SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON D.C., 20549

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

                                 FORM 10-K

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


For fiscal year ended December 31, 2001         Commission File Number 33-24317


                          JORDAN INDUSTRIES, INC.
             (Exact name of registrant as specified in charter)


          Illinois                                             36-3598114
 (state or other jurisdiction of                            (I.R.S. Employer
 incorporation or organization)                            Identification No.)


      Arbor Lake Centre, Suite 550                             60015
         1751 Lake Cook Road                                 (Zip Code)
         Deerfield, Illinois
(Address of Principal Executive Offices)


            Registrant's telephone number, including Area Code:
                               (847) 945-5591


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

                                                       Name of Each Exchange
      Title of Each Class                              on Which Registered
      -------------------                              -------------------
             None                                             N/A


        Securities registered pursuant to Section 12 (g) of the Act:
                                    None


            Indicated by checkmark 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 twelve (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 ninety (90)
days.

                Yes   X                          No
                    -----                           -----


              The aggregate market value of voting stock held by
non-affiliates of the registrant is not determinable as such shares were
privately placed and there is no public market for such shares.


              The number of shares outstanding of Registrant's Common Stock
as of April 3, 2002:  98,501.0004.



<PAGE>


Item 1.  BUSINESS

Jordan Industries, Inc. ("the Company") was organized to acquire and
operate a diverse group of businesses with a corporate staff providing
strategic direction and support. The Company is currently comprised of 24
businesses which are divided into five strategic business units: (i)
Specialty Printing and Labeling, (ii) Consumer and Industrial Products,
(iii) Jordan Specialty Plastics, (iv) Jordan Auto Aftermarket, and (v)
Kinetek.

As a result of the 2000 transactions described in note 4 to the financial
statements, the Jordan Telecommunication Products segment and the Capita
Technologies segment have been reported as discontinued operations for
financial reporting purposes in accordance with Accounting Principles Board
("APB") Opinion No. 30.

The Company believes that its businesses are characterized by leading
positions in niche industries, high operating margins, strong management,
minimal working capital and capital expenditure requirements and low
sensitivity to technological change and economic cycles.

The Company's business strategy is to enhance the growth and profitability
of each business unit, and to build upon the strengths of those units
through product line and other strategic acquisitions. Key elements of this
strategy have been the consolidation and reorganization of acquired
businesses, increased focus on international markets, facilities expansion
and the acquisition of complementary product lines. When, through such
activities, the Company believes that critical mass is attained in a
particular industry segment, the related companies are organized as a
discreet business unit. For example, the Company acquired Imperial in 1983
and made a series of complementary acquisitions, which resulted in the
formation of Kinetek, Inc., formerly known as Motors and Gears, Inc., a
leading domestic manufacturer of electric motors, gears, and motion control
systems.

Through the implementation of this strategy, the Company has demonstrated
significant and consistent growth in net sales. The Company generated
consolidated net sales of $722.8 million for the year ended December 31,
2001 as compared to $450.1 million for the year ended December 31, 1997,
representing a compound annual growth rate of 12.6%.

The following chart depicts the operating subsidiaries, which comprise the
Company's five strategic business units, together with the net sales for
each of the five groups for the year ended December 31, 2001.







                                   -2-
<PAGE>


                          Jordan Industries, Inc.

                      $722.8 Million of Net Sales (1)


SPECIALTY PRINTING AND LABELING             -    JII Promotions
$112.1 Million of Net Sales                 -    Pamco
                                            -    Valmark
                                            -    Seaboard


CONSUMER AND INDUSTRIAL PRODUCTS            -    Cape Craftsmen
$77.6 Million of Net Sales                  -    Welcome Home
                                            -    Cho-Pat
                                            -    Online Environs
                                            -    Internet Services of Michigan
                                            -    Flavorsource
                                            -    GramTel


JORDAN SPECIALTY PLASTICS (2)               -    Sate-Lite
$98.7 Million of Net Sales                  -    Beemak
                                            -    Deflecto


JORDAN AUTO AFTERMARKET (2)                 -    Dacco
$147.0 Million of Net Sales                 -    Alma
                                            -    Atco


Kinetek (2)                                 -    Imperial
$287.4 Million of Net Sales                 -    Gear
                                            -    Merkle-Korff
                                            -    FIR
                                            -    Electrical Design & Control
                                            -    Motion Control Engineering
                                            -    Advanced D.C. Motors






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

     (1)      The results of operations of acquired businesses have been
              included in the Company's consolidated results since the
              respective dates of acquisition. See note 19 to the financial
              statements.

     (2)      The Company's ownership in Jordan Specialty Plastics and
              Jordan Auto Aftermarket is solely in the form of Cumulative
              Preferred Stock. In 2001, Motors and Gears, Inc. changed
              its name to Kinetek, Inc. Kinetek, Inc. is a wholly-owned
              subsidiary of Motors and Gears Holdings Inc., of which the
              Company's ownership is solely in the form of M&G Junior
              Preferred Stock. See note 5 to the financial statements.






                                    -3-
<PAGE>


The Company's operations were conducted through the following business
units as of December 31, 2001:

Specialty Printing and Labeling

The Specialty Printing and Labeling Group manufactures and markets (i)
promotional and specialty advertising products for corporate buyers, (ii)
labels, tapes, and printed graphic panel overlays for electronics and other
manufacturing companies and (iii) printed folding cartons and boxes and
other shipping materials. The companies that are part of Specialty Printing
and Labeling have provided its customers with products and services for an
average of over 40 years. For the fiscal year ended December 31, 2001, the
Specialty Printing and Labeling group generated net sales of $112.1
million. Each of the Specialty Printing and Labeling subsidiaries is
discussed below:

JII Promotions. In 2001, in an effort to focus attention on its specialty
promotion strengths, Sales Promotion Associates, Inc. was renamed JII
Promotions, Inc. ("JII Promotions"). JII Promotions is a distributor of
corporate recognition, promotion and specialty advertising products and a
producer and distributor of calendars for corporate buyers and color and
black and white soft-cover yearbooks for kindergarten through eighth grade.

JII Promotions' net sales for fiscal 2001 were $55.0 million. Approximately
61% of JII Promotions' 2001 net sales were derived from distributing a
broad variety of corporate recognition products, promotion and specialty
advertising products. These products include apparel, watches, crystal,
luggage, writing instruments, glassware, caps, cases, labels and other
items that are printed and identified with a particular corporate logo
and/or corporate advertising campaign. Approximately 27% of JII Promotions'
2001 net sales were derived from sales of a broad variety of calendars,
including hanging, desktop and pocket calendars that are used internally by
corporate customers and distributed by them to their clients and customers.
High-quality artistic calendars are also distributed. In addition, JII
Promotions manufactures and distributes color and black and white
soft-cover school yearbooks for kindergarten through eighth grade, which
accounted for approximately 12% of 2001 net sales.

