | 6,820 |                  
|Operating leases (Note 14)         |       |       | 10,414 |                  |   | 2,974     |       |           | 4,424 |                  
|Minimum royalty payments (Note 14) |       |       | 2,613  |                  |   | 513       |       |           | 600   |                  
|Purchase obligations (Note 14)     |       |       | 450    |                  |   | 450       |       |           |       |                  
|                                   |       |       |        |                  |   |           |       |           |       |                  
|                                   | Total |       | $      | 57,294           |   | $         | 7,965 |           | $     | 11,844           
|                                   |       |       |        |                  |   |           |       |           |       |                  

FORWARD LOOKING STATEMENTS

Various statements made within the Management's Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this report constitute
"forward-looking statements" for purposes of the SEC's "safe harbor" provisions under the Private Securities Litigation Reform Act of 1995 and Rule 3b-6 under the Securities
Exchange Act of 1934, as amended. Any statement that addresses expectations or projections about the future, including statements about the Company's strategy for growth, product development, market
position, expenditures and expected financial results, are forward-looking statements.

Investors
are cautioned that all forward-looking statements involve risks and uncertainties, including those detailed in the Company's public filings with the SEC, news releases and
other communications, which speak only as of the dates of those filings or communications. The Company does not undertake any obligation to release publicly any revisions to these forward-looking
statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. There can be no assurance that actual results will not differ materially from
the Company's expectations. Factors which could cause materially different results include, among others, uncertainties related to continued federal and state funding for highways and risks related to
reductions in government expenditures; the successful completion and integration of acquisitions; the introduction and acceptance of the Company's products and services; an unfavorable change in
product sales mix; seasonality along with the extent and timing of the award of large contracts; the cyclical nature of the Company's governmental markets; competitive and pricing pressures;
increasing raw material costs; excess manufacturing capacity; weather conditions; acts of war and terrorist activities; the possible impairment of intangible assets; and general economic conditions.

16

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Item 8.    Financial Statements and Supplementary Data

REPORT OF INDEPENDENT AUDITORS

To
the board of directors and shareholders of Quixote Corporation:

In
our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of Quixote
Corporation and its subsidiaries at June 30, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended June 30, 2003 in
conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under
Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial
statements and financial statement schedule are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements and financial statement
schedule based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

|/s/ PricewaterhouseCoopers LLP   | 
|-------------------------------- | 
|Chicago, Illinois
August 4, 2003 | 

17

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QUIXOTE CORPORATION AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                      |                                                                  | For each of the three years
ended June 30, |        
|--------------------------------------------------------------------- | ---------------------------------------------------------------- | ------------------------------------------ | -------
|
|
|Net sales                                                             |                                                                  | $                                          | 114,310
|Cost of sales                                                         |                                                                  |                                            | 68,070 
|                                                                      |                                                                  |                                            |        
|Gross profit                                                          |                                                                  |                                            | 46,240 
|                                                                      |                                                                  |                                            |        
|Operating expenses:                                                   |                                                                  |                                            |        
|                                                                      | Selling and administrative                                       |                                            |        
|                                                                      | Research and development                                         |                                            |        
|                                                                      |                                                                  |                                            |        
|                                                                      |                                                                  |                                            | 31,086 
|                                                                      |                                                                  |                                            |        
|Operating profit                                                      |                                                                  |                                            | 15,154 
|Other income (expense):                                               |                                                                  |                                            |        
|                                                                      | Interest income                                                  |                                            |        
|                                                                      | Interest expense                                                 |                                            |        
|                                                                      | Other                                                            |                                            |        
|                                                                      |                                                                  |                                            |        
|                                                                      |                                                                  |                                            | (802   
|                                                                      |                                                                  |                                            |        
|Earnings from continuing operations before provision for income taxes |                                                                  |                                            | 14,352 
|Provision for income taxes                                            |                                                                  |                                            | 4,880  
|                                                                      |                                                                  |                                            |        
|Earnings from continuing operations                                   |                                                                  |                                            | 9,472  
|Discontinued operations:                                              |                                                                  |                                            |        
|                                                                      | Gain on disposal, net of income taxes                            |                                            |        
|                                                                      |                                                                  |                                            |        
|Net earnings                                                          |                                                                  | $                                          | 9,472  
|                                                                      |                                                                  |                                            |        
|Basic earnings per share:                                             |                                                                  |                                            |        
|                                                                      | Earnings from continuing operations                              |                                            | $      
|                                                                      |                                                                  |                                            |        
|                                                                      | Net earnings                                                     |                                            | $      
|                                                                      |                                                                  |                                            |        
|                                                                      | Weighted average common shares outstanding                       |                                            |        
|                                                                      |                                                                  |                                            |        
|Diluted earnings per share:                                           |                                                                  |                                            |        
|                                                                      | Earnings from continuing operations                              |                                            | $      
|                                                                      |                                                                  |                                            |        
|                                                                      | Net earnings                                                     |                                            | $      
|                                                                      |                                                                  |                                            |        
|                                                                      | Weighted average common and common equivalent shares outstanding |                                            |        
|                                                                      |                                                                  |                                            |        

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

18

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QUIXOTE CORPORATION AND SUBSIDIARIES  CONSOLIDATED BALANCE SHEETS

|                                       |                                                                                                                               | As of June 30,                 |                          
|-------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------- | ------------------------------ | -------------------------
|
|
|ASSETS                                 |                                                                                                                               |                                |                          
|Current assets:                        |                                                                                                                               |                                |                          
|                                       | Cash and cash equivalents                                                                                                     |                                | $                        
|                                       | Accounts receivable, net of allowance for doubtful accounts of $1,267
in 2003 and $1,546 in 2002                              |                                |                          
|                                       | Refundable income taxes                                                                                                       |                                |                          
|                                       | Inventories, net                                                                                                              |                                |                          
|                                       | Deferred income tax assets                                                                                                    |                                |                          
|                                       | Notes receivable                                                                                                              |                                |                          
|                                       | Other current assets                                                                                                          |                                |                          
|                                       |                                                                                                                               |                                |                          
|                                       |                                                                                                                               | Total current assets           |                          
|                                       |                                                                                                                               |                                |                          
|Property, plant and equipment at cost: |                                                                                                                               |                                |                          
|                                       | Land                                                                                                                          |                                |                          
|                                       | Buildings and improvements                                                                                                    |                                |                          
|                                       | Machinery and equipment                                                                                                       |                                |                          
|                                       | Furniture and fixtures                                                                                                        |                                |                          
|                                       | Computer equipment and software                                                                                               |                                |                          
|                                       | Leasehold improvements                                                                                                        |                                |                          
|                                       | Construction in progress                                                                                                      |                                |                          
|                                       |                                                                                                                               |                                |                          
|                                       |                                                                                                                               |                                | 44,165                   
|                                       |                                                                                                                               | Less: accumulated depreciation |                          
|                                       |                                                                                                                               |                                |                          
|                                       |                                                                                                                               |                                | 26,237                   
|                                       |                                                                                                                               |                                |                          
|Goodwill                               |                                                                                                                               |                                | 48,642                   
|Intangible assets, net                 |                                                                                                                               |                                | 8,387                    
|Other assets                           |                                                                                                                               |                                | 471                      
|                                       |                                                                                                                               |                                |                          
|                                       |                                                                                                                               | $                              | 150,825                  
|                                       |                                                                                                                               |                                |                          
|LIABILITIES AND SHAREHOLDERS' EQUITY   |                                                                                                                               |                                |                          
|Current liabilities:                   |                                                                                                                               |                                |                          
|                                       | Current portion of long-term debt                                                                                             |                                | $                        
|                                       | Accounts payable                                                                                                              |                                |                          
|                                       | Dividends payable                                                                                                             |                                |                          
|                                       | Income taxes payable                                                                                                          |                                |                          
|                                       | Accrued expenses:                                                                                                             |                                |                          
|                                       |                                                                                                                               | Payroll and commissions        |                          
|                                       |                                                                                                                               | Other                          |                          
|                                       |                                                                                                                               |                                |                          
|                                       |                                                                                                                               |                                | Total current liabilities
|                                       |                                                                                                                               |                                |                          
|Long-term debt, net of current portion |                                                                                                                               |                                | 39,789                   
|Deferred income tax liabilities        |                                                                                                                               |                                | 3,917                    
|Other long-term liabilities            |                                                                                                                               |                                | 565                      
|Commitments and contingent liabilities |                                                                                                                               |                                |                          
|Shareholders' equity:                  |                                                                                                                               |                                |                          
|                                       | Preferred stock, no par value; authorized 100,000 shares; none issued                                                         |                                |                          
|                                       | Common stock, par value $.012/3; authorized 15,000,000 shares; issued 10,437,436 shares2003 and issued 9,744,033 shares2002 |                                |                          
|                                       | Capital in excess of par value of stock                                                                                       |                                |                          
|                                       | Retained earnings                                                                                                             |                                |                          
|                                       | Currency translation adjustment                                                                                               |                                |                          
|                                       | Treasury stock, at cost, 2,131,963 shares2003 and 1,967,963 shares2002                                                      |                                |                          
|                                       |                                                                                                                               |                                |                          
|                                       |                                                                                                                               | Total shareholders' equity     |                          
|                                       |                                                                                                                               |                                |                          
|                                       |                                                                                                                               | $                              | 150,825                  
|                                       |                                                                                                                               |                                |                          

