<PAGE>

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                                 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, 2000

                                       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]

   As of March 20, 2001, there were outstanding 6,408.3 shares of Class A
Common Stock and 19,951.7 shares of Preferred Stock. 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.

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<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.........................................      6

  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...........................................     34

                                PART III

 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT..............     35

 11.  EXECUTIVE COMPENSATION..........................................     36

 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..     38

 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................     39

                                PART IV

 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
       FORM 8-K.......................................................     40
</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. In 1994, Elgin
National Industries, Inc. acquired K&M Inc. in order to broaden Mining
Controls' customer base into the heavy industrial and electric utility markets.
Later that same year, Soros Associates, Inc. was acquired to strengthen the
Engineering Services Segment's technical expertise in the development of marine
port facilities. In 1995, Elgin National Industries, Inc. sold the assets
constituting Ohio Rod's bicycle spoke and nipple product line and the stock of
GC Thorsen, Inc. and at the end of 1996, the stock of American Fastener
Corporation was sold. The foregoing acquisitions and divestitures assisted
Elgin National Industries, Inc. in reducing leverage and, Management believes,
focusing on strengthening its businesses.

   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") and Precision Screw & Bolt Inc. ("Precision"). The Engineering
Services Segment is comprised of Roberts & Schaefer Company ("R&S") and Soros
Associates, Inc. ("Soros").


                                       1
<PAGE>

 Manufactured Products Segment

   The Manufactured Products Segment, through its ten business units,
manufactures and markets products used primarily in the industrial equipment,
durable goods, mining, mineral processing and electric utility 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 39 years. Representative end-users of the products of the
Manufactured Products Segment include Consolidation Coal, General Electric,
American Electric Power, Safeguard/Swaco and R B & W Logistics. The
Manufactured Products Segment has a broad and diverse customer base, with no
single customer accounting for more than 5% of the Segment's sales in 2000.

   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, 2000, were $80.0 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. Over the past ten years, the
Engineering Services Segment has diversified into markets which include
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 2000. Net sales for the Engineering
Services Segment for the year ended December 31, 2000 were $83.3 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. They
also have a special expertise in offshore terminals, involving bulk loading and
unloading at open

                                       2
<PAGE>

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.

   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, 2000 was $83.1 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 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 2000,
approximately 17% 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 and Salt Lake City.
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.

   Primary competitors of the Engineering Services Segment include Watkins
Construction Company (coal, limestone and material handling), Industrial
Resources, Inc. (coal processing and material handling), and Svedala Industries
(coal and limestone handling). 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, motors 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

                                       3
<PAGE>

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, 2000, the Company had approximately 670 employees.
Approximately 14 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
IAM effective from March 1, 1998 through February 28, 2003. Approximately seven
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, 2002. 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
Precision           Cleveland, OH        Manufacturing   Leased     24,450
Vanco               Waukegan, IL         Distribution    Leased     78,000
R & S               Chicago, IL &        Office          Leased     16,200
                    Salt Lake City, UT   Office          Leased     25,267
Soros               Chicago, IL          Office          Leased      5,800
</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 early 1999 the Company settled a lawsuit relating to an engineering
contract claim. The Company received approximately $1.8 million in this
settlement. This settlement was reflected in the Company's 1999 financial
statements.

   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

                                       4
<PAGE>

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 affect 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, 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 39 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 affect 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, 2000. The Company did not
pay any dividends in the years ended December 31, 2000 and 1999.

                                       5
<PAGE>

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, 1996, 1997, 1998, 1999 and 2000 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.

                            Selected Financial Data

<TABLE>
<CAPTION>
                                      Fiscal Year Ended December 31,
                               ------------------------------------------------
                                 1996      1997      1998      1999      2000
                               --------  --------  --------  --------  --------
                                          (dollars in thousands)
<S>                            <C>       <C>       <C>       <C>       <C>
Statement of Operations Data:
Net sales....................  $135,651  $139,615  $156,054  $150,307  $163,370
Cost of sales................   100,119   102,744   118,390   110,917   124,378
                               --------  --------  --------  --------  --------
  Gross profit...............    35,532    36,871    37,664    39,390    38,992
Selling, general and
 administrative expenses.....    21,226    21,840    22,100    25,114    24,063
Amortization expense.........     3,085     3,447     2,128       779       775
                               --------  --------  --------  --------  --------
  Operating income...........    11,221    11,584    13,436    13,497    14,154
Other expenses:
  Interest expense, net......     3,340     3,471     8,190     7,844     7,676
                               --------  --------  --------  --------  --------
Income from continuing
 operations before income
 taxes.......................     7,881     8,113     5,246     5,653     6,478
Provision for income taxes...     3,191     3,187     2,141     2,519     2,605
                               --------  --------  --------  --------  --------
Income from continuing
 operations..................     4,690     4,926     3,105     3,134     3,873
Income from discontinued
 operations, net of income
 taxes(a)....................       174       122
                               --------  --------  --------  --------  --------
Income before extraordinary
 items.......................     4,864     5,048     3,105     3,134     3,873
Extraordinary gain (loss) on
 early extinguishment of
 debt, net of income tax(b)..                (582)                380
                               --------  --------  --------  --------  --------
    Net income...............  $  4,864  $  4,466  $  3,105  $  3,514  $  3,873
                               ========  ========  ========  ========  ========
Other Financial Data:
Gross margin %...............      26.2%     26.4%     24.2%     26.2%     23.9%
Depreciation and
 amortization(c).............  $  5,382  $  5,569  $  4,417  $  3,149  $  3,182
Capital expenditures(c)......     1,739     1,974     4,215     2,600     4,337
Net cash provided by
 operating activities........    17,506     1,008     5,388     7,602    10,674
Net cash provided by (used
 in) investing activities....     1,935    (1,948)   (3,939)   (8,506)   (6,395)
Net cash used in financing
 activities..................   (10,785)     (714)     (805)   (3,376)   (6,959)
Operating Unit Data:
Net Sales:
  Manufactured Products
   Segment...................  $ 78,952  $ 78,592  $ 82,097  $ 77,312  $ 80,036
  Engineering Services
   Segment...................    56,699    61,023    73,957    72,995    83,334
                               --------  --------  --------  --------  --------
    Total Net Sales..........  $135,651  $139,615  $156,054  $150,307  $163,370
                               ========  ========  ========  ========  ========
Balance Sheet Data(d):
Cash and cash equivalents....  $ 10,991  $  9,337  $  9,981  $  5,701  $  3,021
Working capital less cash and
 cash equivalents............     5,129    13,898    15,834     7,140    10,219
Property, plant and
 equipment, net..............    13,741    13,582    15,344    15,754    17,935
Total assets.................    95,914   100,351   103,710   106,704   112,464
Total debt...................    26,891    85,751    85,439    81,059    74,100
Redeemable preferred stock
 and redeemable preferred
 stock units.................    35,380    13,226    14,152    15,080    16,006
Stockholder's deficit........    (2,272)  (31,860)  (29,400)  (26,532)  (23,305)
</TABLE>
--------
(a) Income from discontinued operations is comprised of earnings of American
    Fastener Corporation (sold in 1996), along with the associated gain on the
    sale of the business, net of income taxes.
(b) In 1997 the loss on the early extinguishment of debt resulted from the
    retirement of subordinated debt from proceeds of the Senior Notes and
    included amortization of the remaining financing costs and a prepayment
    penalty. 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.
(c) Excludes depreciation, amortization and capital expenditures related to
    discontinued operations and extraordinary gain or loss.
(d) Includes the balance sheet data of discontinued operations.