JII Promotions distributes calendars that are assembled in-house as well as
by a number of outside suppliers. Facilities for in-house finishing include
a composing room, a camera room, and a calendar binding department. Print
stock, binding material, packaging and other materials are supplied by a
number of independent companies. Specialty advertising products are
purchased from more than 950 suppliers. Calendars and specialty advertising
products are sold through a 650 person sales force, most of who are
independent contractors.


Management believes that JII Promotions has one of the largest domestic
sales forces in the industry. With this large sales force and broad range
of calendars and corporate recognition products available, management
believes that JII Promotions is a strong competitor in its market. This
market is very fragmented and most of the competition comes from
smaller-scale producers and distributors.


Valmark. Valmark, which was founded in 1976 and purchased by the Company in
1994, is a specialty printer and manufacturer of graphic components for the
electronics Original Equipment Manufacturer ("OEM") market. Valmark's
product line includes graphic panel overlays, membrane switch control
panels, adhesive-backed labels and electro magnetic shielding devices.
Approximately 35% of Valmark's 2001 net sales of $18.4 million were derived
from the sales of membrane switch control panels, 49% from graphic panel
overlays, 14% from labels and 2% from shielding devices.


                                    -4-
<PAGE>

The specialty screen print products sold in the electronics industry
continue to operate relatively free of foreign competition due to the high
level of communication and short time frame usually required to produce
orders. While the majority of Valmark's customer base of approximately
1,200 is located in the Northern California area, Valmark conducts business
nationally through its network of manufacturing sales representatives.


Valmark sells to four primary markets: personal computers; general
electronics; turn-key services; and medical instrumentation. Sales to the
hospital and telecommunication industries have experienced the most growth
over recent years due to Valmark's membrane switch control panel
capabilities.

Valmark is able to provide OEM's with a broader range of products than many
of its competitors. Valmark's markets are very competitive in terms of
price and accordingly, Valmark's advantage over its competitors is derived
from its diverse product line and excellent quality ratings.


Pamco. Pamco, which was founded in 1953 and purchased by the Company in
1994, is a manufacturer and distributor of a wide variety of printed tapes
and labels. Pamco offers a range of products from simple one and two-color
labels, such as basic bar code and address labels, to eight-color,
laminated, embossed, and hot stamped labels for products such as video
games and food packaging. All of Pamco's products are made to customer
specifications and approximately 93% of all sales were manufactured
in-house in 2001. The remaining 7% of sales were purchased printed products
and included business cards and stationery.

Pamco's products are marketed by a team of 9 sales representatives who
procure new accounts and service existing accounts. Existing accounts are
serviced by 8 customer service representatives and 1 internal salesperson.
Pamco's customers represent several different industries with the five
largest customers accounting for approximately 14% of 2001 net sales of
$18.0 million.

Pamco competes in a highly fragmented industry. Pamco emphasizes its
impressive 24-hour turnaround time and its ability to accommodate rush
orders that other printers cannot handle. Pamco's ability to deliver a
quality product with quick turn around is its key competitive advantage.


Seaboard. Seaboard, which was founded in 1954 and purchased by the Company
in 1996, is a manufacturer of printed folding cartons and boxes, insert
packaging and blister pack cards.


Seaboard sells directly to a broad customer base, located primarily east of
the Mississippi River, operating in a variety of industries including
hardware, personal hygiene, toys, automotive supplies, food and drugs.
Seaboard's top ten customers accounted for approximately 35% of Seaboard's
2001 net sales of $20.7 million. Seaboard has exhibited high profit margins
and has gained a reputation for exceeding industry standards primarily due
to its excellent operating capabilities. Seaboard has historically been
highly successful in buying and profitably integrating smaller
acquisitions.



                                    -5-
<PAGE>

Seaboard's markets are very competitive in terms of price, and accordingly,
Seaboard's advantage over its competition is derived from its high quality
products and excellent service.

Consumer and Industrial Products

Consumer and Industrial Products serves many product segments. It
manufactures and imports gift items; manufactures orthopedic supports and
pain reducing medical devices; provides internet access to small Midwestern
markets; manufactures and develops flavors used in beverages and foods;
provides internet business development solutions and consulting services;
and provides dedicated internet connectivity, co-location, and data storage
services at regionally located Secure Network Access Centers. For the year
ended December 31, 2001, the Consumer and Industrial Products subsidiaries
generated combined net sales of $77.6 million. Each of the Consumer and
Industrial Products subsidiaries is discussed below.

Cape Craftsmen. Founded in 1966 and purchased by the Company in 1996, Cape
Craftsmen is a manufacturer and importer of gifts, wooden furniture, framed
art and other accessories. Cape Craftsmen manufactures in North Carolina
and imports from the Far East. Cape Craftsmen sells its products through 3
in-house salespeople and 44 independent sales representatives. Net sales in
2001 were $9.0 million, excluding sales to Welcome Home, a related party,
of $15.3 million. Cape Craftsmen competes in a highly fragmented industry
and has therefore found it most effective to compete on the basis of price
with most wood manufacturers and importers. Cape Craftsmen also strives to
deliver better quality and service than its competitors.

Welcome Home. Welcome Home is a specialty retailer of gifts and decorative
home furnishings and accessories in North America. Welcome Home began
operations in the mid 1970's and was acquired by the Company in 1991. It
currently operates 117 stores located in factory outlet centers and
regional malls in 36 states. Welcome Home offers a broad product line of
2,000 to 3,000 items consisting of 12 basic groups, including decorative
home textiles, framed art, furniture, candles, lighting, fragrance,
decorative accessories, decorative garden, music, special opportunity
merchandise and seasonal products.

Competition is highly intense among specialty retailers, traditional
department stores and mass merchant discounters in outlet malls and other
high traffic retail locations. Welcome Home competes principally on the
basis of product assortment, convenience, customer service, price and the
attractiveness of its stores. Welcome Home had net sales of $53.5 million
in the year ended December 31, 2001.

Cho-Pat. In September 1997, the Company purchased Cho-Pat, Inc., a leading
designer and manufacturer of orthopedic related sports medicine devices
used in the prevention and treatment of certain biomechanical injuries.
Several of the devices designed by Cho-Pat hold U.S. patents. Cho-Pat
currently produces 19 different products primarily for reduction of pain
from injuries and the prevention of injuries resulting from over use of the
major joints. For the past 22 years, Cho-Pat's largest selling product has
been the Cho-Pat Knee Strap, designed to reduce the pain from patellar
tendonitis in the knee. Cho-Pat manufactures all of its products in-house.
Cho-Pat sells its products to medical professionals, all branches of the
military, colleges, high school and professional team coaches and trainers,
medical product distributors, wholesalers and retail drug and sporting
goods stores across the country and several overseas areas. Cho-Pat had net
sales of $1.6 million in 2001.