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

19

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QUIXOTE CORPORATION AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

|                                                                      |  | For the three years ended June 30, 2003 | 
|--------------------------------------------------------------------- |  | --------------------------------------- | 
|
|
|
|
|BALANCES, JUNE 30, 2000                                               |  | 9,199,194                               | 
|Exercise of options                                                   |  | 275,597                                 | 
|Net earnings2001                                                     |  |                                         | 
|Currency translation adjustment                                       |  |                                         | 
|Declaration of semi-annual cash dividends ($0.15 per share)           |  |                                         | 
|Issuance of shares pursuant to the stock retirement plan              |  | 10,794                                  | 
|Purchase of shares at $14.58 to $18.25 per share                      |  |                                         | 
|                                                                      |  |                                         | 
|BALANCES, JUNE 30, 2001                                               |  | 9,485,585                               | 
|                                                                      |  |                                         | 
|Exercise of options                                                   |  | 247,654                                 | 
|Net earnings2002                                                     |  |                                         | 
|Currency translation adjustment                                       |  |                                         | 
|Declaration of semi-annual cash dividends ($0.16 per share)           |  |                                         | 
|Issuance of shares pursuant to the stock retirement plan              |  | 10,794                                  | 
|                                                                      |  |                                         | 
|BALANCES, JUNE 30, 2002                                               |  | 9,744,033                               | 
|                                                                      |  |                                         | 
|Exercise of options                                                   |  | 124,075                                 | 
|Net earnings2003                                                     |  |                                         | 
|Currency translation adjustment                                       |  |                                         | 
|Liquidation of foreign entity                                         |  |                                         | 
|Issuance of shares for acquisition of U.S. Traffic                    |  | 558,534                                 | 
|Declaration of semi-annual cash dividends ($0.16 and $0.17 per share) |  |                                         | 
|Issuance of shares pursuant to the stock retirement plan              |  | 10,794                                  | 
|Purchase of shares at $16.31 to $19.28 per share                      |  |                                         | 
|                                                                      |  |                                         | 
|BALANCES, JUNE 30, 2003                                               |  | 10,437,436                              | 
|                                                                      |  |                                         | 

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

20

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QUIXOTE CORPORATION AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                   |                                                                                      | For each of the three years
ended June 30, |        
|------------------------------------------------------------------ | ------------------------------------------------------------------------------------ | ------------------------------------------ | -------
|
|
|OPERATING ACTIVITIES:                                              |                                                                                      |                                            |        
|                                                                   | Earnings from continuing operations                                                  |                                            | $      
|                                                                   | Discontinued operations:                                                             |                                            |        
|                                                                   |                                                                                      | Gain on disposal, net of income taxes      |        
|                                                                   |                                                                                      |                                            |        
|                                                                   | Net earnings                                                                         |                                            |        
|                                                                   | ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH PROVIDED BY CONTINUING OPERATIONS: |                                            |        
|                                                                   | Depreciation                                                                         |                                            |        
|                                                                   | Amortization                                                                         |                                            |        
|                                                                   | Discontinued operations                                                              |                                            |        
|                                                                   | Gain on sale of assets                                                               |                                            |        
|                                                                   | Deferred income taxes                                                                |                                            |        
|                                                                   | Provisions for losses on accounts receivable                                         |                                            |        
|                                                                   | Income tax benefit from employee stock options                                       |                                            |        
|                                                                   | Issuance of stock retirement plan shares                                             |                                            |        
|                                                                   | Loss on investment in TMT joint venture                                              |                                            |        
|                                                                   | Changes in operating assets and liabilities, net of acquisitions:                    |                                            |        
|                                                                   |                                                                                      | Accounts receivable                        |        
|                                                                   |                                                                                      | Inventories                                |        
|                                                                   |                                                                                      | Other assets                               |        
|                                                                   |                                                                                      | Accounts payable and accrued expenses      |        
|                                                                   |                                                                                      | Income taxes payable                       |        
|                                                                   |                                                                                      |                                            |        
|Net cash provided by operating activities of continuing operations |                                                                                      |                                            | 16,156 
|Net cash provided by (used in) discontinued operations             |                                                                                      |                                            |        
|                                                                   |                                                                                      |                                            |        
|Net cash provided by operating activities                          |                                                                                      |                                            | 16,156 
|                                                                   |                                                                                      |                                            |        
|INVESTING ACTIVITIES:                                              |                                                                                      |                                            |        
|                                                                   | Cash paid for acquired businesses, net of cash acquired                              |                                            |        
|                                                                   | Capital expenditures                                                                 |                                            |        
|                                                                   | Proceeds from sale of assets                                                         |                                            |        
|                                                                   | Patent expenditures                                                                  |                                            |        
|                                                                   | Payments on notes receivable                                                         |                                            |        
|                                                                   | Investment in TMT joint venture                                                      |                                            |        
|                                                                   |                                                                                      |                                            |        
|Net cash used in investing activities                              |                                                                                      |                                            | (22,660
|                                                                   |                                                                                      |                                            |        
|FINANCING ACTIVITIES:                                              |                                                                                      |                                            |        
|                                                                   | Payments on notes payable                                                            |                                            |        
|                                                                   | Payments on revolving credit agreement                                               |                                            |        
|                                                                   | Proceeds from revolving credit agreement                                             |                                            |        
|                                                                   | Proceeds from term loan                                                              |                                            |        
|                                                                   | Payment of semi-annual cash dividends                                                |                                            |        
|                                                                   | Proceeds from exercise of common stock options                                       |                                            |        
|                                                                   | Change in bank overdrafts                                                            |                                            |        
|                                                                   | Repurchase of common stock for treasury                                              |                                            |        
|                                                                   |                                                                                      |                                            |        
|Net cash provided by (used in) financing activities                |                                                                                      |                                            | 8,422  
|                                                                   |                                                                                      |                                            |        
|Effect of exchange rate changes on cash                            |                                                                                      |                                            | 37     
|                                                                   |                                                                                      |                                            |        
|Net change in cash and cash equivalents                            |                                                                                      |                                            | 1,955  
|Cash and cash equivalents at beginning of year                     |                                                                                      |                                            | 1,798  
|                                                                   |                                                                                      |                                            |        
|Cash and cash equivalents at end of year                           |                                                                                      | $                                          | 3,753  
|                                                                   |                                                                                      |                                            |        

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

21

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QUIXOTE CORPORATION AND SUBSIDIARIES        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    NATURE OF BUSINESS

Quixote Corporation and its subsidiaries (the Company) develop, manufacture and market, to both domestic and international markets, energy-absorbing highway crash
cushions, flexible post delineators, electronic wireless measuring and sensing devices, weather forecasting stations, variable message signs, computerized highway advisory radio transmitting systems,
intelligent intersection control devices and other highway and transportation safety products to protect, direct and inform motorists and highway workers.

2.    ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTSCash in excess of operating requirements is invested in income-producing investments generally
having initial maturities of three months or less. These investments are stated at cost, which approximates market value. The Company considers these short-term instruments to be cash
equivalents.

CONSOLIDATIONThe consolidated financial statements include the accounts of Quixote Corporation and its wholly-owned
subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

EARNINGS PER SHAREBasic earnings per share (EPS) is computed by dividing net earnings available to holders of common stock
by the weighted average number of shares of common stock outstanding.
Diluted EPS is computed assuming the exercise of all stock options that are profitable to the recipients. Under this assumption, the weighted average number of shares is increased accordingly.

FINANCIAL INSTRUMENTSThe fair value of cash and cash equivalents approximates the carrying value of these assets due to the
short-term maturity of these instruments. The fair value of the Company's long-term debt is estimated to approximate the carrying value based upon borrowing rates currently
available to the Company for borrowings with similar terms and maturity.

INCOME TAXESThe Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events
that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and
tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. In addition, the amount of any future tax benefits are reduced by a
valuation allowance to the extent such benefits are not expected to be fully realized.

INVENTORIESInventories are valued at the lower of cost (first-in, first-out method) or market.

LONG-LIVED ASSETSLong-lived assets include such items as goodwill, patents, product rights and other
intangible assets. Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. For purposes of evaluating the recoverability of long-lived assets, the Company assesses the possibility of obsolescence, demand, new technology, competition, and other
pertinent economic factors and trends that may have an impact on the value or remaining lives of these assets. Additionally, goodwill and other indefinite-lived intangible assets are tested for
impairment at least annually using the discounted cash flow method. Patents and other finite-lived intangible assets are amortized on a straight-line basis over the life of the patent or
agreement.

MANAGEMENT ESTIMATESThe preparation of financial statements in conformity with accounting principles generally accepted in
the United States of America (U.S. GAAP) requires

22

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management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements.
Management's estimates also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

PROPERTY, PLANT AND EQUIPMENTThe Company capitalizes expenditures for major renewals and betterments and charges current
earnings with the cost of maintenance and repairs. Provisions for depreciation have been computed on a straight-line or systematic method based on the expected useful lives of the assets
as indicated below:

|Buildings and improvements      |  | 10 to 40 years
|------------------------------- |  | --------------
|Machinery and equipment         |  | 3 to 12 years 
|Furniture and fixtures          |  | 3 to 10 years 
|Computer equipment and software |  | 3 to  7 years 
|Leasehold improvements          |  | 5 to 10 years 

The cost and accumulated depreciation relating to assets retired or otherwise disposed of are eliminated from the respective accounts at the time of retirement or
other disposition with the gain or loss credited or charged to earnings.

COMPUTER SOFTWAREThe Company capitalizes certain costs incurred in connection with developing or obtaining internal use
computer software. During 2003 and 2002, approximately $501,000 and $1,910,000, respectively, of computer software was capitalized relating to a new manufacturing and accounting system.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTSIn January 2003, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 46, "Consolidation of Variable Interest Entities," which establishes accounting standards for the consolidation of variable interest entities created after January 31,
2003. In April 2003, the FASB issued Statement of Financial Accounting Standard (FAS) No. 149, "Amendment of Statement No. 133 on Derivative Instruments and Hedging Activities,"
which amends and clarifies financial accounting and reporting for derivative instruments and for hedging activities for contracts entered into or modified after June 30, 2003. In
May 2003, the FASB issued FAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity," which establishes standards for classification
and measurement of certain financial instruments entered into or modified after May 31, 2003 with characteristics of both liabilities and equity. As of June 30, 2003, the Company did not
have entities or instruments that apply to these statements. In addition, the Company does not expect that these statements will have a significant impact on fiscal 2004 financial results.

REVENUE RECOGNITIONRevenues are recognized when either services have been rendered or both title and risk of loss of
products have been transferred to unaffiliated customers, with provision for estimated uncollectible amounts.

SHIPPING AND HANDLINGShipping and handling fees charged to customers are included in net sales, and shipping and handling
costs incurred by the Company are included in cost of sales.

RESEARCH AND DEVELOPMENTResearch and development (R&D) costs are expensed as incurred.

