<PAGE>

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

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

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

                                   FORM 10-K

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

                  For the fiscal year ended December 31, 2001

                                      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)

<TABLE>
<CAPTION>
                         Delaware                 36-3908410
              <S>                             <C>
              (State or other jurisdiction of  (I.R.S. Employer
              incorporation or organization)  Identification No.)
</TABLE>

     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, 2002, 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.

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

<PAGE>

                                    PART I

ITEM 1.  BUSINESS

Overview

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

   On November 5, 1997, ENI and Elgin National Industries, Inc. completed a
recapitalization intended to retire certain existing indebtedness, redeem the
equity interests of outside institutional investors, merge Elgin National
Industries, Inc. into ENI and vest (directly or indirectly) in Senior
Management ownership of all of the issued and outstanding capital stock of the
surviving entity. The components of the recapitalization were (i) the offering
of $85,000,000 11% Senior Notes due 2007 (the "Offering"), (ii) ENI using part
of the proceeds of the Offering to repurchase all of the common stock,
preferred stock and common stock warrants of ENI not owned by Senior
Management; (iii) Elgin National Industries, Inc. using part of the proceeds of
the Offering to retire all senior subordinated indebtedness, including the
payment of prepayment fees; (iv) Elgin National Industries, Inc. merging into
ENI, with ENI remaining as the surviving entity; (v) following such merger, ENI
changing its name to Elgin National Industries, Inc. (items (iv) and (v)
resulting in the entity referred to herein as the "Company" or "Elgin"); and
(vi) the Company and certain of its subsidiaries entering into an amended
senior credit facility (the "Senior Credit Facility") (the matters described at
items (i) through (vi) above being the "Recapitalization Transactions"). In
January 2001 the Senior Credit Facility was further amended to increase the
borrowing capacity. This allowed the Company to acquire Leland.

Operating Businesses

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

   The Manufactured Products Segment is comprised of Ohio Rod Products Company
("Ohio Rod"), Tabor Machine Company ("Tabor"), Norris Screen and Manufacturing
Inc. ("Norris"), Centrifugal and Mechanical Industries ("CMI"), Centrifugal
Services, Inc. ("CSI"), Mining Controls, Inc. ("Mining Controls"), Chandler
Products ("Chandler"), Clinch River Corporation ("Clinch") Vanco International,
Inc. ("Vanco"), Leland Powell Fasteners, Inc. ("Leland"), Precision Screw &
Bolt Inc. ("Precision") and Best Metal Finishing Inc. ("Best Metal"). 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 twelve 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 40 years. The Manufactured Products Segment has a broad and
diverse customer base, with no single customer accounting for more than 10% of
the Segment's sales in 2001.

   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, 2001, were $99.1 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
electric utility, aggregates, industrial minerals, base metals and precious
metals. Today, the Engineering Services Segment has a broad, well-balanced
customer base within these industries and derived approximately 90% of its net
sales from customers outside the coal-mining industry during 2001. Net sales
for the Engineering Services Segment for the year ended December 31, 2001 were
$92.5 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 sea. The Engineering Services Segment also designs bulk
materials handling systems for coal-fired electric

                                      2

<PAGE>

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, 2001 was $44.3 million.

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

   The Engineering Services Segment has a broad and diversified customer base,
having executed projects in the electric utility, aggregates, industrial
minerals and base metal industries. The Engineering Services Segment has also
been successful in further diversifying their markets to include international
work. During 2001, approximately 35% 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, motor drive units and
purchased finished goods from outside sources. The Company subcontracts certain
fabrication work to other suppliers. The Company is dependent on the ability of
such fabrication suppliers for timely delivery, performance and quality
specifications. The Engineering Services Segment sources many different types
of components in the construction of plant facilities, which in certain cases
are sold directly to the Company's customer by the selected supplier. These
include equipment such as vibrating screens, centrifuge dryers, flotation units
and other finished products. The Company believes there are numerous sources of
supply for the different materials used in its operations.

                                      3

<PAGE>

Employees

   As of December 31, 2001, the Company had approximately 780 employees.
Approximately 23 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 eight
employees of TranService, Inc., a wholly owned subsidiary of the Company, are
represented by the United Mine Workers of America ("UMWA") and are covered by
the National Bituminous Coal Wage Agreement expiring on December 31, 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             Batavia, IL        Distribution  Leased   30,890
     R & S             Chicago, IL &      Office        Leased   16,200
                       Salt Lake City, UT Office        Leased   25,267
     Soros             Chicago, IL        Office        Leased    5,800
     Leland            Martin, Tenn       Manufacturing Owned    92,000
</TABLE>

ITEM 3.  LEGAL PROCEEDINGS

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

   In 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 continue to do so or that the Company would successfully recover on the
indemnity in the event of an adverse judgment against R&S or adverse outcomes
in any other proceeding. In any such case, the Company would bear the cost of
defense and any adverse judgment. One or more such adverse judgments could
materially and adversely effect the Company's business, financial condition,
results of operations and debt service capability.

                                      4

<PAGE>

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 40 years and have performed
little invasive testing at their sites. In addition, businesses previously
operated by the Company have been sold. There can be no assurance that future
identification of contamination at its current or former sites or at third
party-owned sites where waste generated by the Company has been disposed of
would not have a material adverse effect on the Company's business, results of
operations, financial condition or debt service capability. Any failure by the
Company to obtain required permits for, or adequately restrict the discharge
of, hazardous substances under present or future regulations could subject the
Company to substantial liability. Such liability could have a material adverse
effect on the Company's business, financial condition, results of operations
and debt service capability.

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

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

   None.

                                    PART II

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

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

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

ITEM 6.  SELECTED FINANCIAL DATA

   The following table presents selected historical financial information of
the Company, as of the dates and for the periods indicated. The historical
financial data as of December 31, 1997, 1998, 1999, 2000 and 2001 was

                                      5

<PAGE>

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,
                                                                                 ---------------------------------------------
                                                                                   1997      1998        1999        2000
                                                                                 --------  --------    --------    --------
                                                                                              (dollars in thousands)
<S>                                                                              <C>       <C>         <C>         <C>
Statement of Operations Data:
Net sales....................................................................... $139,615  $156,054    $150,307    $163,370
Cost of sales...................................................................  102,744   118,390     110,917     124,378
                                                                                 --------  --------    --------    --------
   Gross profit.................................................................   36,871    37,664      39,390      38,992
Selling, general and administrative expenses....................................   21,840    22,100      25,114      24,063
Amortization expense............................................................    3,447     2,128         779         775
                                                                                 --------  --------    --------    --------
   Operating income.............................................................   11,584    13,436      13,497      14,154
Other expenses:
   Interest expense, net........................................................    3,471     8,190       7,844       7,676
                                                                                 --------  --------    --------    --------
Income from continuing operations before income taxes...........................    8,113     5,246       5,653       6,478
Provision for income taxes......................................................    3,187     2,141       2,519       2,605
                                                                                 --------  --------    --------    --------
Income from continuing operations...............................................    4,926     3,105       3,134       3,873
Income from discontinued operations, net of income taxes (a)....................      122
                                                                                 --------  --------    --------    --------
Income before extraordinary items...............................................    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...................................................................... $  4,466  $  3,105    $  3,514    $  3,873
                                                                                 ========  ========    ========    ========
Other Financial Data:
Gross margin %..................................................................     26.4%     24.2%       26.2%       23.9%
Depreciation and amortization................................................... $  5,569  $  4,417    $  3,149    $  3,182
Capital expenditures............................................................    1,974     4,215       2,600       4,337
Net cash provided by operating activities.......................................    1,008     5,388       7,602      10,674
Net cash provided by (used in) investing activities.............................   (1,948)   (3,939)     (8,506)     (6,395)
Net cash provided by (used in) financing activities.............................     (714)     (805)     (3,376)     (6,959)
Operating Unit Data:
Net Sales:
   Manufactured Products Segment................................................ $ 78,592  $ 82,097    $ 77,312    $ 80,036
   Engineering Services Segment.................................................   61,023    73,957      72,995      83,334
                                                                                 --------  --------    --------    --------
      Total Net Sales........................................................... $139,615  $156,054    $150,307    $163,370
                                                                                 ========  ========    ========    ========
Balance Sheet Data:
Cash and cash equivalents....................................................... $  9,337  $  9,981    $  5,701    $  3,021
Working capital less cash and cash equivalents..................................   13,898    15,834       7,140      10,219
Property, plant and equipment, net..............................................   13,582    15,344      15,754      17,935
Total assets....................................................................  100,351   103,710     106,704     112,464
Total debt......................................................................   85,751    85,439      81,059      74,100
Redeemable preferred stock and redeemable preferred stock units.................   13,226    14,152      15,080      16,006
Stockholder's deficit...........................................................  (31,860)  (29,400)    (26,532)    (23,305)
</TABLE>
<TABLE>
<CAPTION>