                                    -6-
<PAGE>

Online Environs. In March 2000, the Company purchased Online Environs, Inc.
Online is an international Internet business solutions developer and
consultant whose services are designed to help clients increase sales,
improve communications, and create and enhance business identities over the
Internet. Online is truly an innovative company specializing in web and
application development, implementation of technology products and MIS
services for clients. Online has a strong track record with a list of over
200 clients including the New England Patriots, Enterasys Networks, Compaq
and many others. Online had sales of $1.1 million in the year ended
December 31, 2001.

ISMI. Internet Services of Michigan was purchased by the Company in October
2000. ISMI is an Internet service provider with approximately 8,100
customers located in Michigan. ISMI offers standard dial-up resources as
well as high-speed Internet connections such as DSL, Satellite and ISDN.
ISMI also provides website development and creation services and web
hosting features. ISMI had net sales of $2.2 million in the year ended
December 31, 2001.

Flavorsource. In October 2000, the Company purchased Flavorsource, Inc.
Flavorsource develops and compounds flavors for use in a variety of
beverage products including coffee, tea, juices, sports drinks, and
carbonated beverages, as well as many food products such as nutrition bars,
bakery products, candy and chocolates. Additionally, Flavorsource acts as a
broker and distributor of natural cane sugar products. Flavorsource is a
customer service oriented company that specializes in hands-on product
development with its customers in addition to quality and on-time delivery.
Flavorsource had net sales of $5.7 million in the year ended December 31,
2001.

GramTel. GramTel Communications, Inc. was started by the Company in
December 2000. GramTel is an information technology outsourcing company. It
owns and operates state-of-the-art technology centers that house
mission-critical web servers, applications, and databases for small and
medium sized businesses. In addition, through its engineering and
programming staff, GramTel provides consulting, application management,
infrastructure management, security, and data storage services to its
customers. GramTel leverages its infrastructure and technical staff to
support business's information technology needs at a fraction of the cost
of performing these tasks in-house. It provides the facilities, Internet
bandwidth, and technical personnel to keep business's web-based operations
available 24 hours a day. GramTel had net sales of $0.4 million in the year
ended December 31, 2001.


Jordan Specialty Plastics

Jordan Specialty Plastics serves a broad range of wholesale and retail
markets within the highly-fragmented specialty plastics industry. The group
designs, manufactures and sells (1) "take-one" point of purchase brochure,
folder and application display holders, (2) modular storage systems
("Tilt-Bins"(TM)), (3) plastic injection-molded hardware and office supply
products, (4) extruded vinyl chairmats, (5) safety reflectors for bicycles
and commercial truck manufacturers and (6) colorants to the thermoplastics
industry. The companies that are part of Jordan Specialty Plastics have
provided their customers with products and services for an average of over
35 years. For the year ended December 31, 2001, the Jordan Specialty
Plastics subsidiaries generated combined net sales of $98.7 million. Each
of the Jordan Specialty Plastics subsidiaries is discussed below:


                                    -7-
<PAGE>

Beemak Plastics. Beemak, which was founded in 1951 and acquired by the
Company in July 1989, is an integrated manufacturer of custom
point-of-purchase displays, brochure holders and sign holders. Beemak sells
its proprietary holders and displays to approximately 6,000 customers
around the world. In addition, Beemak produces a small amount of custom
injection-molded plastic parts for customers on a contract manufacturing
basis. Beemak's net sales for 2001 were $4.8 million.


Beemak's products are both injection-molded and custom fabricated. Beemak's
molds are made by outside suppliers. The manufacturing process consists
primarily of the injection-molding of polystyrene plastic and the
fabrication of plastic sheets. Beemak also provides silk screening of
decals and logos onto the final product.


Beemak sells its products through a direct sales force, independent
representatives, an extensive on-going advertising campaign and by
reputation. Beemak sells to distributors, major companies, and competitors,
which resell the product under a different name. Beemak has been successful
in providing excellent service on orders of all sizes, especially on small
orders.

The display holder industry is very fragmented, consisting of a few other
known holder and display firms and regionally-based sheet fabrication
shops. Beemak has benefited from the growth in "direct" advertising budgets
at major companies. Significant advertising dollars are spent each year on
direct-mail campaigns, point-of-purchase displays and other forms of
non-media advertising.

Sate-Lite Manufacturing. Sate-Lite specializes in safety reflectors for
bicycles and commercial truck manufacturers, colorants/masterbatches for
the thermoplastics industry, and a line of retail Tilt-Bin(TM) storage
containers. Sate-Lite was founded in 1968 and acquired by the Company in
1988. Bicycle reflectors and plastic bicycle parts account for
approximately 34% of Sate-Lite's net sales in 2001. Sales of emergency
warning triangles and specialty reflectors and lenses to commercial truck
customers accounted for approximately 21% of net sales in 2001. Sales of
colorants to the thermoplastics industry accounted for approximately 29% of
net sales in 2001. Sales of storage containers accounted for approximately
14% of net sales. The remaining 2% of 2001 net sales were derived from
other miscellaneous plastic injection molded products. Sate-Lite's net
sales for 2001 were $14.9 million.

Sate-Lite's bicycle and truck/auto products are sold directly to a number
of OEM's. The three largest OEM customers are Tandem (China), Federal Mogul
and Grote Industries, which account for a total of approximately 13% of
Sate-Lite's net sales in 2001. Colorants are sold primarily to plastic
processors in North America. The Tilt-Bin(TM) storage containers are sold
primarily to retail outlets used for in-store display fixtures, as well as
for home consumer use. In 2001, Sate-Lite's ten largest customers accounted
for approximately 38% of net sales.

Sate-Lite's bicycle products are marketed to bicycle OEM's in North America
and Asia. Sales to foreign customers are handled directly by management and
by independent trading companies on a commission basis. Sate-Lite's net
export sales accounted for approximately 28% of its total 2001 net sales.
Export sales were principally to China and Canada. The principal raw
materials used in manufacturing Sate-Lite's products are plastic resins,
metal fasteners, and color pigments. Sate-Lite purchases these materials
from several independent suppliers. In the fourth quarter of 1998,


                                    -8-
<PAGE>

Sate-Lite opened a wholly-owned manufacturing factory in China. Sate-Lite
sells to a variety of companies in Asia including Tandem, Giant, Southern
Cross, and other bicycle manufacturers who have increased their sales to
the North American market through mass market bicycle brands such as Huffy,
Mongoose, Pacific, and Schwinn.

The markets for bicycle parts and thermoplastic colorants are highly
competitive. Sate-Lite competes in these markets by offering innovative
products and by relying on its established reputation for producing
high-quality plastic components and colorants. Sate-Lite's principal
competitors in the bicycle parts market consist primarily of foreign
companies. Sate-Lite competes with regional companies in the thermoplastic
colorant markets.

