<PAGE>

================================================================================

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

                               -----------------

                                   FORM 10-K

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

                  For the fiscal year ended December 31, 2002

                                      OR

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

                       Commission file number: 333-43523

                               -----------------

                        ELGIN NATIONAL INDUSTRIES, INC.
            (Exact name of registrant as specified in its charter)

                     Delaware                  36-3908410
                  (State or other
                  jurisdiction of           (I.R.S. Employer
                 incorporation or
                   organization)           Identification No.)

     2001 Butterfield Road, Suite 1020, Downers Grove, Illinois 60515-1050
                   (Address of principal executive offices)

                        Telephone Number: 630-434-7243
              Registrant's telephone number, including area code

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

                                     None

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

                                     None

                               -----------------

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

   Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (SS 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]

   Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act)  [_] Yes    [X] No

   As of March 27, 2003, there were outstanding 6,408.3 shares of Class A
Common Stock and 19,951.7 shares of Preferred Stock. As of June 28, 2002, the
aggregate market value of the voting stock held by non-affiliates of the
registrant is $0 because all voting stock is held by an affiliate of the
registrant.

================================================================================

<PAGE>

                        ELGIN NATIONAL INDUSTRIES, INC.

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                             Page
              Item                                          Number
              ---- -                                        ------
              <C>  <S>                                      <C>
                                   PART I

               1.  BUSINESS................................    1

               2.  PROPERTIES..............................    4

               3.  LEGAL PROCEEDINGS.......................    4

               4.  SUBMISSION OF MATTERS TO A VOTE OF
                     SECURITY HOLDERS......................    5

                                   PART II

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

               6.  SELECTED FINANCIAL DATA.................    5

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

               7A. MARKET RISK.............................   13

               8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY
                     DATA..................................   14

               9.  CHANGES IN AND DISAGREEMENTS WITH
                   ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                   DISCLOSURE..............................   35

                                  PART III

              10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE
                     REGISTRANT............................   36

              11.  EXECUTIVE COMPENSATION..................   37

              12.  SECURITY OWNERSHIP OF CERTAIN
                   BENEFICIAL OWNERS AND MANAGEMENT........   39

              13.  CERTAIN RELATIONSHIPS AND RELATED
                     TRANSACTIONS..........................   40

                                   PART IV

              14.  CONTROLS AND PROCEDURES.................   41

              15.  EXHIBITS, FINANCIAL STATEMENT
                     SCHEDULES, AND REPORTS ON FORM 8-K....   41
</TABLE>

<PAGE>

                                    PART I

ITEM 1.  BUSINESS

Overview

   Elgin National Industries, Inc., incorporated in 1962, was a publicly traded
company listed on the NYSE until it was taken private in 1988 through the
leveraged acquisition of stock of Elgin National Industries, Inc. by The
Jupiter Corporation ("Jupiter"), a private diversified holding company. In
September 1993, an investor group led by institutional investors and Senior
Management (consisting of Fred C. Schulte, Charles D. Hall and Wayne J. Conner)
formed ENI Holding Corp. ("ENI"), and ENI acquired the capital stock of Elgin
National Industries, Inc. from Jupiter in a leveraged buyout. Through the years
Elgin National Industries, Inc. has had strategic acquisitions and divestitures
assisting the company in reducing leverage and, Management believes, focusing
on strengthening its businesses. In 2001 Elgin National Industries, Inc.
acquired Leland Powell Fasteners, Inc.,("Leland"), a manufacturer of specialty
fasteners located in Martin, Tennessee to further strengthen its Manufactured
Products Segment.

   On November 5, 1997, ENI and Elgin National Industries, Inc. completed a
recapitalization intended to retire certain existing indebtedness, redeem the
equity interests of outside institutional investors, merge Elgin National
Industries, Inc. into ENI and vest (directly or indirectly) in Senior
Management ownership of all of the issued and outstanding capital stock of the
surviving entity. The components of the recapitalization were (i) the offering
of $85,000,000 11% Senior Notes due 2007 (the "Offering"), (ii) ENI using part
of the proceeds of the Offering to repurchase all of the common stock,
preferred stock and common stock warrants of ENI not owned by Senior
Management; (iii) Elgin National Industries, Inc. using part of the proceeds of
the Offering to retire all senior subordinated indebtedness, including the
payment of prepayment fees; (iv) Elgin National Industries, Inc. merging into
ENI, with ENI remaining as the surviving entity; (v) following such merger, ENI
changing its name to Elgin National Industries, Inc. (items (iv) and (v)
resulting in the entity referred to herein as the "Company" or "Elgin"); and
(vi) the Company and certain of its subsidiaries entering into an amended
senior credit facility (the "Senior Credit Facility") (the matters described at
items (i) through (vi) above being the "Recapitalization Transactions."

Operating Businesses

   The Company owns and operates a diversified group of middle-market
manufactured products and engineering services businesses. The Company focuses
on operating businesses with leading positions in niche markets, consistent
operating profitability, diverse customer bases, efficient production
capabilities and broad product lines serving stable industries. The Company is
comprised of two operating segments. Through its Manufactured Products Segment,
Elgin is a leading manufacturer and supplier of custom-designed, highly
engineered products used by a wide variety of customers in the industrial
equipment, durable goods, mining, mineral processing and electric utility
industries. Through its Engineering Services Segment, Elgin provides design,
engineering, procurement and construction management services for mineral
processing and bulk materials handling systems used in the mining, mineral
processing, electric utility and the rail and marine transportation industries.

   The Manufactured Products Segment is comprised of Ohio Rod Products Company
("Ohio Rod"), Tabor Machine Company ("Tabor"), Norris Screen and Manufacturing
Inc. ("Norris"), Centrifugal and Mechanical Industries ("CMI"), Centrifugal
Services, Inc. ("CSI"), Mining Controls, Inc. ("Mining Controls"), Chandler
Products ("Chandler"), Clinch River Corporation ("Clinch") Vanco International,
Inc. ("Vanco"), Leland Powell Fasteners, Inc. ("Leland") and Best Metal
Finishing Inc. ("Best Metal"). The Engineering Services Segment is comprised of
Roberts & Schaefer Company ("R&S") and Transervice, Inc., and Soros Associates,
Inc. ("Soros").

  Manufactured Products Segment

   The Manufactured Products Segment, through its eleven business units,
manufactures and markets products used primarily in the industrial equipment,
durable goods, mining, mineral processing and electric utility

                                      1

<PAGE>

industries. The businesses within the Manufactured Products Segment consist of
original equipment manufacturers ("OEM"), suppliers of after-market parts and
services and manufacturers of components used by original equipment
manufacturers. These businesses have supplied their customers with quality
products and services for an average of over 40 years. The Manufactured
Products Segment has a broad and diverse customer base, with no single customer
accounting for more than 10% of the Segment's sales in 2002.

   The Manufactured Products Segment products primarily include specialty
fasteners, various types of centrifuges, incline and horizontal vibrating
screen systems of varying sizes and capacities, specialty high and low voltage
electrical power distribution equipment, electrical switch gear equipment,
power factor control and harmonic correction equipment, underground lighting
and electrical connectors and custom fabrication. The Manufactured Products
Segment also sells after-market parts and services.

   Net sales for the Manufactured Products Segment for the year ended December
31, 2002, were $93.6 million. Products are sold through in-house sales
personnel, as well as independent sales representatives, supported by engineer
and technical services support personnel.

   The Manufactured Products Segment sells its products primarily based on
product quality and overall customer service. The Manufactured Products Segment
can usually respond to custom or small orders quickly and efficiently,
minimizing their competition. The Manufactured Products Segment does have
competition with larger manufacturers particularly during periods of excess
capacity at their production facilities, as well as small regional shops and
independent suppliers.

  Engineering Services Segment

   The Engineering Services Segment provides design, engineering, procurement
and construction management services principally to the mining, mineral
processing, electric utility and rail and marine transportation industries.
Depending upon the needs of the client, these services are provided on either
an unbundled (i.e. task-specific) basis or a full project turnkey basis.
Historically, the Engineering Services Segment provided its services primarily
to the United States coal mining industry. The Engineering Services Segment
continues to diversify into markets, which include electric utility,
aggregates, industrial minerals, base metals and precious metals. Today, the
Engineering Services Segment has a broad, well-balanced customer base within
these industries and derived approximately 80% of its net sales from customers
outside the coal-mining industry during 2002. Net sales for the Engineering
Services Segment for the year ended December 31, 2002 were $55.4 million.

   The Engineering Services Segment provides engineering services including
evaluating the feasibility of the customer's proposal (from both a cost and
engineering standpoint), translating the customer's concept to a workable
design, or providing bankable feasibility studies, detailed engineering
drawings and extensive engineering support in effecting the realization of a
design. In turnkey projects, the Engineering Services Segment performs all
service activities necessary for project completion, including design,
subcontracting, equipment procurement, construction management and startup. The
Engineering Services Segment also provides equipment procurement on behalf of
its customers, involving the designation and sourcing of equipment to meet the
customer's requirements.

   Typical mineral processing facilities designed and built by the Engineering
Services Segment include coal preparation plants, gold processing plants,
copper processing plants and aggregate and crushed rock processing plants. The
Engineering Services Segment also has a special expertise in offshore
terminals, involving bulk loading and unloading at open sea. The Engineering
Services Segment also designs bulk materials handling systems for coal-fired
electric power plants and for handling multiple commodities at rail terminals,
storage facilities, marine terminals and ports. These systems consist of
loading and unloading equipment to remove the material from or place it into
the transportation vehicle (trucks, trains, ships or barges) and multiple
conveying systems to move material to or from stockpiles.

                                      2

<PAGE>

   The Engineering Services Segment provides its services, ranging from
engineering only services to turnkey project completion, primarily to the
mining, mineral processing, electric utility and rail and marine transportation
industries, with a diversified customer base including a number of leading
domestic and international mining companies, electric utility companies and
transportation companies. Engineering only services range in size from under
$10,000 to several hundred thousand dollars. The Engineering Services Segment's
turnkey services include full project responsibility for the design and
construction of mineral processing and bulk material handling facilities. The
Engineering Services Segment focuses on turnkey projects of less than $25
million, with most such projects significantly smaller. Total backlog for the
Engineering Services Segment at December 31, 2002 was $17.9 million.

   Management believes that targeting projects in the range of $1 million to
$25 million gives the Engineering Services Segment two strategic advantages.
First, this is a niche of the mineral processing and material handling markets
that generally does not attract larger firms, permitting the Engineering
Services Segment to compete with smaller, local and regional contractors that
may lack the Engineering Services Segment's experience and capabilities.
Second, by maintaining a larger portfolio of smaller projects, the Engineering
Services Segment is better able to manage the risk inherent in its business.

   The Engineering Services Segment has a broad and diversified customer base,
having executed projects in the electric utility, aggregates, industrial
minerals and base metal industries. The Engineering Services Segment has also
been successful in further diversifying their markets to include international
work. During 2002, approximately 29% of the net sales of the Engineering
Services Segment were from international projects.

   The Engineering Services Segment markets its services through internal
marketing and sales groups principally located in Chicago, Salt Lake City and
Brisbane, Australia. Their management and engineering staff participate in the
process to adequately price and successfully bid on projects. The Engineering
Services Segment also secures projects through partnering or joint bidding
arrangements with larger engineering and construction firms or architectural
engineers, particularly in the case of international projects. In such
arrangements, the Engineering Services Segment will assume specific
responsibility for a particular component of a larger project.

   Generally, the Engineering Services Segment competes with a large number of
specialty engineering firms on the basis of quality of work performed, strength
of reputation, responsiveness to customer needs, price and ability to meet
deadlines, and the Engineering Services Segment seeks to differentiate itself
from its competitors with respect to each of these factors.

Supplies

   The Company acquires substantially all of its raw materials from outside
sources. The basic raw materials primarily used in the Manufactured Products
Segment are flat sheet metal, coiled wire or rod and various forms of stainless
steel materials. Additionally, the Manufactured Products Segment acquires
circuit breakers, components, transformer cores, motor drive units and
purchased finished goods from outside sources. The Company subcontracts certain
fabrication work to other suppliers. The Company is dependent on the ability of
such fabrication suppliers for timely delivery, performance and quality
specifications. The Engineering Services Segment sources many different types
of components in the construction of plant facilities, which in certain cases
are sold directly to the Company's customer by the selected supplier. These
include equipment such as vibrating screens, centrifuge dryers, flotation units
and other finished products. The Company believes there are numerous sources of
supply for the different materials used in its operations.

Employees

   As of December 31, 2002, the Company had approximately 690 employees.
Approximately 12 employees of the Company at CMI's St. Louis, Missouri facility
are represented by District 8 of the International Association of Machinists
and Aerospace Workers ("IAM") and are covered by a contract between CMI and the

                                      3

<PAGE>

IAM effective from March 1, 1998 through March 31, 2003. CMI and IAM signed a
new contract that will be effect from April 1, 2003 through March 31, 2006.
Approximately eight employees of TranService, Inc., a wholly owned subsidiary
of the Company, are represented by the United Mine Workers of America ("UMWA")
and are covered by the National Bituminous Coal Wage Agreement expiring on
December 31, 2006. The Company believes that its relations with its employees
are generally good.

ITEM 2.  PROPERTIES

   The Company and its businesses conduct operations from the following primary
facilities:

<TABLE>
<CAPTION>
                                                                Approximate
                                             Principal   Owned/   Square
     Business               Location         Function    Leased   Footage
     --------          ------------------- ------------- ------ -----------
     <S>               <C>                 <C>           <C>    <C>
     Elgin             Downers Grove, IL   Headquarters  Leased    6,470
     Ohio Rod          Versailles, IN      Manufacturing  Owned   93,350
     Chandler Products Euclid, OH          Manufacturing  Owned   88,000
     Mining Controls   Beckley, WV         Manufacturing  Owned   44,925
     CMI               St. Louis, MO       Manufacturing  Owned   63,295
     CSI               Raleigh, IL         Manufacturing  Owned   16,166
                                                         Leased   18,245
     Tabor             Bluefield, WV       Manufacturing  Owned   44,000
     Norris            Princeton, WV       Manufacturing  Owned   12,700
     Clinch River      Cedar Bluff, VA     Manufacturing  Owned   56,300
     Vanco             Batavia, IL         Distribution  Leased   30,890
     R & S             Chicago, IL &       Office        Leased   16,200
                       Salt Lake City, UT  Office        Leased   25,267
     R & S Australia   Brisbane, Australia Office        Leased    1,400
     Soros             Chicago, IL         Office        Leased    5,800
     Leland            Martin, Tenn        Manufacturing  Owned   92,000
</TABLE>

ITEM 3.  LEGAL PROCEEDINGS

   The Company and its subsidiaries are involved in legal proceedings from time
to time in the ordinary course of its business. As of the date of this filing,
neither the Company nor any of its subsidiaries are a party to any lawsuit or
proceeding which, individually or in the aggregate, in the opinion of
management, is reasonably likely to have a material adverse effect on the
financial condition, results of operation or cash flow of the Company.