                                                                                   2001
                                                                                 --------

<S>                                                                              <C>
Statement of Operations Data:
Net sales....................................................................... $191,551
Cost of sales...................................................................  149,988
                                                                                 --------
   Gross profit.................................................................   41,563
Selling, general and administrative expenses....................................   24,307
Amortization expense............................................................    1,631
                                                                                 --------
   Operating income.............................................................   15,625
Other expenses:
   Interest expense, net........................................................    8,810
                                                                                 --------
Income from continuing operations before income taxes...........................    6,815
Provision for income taxes......................................................    3,309
                                                                                 --------
Income from continuing operations...............................................    3,506
Income from discontinued operations, net of income taxes (a)....................
                                                                                 --------
Income before extraordinary items...............................................    3,506
Extraordinary gain (loss) on early extinguishment of debt, net of income tax (b)
                                                                                 --------
Net income...................................................................... $  3,506
                                                                                 ========
Other Financial Data:
Gross margin %..................................................................     21.7%
Depreciation and amortization................................................... $  4,604
Capital expenditures............................................................    4,440
Net cash provided by operating activities.......................................    5,619
Net cash provided by (used in) investing activities.............................  (24,780)
Net cash provided by (used in) financing activities.............................   16,140
Operating Unit Data:
Net Sales:
   Manufactured Products Segment................................................ $ 99,080
   Engineering Services Segment.................................................   92,471
                                                                                 --------
      Total Net Sales........................................................... $191,551
                                                                                 ========
Balance Sheet Data:
Cash and cash equivalents....................................................... $
Working capital less cash and cash equivalents..................................   12,381
Property, plant and equipment, net..............................................   22,070
Total assets....................................................................  137,746
Total debt......................................................................   91,234
Redeemable preferred stock and redeemable preferred stock units.................   16,933
Stockholder's deficit...........................................................  (20,445)
</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.

                                      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
fourteen 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,
                                                      ----------------------------------------
                                                          1999          2000               2001
                                                      ------------  ------------       ------------
<S>                                                   <C>    <C>    <C>       <C>      <C>       <C>
Net sales............................................ $150.3 100.0% $163.4    100.0%   $191.5    100.0%
Cost of sales........................................  110.9  73.8   124.4     76.1     150.0     78.3
Gross profit.........................................   39.4  26.2    39.0     23.9      41.5     21.7
Selling, general & administrative expenses...........   25.1  16.7    24.0     14.7      24.3     12.7
Amortization expense.................................    0.8   0.5     0.8      0.5       1.6      0.8
Operating income.....................................   13.5   9.0    14.2      8.7      15.6      8.2
Interest expense, net................................    7.9   5.2     7.7      4.7       8.8      4.6
Income from continuing operations before income taxes    5.6   3.8     6.5      4.0       6.8      3.6
Provision for income taxes...........................    2.5   1.7     2.6      1.6       3.3      1.7
Income before extraordinary item.....................    3.1   2.1     3.9      2.4       3.5      1.9
Extraordinary item, net of income taxes..............    0.4   0.2
Net income...........................................    3.5   2.3     3.9      2.4       3.5      1.9
</TABLE>

                         Manufactured Products Segment
                             (dollars in millions)

<TABLE>
<CAPTION>
                            For the Fiscal Year Ended December 31,
                            -------------------------------------
                                1999         2000         2001
                            -----------  -----------  -----------
              <S>           <C>   <C>    <C>   <C>    <C>   <C>
              Net sales.... $77.3 100.0% $80.0 100.0% $99.1 100.0%
              Cost of sales  50.6  65.4   52.4  65.5   69.2  69.8
              Gross profit.  26.7  34.6   27.6  34.5   29.9  30.2
</TABLE>

                         Engineering Services Segment
                             (dollars in millions)

<TABLE>
<CAPTION>
                            For the Fiscal Year Ended December 31,
                            -------------------------------------
                                1999         2000         2001
                            -----------  -----------  -----------
              <S>           <C>   <C>    <C>   <C>    <C>   <C>
              Net sales.... $73.0 100.0% $83.4 100.0% $92.4 100.0%
              Cost of sales  60.3  82.6   72.0  86.3   80.8  87.4
              Gross profit.  12.7  17.4   11.4  13.7   11.6  12.6
</TABLE>

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

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

   Net sales for the Engineering Services Segment for the year ended December
31, 2001 increased $9.1 million, or 11.0%, to $92.4 million from $83.3 million
for the corresponding period in 2000 due primarily to

                                      8

<PAGE>

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

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

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

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

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

   Selling, General and Administrative Expenses:  Selling, general and
administrative expenses of the Company of $24.3 million for the year ended
December 31, 2001 represented an increase of $0.3 million in comparison to
$24.0 million for the corresponding period in 2000 primarily due to the
inclusion of Leland's expenses, acquired in January 2001 and higher employee
related costs at Corporate, offset with a reversal of a bad debt provision on a
note that was paid in full and the recovery of legal costs upon the settlement
of a lawsuit within the Engineering Services Segment.

   Amortization Expense: Amortization expense of $1.6 million for the year
ended December 31, 2001 increased $0.8 million from $0.8 million for the year
ended December 31, 2000. The increased amortization expense was due to higher
goodwill amortization due to the acquisitions of Precision, acquired in October
2000 and Leland, acquired in January 2001, and higher amortization of financing
costs due to amending the Company's Senior Credit Facility in January 2001.

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

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

                                      9

<PAGE>

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

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

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

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

  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 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

                                      10

<PAGE>

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.

   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.

                                      11

<PAGE>

   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.

Liquidity and Capital Resources

   Net cash provided by operating activities for the year ended December 31,
2001 was $5.6 million, due to $6.6 million generated from net income and
non-cash charges, partially offset with $1.0 million net cash used 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, 2001 of
$24.8 million consisted of $4.4 million for capital expenditures including $1.6
million relating to the construction of a plating facility and $2.8 million in
accordance with the Company's regular practice of upgrading and maintaining its
equipment base and facilities and $20.4 million for the stock acquisition of
Leland on January 18, 2001. Leland is a manufacturer of specialty fasteners
located in Martin, Tennessee. Leland has 51 employees and has been in business
since 1968.