23

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STOCK-BASED COMPENSATIONStock option plans, more fully described in Note 8, are accounted for under the provisions of
FAS No. 123, "Accounting for Stock-Based Compensation," which encourages entities to adopt a fair value based method of accounting for stock-based compensation plans in place of the provisions
of Accounting Principles Board Opinion (APB) No. 25, "Accounting for Stock Issued to Employees," for all arrangements under which employees receive shares of stock or other equity instruments
of the employer. As allowed by FAS No. 123, the Company applies the provisions of APB No. 25 in accounting for its stock-based employee compensation arrangements. No compensation expense
has been recognized for stock option grants as all such grants had an exercise price not less than fair market value on the date of grant. The following table presents the pro forma effects on net
earnings and earnings per share if the Company had applied the fair value recognition provisions of FAS No. 123 to stock-based compensation for the years ended June 30:

|                                                                |  | 2003 |        | 2002 |   | 2001  |  
|--------------------------------------------------------------- |  | ---- | ------ | ---- | - | ----- | -
|
|Net earningsas reported                                        |  | $    | 9,472  |      | $ | 6,824 |  
|Deduct: pro forma stock option compensation expense, net of tax |  |      | (1,303 | )    |   | (966  | )
|                                                                |  |      |        |      |   |       |  
|Net earningspro forma                                          |  | $    | 8,169  |      | $ | 5,858 |  
|                                                                |  |      |        |      |   |       |  
|Earnings per share:                                             |  |      |        |      |   |       |  
|Basicas reported                                               |  | $    | 1.21   |      | $ | .89   |  
|Basicpro forma                                                 |  | $    | 1.04   |      | $ | .76   |  
|Dilutedas reported                                             |  | $    | 1.17   |      | $ | .84   |  
|Dilutedpro forma                                               |  | $    | 1.01   |      | $ | .72   |  

3.    ACQUISITIONS

Effective May 16, 2003, the Company acquired certain assets and liabilities of the Traffic and Transit Lighting businesses of U.S. Traffic Corporation
(UST). UST is a designer, manufacturer and supplier of intelligent intersection control systems and other transportation equipment located in Santa Fe Springs, California and Tecate, Mexico. The
Company paid a purchase price of $35,725,000, net of cash acquired of $501,000, consisting of $20,158,000 in cash, a $5,000,0000 five-year, 5.25% subordinated promissory note and 558,534
shares of the Company's common stock with a fair value of $10,567,000. No UST bank debt was assumed. The excess of purchase price over the estimated fair value of the assets acquired approximated
$19,048,000, of which approximately $17,967,000 is deductible for tax purposes. The Company's source of funds for this acquisition was a $70,000,000 credit facility described in Note 7. UST had
revenues for its fiscal year ended September 30, 2002 of approximately $46,000,000. The Company intends to utilize the purchased assets to continue UST's business and intends to combine this
business with certain other businesses in its Inform segment. The Company anticipates that the UST business will provide future operating synergies in the traffic control market, expand the Company's
customer base into the municipal and county markets and leverage the Company's existing technologies within the Inform segment.

24

---

The
following unaudited summary presents the estimated fair values of the assets acquired and liabilities of UST assumed as of May 16, 2003, the date of acquisition.

|                              |                   | Dollar amounts
in thousands
|----------------------------- | ----------------- | ---------------------------
|Current assets                |                   | $                          
|Property, plant and equipment |                   |                            
|Intangible assets             |                   |                            
|Goodwill                      |                   |                            
|                              |                   |                            
|                              | Total assets      |                            
|                              |                   |                            
|Current liabilities           |                   |                            
|Long-term liabilities         |                   |                            
|                              |                   |                            
|                              | Total liabilities |                            
|                              |                   |                            
|Net assets                    |                   | $                          
|                              |                   |                            

The allocation of the purchase price above is subject to change based on finalization of valuations of certain assets and liabilities. The intangible assets
acquired in connection with the acquisition of UST were assigned as follows:

|                                    |                        | Gross Carrying
Amount |       | Weighted-average
Useful Life
|----------------------------------- | ---------------------- | --------------------- | ----- | ----------------------------
|
|Amortized intangible assets:        |                        |                       |       |                             
|                                    | Customer relationships |                       | $     | 2,120                       
|                                    | Technology             |                       |       | 380                         
|                                    | Backlog                |                       |       | 510                         
|                                    |                        |                       |       |                             
|                                    |                        |                       | 3,010 |                             
|Indefinite-lived intangible assets: |                        |                       |       |                             
|                                    | Trade names            |                       |       | 560                         
|                                    |                        |                       |       |                             
|Total                               |                        | $                     | 3,570 |                             
|                                    |                        |                       |       |                             

Effective August 31, 2001, the Company acquired all of the outstanding stock of Surface Systems, Inc. (SSI). SSI was included in the Company's
Inform segment. SSI is a leading manufacturer and seller of patented pavement sensing equipment and specialized weather stations and also provides weather forecasting services. The Company believes
that SSI will play an important part in the Inform segment by providing weather information to improve safety on the roads. SSI had revenues for its fiscal year ended June 30, 2001 of
approximately $9,000,000. The Company paid a purchase price of approximately $11,300,000 in cash, net of cash acquired. The excess of purchase price over the estimated fair value of the assets
acquired approximated $6,209,000. No SSI bank debt was assumed. The Company's source of funds for this acquisition was its existing bank credit facility.

Effective
January 1, 2001, the Company acquired all of the stock of National Signal, Inc. (NSI). NSI is engaged in designing, manufacturing and distributing variable
message signs, directional displays and warning lights for the transportation industry. NSI is based in La Mirada, California and had revenues for calendar 2000 of approximately $8,000,000. The
purchase price was $4,450,000, of which

25

---

$2,950,000
was paid in cash. The remaining $1,500,000 was paid in a three-year, 5% promissory note, payable in equal annual installments. In addition, the selling shareholders have an
opportunity to earn up to $2,500,000, as additional purchase price consideration, by attaining certain sales and earnings targets over the three calendar years following the acquisition date. As of
June 30, 2003, no additional purchase price has been recorded. The excess of purchase price over the estimated fair value of the assets acquired approximated $4,100,000. NSI was included in the
Company's Inform segment.

The
following unaudited pro forma summary presents the consolidated results of operations for each of the years ended June 30 as if the acquisitions had occurred at the beginning
of fiscal 2002:

|                               |  | 2003 |         | 2002
|------------------------------ |  | ---- | ------- | ----
|
|Net sales                      |  | $    | 153,082 |     
|Net earnings                   |  |      | 10,115  |     
|Net earnings per diluted share |  |      | 1.18    |     

The unaudited consolidated pro forma information is not necessarily indicative of the combined results that would have occurred had the acquisitions occurred on
that date, nor is it indicative of the results that may occur in the future.

4.    DISPOSITIONS AND DISCONTINUED OPERATIONS

In fiscal years 1996 and 1997, the Company sold substantially all of the assets and transferred significant operating liabilities of Disc
Manufacturing, Inc. and its legal technologies businesses. During the year ended June 30, 2002, the Company recorded a gain from discontinued operations of $927,000, or $0.11 per diluted
share, which was net of income tax provisions of $521,000, of which $735,000 was due to the adjustment of certain accruals in the fourth quarter related to contingencies which the Company no longer
believes are probable and $192,000 from the favorable outcome of a legal settlement.

During
the year ended June 30, 2002, the Company recorded other income of $830,000 related to the gain on sale of certain assets of its non-highway plastic product
line for $581,000 in cash and $700,000 in a three-year promissory note with interest imputed at 8%.

In
October 1998, the Company entered into a joint venture, known as Transportation Management Technologies, L.L.C. (TMT), to market pavement inspection and other high technology
products and services to highway departments in the United States. The Company invested $1,740,000 in TMT, of which $764,000 was paid in 1999, $361,000 in 2000 and $615,000 in 2001, for a 19% interest
in the joint venture. This investment was being accounted for under the equity method of accounting. Effective April 2001, the Company liquidated its remaining $500,000 interest in the TMT
joint venture in exchange for one of the venture's pavement inspection vehicles.

26

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5.    INVENTORIES

Inventories consist of the following at June 30:

|                |  | 2003 |        | 2002
|--------------- |  | ---- | ------ | ----
|
|Finished goods  |  | $    | 6,984  |     
|Work-in-process |  |      | 5,508  |     
|Raw materials   |  |      | 10,475 |     
|                |  |      |        |     
|                |  | $    | 22,967 |     
|                |  |      |        |     

6.    INTANGIBLE ASSETS AND GOODWILL

Intangible assets consist of the following as of June 30:

|                                    |                               | 2003 |        | 2002 
|----------------------------------- | ----------------------------- | ---- | ------ | -----
|
|
|Amortized intangible assets:        |                               |      |        |      
|                                    | Patents and licenses          |      | $      | 2,779
|                                    | Technology and installed base |      |        | 3,100
|                                    | Customer relationships        |      |        | 2,320
|                                    | Other                         |      |        | 530  
|                                    |                               |      |        |      
|                                    |                               |      | 8,729  |      
|Indefinite-lived intangible assets: |                               |      |        |      
|                                    | Trade names                   |      |        | 1,660
|                                    |                               |      |        |      
|Total                               |                               | $    | 10,389 |      
|                                    |                               |      |        |      

Amortization expense was $595,000, $398,000, and $1,835,000 for the years ended June 30, 2003, 2002, and 2001 respectively. Effective July 1, 2001,
with the adoption of FAS No. 142, the Company is no longer required to amortize goodwill and other indefinite-lived intangible assets. If goodwill had not been amortized for the year ended June
30, 2001, net income would have increased by $967,000 from $10,843,000 to $11,810,000; basic earnings per share would have increased $0.13 per share from $1.47 per share to $1.60 per share; and
diluted earnings per share would have increased $0.12 per share from $1.35 per share to $1.47 per share. The estimated amortization expense for the five fiscal years subsequent to 2003 is as follows:
$1,384,000 in 2004, $899,000 in 2005, $885,000 in 2006, $816,000 in 2007 and $747,000 in 2008.