   In connection with the 1993 leveraged buyout of the Company, The Jupiter
Corporation (the former ultimate parent entity of the Company) agreed to
indemnify the Company against various claims and ongoing litigation and assumed
the defense of such litigation. The litigation includes a wrongful death
product liability claim against R&S in connection with an accident at a work
site. Although the Company believes that Jupiter and its insurance carrier are
performing on the indemnity obligations, there can be no assurance that they
will continue to do so or that the Company would successfully recover on the
indemnity in the event of an adverse judgment against R&S or adverse outcomes
in any other proceeding. In any such case, the Company would bear the cost of
defense and any adverse judgment. One or more such adverse judgments could
materially and adversely effect the Company's business, financial condition,
results of operations and debt service capability.

Environmental

   The Company is subject to a variety of foreign, federal, state and local
governmental regulations related to the storage, use, discharge and disposal of
toxic, volatile or otherwise hazardous materials used in its manufacturing
processes. The Company has not historically incurred any material adverse
effect on its business, financial condition, results of operations or cash flow
as a result of the Company's compliance with U.S. federal,

                                      4

<PAGE>

state, provincial, local or foreign environmental laws or regulations or
remediation costs. Some risk of environmental liability and other costs is
inherent, however, in the nature of the businesses conducted by the
Manufactured Products Segment, which have been in operation for an average of
over 40 years and have performed little invasive testing at their sites. In
addition, businesses previously operated by the Company have been sold. There
can be no assurance that future identification of contamination at its current
or former sites or at third party-owned sites where waste generated by the
Company has been disposed of would not have a material adverse effect on the
Company's business, results of operations, financial condition or debt service
capability. Any failure by the Company to obtain required permits for, or
adequately restrict the discharge of, hazardous substances under present or
future regulations could subject the Company to substantial liability. Such
liability could have a material adverse effect on the Company's business,
financial condition, results of operations and debt service capability.

   The Company has been named as a potentially responsible party by the New
York Department of Environmental Conservation for clean-up costs at the
Company's former manufacturing facility in Orangeburg, New York. The Company
has obtained the agreement of its former ultimate parent entity to indemnify it
against losses, damages and costs arising out of such action. Although the
Company believes that the indemnitor has performed its obligations on this site
to date, there can be no assurance that it will continue to do so or that the
Company would successfully recover on the indemnity. In such a case, the
Company would bear the cost of any remediation, which costs could be
significant and materially and adversely effect the Company's business,
financial condition, results of operations and debt service capability.

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

   None.

                                    PART II

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

   There is no established public offering market for the outstanding common
equity of the Company and 100% of its outstanding common equity is beneficially
owned by Senior Management.

   The ability of the Company to pay dividends is governed by restrictive
covenants contained in the indenture governing its publicly-held debt as well
as restrictive covenants contained in the Company's Senior Credit Facility. As
a result of these restrictive covenants, the Company was limited in the amount
of dividends it was allowed to pay on December 31, 2002. The Company did not
pay any dividends in the years ended December 31, 2002, 2001 and 2000.

ITEM 6.  SELECTED FINANCIAL DATA

   The following table presents selected historical financial information of
the Company, as of the dates and for the periods indicated. The historical
financial data as of December 31, 1998, 1999, 2000, 2001 and 2002 was derived
from the audited consolidated financial statements of the Company. The selected
financial information should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Company's audited consolidated financial statements and notes thereto.

                                      5

<PAGE>

                            Selected Financial Data

<TABLE>
<CAPTION>
                                                                                   Fiscal Year Ended December 31,
                                                                          ------------------------------------------------
                                                                            1998      1999      2000      2001      2002
                                                                          --------  --------  --------  --------  --------
                                                                                       (dollars in thousands)
<S>                                                                       <C>       <C>       <C>       <C>       <C>
Statement of Operations Data:
Net sales................................................................ $156,054  $150,307  $163,370  $191,551  $149,000
Cost of sales............................................................  118,390   110,917   124,378   149,988   116,730
                                                                          --------  --------  --------  --------  --------
   Gross profit..........................................................   37,664    39,390    38,992    41,563    32,270
Selling, general and administrative expenses.............................   22,485    25,507    24,419    24,850    27,007
Goodwill amortization....................................................    1,743       386       419     1,088
                                                                          --------  --------  --------  --------  --------
   Operating income......................................................   13,436    13,497    14,154    15,625     5,263
Other expenses:
   Interest expense, net.................................................    8,190     7,844     7,676     8,810     8,747
                                                                          --------  --------  --------  --------  --------
Income (loss) before income taxes........................................    5,246     5,653     6,478     6,815    (3,484)
Provision (benefit) for income taxes.....................................    2,141     2,519     2,605     3,309    (1,501)
                                                                          --------  --------  --------  --------  --------
Income (loss) before extraordinary items.................................    3,105     3,134     3,873     3,506    (1,983)
Extraordinary gain on early extinguishment of debt, net of income tax (a)                380
                                                                          --------  --------  --------  --------  --------
Net income (loss)........................................................ $  3,105  $  3,514  $  3,873  $  3,506  $ (1,983)
                                                                          ========  ========  ========  ========  ========
Other Financial Data:
Gross margin %...........................................................     24.2%     26.2%     23.9%     21.7%     21.7%
Depreciation and amortization............................................ $  4,417  $  3,149  $  3,182  $  4,604  $  3,707
Capital expenditures.....................................................    4,215     2,600     4,337     4,440     3,572
Net cash provided by (used in) operating activities......................    5,388     7,602    10,674     5,619    (2,598)
Net cash provided by (used in) investing activities......................   (3,939)   (8,506)   (6,395)  (24,780)   (3,497)
Net cash provided by (used in) financing activities......................     (805)   (3,376)   (6,959)   16,140     6,095
Operating Unit Data:
Net Sales:...............................................................
   Manufactured Products Segment......................................... $ 82,097  $ 77,312  $ 80,036  $ 99,080  $ 93,562
   Engineering Services Segment..........................................   73,957    72,995    83,334    92,471    55,438
                                                                          --------  --------  --------  --------  --------
      Total Net Sales.................................................... $156,054  $150,307  $163,370  $191,551  $149,000
                                                                          ========  ========  ========  ========  ========
Balance Sheet Data:
Cash and cash equivalents................................................ $  9,981  $  5,701  $  3,021  $         $
Working capital less cash and cash equivalents...........................   15,834     7,140    10,219    12,381    18,150
Property, plant and equipment, net.......................................   15,344    15,754    17,935    22,070    22,441
Total assets.............................................................  103,710   106,704   112,464   137,746   124,617
Total debt...............................................................   85,439    81,059    74,100    91,234    97,329
Redeemable preferred stock and redeemable preferred stock units..........   14,152    15,080    16,006    16,933    17,860
Stockholder's deficit....................................................  (29,400)  (26,532)  (23,305)  (20,445)  (23,074)
</TABLE>
--------
(a)In 1999 the gain on early extinguishment of debt resulted from the
   repurchase of the Company's senior notes net of amortization of related
   finance costs.

                                      6

<PAGE>

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

Overview

   Elgin owns and operates a diversified group of middle-market industrial
manufacturing and engineering services businesses. The Company focuses on
operating businesses with leading positions in niche markets, consistent
profitability, diverse customer bases, efficient production capabilities and
broad product lines serving stable industries. The Company is comprised of
thirteen business units that are organized into two operating segments. Through
its Manufactured Products Segment, Elgin is a leading manufacturer and supplier
of custom-designed, highly engineered products used by a wide variety of
customers in the industrial equipment, durable goods, mining, mineral
processing and electric utility industries. Through its Engineering Services
Segment, Elgin provides design, engineering, procurement and construction
management services for mineral processing and bulk materials handling systems
used in the mining, mineral processing, electric utility and the rail and
marine transportation industries.

Variability of Revenues and Cash Flows

   The Engineering Services Segment's project base is typically comprised of
over 100 projects in process each year. At any given time, this project base
includes a substantial majority of small projects (which the Company defines as
producing less than $1.0 million in annual sales) as well as a number of larger
projects (which the Company defines as producing $1.0 million or more in annual
sales). The Company's revenues from these larger projects tend to fluctuate
from year to year depending on the number of such projects in process and the
respective status of each project. In addition, these larger projects often
extend over more than one year, causing potential fluctuations in revenues and
cash flows. The Company uses the percentage of completion method of accounting
for its engineering services contracts. Under this method of accounting, the
degree of completion of each contract is generally determined by comparing the
costs incurred to date to the total costs anticipated for the entire contract,
taking into account the current estimates of cost to complete the contract.
Revenue is recognized on each contract as a percentage of the total contract
revenue in proportion to the degree of the project's completion. Management
routinely reviews total estimated costs to complete each contract and revises
the estimated gross margin on the contract accordingly. Losses are recognized
in full in the period in which they are determined. Cash flows can vary
significantly from period to period, depending on the terms of the larger
contracts then in force. In some contracts, the customers provide full or
partial advance cash payments prior to performance by the Company. In other
contracts, receipts follow disbursements in varying degrees. As a result,
reported operating income of the Engineering Services Segment for any period is
not necessarily indicative of cash flow for that period.

                                      7

<PAGE>

Results of Operations

   The following tables set forth, for the periods indicated, amounts derived
from the Company's consolidated statements of operations and related
percentages of net sales. There can be no assurance that the trends in
operating results will continue in the future.

                             Company Consolidated
                             (dollars in millions)

<TABLE>
<CAPTION>
                                             For the Fiscal Year Ended December 31,
                                           -----------------------------------------
                                               2000          2001           2002
                                           ------------  ------------  -------------
<S>                                        <C>    <C>    <C>    <C>    <C>     <C>
Net sales................................. $163.4 100.0% $191.5 100.0% $149.0  100.0%
Cost of sales.............................  124.4  76.1   150.0  78.3   116.7   78.3
Gross profit..............................   39.0  23.9    41.5  21.7    32.3   21.7
Selling, general & administrative expenses   24.4  14.9    24.8  12.9    27.0   18.1
Goodwill amortization.....................    0.4   0.3     1.1   0.6
Operating income..........................   14.2   8.7    15.6   8.2     5.3    3.6
Interest expense, net.....................    7.7   4.7     8.8   4.6     8.8    5.9
Income (loss) before income taxes.........    6.5   4.0     6.8   3.6    (3.5)  (2.3)
Provision (benefit) for income taxes......    2.6   1.6     3.3   1.7    (1.5)  (1.0)
Net income (loss).........................    3.9   2.4     3.5   1.9    (2.0)  (1.3)
</TABLE>

                         Manufactured Products Segment
                             (dollars in millions)

<TABLE>
<CAPTION>

                            For the Fiscal Year Ended December 31,
                            -------------------------------------
                                2000         2001         2002
                            -----------  -----------  -----------
              <S>           <C>   <C>    <C>   <C>    <C>   <C>
              Net sales.... $80.0 100.0% $99.1 100.0% $93.6 100.0%
              Cost of sales  52.4  65.5   69.2  69.8   67.1  71.7
              Gross profit.  27.6  34.5   29.9  30.2   26.5  28.3
</TABLE>

                         Engineering Services Segment
                             (dollars in millions)

<TABLE>
<CAPTION>
                            For the Fiscal Year Ended December 31,
                            -------------------------------------
                                2000         2001         2002
                            -----------  -----------  -----------
              <S>           <C>   <C>    <C>   <C>    <C>   <C>
              Net sales.... $83.4 100.0% $92.4 100.0% $55.4 100.0%
              Cost of sales  72.0  86.3   80.8  87.4   49.6  89.6
              Gross profit.  11.4  13.7   11.6  12.6    5.8  10.4
</TABLE>

  Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

   Net Sales:  Net sales for the Manufactured Products Segment for the year
ended December 31, 2002 decreased $5.5 million, or 5.6%, to $93.6 million from
$99.1 million for the corresponding period in 2001. The decreased sales level
was due to decreased sales of centrifugal dryers and industrial capital
equipment, partially offset with increased fastener sales and sales of
electronic components.

                                      8

<PAGE>

   Net sales for the Engineering Services Segment for the year ended December
31, 2002 decreased $37.0 million, or 40.0%, to $55.4 million from $92.4 million
for the corresponding period in 2001 due primarily to decreased sales of larger
engineering jobs with sales greater than $1.0 million. In 2002 the Engineering
Services Segment had $43.2 million in sales from seven larger jobs compared to
$81.1 million from fifteen jobs in 2001.

   Cost of Sales:  Cost of sales for the Manufactured Products Segment for the
year ended December 31, 2002 decreased $2.1 million, or 3.0%, to $67.1 million
from $69.2 million for the corresponding period in 2001 due to the decreased
sales level. The Manufactured Products Segment's cost of sales as a percentage
of net sales increased to 71.7% for the year ended December 31, 2002 from 69.8%
for the corresponding period in 2001 due to lower margins earned on centrifugal
dryer sales and steel fabrication work, along with costs associated with the
start-up of Best Metal Finishing, a plating facility which will begin
operations during the second quarter of 2003.

   Cost of sales for the Engineering Services Segment for the year ended
December 31, 2002 decreased $31.2 million, or 38.5%, to $49.6 million from
$80.8 million for the corresponding period in 2001 due to the lower sales
level, partially offset with a reduction of margin on two larger projects. As a
percentage of net sales, the Engineering Services Segment's cost of sales
increased to 89.6% for the year ended December 31, 2002 from 87.4% for the
corresponding period in 2001.

   Gross Profit:  Gross profit for the Manufactured Products Segment for the
year ended December 31, 2002 decreased $3.4 million, or 11.4%, to $26.5 million
from $29.9 million for the corresponding period in 2001 due to the decreased
sales level. The Manufactured Products Segment's gross profit as a percentage
of net sales decreased to 28.3% for the year ended December 31, 2002 from 30.2%
for the corresponding period in 2001 due to the lower margins earned on
centrifugal dryer sales and steel fabrication work, along with costs associated
with the start-up of Best Metal Finishing.

   Gross profit of the Engineering Services Segment for the year ended December
31, 2002 decreased $5.8 million, or 50.5%, to $5.8 million from $11.6 million
for the corresponding period in 2001 due to the lower sales level in the year
ended December 31, 2002. As a percentage of net sales, the Engineering Services
Segment's gross profit decreased to 10.4% for the year ended December 31, 2002
from 12.6% for the corresponding period in 2001 due to a reduction of margin on
two larger projects.

   Selling, General and Administrative Expenses:  Selling, general and
administrative expenses of the Company of $27.0 million for the year ended
December 31, 2002 represented an increase of $2.2 million in comparison to
$24.8 million for the corresponding period in 2001 primarily due to non-cash
pension expense of $1.1 million incurred in 2002 compared to non-cash pension
income of $1.7 million in 2001.

   Goodwill Amortization:  Beginning January 1, 2002 the Company discontinued
the amortization of goodwill in accordance with the provisions of Statement of
Accounting Standards No. 142--Goodwill and Other Intangible Assets. Goodwill
amortization was $1.1 million for the year ended December 31, 2001.

   Operating Income:  Operating income of the Company for the year ended
December 31, 2002 of $5.3 million was $10.3 million lower than the operating
income of $15.6 million for the corresponding period in 2001 for the reasons
discussed above. Operating income as a percentage of net sales decreased to
3.6% for the year ended December 31, 2002 from 8.2% for the corresponding
period in 2001.