   On January 18, 2001 the Company amended its Senior Credit Facility to
increase the borrowing capacity of the revolver loan up to $23.0 million (less
any outstanding letters of credit) based on a monthly variable borrowing base.
The Company's letters of credit totaled $3.3 million as of December 31, 2001 of
which $3.0 million mature within one year and the remaining $0.3 million mature
within two years. In addition the Senior Credit Facility was amended to include
a $12.0 million term loan. Both the revolver and the term loan have a maturity
of January 18, 2005. The term loan requires quarterly principal payments of
$750,000 beginning on March 31, 2001 as well as an additional annual payment
based on an excess cash flow calculation for the previous year. The increased
debt capacity of the amended Senior Credit Facility allowed the Company to
acquire Leland in January.

   Cash provided by financing activities for 2001 was $16.1 million which
included borrowings of $12.0 million on the term loan, $7.3 million on the
revolver and $0.1 million on a loan for the construction of a plating facility
in Osgood, Indiana. The construction loan has additional available credit of
$1.0 million. This plating facility is scheduled to be completed during the
second quarter of 2002. Total capital expenditures relating to the plating
facility is expected to be approximately $2.0 million in 2002. Offsetting these
borrowings was cash used for debt issuance costs on the amended credit facility
of $1.0 million and the repayment of debt of $2.3 million.

   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, and available credit will be
adequate to meet its anticipated debt service requirements, working capital
needs and capital expenditures.

   The Company has the following contractual cash obligations outstanding as of
December 31, 2001:

Contractual Cash Obligations

<TABLE>
<CAPTION>
                                                Payments Due by Period
                                        ---------------------------------------
                                                Less than  1-3    4-5   After 5
                                         Total   1 Year   Years  Years   Years
                                        ------- --------- ------ ------ -------
                                                (dollars in thousands)
 <S>                                    <C>     <C>       <C>    <C>    <C>
 Long Term Debt........................ $91,150  $3,050   $6,100 $8,050 $73,950
 Operating Leases......................   7,485   1,984    3,484  1,901     116
                                        -------  ------   ------ ------ -------
    Total Contractual Cash Obligations. $98,635  $5,034   $9,584 $9,951 $74,066
                                        =======  ======   ====== ====== =======
</TABLE>

                                      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, 2001 was $55.9 million. Approximately $11.6 million relates to the
Manufactured Products Segment, with the remainder of $44.3 million relating to
the Engineering Services Segment. Within the Engineering Services Segment's
backlog at December 31, 2001, $21.1 million relates to two engineering,
procurement and construction management projects of material handling systems,
and $4.1 million relates to the engineering and construction management of a
coal preparation plant. 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 2001, approximately 19% of the Company's net sales were attributable to
products sold or services provided outside of the United States. In 2001, the
majority of the Company's foreign sales were to companies located in Puerto
Rico, Venezuela, 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, 2001 and December 31, 2000..........................  16
Consolidated Statements of Income for the years ended December 31, 2001, 2000 and 1999.............  17
Consolidated Statements of Changes in Common Stockholder's Deficit for the years ended December 31,
  2001, 2000 and 1999..............................................................................  18
Consolidated Statements of Cash Flows for the years ended December 31, 2001, 2000 and 1999.........  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 consolidated balance sheets of Elgin National
Industries, Inc. and Subsidiary Companies as of December 31, 2001 and 2000, and
the related consolidated statements of income, changes in common stockholder's
deficit and cash flows for each of the three years in the period ended December
31, 2001. 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, 2001 and 2000 and the consolidated results of their operations and
their cash flows for each of the three years ended December 31, 2001, in
conformity with accounting principles generally accepted in the United States.
Also, in our opinion, the related financial statement schedule when considered
in relation to the basic financial statements, taken as a whole, presents
fairly in all material respects the information set therein.

                                          ERNST & YOUNG LLP

Chicago, Illinois
February 15, 2002

                                      15

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

                          CONSOLIDATED BALANCE SHEETS
                          December 31, 2001 and 2000
                       (in thousands except share data)

<TABLE>
<CAPTION>
                                      ASSETS                                          2001      2000
                                      ------                                        --------  --------
<S>                                                                                 <C>       <C>
Current assets:
   Cash and cash equivalents....................................................... $         $  3,021
   Accounts receivable, net........................................................   37,292    29,072
   Inventories, net................................................................   18,359    15,838
   Prepaid expenses and other assets...............................................      345     2,202
   Deferred income taxes...........................................................    3,542     3,251
                                                                                    --------  --------
       Total current assets........................................................   59,538    53,384
Property, plant and equipment, net.................................................   22,070    17,935
Loans receivable to related parties................................................    7,833     7,833
Other assets.......................................................................   26,717    24,789
Goodwill and intangibles...........................................................   21,588     8,523
                                                                                    --------  --------
       Total assets................................................................ $137,746  $112,464
                                                                                    ========  ========

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

Current liabilities:
   Short-term debt................................................................. $    134  $
   Current portion of long-term debt...............................................    3,050        50
   Accounts payable................................................................   32,032    29,326
   Accrued expenses................................................................   11,941    10,768
                                                                                    --------  --------
       Total current liabilities...................................................   47,157    40,144
Long-term debt less current portion................................................   88,050    74,050
Other liabilities..................................................................    2,273     2,153
Deferred income taxes..............................................................    3,778     3,416
                                                                                    --------  --------
       Total liabilities...........................................................  141,258   119,763
                                                                                    --------  --------
Redeemable preferred stock units...................................................   13,288    12,561
                                                                                    --------  --------
Redeemable preferred stock.........................................................    3,645     3,445
                                                                                    --------  --------
Common stockholder's deficit:
   Common stock, Class A par value $.01 per share; authorized 23,678 shares; 6,408
     shares issued and outstanding as of December 31, 2001 and 2000................
   Retained deficit................................................................  (20,445)  (23,305)
                                                                                    --------  --------
       Total common stockholder's deficit..........................................  (20,445)  (23,305)
                                                                                    --------  --------
       Total liabilities and stockholder's deficit................................. $137,746  $112,464
                                                                                    ========  ========
</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, 2001, 2000 and 1999
                                (in thousands)

<TABLE>
<CAPTION>
                                                                         2001        2000        1999
                                                                       --------    --------    --------
<S>                                                                    <C>         <C>         <C>
Net sales............................................................. $191,551    $163,370    $150,307
Cost of sales.........................................................  149,988     124,378     110,917
                                                                       --------    --------    --------
   Gross profit.......................................................   41,563      38,992      39,390
Selling, general and administrative expenses..........................   24,307      24,063      25,114
Amortization expense..................................................    1,631         775         779
                                                                       --------    --------    --------
   Operating income...................................................   15,625      14,154      13,497
Other expenses (income)
   Interest income....................................................     (741)       (850)     (1,215)
   Interest expense...................................................    9,551       8,526       9,059
                                                                       --------    --------    --------
Income before income taxes............................................    6,815       6,478       5,653
Provision for income taxes............................................    3,309       2,605       2,519
                                                                       --------    --------    --------
Income before extraordinary item......................................    3,506       3,873       3,134
                                                                       --------    --------    --------
Extraordinary gain on early extinguishment of debt, net of tax of $239                              380
                                                                       --------    --------    --------
Net income............................................................ $  3,506    $  3,873    $  3,514
                                                                       ========    ========    ========
</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, 2001, 2000 and 1999
                       (in thousands except share data)