Deflecto Corporation. Founded in 1960 and acquired by the Company in 1998,
Deflecto designs, manufactures and markets plastic injection-molded
products for mass merchandisers, major retailers and large wholesalers.
Deflecto sells its products in two product categories: hardware products
and office supply products. Hardware products, which comprised
approximately 61% of Deflecto's net sales in 2001, include heating and
cooling air deflectors, clothes dryer vents and ducts, kitchen vents and
ducts, sheet metal pipes and elbows, exhaust fittings, heating ventilation
and air conditioning registers and other widely recognized products. Office
supply products, many of which have patents and trademarks, represented
approximately 39% of net sales in 2001 and include such items as wall
pockets, literature displays, file and chart holders, business card
holders, chairmats and other top-branded office supply products. Deflecto's
net sales for 2001 were $79.0 million.

Deflecto manufactures approximately 90% of its products in-house, with the
remainder outsourced to other injection molders. Deflecto efficiently
manages the mix of manufactured and outsourced product due to its ability
to accurately project pricing, cost and capacity constraints. This strategy
enables Deflecto to grow without being constrained by capacity issues.


Deflecto sells its products through an in-house salaried sales force and
the use of independent sales representatives. Deflecto has the critical
mass to command strong positions and significant shelf space with the major
mass merchandisers and retailers. In the hardware products line, Deflecto
sells to major national retailers such as Ace Hardware, Wal-Mart, and Home
Depot, as well as to heating, ventilating and air conditioning ("HVAC") and
appliance part wholesalers. Deflecto sells its office supply products line
to major office supply retailers such as Office Max and Staples, as well as
to national wholesalers, such as United Wholesalers and S.P. Richards.
Deflecto has established strong relationships with its customers and is
known for delivering high quality, well packaged products in a timely
manner.

Competition in the hardware and office supplies business is increasing due
to the consolidation of companies serving the market. The increased
competition has prevented price increases and has forced manufacturers to
improve production efficiency, product quality and delivery. The Company
believes that Deflecto's mix of manufactured and outsourced product, and
its management of this process, allows it to maintain high production
efficiency, keeping costs down and product quality high.


                                    -9-
<PAGE>

Jordan Auto Aftermarket

Jordan Auto Aftermarket is the leading supplier of remanufactured torque
converters to the automotive aftermarket parts industry. In addition, it
produces newly manufactured torque converters, air conditioning
compressors, and clutch and disc assemblies for major automotive and
equipment OEM's. For the year ended December 31, 2001, the Jordan Auto
Aftermarket subsidiaries generated combined net sales of $147.0 million.
Each of the Jordan Auto Aftermarket subsidiaries is discussed below.


DACCO. DACCO is a producer of remanufactured torque converters, as well as
automotive transmission sub-systems and other related products used by
transmission repair shops. DACCO was founded in 1965 and acquired by the
Company in 1988.

The majority of DACCO's products are classified as "hard" products, which
primarily consist of torque converters and hydraulic pumps that have been
rebuilt or remanufactured by DACCO. The torque converter, which replaces
the clutch in an automatic transmission, transfers power from the engine to
the drive shaft. The hydraulic pump supplies oil to all the systems in the
transmission.

The remaining products sold by DACCO are classified as "soft" products,
such as sealing rings, bearings, washers, filter kits and rubber
components. Soft products are purchased from a number of vendors and are
resold in a broad variety of packages, configurations and kits.

DACCO's customers are automotive transmission parts distributors and
transmission repair shops and mechanics. DACCO has 48 independent sales
representatives who accounted for approximately 46% of DACCO's net sales of
$65.7 million in 2001. These sales representatives sell nationwide to
independent warehouse distributors and transmission repair shops. DACCO
also operates 41 distribution centers, which sell directly to transmission
shops. DACCO's distribution centers average 5,400 square feet and cover a
50-100 mile selling radius. In 2001, no single customer accounted for more
than 2% of DACCO's net sales.

The domestic market for DACCO's hard products is fragmented and DACCO's
competitors primarily consist of a number of small regional and local
re-builders. DACCO believes that it competes strongly against these
re-builders by offering a broader product line, quality products, and lower
prices, all of which are made possible by DACCO's size and economies of
operation. However, the market for soft products is highly competitive and
several of its competitors are larger than DACCO. DACCO competes in the
soft products market on the basis of its low prices due to volume buying,
its growing distribution network and its ability to offer one-step
procurement of a broad variety of both hard and soft products.

Alma. Founded in 1944 and acquired by the Company in March 1999, Alma uses
a combination of remanufacturing and new production to produce torque
converters, air conditioning compressors, and clutch and disc assemblies
for major automotive and equipment OEM's such as Ford, Chrysler, GM, John
Deere, Caterpillar, and Case, as well as numerous other direct aftermarket
customers. Torque converters and clutch and disc assemblies are also
referred to as drive trains. Net sales were $75.6 million during the year
ended December 31, 2001.


                                   -10-
<PAGE>

Alma manufactures its products to customer's specifications, and its
engineering department works closely with the customer's engineers to
ensure that specifications are met. Torque converters are remanufactured
and sold to major automotive OEMs such as Ford and Chrysler, typically for
warranty replacement. Alma does not sell torque converters in the
independent aftermarket, which is the primary market for DACCO's torque
converters. Air conditioning compressors are both remanufactured and
produced new for the automotive aftermarket. Alma's compressors are sold to
the service arms of major automotive manufacturers such as Ford, Chrysler,
GM, John Deere, and Caterpillar. Alma supplies the majority of the
compressors purchased by these customers in the aftermarket. Clutch and
disc assemblies are both remanufactured and produced new and are sold
primarily to repackagers who then resell the products to automotive parts
distributors. Alma has long-term contracts with several customers, and has
developed strong relationships with all of its major customers. Alma was
selected by Ford to remanufacture, distribute, and fully merchandise Ford's
first two Ford Quality Renewal programs for torque converters and clutch
and disc assemblies. The use of Alma remanufactured Ford Quality Renewal
products in new vehicle warranty repair is indicative of Alma's
engineering, manufacturing and quality expertise. Approximately 21% of
Alma's 2001 sales were to Ford and approximately 11% were to Chrysler.

Alma's market is somewhat captive in that any supplier selling to the major
automotive and equipment OEMs must adhere to the same quality standards
with which Alma complies. Alma competes based on quality, price, and
customer service.

Atco. Atco Products, Inc. was founded in 1968 and was acquired by the
Company in July of 2001. The Company's office, engineering, sales, and
customer service departments are located in Ferris, Texas, where mobile air
conditioning components are manufactured. Atco focuses on quality parts,
quick responses to customer needs and deliveries.