   Interest Income:  Interest income of the Company for the year ended December
31, 2002 of $0.7 million approximated interest income for the year ended
December 31, 2001.

   Interest Expense:  Interest expense of the Company for the year ended
December 31, 2002 of $9.5 million approximated interest expense for the year
ended December 31, 2001.

                                      9

<PAGE>

   (Loss) Income Before Income Taxes:  The Company incurred a loss before
income taxes of $3.5 million for the year ended December 31, 2002, compared to
income before income taxes of $6.8 million for the year ended December 31,
2001, for the reasons discussed above. Loss before income taxes, as a
percentage of net sales was 2.3% for the year ended December 31, 2002 compared
to income before income taxes of 3.6% for the year ended 2001.

   (Benefit) Provision for Income Taxes:  Benefit for income taxes for the year
ended December 31, 2002 was $1.5 million, compared to a provision of $3.3
million for the year ended December 31, 2001. The Company's effective tax rate
decreased to 43% in 2002 from 49% in 2001 primarily due to an adjustment to
deferred income taxes in 2001.

   Net (Loss) Income:  The Company had a net loss of $2.0 million for the year
ended December 31, 2002, compared to net income of $3.5 million for the year
ended December 31, 2001. This decrease of $5.5 million was due to the reasons
discussed above. Net loss as a percentage of net sales was 1.3% for the year
ended December 31, 2002 compared to net income as a percentage of sales of 1.8%
for the corresponding year ended 2001.

  Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

   Net Sales:  Net sales for the Manufactured Products Segment for the year
ended December 31, 2001 increased $19.1 million, or 23.8%, to $99.1 million
from $80.0 million for the corresponding period in 2000. The increased sales
level was due to the inclusion of an entire year's sales from Leland, acquired
in January 2001 and Precision, acquired in October 2000 as well as increased
sales of centrifugal dryers, starters and industrial capital equipment,
partially offset with decreased fastener sales.

   Net sales for the Engineering Services Segment for the year ended December
31, 2001 increased $9.1 million, or 11.0%, to $92.4 million from $83.3 million
for the corresponding period in 2000 due primarily to increased sales of larger
engineering jobs with sales greater than $1.0 million. In 2001 the Engineering
Services Segment had $80.1 million in sales from fifteen larger jobs compared
to $69.7 million from seventeen jobs for 2000. This increase was partially
offset with decreased sales on smaller projects with sales less than $1.0
million. For the year ended December 31, 2001 sales of smaller engineering jobs
totaled $12.3 million compared to $13.6 million for the corresponding period in
2000.

   Cost of Sales:  Cost of sales for the Manufactured Products Segment for the
year ended December 31, 2001 increased $16.8 million, or 31.9%, to $69.2
million from $52.4 million for the corresponding period in 2000 due to the
increased sales level. The Manufactured Products Segment's cost of sales as a
percentage of net sales increased to 69.8% for the year ended December 31, 2001
from 65.5% for the corresponding period in 2000 due to lower margins earned on
fastener sales and sales of manufactured screens.

   Cost of sales for the Engineering Services Segment for the year ended
December 31, 2001 increased $8.8 million, or 12.4%, to $80.8 million from $72.0
million for the corresponding period in 2000 due to the higher sales level and
lower margins earned on smaller jobs with less than $1.0 million in sales,
partially offset with higher margins earned on the larger projects due to cost
savings realized on a few larger jobs. As a percentage of net sales, the
Engineering Services Segment's cost of sales increased to 87.4% for the year
ended December 31, 2001 from 86.3% for the corresponding period in 2000.

   Gross Profit:  Gross profit for the Manufactured Products Segment for the
year ended December 31, 2001 increased $2.3 million, or 8.4%, to $29.9 million
from $27.6 million for the corresponding period in 2000 due to the increased
sales level. The Manufactured Products Segment's gross profit as a percentage
of net sales decreased to 30.2% for the year ended December 31, 2001 from 34.5%
for the corresponding period in 2000 due to the lower margins earned on
fastener sales and manufactured screens sales.

                                      10

<PAGE>

   Gross profit of the Engineering Services Segment for the year ended December
31, 2001 increased $0.2 million, or 2.2%, to $11.6 million from $11.4 million
for the corresponding period in 2000 due to the higher sales level in the year
ended December 31, 2001. As a percentage of net sales, the Engineering Services
Segment's gross profit decreased to 12.6% for the year ended December 31, 2001
from 13.7% for the corresponding period in 2000 due to the lower margins earned
on smaller jobs, partially offset with higher margins realized on larger
projects.

   Selling, General and Administrative Expenses:  Selling, general and
administrative expenses of the Company of $24.8 million for the year ended
December 31, 2001 represented an increase of $0.4 million in comparison to
$24.4 million for the corresponding period in 2000 primarily due to the
inclusion of Leland's expenses, acquired in January 2001, higher amortization
of financing costs due the amending the Company's Senior Credit Facility and
higher employee related costs at Corporate, offset with a reversal of a bad
debt provision on a note that was paid in full and the recovery of legal costs
upon the settlement of a lawsuit within the Engineering Services Segment.

   Goodwill Amortization:  Goodwill amortization of $1.1 million for the year
ended December 31, 2001 increased $0.7 million from $0.4 million for the year
ended December 31, 2000. The increased amortization expense was due to higher
goodwill amortization due to the acquisitions of Precision, acquired in October
2000 and Leland, acquired in January 2001.

   Operating Income:  Operating income of the Company for the year ended
December 31, 2001 of $15.6 million was $1.4 million higher than the operating
income of $14.2 million for the corresponding period in 2000 for the reasons
discussed above. Operating income as a percentage of net sales decreased to
8.2% for the year ended December 31, 2001 from 8.7% for the corresponding
period in 2000.

   Interest Income:  Interest income of the Company for the year ended December
31, 2000 of $0.7 million decreased $0.1 million or 12.8% from $0.8 million for
the year ended December 31, 2000. This decrease was due to decreased interest
bearing deposits in 2001.

   Interest Expense:  Interest expense of the Company for the year ended
December 31, 2001 of $9.6 million increased $1.1 million or 12.0% from $8.5
million for the corresponding period in 2000 due to the increased debt
outstanding.

   Income from Before Income Taxes:  Income before income taxes for the year
ended December 31, 2001 increased $0.3 million, or 5.2%, to $6.8 million from
$6.5 million for the corresponding period in 2000 for the reasons discussed
above. Income before income taxes, as a percentage of net sales was 3.6% for
the year ended December 31, 2001 compared to 4.0% for the year ended 2000.

   Provision for Income Taxes:  Provision for income taxes for the year ended
December 31, 2001 increased $0.7 million to $3.3 million from $2.6 million the
year ended December 31, 2000. The Company's effective tax rate increased to 49%
in 2001 from 40% in 2000 primarily due to a higher percentage on nondeductible
expenses and an adjustment to deferred income taxes.

   Net Income:  The net income for the Company for the year ended December 31,
2001 decreased $0.4 million, or 10.3%, to $3.5 million from $3.9 million for
the year ended December 31, 2000 for the reasons discussed above. Net income as
a percentage of net sales decreased to 1.8% for the year ended December 31,
2001 from 2.4% for the corresponding year ended 2000.

Liquidity and Capital Resources

   Net cash used in operating activities for the year ended December 31, 2002
of $2.6 million was used to decrease accounts payable and accrued expenses and
to increase prepaid expenses and other assets. These uses

                                      11

<PAGE>

were partially offset with cash generated from the net loss adjusted for
non-cash charges and decreased accounts receivable and inventories. Cash flows
from operations for any specific period are often materially affected by the
timing and amounts of payments on contracts of the Engineering Services
Segment, and the timing of payments by such Segment for products and services.

   Cash used in investing activities for the year ended December 31, 2002 of
$3.5 million consisted of $3.6 million for capital expenditures including $2.8
million relating to the construction of the facilities and capital equipment to
be used at Best Metal Finishing and $0.8 million in accordance with the
Company's regular practice of upgrading and maintaining its equipment base and
facilities, partially offset with $0.1 million of proceeds from the sale of
equipment.

   Cash provided by financing activities for 2002 was $6.1 million which
included borrowings of $8.3 million on the revolver and $1.1 million on a loan
for the construction of Best Metal Finishing. Best Metal Finishing is scheduled
to begin operations during the second quarter of 2003. Offsetting these
borrowings was cash used for the repayment of debt of $3.3 million.

   The Company's liquidity requirements, both long term (over one year) and
short term, are primarily for debt service, working capital needs and capital
expenditures. The recent decline in the cash flow generated by the Company's
business during the year ended December 31, 2002 has resulted in the Company's
liquidity being constrained at year-end. The Company anticipates that with
improved operating results, funds provided from future operations and funds
available under the new Senior Credit Facility should be sufficient to meet its
anticipated debt service requirements, working capital needs and capital
expenditures.

   The Company has the following contractual cash obligations outstanding as of
December 31, 2002:

Contractual Cash Obligations

<TABLE>
<CAPTION>
                                                 Payments Due by Period
                                       ------------------------------------------
                                                Less than   1-3     4-5   After 5
                                        Total    1 Year    Years   Years   Years
                                       -------- --------- ------- ------- -------
                                                 (dollars in thousands)
<S>                                    <C>      <C>       <C>     <C>     <C>
Long Term Debt........................ $ 97,329  $2,984   $19,312 $74,025 $1,008
Operating Leases......................    5,188   1,785     2,739     584     80
                                       --------  ------   ------- ------- ------
   Total Contractual Cash Obligations. $102,517  $4,769   $22,051 $74,609 $1,088
                                       ========  ======   ======= ======= ======
</TABLE>

   On February 10, 2003, the Company and its subsidiaries entered into a new
Loan and Security Agreement to increase its borrowing capacity. Proceeds from
the new Senior Credit Facility were used to repay and retire all amounts
outstanding under the then existing Senior Credit Facility. The new Senior
Credit Facility includes three term loans, Term Loan A, Term Loan, B and Term
Loan C, having original principal amounts of $7,500,000, $2,500,000 and
$15,000,000, respectively. The new Senior Credit Facility also includes a
revolver loan with a commitment amount of $27,500,000 subject to borrowing base
and other restrictions, as well as restrictions under the Company's Indenture.
Term Loan A will require monthly principal payments of $0.1 million beginning
May 2003. Term Loan B will require monthly principal payments of $0.1 million
beginning in May 2003. Term C does not require current principal repayments.
The Company's assets are pledged under the terms of the new Senior Credit
Facility.

                                      12

<PAGE>

   Upon entering into the new Loan and Security Agreement, based upon the new
term loan agreements, contractual obligations after February 10, 2003 will be
as follows:

Contractual Cash Obligations

<TABLE>
<CAPTION>
                                                Payments Due by Period
                                       -----------------------------------------
                                                Less than  1-3     4-5   After 5
                                        Total    1 Year   Years   Years   Years
                                       -------- --------- ------ ------- -------
                                                 (dollars in thousands
<S>                                    <C>      <C>       <C>    <C>     <C>
Long Term Debt........................ $100,179  $1,405   $3,616 $91,425 $3,733
Operating Leases......................    5,188   1,785    2,739     584     80
                                       --------  ------   ------ ------- ------
   Total Contractual Cash Obligations. $105,367  $3,190   $6,355 $92,009 $3,813
                                       ========  ======   ====== ======= ======
</TABLE>

Backlog

   The Company's backlog consists of that portion of contracts for the
Engineering Services Segment that have been awarded but not performed and also
includes open orders for the Manufactured Products Segment. Backlog at December
31, 2002 was $28.7 million. Approximately $10.8 million relates to the
Manufactured Products Segment, with the remaining amount of $17.9 million
relating to the Engineering Services Segment. Within the Engineering Services
Segment's backlog at December 31, 2002, $6.5 million relates to two
engineering, procurement and construction management projects for the upgrade
of coal preparation plants, and $2.3 million relates to a turnkey project for a
cement distribution terminal. A majority of the current backlog is expected to
be realized within the next twelve months.

Inflation

   Historically, general inflation has had only a minor affect on the
operations of the Company and its internal and external sources for liquidity
and working capital, and the Company has generally been able to increase prices
to reflect cost increases.

Safe Harbor

   Statements herein regarding the Company's ability to meet its liquidity
requirements and the anticipated benefits from the Company's capital
expenditures, and the Company's expected realization of current backlog
constitute forward-looking statements within the meaning of the Securities Act
of 1933 and the Securities Act of 1934. Such statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from those projected. Further, statements herein regarding the Company's
performance in future periods are subject to risks relating to, deterioration
of relationships with, or the loss of material customers or suppliers, possible
product liability claims, decreases in demand for the Company's products, and
adverse changes in general market and industry conditions. Management believes
these forward looking statements are reasonable; however, undue reliance should
not be placed on such forward looking statements, which are based on current
expectations.

ITEM 7A.  MARKET RISK

   In 2002, approximately 13% of the Company's net sales were attributable to
products sold or services provided outside of the United States. In 2002, the
majority of the Company's foreign sales were to companies located in Puerto
Rico and Australia. A portion of these net sales and cost of sales is derived
from international operations which are conducted in foreign currencies.
Changes in the value of these foreign currencies relative to the U.S. dollar
could adversely affect the Company's business, financial condition, results of
operation and debt service capability. The majority of the Company's foreign
sales and costs are denominated in U.S. dollars. With respect to transactions
denominated in foreign currencies, the Company attempts to mitigate foreign
exchange risk by contractually shifting the burden of the risk of currency
fluctuations to the other party in the transactions.

                                      13

<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 Index to Consolidated Financial Statements of Elgin National Industries, Inc.

<TABLE>
<CAPTION>
                                                                                                    Page
                                                                                                    ----
<S>                                                                                                 <C>
Report of Independent Auditors--Ernst & Young LLP..................................................  15

Consolidated Balance Sheets as of December 31, 2002 and December 31, 2001..........................  16

Consolidated Statements of Operations for the years ended December 31, 2002, 2001 and 2000.........  17

Consolidated Statements of Changes in Common Stockholder's Deficit for the years ended December 31,
  2002, 2001 and 2000..............................................................................  18

Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000.........  19

Notes to Consolidated Financial Statements.........................................................  20
</TABLE>

                                      14

<PAGE>

                        REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholder
Elgin National Industries, Inc.

   We have audited the consolidated balance sheets of Elgin National
Industries, Inc. and Subsidiary Companies as of December 31, 2002 and 2001, and
the related consolidated statements of operations, changes in common
stockholder's deficit and cash flows for each of the three years in the period
ended December 31, 2002. Our audit also included the financial schedule listed
in the index at Item 15b. These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.

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

   In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Elgin National Industries, Inc. and Subsidiary Companies as of December 31,
2002 and 2001 and the consolidated results of their operations and their cash
flows for each of the three years in the period ended December 31, 2002, in
conformity with accounting principles generally accepted in the United States.
Also, in our opinion, the related financial statement schedule when considered
in relation to the basic financial statements, taken as a whole, presents
fairly in all material respects the information set therein.

   As discussed in Note 7 to the consolidated financial statements, in the year
ended December 31, 2002, the Company changed its method of accounting for
goodwill.