                                       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
twelve 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,
                                     ----------------------------------------
                                         1998          1999          2000
                                     ------------  ------------  ------------
<S>                                  <C>    <C>    <C>    <C>    <C>    <C>
Net sales........................... $156.1 100.0% $150.3 100.0% $163.4 100.0%
Cost of sales.......................  118.4  75.8   110.9  73.8   124.4  76.1
Gross profit........................   37.7  24.2    39.4  26.2    39.0  23.9
Selling, general & administrative
 expenses...........................   22.1  14.2    25.1  16.7    24.0  14.7
Amortization expense................    2.1   1.4     0.8   0.5     0.8   0.5
Operating income....................   13.5   8.6    13.5   9.0    14.2   8.7
Interest expense, net...............    8.2   5.2     7.9   5.2     7.7   4.7
Income from continuing operations
 before income taxes................    5.3   3.4     5.6   3.8     6.5   4.0
Provision for income taxes..........    2.2   1.4     2.5   1.7     2.6   1.6
Income before extraordinary item....    3.1   2.0     3.1   2.1     3.9   2.4
Extraordinary item, net of income
 taxes..............................                  0.4   0.2
Net income..........................    3.1   2.0     3.5   2.3     3.9   2.4

                         Manufactured Products Segment
                             (dollars in millions)

<CAPTION>
                                     For the Fiscal Year Ended December 31,
                                     ----------------------------------------
                                         1998          1999          2000
                                     ------------  ------------  ------------
<S>                                  <C>    <C>    <C>    <C>    <C>    <C>
Net sales........................... $ 82.1 100.0% $ 77.3 100.0% $ 80.0 100.0%
Cost of sales.......................   54.3  66.2    50.6  65.4    52.4  65.5
Gross profit........................   27.8  33.8    26.7  34.6    27.6  34.5

                          Engineering Services Segment
                             (dollars in millions)

<CAPTION>
                                     For the Fiscal Year Ended December 31,
                                     ----------------------------------------
                                         1998          1999          2000
                                     ------------  ------------  ------------
<S>                                  <C>    <C>    <C>    <C>    <C>    <C>
Net sales........................... $ 74.0 100.0% $ 73.0 100.0% $ 83.4 100.0%
Cost of sales.......................   64.1  86.6    60.3  82.6    72.0  86.3
Gross profit........................    9.9  13.4    12.7  17.4    11.4  13.7
</TABLE>

 Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

   Net Sales: Net sales for the Manufactured Products Segment for the year
ended December 31, 2000 increased $2.7 million, or 3.5%, to $80.0 million from
$77.3 million for the corresponding period in 1999. Increased sales of screen
and screen parts, industrial capital equipment and electronic components were
partially offset with decreased sales of specialty fasteners and decreased
steel fabrication sales.

   Net sales for the Engineering Services Segment for the year ended December
31, 2000 increased $10.3 million, or 14.2%, to $83.3 million from $73.0 million
for the corresponding period in 1999 due primarily to increased sales of larger
engineering jobs with sales greater than $1.0 million. In 2000 the

                                       8
<PAGE>

Engineering Services Segment had $69.7 million in sales from seventeen larger
jobs compared to $58.5 million from fifteen jobs for 1999. This increase was
partially offset with decreased sales on smaller projects with sales less than
$1.0 million. For the year ended December 31, 2000 sales of smaller engineering
jobs totaled $13.6 million compared to $14.5 million for the corresponding
period in 1999.

   Cost of Sales: Cost of sales for the Manufactured Products Segment for the
year ended December 31, 2000 increased $1.8 million, or 3.6%, to $52.4 million
from $50.6 million for the corresponding period in 1999 primarily due to an
overall increased sales level. The Manufactured Products Segment's cost of
sales as a percentage of net sales increased slightly to 65.5% for the year
ended December 31, 2000 from 65.4% for the corresponding period in 1999.

   Cost of sales for the Engineering Services Segment for the year ended
December 31, 2000 increased $11.7 million, or 19.3%, to $72.0 million from
$60.3 million for the corresponding period in 1999. The cost of sales for the
year ended December 31, 1999 included a reduction of approximately $1.6 million
due to the favorable settlement of a lawsuit relating to an engineering
contract claim. Without the effect of this settlement the cost of sales would
have increased $10.1 million primarily due to favorable closeouts on some
larger projects in 1999. As a percentage of net sales, the Engineering Services
Segment's cost of sales increased to 86.3% for the year ended December 31, 2000
from 82.6% for the corresponding period in 1999.

   Gross Profit: Gross profit for the Manufactured Products Segment for the
year ended December 31, 2000 increased $0.9 million, or 3.3%, to $27.6 million
from $26.7 million for the corresponding period in 1999 due to the increased
sales level. The Manufactured Products Segment's gross profit as a percentage
of net sales decreased slightly to 34.5% for the year ended December 31, 2000
from 34.6% for the corresponding period in 1999.

   Gross profit of the Engineering Services Segment for the year ended December
31, 2000 decreased $1.3 million, or 10.2%, to $11.4 million from $12.7 million
for the corresponding period in 1999 primarily due to a reduction of the cost
of sales of $1.6 million in 1999 due to a settlement of a lawsuit described
above and due to higher margins earned on larger projects and to favorable
closeouts on some larger projects in 1999, partially offset with the higher
sales level in the year ended December 31, 2000. As a percentage of net sales,
the Engineering Services Segment's gross profit decreased to 13.7% for the year
ended December 31, 2000 from 17.4% for the corresponding period in 1999.

   Selling, General and Administrative Expenses: Selling, general and
administrative expenses of the Company of $24.1 million for the year ended
December 31, 2000 represented a decrease of $1.0 million in comparison to $25.1
million for the corresponding period in 1999 primarily due to lower proposal
costs, a decreased provision for receivables within the Engineering Services
Segment and higher pension income at Corporate.

   Amortization Expense: Amortization expense of $0.8 million for the year
ended December 31, 2000 approximated the amortization expense in 1999.

   Operating Income: Operating income of the Company for the year ended
December 31, 2000 of $14.2 million was $0.7 million higher than the operating
income of $13.5 million for the corresponding period in 1999 for the reasons
discussed above. Operating income as a percentage of net sales decreased to
8.7% for the year ended December 31, 2000 from 9.0% for the corresponding
period in 1999.

   Interest Income: Interest income of the Company for the year ended December
31, 2000 of $0.9 million decreased $0.3 million or 30.0% from $1.2 million for
the year ended December 31, 1999. This decrease was due to interest received on
a lawsuit settlement described above in 1999 along with decreased interest
bearing deposits in 2000.


                                       9
<PAGE>

   Interest Expense Interest expense of the Company for the year ended December
31, 2000 of $8.5 million decreased $0.6 million or 5.9% from $9.1 million for
the corresponding period in 1999 due to the decreased debt outstanding.

   Income from Continuing Operations Before Income Taxes: Income from
continuing operations before income taxes for the year ended December 31, 2000
increased $0.8 million, or 14.6%, to $6.5 million from $5.7 million for the
corresponding period in 1999 for the reasons discussed above. Income from
continuing operations, before income taxes, as a percentage of net sales was
4.0% for the year ended December 31, 2000 compared to 3.8% for the year ended
1999.

   Provision for Income Taxes: Provision for income taxes for the year ended
December 31, 2000 increased $0.1 million to $2.6 million from $2.5 million the
year ended December 31, 1999. The Company's effective tax rate decreased to 40%
in 2000 from 44% in 1999 primarily due to lower foreign and state taxes.

   Income before Extraordinary Item: Income before extraordinary item for the
year ended December 31, 2000 of $3.9 million increased $0.8 million or 23.6%
from $3.1 million for the corresponding period in 1999 for the reasons
discussed above. Income before extraordinary item as a percentage of net sales
increased to 2.4% for the year ended December 31, 2000 from 2.1% for the
corresponding period in 1999.

   Extraordinary Item, Net of Income Taxes: The extraordinary item of $0.4
million for the year ended December 31, 1999 was the gain on the early
extinguishment of debt that resulted from the repurchase of $11.1 million in
Senior Notes at a discount, partially offset with amortization of the remaining
financing costs related to the notes repurchased.

   Net Income: The net income for the Company for the year ended December 31,
2000 increased $0.4 million, or 10.2%, to $3.9 million from $3.5 million for
the year ended December 31, 1999 for the reasons discussed above. Net income as
a percentage of net sales increased to 2.4% for the year ended December 31,
2000 from 2.3% for the corresponding year ended 1999.

 Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

   Net Sales: Net sales for the Manufactured Products Segment for the year
ended December 31, 1999 decreased $4.8 million, or 5.8%, to $77.3 million from
$82.1 million for the corresponding period in 1998. Decreased sales of
powertrain fasteners, centrifugal dryers, high voltage equipment and industrial
capital equipment were partially offset with increased steel fabrication sales.

   Net sales for the Engineering Services Segment for the year ended December
31, 1999 decreased $1.0 million, or 1.3%, to $73.0 million from $74.0 million
for the corresponding period in 1998 due primarily to decreased sales of
smaller engineering jobs with sales less than $1.0 million. In 1999 the
Engineering Services Segment had $14.5 million in sales from smaller jobs
compared to $18.8 million for 1998. This decrease was partially offset with
increased sales on larger projects with sales over $1.0 million. For the year
ended December 31, 1999, sales of $58.5 million were reported on fifteen larger
projects, exceeding sales of $55.2 million reported on sixteen larger projects
for the corresponding period in 1998.