Atco manufactures and distributes hose assemblies, driers and accumulators,
fittings, and crimping tools to a large customer base, including such
companies as GMSPO, PACCAR, Gates, Dana-Weatherhead, and other OE and
automotive aftermarket customers. Atco is the sole external source to
Kenworth and Peterbilt for steel and aluminum air conditioning tube
assemblies and hose end fittings, which are manufactured in the ISO-9000
certified plant in Ennis, Texas. Atco has led the way with innovations like
the patented portable hand-operated model 3700 crimping tool. Net sales
were $5.7 million from the date of acquisition through December 31, 2001.


Kinetek

Kinetek is a leading domestic manufacturer of specialty purpose electric
motors, gearmotors, gearboxes, gears, transaxles and electronic motion
controls, serving a diverse customer base, including consumer, commercial
and industrial markets. Its products are used in a broad range of
applications, including vending machines, golf carts, lift trucks,
industrial ventilation equipment, automated material handling systems and
elevators.

Kinetek operates in the businesses of electric motors ("motors") which
includes the subsidiaries Imperial, Gear, Merkle-Korff, Fir, and Advanced
D.C. Motors; and electronic motion control systems ("controls") which
includes the subsidiaries Electrical Design & Control and Motion Control
Engineering. For the year ended December 31, 2001 Kinetek generated net
sales of $287.4 million.


                                   -11-
<PAGE>

Electric Motors. Electric motors are devices that convert electric power
into rotating mechanical energy. The amount of energy delivered is
determined by the level of input power supplied to the electric motor and
the size of the motor itself. An electric motor can be powered by
alternating current ("AC") or direct current ("DC"). AC power is generally
supplied by power companies directly to homes, offices and industrial sites
whereas DC power is supplied either through the use of batteries or by
converting AC power to DC power. Both AC motors and DC motors can be used
to power most applications; the determination is made through the
consideration of power source availability, speed variability requirements,
torque considerations, and noise constraints.

The power output of electric motors is measured in horsepower. Motors are
produced in power outputs that range from less than one horsepower up to
thousands of horsepower.


SubFractional Motors. Kinetek's subfractional horsepower products are
comprised of motors and gearmotors, which power applications up to 30 watts
(1/25 horsepower). These small, "fist-sized" AC and DC motors are used in
light duty applications such as snack and beverage vending machines,
refrigerator ice dispensers and photocopy machines.

Fractional/Integral Motors. Kinetek's fractional/integral horsepower
products are comprised of AC and DC motors and gearmotors having power
ranges from 1/8 to 100 horsepower. Primary end markets for these motors
include commercial floor equipment, commercial dishwashers, commercial
sewing machines, industrial ventilation equipment, golf carts, lift trucks
and elevators.

Gears and Gearboxes. Gears and gearboxes are mechanical components used to
transmit mechanical energy from one source to another source. They are
normally used to change the speed and torque characteristics of a power
source such as an electric motor. Gears and gearboxes come in various
configurations such as helical gears, bevel gears, worm gears, planetary
gearboxes, and right-angle gearboxes. For certain applications, an electric
motor and a gearbox are combined to create a gearmotor.

Kinetek's precision gear and gearbox products are produced in sizes of up
to 16 inches in diameter and in various customized configurations such as
pump, bevel, worm and helical gears. Primary end markets for these products
include original equipment manufacturers ("OEM's") of motors, commercial
floor care equipment, aerospace and food processing product equipment.

Electronic Motion Control Systems. Electronic motion control systems are
assemblies of electronic and electromechanical components that are
configured in such a manner that the systems have the capability to control
various commercial or industrial processes such as conveyor systems,
packaging systems, elevators, and automated assembly operations. The
components utilized in a motion control system are typically electric motor
drives (electronic controls that vary the speed and torque characteristics
of electric motors), programmable logic controls ("PLCs"), transformers,
capacitors, switches and software to configure and control the system. The
majority of the Company's motion control products control elevators and
automated conveyor systems used in automotive manufacturing.


                                   -12-
<PAGE>


Backlog

As of December 31, 2001 the Company had a backlog of approximately $80.2
million. The backlog is primarily due to motor sales at Merkle-Korff, a
Kinetek subsidiary, and printing and graphic component sales at Valmark.
Management believes that the Company will ship substantially all of its
backlog during 2002.


Seasonality

The Company's aggregate business has a certain degree of seasonality. JII
Promotions and Welcome Home's sales are somewhat stronger toward year-end
due to the nature of their products. Calendars at JII Promotions have an
annual cycle while home furnishings and accessories at Welcome Home are
popular as holiday gifts.


Research and Development

As a general matter, the Company operates businesses that do not require
substantial capital or research and development expenditures. However,
development efforts are targeted at certain subsidiaries as market
opportunities are identified. None of these subsidiaries' development
efforts require substantial resources from the Company.

Patents, Trademarks, Copyrights and Licenses

The Company protects its confidential, proprietary information as trade
secrets. The Company's products are generally not protected by virtue of
any proprietary rights such as patents. There can be no assurance that the
steps taken by the Company to protect its proprietary rights will be
adequate to prevent misappropriation of its technology and know-how or that
the Company's competitors will not independently develop technologies that
are substantially equivalent to or superior to the Company's technology. In
addition, the laws of some foreign countries do not protect the Company's
proprietary rights to the same extent as do the laws of the United States.
In the Company's opinion, the loss of any intellectual property asset would
not have a material adverse effect on the Company's business, financial
condition, or results of operations.

The Company is also subject to the risk of adverse claims and litigation
alleging infringement of proprietary rights of others. From time to time,
the Company has received notice of infringement claims from other parties.
Although the Company does not believe it infringes on the valid proprietary
rights of others, there can be no assurance against future infringement
claims by third parties with respect to the Company's current or future
products. The resolution of any such infringement claims may require the
Company to enter into license arrangements or result in protracted and
costly litigation, regardless of the merits of such claims.


Employees

As of December 31, 2001, the Company and its subsidiaries employed
approximately 6,500 people. Approximately 1,700 of these employees were
members of various labor unions. The Company believes that its
subsidiaries' relations with their respective employees are good.



                                   -13-
<PAGE>


Environmental Regulations

The Company is subject to numerous U.S. and foreign federal, state,
provincial and local laws and regulations relating to the storage,
handling, emissions and discharge of materials into the environment,
including the U.S. Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), the Clean Water Act, the Clean Air Act, the
Emergency Planning and Community Right-to-Know Act, and the Resource
Conservation and Recovery Act. Under CERCLA and analogous state laws, a
current or previous owner or operator of real property may be liable for
the costs of removal or remediation of hazardous or toxic substances on,
under, or in such property. Such laws frequently impose cleanup liability
regardless of whether the owner or operator knew of or was responsible for
the presence of such hazardous or toxic substances and regardless of
whether the release or disposal of such substances was legal at the time it
occurred. Regulations of particular significance to the Company's ongoing
operations include those pertaining to handling and disposal of solid and
hazardous waste, discharge of process wastewater and storm water and
release of hazardous chemicals. The Company believes it is in substantial
compliance with such laws and regulations.