                                          ERNST & YOUNG LLP

Chicago, Illinois
February 20, 2003

                                      15

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

                          CONSOLIDATED BALANCE SHEETS

                          December 31, 2002 and 2001
                       (in thousands except share data)

<TABLE>
<CAPTION>
                                      ASSETS                                          2002      2001
                                      ------                                        --------  --------
<S>                                                                                 <C>       <C>
Current assets:
   Accounts receivable, net........................................................ $ 23,196  $ 37,292
   Inventories, net................................................................   16,711    18,359
   Prepaid expenses and other assets...............................................    2,801       345
   Deferred income taxes...........................................................    3,797     3,542
                                                                                    --------  --------
       Total current assets........................................................   46,505    59,538
Property, plant and equipment, net.................................................   22,441    22,070
Loans receivable from related parties..............................................   10,268     9,521
Other assets.......................................................................   26,408    27,622
Goodwill...........................................................................   18,995    18,995
                                                                                    --------  --------
       Total assets................................................................ $124,617  $137,746
                                                                                    ========  ========

                   LIABILITIES AND COMMON STOCKHOLDER'S DEFICIT
                   --------------------------------------------

Current liabilities:
   Short-term debt................................................................. $         $    134
   Current portion of long-term debt...............................................    2,984     3,050
   Accounts payable................................................................   16,120    32,032
   Accrued expenses................................................................    9,251    11,941
                                                                                    --------  --------
       Total current liabilities...................................................   28,355    47,157
Long-term debt less current portion................................................   94,345    88,050
Other liabilities..................................................................    2,323     2,273
Deferred income taxes..............................................................    4,808     3,778
                                                                                    --------  --------
       Total liabilities...........................................................  129,831   141,258
                                                                                    --------  --------
Redeemable preferred stock units...................................................   14,016    13,288
                                                                                    --------  --------
Redeemable preferred stock.........................................................    3,844     3,645
                                                                                    --------  --------
Common stockholder's deficit:
   Common stock, Class A par value $.01 per share; authorized 23,678 shares; 6,408
     shares issued and outstanding as of December 31, 2002 and 2001
   Retained deficit................................................................  (23,074)  (20,445)
                                                                                    --------  --------
       Total common stockholder's deficit..........................................  (23,074)  (20,445)
                                                                                    --------  --------
       Total liabilities and stockholder's deficit................................. $124,617  $137,746
                                                                                    ========  ========
</TABLE>


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

                                      16

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS

             For the Years Ended December 31, 2002, 2001 and 2000
                                (in thousands)

<TABLE>
<CAPTION>
                                                  2002      2001      2000
                                                --------  --------  --------
   <S>                                          <C>       <C>       <C>
   Net sales................................... $149,000  $191,551  $163,370
   Cost of sales...............................  116,730   149,988   124,378
                                                --------  --------  --------
      Gross profit.............................   32,270    41,563    38,992
   Selling, general and administrative expenses   27,007    24,850    24,419
   Goodwill amortization.......................              1,088       419
                                                --------  --------  --------
      Operating income.........................    5,263    15,625    14,154
   Other expenses (income)
      Interest income..........................     (768)     (741)     (850)
      Interest expense.........................    9,515     9,551     8,526
                                                --------  --------  --------
   (Loss) income before income taxes...........   (3,484)    6,815     6,478
   (Benefit) provision for income taxes........   (1,501)    3,309     2,605
                                                --------  --------  --------
   Net (loss) income........................... $ (1,983) $  3,506  $  3,873
                                                ========  ========  ========
</TABLE>



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

                                      17

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

      CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDER'S DEFICIT

             For the Years Ended December 31, 2002, 2001 and 2000
                       (in thousands except share data)

<TABLE>
<CAPTION>
                                                                                              Total
                                                                         Common Retained  Stockholder's
                                                                         Stock  (Deficit)    Deficit
                                                                         ------ --------- -------------
<S>                                                                      <C>    <C>       <C>
Balance as of December 31, 1999.........................................  $     $(26,532)   $(26,532)
                                                                          ---   --------    --------
Net income for the year ended December 31, 2000.........................           3,873       3,873
Redeemable preferred stock dividends (19,952 shares at $10.00 per share)            (200)       (200)
Redeemable preferred stock unit dividend equivalent, net of tax of $281.            (446)       (446)
                                                                          ---   --------    --------
Balance as of December 31, 2000.........................................         (23,305)    (23,305)
                                                                          ---   --------    --------
Net income for the year ended December 31, 2001.........................           3,506       3,506
Redeemable preferred stock dividends (19,952 shares at $10.00 per share)            (200)       (200)
Redeemable preferred stock unit dividend equivalent, net of tax of $281.            (446)       (446)
                                                                          ---   --------    --------
Balance as of December 31, 2001.........................................         (20,445)    (20,445)
                                                                          ---   --------    --------
Net loss for the year ended December 31, 2002...........................          (1,983)     (1,983)
Redeemable preferred stock dividends (19,952 shares at $10.00 per share)            (200)       (200)
Redeemable preferred stock unit dividend equivalent, net of tax of $281.            (446)       (446)
                                                                          ---   --------    --------
Balance as of December 31, 2002.........................................  $     $(23,074)   $(23,074)
                                                                          ===   ========    ========
</TABLE>


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

                                      18

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

             For the Years Ended December 31, 2002, 2001 and 2000
                                (in thousands)

<TABLE>
<CAPTION>
                                                                              2002        2001      2000
                                                                            --------    --------  -------
<S>                                                                         <C>         <C>       <C>
Cash flows from operating activities:
   Net (loss) income....................................................... $ (1,983)   $  3,506  $ 3,873
   Adjustments to reconcile net income to net cash provided by operating
     activities:
       Depreciation........................................................    3,138       2,973    2,407
       Goodwill amortization...............................................                1,088      364
       Amortization of finance costs.......................................      569         543      411
       Provision for deferred income taxes.................................    1,056         352      746
       Provision (Recovery) for doubtful accounts and notes receivable.....      306        (593)     356
       Provision for inventories...........................................      248         392      256
       Expense (income) from pension overfunding...........................    1,076      (1,747)  (1,427)
       (Gain) loss on the disposal of assets...............................      (12)         45       (5)
   Changes in assets and liabilities:
       Accounts receivable.................................................   13,790      (5,248)  (1,644)
       Inventories.........................................................    1,400         109   (1,340)
       Prepaid expenses and other assets...................................   (3,634)      1,696     (987)
       Accounts payable, accrued expenses, and other liabilities...........  (18,552)      2,503    7,664
                                                                            --------    --------  -------
          Net cash (used in) provided by operating activities..............   (2,598)      5,619   10,674
                                                                            --------    --------  -------
Cash flows from investing activities:
   Proceeds from the sale of assets........................................       75          36       20
   Purchase of property, plant and equipment...............................   (3,572)     (4,440)  (4,337)
   Business acquired, net of cash..........................................              (20,376)  (2,078)
                                                                            --------    --------  -------
          Net cash used by investing activities............................   (3,497)    (24,780)  (6,395)
                                                                            --------    --------  -------
Cash flows from financing activities:
   Debt issuance costs.....................................................                 (994)
   Borrowings on short-term debt...........................................                  134
   Borrowings on long-term debt............................................    9,361      19,300      150
   Repayments of long-term debt............................................   (3,266)     (2,300)  (7,109)
                                                                            --------    --------  -------
          Net cash provided by (used in) financing activities..............    6,095      16,140   (6,959)
                                                                            --------    --------  -------
Net decrease in cash.......................................................        0      (3,021)  (2,680)
Cash and cash equivalents at beginning of period...........................        0       3,021    5,701
                                                                            --------    --------  -------
Cash and cash equivalents at end of period................................. $      0    $      0  $ 3,021
                                                                            ========    ========  =======
</TABLE>

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

                                      19

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  Description of Company

   Elgin National Industries, Inc. ("the Company") owns and operates a
diversified group of middle-market industrial manufacturing and engineering
services businesses. The Company is organized into two operating segments.
Through its Manufactured Products Segment, the Company manufactures and
supplies custom-designed, highly engineered products used by a wide variety of
customers in the industrial equipment, durable goods, mining, mineral
processing and electric utility industries, primarily within the United States.
Through its Engineering Services Segment, the Company provides design,
engineering, procurement and construction management services for mineral
processing and bulk materials handling systems used in the mining, mineral
processing, electric utilities and the rail and marine transportation
industries, both within the United States and internationally.

2.  Summary of Significant Accounting Policies

   The significant accounting policies of the Company are summarized below:

  (a) Principles of Consolidation

   The consolidated financial statements include the accounts of the Company
and its subsidiaries. All significant intercompany transactions and balances
have been eliminated in consolidation.

  (b) Estimates

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

  (c) Revenue Recognition

   Revenues earned through manufactured products are recognized upon shipment
to the customer. Revenues earned through engineering services are recognized on
the percentage-of-completion method measured by comparing costs incurred to
date with total estimated costs on each project. The lengths of the Company's
construction contracts vary, but are typically longer than one year. However,
in accordance with industry practice, contract-related assets and liabilities
are classified as current in the accompanying consolidated balance sheets.
Contract costs include direct material and engineering costs along with
indirect costs related to contract performance. Favorable adjustments to these
cost estimates are made and recognized in income over the remaining contract
period. Unfavorable adjustments are recorded as soon as they are apparent.
Estimated losses on uncompleted contracts are provided in full within the
period in which such losses are determinable.

  (d) Accounts Receivable

   Credit evaluations of customers are ongoing and collateral, or other
security is generally not required on accounts receivable. An allowance for
doubtful accounts is maintained at a level management believes is sufficient to
cover potential credit losses. Accounts receivable are charged to the allowance
for doubtful accounts when we have determined that the receivable will not be
collected. Accounts receivable balances are determined to be delinquent when
the amount is past due based on the contractual terms with the customer.

                                      20

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


2.  Summary of Significant Accounting Policies, continued

  (e) Inventories

   Inventories are valued at the lower of cost or market. Cost is determined on
the first-in, first-out (FIFO) and the average cost bases.

  (f) Property, Plant and Equipment

   Property, plant and equipment are stated at cost. Depreciation is computed
principally using the straight-line and double declining-balance methods over
the estimated useful lives of the related assets which range from 3 to 30
years. Maintenance and repair costs are charged to earnings as incurred. Costs
of major improvements are capitalized.

  (g) Goodwill

   The excess of cost over fair value of the net assets acquired is reflected
in the consolidated financial statements as goodwill. Effective January 1,
2002, goodwill is no longer amortized, but is subject to annual impairment
tests. If an impairment exists, the amount of such impairment is calculated
based on the difference between the carrying value and the estimated fair value
of the asset.

  (h) Income Taxes

   Deferred income taxes are recognized for the tax consequences in future
years of differences between the tax basis of assets and liabilities and their
financial reporting amounts at December 31, 2002 and 2001 based on tax rates
applicable to the periods in which the differences are expected to affect
taxable earnings. Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized.

  (i) Cash Equivalents

   The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.

  (j) Fair Value of Financial Instruments

   The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:

      Cash and cash equivalents:  The carrying amount reported in the balance
   sheet for cash and cash equivalents approximates its fair value.

      Accounts receivable and accounts payable:  The carrying amounts reported
   in the balance sheet for accounts receivable and accounts payable
   approximate their fair value.

      Long-term debt:  The fair values for long-term debt is based on quoted
   market prices, except current portion which approximates book value.

  (k) Shipping Costs

   The Company classifies shipping costs incurred to physically move product
from the seller's place of business to the buyer's designated location as
selling costs. Shipping costs were $751,000, $717,000 and $648,000 for the
years ended December 31, 2002, 2001 and 2000 respectively.

                                      21

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

2.  Summary of Significant Accounting Policies, continued

  (l) Reclassification

   Certain amounts in the 2001 and 2000 financial statements have been
reclassified to conform to the 2002 presentation.

3.  Accounts Receivable

   Accounts receivable consist of:

<TABLE>
<CAPTION>
                                                                     December 31,
                                                                    ---------------
                                                                     2002    2001
                                                                    ------- -------
                                                                    (in thousands)
<S>                                                                 <C>     <C>
Trade accounts..................................................... $11,595 $13,374
                                                                    ------- -------
Construction contracts:
   Billed..........................................................  10,257  17,767
   Costs and estimated earnings in excess of billings on contracts.     392   2,622
   Retainage due upon completion of contracts......................   1,486   3,767
                                                                    ------- -------
                                                                     23,730  37,530
                                                                    ------- -------
Other receivables..................................................     311     445
                                                                    ------- -------
                                                                     24,041  37,975
Less allowance for doubtful accounts...............................     845     683
                                                                    ------- -------
                                                                    $23,196 $37,292
                                                                    ======= =======
</TABLE>

   Billings exceeded related costs and gross profit recognized on certain
contracts by $5,142,000 and $12,808,000 as of December 31, 2002 and 2001,
respectively. These amounts are classified as current liabilities in the
accompanying consolidated balance sheets.

   It is estimated that the majority of the retainage due upon completion of
contracts at December 31, 2002 will be collected in 2003.

   A significant portion of the Company's business activity is concentrated
within the coal mining industry. Accounts receivable at December 31, 2002 and
2001 from companies within the coal mining industry were $9,084,000 and
$21,998,000, respectively.

4.  Inventories

   Inventories consist of:

<TABLE>
<CAPTION>
                                                      December 31,
                                                     ---------------
                                                      2002    2001
                                                     ------- -------
                                                     (in thousands)
            <S>                                      <C>     <C>
            Finished goods.......................... $10,655 $10,990
            Work-in-process.........................   2,007   2,387
            Raw materials...........................   5,569   6,744
                                                     ------- -------
                                                      18,231  20,121
            Less excess and obsolete reserve........   1,520   1,762
                                                     ------- -------
                                                     $16,711 $18,359
                                                     ======= =======
</TABLE>

                                      22

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


5.  Property, Plant and Equipment

   Property, plant and equipment, at cost, consist of:

<TABLE>
<CAPTION>
                                                      December 31,
                                                     ---------------
                                                      2002    2001
                                                     ------- -------
                                                     (in thousands)
            <S>                                      <C>     <C>
            Land.................................... $ 2,266 $ 2,260
            Buildings and improvements..............  13,289  12,044
            Machinery and equipment.................  27,726  25,500
                                                     ------- -------
                                                      43,281  39,804
            Less accumulated depreciation...........  20,840  17,734
                                                     ------- -------
                                                     $22,441 $22,070
                                                     ======= =======
</TABLE>

   Depreciation expense for the years ended December 31, 2002, 2001 and 2000
was $3,138,000, $2,973,000 and $2,407,000, respectively.

6.  Other Assets

   Other assets consist of:

<TABLE>
<CAPTION>
                                                      December 31,
                                                     ---------------
                                                      2002    2001
                                                     ------- -------
                                                     (in thousands)
            <S>                                      <C>     <C>
            Prepaid pension cost.................... $23,187 $24,263
            Financing costs.........................   2,025   2,594
            Other assets............................   1,196     765
                                                     ------- -------
                                                     $26,408 $27,622
                                                     ======= =======
</TABLE>

7.  Goodwill

   In June 2001, the Financial Accounting Standards Board issued Statements of
Accounting Standards No. 141, Business Combinations, and No. 142, Goodwill and
Other Intangible Assets. Under the new rules, goodwill is no longer amortized
and is subject to annual impairment tests, or more frequent testing if
circumstances indicate that goodwill may be impaired.