   Cost of Sales: Cost of sales for the Manufactured Products Segment for the
year ended December 31, 1999 decreased $3.7 million, or 6.9%, to $50.6 million
from $54.3 million for the corresponding period in 1998 primarily due to an
overall decreased sales level. The Manufactured Products Segment's cost of
sales as a percentage of net sales decreased to 65.4% for the year ended
December 31, 1999 from 66.2% for the corresponding period in 1998 primarily due
to lower costs as a percentage of sales on fastener sales and screen and
related parts sales, partially offset with higher costs on centrifugal dryer
sales.

   Cost of sales for the Engineering Services Segment for the year ended
December 31, 1999 decreased $3.8 million, or 5.8%, to $60.3 million from $64.1
million for the corresponding period in 1998. The cost of

                                       10
<PAGE>

sales for the year ended December 31, 1999 included a reduction of
approximately $1.6 million due to the favorable settlement of a lawsuit
relating to an engineering contract claim. Without the effect of this
settlement the cost of sales would have decreased $2.2 million primarily due to
favorable closeouts on some larger projects. As a percentage of net sales, the
Engineering Services Segment's cost of sales decreased to 82.6% for the year
ended December 31, 1999 from 86.6% for the corresponding period in 1998.

   Gross Profit: Gross profit for the Manufactured Products Segment for the
year ended December 31, 1999 decreased $1.1 million, or 3.7%, to $26.7 million
from $27.8 million for the corresponding period in 1998 due to the decreased
sales level, partially offset with lower costs as a percentage of sales. The
Manufactured Products Segment's gross profit as a percentage of net sales
increased to 34.6% for the year ended December 31, 1999 from 33.8% for the
corresponding period in 1998. The increase in the gross profit was primarily
due to increased margins on fastener sales and screen and screen parts sales,
partially offset with a lower gross profit margin earned on centrifugal dryer
sales.

   Gross profit of the Engineering Services Segment for the year ended December
31, 1999 increased $2.8 million, or 27.9%, to $12.7 million from $9.9 million
for the corresponding period in 1998 primarily due to a reduction of the cost
of sales of $1.6 million due to a settlement of a lawsuit described above and
due to higher margins earned on larger projects. As a percentage of net sales,
the Engineering Services Segment's gross profit increased to 17.4% for the year
ended December 31, 1999 from 13.4% for the corresponding period in 1998.

   Selling, General and Administrative Expenses: Selling, general and
administrative expenses of the Company of $25.1 million for the year ended
December 31, 1999 increased $3.0 million in comparison to $22.1 million for the
corresponding period in 1998 primarily due to higher proposal costs, an
increased provision for receivables and higher professional fees within the
Engineering Services Segment. The Manufactured Products Segment incurred
increased warranty costs and higher costs related to the sales efforts of
centrifugal dryers. Selling, general and administrative expenses as a
percentage of net sales increased to 16.7% for the year ended December 31, 1999
from 14.2% for the corresponding period in 1998 due to decreased net sales.

   Amortization Expense: Amortization expense of the Company for the year ended
December 31, 1999 decreased $1.3 million, or 63.4%, to $0.8 million from $2.1
million for the corresponding period in 1998. The decrease in amortization
expense resulted from the completion of the non-compete amortization in 1998.

   Operating Income: Operating income of the Company for the year ended
December 31, 1999 of $13.5 million approximated the operating income for the
corresponding period in 1998 for the reasons discussed above. Operating income
as a percentage of net sales increased to 9.0% for the year ended December 31,
1999 from 8.6% for the corresponding period in 1998.

   Interest Income: Interest income of the Company for the year ended December
31, 1999 increased $0.1 million or 11.2%. This increase was due to interest
received on a lawsuit settlement described above, partially offset with
decreased interest bearing deposits.

   Interest Expense: Interest expense of the Company for the year ended
December 31, 1999 decreased $0.2 million or 2.4% due to the decreased debt
outstanding and a slightly lower interest rate compared to 1998.

   Income from Continuing Operations Before Income Taxes: Income from
continuing operations before income taxes for the year ended December 31, 1999
increased $0.3 million, or 7.8%, to $5.6 million from $5.3 million for the
corresponding period in 1998 for the reasons discussed above. Income from
continuing operations, before income taxes, as a percentage of net sales was
3.8% for the year ended December 31, 1999 compared to 3.4% for the year ended
1998.

   Provision for Income Taxes: Provision for income taxes for the year ended
December 31, 1999 increased $0.3 million or 17.7% to $2.5 million from $2.2
million the year ended December 31, 1998. The Company's

                                       11
<PAGE>

effective tax rate increased to 44.0% in 1999 from 40.8% in 1998 primarily due
to higher foreign and state taxes.

   Income from Continuing Operations: Income from continuing operations of the
Company for the year ended December 31, 1999 of $3.1 million approximated
income from continuing operations for the corresponding period in 1998 for the
reasons discussed above. Income from continuing operations as a percentage of
net sales increased to 2.1% for the year ended December 31, 1999 from 2.0% for
the corresponding period in 1998.

   Extraordinary Item, Net of Income Taxes: The extraordinary item of $0.4
million for the year ended December 31, 1999 was the gain on the early
extinguishment of debt that resulted from the repurchase of $11.1 million in
Senior Notes at a discount, partially offset with amortization of the remaining
financing costs related to the notes repurchased.

   Net Income: The net income for the Company for the year ended December 31,
1999 increased $0.4 million, or 13.2%, to $3.5 million from $3.1 million for
the year ended December 31, 1998 for the reasons discussed above. Net income as
a percentage of net sales increased to 2.3% for the year ended December 31,
1999 from 2.0% for the corresponding year ended 1998.

Liquidity and Capital Resources

   Net cash provided by operating activities for the year ended December 31,
2000 was $10.7 million, due to $7.0 million generated from net income and non-
cash charges. and $3.7 million net cash provided by operating assets and
liabilities. 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, 2000 of
$6.4 million consisted of $4.3 million for capital expenditures in accordance
with the Company's regular practice of upgrading and maintaining its equipment
base and facilities and $2.1 million, net of cash acquired of $0.2 million, for
the stock acquisiton of Precision Screw & Bolt Inc. ("Precision") in October,
2000. Precision is a manufacturer of specialty fasteners located in Cleveland,
Ohio. Precision has 18 employees and has been in business since 1986.

   Cash used in financing activities for 2000 of $7.0 million included $7.0
million for the repayment of principal outstanding on the revolver loan and
$0.1 million of scheduled debt repayments, partially offset with $0.1 million
in borrowings on a mortgage in connection with land purchased.

   The Company's liquidity requirements, both long term (over one year) and
short term, are for working capital, capital expenditures and debt service. The
primary source for meeting these needs has been funds provided by operations.
Based on current and planned operations the Company believes that funds
provided by operations, along with cash on hand, will be adequate to meet its
anticipated debt service requirements, working capital needs and capital
expenditures. At December 31, 2000 the Company had a Senior Credit Facility
which provided a $20.0 million revolving line of credit, subject to borrowing
base limitations. There were no borrowings under the Senior Credit Facility
(excluding $3.6 million in outstanding letters of credit and excluding payment
and performance bonds) at that date. On January 18, 2001 the Senior Credit
Facility was amended to increase the borrowing capacity of the revolver loan up
to $23,000,000 (less any outstanding letters of credit) based on a monthly
variable borrowing base. In addition the Senior Credit Facility was amended to
include a $12,000,000 term loan. Both the revolver and the term loan have a
maturity of January 18, 2005. The term loan will require quarterly principal
payments of $750,000 beginning April 2001. The increased debt capacity of the
amended Senior Credit Facility has allowed the Company to acquire Leland Powell
Fasteners, Inc. ("Leland") on January 18, 2001. The purchase price of Leland
was approximately $20 million. Leland is a manufacturer of specialty fasteners
located in Martin, Tennessee. Leland Powell has 53 employees and has been in
business since 1968.