The Company generally conducts an assessment of compliance and the
equivalent of a Phase I environmental survey on each acquisition candidate
prior to purchasing a company to assess the potential for the presence of
hazardous or toxic substances that may lead to cleanup liability with
respect to such properties. The Company does not currently anticipate any
material adverse effect on its results of operations, financial condition
or competitive position as a result of compliance with federal, state,
provincial, local or foreign environmental laws or regulations. However,
some risk of environmental liability and other costs is inherent in the
nature of the Company's business, and there can be no assurance that
material environmental costs will not arise. Moreover, it is possible that
future developments such as the obligation to investigate or cleanup
hazardous or toxic substances at the Company's property for which
indemnification is not available, could lead to material costs of
environmental compliance and cleanup by the Company.

FIR, a wholly-owned subsidiary of Kinetek, owns property in
Casalmaggiore, Italy that is the subject of investigation and remediation
under the review of government authorities for soils and groundwater
contaminated by historic waste handling practices. In connection with the
acquisition of FIR, the Company obtained indemnification from the former
owners for this investigation and remediation.


Alma owns two properties in Alma, MI that are contaminated by chlorinated
solvent and oil contamination. One is on the Michigan List of Sites of
Environmental Contamination and has been the subject of investigation by
the Michigan Department of Environmental Quality ("DEQ") since 1982. By
1985, the former owner had cleaned out, closed and capped the lagoons,
which were the source of the contamination and in 1992, had installed a
groundwater remediation system. On January 5, 1999 the former owner
submitted to DEQ a proposed remedial action plan which recommends that the
groundwater treatment system continue to operate for up to thirty years, a
deed restriction that limits the use of the property to industrial use and
the adoption, by the City of Alma, of an ordinance which prohibits the
private use of groundwater for drinking water. DEQ has not yet approved or
denied the plan. The second property is contaminated with petroleum
constituents and chlorinated solvents. The scope and extent of the
contamination is being investigated. In connection with the acquisition of
these properties, the Company obtained indemnification and assurances from
the Seller that the Seller bore full responsibility for the completion of
the investigation and remediation of the historic contamination of the two
properties. DEQ has required the former owner to conduct additional
groundwater sampling and analysis to more completely delineate the vertical
and horizontal extent of the contamination at both locations. The former
owner anticipates completing the additional investigations and submitting
revised remedial action plans by the end of 2002.


                                   -14-
<PAGE>

In October 1997, the Tennessee Department of Environmental Control ("DEC")
requested information from DACCO about a contaminated spring adjacent to
its Cookeville, Tennessee property. The spring is reportedly contaminated
with materials which DACCO does not believe would have originated at the
facility, and DACCO therefore does not believe that it caused the
contamination or that it will be responsible for the clean-up. In September
1998, the DEC informed DACCO that the spring requires further
investigation, and that DACCO's Cookeville property meets the criteria for
designation as a state Superfund cleanup site. The DEC has subsequently
agreed to examine the potential liability of other companies in the area
before pursuing DACCO for cleanup costs. DEC conducted an additional
investigation and a preliminary site assessment in August 2000. The results
revealed very low levels of petroleum constituents, chlorinated solvents
and chloroform and DEC determined that no further action is required.
































                                   -15-
<PAGE>


Item 2.  Properties


The Company leases approximately 49,200 square feet of office space for its
headquarters in Illinois. The principal properties of each subsidiary of
the Company at December 31, 2001, and the location, the primary use, the
capacity, and ownership status thereof, are set forth in the table below.

<TABLE>
<CAPTION>

 COMPANY LOCATION            USE                                       SQUARE          OWNED/
 ----------------            ---                                       ------          ------
                                                                                       LEASE
<S>                         <C>                                      <C>             <C>
 Advanced DC
   Syracuse, NY              Manufacturing/Administration              49,600           Owned
   Syracuse, NY              Manufacturing                             45,600          Leased
   Carrollton, TX            Manufacturing/Administration              29,000          Leased
   Dewitt, NY                Manufacturing                             18,700          Leased
   Eternoz, France           Manufacturing/Administration              19,000          Leased
   Putzbrunn, Germany        Warehouse                                  1,200          Leased


 Alma
   Alma, MI                  Manufacturing/Warehouse                  271,450           Owned
   Alma, MI                  Manufacturing/Warehouse                  101,900           Owned
   Alma, MI                  Warehouse                                 44,060           Owned
   Alma, MI                  Warehouse                                 33,400           Owned
   Alma, MI                  Warehouse                                  9,600           Owned

 Atco
   Ferris, TX                Manufacturing                             93,100           Owned
   Ennis, TX                 Manufacturing                             24,100           Owned
   Athens, TX                Manufacturing                             88,800          Leased


 Beemak
   Rancho Dominguez, CA      Manufacturing/Administration             104,000          Leased

 Cape Craftsmen
   Elizabethtown, NC         Manufacturing/Administration             113,000          Leased
   Elizabethtown, NC         Assembly                                  30,750          Leased
   Wilmington, NC            Administration                             6,250          Leased
   Clarkton, NC              Assembly                                  48,000          Leased


 Cho-Pat
   Mt. Holly, NJ             Manufacturing/Administration               7,500          Leased


 Dacco
   Cookeville, TN            Manufacturing/Administration             355,000           Owned
   Huntland, TN              Manufacturing                             72,000           Owned

 Deflecto
   Indianapolis, IN          Manufacturing/Administration             182,600           Owned
   Fishers, IN               Manufacturing                            134,400          Leased
   St. Catherines, Ont.      Manufacturing/Administration              50,000           Owned
   St. Catherines, Ont.      Assembly                                  78,000          Leased
   Midvale, OH               Manufacturing/Assembly                    20,430           Owned
   Pearland, TX              Manufacturing                             63,000          Leased
   Newport, Wales            Manufacturing                             66,000           Owned
   Aurora, Ontario           Manufacturing/Administration              30,500          Leased
   Ontario, CA               Manufacturing                             36,500          Leased


                                        -16-
<PAGE>
<CAPTION>

<S>                         <C>                                     <C>              <C>
 ED&C
   Troy, MI                  Manufacturing/Administration              33,700          Leased


 FIR
   Casalmaggiore, Italy      Manufacturing/Administration             100,000           Owned
   Varano, Italy             Manufacturing                             30,000           Owned
   Bedonia, Italy            Manufacturing                              8,000          Leased
   Reggio Emilia, Italy      Manufacturing/Distribution                30,000          Leased
   Genova, Italy             Research & Development/Manufacturing      33,000          Leased