   The Company has two reporting segments, Manufactured Products and
Engineering Services, goodwill was allocated to these segments as follows:

<TABLE>
<CAPTION>
                                                    December 31, 2002
                                                    -----------------
                                                     (In thousands)
           <S>                                      <C>
           Engineering Services....................      $   500
           Manufactured Products...................       18,495
                                                         -------
              Total................................      $18,995
                                                         =======
</TABLE>

                                      23

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


7.  Goodwill, continued

   The proforma impact of eliminating goodwill amortization on the consolidated
statements of operations for the years ended December 31, 2001 and 2000 are as
follows:

<TABLE>
<CAPTION>
                                                       2001    2000
                                                      ------  ------
                                                      (in thousands)
             <S>                                      <C>     <C>
             Reported net income..................... $3,506  $3,873
             Goodwill amortization, net of tax.......    650     251
                                                      ------  ------
                Adjusted net income.................. $4,156  $4,124
                                                      ======  ======
</TABLE>

   Goodwill increased $13,702,000 in 2001 due to the acquisition of Leland
Powell Fasteners, Inc. Amortization expense for goodwill was $1,088,000 and
$419,000 for the years ended December 31, 2001 and 2000, respectively.

8.  Accounts Payable and Accrued Expenses

   Accounts payable and accrued expenses consist of:

<TABLE>
<CAPTION>
                                                      December 31,
                                                     ---------------
                                                      2002    2001
                                                     ------- -------
                                                     (in thousands)
            <S>                                      <C>     <C>
            Accounts payable--trade................. $ 7,558 $15,121
            Accounts payable--other.................   3,420   4,103
            Billings on contracts in excess of
              costs and gross profit Recognized.....   5,142  12,808
            Accrued payroll and commissions.........   2,113   4,103
            Other accruals..........................   7,138   7,838
                                                     ------- -------
                                                     $25,371 $43,973
                                                     ======= =======
</TABLE>

9.  Income Taxes

   The types of temporary differences between the tax basis of assets and
liabilities and their financial reporting amounts that give rise to a
significant portion of the deferred tax liability and deferred tax asset of
which their approximate tax effect are as follows:

<TABLE>
<CAPTION>
                                                      December 31,
                                                   -----------------
                                                     2002      2001
                                                   --------  -------
                                                     (in thousands)
          <S>                                      <C>       <C>
          Accounts receivable..................... $    281  $   221
          Inventories.............................      536      653
          Accrued expenses........................    2,070    2,084
          Intangibles.............................      637    1,303
          Redeemable preferred stock units........    5,045    4,673
          State net operating loss carry forward..      910      584
                                                   --------  -------
             Total deferred tax asset.............    9,479    9,518
                                                   --------  -------
          Prepaid pension.........................  (10,115)  (9,370)
          Property plant & equipment..............     (375)    (384)
                                                   --------  -------
             Total deferred tax liability.........  (10,490)  (9,754)
                                                   --------  -------
          Net deferred tax (liability) asset...... $ (1,011) $  (236)
                                                   ========  =======
</TABLE>

                                      24

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


9.  Income Taxes, continued


   State net operating loss carry forwards begin to expire in the year ended
December 31, 2019.

   The components of the provision (benefit) for income taxes are:

<TABLE>
<CAPTION>
                                  Years Ended December 31,
                                  -----------------------
                                    2002     2001    2000
                                  -------   ------  ------
                                      (in thousands)
                      <S>         <C>       <C>     <C>
                      Current
                         Federal. $(2,324)  $2,051  $1,761
                         State...    (275)     803     354
                         Foreign.      42      103      25
                      Deferred
                         Federal.   1,244      541     381
                         State...    (188)    (189)     84
                                  -------   ------  ------
                                  $(1,501)  $3,309  $2,605
                                  =======   ======  ======
</TABLE>

   The Company's effective tax rates of 43%, 49% and 40% for the years ended
December 31, 2002, 2001 and 2000, respectively, differ from the statutory
federal tax rate of 34% as follows:

<TABLE>
<CAPTION>
                                               Years Ended December 31,
                                               ----------------------
                                                 2002      2001   2000
                                               -------    ------ ------
                                                   (in thousands)
          <S>                                  <C>        <C>    <C>
          Income before income taxes.......... $(3,484)   $6,815 $6,478
                                               =======    ====== ======
          Statutory federal income tax........ $(1,185)   $2,317 $2,203
          State taxes, net of federal benefit.    (182)      376    234
          Foreign sales corporation income tax      41        59     65
          Adjustment to deferred income tax...               425
          Other items.........................    (175)      132    103
                                               -------    ------ ------
                                               $(1,501)   $3,309 $2,605
                                               =======    ====== ======
</TABLE>

   The Company made cash payments for income taxes totalling $103,000,
$1,501,000 and $2,074,000 during the years ended December 31, 2002, 2001 and
2000, respectively.

   The Company had income before taxes from foreign operations of $652,000 in
2002. Results from foreign operations were immaterial in 2001 and 2000.

10.  Short-Term Debt

   Short-term debt consisted of a construction loan for the construction of a
plating facility in Osgood, Indiana. The construction loan had a maximum
principal balance of $1,200,000 with an outstanding principal balance of
$134,000 on December 31, 2001. This loan was a variable rate loan with interest
equal to prime with a floor of 7% and a lifetime cap of 10%. The maturity of
the construction loan was July 1, 2002 upon which time the loan was converted
to a twenty year amortizing mortgage loan.

                                      25

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


11.  Long-Term Debt

   Long-term debt consists of:

<TABLE>
<CAPTION>
                                                               December 31,
                                                              ---------------
                                    Interest Rate at
                                      December 31,   Year of
            Type of Issue                 2002       Maturity  2002    2001
            -------------           ---------------- -------- ------- -------
                                                              (in thousands)
   <S>                              <C>              <C>      <C>     <C>
   Fixed rate:
      Senior notes.................      11.00%        2007   $73,950 $73,950
      Mortgage payable.............       0.00%        2003        50     100
   Variable rate:
      Term loan....................                    2005     6,550   9,750
      Revolver loan................                    2005    15,600   7,300
      Mortgage loan................                    2022     1,179
                                                              ------- -------
   Total long-term debt............                            97,329  91,100
   Less current maturities.........                             2,984   3,050
                                                              ------- -------
   Total non-current long-term debt                           $94,345 $88,050
                                                              ======= =======
</TABLE>

   Annual principal payments on long-term debt at December 31, 2002 were as
follows (in thousands):

<TABLE>
<CAPTION>
                              Revolver   Senior      Term     Mortgage
                                Loan     Notes       loan      Loans    Total
          -                   --------   -------    ------    -------- -------
          <S>                 <C>        <C>        <C>       <C>      <C>
          2003...............                       $2,911     $   73  $ 2,984
          2004...............                        2,911         39    2,950
          2005............... $15,600                  728         34   16,362
          2006...............                                      36       36
          2007...............            $73,950                   39   73,989
          2008 and thereafter                                   1,008    1,008
                              -------    -------    ------     ------  -------
                              $15,600    $73,950    $6,550     $1,229  $97,329
                              =======    =======    ======     ======  =======
</TABLE>

   Under the terms of the senior notes, the Company is required to make only
interest payments until the senior notes maturity in 2007. The senior notes may
be redeemed, in whole or in part, at any time at the option of the Company, at
the redemption prices as detailed below, being equal to a percentage of the
principal amount of the notes being redeemed, plus accrued and unpaid interest
and specified liquidated damages, if any, to the date of redemption.

<TABLE>
<CAPTION>
                         Year                Percentage
                         ----                ----------
                         <S>                 <C>
                         2003...............  103.667%
                         2004...............  101.833%
                         2005 and thereafter  100.000%
</TABLE>

   In addition, in the event of a Change of Control, each holder of the senior
notes will have the right to require the Company to make an offer to purchase
such holder's notes, in whole or in part, at a price equal to 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest and
liquidated damages, if any, to the date of purchase.

   The senior notes contain certain restrictive covenants, which, among other
things, limit the ability of the Company to incur additional indebtedness and
make certain restricted payments, grant liens upon its assets, sell certain
assets, merge or consolidate.


                                      26

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

           NOTES TO CONSOLIlDATED FINANCIAL STATEMENTS--(Continued)



11.  Long-Term Debt, continued

   The senior notes are unsecured obligations and are guaranteed by the
Company's material domestic subsidiaries.

   The variable rate mortgage loan has an interest rate equal to prime with a
floor of 7% and a lifetime cap of 10%.

   Under the terms of a Bank Credit Agreement the Company had the revolver loan
with a borrowing capacity of up to $23,000,000 (less any outstanding letters of
credit) based upon a monthly variable borrowing base. At December 31, 2002, the
Company's available borrowing base of $21,123,000 less the outstanding balance
of $15,600,000 and letters of credit of $1,742,000 resulted in an unused
portion of the revolving credit facility of $3,781,000.

   In addition, the Bank Credit Agreement included a term loan with a principal
balance of $6,550,000 as of December 31, 2002. The term loan required quarterly
principal payments of $728,000. Both the revolver loan and term loan had
interest rates tied to a pricing grid. At December 31, 2002 the revolver and
term loan interest was either at (a) the greater of (i) the interest rate per
annum announced from time to time by the Agent at its principal office as its
then prime rate, or (ii) the Federal Funds Effective Rate plus 0.5% per annum
("Base Rate") plus a margin or the Euro Rate plus a margin. Both the revolver
and the term loan portions of the Bank Credit Agreement had a maturity of
January 18, 2005.

   The Bank Credit Agreement contains certain restrictive covenants, which,
among other things, limit the amount of indebtedness, limit the payment of
dividends and require the maintenance of certain financial ratios.

   On February 10, 2003, the Company and its subsidiaries entered into a new
Loan and Security Agreement to increase its borrowing capacity. Proceeds from
the new Loan and Security Agreement were used to repay and retire all amounts
outstanding under the prior Bank Credit Agreement. The Loan and Security
Agreement includes three term loans, Term Loan A, Term Loan B and Term Loan C,
having original principal amounts of $7,500,000, $2,500,000 and $15,000,000,
respectively. The Loan and Security Agreement also includes a revolver loan
with a commitment amount of $27,500,000 subject to borrowing base and other
restrictions, as well as restrictions under the Company's Indenture. Term Loan
A and Term Loan B will require monthly principal payments of $104,000 and
$63,000, respectively beginning May 2003. Term C does not require current
principal repayments and is due in full on February 10, 2006. The Company's
assets are pledged under the terms of the Loan and Security Agreement. The Loan
and Security Agreement has a maturity date of February 10, 2008. Term Loan A
will accrue interest at the prime rate set by Wells Fargo's principal office
("Prime Rate") plus a margin determined by a pricing grid. Term Loan B will
accrue interest at the Prime Rate plus 3.00% per annum. Term Loan C will accrue
interest at the Prime Rate plus 4.75% per annum. The revolver loan will accrue
interest at the Prime Rate plus 1.00% per annum.

   Annual principal payments on the term loan portion of the Loan and Security
Agreement will be as follows (in thousands):

<TABLE>
<CAPTION>
                                    Term   Term     Term
                                   Loan A Loan B   Loan C      Total
                                   ------ ------   -------    -------
               <S>                 <C>    <C>      <C>        <C>
               2003............... $  500 $  832              $ 1,332
               2004...............    750  1,250                2,000
               2005...............  1,125    418                1,543
               2006...............  1,200          $15,000     16,200
               2007...............  1,200                       1,200
               2008 and thereafter  2,725                       2,725
                                   ------ ------   -------    -------
                                   $7,500 $2,500   $15,000    $25,000
                                   ====== ======   =======    =======
</TABLE>

                                      27

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

11.  Long-Term Debt, continued

   Along with scheduled principal repayments, the term loans require additional
principal payments after the end of each year based on an excess cash flow
calculation.

   The Company made cash payments for interest totalling $9,522,000, $9,357,000
and $8,557,000, respectively, during 2002, 2001 and 2000.

   The weighted average interest rate on current portion of the long term debt
for 2002 was 5.42%.

   Based upon the Company's ability to obtain financing under similar terms,
the estimated fair value of the Company's long-term debt including the current
portion was $67,934,000 and $77,184,000 at December 31, 2002 and December 31,
2001, respectively.

12.  Redeemable Preferred Stock Units

   In exchange for amounts owed to certain officers, the Company granted to
them redeemable preferred stock units redeemable on December 31, 2007 with an
aggregate principal value of $7,274,000 provided, that, the Company's
obligation to make a redemption payment at such time is subject to the
restrictions contained in the agreement governing the 11% senior notes due 2007.

   The Company had accrued dividend equivalent amounts equal to $6,742,000 and
$6,014,000 at December 31, 2002 and 2001, respectively. The redeemable
preferred stock units accrue at 10% per annum. Principal and accrued dividend
equivalent amounts were $14,016,000 and $13,288,000 at December 31, 2002 and
2001, respectively, and will be paid in tandem with the Company's redeemable
preferred stock dividend and redemption payments.

13.  Redeemable Preferred Stock

   The Company has 550,000 shares of $1.00 par value redeemable preferred stock
authorized with 19,952 shares issued and outstanding at December 31, 2002. The
redeemable preferred stock is mandatorily redeemable at $100 per share
totalling $1,995,000 for all shares currently outstanding, plus all accrued and
unpaid dividends thereon on December 31, 2007 or upon the occurrence of a
qualified public offering or other sale of the Company.

   The redeemable preferred stock has a preferential liquidation value of $100
per share and accrues cumulative preferred dividends at 10% per annum of the
liquidation value. Dividends accrue cumulatively at a rate of 10% per annum.
Redeemable preferred stock has no voting rights.

   The Company had accrued dividends of $1,849,000 and $1,650,000 as of
December 31, 2002 and 2001, respectively.

14.  Pension and Profit Sharing Plans

   The Company has a noncontributory defined benefit plan which is open to all
eligible, full-time, nonunion employees and is salary related and integrated
with Social Security. The Company's funding policy for the plan is to fund the
minimum annual contribution required by applicable regulations. Pension plan
assets are primarily invested in bonds, corporate notes and common stock.

                                      28

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


14.  Pension and Profit Sharing Plans, continued

   In 1995, the Company established a nonqualified supplemental employee
retirement plan ("SERP") for certain employees whose pension benefits were
limited by the Omnibus Budget Reconciliation Act of 1993, the Employee
Retirement Income Security Act ("ERISA") and the Uruguay Round General
Agreement on Tariffs and Trade ("GATT").

   The following information for the years ended December 31, 2002 and 2001 has
been obtained from the actuarial computation for the years ended September 30,
2002 and 2001, respectively.