The
carrying amount of goodwill consists of the following at June 30:

| |  | 2003 |       | 2002
| |  | ---- | ----- | ----
|
|
| |  | $    | 8,139 |     
| |  |      |       |     

During the fiscal year ended June 30, 2003, goodwill in the amount of $19,048,000 was acquired in connection with the acquisition of UST, and is included
in the Inform segment.

27

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7.    LONG-TERM DEBT

Long-term debt consists of the following at June 30:

|                                                                       |                      | 2003 |        | 2002 
|---------------------------------------------------------------------- | -------------------- | ---- | ------ | -----
|
|Revolving credit note due May 16, 2006, interest at variable rates     |                      | $    | 16,500 |      
|Revolving credit note due October 31, 2004, interest at variable rates |                      |      |        |      
|Term loan due May 16, 2006, interest at variable rates                 |                      |      | 20,000 |      
|Subordinated promissory note                                           |                      |      | 5,000  |      
|Notes payable, net of discounts of $3962003 and $5792002             |                      |      | 2,251  |      
|Other                                                                  |                      |      | 66     |      
|                                                                       |                      |      |        |      
|Total long-term debt                                                   |                      |      | 43,817 |      
|                                                                       | Less current portion |      |        | 4,028
|                                                                       |                      |      |        |      
|Long-term debt, net                                                    |                      | $    | 39,789 |      
|                                                                       |                      |      |        |      

In May 2003, the Company entered into a $70 million, three-year unsecured credit agreement with four banks, which replaced the Company's
previous $40 million facility. The agreement provides for a $50 million revolving credit facility, with a flex-up option of up to $5 million for a maximum revolving
credit facility of $55 million. The agreement also includes a three-year term loan for $20 million. Principal on the term loan is payable quarterly in installments of
$750,000, plus interest, commencing on September 30, 2003. The agreement contains both fixed and floating interest rate options, at the prime rate or LIBOR rate, plus a margin. It contains
affirmative and negative covenants including requirements that the Company maintain certain financial ratios and be profitable each year. The agreement may be renewed one additional year on each
anniversary date upon the Company's request and mutual consent of the banks.

The
subordinated promissory note is a five-year note, payable at the end of the term. It was entered into in connection with the acquisition of UST and is payable to the
former owners. It bears interest at 5.25%, with interest payable semi-annually. The notes payable were entered into in connection with the acquisitions of National Signal, Inc.
(NSI) and Roadway Safety Service, Inc. (Roadway) and are payable to several former owners and employees. The NSI note is a three-year, 5% promissory note, payable in equal annual
installments. The Roadway notes are payable quarterly over five and ten year periods through 2007 with interest imputed at 8.5%.

The
aggregate amount of maturities of long-term debt for the four years subsequent to 2004 assuming renewal of the credit agreement is as follows: $3,393,000 in 2005,
$3,427,000 in 2006, $3,465,000 in 2007 and $8,004,000 in 2008.

8.    STOCK OPTIONS AND STOCK TRANSACTIONS

The Company has stock option plans providing for grants of options for directors based upon a fixed calculation and for employees as may be determined by the
Compensation Committee of the Board of Directors. Options under the plans are to be granted at no less than 100% of the current market price at the date of the grant. Options vest over not less than a
six-month period and have a term of not more than ten years. No charges are made to earnings in connection with the option plans.

28

---

Information
with respect to stock option activity under the Company's plans is as follows:

|                     |  | Number of Common Shares |   | Option Price
per Share |                | Weighted Average Exercise Price
|-------------------- |  | ----------------------- | - | ---------------------- | -------------- | -------------------------------
|June 30, 2000        |  | 1,366,212               |   | $                      | 6.88 to $21.00 |                                
|                     |  |                         |   |                        |                |                                
|Granted              |  | 390,700                 |   |                        | 13.75 to 16.00 |                                
|Exercised            |  | (364,905                | ) |                        | 6.88 to 21.00  |                                
|Cancelled or expired |  | (12,633                 | ) |                        | 12.15 to 16.00 |                                
|                     |  |                         |   |                        |                |                                
|June 30, 2001        |  | 1,379,374               |   |                        | 6.88 to 21.00  |                                
|                     |  |                         |   |                        |                |                                
|Granted              |  | 189,300                 |   |                        | 23.77 to 24.95 |                                
|Exercised            |  | (283,834                | ) |                        | 6.88 to 16.00  |                                
|Cancelled or expired |  | (36,666                 | ) |                        | 13.32 to 24.95 |                                
|                     |  |                         |   |                        |                |                                
|June 30, 2002        |  | 1,248,174               |   |                        | 6.88 to 24.95  |                                
|                     |  |                         |   |                        |                |                                
|Granted              |  | 198,100                 |   |                        | 16.04 to 20.54 |                                
|Exercised            |  | (189,744                | ) |                        | 8.00 to 16.00  |                                
|Cancelled or expired |  | (300                    | ) |                        | 23.77 to 23.77 |                                
|                     |  |                         |   |                        |                |                                
|June 30, 2003        |  | 1,256,230               |   | $                      | 6.88 to $24.95 |                                
|                     |  |                         |   |                        |                |                                

Options outstanding at June 30, 2003 are exercisable as follows: 849,341 currently, 230,825 in 2004, 115,365 in 2005 and 60,699 thereafter. The weighted
average fair value of options granted during 2003, 2002 and 2001 was $5.36, $6.20 and $5.13, respectively. As of June 30, 2003, the Company has 355,400 common shares reserved for its option and
award plans.

The
following is the composition of the June 30, 2003 stock option balance:

|                   |  | Outstanding |  | Currently Exercisable
|------------------ |  | ----------- |  | ---------------------
|
|$  6.88 to $  9.00 |  | 4.3 years   |  | $                    
|10.00 to  14.91    |  | 3.4 years   |  |                      
|16.00 to  20.00    |  | 4.5 years   |  |                      
|20.54 to  24.95    |  | 3.1 years   |  |                      
|                   |  |             |  |                      
|$  6.88 to $24.95  |  | 3.8 years   |  | $                    
|                   |  |             |  |                      

29

---



Had
compensation cost for the Company's stock option plans been determined based on the fair value method for awards in 2003, 2002 and 2001 consistent with the provisions of FAS
No. 123, the Company's net earnings and net earnings per diluted share would have been changed to the pro forma amounts indicated below:

|                               |  | 2003 |       | 2002 |   | 2001 
|------------------------------ |  | ---- | ----- | ---- | - | -----
|
|Net earnings                   |  | $    | 8,169 |      | $ | 5,858
|Net earnings per diluted share |  |      | 1.01  |      |   | .72  

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

|                                     |  | 2003        |  | 2002        |  | 2001       
|------------------------------------ |  | ----------- |  | ----------- |  | -----------
|Risk free interest rate              |  | 3.2% - 3.6% |  | 3.3% - 4.5% |  | 5.8% - 6.1%
|Expected dividend yield              |  | 1.70%       |  | 1.89%       |  | 1.94%      
|Weighted average expected volatility |  | 42%         |  | 29%         |  | 37%        
|Weighted average expected life       |  | 4.2 years   |  | 4.2 years   |  | 4.9 years  

9.    SHAREHOLDER RIGHTS PLAN

The Company has a Shareholder Rights Plan (the Plan) which was established to deter coercive takeover tactics and to prevent an acquirer from gaining control of
the Company without offering a fair price to all of the Company's stockholders. The Plan calls for stockholders of record as of July 14, 1998 to receive a dividend distribution of one right for
each outstanding share of the Company's common stock. Each share issued after that date is also granted a right. Each right entitles the holder, upon the occurrence of certain events, to purchase a
unit consisting of one one-thousandth of a share of Series A Junior Participating Preferred Stock, no par value, for $40 per unit. In addition, if an acquiring person becomes the
beneficial owner of more than 15% of the Company's outstanding common stock, each right will entitle the holder (other than such acquiring person) to receive, upon exercise, common stock of the
Company having a value equal to two times the exercise price of the right.

If
after an acquiring person becomes the beneficial holder of more than 15% of the Company's outstanding common stock and then the Company is acquired in a merger or other business
combination in which the Company would not be the surviving corporation or 50% or more of the Company's assets or earning power is sold, each holder shall have the right to receive, upon exercise,
common stock of the acquiring corporation having a value equal to two times the exercise price of the right. The Company may redeem the rights, for $.01 per right, under certain circumstances.

10.    RETIREMENT PLANS

The Company has a retirement stock award program for certain key executives of the Company. The award consists of shares of the Company's common stock and cash
ending with the fiscal year in which each executive attains his or her 62nd birthday. In order to receive each year's stock award, the executive must remain employed with the Company through the end
of the fiscal year, unless excused

30

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by
reason of death or other involuntary termination. Participants are also required to retain the shares awarded for as long as they are employed by the Company or until age 65. The size of each
participant's annual award is determined under accepted actuarial principles to provide a retirement income based upon a percentage of the executive's projected compensation and length of service at
retirement, but only if the Company's stock price appreciates at a sustained target rate. The retirement stock award program resulted in a charge to earnings of $420,000 in 2003, $368,000 in 2002 and
$533,000 in 2001.

The
Company has an incentive savings plan covering substantially all employees of the Company. The plan allows qualified employees to make tax deferred contributions pursuant to Internal
Revenue Code Section 401(k). The Company contributes a matching contribution based upon a percentage of the participants' contributions which is invested directly in the common stock of the
Company. Additional discretionary company contributions may be made at the option of the Company's Board of Directors. The expense for the plan was $738,000 in 2003, $701,000 in 2002 and $613,000 in
2001.