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

<TABLE>
<CAPTION>
                                                                              2001     2000      1999
                                                                            --------  -------  --------
<S>                                                                         <C>       <C>      <C>
Cash flows from operating activities:
   Net income.............................................................. $  3,506  $ 3,873  $  3,514
   Adjustments to reconcile net income to net cash provided by operating
     activities:
       Depreciation........................................................    2,973    2,407     2,370
       Amortization........................................................    1,631      775       779
       Provision for deferred income taxes.................................      352      746       235
       (Recovery) provision for doubtful accounts and notes receivable.....     (593)     356       907
       Provision for inventories...........................................      392      256       332
       Gain on the early retirement of debt................................                        (619)
       Income from pension overfunding.....................................   (1,747)  (1,427)   (1,174)
       Loss (gain) on the disposal of assets...............................       45       (5)      (20)
   Changes in assets and liabilities:
       Accounts receivable.................................................   (5,248)  (1,644)       54
       Inventories.........................................................      109   (1,340)      (50)
       Prepaid expenses and other assets...................................    1,696     (987)   (1,766)
       Accounts payable, accrued expenses, and other liabilities...........    2,503    7,664     3,040
                                                                            --------  -------  --------
          Net cash provided by operating activities........................    5,619   10,674     7,602
                                                                            --------  -------  --------
Cash flows from investing activities:
   Proceeds from the sale of assets........................................       36       20        41
   Purchase of property, plant and equipment...............................   (4,440)  (4,337)   (2,600)
   Issuance of notes receivable to related parties.........................                      (4,200)
   Business acquired, net of cash..........................................  (20,376)  (2,078)   (1,747)
                                                                            --------  -------  --------
          Net cash used by investing activities............................  (24,780)  (6,395)   (8,506)
                                                                            --------  -------  --------
Cash flows from financing activities:
   Debt issuance costs.....................................................     (994)
   Borrowings on short-term debt...........................................      134
   Borrowings on long-term debt............................................   19,300      150     7,000
   Repayments of long-term debt............................................   (2,300)  (7,109)  (10,376)
                                                                            --------  -------  --------
          Net cash provided by (used in) financing activities..............   16,140   (6,959)   (3,376)
                                                                            --------  -------  --------
Net decrease in cash.......................................................   (3,021)  (2,680)   (4,280)
Cash and cash equivalents at beginning of period...........................    3,021    5,701     9,981
                                                                            --------  -------  --------
Cash and cash equivalents at end of period................................. $      0  $ 3,021  $  5,701
                                                                            ========  =======  ========
</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)


2.  Summary of Significant Accounting Policies, 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, 2001 and 2000 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 $717,000, $648,000 and $609,000 for the
years ended December 31, 2001, 2000 and 1999 respectively.

                                      21

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


2.  Summary of Significant Accounting Policies, continued

  (l) Adoption of Accounting Principles

   Effective January 1, 2001, the Company adopted the provisions of Statement
of Accounting Standards No. 133, ''Accounting for Derivative Instruments and
Hedging Activities'' ("SFAS No. 133"). 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 adoption of SFAS No. 133 did not have any effect on the
Company.

   In June 2001, the Financial Accounting Standards Board issued Statements of
Accounting Standards No. 141, Business Combinations, and No. 142, Goodwill and
Other Intangible Assets, effective for fiscal years beginning after December
31, 2001. Under the new rules, goodwill and intangible assets deemed to have
indefinite lives will no longer be amortized but will be subject to annual
impairment tests in accordance with the Statements. Other intangible assets
will continue to be amortized over their useful lives.

   The Company will apply the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002. Application of the
nonamortization provisions of the Statement is expected to result in an
increase in net income of approximately $660,000 per year. During 2002, the
Company will perform the first of the required impairment tests of goodwill and
indefinite lived intangible assets as of January 1, 2002 and has not yet
determined what the effect of these tests will be on the earnings and financial
position of the Company.

  (m) Reclassification

   Certain amounts in the 2000 and 1999 financial statements have been
reclassified to conform to the 2001 presentation.

3.  Accounts Receivable

   Accounts receivable consist of:

<TABLE>
<CAPTION>
                                                                     December 31,
                                                                    ---------------
                                                                     2001    2000
                                                                    ------- -------
                                                                    (in thousands)
<S>                                                                 <C>     <C>
Trade accounts..................................................... $13,374 $ 9,046
                                                                    ------- -------
Construction contracts:
   Billed..........................................................  17,767  16,578
   Costs and estimated earnings in excess of billings on contracts.   2,622     468
   Retainage due upon completion of contracts......................   3,767   3,527
                                                                    ------- -------
                                                                     37,530  20,573
                                                                    ------- -------
Other receivables..................................................     445     313
                                                                    ------- -------
                                                                     37,975  29,932
Less allowance for doubtful accounts...............................     683     860
                                                                    ------- -------
                                                                    $37,292 $29,072
                                                                    ======= =======
</TABLE>

                                      22

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


3.  Accounts Receivable, continued

   Billings exceeded related costs and gross profit recognized on certain
contracts by $12,808,000 and $16,762,000 as of December 31, 2001 and 2000,
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, 2001 will be collected in 2002.

   A significant portion of the Company's business activity is concentrated
within the coal mining industry. Accounts receivable at December 31, 2001 and
2000 from companies within the coal mining industry were $21,998,000 and
$17,300,000, respectively.

4.  Inventories

   Inventories consist of:

<TABLE>
<CAPTION>
                                                  December 31,
                                                 ---------------
                                                  2001    2000
                                                 ------- -------
                                                 (in thousands)
                <S>                              <C>     <C>
                Finished goods.................. $10,990 $10,168
                Work-in-process.................   2,387   1,356
                Raw materials...................   6,744   5,916
                                                 ------- -------
                                                  20,121  17,440
                Less excess and obsolete reserve   1,762   1,602
                                                 ------- -------
                                                 $18,359 $15,838
                                                 ======= =======
</TABLE>

5.  Property, Plant and Equipment

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

<TABLE>
<CAPTION>
                                                December 31,
                                               ---------------
                                                2001    2000
                                               ------- -------
                                               (in thousands)
                 <S>                           <C>     <C>
                 Land......................... $ 2,260 $ 2,176
                 Buildings and improvements...  12,044   9,645
                 Machinery and equipment......  25,500  21,181
                                               ------- -------
                                                39,804  33,002
                 Less accumulated depreciation  17,734  15,067
                                               ------- -------
                                               $22,070 $17,935
                                               ======= =======
</TABLE>

   Depreciation expense for the years ended December 31, 2001, 2000 and 1999
was $2,973,000, $2,407,000 and $2,370,000, respectively.

                                      23

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


6.  Goodwill and Intangibles

   The components of goodwill and intangibles are as follows:

<TABLE>
<CAPTION>
                                                 December 31,
                                                ---------------
                                                 2001    2000
                                                ------- -------
                                                (in thousands)
                <S>                             <C>     <C>
                Goodwill....................... $23,159 $ 9,457
                Financing and acquisition costs   4,787   3,793
                                                ------- -------
                                                 27,946  13,250
                Less accumulated amortization..   6,358   4,727
                                                ------- -------
                                                $21,588 $ 8,523
                                                ======= =======
</TABLE>

   Goodwill increased $13,702,000 in 2001 due to the acquisition of Leland
Powell Fasteners, Inc. Amortization expense, including amounts related to the
early extinguishment of debt, was $1,631,000, $775,000 and $1,164,000, for the
years ended December 31, 2001, 2000 and 1999, respectively.