   The change in the benefit obligation for the defined benefit plan is as
follows for the years ended December 31:

<TABLE>
<CAPTION>
                                                          2002     2001
                                                        -------  -------
                                                         (in thousands)
      <S>                                               <C>      <C>
      Projected benefit obligation at beginning of year $26,158  $22,994
      Service cost--benefits earned during the period..   1,058      800
      Interest cost on projected benefit obligation....   1,337    1,423
      Actuarial (gains) losses.........................     866    2,243
      Benefit payments.................................    (797)  (1,302)
      Settlements......................................  (3,689)
      Special Termination Benefits.....................     476
                                                        -------  -------
      Projected benefit obligation at end of year...... $25,409  $26,158
                                                        =======  =======
</TABLE>

   The change in plan assets is as follows for the years ended December 31:

<TABLE>
<CAPTION>
                                                             2002     2001
                                                           -------  -------
                                                            (in thousands)
    <S>                                                    <C>      <C>
    Fair value of plan assets at beginning of year........ $38,039  $46,112
    Actual return on plan assets..........................  (2,776)  (6,771)
    Settlements...........................................  (3,689)
    Benefit payments......................................    (797)  (1,302)
                                                           -------  -------
    Fair value of plan assets at end of year.............. $30,777  $38,039
                                                           =======  =======

                                                             2002     2001
                                                           -------  -------
                                                            (in thousands)
    Plan assets in excess of projected benefit obligations $ 5,368  $11,881
    Unrecognized amounts:
       Prior service cost.................................     559      484
       Net gain...........................................  15,906   10,511
                                                           -------  -------
    Prepaid pension cost.................................. $21,833  $22,876
                                                           =======  =======
</TABLE>

   Prepaid pension cost included in other assets at December 31, 2002 and 2001,
was $23,187,000 and $24,263,000, respectively. Pension costs included in other
liabilities at December 31, 2002 and 2001, was $1,354,000 and $1,387,000,
respectively.

   At December 31, 2002 and 2001, respectively, the Company's SERP projected
benefit obligation of $995,000 and $1,104,000 was not funded.

                                      29

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


14.  Pension and Profit Sharing Plans, continued

   Weighted average assumptions as of December 31:

<TABLE>
<CAPTION>
                                                    2002  2001
                                                    ----  ----
                 <S>                                <C>   <C>
                 Settlement rate................... 5.00% 5.25%
                 Long term rate of return on assets 8.00  9.00
                 Rate of compensation increase..... 4.75  4.75
</TABLE>

   Components of net periodic pension expense (benefit) are as follows for the
years ended December 31:

<TABLE>
<CAPTION>
                                                               2002       2001     2000
                                                             -------    -------  -------
                                                                   (in thousands)
<S>                                                          <C>        <C>      <C>
Service cost--benefits earned during the period............. $ 1,058    $   800  $ 1,036
Interest cost on projected benefit obligation...............   1,337      1,423    1,222
Expected return on assets...................................  (4,173)    (3,900)  (3,538)
Additional pension expense due to settlement................   2,420
Additional pension expense due to special termination charge     476
Net amortization of prior service cost......................     (76)       (76)     (76)
Net amortization of prior losses............................                 11       17
                                                             -------    -------  -------
Net periodic pension expense (benefit)...................... $ 1,042    $(1,742) $(1,339)
                                                             =======    =======  =======
</TABLE>

   In addition the Company makes contributions to a union-administered pension
plan for certain employees who do not participate in the Company's pension
plan. The Company's aggregate expense for this plan for the years ended
December 31, 2002, 2001 and 2000 was $43,000, $44,000 and $47,000, respectively.

   The Company has a combined 401(k) employee savings and profit sharing plan
for all eligible, full time non-union employees. Contributions to the plan are
based upon management's discretion. The Company's aggregate expense for these
plans for the years ended December 31, 2002, 2001 and 2000 was $588,000,
$1,292,000 and $1,240,000, respectively.

   In addition the Company established during 1995 a non-qualified profit
sharing plan for certain employees whose 401(k) benefits were also limited to
the Omnibus Budget Reconciliation Act of 1993, ERISA and GATT. The Company's
expense for this plan in 2002, 2001 and 2000 was $63,000, $55,000 and $36,000,
respectively.

15.  Leases

   The Company has entered into noncancellable operating leases, primarily for
office space, vehicles and equipment, that have initial or remaining terms of
more than one year.

   Future minimum annual rental expenditures are as follows:

<TABLE>
<CAPTION>
                       Year                (in thousands)
                       ----                --------------
                       <S>                 <C>
                       2003...............     $1,785
                       2004...............      1,581
                       2005...............      1,158
                       2006...............        431
                       2007...............        153
                       2008 and thereafter         80
                                               ------
                                               $5,188
                                               ======
</TABLE>

                                      30

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


15.  Leases, continued

   Rental expense for the twelve months ended December 31, 2002, 2001 and 2000
was $1,791,000, $1,966,000 and $1,941,000, respectively.

16.  Related Party Transactions

   At December 31, 2002 and 2001, the Company had the following outstanding
notes receivable and note payable with related parties:

      (I) Two notes receivable from a limited partnership owned by an officer
   with principal due on each in the amount of $1,000,000 in December, 2007.
   Prepayment is required if the value to be paid under the redeemable
   preferred stock units at the time of payment is less than the aggregate
   amount of the principal and interest outstanding. Interest accrues at 5.35%
   and 6.31%, respectively, and is payable at the earlier of prepayment or
   maturity. Interest earned for the years ended December 31, 2002, 2001 and
   2000 was $285,000, $117,000 and $117,000, respectively.

      (II) Notes receivable from certain officers in the total principal amount
   of $1,033,000, $600,000 and $4,200,000 due in December, 2007. Interest
   accrues at 6.42%, 6.31% and 5.37%, respectively, per annum. Interest earned
   was $462,000, $330,000, and $330,000, respectively, for the years ended
   December 31, 2002, 2001 and 2000.

      (III) Subject to an offset agreement, notes receivable and a note payable
   in the amount of $1,603,000 with a limited partnership owned by an officer.
   These notes accrue interest at 5.35% annually. All notes are due in
   December, 2007.

17.  Contingencies

   The Company has claims against others, and there are claims by others
against it, in a variety of matters arising out of the conduct of the Company's
business. The ultimate resolution of all such claims would not, in the opinion
of management, have a material effect on the Company's financial position, cash
flows or results of operations.

   In connection with the 1993 leveraged buyout of the Company, The Jupiter
Corporation ("Jupiter"), the previous owner, agreed to indemnify the Company
against various claims and ongoing litigation and assumed the defense of such
litigation. The litigation includes a wrongful death product liability claim
against one of the Company's subsidiaries in connection with an accident at a
work site. Although the Company believes that Jupiter and its insurance carrier
are performing on the indemnity obligations, there can be no assurance that
they will continue to do so or that the Company would successfully recover on
the indemnity in the event of an adverse judgement against the subsidiary or
adverse outcomes in any other proceedings. In any such case, the Company would
bear the cost of defense and any adverse judgment. One or more such adverse
judgements could materially and adversely affect the Company's business,
financial condition, results of operations and debt service capability.

                                      31

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


18. Segment Information

   The Company operates predominantly within the United States, primarily in
two industries, Manufactured Products and Engineering Services. The accounting
policies of the segments are the same as those described in the "Summary of
Significant Accounting Policies." In accordance with the Company's method of
internal reporting, corporate-headquarters costs are not allocated to the
individual segments. Information about the Company by industry is presented
below for the years ended December 31:

<TABLE>
<CAPTION>
                                                                         2002      2001      2000
                                                                       --------  --------  --------
                                                                              (In thousands)
<S>                                                                    <C>       <C>       <C>
Net sales to external customers:
   Manufactured Products.............................................. $ 93,562  $ 99,080  $ 80,036
   Engineering Services...............................................   55,438    92,471    83,334
                                                                       --------  --------  --------
       Total net sales to external customers.......................... $149,000  $191,551  $163,370
                                                                       ========  ========  ========
Net sales to internal customers:
   Manufactured Products.............................................. $  3,361  $  4,960  $  3,393
   Engineering Services...............................................      240       493       227
                                                                       --------  --------  --------
       Total net sales to internal customers.......................... $  3,601  $  5,453  $  3,620
                                                                       ========  ========  ========
Total net sales:
   Manufactured Products.............................................. $ 96,923  $104,040  $ 83,429
   Engineering Services...............................................   55,678    92,964    83,561
                                                                       --------  --------  --------
       Total net sales................................................  152,601   197,004   166,990
       Elimination of net sales to internal customers.................    3,601     5,453     3,620
                                                                       --------  --------  --------
       Total consolidated net sales................................... $149,000  $191,551  $163,370
                                                                       ========  ========  ========
Earnings before interest, taxes and goodwill amortization:
   Manufactured Products.............................................. $ 12,964  $ 15,784  $ 14,543
   Engineering Services...............................................      194     6,780     4,641
                                                                       --------  --------  --------
       Total segment earnings before interest, taxes and goodwill
         amortization.................................................   13,158    22,564    19,184
Goodwill amortization.................................................             (1,088)     (419)
Interest income.......................................................      768       741       850
Interest expense......................................................   (9,515)   (9,551)   (8,526)
Corporate expenses before interest, taxes and goodwill amortization...   (7,895)   (5,851)   (4,611)
                                                                       --------  --------  --------
       Consolidated (loss) income before income taxes................. $ (3,484) $  6,815  $  6,478
                                                                       ========  ========  ========
Capital expenditures:
   Manufactured Products.............................................. $  3,484  $  3,111  $  1,535
   Engineering Services...............................................       82       185       203
                                                                       --------  --------  --------
       Total segment capital expenditures.............................    3,566     3,296     1,738
       Corporate......................................................        6     1,144     2,599
                                                                       --------  --------  --------
       Total capital expenditures..................................... $  3,572  $  4,440  $  4,337
                                                                       ========  ========  ========
</TABLE>

                                      32

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

18.  Segment Information, continued

<TABLE>
<CAPTION>
                                                 2002     2001    2000
                                               -------- -------- ------
                                                    (In thousands)
        <S>                                    <C>      <C>      <C>
        Depreciation:
           Manufactured Products.............. $  2,646 $  2,581 $2,206
           Engineering Services...............      171      189    169
                                               -------- -------- ------
               Total segment depreciation.....    2,817    2,770  2,375
               Corporate......................      321      203     32
                                               -------- -------- ------
               Total depreciation............. $  3,138 $  2,973 $2,407
                                               ======== ======== ======
        Assets:
           Manufactured Products.............. $ 61,880 $ 64,939
           Engineering Services...............   12,998   24,941
                                               -------- --------
               Total segment assets...........   74,878   89,880
               Corporate and other............   49,739   47,866
                                               -------- --------
               Total assets................... $124,617 $137,746
                                               ======== ========
</TABLE>

   The following is sales information by geographic area for the years ended
December 31 (in thousands):

<TABLE>
<CAPTION>
                                    2002     2001     2000
                                  -------- -------- --------
                    <S>           <C>      <C>      <C>
                    United States $129,217 $154,582 $145,178
                    Foreign......   19,783   36,969   18,192
                                  -------- -------- --------
                                  $149,000 $191,551 $163,370
                                  ======== ======== ========
</TABLE>

   Foreign revenue is based on the final destination of merchandise sold. There
were no sales to a single foreign country that were material to the
consolidated revenues of the Company.

19.   Subsidiary Guarantors

   The Company's payment obligations under the Senior Notes and revolver loan
are fully and unconditionally guaranteed on a joint and several basis
(collectively, "Subsidiary Guarantees") by Tabor Machine Company, Norris Screen
and Manufacturing, Inc., TranService, Inc., Mining Controls, Inc., Clinch River
Corporation, Centrifugal Services, Inc., Roberts & Schaefer Company, Soros
Associates, Inc., Vanco International, Inc., Leland Powell Fasteners, Inc., ENI
International, Ltd. and Best Metal Finishing, Inc. ("the Guarantors") each a
direct, wholly-owned subsidiary of the Company. The following summarized
combined financial data illustrates the composition of the combined Guarantors.

<TABLE>
<CAPTION>
                                         December 31, 2002
                                         -----------------
                                    Combined  Consolidating Consolidated
                           Parent  Guarantors  Adjustments     Total
                           ------- ---------- ------------- ------------
                                          (in thousands)
       <S>                 <C>     <C>        <C>           <C>
       Current assets..... $13,492  $33,013                   $ 46,505
       Noncurrent assets..  59,266   42,325     $(23,479)       78,112
                           -------  -------     --------      --------
       Total assets....... $72,758  $75,338     $(23,479)     $124,617
                           =======  =======     ========      ========
       Current liabilities $10,087  $18,268                   $ 28,355
       Total liabilities.. $74,993  $54,838                   $129,831
</TABLE>

                                      33

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


19.   Subsidiary Guarantors, continued

<TABLE>
<CAPTION>
                                         December 31, 2001
                                         -----------------
                                     Combined  Consolidating Consolidated
                            Parent  Guarantors  Adjustments     Total
                           -------- ---------- ------------- ------------
                                           (in thousands)
       <S>                 <C>      <C>        <C>           <C>
       Current assets..... $ 11,498  $48,040                   $ 59,538
       Noncurrent assets..   87,163   11,359     $(20,314)       78,208
                           --------  -------     --------      --------
       Total assets....... $ 98,661  $59,399     $(20,314)     $137,746
                           ========  =======     ========      ========
       Current liabilities $ 11,830  $35,327                   $ 47,157
       Total liabilities.. $106,971  $34,287                   $141,258
</TABLE>

<TABLE>
<CAPTION>
                                                      Year ended December 31, 2002
                                                      ----------------------------
                                                       Combined  Consolidating Consolidated
                                              Parent  Guarantors  Adjustments     Total
                                             -------  ---------- ------------- ------------
                                                             (in thousands)
<S>                                          <C>      <C>        <C>           <C>
Sales, net.................................. $32,104   $117,896     $(1,000)     $149,000
Gross profit................................  11,727     20,543                    32,270
(Loss) income before income tax.............  (8,182)     4,698                    (3,484)
Net (loss) Income...........................  (4,842)     2,859                    (1,983)
Cash (used) provided by operating activities  (4,882)     2,284                    (2,598)
Cash used by investing activities...........    (268)    (3,229)                   (3,497)
Cash provided by financing activities.......   5,150        945                     6,095
</TABLE>

<TABLE>
<CAPTION>
                                               Year ended December 31, 2001
                                               ----------------------------
                                                 Combined  Consolidating Consolidated
                                       Parent   Guarantors  Adjustments     Total
                                      --------  ---------- ------------- ------------
                                                      (in thousands)
<S>                                   <C>       <C>        <C>           <C>
Sales, net........................... $ 35,534   $158,172     $(2,155)     $191,551
Gross profit.........................   18,096     23,467                    41,563
(Loss) income before income tax......   (1,286)     8,101                     6,815
Net (loss) Income....................     (198)     3,704                     3,506
Cash provided by operating activities    3,250      2,369                     5,619
Cash used in investing activities....  (22,277)    (2,503)                  (24,780)
Cash provided by financing activities   16,006        134                    16,140
</TABLE>

<TABLE>
<CAPTION>
                                               Year ended December 31, 2000
                                               ----------------------------
                                                Combined  Consolidating Consolidated
                                       Parent  Guarantors  Adjustments     Total
                                      -------  ---------- ------------- ------------
                                                      (in thousands)
<S>                                   <C>      <C>        <C>           <C>
Sales, net........................... $37,932   $126,710     $(1,272)     $163,370
Gross profit.........................  14,749     24,243                    38,992
(Loss) income before income tax......  (2,001)     8,479                     6,478
Net (loss) income....................    (425)     4,298                     3,873
Cash provided by operating activities   4,563      6,111                    10,674
Cash used in investing activities....  (5,810)      (585)                   (6,395)
Cash used in financing activities....  (1,433)    (5,526)                   (6,959)
</TABLE>

                                      34

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

19.   Subsidiary Guarantors, continued

   The direct and non-direct, non-guarantor subsidiaries, in terms of assets,
equity, income, and cash flows, on an individual and combined basis are
inconsequential.