                                       12
<PAGE>

Backlog

   The Company's backlog consists primarily 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, 2000 was $92.5 million. Approximately $9.3 million relates to the
Manufactured Products Segment, with the remainder of $83.2 million relating to
the Engineering Services Segment. Within the Engineering Services Segment's
backlog at December 31, 2000, $57.8 million relates to three engineering,
procurement and construction management projects of material handling systems,
and $5.0 million relates to the procurement of coal processing equipment for a
coal preparation facility. 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 2000, approximately 11% of the Company's net sales were attributable to
products sold or services provided outside of the United States. In 2000, the
majority of the Company's foreign sales were to companies located in Egypt,
Australia, and Poland. 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 Accountants--Ernst & Young, L.L.P..................  15

Consolidated Balance Sheets as of December 31, 2000 and December 31,
 1999....................................................................  16

Consolidated Statements of Income for the years ended December 31, 2000,
 1999 and 1998...........................................................  17

Consolidated Statements of Changes in Common Stockholder's Deficit for
 the years ended December 31, 2000, 1999 and 1998........................  18

Consolidated Statements of Cash Flows for the years ended December 31,
 2000, 1999 and 1998.....................................................  19

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

                                       14
<PAGE>

                       REPORT OF INDEPENDENT ACCOUNTANTS

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

   We have audited the balance sheets of Elgin National Industries, Inc. and
Subsidiary Companies as of December 31, 2000 and 1999, and the related
statements of income, changes in common stockholder's deficit and cash flows
for each of the three years ended December 31, 2000. Our audit also included
the financial schedule listed in the index at Item 14(b). 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,
2000 and 1999 and the consolidated results of their operations and their cash
flows for each of the three years ended December 31, 2000, 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 statements, taken as a whole, presents fairly in all material
respects the information set therein.

                                          Ernst & Young LLP

Chicago, Illinois
February 21, 2001

                                       15
<PAGE>

            ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

                          CONSOLIDATED BALANCE SHEETS
                           December 31, 2000 and 1999
                        (in thousands except share data)

<TABLE>
<CAPTION>
                          ASSETS                              2000      1999
                          ------                            --------  --------
<S>                                                         <C>       <C>
Current assets:
  Cash and cash equivalents................................ $  3,021  $  5,701
  Accounts receivable, net.................................   29,072    27,425
  Inventories, net.........................................   15,838    14,492
  Prepaid expenses and other assets........................    2,202       891
    Deferred income taxes..................................    3,251     3,322
                                                            --------  --------
Total current assets.......................................   53,384    51,831
Property, plant and equipment, net.........................   17,935    15,754
Loans receivable to related parties........................    7,833     7,833
Other assets...............................................   24,789    23,686
Goodwill and intangibles...................................    8,523     7,600
                                                            --------  --------
    Total assets........................................... $112,464  $106,704
                                                            ========  ========

<CAPTION>
       LIABILITIES AND COMMON STOCKHOLDER'S DEFICIT
       --------------------------------------------

<S>                                                         <C>       <C>
Current liabilities:
  Current portion of long-term debt........................ $     50  $  7,109
  Accounts payable.........................................   29,326    21,074
  Accrued expenses.........................................   10,768    10,807
                                                            --------  --------
    Total current liabilities..............................   40,144    38,990
Long-term debt less current portion........................   74,050    73,950
Other liabilities..........................................    2,153     2,194
Deferred income taxes......................................    3,416     3,022
                                                            --------  --------
    Total liabilities......................................  119,763   118,156
                                                            --------  --------
Redeemable preferred stock units...........................   12,561    11,834
                                                            --------  --------
Redeemable preferred stock.................................    3,445     3,246
                                                            --------  --------
Common stockholder's deficit:
  Common stock, Class A par value $.01 per share;
   authorized 23,678 shares; 6,408 issued and outstanding
   as of December 31, 2000 and 1999
  Retained deficit.........................................  (23,305)  (26,532)
                                                            --------  --------
    Total common stockholder's deficit.....................  (23,305)  (26,532)
                                                            --------  --------
    Total liabilities and stockholder's deficit............ $112,464  $106,704
                                                            ========  ========
</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 INCOME
              For the Years Ended December 31, 2000, 1999 and 1998
                                 (in thousands)

<TABLE>
<CAPTION>
                                                   2000      1999      1998
                                                 --------  --------  --------
<S>                                              <C>       <C>       <C>
Net sales....................................... $163,370  $150,307  $156,054
Cost of sales...................................  124,378   110,917   118,390
                                                 --------  --------  --------
  Gross profit..................................   38,992    39,390    37,664
Selling, general and administrative expenses....   24,063    25,114    22,100
Amortization expense............................      775       779     2,128
                                                 --------  --------  --------
  Operating income..............................   14,154    13,497    13,436
Other expenses (income)
  Interest income...............................     (850)   (1,215)   (1,093)
  Interest expense..............................    8,526     9,059     9,283
                                                 --------  --------  --------
Income before income taxes......................    6,478     5,653     5,246
Provision for income taxes......................    2,605     2,519     2,141
                                                 --------  --------  --------
Income before extraordinary item................    3,873     3,134     3,105
                                                 --------  --------  --------
Extraordinary gain on early extinguishment of
 debt, net of tax of $239.......................                380
                                                 --------  --------  --------
Net income...................................... $  3,873  $  3,514  $  3,105
                                                 ========  ========  ========
</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, 2000, 1999 and 1998
                        (in thousands except share data)

<TABLE>
<CAPTION>
                                                                     Total
                                               Common Retained   Stockholder's
                                               Stock  (Deficit)     Deficit
                                               ------ ---------  -------------
<S>                                            <C>    <C>        <C>
Balance as of December 31, 1997............... $      $(31,860)    $(31,860)
Net income for the year ended December 31,
 1998.........................................           3,105        3,105
Redeemable preferred stock dividends (19,952
 shares at $10.00 per share)..................            (199)        (199)
Redeemable preferred stock unit dividend
 equivalent, net of tax of $281...............            (446)        (446)
                                               -----  --------     --------
Balance as of December 31, 1998...............         (29,400)     (29,400)
                                               =====  ========     ========
Net income for the year ended December 31,
 1999.........................................           3,514        3,514
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, 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)
                                               =====  ========     ========
</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, 2000, 1999 and 1998
                                 (in thousands)

<TABLE>
<CAPTION>
                                                     2000      1999     1998
                                                    -------  --------  -------
<S>                                                 <C>      <C>       <C>
Cash flows from operating activities:
  Net income....................................... $ 3,873  $  3,514  $ 3,105
  Adjustments to reconcile net income to net cash
   provided by operating activities:
    Depreciation...................................   2,407     2,370    2,289
    Amortization...................................     775       779    2,128
    Provision (benefit) for deferred income taxes..     746       235     (234)
    Provision for doubtful accounts and notes
     receivable....................................     356       907       95
    Provision for inventories......................     256       332      570
    Gain on the early retirement of debt...........              (619)
    Income from pension overfunding................  (1,427)   (1,174)  (1,125)
    Gain on the disposal of assets.................      (5)      (20)    (112)
  Changes in assets and liabilities:
    Accounts receivable............................  (1,644)       54     (129)
    Inventories....................................  (1,340)      (50)    (953)
    Prepaid expenses and other assets..............    (987)   (1,766)     169
    Accounts payable, accrued expenses, and other
     liabilities...................................   7,664     3,040     (415)
                                                    -------  --------  -------
      Net cash provided by operating activities....  10,674     7,602    5,388
                                                    -------  --------  -------
Cash flows from investing activities:
  Proceeds from the sale of assets.................      20        41      276
  Purchase of property, plant and equipment........  (4,337)   (2,600)  (4,215)
  Issuance of notes receivable to related parties..            (4,200)
  Business acquired, net of cash...................  (2,078)   (1,747)
                                                    -------  --------  -------
      Net cash used by investing activities........  (6,395)   (8,506)  (3,939)
                                                    -------  --------  -------
Cash flows from financing activities:
  Debt issuance costs..............................                       (493)
  Borrowings on long-term debt.....................     150     7,000
  Repayments of long-term debt.....................  (7,109)  (10,376)    (312)
                                                    -------  --------  -------
      Net cash used in financing activities........  (6,959)   (3,376)    (805)
                                                    -------  --------  -------
Net (decrease) increase in cash....................  (2,680)   (4,280)     644
Cash and cash equivalents at beginning of period...   5,701     9,981    9,337
                                                    -------  --------  -------
Cash and cash equivalents at end of period......... $ 3,021  $  5,701  $ 9,981
                                                    =======  ========  =======
</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 generally
accepted accounting principles 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.