7.  Accounts Payable and Accrued Expenses

   Accounts payable and accrued expenses consist of:

<TABLE>
<CAPTION>
                                                                      December 31,
                                                                     ---------------
                                                                      2001    2000
                                                                     ------- -------
                                                                     (in thousands)
<S>                                                                  <C>     <C>
Accounts payable--trade............................................. $15,121 $12,126
Accounts payable--other.............................................   4,103     438
Billings on contracts in excess of costs and gross profit recognized  12,808  16,762
Accrued payroll and commissions.....................................   4,103   3,220
Other accruals......................................................   7,838   7,548
                                                                     ------- -------
                                                                     $43,973 $40,094
                                                                     ======= =======
</TABLE>

                                      24

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


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,
                                                   ----------------
                                                    2001     2000
                                                   -------  -------
                                                    (in thousands)
            <S>                                    <C>      <C>
            Accounts receivable................... $   221  $   440
            Inventories...........................     653      487
            Accrued expenses......................   2,084    2,200
            Intangibles...........................   1,303    1,668
            Redeemable preferred stock units......   4,673    4,300
            State net operating loss carry forward     584      124
                                                   -------  -------
               Total deferred tax asset...........   9,518    9,219
                                                   -------  -------
            Prepaid pension.......................  (9,370)  (8,734)
            Property plant & equipment............    (384)    (650)
                                                   -------  -------
               Total deferred tax liability.......  (9,754)  (9,384)
                                                   -------  -------
            Net deferred tax (liability) asset.... $  (236) $  (165)
                                                   =======  =======
</TABLE>

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

<TABLE>
<CAPTION>
                                  Years Ended December 31,
                                  -----------------------
                                   2001     2000    1999
                                  ------   ------  ------
                                       (in thousands)
                      <S>         <C>      <C>     <C>
                      Current
                         Federal. $2,051   $1,761  $2,133
                         State...    803      354     468
                         Foreign.    103       25     209
                      Deferred
                         Federal.    541      381     (43)
                         State...   (189)      84      (9)
                                  ------   ------  ------
                                  $3,309   $2,605  $2,758
                                  ======   ======  ======
</TABLE>

   Allocation of the provision for income taxes in the 2001, 2000 and 1999
consolidated statements of income include the following:

<TABLE>
<CAPTION>
                                        Years Ended December 31,
                                        ------------------------
                                          2001     2000      1999
                                         ------   ------    ------
                                             (in thousands)
                <S>                     <C>       <C>       <C>
                Continuing operations.. $3,309    $2,605    $2,519
                Extraordinary gain--tax                        239
                                         ------   ------    ------
                                        $3,309    $2,605    $2,758
                                         ======   ======    ======
</TABLE>

                                      25

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


8.  Income Taxes, continued

   The Company's effective tax rates of 49%, 40% and 44% for the years ended
December 31, 2001, 2000 and 1999, respectively, differ from the statutory
federal tax rate of 34% as follows:

<TABLE>
<CAPTION>
                                              Years Ended December 31,
                                              ------------------------
                                                2001    2000    1999
                                               ------  ------  ------
                                                   (in thousands)
         <S>                                  <C>      <C>     <C>
         Income before income taxes.......... $6,815   $6,478  $6,272
                                               ======  ======  ======
         Statutory federal income tax........ $2,317   $2,203  $2,133
         State taxes, net of federal benefit.    376      234     309
         Foreign sales corporation income tax     59       65      47
         Adjustment to deferred income tax...    425
         Other items.........................    132      103     269
                                               ------  ------  ------
                                              $3,309   $2,605  $2,758
                                               ======  ======  ======
</TABLE>

   The Company made cash payments for income taxes totalling $1,501,000,
$2,704,000 and $2,022,000 during the years ended December 31, 2001, 2000 and
1999, respectively.

9.  Short-Term Debt

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

10.  Long-Term Debt

   Long-term debt consists of:

<TABLE>
<CAPTION>
                                    Interest Rate at           December 31,
                                      December 31,   Year of  ---------------
   Type of Issue                          2001       Maturity  2001    2000
   -------------                    ---------------- -------- ------- -------
                                                              (in thousands)
   <S>                              <C>              <C>      <C>     <C>
   Fixed rate:
      Senior notes.................      11.00%        2007   $73,950 $73,950
      Mortgage payable.............       0.00%        2003       100     150
   Variable rate:
      Term loan....................                    2005     9,750
      Revolver loan................                    2005     7,300
                                                              ------- -------
   Total long-term debt............                            91,100  74,100
   Less current maturities.........                             3,050      50
                                                              ------- -------
   Total non-current long-term debt                           $88,050 $74,050
                                                              ======= =======
</TABLE>

   Under the terms of a Bank Credit Agreement the Company has the revolver loan
with a borrowing capacity of up to $23,000,000 (less any outstanding letters of
credit) based upon a monthly variable borrowing base. At December 31, 2001, the
Company's available borrowing base of $23,000,000 less the outstanding letters
of credit
of $3,298,000 resulted in an available portion of the revolving credit facility
of $19,702,000. In addition, the

                                      26

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


10.  Long-Term Debt, continued

Bank Credit Agreement includes a term loan with a principal balance of
$9,750,000 as of December 31, 2001. The term loan requires quarterly principal
payments of $750,000. Both the revolver loan and term loan have interest rates
tied to a pricing grid. At December 31, 2001 the revolver and term loan
interest is either at (a) the greater of (i) the interest rate per annum
announced from time to time by the Agent at its principal office as its then
prime rate, or (ii) the Federal Funds Effective Rate plus 0.5% per annum ("Base
Rate") plus a margin or the Euro Rate plus a margin. Both the revolver and the
term loan portions of the Bank Credit Agreement have a maturity of January 18,
2005.

   The Company's assets are pledged under the terms of the Bank Credit
Agreement as of December 31, 2001.

   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, 2001 were as
follows (in thousands):

<TABLE>
<CAPTION>
                              Revolver  Senior   Term     Mortgage
                                Loan    Notes    loan       loan    Total
                              --------  ------- ------    -------- -------
          <S>                 <C>       <C>     <C>       <C>      <C>
          2002...............                   $3,000      $ 50   $ 3,050
          2003...............                    3,000        50     3,050
          2004...............                    3,000               3,000
          2005...............  $7,300              750               8,050
          2006...............
          2007 and thereafter           $73,950                     73,950
                               ------   ------- ------      ----   -------
                               $7,300   $73,950 $9,750      $100   $91,100
                               ======   ======= ======      ====   =======
</TABLE>

   Along with scheduled principal repayments, the term loan requires an
additional principal payment after the end of each year based on an excess cash
flow calculation.

   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.

                                      27

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


10.  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 made cash payments for interest totalling $9,357,000, $8,557,000
and $9,218,000, respectively, during 2001, 2000 and 1999.

   The weighted average interest rate on current portion of the long term debt
for 2001 was 7.76%.

   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 $77,184,000 and $61,529,000 at December 31, 2001 and December 31,
2000, respectively.