   Separate financial statements of the Guarantors are not presented because
management has determined that these would not be material to investors.

20.   Acquisition of Subsidiary

   On January 18, 2001 the Company acquired Leland Powell Fasteners, Inc.
("Leland") for $20,376,000 net of cash. Leland is a manufacturer of specialty
fasteners located in Martin, Tennessee. The acquisition of Leland was accounted
for as a purchase. The amount of the purchase price over the fair value of net
assets acquired is reflected in the accompanying consolidated balance sheet as
goodwill. The results of operations from the date of acquisition are included
in the consolidated statement of operations.

21.   Selected Quarterly Data (unaudited)

<TABLE>
<CAPTION>
                    Quarter ended     Quarter ended    Quarter ended Quarter ended
                  December 31, 2002 September 30, 2002 June 30, 2002 March 31, 2002
                  ----------------- ------------------ ------------- --------------
<S>               <C>               <C>                <C>           <C>
Net sales........      $36,641           $36,863          $37,277       $38,219
Gross Profit.....        9,251             7,912            6,751         8,356
Net (Loss) Income         (713)             (203)          (1,129)           62
</TABLE>

<TABLE>
<CAPTION>
                Quarter ended     Quarter ended    Quarter ended Quarter ended
              December 31, 2001 September 30, 2001 June 30, 2001 March 31, 2001
              ----------------- ------------------ ------------- --------------
 <S>          <C>               <C>                <C>           <C>
 Net sales...      $53,433           $43,540          $51,012       $43,566
 Gross Profit       12,002             9,681           10,634         9,246
 Net Income..        1,415               530              805           756
</TABLE>

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

   None

                                      35

<PAGE>

                                   PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

   The following table sets forth information regarding the directors and
executive officers of the Company:

<TABLE>
<CAPTION>
                                                              Director
         Name            Age    Position with the Company      Since
         ----            --- -------------------------------- --------
         <S>             <C> <C>                              <C>
         Fred C. Schulte 56  Chairman of the Board, Chief       1988
                             Executive Officer and Director
         Charles D. Hall 64  President, Chief Operating         1993
                             Officer and Director
         Wayne J. Conner 50  Vice President, Treasurer, Chief   1993
                             Financial Officer and Director
         Lynn C. Batory. 44  Vice President, Controller and
                             Secretary
         David Hall..... 43  Vice President of Manufacturing
         Mort Maurer.... 85  Director                           1998
</TABLE>

   Directors are elected for one year terms and hold office until their
successors are elected and qualified. The executive officers are appointed by
and serve at the discretion of the Board of Directors.

   A brief description of the employment history of the directors and executive
officers of the Company listed above are set forth below:

   Fred C. Schulte is Chairman of the Board, Chief Executive Officer and a
Director of the Company. Mr. Schulte joined the Company as President and CEO in
1988 in connection with the acquisition of the Company by The Jupiter
Corporation. Mr. Schulte had joined The Jupiter Corporation earlier that same
year. From 1986 to 1988, Mr. Schulte served as Vice President-Executive
Department for Santa Fe Southern Pacific at its headquarters in Chicago. From
1976 to 1986, Mr. Schulte was employed with SF Mineral Company (a Santa Fe
Southern Pacific Company) in Albuquerque, New Mexico. From 1974 to 1976, Mr.
Schulte was employed by Kerr McGee Corporation where he held a number of
engineering, operating and management positions in the company's Hard-Minerals
Division. Prior to 1974, Mr. Schulte served for five years in the United States
Air Force as a pilot and operations officer. Mr. Schulte received an Engineer
of Mines degree from the Colorado School of Mines and a Master of Business
Administration degree from Oklahoma City University.

   Charles D. Hall is President, Chief Operating Officer and a Director of the
Company. Mr. Hall joined the corporate staff of the Company in 1988, serving as
Vice President of Operations prior to being named President in 1997. From 1975
to 1988, Mr. Hall was employed by Ohio Rod, initially as Controller and Chief
Financial Officer and then, in late 1975, as President, a position he held
until 1988. Prior to joining Ohio Rod, Mr. Hall was employed by Walker China in
Bedford Heights, Ohio from 1971 to 1974. Mr. Hall is the father of David Hall,
the Company's Vice President of Manufacturing.

   Wayne J. Conner is Vice President, Chief Financial Officer, Treasurer and a
Director of the Company. Mr. Conner joined the Company in 1989 as Vice
President and Chief Financial Officer. From 1985 to 1989,
Mr. Conner was employed by AluChem, Inc. of Cincinnati, Ohio as the Corporate
Controller and Chief Financial Officer. From 1984 to 1985, Mr. Conner served as
the Vice President of Finance and Administration for a start-up computer manual
writing company, Comware, Incorporated. From 1976 to 1984, Mr. Conner was
employed by Ohio Rod as the Controller and Chief Financial Officer. Mr. Conner
began his career at the public accounting firm of Haskins and Sells. Mr. Conner
is a graduate of the University of Cincinnati, College of Business
Administration and is a Certified Public Accountant.

                                      36

<PAGE>

   Lynn C. Batory is Vice President, Controller and Secretary of the Company.
Ms. Batory joined the Company in 1983 as an internal auditor performing
operational audits and special projects. Since then, Ms. Batory has held
positions of increasing responsibility including Accounting Manager, Assistant
Controller and her current position of Controller which she attained in 1988.
In 1993, Ms. Batory was also named Vice President and Secretary. Prior to
joining the Company, Ms. Batory was employed by NICOR, Inc. of Naperville,
Illinois from 1981 to 1983 as a staff accountant providing financial support
for ten mining companies and five marine transportation companies. Ms. Batory
holds a Bachelor of Science degree in Accounting from the University of Houston.

   David Hall is Vice President of Manufacturing. Mr. Hall joined the Company
in 1995, and is currently responsible for the operations of the Manufactured
Products Segment. From 1984 to 1995, Mr. Hall was employed by Consolidated
Industries of Lafayette, Indiana where he served in various positions of
increasing responsibility including Assistant Controller, Controller, Vice
President of Finance and Administration and, beginning in 1994, General
Manager. Mr. Hall has a Bachelor of Science degree in Accounting from Butler
University. David Hall is the son of Charles D. Hall, President, Chief
Operating Officer and a director of the Company.

   Mort Maurer was elected in January, 1998 to serve as a director of the
Company. Mr. Maurer has over 30 years executive managerial experience at large
manufacturing companies, including Northrop Corporation and RCA. From 1983 to
1987, Mr. Maurer served as Vice President of Monogram Industries. Mr. Maurer
currently serves as Chairman of the Board of Spaulding Composites, Inc. and
since 1987, Mr. Maurer has been retained as a consultant by Nortek, Inc. Mr.
Maurer holds a Master of Business Administration degree from Pepperdine
University and also holds a Bachelor of Science degree in Mechanical
Engineering.

ITEM 11.  EXECUTIVE COMPENSATION

   The following table sets forth certain information concerning compensation
of the Company's Chief Executive Officer and for the four other most highly
compensated officers of the Company having total annual salary and bonus in
excess of $100,000.

<TABLE>
<CAPTION>
                                                           All Other Annual
    Name and Principal Position     Year  Salary   Bonus     Compensation
    ---------------------------     ---- -------- -------- ----------------
    <S>                             <C>  <C>      <C>      <C>
    Fred C. Schulte................ 2002 $387,831 $114,510     $118,381
      Chairman and Chief
       Executive Officer            2001  369,363  294,930      111,591
                                    2000  351,774  256,125      111,592

    Charles D. Hall................ 2002  349,049  114,510      114,520
      President and Chief
       Operating Officer            2001  332,427  294,930       95,414
                                    2000  316,597  256,125       97,541

    Wayne J. Conner................ 2002  201,672  114,510       70,458
      Vice President, Treasurer
       and Chief Financial Officer  2001  192,069  294,930       76,958
                                    2000  182,923  256,125       84,690

    Lynn C. Batory................. 2002  131,577                24,238
      Vice President, Controller
       and Secretary                2001  126,515  150,000       33,802
                                    2000  119,139  133,706       12,382

    David Hall..................... 2002  131,577                19,804
      Vice President of
       Manufacturing                2001  126,515  150,000       24,101
                                    2000  119,139  133,706       12,382
</TABLE>

   All other annual compensation reflects employer contributions to the
Company's Profit Sharing Plan (as defined) and Supplemental Employee Retirement
Plan (as defined), auto, membership, professional fee and travel and medical
benefits and the value of term life and disability insurance premiums.

                                      37

<PAGE>

Profit Sharing Plan

   The Company maintains the Elgin National Industries, Inc. Master Savings &
Profit Sharing Plan (the "Profit Sharing Plan"). Generally, all non-union
employees of the Company who have completed one year of service are eligible to
participate in the Profit Sharing Plan. For any plan year, the Company may make
a discretionary contribution to the Profit Sharing Plan, which is allocated to
participants who have completed 1,000 hours of service during the year and who
are employed on the last day of the year based on their compensation for that
year. Participants vest in their account balances ratably over five years (in
20 percent increments). Generally, distributions from the Profit Sharing Plan
are made following termination of employment.

Supplemental Employee Retirement Plan

   The Company maintains the Elgin National Industries, Inc. Supplemental
Retirement Plan (the "Supplemental Employee Retirement Plan"). Employees are
eligible for participation in this plan if they participate in the Profit
Sharing Plan or the ENI Pension Plan for Employees of Elgin National
Industries, Inc. and Participating Affiliates (the "Pension Plan") and have
been approved for participation by the Board of Directors. The Supplemental
Employee Retirement Plan provides benefits to participants whose full benefits
under the Profit Sharing Plan or the Pension Plan have been limited by certain
provisions of the Internal Revenue Code. Benefits under the Supplemental Plan
are generally payable upon termination of employment.

                            Pension Plan Table (a)

<TABLE>
<CAPTION>
                                               Years of Service
                                  ------------------------------------------
   Remuneration (b)                 15      20       25       30       35
   ----------------               ------- ------- -------- -------- --------
   <S>                            <C>     <C>     <C>      <C>      <C>
   $200,000...................... $20,281 $27,042 $ 33,802 $ 40,563 $ 47,323
   $225,000......................  23,094  30,792   38,490   46,188   53,885
   $250,000......................  25,906  34,542   43,177   51,813   60,448
   $300,000......................  31,531  42,042   52,552   63,063   73,573
   $350,000......................  37,156  49,542   61,927   74,313   86,698
   $400,000......................  42,781  57,042   71,302   85,563   99,823
   $450,000......................  48,406  64,542   80,677   96,813  112,948
   $500,000......................  54,031  72,042   90,052  108,063  126,073
   $550,000......................  59,656  79,542   99,427  119,313  139,198
   $600,000......................  65,281  87,042  108,802  130,563  152,323
</TABLE>
--------
(a)The above table illustrates the estimated annual retirement benefits payable
   to Pension Plan and Supplemental Employee Retirement Plan participants
   commencing at age 65 in the form of a single life annuity, not subject to
   deduction for social security or other offsets. The above information is
   based on the current pension formula for various levels of compensation and
   years of service.
(b)A participant's pension benefit is generally based on a percentage of his
   salary and bonus for the highest five years of his employment and his years
   of credited service. The compensation taken into account under the Pension
   Plan for 1997 was limited to $160,000 in accordance with Internal Revenue
   Code rules and such limitation may be adjusted periodically in the future in
   accordance with Section 401(a)(17) of the Code. Remuneration in the above
   table is represented as the highest consecutive five-year average salary.
   The above table does not reflect the current compensation limitation under
   Code Section 401(a)(17) for qualified pension plans, because the
   Supplemental Employee Retirement Plan provides benefits for compensation
   above the limitation. Credited service under the Pension Plan as of January
   1, 2001 for the named executive officers is as follows: Mr. Schulte, 13
   years; Mr. C. Hall, 28 years; Mr. Conner, 20 years; Ms. Batory 19 years; and
   Mr. D. Hall, 6 years.

Employment and Non-Competition Agreements

   The Company and each of Messrs. Schulte, C. Hall and Conner entered into
employment and non-competition agreements, with an initial term beginning on
November 5, 1997, and ending on the fifth anniversary

                                      38

<PAGE>

thereof (the "Employment Agreements"). The term of the Employment Agreements is
subject to annual renewal after the initial term unless one party gives written
notice of non-renewal to the other party at least 180 days prior to the then
current expiration date. Under the terms of the Employment Agreements, Mr.
Schulte serves as the Chief Executive Officer and received a base salary of
$387,831 for 2002, and will receive annual increases beginning in 2003 equal to
the greater of the change in the applicable consumer price index or 5% per
annum; Mr. C. Hall serves as the President and Chief Operating Officer and
received a base salary of $349,049 for 2002, and will receive annual increases
beginning in 2003 equal to the greater of the change in the applicable consumer
price index or 5% per annum; and Mr. Conner serves as the Chief Financial
Officer and received a base salary of $201,672 for 2002, and will receive
annual increases beginning in 2003 equal to the greater of the change in the
applicable consumer price index or 5% per annum. Each of the executive officers
is entitled to an annual bonus for 2002 and later years of 1.5% of the
Company's consolidated earnings before interest expense, taxes, amortization
and the employment agreement bonuses described in this paragraph, subject to
certain adjustments. The Employment Agreements contain a confidentiality
covenant and a non-competition covenant that generally applies during the term
of employment and for a period of 3 years thereafter.