 (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.


                                       20
<PAGE>

            ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

 (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 and Intangibles

   The excess of cost over fair value of the net assets acquired is reflected
in the consolidated financial statements as goodwill and is being amortized
using the straight-line method over a period of twenty years. The Company
assesses recoverability of goodwill based on an evaluation of undiscounted
projected cash flows of the acquired business through the remaining
amortization period. 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.

   Intangibles consist primarily of financing and acquisition costs and are
being amortized using the straight-line method over a period of three to ten
years.

 (h) Income Taxes

   Deferred income taxes are recognized for the tax consequences in future
years of differences between the tax bases of assets and liabilities and their
financial reporting amounts at December 31, 2000 and 1999 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 $527,000, $557,000 and $560,000 for the
years ended December 31, 2000, 1999 and 1999 respectively.


                                       21
<PAGE>

            ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

 (l) Adoption of Accounting Principles

   The Company will implement the provisions of Statement of Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS No. 133"), which will be effective for fiscal years
beginning after June 15, 2000. SFAS No. 133 requires all derivatives to be
recognized in the statement of financial position as either assets or
liabilities and measured at fair value. In addition, all hedging relationships
must be designated, reassessed and documented pursuant to the provisions of
SFAS No. 133. The Company will be required to adopt SFAS No. 133 on January 1,
2001. Management believes the adoption of SFAS No. 133 will not have a material
effect on the Company.

 (m) Reclassification

   Certain amounts in the 1999 and 1998 financial statements have been
reclassified to conform to the 2000 presentation.

3. Accounts Receivable

   Accounts receivable consist of:

<TABLE>
<CAPTION>
                                                                December 31,
                                                               ---------------
                                                                2000    1999
                                                               ------- -------
                                                               (in thousands)
   <S>                                                         <C>     <C>
   Trade accounts............................................. $ 9,046 $ 9,558
                                                               ------- -------
   Construction contracts:
     Billed...................................................  16,578  13,782
     Costs and estimated earnings in excess of billings on
      contracts...............................................     468   2,307
     Retainage due upon completion of contracts...............   3,527   2,040
                                                               ------- -------
                                                                20,573  18,129
                                                               ------- -------
   Other receivables..........................................     313     399
                                                               ------- -------
                                                                29,932  28,086
   Less allowance for doubtful accounts.......................     860     661
                                                               ------- -------
                                                               $29,072 $27,425
                                                               ======= =======
</TABLE>

   Billings exceeded related costs and gross profit recognized on certain
contracts by $16,762,000 and $11,094,000 as of December 31, 2000 and 1999,
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, 2000 will be collected in 2001.

   A significant portion of the Company's business activity is concentrated
within the coal mining industry. Accounts receivable at December 31, 2000 and
1999 from companies within the coal mining industry were $17,300,000 and
$17,306,000, respectively.

                                       22
<PAGE>

            ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


4. Inventories

   Inventories consist of:

<TABLE>
<CAPTION>
                                                                 December 31,
                                                                ---------------
                                                                 2000    1999
                                                                ------- -------
                                                                (in thousands)
   <S>                                                          <C>     <C>
   Finished goods.............................................. $10,168 $ 9,177
   Work-in-process.............................................   1,356   1,495
   Raw materials...............................................   5,916   5,324
                                                                ------- -------
                                                                 17,440  15,996
   Less excess and obsolete reserve............................   1,602   1,504
                                                                ------- -------
                                                                $15,838 $14,492
                                                                ======= =======
</TABLE>

5. Property, Plant and Equipment

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

<TABLE>
<CAPTION>
                                                                 December 31,
                                                                ---------------
                                                                 2000    1999
                                                                ------- -------
                                                                (in thousands)
   <S>                                                          <C>     <C>
   Land........................................................ $ 2,176 $ 1,926
   Buildings and improvements..................................   9,645   7,282
   Machinery and equipment.....................................  21,181  19,476
                                                                ------- -------
                                                                 33,002  28,684
   Less accumulated depreciation...............................  15,067  12,930
                                                                ------- -------
                                                                $17,935 $15,754
                                                                ======= =======
</TABLE>

   Depreciation expense for the years ended December 31, 2000, 1999 and 1998
was $2,407,000, $2,370,000 and $2,289,000, respectively.

6. Goodwill and Intangibles

   The components of goodwill and intangibles are as follows:

<TABLE>
<CAPTION>
                                                                 December 31,
                                                                ---------------
                                                                 2000    1999
                                                                ------- -------
                                                                (in thousands)
   <S>                                                          <C>     <C>
   Goodwill.................................................... $ 9,457 $ 7,759
   Financing and acquisition costs.............................   3,793   4,192
                                                                ------- -------
                                                                 13,250  11,951
   Less accumulated amortization...............................   4,727   4,351
                                                                ------- -------
                                                                $ 8,523 $ 7,600
                                                                ======= =======
</TABLE>

   Amortization expense, including amounts related to the early extinguishment
of debt, was $775,000, $1,164,000 and $2,128,000, for the years ended December
31, 2000, 1999 and 1998, respectively.

                                       23
<PAGE>

            ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


7. Accounts Payable and Accrued Expenses

   Accounts payable and accrued expenses consist of:

<TABLE>
<CAPTION>
                                                                December 31,
                                                               ---------------
                                                                2000    1999
                                                               ------- -------
                                                               (in thousands)
   <S>                                                         <C>     <C>
   Accounts payable--trade.................................... $12,126 $ 9,596
   Accounts payable--other....................................     438     384
   Billings on contracts in excess of costs and gross profit
    recognized................................................  16,762  11,094
   Accrued payroll and commissions............................   3,220   3,229
   Other accruals.............................................   7,548   7,578
                                                               ------- -------
                                                               $40,094 $31,881
                                                               ======= =======
</TABLE>

8. Income Taxes

   The types of temporary differences between the tax bases 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,
                                                               ----------------
                                                                2000     1999
                                                               -------  -------
                                                               (in thousands)
   <S>                                                         <C>      <C>
   Accounts receivable........................................ $   440  $   209
   Inventories................................................     487      540
   Accrued expenses...........................................   2,200    2,302
   Intangibles................................................   1,668    1,935
   Redeemable preferred stock units...........................   4,300    3,927
   State net operating loss carry forward.....................     124      271
                                                               -------  -------
     Total deferred tax asset.................................   9,219    9,184
                                                               -------  -------
   Prepaid pension............................................  (8,734)  (8,145)
   Property plant & equipment.................................    (650)    (739)
                                                               -------  -------
     Total deferred tax liability.............................  (9,384)  (8,884)
                                                               -------  -------
   Net deferred tax (liability) asset......................... $  (165) $   300
                                                               =======  =======
</TABLE>

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

<TABLE>
<CAPTION>
                                                          Years Ended December
                                                                  31,
                                                          ---------------------
                                                           2000   1999    1998
                                                          ------ ------  ------
                                                             (in thousands)
   <S>                                                    <C>    <C>     <C>
   Current
     Federal............................................. $1,761 $2,133  $2,015
     State...............................................    354    468     253
     Foreign.............................................     25    209     107
   Deferred
     Federal.............................................    381    (43)   (192)
     State...............................................     84     (9)    (42)
                                                          ------ ------  ------
                                                          $2,605 $2,758  $2,141
                                                          ====== ======  ======
</TABLE>


                                       24
<PAGE>

            ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


8. Income Taxes, continued

   Allocation of the provision for income taxes in the 2000, 1999 and 1998
consolidated statements of income include the following:

<TABLE>
<CAPTION>
                                                         Years Ended December
                                                                  31,
                                                        -----------------------
                                                         2000    1999    1998
                                                        ------- ------- -------
                                                            (in thousands)
   <S>                                                  <C>     <C>     <C>
   Continuing operations............................... $ 2,605 $ 2,519 $ 2,141
   Extraordinary gain--tax.............................             239
                                                        ------- ------- -------
                                                        $ 2,605 $ 2,758 $ 2,141
                                                        ======= ======= =======
</TABLE>

   The Company's effective tax rates of 40%, 44% and 41% for the years ended
December 31, 2000, 1999 and 1998, respectively, differ from the statutory
federal tax rate of 34% as follows:

<TABLE>
<CAPTION>
                                                           Years Ended December
                                                                   31,
                                                           --------------------
                                                            2000   1999   1998
                                                           ------ ------ ------
                                                              (in thousands)
   <S>                                                     <C>    <C>    <C>
   Income before income taxes............................. $6,478 $6,272 $5,246
                                                           ====== ====== ======
   Statutory federal income tax........................... $2,203 $2,133 $1,784
   State taxes, net of federal benefit....................    234    309    167
   Foreign sales corporation income tax...................     65     47     45
   Other items............................................    103    269    145
                                                           ------ ------ ------
                                                           $2,605 $2,758 $2,141
                                                           ====== ====== ======
</TABLE>

   The Company made cash payments for income taxes totalling $2,704,000,
$2,022,000 and $2,307,000 during the years ended December 31, 2000, 1999 and
1998, respectively.