11.  Redeemable Preferred Stock Units

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

   The Company had accrued dividend equivalent amounts equal to $6,014,000 and
$5,287,000 at December 31, 2001 and 2000, respectively. The redeemable
preferred stock units accrue at 10% per annum. Principal and accrued dividend
equivalent amounts were $13,288,000 and $12,561,000 at December 31, 2001 and
2000, respectively, and will be paid in tandem with the Company's redeemable
preferred stock dividend and redemption payments.

12.  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, 2001. 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 $1,650,000 and $1,450,000 as of
December 31, 2001 and 2000, respectively.

13.  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

                                      28

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


13.  Pension and Profit Sharing Plans, continued

is to fund the minimum annual contribution required by applicable regulations.
Pension plan assets are primarily invested in bonds, corporate notes and common
stock.

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

   The following information for the years ended December 31, 2001 and 2000 has
been obtained from the actuarial computation for the years ended September 30,
2001 and 2000, respectively.

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

<TABLE>
<CAPTION>
                                                         2001     2000
                                                        -------  -------
                                                         (in thousands)
      <S>                                               <C>      <C>
      Projected benefit obligation at beginning of year $22,994  $20,067
      Service cost--benefits earned during the period..     800    1,036
      Interest cost on projected benefit obligation....   1,423    1,222
      Plan amendments..................................              459
      Actuarial (gains) losses.........................   2,431    1,687
      Benefit payments.................................  (1,302)  (1,477)
                                                        -------  -------
      Projected benefit obligation at end of year...... $26,346  $22,994
                                                        =======  =======
</TABLE>

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

<TABLE>
<CAPTION>
                                                        2001     2000
                                                       -------  -------
                                                        (in thousands)
        <S>                                            <C>      <C>
        Fair value of plan assets at beginning of year $46,112  $42,996
        Actual return on plan assets..................  (6,771)   4,593
        Employer contributions........................
        Benefit payments..............................  (1,302)  (1,477)
                                                       -------  -------
        Fair value of plan assets at end of year...... $38,039  $46,112
                                                       =======  =======
</TABLE>

<TABLE>
<CAPTION>
                                                            2001    2000
                                                           ------- -------
                                                            (in thousands)
    <S>                                                    <C>     <C>
    Plan assets in excess of projected benefit obligations $11,881 $23,118
    Unrecognized amounts:
       Prior service cost.................................     484     408
       Net gain...........................................  10,511  (2,391)
                                                           ------- -------
    Prepaid pension cost.................................. $22,876 $21,135
                                                           ======= =======
</TABLE>

   Prepaid pension cost included in other assets at December 31, 2001 and 2000,
was $24,263,000 and $22,517,000, respectively. Pension costs included in other
liabilities at December 31, 2001 and 2000, was $1,387,000 and $1,382,000,
respectively.

                                      29

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


13.  Pension and Profit Sharing Plans, continued

   At December 31, 2001 and 2000, respectively, the Company's SERP projected
benefit obligation of $1,104,000 and $1,111,000 was not funded.

   Weighted average assumptions as of December 31:

<TABLE>
<CAPTION>
                                                    2001  2000
                                                    ----  ----
                 <S>                                <C>   <C>
                 Settlement rate................... 5.25% 6.00%
                 Long term rate of return on assets 9.00  9.00
                 Rate of compensation increase..... 4.75  5.50
</TABLE>

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

<TABLE>
<CAPTION>
                                                    2001     2000     1999
                                                   -------  -------  -------
                                                         (in thousands)
   <S>                                             <C>      <C>      <C>
   Service cost--benefits earned during the period $   800  $ 1,036  $ 1,106
   Interest cost on projected benefit obligation..   1,423    1,222    1,231
   Expected return on assets......................  (3,900)  (3,538)  (3,316)
   Net amortization of prior service cost.........     (76)     (76)     218
   Net amortization of prior losses...............      11       17       84
                                                   -------  -------  -------
   Net periodic pension benefit................... $(1,742) $(1,339) $  (677)
                                                   =======  =======  =======
</TABLE>

   In addition the Company makes contributions to a union-administered pension
plan for certain employees who do not participate in the Company's pension
plan. The Company's aggregate expense for this plan for the years ended
December 31, 2001, 2000 and 1999 was $44,000, $47,000 and $49,000, 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, 2001, 2000 and 1999 was $1,292,000,
$1,240,000 and $1,036,000, respectively.

   In addition the Company established during 1995 a non-qualified profit
sharing plan for certain employees whose 401(k) benefits were also limited to
the Omnibus Budget Reconciliation Act of 1993, ERISA and GATT. The Company's
expense for this plan in 2001, 2000 and 1999 was $55,000, $36,000 and $12,000,
respectively.

14.  Leases

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

   Future minimum annual rental expenditures are as follows:

<TABLE>
<CAPTION>
                       Year                (in thousands)
                       ----                --------------
                       <S>                 <C>
                       2002...............     $1,984
                       2003...............      1,828
                       2004...............      1,656
                       2005...............      1,290
                       2006...............        611
                       2007 and thereafter        116
                                               ------
                                               $7,485
                                               ======
</TABLE>

                                      30

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


14.  Leases, continued

   Rental expense for the twelve months ended December 31, 2001, 2000 and 1999
was $1,966,000, $1,941,000 and $1,634,000, respectively.

15.   Related Party Transactions

   At December 31, 2001 and 2000, 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, 2001,
   2000 and 1999 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, $330,000, and $217,000, respectively, for the years ended
   December 31, 2001, 2000 and 1999.

      (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.

16.  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.

17.  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

                                      31

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


17.  Segment Information, continued

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>
                                                                             2001      2000      1999
                                                                           --------  --------  --------
                                                                                  (In thousands)
<S>                                                                        <C>       <C>       <C>
Net sales to external customers:
   Manufactured Products.................................................. $ 99,080  $ 80,036  $ 77,312
   Engineering Services...................................................   92,471    83,334    72,995
                                                                           --------  --------  --------
       Total net sales to external customers.............................. $191,551  $163,370  $150,307
                                                                           ========  ========  ========
Net sales to internal customers:
   Manufactured Products.................................................. $  4,960  $  3,393  $  2,638
   Engineering Services...................................................      493       227       225
                                                                           --------  --------  --------
       Total net sales to internal customers.............................. $  5,453  $  3,620  $  2,863
                                                                           ========  ========  ========
Total net sales:
   Manufactured Products.................................................. $104,040  $ 83,429  $ 79,950
   Engineering Services...................................................   92,964    83,561    73,220
                                                                           --------  --------  --------
       Total net sales....................................................  197,004   166,990   153,170
       Elimination of net sales to internal customers.....................    5,453     3,620     2,863
                                                                           --------  --------  --------
       Total consolidated net sales....................................... $191,551  $163,370  $150,307
                                                                           ========  ========  ========
Earnings before interest, taxes and amortization:
   Manufactured Products.................................................. $ 15,784  $ 14,543  $ 14,305
   Engineering Services...................................................    6,780     4,641     4,785
                                                                           --------  --------  --------
       Total segment earnings before interest, taxes and amortization.....   22,564    19,184    19,090
Amortization..............................................................   (1,631)     (775)     (779)
Interest income...........................................................      741       850     1,215
Interest expense..........................................................   (9,551)   (8,526)   (9,059)
Corporate expenses before interest, taxes and amortization................   (5,308)   (4,255)   (4,814)
                                                                           --------  --------  --------
        Consolidated income from continuing operations before
          income taxes.................................................... $  6,815  $  6,478  $  5,653
                                                                           ========  ========  ========
</TABLE>