11.    INCOME TAXES

The income tax provision for continuing and discontinued operations consist of the following:

|                                                 |                           | 2003 |       | 2002  |   | 2001  |      
|------------------------------------------------ | ------------------------- | ---- | ----- | ----- | - | ----- | -----
|
|Current:                                         |                           |      |       |       |   |       |      
|                                                 | Federal and international |      | $     | 2,759 |   | $     | 734  
|                                                 | State                     |      |       | 163   |   |       | 465  
|                                                 |                           |      |       |       |   |       |      
|                                                 |                           |      | 2,922 |       |   | 1,199 |      
|                                                 |                           |      |       |       |   |       |      
|Deferred:                                        |                           |      |       |       |   |       |      
|                                                 | Federal and international |      |       | 1,573 |   |       | 2,046
|                                                 | State                     |      |       | 385   |   |       | 71   
|                                                 |                           |      |       |       |   |       |      
|                                                 |                           |      | 1,958 |       |   | 2,117 |      
|                                                 |                           |      |       |       |   |       |      
|Income tax provision for continuing operations   |                           |      | 4,880 |       |   | 3,316 |      
|Income tax provision for discontinued operations |                           |      |       |       |   | 521   |      
|                                                 |                           |      |       |       |   |       |      
|Total income tax provision                       |                           | $    | 4,880 |       | $ | 3,837 |      
|                                                 |                           |      |       |       |   |       |      

31

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The components of the net deferred tax asset (liability) are as follows:

|                          |                                              | 2003 |        | 2002   |  
|------------------------- | -------------------------------------------- | ---- | ------ | ------ | -
|
|Deferred tax assets:      |                                              |      |        |        |  
|                          | Accounts receivable allowance                |      | $      | 443    |  
|                          | Inventory valuation                          |      |        | 755    |  
|                          | Compensated absences and medical claims      |      |        | 368    |  
|                          | Tax over book basis in affiliates            |      |        | 461    |  
|                          | Other liabilities and reserves               |      |        | 2,007  |  
|                          | Net operating and capital loss carryforwards |      |        | 1,434  |  
|                          | Valuation allowance                          |      |        | (946   | )
|                          |                                              |      |        |        |  
|                          |                                              |      | 4,522  |        |  
|                          |                                              |      |        |        |  
|Deferred tax liabilities: |                                              |      |        |        |  
|                          | Book over tax basis of fixed assets          |      |        | (1,832 | )
|                          | Book over tax basis of intangible assets     |      |        | (3,894 | )
|                          |                                              |      |        |        |  
|                          |                                              |      | (5,726 | )      |  
|                          |                                              |      |        |        |  
|                          | Net deferred tax asset (liability)           |      | $      | (1,204 | )
|                          |                                              |      |        |        |  

The valuation allowance relates principally to deferred tax assets that the Company estimates may not be realizable, including portions of tax over book basis in
affiliates, and net operating and capital loss carryforwards. Based on management's assessment, it is more likely than not that the net deferred tax assets will be realized through future taxable
earnings or implementation of tax planning strategies.

At
June 30, 2003, certain subsidiaries of the Company have approximately $2,740,000 of state and $2,144,000 of federal net operating loss carryforwards for tax purposes. Certain
limitations on utilization are present and realization of a significant portion of the carryforwards is uncertain. These carryforwards expire in years from 2013 through 2021.

The
net deferred tax asset (liability) consists of the following at June 30:

|                       |                                   |                                          |  | 2003 |   | 2002   |       
|---------------------- | --------------------------------- | ---------------------------------------- |  | ---- | - | ------ | ------
|
|Continuing operations: |                                   |                                          |  |      |   |        |       
|                       | Current deferred tax asset        |                                          |  |      | $ | 2,713  |       
|                       | Noncurrent deferred tax liability |                                          |  |      |   | (3,917 | )     
|                       |                                   |                                          |  |      |   |        |       
|                       |                                   | Total net deferred tax asset (liability) |  |      |   | $      | (1,204
|                       |                                   |                                          |  |      |   |        |       

32

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The income tax provision differed from the taxes calculated at the statutory federal tax rate as follows:

|                                                |  | 2003 |       | 2002 |   | 2001 
|----------------------------------------------- |  | ---- | ----- | ---- | - | -----
|
|Taxes at statutory rate                         |  | $    | 4,923 |      | $ | 3,133
|State income taxes                              |  |      | 493   |      |   | 378  
|R&D credit                                      |  |      | (139  | )    |   |      
|Other                                           |  |      | (397  | )    |   | (195 
|                                                |  |      |       |      |   |      
|Income tax provision for continuing operations: |  | $    | 4,880 |      | $ | 3,316
|                                                |  |      |       |      |   |      

12.    COMPREHENSIVE INCOME

Comprehensive income consists of the following for the years ended June 30:

|                                |  | 2003 |       | 2002 |   | 2001  |  
|------------------------------- |  | ---- | ----- | ---- | - | ----- | -
|
|Net earnings                    |  | $    | 9,472 |      | $ | 6,824 |  
|Currency translation adjustment |  |      | 19    |      |   | (34   | )
|                                |  |      |       |      |   |       |  
|Comprehensive income            |  | $    | 9,491 |      | $ | 6,790 |  
|                                |  |      |       |      |   |       |  

13.    EARNINGS PER SHARE

The computation of basic and diluted earnings per share is as follows:

|                                                   |         | 2003 |           | 2002 |   | 2001     
|-------------------------------------------------- | ------- | ---- | --------- | ---- | - | ---------
|
|NUMERATOR:                                         |         |      |           |      |   |          
|Net earnings available to common shareholders      |         | $    | 9,472     |      | $ | 6,824    
|                                                   |         |      |           |      |   |          
|DENOMINATOR:                                       |         |      |           |      |   |          
|Weighted average shares outstandingbasic          |         |      | 7,847,169 |      |   | 7,682,706
|Effect of dilutive securitiescommon stock options |         |      | 215,228   |      |   | 438,915  
|                                                   |         |      |           |      |   |          
|Weighted average shares outstandingdiluted        |         |      | 8,062,397 |      |   | 8,121,621
|                                                   |         |      |           |      |   |          
|NET EARNINGS PER SHARE OF COMMON STOCK:            |         |      |          
|                                                   | Basic   |      | $         | 1.21 |   | $        
|                                                   |         |      |           |      |   |          
|                                                   | Diluted |      | $         | 1.17 |   | $        
|                                                   |         |      |           |      |   |          

33

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There were outstanding options to purchase common stock at prices that exceeded the average market price for the income statement period. These options have been
excluded from the computation of diluted earnings per share and are as follows:

|                                 |  | 2003 |         | 2002 |   | 2001   
|-------------------------------- |  | ---- | ------- | ---- | - | -------
|Average exercise price per share |  | $    | 23.78   |      | $ | 24.83  
|Number of shares                 |  |      | 246,000 |      |   | 180,300

14.    GUARANTEES, COMMITMENTS AND CONTINGENT LIABILITIES

In November, 2002, the FASB issued FIN No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others". The Company has adopted the requirements of this Interpretation. Disclosures regarding each group of similar guarantees are provided below.

LEASE COMMITMENTSThe Company uses various leased facilities and equipment in its operations. The terms for these leased
assets vary depending on the lease agreements. Aggregate rental expense under operating leases, principally for office and manufacturing facilities, was $1,895,000 in 2003, $1,023,000 in 2002 and
$829,000 in 2001. These operating leases include options for renewal. Annual minimum future rentals for lease commitments are approximately $2,974,000 in 2004, $2,520,000 in 2005, $1,904,000 in 2006,
$1,687,000 in 2007 and $1,329,000 in 2008, for an aggregate of $10,414,000 for the five-year period.

PRODUCT WARRANTY LIABILITYThe Company warrants to the original purchaser regarding certain of its products that it will, at
its option, repair or replace, without charge, such products if they fail due to a manufacturing defect. The term of these warranties varies (30 days to 5 years) by product. The Company
accrues for product warranties when, based on available information, it is probable that customers will make claims under warranties relating to products that have been sold, and a reasonable estimate
of the costs can be made.

The
Company's estimated product warranty liability for 2003 is as follows:

|Balance, July 1, 2002  |  | $ | 447,000   |  
|---------------------- |  | - | --------- | -
|Current provisions     |  |   | 390,000   |  
|Expenditures           |  |   | (412,000  | )
|Acquisition of UST     |  |   | 1,561,000 |  
|                       |  |   |          
|Balance, June 30, 2003 |  | $ | 1,986,000 |  
|                       |  |   |          

LEGALThe Company is subject to legal actions of a routine manner and common to its businesses. The Company records loss
contingencies where appropriate within the guidelines established by Statement of FAS No. 5 "Accounting for Contingencies". In the opinion of management, based on the advice of legal counsel,
the amount of liability, if any, arising from legal actions should not have a material effect on the Company's results of operations or financial condition.

EXECUTIVE AGREEMENTSThe Company has agreements with certain executives which are designed to retain the services of key
employees and to provide for continuity of management in the

34

---

event
of a termination or an actual or threatened change in control of the Company. Upon occurrence of a termination or a triggering event after a change in control, as defined, the Company would be
liable for payment of benefits under these agreements, to a maximum amount of $4,937,000. The Company has by-laws and agreements under which it indemnifies its directors and officers from
liability for certain events or occurrences while the directors or officers are, or were, serving at the Company's request in such capacities. The term of the indemnification period is for the
director's or officer's lifetime. The Company believes that any obligations relating to this indemnification are predominantly covered by insurance subject to certain exclusions and deductibles.
Historically, the Company has not made payments under these executive agreements, and no amount has been accrued in the accompanying consolidated financial statements.

BUSINESS PURCHASE AGREEMENTSAs part of the purchase price of UST, the Company has agreed to pay the sellers contingent
consideration based on a percentage of revenues for sales of certain products between May 1, 2003 and December 31, 2009, up to a maximum of $5,250,000. No amounts have been paid for
fiscal 2003. Also as part of the purchase price of UST, the Company guaranteed the principal and interest payments on the $5,000,000 five-year, 5.25% subordinated promissory note payable
to the sellers. The Company also guaranteed the timely payment of the liabilities assumed at closing. The unpaid liabilities are included in the accompanying financial statements. The Company is
leasing UST's Sante Fe Springs, California facility and its Tecate, Mexico facility from affiliates of the sellers, for five year terms which can be renewed for five years. The Company has guaranteed
its performance of its obligations under the leases. The lease commitments under the leases are included above.