9. Long-Term Debt

   Long-term debt consists of:

<TABLE>
<CAPTION>
                                       Interest Rate at           December 31,
                                         December 31,   Year of  ---------------
         Type of Issue                       2000       Maturity  2000    1999
         -------------                 ---------------- -------- ------- -------
                                                                 (in thousands)
   <S>                                 <C>              <C>      <C>     <C>
   Fixed rate:
     Senior notes....................       11.00%        2007   $73,950 $73,950
     Notes payable...................        6.00%        2000               109
     Mortgage payable................        0.00%        2003       150
   Variable rate:
     Revolver loan...................                     2000             7,000
                                                                 ------- -------
   Total long-term debt..............                             74,100  81,059
   Less current maturities...........                                 50   7,109
                                                                 ------- -------
   Total non-current long-term debt..                            $74,050 $73,950
                                                                 ======= =======
</TABLE>

   Under the terms of the Bank Credit Agreement, the revolver loan had a
borrowing capacity of up to $20,000,000 (less any outstanding letters of
credit) based upon a monthly variable borrowing base. At December 31, 2000, the
Company's available borrowing base of $18,919,000 less the outstanding letters
of credit of $3,631,000 resulted in an available portion of the revolving
credit facility of $15,288,000. The

                                       25
<PAGE>

            ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


9. Long-Term Debt, continued

revolver interest was at either (a) the greater of Federal Funds Rate plus 0.5%
or the bank's reference rate, or (b) LIBOR plus 1.5%. A commitment fee of 3/10%
per annum on unused borrowable money under the revolving loan and a 1.5% per
annum fee for outstanding letters of credit is payable to the bank quarterly.

   The Company's accounts receivable and inventory were pledged under the terms
of the Bank Credit Agreement as of December 31, 2000.

   On January 18, 2001 the Bank Credit Agreement was amended to increase the
borrowing capacity of the revolver loan up to $23,000,000 (less any outstanding
letters of credit) based on a monthly variable borrowing base. In addition the
Bank Credit Agreement was amended to include a $12,000,000 term loan. Both the
revolver and the term loan portions of the Bank Credit Agreement have a
maturity of January 18, 2005. The term loan will require quarterly principal
payments of $750,000 beginning April 2001. In addition to the collateral
pledged as of December 31, 2000 the Company has pledged its remaining assets
for the amended and restated Bank Credit Agreement.

   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.

   Annual principal payments on long-term debt at December 31, 2000 were as
follows (in thousands):

<TABLE>
<CAPTION>
                                                        Senior  Mortgage
                                                         Notes    loan    Total
                                                        ------- -------- -------
   <S>                                                  <C>     <C>      <C>
   2001................................................           $ 50   $    50
   2002................................................             50        50
   2003................................................             50        50
   2004................................................
   2005................................................
   2006 and thereafter................................. $73,950           73,950
                                                        -------   ----   -------
                                                        $73,950   $150   $74,100
                                                        =======   ====   =======
</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 on or after November 1, 2002 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>
   2002..............................................................   105.500%
   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 CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


9. Long-Term Debt, continued

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

   In 1999 the Company repurchased $11,050,000 of the senior notes at a
discount of $1,004,000. The gain on early extinguishment of debt is reduced by
the amortization of financing costs of $385,000, and is shown net of tax.

   The Company's interest expense for the years ended December 31, 2000, 1999
and 1998 was $8,526,000, $9,059,000 and $9,283,000, respectively. The Company
made cash payments for interest totalling $8,557,000, $9,218,000 and
$9,283,000, respectively, during 2000, 1999 and 1998.

   The weighted average interest rate on short term borrowings for 2000 was
7.97%.

   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 $61,529,000, and $66,269,000 at December 31, 2000 and December 31,
1999, respectively.

10. 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 $5,287,000 and
$4,560,000 at December 31, 2000 and 1999, respectively. The redeemable
preferred stock units accrue at 10% per annum. Principal and accrued dividend
equivalent amounts were $12,561,000 and $11,834,000 at December 31, 2000 and
1999, respectively, and will be paid in tandem with the Company's redeemable
preferred stock dividend and redemption payments.

11. 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, 2000. 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 $1,450,000 and $1,251,000 as of
December 31, 2000 and 1999, respectively.

12. 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.

                                       27
<PAGE>

            ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


12. 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 and the Uruguay Round General Agreement on
Tariffs and Trade ("GATT").

   In 1999, the Company changed the actuarial valuation period from a calendar
year to the period from October 1 to September 30 of each year. Accordingly,
the following information for the years ended December 31, 2000 and 1999 has
been obtained from the actuarial computation for the years ended September 30,
2000 and 1999, respectively.

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

<TABLE>
<CAPTION>
                                                                2000     1999
                                                               -------  -------
                                                               (in thousands)
   <S>                                                         <C>      <C>
   Projected benefit obligation at beginning of year.......... $20,067  $21,926
   Service cost--benefits earned during the period............   1,036    1,106
   Interest cost on projected benefit obligation..............   1,222    1,231
   Plan amendments............................................     459
   Actuarial (gains) losses...................................   1,687   (2,041)
   Benefit payments...........................................  (1,477)  (2,155)
                                                               -------  -------
   Projected benefit obligation at end of year................ $22,994  $20,067
                                                               =======  =======
</TABLE>

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

<TABLE>
<CAPTION>
                                                                2000     1999
                                                               -------  -------
                                                               (in thousands)
   <S>                                                         <C>      <C>
   Fair value of plan assets at beginning of year............. $42,996  $39,051
   Actual return on plan assets...............................   4,593    5,657
   Employer contributions.....................................
   Benefit payments...........................................  (1,477)  (1,712)
                                                               -------  -------
   Fair value of plan assets at end of year................... $46,112  $42,996
                                                               =======  =======
</TABLE>

<TABLE>
<CAPTION>
                                                              2000     1999
                                                             -------  -------
                                                             (in thousands)
   <S>                                                       <C>      <C>
   Plan assets in excess of projected benefit obligations... $23,118  $22,929
   Unrecognized amounts:
     Prior service cost.....................................     408     (127)
     Net gain...............................................  (2,391)  (3,006)
                                                             -------  -------
   Prepaid pension cost..................................... $21,135  $19,796
                                                             =======  =======
</TABLE>

   Prepaid pension cost included in other assets at December 31, 2000 and 1999,
was $22,517,000 and $21,090,000, respectively. Pension costs included in other
liabilities at December 31, 2000 and 1999, was $1,382,000 and $1,294,000,
respectively.

                                       28
<PAGE>

            ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


12. Pension and Profit Sharing Plans, continued

   At December 31, 2000 and 1999, respectively, the Company's SERP projected
benefit obligation of $1,111,000 and $1,731,000 was not funded.

   Weighted average assumptions as of December 31:
<TABLE>
<CAPTION>
                                                                     2000  1999
                                                                     ----  ----
   <S>                                                               <C>   <C>
   Settlement rate.................................................. 6.00% 6.25%
   Long term rate of return on assets............................... 9.00  9.00
   Rate of compensation increase.................................... 5.50  5.50
</TABLE>

   Components of net periodic pension cost are as follows for the years ended:

<TABLE>
<CAPTION>
                                                     2000     1999     1998
                                                    -------  -------  -------
                                                        (in thousands)
   <S>                                              <C>      <C>      <C>
   Service cost--benefits earned during the
    period........................................  $ 1,036  $ 1,106  $   916
   Interest cost on projected benefit obligation..    1,222    1,231    1,181
   Expected return on assets......................   (3,538)  (3,316)  (2,899)
   Net amortization of prior service cost.........      (76)     218       (6)
   Net amortization of prior losses...............       17       84
                                                    -------  -------  -------
   Net periodic pension benefit...................  $(1,339) $  (677) $  (808)
                                                    =======  =======  =======
</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 these plans for the years ended
December 31, 2000, 1999 and 1998 was $47,000, $49,000 and $56,000,
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, 2000, 1999 and 1998 was $1,240,000,
$1,036,000 and $1,266,000, 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, the Employee Retirement Income
Security Act and the Uruguay Round General Agreement on Tariffs and Trade
("GATT"). The Company's expense for this plan in 2000, 1999 and 1998 was
$36,000, $12,000 and $37,000, respectively.