                                      32

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


17.  Segment Information, continued

<TABLE>
<CAPTION>
                                                     2001     2000    1999
                                                   -------- -------- ------
                                                        (In thousands)
    <S>                                            <C>      <C>      <C>
    Capital expenditures:
       Manufactured Products...................... $  3,111 $  1,535 $2,056
       Engineering Services.......................      185      203    137
                                                   -------- -------- ------
           Total segment capital expenditures.....    3,296    1,738  2,193
           Corporate..............................    1,144    2,599    407
                                                   -------- -------- ------
           Total capital expenditures............. $  4,440 $  4,337 $2,600
                                                   ======== ======== ======
    Depreciation:
       Manufactured Products...................... $  2,581 $  2,206 $2,160
       Engineering Services.......................      189      169    184
                                                   -------- -------- ------
           Total segment depreciation.............    2,770    2,375  2,344
           Corporate..............................      203       32     26
                                                   -------- -------- ------
           Total depreciation..................... $  2,973 $  2,407 $2,370
                                                   ======== ======== ======
    Assets:
       Manufactured Products...................... $ 64,939 $ 40,653
       Engineering Services.......................   24,941   22,288
                                                   -------- --------
           Total segment assets...................   89,880   62,941
           Corporate and other....................   47,866   49,523
                                                   -------- --------
           Total assets........................... $137,746 $112,464
                                                   ======== ========
</TABLE>

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

<TABLE>
<CAPTION>
                                    2001     2000     1999
                                  -------- -------- --------
                    <S>           <C>      <C>      <C>
                    United States $154,582 $145,178 $131,317
                    Foreign......   36,969   18,192   18,990
                                  -------- -------- --------
                                  $191,551 $163,370 $150,307
                                  ======== ======== ========
</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.

                                      33

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


18.  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., Precision Screw &
Bolt Inc., Leland Powell Fasteners, Inc., ENI International, Ltd. and Best
Metal Finishing, Inc. ("the Guarantors") each a direct, wholly-owned subsidiary
of the Company. The following summarized combined financial data illustrates
the composition of the combined Guarantors.

<TABLE>
<CAPTION>
                                         December 31, 2001
                           ----------------------------------------------
                                     Combined  Consolidating Consolidated
                            Parent  Guarantors  Adjustments     Total
                           -------- ---------- ------------- ------------
                                           (in thousands)
       <S>                 <C>      <C>        <C>           <C>
       Current assets..... $ 11,498  $48,040                   $ 59,538
       Noncurrent assets..   93,110   11,359     $(26,261)       78,208
                           --------  -------     ---------     --------
       Total assets....... $104,608  $59,399     $(26,261)     $137,746
                           ========  =======     =========     ========
       Current liabilities $ 19,130  $35,327                   $ 54,457
       Total liabilities.. $106,971  $34,287                   $141,258

                                         December 31, 2000
                           ----------------------------------------------
                                     Combined  Consolidating Consolidated
                            Parent  Guarantors  Adjustments     Total
                           -------- ---------- ------------- ------------
                                           (in thousands)
       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>
<TABLE>
<CAPTION>

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

                                                      Year ended December 31, 2000
                                             ----------------------------------------------
                                                        Combined  Consolidating Consolidated
                                              Parent   Guarantors  Adjustments     Total
                                             --------  ---------- ------------- ------------
                                                             (in thousands)
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>

                                      34

<PAGE>

           ELGIN NATIONAL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


18.  Subsidiary Guarantors, continued

<TABLE>
<S>                                          <C>      <C>        <C>           <C>
                                                      Year ended December 31, 1999
                                             ---------------------------------------------
                                                       Combined  Consolidating Consolidated
                                             Parent   Guarantors  Adjustments     Total
                                             -------  ---------- ------------- ------------
                                                             (in thousands)
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>

   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.

19.  Acquisition of Subsidiary

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

20.  Selected Quarterly Data (unaudited)

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

<TABLE>
<CAPTION>
                          Quarter       Quarter    Quarter   Quarter
                           ended         ended      ended     ended
                        December 31, September 30, June 30, March 31,
                            2000         2000        2000     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>

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

   None

                                      35

<PAGE>

                                   PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

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

<TABLE>
<CAPTION>
                                                                   Director
        Name        Age         Position with the Company           Since
        ----        --- ------------------------------------------ --------
    <S>             <C> <C>                                        <C>
    Fred C. Schulte 55  Chairman of the Board, Chief Executive
                          Officer and Director                       1988
    Charles D. Hall 63  President, Chief Operating Officer and
                          Director                                   1993
    Wayne J. Conner 49  Vice President, Treasurer, Chief Financial
                          Officer and Director                       1993
    Lynn C. Batory. 43  Vice President, Controller and Secretary
    David Hall..... 42  Vice President of Manufacturing
    Mort Maurer.... 84  Director                                     1998
</TABLE>

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

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

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

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

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

                                      36

<PAGE>

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

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

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

ITEM 11.  EXECUTIVE COMPENSATION

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

<TABLE>
<CAPTION>
                                                                       All Other
                                                                         Annual
Name and Principal Position                    Year  Salary   Bonus   Compensation
---------------------------                    ---- -------- -------- ------------
<S>                                            <C>  <C>      <C>      <C>
Fred C. Schulte............................... 2001 $369,363 $294,930   $111,591
 Chairman and Chief Executive Officer          2000  351,774  256,125    111,592
                                               1999  335,023  249,555    115,182

Charles D. Hall............................... 2001  332,427  294,930     95,414
 President and Chief Operating Officer         2000  316,597  256,125     97,541
                                               1999  301,522  249,555     87,648

Wayne J. Conner............................... 2001  192,069  294,930     76,958
 Vice President, Treasurer and Chief Financial 2000  182,923  256,125     84,690
                                               1999  174,213  249,555     90,839

Lynn C. Batory................................ 2001  126,515  150,000     33,802
 Vice President, Controller and Secretary      2000  119,139  133,706     12,382
                                               1999  113,007  115,763     11,585

David Hall.................................... 2001  126,515  150,000     24,101
 Vice President of Manufacturing               2000  119,139  133,706     12,382
                                               1999  113,007  115,763     11,585
</TABLE>

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

                                      37

<PAGE>

Profit Sharing Plan

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

Supplemental Employee Retirement Plan

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

                            Pension Plan Table (a)

<TABLE>
<CAPTION>
                                        Years of Service
                           ------------------------------------------
          Remuneration (b)   15      20       25       30       35
          ---------------- ------- ------- -------- -------- --------
          <S>              <C>     <C>     <C>      <C>      <C>
              $200,000.... $20,407 $27,209 $ 34,011 $ 40,814 $ 47,616
              $225,000....  23,219  30,959   38,699   46,439   54,178
              $250,000....  26,032  34,709   43,386   52,064   60,741
              $300,000....  31,657  42,209   52,761   63,314   73,866
              $350,000....  37,282  49,709   62,136   74,564   86,991
              $400,000....  42,907  57,209   71,511   85,814  100,116
              $450,000....  48,532  64,709   80,886   97,064  113,241
              $500,000....  54,157  72,209   90,261  108,314  126,366
              $550,000....  59,782  79,709   99,636  119,564  139,491
              $600,000....  65,407  87,209  109,011  130,814  152,616
</TABLE>
--------
(a) The above table illustrates the estimated annual retirement benefits
    payable to Pension Plan and Supplemental Employee Retirement Plan
    participants commencing at age 65 in the form of a single life annuity, not
    subject to deduction for social security or other offsets. The above
    information is based on the current pension formula for various levels of
    compensation and years of service.
(b) A participant's pension benefit is generally based on a percentage of his
    salary and bonus for the highest five years of his employment and his years
    of credited service. The compensation taken into account under the Pension
    Plan for 1997 was limited to $160,000 in accordance with Internal Revenue
    Code rules and such limitation may be adjusted periodically in the future
    in accordance with Section 401(a)(17) of the Code. Remuneration in the
    above table is represented as the highest consecutive five-year average
    salary. The above table does not reflect the current compensation
    limitation under Code Section 401(a)(17) for qualified pension plans,
    because the Supplemental Employee Retirement Plan provides benefits for
    compensation above the limitation. Credited service under the Pension Plan
    as of January 1, 2001 for the named executive officers is as follows: Mr.
    Schulte, 12 years; Mr. C. Hall, 27 years; Mr. Conner, 19 years; Ms. Batory,
    18 years; and Mr. D. Hall, 5 years.