INDEMNIFICATION OF LENDERS AND AGENTS UNDER CREDIT FACILITIESUnder its credit facilities, the Company has agreed to
indemnify its lenders under such facilities against costs or losses resulting from changes in laws and regulations which would increase the lenders' costs, and from any legal action brought against
the lenders related to the use of loan proceeds. These indemnifications generally extend for the term of the credit facilities and do not provide for any limit on the maximum potential liability.
Historically, the Company has not made any significant indemnification payments under such agreements and no amount has been accrued in the accompanying consolidated financial statements with respect
to these indemnification guarantees.

BID AND PERFORMANCE BONDSThe Company has entered into bid and performance related bonds associated with various contracts.
Potential payments due under these bonds are related to the Company's performance under the applicable contract. The total amount of bid and performance related bonds that were available and undrawn
was $5,300,000 as of June 30, 2003. Historically, the Company has not made significant payments on bid and performance bonds, and no amount has been accrued in the accompanying consolidated
financial statements.

OTHER COMMITMENTSThe Company has standby letters of credit covering potential workers' compensation liabilities. The total
standby exposure at June 30, 2003 was $330,000.

The
Company has certain non-cancellable royalty agreements, which contain certain minimum payments in the aggregate of $2,613,000 through fiscal year 2012. The Company has a
purchase commitment arrangement related to expansion of one of its facilities in the amount of approximately $450,000 as of June 30, 2003. There are no current liabilities accrued in the
accompanying financial statements for these commitments as of June 30, 2003.

35

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15.    SUPPLEMENTAL CASH FLOW STATEMENT DISCLOSURES

Cash paid for interest was $908,000 in 2003, $1,218,000 in 2002 and $1,478,000 in 2001. Cash paid for income taxes was $2,691,000 in 2003, $2,014,000 in 2002 and
$5,363,000 in 2001. The Company declared dividends that were payable at year end of $1,404,000 in 2003, $1,240,000 in 2002 and $1,123,000 in 2001. In connection with the acquisition of UST in
May 2003, the purchase price for the net assets acquired included a $5,000,000 five-year, 5.25% subordinated promissory note and 558,534 shares of the Company's common stock with a
fair value of $10,567,000. In connection with the purchase of NSI in January 2001, approximately $1,700,000 of NSI's bank debt was assumed and was simultaneously paid off on the date of
closing. In addition, the purchase price of NSI included $1,500,000 in a three-year, 5% promissory note.

16.    INDUSTRY SEGMENT INFORMATION

The Company's operations are comprised of two principal reportable segments within the highway and transportation safety industrythe manufacture and
sale of highway and transportation safety products which Protect and Direct, and the manufacture and sale of products which Inform that are often referred to as Intelligent Transportation Systems
(ITS) products. The primary product lines within the Protect and Direct segment include energy-absorbing products such as crash cushions, truck-mounted attenuators, sand-filled barrels and
barriers as well as highway delineators. The products within this segment absorb and dissipate the force of impact in collisions between vehicles and fixed roadside objects as well as products that
prevent collisions and help to control the flow of traffic by directing or guiding. The primary product lines within the Inform segment include intelligent intersection control systems, highway
advisory radio systems,variable message signs, advanced sensing products which measure distance, count and classify vehicles, and sense weather conditions and other transportation equipment. The
products within this segment provide information to prevent collisions from occurring and ease traffic congestion. The majority of the Company's sales of its highway and transportation safety products
are to distributors and contractors who then provide product and services to federal, state and local governmental units. The Company's business is conducted principally in the United States, its
country of domicile, with sales outside the United States as follows: $13,545,000 in
2003, $8,596,000 in 2002, and $9,489,000 in 2001. Inter-company sales between segments represented less than one percent of consolidated net sales in fiscal 2003, 2002 and 2001.

The
Company's reportable segments are based on similarities in products and represent the aggregation of operating units for which financial information is regularly evaluated in
determining resource allocation and assessing performance. The Company evaluates the performance of its segments and allocates resources to them based on operating income as well as other factors.
Operating income is determined by deducting operating expenses from all revenues. In computing operating income, none of the following has been added or deducted: unallocated corporate expenses,
interest income or expense, other income or loss or income tax provisions or benefits. Corporate assets consist primarily of cash and cash equivalents, depreciable assets and income tax assets.
Accounting policies for the segments are the same as those for the Company.

36

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The
following table presents financial information about reported segments as of and for the years ended June 30, 2003, 2002 and 2001 comprising the totals reported in the
consolidated financial statements.

|                               |                       | 2003 |   | 2002    |   | 2001 |        
|------------------------------ | --------------------- | ---- | - | ------- | - | ---- | -------
|
|Revenues:                      |                       |      |   |         |   |      |        
|                               | Protect and Direct    |      | $ | 77,243  |   | $    | 67,225 
|                               | Inform                |      |   | 37,067  |   |      | 22,469 
|                               |                       |      |   |         |   |      |        
|                               | Total                 |      | $ | 114,310 |   | $    | 89,694 
|                               |                       |      |   |         |   |      |        
|Depreciation and amortization: |                       |      |   |         |   |      |        
|                               | Protect and Direct    |      | $ | 2,684   |   | $    | 2,309  
|                               | Inform                |      |   | 1,267   |   |      | 767    
|                               | Unallocated corporate |      |   | 27      |   |      | 463    
|                               |                       |      |   |         |   |      |        
|                               | Total                 |      | $ | 3,978   |   | $    | 3,539  
|                               |                       |      |   |         |   |      |        
|Operating profit:              |                       |      |   |         |   |      |        
|                               | Protect and Direct    |      | $ | 18,846  |   | $    | 14,755 
|                               | Inform                |      |   | 3,151   |   |      | 367    
|                               | Unallocated corporate |      |   | (6,843  | ) |      | (5,633 
|                               |                       |      |   |         |   |      |        
|                               | Total                 |      | $ | 15,154  |   | $    | 9,489  
|                               |                       |      |   |         |   |      |        
|Identifiable assets:           |                       |      |   |         |   |      |        
|                               | Protect and Direct    |      | $ | 53,780  |   | $    | 54,636 
|                               | Inform                |      |   | 90,112  |   |      | 39,682 
|                               | Unallocated corporate |      |   | 6,933   |   |      | 5,726  
|                               |                       |      |   |         |   |      |        
|                               | Total                 |      | $ | 150,825 |   | $    | 100,044
|                               |                       |      |   |         |   |      |        
|Capital expenditures:          |                       |      |   |         |   |      |        
|                               | Protect and Direct    |      | $ | 1,748   |   | $    | 6,800  
|                               | Inform                |      |   | 429     |   |      | 177    
|                               | Unallocated corporate |      |   | 80      |   |      | 27     
|                               |                       |      |   |         |   |      |        
|                               | Total                 |      | $ | 2,257   |   | $    | 7,004  
|                               |                       |      |   |         |   |      |        

37

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17.    QUARTERLY FINANCIAL DATA (UNAUDITED)

Summarized unaudited quarterly financial data for years 2003 and 2002 follows:

|                                      |                       | Three months ended
|------------------------------------- | --------------------- | ------------------
|
|
|FISCAL 2003                           |                       |                   
|Net sales                             |                       | $                 
|Gross profit                          |                       |                   
|Net earnings                          |                       |                   
|Basic earnings per share              |                       |                   
|Diluted earnings per share            |                       |                   
|FISCAL 2002                           |                       |                   
|Net sales                             |                       | $                 
|Gross profit                          |                       |                   
|Earnings from continuing operations   |                       |                   
|Earnings from discontinued operations |                       |                   
|Net earnings                          |                       |                   
|Basic earnings per share:             |                       |                   
|                                      | Continuing operations |                   
|                                      | Net earnings          |                   
|Diluted earnings per share:           |                       |                   
|                                      | Continuing operations |                   
|                                      | Net earnings          |                   

38

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Item 9.       Changes in and Disagreements with Auditors on Accounting and Financial Disclosures

None.

Item 9A.    Controls and Procedures

Disclosure
controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in the reports that are filed or submitted
under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that are filed under the Exchange Act is accumulated and
communicated to management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Under the supervision of
and with the participation of management, including the principal executive officer and principal financial officer, the Company has evaluated the effectiveness of the design and operation of its
disclosure controls and procedures as of June 30, 2003, and, based on its evaluation, our principal executive officer and principal financial officer have concluded that these controls and procedures
are effective.

Although
the Company believes its pre-existing disclosure controls and procedures were adequate to enable it to comply with current disclosure obligations, the Company
implemented minor changes, primarily to formalize and document procedures already in place. The Company also established a disclosure committee, which consists of certain members of the Company's
management and has hired a Manager of Internal Audit. The Company is currently in the process of further reviewing, documenting and refining its disclosure controls and procedures, including internal
controls and procedures, in order to enhance their effectiveness.

There
have been no significant changes in internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation described above,
including any corrective actions with regard to significant deficiencies and material weaknesses.

39

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PART III

Item 10.    Directors and Executive Officers of the Registrant

Some of the information required in response to this item regarding Directors of the Registrant is set forth on pages 2 through 4 and page 21
of the Registrant's Definitive Proxy Statement for the Annual Meeting of Stockholders to be held on November 13, 2003 to be filed with the Commission on or about October 1, 2003 and is
incorporated herein by reference.

The
executive officers of the Company, their ages and offices held by each during fiscal 2003 are as follows:

|Leslie J. Jezuit |  | 57 |  | Chairman, Chief Executive Officer & DirectorQuixote Corporation and Energy Absorption Systems, Inc.; Vice ChairmanEnergy Absorption Systems, Inc.
|---------------- |  | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------
|Daniel P. Gorey  |  | 52 |  | Chief Financial Officer, Vice President & TreasurerQuixote Corporation; Vice President & TreasurerEnergy Absorption Systems, Inc.                
|Joan R. Riley    |  | 50 |  | Vice President, General Counsel & SecretaryQuixote Corporation; SecretaryEnergy Absorption Systems, Inc.                                         

Mr. Jezuit joined the Company as President and Chief Operating Officer of Quixote Corporation in 1996. Prior to that time, Mr. Jezuit served as
President and Chief Operating Officer of Robert Shaw Controls Company. In October, 1999 Mr. Jezuit assumed the position of Chief Executive Officer and in July 2001 was elected Chairman
of the Board of Directors.