13. 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>
                                                                         (in
      Year                                                            thousands)
      ----                                                            ---------
      <S>                                                             <C>
      2001...........................................................  $ 1,812
      2002...........................................................    1,534
      2003...........................................................    1,337
      2004...........................................................    1,185
      2005...........................................................      882
      2006 and thereafter............................................      218
                                                                       -------
                                                                       $ 6,968
                                                                       =======
</TABLE>

                                       29
<PAGE>

            ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


13. Leases, continued

   Rental expense for the twelve months ended December 31, 2000, 1999 and 1998
was $1,941,000, $1,634,000 and $1,453,000, respectively.

14. Related Party Transactions

   At December 31, 2000 and 1999, 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 each of the years ended December 31, 2000,
  1999 and 1998 was $117,000.

     (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 $330,000, $217,000, and $104,000, respectively, for the
  years ended December 31, 2000, 1999 and 1998.

     (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.

15. 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.

   In early 1999 the Company settled a lawsuit relating to an engineering
contract claim. The Company received approximately $1.8 million in this
settlement. This settlement was reflected in the Company's 1999 financial
statements.

                                       30
<PAGE>

            ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


16. 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>
                                                     2000      1999      1998
                                                   --------  --------  --------
                                                         (In thousands)
<S>                                                <C>       <C>       <C>
Net sales to external customers:
  Manufactured Products..........................  $ 80,036  $ 77,312  $ 82,097
  Engineering Services...........................    83,334    72,995    73,957
                                                   --------  --------  --------
    Total net sales to external customers........  $163,370  $150,307  $156,054
                                                   ========  ========  ========
Net sales to internal customers:
  Manufactured Products..........................  $  3,393  $  2,638  $  2,634
  Engineering Services...........................       227       225       656
                                                   --------  --------  --------
    Total net sales to internal customers........  $  3,620  $  2,863  $  3,290
                                                   ========  ========  ========
Total net sales:
  Manufactured Products..........................  $ 83,429  $ 79,950  $ 84,731
  Engineering Services...........................    83,561    73,220    74,613
                                                   --------  --------  --------
    Total net sales..............................   166,990   153,170   159,344
    Elimination of net sales to internal
     customers...................................     3,620     2,863     3,290
                                                   --------  --------  --------
    Total consolidated net sales.................  $163,370  $150,307  $156,054
                                                   ========  ========  ========
Earnings before interest, taxes and amortization:
  Manufactured Products..........................  $ 14,543  $ 14,305  $ 16,045
  Engineering Services...........................     4,641     4,785     3,907
                                                   --------  --------  --------
    Total segment earnings before interest, taxes
     and amortization............................    19,184    19,090    19,952
Amortization.....................................      (775)     (779)   (2,128)
Interest income..................................       850     1,215     1,093
Interest expense.................................    (8,526)   (9,059)   (9,283)
Corporate expenses before interest, taxes and
 amortization....................................    (4,255)   (4,814)   (4,388)
                                                   --------  --------  --------
    Consolidated income from continuing
     operations before income taxes..............  $  6,478  $  5,653  $  5,246
                                                   ========  ========  ========
Capital expenditures:
  Manufactured Products..........................  $  1,535  $  2,056  $  3,821
  Engineering Services...........................       203       137       250
                                                   --------  --------  --------
    Total segment capital expenditures...........     1,738     2,193     4,071
    Corporate....................................     2,599       407       144
                                                   --------  --------  --------
    Total capital expendituures..................  $  4,337  $  2,600  $  4,215
                                                   ========  ========  ========
</TABLE>

                                       31
<PAGE>

            ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


16. Segment Information, continued

<TABLE>
<CAPTION>
                                                         2000     1999    1998
                                                       -------- -------- ------
                                                            (In thousands)
<S>                                                    <C>      <C>      <C>
Depreciation:
  Manufactured Products............................... $  2,206 $  2,160 $2,030
  Engineering Services................................      169      184    224
                                                       -------- -------- ------
    Total segment depreciation........................    2,375    2,344  2,254
    Corporate.........................................       32       26     35
                                                       -------- -------- ------
    Total depreciation................................ $  2,407 $  2,370 $2,289
                                                       ======== ======== ======
Assets:
  Manufactured Products............................... $ 40,653 $ 39,228
  Engineering Services................................   22,288   19,305
                                                       -------- --------
  Total segment assets................................   62,941   58,533
  Corporate and other.................................   49,523   48,171
                                                       -------- --------
    Total assets...................................... $112,464 $106,704
                                                       ======== ========
</TABLE>

   The following is sales information by geographic area for the years ended
December 31:

<TABLE>
<CAPTION>
                                                       2000      1999     1998
                                                     --------- -------- --------
   <S>                                               <C>       <C>      <C>
   United States...................................  $ 145,178 $131,317 $118,145
   Foreign.........................................     18,192   18,990   37,909
                                                     --------- -------- --------
                                                     $ 163,370 $150,307 $156,054
                                                     ========= ======== ========
</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.

17. 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. and Precision Screw & Bolt Inc.,
ENI International, Ltd. ("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, 2000
                                   ---------------------------------------------
                                            Combined  Consolidating Consolidated
                                   Parent  Guarantors  Adjustments     Total
                                   ------- ---------- ------------- ------------
                                                  (in thousands)
   <S>                             <C>     <C>        <C>           <C>
   Current assets................. $15,539  $37,845                   $ 53,384
   Noncurrent assets..............  68,376   12,988     $(22,284)       59,080
                                   -------  -------     --------      --------
   Total assets................... $83,915  $50,833     $(22,284)     $112,464
   Current liabilities............ $ 7,904  $32,240                   $ 40,144
   Total liabilities.............. $88,781  $30,982                   $119,763
</TABLE>

                                       32
<PAGE>

            ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


17. Subsidiary Guarantors, continued

<TABLE>
<CAPTION>
                                                 December 31, 1999
                                   ---------------------------------------------
                                            Combined  Consolidating Consolidated
                                   Parent  Guarantors  Adjustments     Total
                                   ------- ---------- ------------- ------------
                                                  (in thousands)
   <S>                             <C>     <C>        <C>           <C>
   Current assets................. $18,857  $32,974                   $ 51,831
   Noncurrent assets..............  68,767    6,846     $(20,740)       54,873
                                   -------  -------     --------      --------
   Total assets................... $87,624  $39,820     $(20,740)     $106,704
   Current liabilities............ $15,865  $23,125                   $ 38,990
   Total liabilities.............. $96,643  $21,513                   $118,156
</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
   Income before income tax....  (2,001)     8,479                     6,478
   Net Income..................    (425)     4,298                     3,873
   Cash (used) provided by
    operating activities.......   4,563      6,111                    10,674
   Cash (used) provided by
    investing activities.......  (5,810)      (585)                   (6,395)
   Cash (used) provided by
    financing activities.......  (1,433)    (5,526)                   (6,959)
</TABLE>

<TABLE>
<CAPTION>
                                        Year ended December 31, 1999
                                ----------------------------------------------
                                          Combined  Consolidating Consolidated
                                Parent   Guarantors  Adjustments     Total
                                -------  ---------- ------------- ------------
                                               (in thousands)
   <S>                          <C>      <C>        <C>           <C>
   Sales, net.................. $42,519   $109,071     $(1,283)     $150,307
   Gross profit................  16,773     22,617                    39,390
   Income before income tax....  (1,540)     7,193                     5,653
   Net Income..................  (2,938)     6,452                     3,514
   Cash (used) provided by
    operating activities.......   8,179       (577)                    7,602
   Cash (used) provided by
    investing activities.......  (7,803)      (703)                   (8,506)
   Cash (used) provided by
    financing activities.......  (4,656)     1,280                    (3,376)
</TABLE>

<TABLE>
<CAPTION>
                                        Year ended December 31, 1998
                                ----------------------------------------------
                                          Combined  Consolidating Consolidated
                                Parent   Guarantors  Adjustments     Total
                                -------  ---------- ------------- ------------
                                               (in thousands)
   <S>                          <C>      <C>        <C>           <C>
   Sales, net.................. $44,456   $112,982     $(1,384)     $156,054
   Gross profit................  17,464     20,200                    37,664
   Income before income tax....  (1,417)     6,663                     5,246
   Net Income..................    (968)     4,073                     3,105
   Cash (used) provided by
    operating activities.......   6,310       (922)                    5,388
   Cash (used) provided by
    investing activities.......    (729)    (3,210)                   (3,939)
   Cash (used) provided by
    financing activities.......  (4,937)     4,132                      (805)
</TABLE>

   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.