 Gear
   Grand Rapids, MI          Manufacturing/Administration              45,000           Owned

 GramTel
   South Bend, IN            Sales/Administration/Other                 9,000           Owned


 Imperial
   Akron, OH                 Manufacturing                            106,000          Leased
   Middleport, OH            Manufacturing                             85,000           Owned
   Cuyahoga Falls, OH        Manufacturing                             58,000          Leased
   Alamagordo, NM            Manufacturing                             40,200          Leased
   Oakwood Village, OH       Manufacturing/Administration              25,000          Leased


 ISMI
   Howell, MI                Administration/Sales                       2,700          Leased

 JII Promotions
   Columbus, OH              Sales                                     11,000          Leased
   Coshocton, OH             Manufacturing/Administration             218,000           Owned
   Red Oak, IA               Manufacturing/Assembly/Administration    140,000           Owned


 Merkle-Korff
   Des Plaines, IL           Design/Administration                     38,000          Leased
   Richland Center, WI       Manufacturing                             45,000          Leased
   Darlington, WI            Manufacturing                             68,000          Leased
   Des Plaines, IL           Manufacturing/Administration             112,000          Leased
   San Luis Potosi,          Manufacturing                             46,000          Leased
     Mexico


 Motion Control
   Rancho Cordova, CA        Manufacturing/Administration              80,600          Leased
   New York, NY              Sales                                        600          Leased


 Online Environs
   Boston, MA                Design/Sales                               4,700          Leased


 Pamco
   Des Plaines, IL           Manufacturing/Administration              52,000           Owned
   King of Prussia, PA       Subleased                                 24,000          Leased


 Sate-Lite
   Niles, IL                 Manufacturing/Administration             117,835          Leased
   Shunde, Guangdong         Manufacturing/Administration              47,000          Leased


 Seaboard
   Fitchburg, MA             Manufacturing/Administration             260,000           Owned
   Miami, FL                 Manufacturing/Administration              90,000           Owned
   Carlstadt, NJ             Manufacturing                             50,000          Leased


 Valmark
   Fremont, CA               Manufacturing/Administration              46,700          Leased
   Fremont, CA               Manufacturing/Administration              14,830          Leased

 Welcome Home
   Wilmington, NC            Administration/Warehouse                  29,500          Leased
</TABLE>


                                   -17-
<PAGE>


DACCO also owns or leases 41 distribution centers, which average 5,400
square feet in size. DACCO maintains five distribution centers in Florida,
four distribution centers in Tennessee, three distribution centers in
Illinois and Virginia, two distribution centers in each of Arizona,
Indiana, Michigan, Texas, Alabama, California, South Carolina and Ohio with
the remaining distribution centers located in Pennsylvania, Minnesota,
Missouri, Nebraska, West Virginia, Oklahoma, Nevada, Georgia, Maryland and
Kentucky.

Welcome Home leases 117 specialty retail stores in 36 states, with the
majority of store locations in outlet malls. Welcome Home maintains 16
stores in California, 9 stores in Florida, 6 stores in Texas, 5 stores in
North Carolina, Georgia, Missouri and New York, and 4 stores in each of
Michigan, Pennsylvania and Washington. The remaining stores are located
throughout the United States.

Merkle-Korff and Motion Control lease certain production and office space
from related parties. The Company believes that the terms of these leases
are comparable to those which would have been obtained by the Company had
the leases been entered into with an unaffiliated third party.

To the extent that any of the Company's existing leases expire in 2002, the
Company believes that its existing leased facilities are adequate for the
operations of the Company and its subsidiaries.


Item 3.  LEGAL PROCEEDINGS

The Company's subsidiaries are parties to various legal actions arising in
the normal course of their businesses. The Company believes that the
disposition of such actions individually or in the aggregate will not have
a material adverse effect on the consolidated financial position or results
of operations of the Company.


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

No matters were submitted to a vote of security holders during the fiscal
year ended December 31, 2001.















                                   -18-
<PAGE>

                                  Part II

Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDERS MATTERS

The only authorized, issued and outstanding class of capital stock of the
Company is Common Stock. There is no established public trading market for
the Company's Common Stock.

(a)      At December 31, 2001, there were 18 holders of record of the
         Company's Common Stock.

(b)      The Company has not declared any cash dividends on its Common
         Stock since the Company's formation in May 1988. The Indenture,
         dated as of July 25, 1997, by and between the Company and U.S.
         Bank Trust National Association f/k/a First Bank National
         Association, as Trustee, (the "Trustee") with respect to the 10
         3/8% Senior Notes and the Indenture dated as of April 2, 1997, by
         and between the Company and the Trustee with respect to the 11
         3/4% Senior Subordinated Discount Debentures (collectively the
         "Indentures") contain restrictions on the Company's ability to
         declare or pay dividends on its capital stock. The Indentures each
         prohibit the declaration or payment of any dividends or the making
         of any distribution by the Company or any Restricted Subsidiary
         (as defined in the Indentures) other than dividends or
         distributions payable in stock of the Company or a Subsidiary and
         other than dividends or distributions payable to the Company.


























                                   -19-
<PAGE>


Item 6.  SELECTED FINANCIAL DATA

The following table presents selected operating, balance sheet and other
data of the continuing operations of the Company and its subsidiaries as of
and for the five years ended December 31, 2001. The financial data have
been derived from the consolidated financial statements of the Company and
its subsidiaries. As a result of the 2000 transactions described in note 4
to the financial statements, the Jordan Telecommunications Products segment
and the Capita Technologies segment have been reported as discontinued
operations for financial reporting purposes in accordance with Accounting
Principles Board ("APB") Opinion No. 30, and their results have been
excluded from the information shown below.

<TABLE>
<CAPTION>

                                                                  Year Ended December 31,
                                            -------------------------------------------------------------------
                                                                  (Dollars in thousands)

                                              2001          2000         1999          1998            1997
                                              ----          ----         ----          ----            ----
<S>                                        <C>           <C>          <C>            <C>             <C>
Operating data: (1)
Net Sales.............................      $722,823      $807,296     $766,655       $633,579        $450,102
Cost of sales, excluding
 depreciation.........................       460,004       513,755      497,223        406,970         282,654
                                             -------       -------      -------        -------         -------
Gross profit, excluding
 depreciation.........................       262,819       293,541      269,432        226,609         167,448
Selling, general and
 administrative expense,
 excluding depreciation...............       177,291       173,370      153,582        131,055         100,778
Operating income......................        28,718        55,013       69,245         57,977          39,221
Interest expense......................        91,344        92,009       87,058         70,184          66,947
Interest income.......................          (791)       (1,464)      (1,083)        (1,656)         (2,227)
Loss from continuing
 operations before income
 taxes and minority interest(2).......       (64,001)      (38,884)      (6,603)       (10,912)         (7,382)
Loss from continuing
 operations...........................       (58,272)      (36,046)      (5,731)       (15,081)        (10,603)

Balance sheet data (at end
  of period):
Cash and cash equivalents.............        26,050        21,713       19,973         14,967          43,512
Working capital.......................       159,127       154,599      161,570        144,474         124,941
Total assets..........................       829,396       887,501    1,159,496        955,405         849,595
Long-term debt (less
  current portion)....................       819,406       787,694      837,712      1,054,327         915,145
Net capital deficiency (3)............      (139,056)      (82,010)    (238,835)      (208,144)       (175,285)
</TABLE>

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

(1)  The Company has acquired a diversified group of operating companies
     over the five year period, which significantly affects the
     comparability of the information shown above.