Mr. Gorey
joined the Company as Manager of Corporate Accounting in July 1985. He was made Controller of the Company in 1987, elected Vice President in 1994, and was elected
Chief Financial Officer and Treasurer in November 1996. In August 2001, Mr. Gorey was elected to the Board of Directors.

Ms. Riley
joined the Company as Assistant General Counsel and Assistant Secretary in 1991, was elected General Counsel and Secretary in 1997 and a Vice President in 1999.

There
is no family relationship between any of the officers described above.

None
of the officers described above are party or otherwise involved in any legal proceedings adverse to the Company or its subsidiaries.

40

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Item 11.    Executive Compensation

The information required in response to this item is set forth under the caption "Remuneration of Directors and Executive Officers" of the Registrant's Definitive
Proxy Statement for the Annual Meeting of Stockholders to be held on November 13, 2003 to be filed with the Commission on or about October 1, 2003 and is incorporated herein by
reference.

Item 12.    Security Ownership of Certain Beneficial Owners and Management

The information required in response to this item is set forth under the caption "Stock Ownership of Certain Beneficial Owners" of the Registrant's Definitive
Proxy Statement for the Annual Meeting of Stockholders to be held on November 13, 2003 to be filed with the Commission on or about October 1, 2003 and is incorporated herein by
reference.

Item 13.    Certain Relationships and Related Transactions

The information required in response to this item is set forth under the caption "Certain Transactions and Business Relationships" of the Registrant's Definitive
Proxy Statement for the Annual Meeting of Stockholders to be held on November 13, 2003 to be filed with the Commission on or about October 1, 2003 and is incorporated herein by
reference.

Item 14.    Principal Accountant Fees and Services

The information set forth in the Proxy Statement under the heading "Audit and Other Fees Paid to PricewaterhouseCoopers LLP" is incorporated herein by reference.

41

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PART IV

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

|Item
Number |  | Page Number in
This Report                                                                      
|----------- |  | ------------------------------------------------------------------------------------------------
|(a).1.      |  | Financial Statements                                                                            
|            |  | Report of Independent Auditors                                                                  
|            |  | Consolidated Statements of Operations for the years ended June 30, 2003, 2002 and 2001          
|            |  | Consolidated Balance Sheets as of June 30, 2003 and 2002                                        
|            |  | Consolidated Statements of Shareholders' Equity for the years ended June 30, 2003, 2002 and 2001
|            |  | Consolidated Statements of Cash Flows for the years ended June 30, 2003, 2002 and 2001          
|            |  | Notes to Consolidated Financial Statements                                                      

|(a).2.                                                                                                                                                                                                                                                                                            |  | Financial Statement Schedule                                                 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------
|The financial statement schedule listed under Item 15(d) is filed as part of this annual report. All other schedules have been omitted because the required information is included in the
consolidated financial statements or notes thereto or because they are not applicable or not required.
|(a).3.                                                                                                                                                                                                                                                                                            |  | The exhibits listed under Item 15(c) are filed as part of this annual report.
|(b).                                                                                                                                                                                                                                                                                              |  | Reports on Form 8-K                                                          

On May 23, 2003 the Company filed a report on Form 8-K dated May 22, 2003, reporting the issuance of a press release announcing
the acquisition of the Traffic and Transit Lighting businesses of U.S. Traffic Corporation by its wholly-owned subsidiary, Green Light Acquisition Company. The press release also reported the
Company's new $70 million credit arrangement with The Northern Trust Company, LaSalle National Bank N.A., National City Bank and Harris Bank and Trust Company.

On
June 5, 2003 the Company filed a Form 8-K dated May 21, 2003, describing the acquisition of U.S. Traffic Corporation. The Form 8-K
was amended by a Form 8-K/A on August 4, 2003 to file the acquisition financial statements consisting of the audited financial statements of the Traffic and Transit Lighting
Products Business (components of U.S. Traffic Corporation and subsidiaries) for the year ended September 30, 2002 and the unaudited financial statements for the six months ended
March 31, 2003.

On
August 13, 2003 the Company filed a report on Form 8-K dated August 12, 2003 to report the issuance of a press release announcing the results for its
fourth quarter and fiscal year ended June 30, 2003 and to report certain financial estimates discussed during its conference call on August 12, 2003.

|(c). |  | Exhibits
|---- |  | --------
|     |  | 2.1     
|     |  |         

42

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| |  | 3. | (a) |   | Restated Certificate of Incorporation dated February 4, 1998 filed as Exhibit 3(a) to the Company's Form 10-Q Report for the quarter ended December 31, 1997, File No. 0-7903, and incorporated herein by reference; Certificate
of Designation, Preferences and Rights of Series B Junior Participating Preferred Stock dated July 24, 1998, filed as Exhibit 1 to the Company's Form 8-A Registration Statement dated July 23, 1998, File No. 001-08123,
and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | -- | --- | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |    | (b) |   | Amended and Restated By-Laws of the Company as amended through February 24, 2000, filed as Exhibit 3(b) to the Company's Form 10-Q Report for the quarter ended March 31, 2000, File No. 0-7903, and incorporated herein by
reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | 4. | (a) |   | Rights Agreement dated as of July 24, 1998, between the Company and BankBoston, N.A, as Rights Agent, filed as Exhibit 1 to the Company's Form 8-A Registration Statement dated July 23, 1998, File No. 001-08123, and
incorporated herein by reference; Amendment to Rights Agreement dated as of October 15, 2001, filed as Exhibit 4(a) to the Company's Form 10-Q for the quarter ended December 31, 2001, File No. 0-7903, and incorporated herein
by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  | 10 | (a) |   | Credit Agreement ("Credit Agreement") dated as of May 16, 2003 among Quixote Corporation as the Borrower, and The Northern Trust Company, LaSalle National Bank, Harris Trust and Savings Bank and National City Bank of Michigan/Illinois, as
lenders (the "Lenders"); Term Loan Notes dated May 21, 2003 from Quixote Corporation to the Lenders; Revolving Credit Notes dated May 21, 2003 from Quixote Corporation to the Lenders; and Subsidiary Guaranty dated as of May 16, 2003 in
favor of the Lenders by certain identified subsidiaries of Quixote Corporation, all of the foregoing filed as Exhibit 10.13 to the Company's Form 8-K Current Report dated May 21, 2003 and filed on June 5, 2003, File
No. 0-7903, and incorporated herein by reference; ISDA Master Agreement dated as of September 18, 2003 between the Company and Harris Trust and Savings Bank and Guaranty Agreement of certain subsidiaries of the Company dated as of
September 18, 2003, filed herewith.    
| |  |    | (b) | * | 1991 Director Stock Option Plan, as amended through August 16, 2000, filed as Exhibit 10(b) to the Company's Form 10-K Report for the fiscal year ended June 30, 2000, File No. 0-7903, and incorporated herein by
reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |  |    | (c) | * | 1993 Long-Term Stock Ownership Incentive Plan, as amended through August 16, 2000, filed as Exhibit 10(c) to the Company's Form 10-K Report for the fiscal year ended June 30, 2000, File No. 0-7903, and incorporated herein by
reference; Retirement Award Agreement dated as of June 30, 1997 between the Company and Daniel P. Gorey, filed as Exhibit 10(d) to the Company's Form 10-K Report for the fiscal year ended June 30, 1997, File No. 0-7903, and
incorporated herein by reference; Retirement Award Agreement dated as of February 19, 1998 between the Company and Leslie J. Jezuit filed as Exhibit 10(a) to the Company's Form 10-Q Report for the quarter ended March 31, 1998 and
incorporated herein by reference; Retirement Award Agreement dated as of February 19, 1998 between the Company and Joan R. Riley, filed as Exhibit 10(d) to the Company's Form 10-K Report for the fiscal year ended June 30, 1998,
File No. 0-7903, and incorporated herein by reference.
| |  |    | (d) | * | 2001 Employee Stock Incentive Plan, filed as Exhibit 10(c) to the Company's Form 10-Q Report for the quarter ended December 31, 2001, File No. 0-7903, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  |    |     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

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| |  |  | (e) | * | 2001 Non-Employee Directors Stock Option Plan, filed as Exhibit 10(b) to the Company's Form 10-Q Report for the quarter ended December 31, 2001, File No. 0-7903, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  |  | --- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | (f) |   | Lease Agreement between the Company and United Insurance Company of America ("Company Lease") dated July 2, 1993, filed as Exhibit 10(j) to the Company's Form 10-K Report for the fiscal year ended June 30, 1993, File
No. 0-7903, and incorporated herein by reference; Lease Amendment to Company Lease dated as of May 17, 1994, filed as Exhibit 10(h) to the Company's Form 10-K Report for the fiscal year ended June 30, 1994, File
No. 0-7903, and incorporated herein by reference; Second Amendment to Company Lease dated January 30, 1995 and Third Amendment to Company Lease dated December 15, 1995, filed as Exhibits 10(b) and 10(c) to the Company's
Form 10-Q Report for the quarter ended December 31, 1995, File No. 0-7903, and incorporated herein by reference; Fourth Amendment to Company dated as of September 18, 1996 filed as Exhibit 10(b) to the Company's
Form 10-Q Report for the quarter ended December 31, 1996 and incorporated herein by reference; Office Lease between Amberjack, Ltd. and Litigation Sciences, Inc. dated July 2, 1990, filed as Exhibit 10(a) to the
Company's Form 10-Q Report for the quarter ended December 31, 1993, File No. 0-7903 and incorporated herein by reference; First Amendment to Office Lease between Amberjack Ltd. and Stenograph Corporation dated as of June 23,
1994, filed as Exhibit 10(h) to the Company's Form 10-K Report for the fiscal year ended June 30, 1994, File No. 0-7903, and incorporated herein by reference; Lease Agreement between TBC Place Partners, LLC and Highway
Information Systems, Inc. dated August 9, 1999, filed as Exhibit 10(d) to the Company's Form 10-K Report for the fiscal year ended June 30, 1999, File No. 0-7903, and incorporated herein by reference; Office/Warehouse
Lease dated August, 2002 between Teduke Investment Company c/o Bakewell Corporation and Surface Systems, Inc., filed as Exhibit 10 (f) to the Company's 10-K Report for the fiscal year ended June 30, 2002, File No. 0-7903, and
incorporated herein by reference; Lease between Green Light Acquisition Company and Cambridge Real Estate Corporation dated as of May 16, 2003, filed as Exhibit 10.7 to the Company's Form 8-K Current Report dated May 21, 2003 and
filed on June 5, 2003, File No. 0-7903, and incorporated herein by reference; Lease Contract between Quixote Safety Transportation Mexico S. de R. L. C. V. and Intersection Development Corporation S. A. de
C. V. dated as of May 16, 2003, filed as Exhibit 10.8 to the Company's Form 8-K Current Report dated May 21, 2003 and filed on June 5, 2003, File No. 0-7903, and incorporated herein by reference; Office Lease
Agreement dated August 30, 2003 between the Company and TDC Canada Inc. and Wacker GP, Inc., filed herewith.
| |  |  | (g) | * | Letter Agreement dated December 15, 1995 between the Company and Leslie J. Jezuit, filed as Exhibit 10(d) to the Company's Form 10-Q Report for the quarter ended December 31, 1995, File No. 0-7903, and incorporated
herein by reference; Change of Control Agreements dated December 1,1997 by and between the Company and each of Leslie J. Jezuit and Daniel P. Gorey, filed as Exhibit 10(f) to the Company's Form 10-Q Report for the quarter
ended December 31, 1997, File No. 0-7903, and incorporated herein by reference; Change of Control Agreement dated December 1, 1997 between the Company and Joan R. Riley, filed as Exhibit 10(f) to the Company's 10-K Report for
the fiscal year ended June 30, 1998, File No. 0-7903, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  |  |     |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