   Each such Employment Agreement will terminate prior to the schedule
expiration date in the event of the death or disability of the named executive
officer or upon the sale by such named executive officer of his stock in the
Company. In addition, the Company may terminate the employment of any of the
named executive officers for cause (as defined in the agreements, generally
commission of certain felonies, material breaches of duty or breaches of the
non competition restriction) and any named executive officer may terminate
employment in the event the Company materially breaches the provisions of the
Employment Agreement. Upon such a termination by an executive officer or
termination by the Company without cause, the terminated executive officer will
be entitled to continued payments and benefits for the remainder of the then
current term. Upon the expiration and non-renewal of the Employment Agreement,
the executive officer will receive severance payments for one year thereafter
equal to the executive's base salary, subject to the executive's continued
compliance with the non-competition provisions. Under each of the Employment
Agreements, the Company has the obligation to maintain life insurance covering
each of the named executive officers, with the proceeds thereof to be used to
honor any put rights exercised by the estate of an executive officer.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

   Partnership Agreement. The issued and outstanding common stock of the
Company is owned by SHC Investment Partnership, a Delaware general partnership
(the "Partnership"). Each of Fern Limited Partnership (a Delaware limited
partnership controlled by Fred C. Schulte), Charles D. Hall and Wayne J. Conner
holds a 33.33% voting interest in the Partnership. The management of the
Partnership is governed by a partnership agreement (the "Partnership
Agreement") among Fern, Hall and Conner. The Partnership Agreement requires
that partners holding 66.66% of the voting interest in the Partnership must
consent to any vote cast by the Partnership in its capacity as the sole common
stockholder of the Company. Pursuant to the Partnership Agreement, each partner
agrees to cause the Partnership to vote in favor of the election of Schulte,
Hall and Conner as directors of the Company. Because of the greater number of
common shares originally contributed to the Partnership by Fern, Fern will also
hold a non-voting preferred equity interest in the Partnership. This preferred
equity interest is entitled to a preference in any distributions until the
agreed value of the preferred interest, and all accrued interest thereon, is
paid. Generally, the partners are not permitted to transfer their interests in
the Partnership, although the Partnership Agreement does permit a partner to
transfer to family members the right to receive revenues due on the Partnership
interest. In connection with the Partnership Agreement, each of Fern, Hall and
Conner have agreed to grant each other a right of first refusal with respect to
their respective shares of preferred stock in the Company. The outstanding
preferred stock in the Company will continue to be held by Fern, Hall and
Conner individually and will not be held by the Partnership.

   The following table sets forth certain information regarding beneficial
ownership of the capital stock of the Company by (i) each stockholder expected
to own beneficially more than 5% of the outstanding capital stock of

                                      39

<PAGE>

the Company and (ii) each director or executive officer of the Company and all
directors and executive officers as a group.

<TABLE>
<CAPTION>
                                                        Shares of Common   Shares of Preferred
                                                        Stock Beneficially Stock Beneficially
                                                             Owned            Owned (a)
-                                                       -----------------  ------------------
Name                                                    Number    Percent   Number    Percent
----                                                     -------  -------   --------  -------
<S>                                                     <C>       <C>      <C>        <C>
SHC Investment Partnership............................. 6,408.3      100%        --      --
Fred C. Schulte........................................ 2,136.1   33 1/3%  11,621.7      58%
Charles D. Hall........................................ 2,136.1   33 1/3%   4,165.0      21%
Wayne J. Conner........................................ 2,136.1   33 1/3%   4,165.0      21%
Lynn C. Batory.........................................      --       --         --      --
David Hall.............................................      --       --         --      --
Mort Maurer............................................      --       --         --      --
Directors and executive officers as a group (6 persons) 6,408.3      100%  19,951.7     100%
</TABLE>
--------
(a)Does not include preferred stock units.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

   Members of Senior Management are indebted to the Company in the aggregate
net principal amount of $7,833,000, described below.

   Fred C. Schulte through his affiliate Fern Limited Partnership, a Delaware
limited partnership controlled by Mr. Schulte, is indebted to the Company in
the amount of $1,000,000 evidenced by a promissory note originally dated
September 24, 1993 from Fern Limited Partnership, and payable to the Company,
bearing interest at 5.35% per annum and maturing in December, 2007, subject to
certain mandatory prepayment requirements. Fern Limited Partnership is the
obligor on another promissory note dated September 24, 1993 and payable to the
Company in the amount of $1,603,000, bearing interest at 5.35% per annum and
maturing in December, 2007. This obligation is offset by two promissory notes
from the Company payable to Mr. Schulte in the aggregate amount of $1,603,000
and bearing the same 5.35% interest rate and December, 2007 maturity date. Fern
Limited Partnership is also indebted to the Company in the amount of $1,000,000
evidenced by a promissory note, dated December 23, 1997 bearing interest at
6.31% per annum and maturing in December, 2007.

   Fred C. Schulte is indebted to the Company in the amount of $3,200,000
evidenced by a promissory note, dated June 30, 1999, bearing interest at 5.37%
per annum and maturing in December, 2007

   Charles D. Hall is indebted to the Company in the amount of $516,500
evidenced by a promissory note, dated September 24, 1993, bearing interest at
6.42% per annum and maturing in December, 2007, subject to certain mandatory
prepayment requirements. Mr. Hall is indebted to the Company in the amount of
$300,000 evidenced by a promissory note, dated December 23, 1997 bearing
interest at 6.31% per annum and maturing in December, 2007. Mr. Hall is also
indebted to the Company in the amount of $500,000 evidenced by a promissory
note, dated June 30, 1999, bearing interest at 5.37% per annum and maturing in
December, 2007.

   Wayne J. Conner is indebted to the Company in the amount of $516,500
evidenced by a promissory note dated September 24, 1993 bearing interest at
6.42% per annum and maturing in December, 2007, subject to certain mandatory
prepayment requirements. Mr. Conner is indebted to the Company in the amount of
$300,000 evidenced by a promissory note, dated December 23, 1997 bearing
interest at 6.31% per annum and maturing in December, 2007. Mr. Conner is also
indebted to the Company in the amount of $500,000 evidenced by a promissory
note, dated June 30, 1999, bearing interest at 5.37% per annum and maturing in
December, 2007.

                                      40

<PAGE>

                                    PART IV

ITEM 14.  CONTROLS AND PROCEDURES

   Within the 90 days prior to filing date of this Report, our management,
including our Chief Executive Officer and our Chief Financial Officer,
conducted an evaluation of the effectiveness and design of our disclosure
controls and procedures pursuant to Rule 13a-15 of the Securities Exchange Act
of 1934 (the "Exchange Act"). Based upon that evaluation, our Chief Executive
Officer and our Chief Financial Officer each concluded that our disclosure
controls and procedures were effective. There have been no significant changes
in our internal controls or in other factors that could significantly affect
these controls subsequent to the date that they completed their evaluation.

   The term "disclosure controls and procedures" is defined in Rule 13a-14(c)
of the Exchange Act as "controls and other procedures designed to ensure that
information required to be disclosed by the issuer in the reports files or
submits 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." Our disclosure controls and procedures are designed to ensure
that material information relating to us and our consolidated subsidiaries is
accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate to allow timely decisions
regarding our required disclosures.

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

   (a) Financial Statements

      See "Index to Consolidated Financial Statements of Elgin National
   Industries,
      Inc." set forth in Item 8, "Financial Statements and Supplementary Data."

   (b) Financial Statement Schedule

      Schedule II  Valuation and Qualifying Accounts........................  42

       SCHEDULES OMITTED AS NOT REQUIRED OR INAPPLICABLE


          Schedule I -- Condensed financial information of registrant
          Schedule III -- Real estate and accumulated depreciation
          Schedule IV -- Mortgage loans on real estate
          Schedule V -- Supplemental information concerning property-casualty
          insurance operations

                                      41

<PAGE>

                                                                    SCHEDULE II

                        ELGIN NATIONAL INDUSTRIES, INC.

                       VALUATION AND QUALIFYING ACCOUNTS
                                (in thousands)

<TABLE>
<CAPTION>
                                              Additions
                                   Balance at Charged to            Balance at
                                   Beginning  Costs and               End of
  Description                      of Period   Expenses  Deductions   Period
  -----------                      ---------- ---------- ---------- ----------
  <S>                              <C>        <C>        <C>        <C>
  Allowance for doubtful accounts:
     Year ended December 31, 2000.   $  661      $356       $157      $  860
     Year ended December 31, 2001.      860       157        334         683
     Year ended December 31, 2002.      683       306        144         845
  Reserve for inventories:
     Year ended December 31, 2000.   $1,504      $256       $158      $1,602
     Year ended December 31, 2001.    1,602       392        232       1,762
     Year ended December 31, 2002.    1,762       248        490       1,520
</TABLE>

   C. Exhibits

      (i) A list of exhibits included as part of this Form 10-K is set forth in
   the Index to Exhibits that immediately precedes such Exhibits, which is
   incorporated herein by reference.

      (ii) Reports on Form 8-K

   Report dated January 24, 2002 for Item 5. No financial statements were filed
with this report.

   Report dated February 10, 2003 for Item 5. No financial statements were
filed with this report.

                                      42

<PAGE>

                                  SIGNATURES

   Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                          ELGIN NATIONAL INDUSTRIES, INC.

                                                 /S/  WAYNE J. CONNER
                                          By ___________________________________
                                                     Wayne J. Conner
                                          Vice President, Treasurer, and Chief
                                                     Financial Officer
                                              (Duly Authorized Officer and
                                               Principal Financial Officer)

Dated: March 27, 2003

   Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on March 27, 2003.

                                          ELGIN NATIONAL INDUSTRIES, INC.

                                                 /S/  WAYNE J. CONNER
                                          By ___________________________________
                                                     Wayne J. Conner
                                            Vice President, Treasurer and CFO
                                              (Duly Authorized Officer and
                                               Principal Financial Officer)

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

          Signature                        Title                   Date
          ---------                        -----                   ----

    /S/  FRED C. SCHULTE       Chairman of the Board, Chief   March 27, 2003
-----------------------------    Executive Officer and
       Fred C. Schulte           Director

    /S/  CHARLES D. HALL       President, Chief Operating     March 27, 2003
-----------------------------    Officer and Director
       Charles D. Hall

    /S/  WAYNE J. CONNER       Vice President, Treasurer,     March 27, 2003
-----------------------------    Chief Financial Officer and
       Wayne J. Conner           Director

     /S/  LYNN C. BATORY       Vice President, Controller     March 27, 2003
-----------------------------    and Secretary
       Lynn C. Batory

       /S/  DAVID HALL         Vice President of              March 27, 2003
-----------------------------    Manufacturing
         David Hall

                                      43

<PAGE>

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
      Exhibit                                                    Footnote
      Number                Document Description                 Reference
      ------  -------------------------------------------------  ---------
      <C>     <S>                                                <C>
        3.1   Certificate of Incorporation of Elgin National        (3)
              Industries, Inc.

        3.2   Bylaws of Elgin National Industries, Inc.             (3)

        4.1   Indenture dated November 5, 1997, between Elgin       (2)
              National Industries, Inc., subsidiaries and
              Norwest Bank Minnesota, as Trustee.

        4.2   Form of 11% Senior Note due 2007 (included in         (2)
              Exhibit 4.1).

        4.3   Registration Rights Agreement dated November 5,       (3)
              1997, by and among Elgin National Industries,
              Inc., certain of its subsidiaries, and
              BancAmerica Robertson Stephens and CIBC Wood
              Gundy Securities Corp.

        4.4   Form of Subsidiary Guaranty (included in Exhibit      (2)
              4.1).

       10.1   Credit Agreement dated as of September 24, 1993,      (2)
              as Amended and Restated as of November 5, 1997,
              by and among Elgin National Industries, Inc.,
              various financial institutions, and Bank of
              America National Trust and Savings Association,
              individually and as agent.

       10.2   Employment and Non-Competition Agreement dated as     (2)
              of November 5, 1997, between Elgin National
              Industries, Inc. and Fred C. Schulte.*

       10.3   Employment and Non-Competition Agreement dated as     (2)
              of November 5, 1997, between Elgin National
              Industries, Inc. and Charles D. Hall.*

       10.4   Employment and Non-Competition Agreement dated as     (2)
              of November 5, 1997, between Elgin National
              Industries, Inc. and Wayne J. Conner.*

       10.5   The Elgin National Industries, Inc. Supplemental      (3)
              Retirement Plan dated as of 1995, and effective
              January 1, 1995.*

       10.6   Credit Agreement dated as of September 24, 1993,      (4)
              as Amended and Restated as of January 18, 2001,
              by and among Elgin National Industries, Inc.,
              various financial institutions, and PNC Bank,
              National Association, individually and as agent.

       10.7   First Amendment to Credit Agreement dated as of       (4)
              September 24, 1993, as Amended and Restated as of
              January 18, 2001, and further amended as of March
              1, 2001 by and among Elgin National Industries,
              Inc., various financial institutions, and PNC
              Bank, National Association, individually and as
              agent.

       10.8   Second Amended to Credit Agreement dated as of        (4)
              September 24, 1993, as Amended and Restated as of
              January 18, 2001, and further amended as of June
              28, 2001 by and among Elgin National Industries,
              Inc., various financial institutions, and PNC
              Bank, National Association, individually and as
              agent.

       10.9   Third Amendment to Credit Agreement dated as of       (5)
              September 24, 1993, as Amended and Restated as of
              January 18, 2001, and further amended as of March
              31, 2002 by and among Elgin National Industries,
              Inc., various financial institutions, and PNC
              Bank, National Association, individually and as
              agent.

       10.10  Waiver and Fourth Amendment to Credit Agreement       (6)
              dated as of September 24, 1993, as Amended and
              Restated as of January 18, 2001, and further
              amended as of September 30, 2002 by and among
              Elgin National Industries, Inc., various
              financial institutions, and PNC Bank, National
              Association, individually and as agent.
</TABLE>

                                      44

<PAGE>

<TABLE>
<CAPTION>
      Exhibit                                                    Footnote
      Number                Document Description                 Reference
      ------  -------------------------------------------------  ---------
      <C>     <S>                                                <C>
       10.11  Loan and Security Agreement, dated February 10,       (7)
              2003 by and among Elgin National Industries, Inc.
              and each of its subsidiaries and Foothill Capital
              Corporation, as lender, Arranger and
              administrative agent and Ableco Finance LLC, as
              lender.

       10.12  Amendment to Employment and Non-Competition           (1)
              Agreement dated as of January 29, 2003, between
              Elgin National Industries, Inc. and Charles D.
              Hall.

       10.13  Amendment to Employment and Non-Competition           (1)
              Agreement dated as of January 29, 2003, between
              Elgin National Industries, Inc. and Fred C.
              Schulte.

       10.14  Amendment to Employment and Non-Competition           (1)
              Agreement dated as of January 29, 2003, between
              Elgin National Industries, Inc. and Wayne J.
              Conner.

       21     Subsidiaries of Elgin National Industries, Inc.       (2)

       99.1   Certification Pursuant to 18 U.S.C. Section 1350,     (1)
              as Adopted Pursuant to Section 906 of the
              Sabanes-Oxley Act of 2002.

       99.2   Certification Pursuant to 18 U.S.C. Section 1350,     (1)
              as Adopted Pursuant to Section 906 of the
              Sarbanes-Oxley Act of 2002.
</TABLE>
--------
(1)Filed within
(2)Incorporated by reference to Pre-Effective Form S-4 Registration Statement
   of the Company (File No. 333-43523) filed with the Commission on December
   30, 1997.
(3)Incorporated by reference to Pre-Effective Amendment No. 1 to Form S-4
   Registration Statement of the Company (File No. 333-43523) filed with the
   Commission on January 23, 1998.
(4)Incorporated by reference to Form 10-Q of the Company (File No. 001-03771)
   filed with the Commission on August 10, 2001.
(5)Incorporated by reference to Form 10-Q of the Company (File No. 001-05771)
   filed with the Commission on May 15, 2002.
(6)Incorporated by reference to Form 10-Q of the Company (File No. 001-05771)
   filed with the Commission on November 12, 2002.
(7)Incorporated by reference to Form 8-K of the Company (File No. 001-05771)
   filed with the Commission on February 18, 2003.
*  Management contract or compensatory plan or arrangement.

                                      45