                                      38

<PAGE>

Employment and Non-Competition Agreements

   The Company and each of Messrs. Schulte, C. Hall and Conner entered into
employment and non-competition agreements, with an initial term beginning on
November 5, 1997, and ending on the fifth anniversary 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 $369,363
for 2001, and will receive annual increases beginning in 2002 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 $332,427 for 2001, and will receive annual increases beginning
in 2002 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 $192,069 for 2001, and will receive annual increases
beginning in 2002 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 2001 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

                                      39

<PAGE>

their respective shares of preferred stock in the Company. The outstanding
preferred stock in the Company will continue to be held by Fern, Hall and
Conner individually and will not be held by the Partnership.

   The following table sets forth certain information regarding beneficial
ownership of the capital stock of the Company by (i) each stockholder expected
to own beneficially more than 5% of the outstanding capital stock of the
Company and (ii) each director or executive officer of the Company and all
directors and executive officers as a group.

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

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

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

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

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

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

                                      40

<PAGE>

                                    PART IV

ITEM 14.  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

<TABLE>
               <S>                                            <C>
               Schedule II  Valuation and Qualifying Accounts 42
</TABLE>

   SCHEDULES OMITTED AS NOT REQUIRED OR INAPPLICABLE

      Schedule I--Condensed financial information of registrant

      Schedule III--Real estate and accumulated depreciation

      Schedule IV--Mortgage loans on real estate

      Schedule V--Supplemental information concerning property-casualty
   insurance operations

                                      41

<PAGE>

                                                                    SCHEDULE II

                        ELGIN NATIONAL INDUSTRIES, INC.

                       VALUATION AND QUALIFYING ACCOUNTS
                                (in thousands)

<TABLE>
<CAPTION>
                                            Additions  Additions
                                 Balance at Charged to Charged to            Balance at
                                 Beginning  Costs and    other                 End of
Description                      of Period   Expenses   accounts  Deductions   Period
-----------                      ---------- ---------- ---------- ---------- ----------
<S>                              <C>        <C>        <C>        <C>        <C>
Allowance for doubtful accounts:
 Year ended December 31, 1999...     601       157         0          97         661
 Year ended December 31, 2000...     661       356         0         157         860
 Year ended December 31, 2001...     860       157         0         334         683
Reserve for inventories:
 Year ended December 31, 1999...   2,042       332         0         870       1,504
 Year ended December 31, 2000...   1,504       256         0         158       1,602
 Year ended December 31, 2001...   1,602       392         0         232       1,762
</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

                                      42

<PAGE>

                                      43
                                  SIGNATURES

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

                                          ELGIN NATIONAL INDUSTRIES, INC.

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

Dated: March 27, 2002

   Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on March 27, 2001.

                                          ELGIN NATIONAL INDUSTRIES, INC.

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

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

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

    /S/  FRED C. SCHULTE      Chairman of the Board, Chief  March 27, 2002
-----------------------------   Executive Officer and
       Fred C. Schulte          Director

    /S/  CHARLES D. HALL      President, Chief Operating    March 27, 2002
-----------------------------   Officer and Director
       Charles D. Hall

    /S/  WAYNE J. CONNER      Vice President, Treasurer,    March 27, 2002
-----------------------------   Chief Financial Officer and
       Wayne J. Conner          Director

     /S/  LYNN C. BATORY      Vice President, Controller    March 27, 2002
-----------------------------   and Secretary
       Lynn C. Batory

       /S/  DAVID HALL        Vice President of             March 27, 2002
-----------------------------   Manufacturing
         David Hall

<PAGE>

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit                                                                                    Footnote
Number                                 Document Description                                Reference
------- ---------------------------------------------------------------------------------- ---------
<C>     <S>                                                                                <C>
 3.1.   Certificate of Incorporation of Elgin National Industries, Inc.                       (2)
 3.2.   Bylaws of Elgin National Industries, Inc.                                             (2)
 4.1.   Indenture dated November 5, 1997, between Elgin National Industries, Inc.,
        subsidiaries and Norwest Bank Minnesota, as Trustee.                                  (1)
 4.2.   Form of 11% Senior Note due 2007 (included in Exhibit 4.1).                           (1)
 4.3.   Registration Rights Agreement dated November 5, 1997, by and among Elgin
        National Industries, Inc., certain of its subsidiaries, and BancAmerica Robertson
        Stephens and CIBC Wood Gundy Securities Corp.                                         (2)
 4.4.   Form of Subsidiary Guaranty (included in Exhibit 4.1).                                (1)
10.1.   Credit Agreement dated as of September 24, 1993, as Amended and Restated as of
        November 5, 1997, by and among Elgin National Industries, Inc., various financial
        institutions, and Bank of America National Trust and Savings Association,
        individually and as agent.                                                            (1)
10.2.   Employment and Non-Competition Agreement dated as of November 5, 1997,
        between Elgin National Industries, Inc. and Fred C. Schulte.*                         (1)
10.3.   Employment and Non-Competition Agreement dated as of November 5, 1997,
        between Elgin National Industries, Inc. and Charles D. Hall.*                         (1)
10.4.   Employment and Non-Competition Agreement dated as of November 5, 1997,
        between Elgin National Industries, Inc. and Wayne J. Conner.*                         (1)
10.5.   The Elgin National Industries, Inc. Supplemental Retirement Plan dated as of 1995,
        and effective January 1, 1995.*                                                       (2)
10.6.   Credit Agreement dated as of September 24, 1993, as Amended and Restated as of
        January 18, 2001, by and among Elgin National Industries, Inc., various financial
        institutions, and PNC Bank, National Association, individually and as agent.          (3)
10.7.   First Amendment to Credit Agreement dated as of September 24, 1993, as Amended
        and Restated as of January 18, 2001, and further amended as of March 1, 2001 by
        and among Elgin National Industries, Inc., various financial institutions, and PNC
        Bank, National Association, individually and as agent.                                (3)
10.8.   Second Amended to Credit Agreement dated as of September 24, 1993, as Amended
        and Restated as of January 18, 2001, and further amended as of June 28, 2001 by
        and among Elgin National Industries, Inc., various financial institutions, and PNC
        Bank, National Association, individually and as agent.                                (3)
  21    Subsidiaries of Elgin National Industries, Inc.                                       (1)
</TABLE>
--------
(1) 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.
(2) 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.
(3) Incorporated by reference to Form 10-Q of the Company (File No. 001-03771)
    filed with the Commission
   on August 10, 2001.
  * Management contract or compensatory plan or arrangement.

                                      44