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| |  |  | (h) |  | Asset Purchase Agreement made October 10, 1997, and effective October 1, 1997, by and between Quixote Corporation, TranSafe Corporation, Roadway Safety Service, Inc., Momentum Management, Inc., and Fitch Barrier Corporation;
Exclusive License Agreement made October 10, 1997, and effective October 1, 1997, by and between Robert A. Mileti, Roadway Safety Systems, Inc., Quixote Corporation and TranSafe Corporation; Consulting Agreement made
October 10, 1997, and effective October 1, 1997, by and between TranSafe Corporation and E. Scott Walter; Consulting Agreement made October 10, 1997, and effective October 1, 1997, by and between Quixote Corporation, Energy
Absorption Systems, Inc., Roadway Safety Systems, Inc. and Robert A. Mileti, all filed as Exhibits 2.1, 2.2, 2.3 and 2.4 to the Company's Form 8-K Report dated October 10, 1997, File No. 0-7903, and incorporated
herein by reference.
| |  |  | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | (i) |  | Stock Purchase Agreement dated as of January 16, 2001 by and between Quixote Transportation Safety, Inc., Mark Fernandez and Guadalupe Martinez, Form of Promissory Note of Quixote Transportation Safety, Inc. and Form of Guaranty of
Quixote Corporation filed as Exhibit C to Company's Form 8-K Current Report dated and filed January 30, 2001, File No. 0-7903, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  |  | (j) |  | Stock Purchase Agreement dated August 30, 2001 between Quixote Transportation Safety Inc. and the Shareholders of Surface Systems, Inc., filed as Exhibit 7(c) to the Company's Form 8-K Current Report dated August 30,
2001 and filed on September 13, 2001, File No. 0-7903, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  |  | (k) |  | Subordinated Promissory Note of Green Light Acquisition Company dated as of May 16, 2003, filed as Exhibit 10.2 to the Company's Form 8-K Current Report dated May 21, 2003 and filed on June 5, 2003, File No. 0-7903, and
incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  |  | (l) |  | Guaranties of Raymond International W.L.L., Raymond Overseas Holding Limited and Basil K. Vasiliou dated as of May 16, 2003, filed as Exhibit 10.3 to the Company's Form 8-K Current Report dated May 21, 2003 and filed on
June 5, 2003, File No. 0-7903, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |  |  | (m) |  | Guaranties of Quixote Corporation to U.S. Traffic Corporation, Myers/Nuart Electrical Products, Inc., Cambridge Leasing Corporation and Intersection Development Corporation S. A. de C. V. dated as of May 16, 2003, filed as
Exhibit 10.4 to the Company's Form 8-K Current Report dated May 21, 2003 and filed on June 5, 2003, File No. 0-7903, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |  |  | (n) |  | The Standstill Agreement between Quixote Corporation and U.S. Traffic Corporation dated as of May 16, 2003, filed as Exhibit 10.5 to the Company's Form 8-K Current Report dated May 21, 2003 and filed on June 5, 2003,
File No. 0-7903, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  |  | (o) |  | The Registration Rights Agreement between Quixote Corporation and U.S. Traffic Corporation dated as of May 16, 2003, filed as Exhibit 10.6 to the Company's Form 8-K Current Report dated May 21, 2003 and filed on June 5,
2003, File No. 0-7803, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |  |  | (p) |  | The Myers Pedestal Transition Agreement between Green Light Acquisition Company and U.S. Traffic Corporation and Myers/Nuart Electrical Products, Inc. dated as of May 16, 2003, filed as Exhibit 10.9 to the Company's Form 8-K
Current Report dated May 21, 2003 and filed on June 5, 2003, File No. 0-7903, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  |  |     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

45

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| |  |     | (q) |  | Stockholders Covenant Not to Compete and Other Post-Asset Sale Obligations between Green Light Acquisition Company and Raymond International W.L.L., Raymond Overseas Holding Limited and Basil K. Vasiliou dated as of May 16, 2003, filed
as Exhibit 10.10 to the Company's Form 8-K Current Report dated May 21, 2003 and filed on June 5, 2003, File No. 0-7903, and incorporated herein by reference.
| |  | --- | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |     | (r) |  | The OEM Supply Agreement between Green Light Acquisition Company and Myers Power Products, Inc. dated as of May 16, 2003, filed as Exhibit 10.11 to the Company's Form 8-K Current Report dated May 21, 2003 and filed on
June 5, 2003, File No. 0-7903, and incorporated herein by reference.                                                                                                            
| |  |     | (s) |  | Employment Agreement between Green Light Acquisition Company and Gary Coury dated as of May 16, 2003, filed as Exhibit 10.12 to the Company's Form 8-K Current Report dated May 21, 2003 and filed on June 5, 2003, File
No. 0-7903, and incorporated herein by reference.                                                                                                                                
| |  | 21. |     |  | Subsidiaries of the Company                                                                                                                                                                                                                                                                                                                                                                               
| |  | 23. |     |  | Consent of PricewaterhouseCoopers LLP as Independent Certified Public Accountants                                                                                                                                                                                                                                                                                                                         
| |  | 31. |     |  | Certifications of the Chief Executive Officer and Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.                                                                                                                                                                                                                                                            
| |  | 32. |     |  | Certifications of the Chief Executive Officer and Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.                                                                                                                                                                                                                                                            

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|(d) |  | Schedules:                                       
|--- |  | -------------------------------------------------
|    |  | IIValuation and Qualifying Accounts and Reserves

46

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SIGNATURES

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

|                          | QUIXOTE CORPORATION (Registrant)
|------------------------- | --------------------------------
|Dated: September 25, 2003 | By:                             

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                                                           |  | DATE              
|----------------------------------------------------- |  | --------------------------------------------------------------- |  | ------------------
|                                                      |  |                                                                 |  |                   
|/s/LESLIE J. JEZUITLeslie J. Jezuit                   |  | Chairman and Director (President, Chief Executive Officer)      |  | September 25, 2003
|/s/DANIEL P. GOREYDaniel P. Gorey                     |  | Vice President, Chief Financial Officer, Treasurer and Director |  | September 25, 2003
|/s/JOAN R. RILEYJoan R. Riley                         |  | Vice President, General Counsel and Secretary                   |  | September 25, 2003
|/s/JAMES H. DEVRIESJames H. DeVries                   |  | Director                                                        |  | September 25, 2003
|/s/WILLIAM G. FOWLERWilliam G. Fowler                 |  | Director                                                        |  | September 25, 2003
|/s/LAWRENCE C. MCQUADELawrence C. McQuade             |  | Director                                                        |  | September 25, 2003
|/s/ROBERT D. VAN ROIJEN, JR.Robert D. van Roijen, Jr. |  | Director                                                        |  | September 25, 2003

47

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QUIXOTE CORPORATION & SUBSIDIARIES  SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS AND RESERVES  For the years ended June 30, 2003, 2002 and 2001

|Column A                         |  | Column B |           | Column C(a) |   | Column D(b) |   | Column E
|-------------------------------- |  | -------- | --------- | ----------- | - | ----------- | - | --------
|
|Allowance for Doubtful Accounts: |  |          |           |             |   |             |   |         
|Year ended
June 30, 2003         |  | $        | 1,546,000 |             | $ | 276,000     |   | $       
|                                 |  |          |           |             |   |             |   |         
|Year ended
June 30, 2002         |  | $        | 777,000   |             | $ | 792,000     |   | $       
|                                 |  |          |           |             |   |             |   |         
|Year ended
June 30, 2001         |  | $        | 955,000   |             | $ | (71,000     | ) | $       
|                                 |  |          |           |             |   |             |   |         

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48

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EXHIBIT INDEX

|Exhibit Number |   | Exhibits                                                                                                                                                                                                
|-------------- | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10(a           | ) | ISDA Master Agreement dated as of September 18, 2003 between the Company and Harris Trust and Savings Bank and Guaranty Agreement of certain subsidiaries of the Company dated as of September 18, 2003.
|10(f           | ) | Office Lease Agreement dated August 30, 2003 between the Company and TDC Canada Inc. and Wacker GP, Inc.                                                                                                
|21             |   | Subsidiaries of the Company                                                                                                                                                                             
|23             |   | Consent of Independent Accountants                                                                                                                                                                      
|31             |   | Certifications of the Chief Executive Officer and Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002                                                                           
|32             |   | Certifications of the Chief Executive Officer and Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002                                                                           

49

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