                                       33
<PAGE>

            ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


18. Selected Quarterly Data (unaudited)

<TABLE>
<CAPTION>
                Quarter ended     Quarter ended    Quarter ended Quarter ended
              December 31, 2000 September 30, 2000 June 30, 2000 March 31, 2000
              ----------------- ------------------ ------------- --------------
<S>           <C>               <C>                <C>           <C>
Net sales....      $41,283           $40,653          $42,119       $39,315
Gross
 Profit......        9,301             9,293           10,481         9,917
Net Income...          990               816            1,198           869
</TABLE>

19. Subsequent Event

   On January 18, 2001 the Company acquired Leland Powell Fasteners, Inc.
("Leland") for approximately $20 million. Leland is a manufacturer of specialty
fasteners located in Martin, Tennessee. Leland Powell has 53 employees and has
been in business since 1968. On that date the Company amended the Bank Credit
Agreement increasing the borrowing capacity of the revolver loan from $20
million to $23 million. In addition the Bank Credit Agreement was amended to
include a $12 million term loan. The term loan will require quarterly principal
payments of $750,000 beginning April, 2001.

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

   None

                                       34
<PAGE>

                                   PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT MANAGEMENT

   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.......  54 Chairman of the Board, Chief
                               Executive Officer and Director            1988

   Charles D. Hall.......  62 President, Chief Operating
                               Officer and Director                      1993

   Wayne J. Conner.......  48 Vice President, Treasurer, Chief
                               Financial Officer and Director            1993

   Lynn C. Batory........  42 Vice President, Controller and Secretary

   David Hall............  41 Vice President of Manufacturing

   Mort Maurer...........  83 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.

                                      35
<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...........................  2000 $351,774 $256,125   $111,592(1)
 Chairman and Chief Executive Officer       1999  335,023  249,555    115,182(1)
                                            1998  319,070  267,245    109,499(1)

Charles D. Hall...........................  2000  316,597  256,125     97,541(1)
 President and Chief Operating Officer      1999  301,522  249,555     87,648(1)
                                            1998  287,163  267,245     73,856(1)

Wayne J. Conner...........................  2000  182,923  256,125     84,690(1)
 Vice President, Treasurer and Chief        1999  174,213  249,555     90,839(1)
 Financial Officer                          1998  165,917  267,245     73,631(1)

Lynn C. Batory............................  2000  119,139  133,706     12,382(1)
 Lynn C. Batory Vice President, Controller  1999  113,007  115,763     11,585(1)
 and Secretary                              1998  107,625  110,250     11,102(1)

David Hall................................  2000  119,139  133,706     12,382(2)
 Vice President of Manufacturing            1999  113,007  115,763     11,585(2)
                                            1998  107,625  110,250     11,102(2)
</TABLE>
--------
(1) 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 benefits and the value of term life
    and disability insurance premiums.
(2) Includes employer contributions to the Company's Profit Sharing Plan and
    the value of life insurance premiums.

                                       36
<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>
Remuneration(b)                                    Years of Service
---------------                       ------------------------------------------
                                        15      20       25       30       35
                                      ------- ------- -------- -------- --------
<S>                                   <C>     <C>     <C>      <C>      <C>
$200,000............................. $20,526 $27,368 $ 34,209 $ 41,051 $ 47,893
$225,000.............................  23,338  31,118   38,897   46,676   54,456
$250,000.............................  26,151  34,868   43,584   52,301   61,018
$300,000.............................  31,776  42,368   52,959   63,551   74,143
$350,000.............................  37,401  49,868   62,334   74,801   87,268
$400,000.............................  43,026  57,368   71,709   86,051  100,393
$450,000.............................  48,651  64,868   81,084   97,301  113,518
$500,000.............................  54,276  72,368   90,459  108,551  126,643
$550,000.............................  59,901  79,868   99,834  119,801  139,768
$600,000.............................  65,526  87,368  109,209  131,051  152,893
</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, 2000 for the named executive officers is as follows: Mr.
    Schulte, 11 years; Mr. C. Hall, 26 years; Mr. Conner, 18 years; Ms. Batory
    17 years; and Mr. D. Hall, 4 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

                                       37
<PAGE>

anniversary thereof (the "Employment Agreements"). The terms of the new
employment contracts relating to base salary and related increases and annual
bonuses are substantially similar to the terms of the employment agreements
negotiated between Senior Management and the Selling Stockholders that were in
effect prior to the Recapitalization Transactions. 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 $351,774 for 2000, and will receive annual increases beginning
in 2001 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 $316,597 for 2000, and will receive
annual increases beginning in 2001 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 $182,923 for 2000, and
will receive annual increases beginning in 2001 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 2000 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.

                                       38
<PAGE>

   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 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         Shares of
                                              Common Stock     Preferred Stock
                                              Beneficially       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 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% percent 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.

                                       39
<PAGE>

                                    PART IV

ITEM 14. 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...........  41

   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

                                       40
<PAGE>

                                                                     SCHEDULE II

                        ELGIN NATIONAL INDUSTRIES, INC.

                       VALUATION AND QUALIFYING ACCOUNTS
                                 (in thousands)

<TABLE>
<CAPTION>
                                     Additions  Additions
                          Balance at Charged to  Charged             Balance at
                          Beginning  Costs and  to other               End of
      Description         of Period   Expenses  accounts  Deductions   Period
      -----------         ---------- ---------- --------- ---------- ----------
<S>                       <C>        <C>        <C>       <C>        <C>
Allowance for doubtful
 accounts:
 Year ended December 31,
  1998..................      578        95          0        72         601
 Year ended December 31,
  1999..................      601       157          0        97         661
 Year ended December 31,
  2000..................      661       356          0       157         860
Reserve for inventories:
 Year ended December 31,
  1998..................    1,601       570          0       129       2,042
 Year ended December 31,
  1999..................    2,042       332          0       870       1,504
 Year ended December 31,
  2000..................    1,504       256          0       158       1,602
</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

   None

                                       41
<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 24, 2001

   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 26, 2000.

                                          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.

<TABLE>
<CAPTION>
              Signature                             Title                     Date
              ---------                             -----                     ----

<S>                                    <C>                             <C>
       /s/ Fred C. Schulte             Chairman of the Board, Chief      March 26, 2001
______________________________________  Executive Officer and Director
           Fred C. Schulte

       /s/ Charles D. Hall             President, Chief Operating        March 26, 2001
______________________________________  Officer and Director
           Charles D. Hall

       /s/ Wayne J. Conner             Vice President, Treasurer,        March 26, 2001
______________________________________  Chief Financial Officer and
           Wayne J. Conner              Director

        /s/ Lynn C. Batory             Vice President, Controller and    March 26, 2001
______________________________________  Secretary
            Lynn C. Batory

          /s/ David Hall               Vice President of Manufacturing   March 26, 2001
______________________________________
              David Hall
</TABLE>

                                       42
<PAGE>

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
 Exhibit                                                              Footnote
 Number                     Document Description                      Reference
 -------                    --------------------                      ---------

 <C>     <S>                                                          <C>
  3.1    Certificate of Incorporation of Elgin National Industries,       (3)
         Inc.

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

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

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

  4.3    Registration Rights Agreement dated November 5, 1997, by         (3)
         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 4.1).           (2)

 10.1    Credit Agreement dated as of September 24, 1993, as              (2)
         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 of             (2)
         November 5, 1997, between Elgin National Industries, Inc.
         and Fred C. Schulte.*

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

 10.4    Employment and Non-Competition Agreement dated as of             (2)
         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.*

 21      Subsidiaries of Elgin National Industries, Inc.                  (2)
</TABLE>
--------
(1) Filed herewith.
(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.
 * Management contract or compensatory plan or arrangement.

                                       43