(2)  Loss from continuing operations before income taxes and minority
     interest in 1997 includes a gain on the sale of a subsidiary of
     $17,081, and the recording of equity in the loss of an investee of
     $3,386. Loss from continuing operations before income taxes and
     minority interest in 1999 includes a gain on the sale of a subsidiary
     of $10,037. Loss from continuing operations before income taxes and
     minority interest in 2000 includes a $14,636 write-down of goodwill
     related to a subsidiary of Kinetek (see note 22 to the financial
     statements) and a loss on the sale of a subsidiary of $2,798 (see note
     14 to the financial statements).

(3)  No cash dividends on the Company's Common Stock have been declared or
     paid.



                                   -20-
<PAGE>


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

Historical Results of Operations

Summarized below are the historical net sales, operating income (loss) and
operating margin (as defined below) for each of the Company's business
groups for the fiscal years ended December 31, 2001, 2000, and 1999. This
discussion should be read in conjunction with the historical consolidated
financial statements and the related notes thereto contained elsewhere in
this Annual Report.

<TABLE>
<CAPTION>

                                                        Year ended December 31,
                                                        -----------------------
                                                2001              2000              1999
                                                ----              ----              ----
                                                         (Dollars in thousands)
<S>                                           <C>            <C>                <C>
Net Sales:
Specialty Printing & Labeling                  $112,123         $122,691          $117,678
Jordan Specialty Plastics                        98,733           98,353            86,284
Jordan Auto Aftermarket                         147,047          141,213           131,935
Kinetek                                         287,362          316,666           307,877
Consumer and Industrial Products                 77,558          128,373           122,881
                                               --------         --------          --------
   Total                                       $722,823         $807,296          $766,655
                                               ========         ========          ========

Operating Income (Loss) (1):
Specialty Printing & Labeling                   $  (984)         $ 7,210            $7,638
Jordan Specialty Plastics                         2,057            1,928             4,319
Jordan Auto Aftermarket                          19,494           20,449            16,675
Kinetek                                          37,272           36,497            50,597
Consumer and Industrial Products                 (3,485)           3,071             7,867
                                                -------          -------           -------
   Total                                        $54,354          $69,155           $87,096
                                                =======          =======           =======

Operating Margin (2):
Specialty Printing & Labeling                     (0.9%)            5.9%              6.5%
Jordan Specialty Plastics                          2.1%             2.0%              5.0%
Jordan Auto Aftermarket                           13.3%            14.5%             12.6%
Kinetek                                           13.0%            11.5%             16.4%
Consumer and Industrial Products                  (4.5%)            2.4%              6.4%
Combined                                           7.5%             8.6%             11.4%
</TABLE>

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

(1)  Before corporate overhead of $25,636, $14,142, and $17,851 for the years
     ended December 31, 2001, 2000, and 1999, respectively.

(2)  Operating margin is operating income (loss) divided by net sales.







                                   -21-
<PAGE>


Specialty Printing & Labeling. As of December 31, 2001, the Specialty
Printing & Labeling group consisted of JII Promotions, Valmark, Pamco, and
Seaboard.

2001 Compared to 2000. Net sales decreased $10.6 million or 8.6% for the
year ended December 31, 2001. Net sales decreased primarily due to lower
sales of outside specialties, calendars, and school annuals at JII
Promotions, $5.2 million, $1.5 million, and $0.3 million, respectively,
decreased sales of screen printing, rollstock, membrane switches and
shrouds at Valmark, $1.5 million, $1.4 million, $0.2 million and $0.2
million, respectively, and lower sales of labels at Pamco, $0.5 million.
Partially offsetting these decreases were increased sales of folding boxes
at Seaboard, $0.2 million. The decrease in outside specialties at JII
Promotions is due to large one-time orders in 2000, which were not repeated
in 2001. Valmark's sales decrease is due to lower sales to Apple Computer,
which experienced a downturn resulting from slowing demand for personal
computers. The increase in sales at Seaboard is primarily due to the
acquisition of Pioneer in July 2001.

Operating income decreased $8.2 million or 113.7% for the year ended
December 31, 2001. This decrease is primarily due to lower operating income
at JII Promotions, $3.1 million, Valmark, $3.3 million, and Pamco, $2.1
million, partially offset by increased operating income at Seaboard, $0.3
million. The lower operating income at JII Promotions and Valmark is due to
the sales decreases mentioned above, as well as higher accounts receivable
write-offs due to the slowing economy. The decrease at Pamco is due to
losses at the East Coast facility, which was closed in October 2001.
Operating margin decreased to (0.9%) as the result of these decreases.

2000 Compared to 1999. Net sales increased $5.0 million or 4.3% for the
year ended December 31, 2000. Net sales increased primarily due to
increased sales of outside specialties at JII Promotions, $1.2 million,
screen printing and membrane switches at Valmark, $1.6 million and $0.9
million, respectively, labels at Pamco, $1.2 million and packaging at
Seaboard, $0.4 million. Partially offsetting these increases was the
decrease in calendar sales at JII Promotions of $0.3 million. The decrease
in sales of calendars at JII Promotions is due to consolidation in the
banking and insurance industries. The increase in sales at Valmark is
primarily the result of Valmark's successful initiative to provide Apple
Computer with the product identification labels for its new computer
products.

Operating income decreased $0.4 million or 5.6% for the year ended December
31, 2000. The majority of the decrease was due to lower operating income at
Pamco, $0.8 million and Seaboard, $0.3 million, partially offset by
increases in operating income at JII Promotions, $0.1 million and Valmark,
$0.6 million. The increase in operating income at Valmark is due primarily
to the increase in sales to Apple as mentioned above. The decrease in
operating income at Pamco was due to start-up costs at its new facility in
Pennsylvania.

Jordan Specialty Plastics. As of December 31, 2001 the Jordan Specialty
Plastics group consisted of Sate-Lite, Beemak, and Deflecto.

2001 Compared to 2000. Net sales increased $0.4 million or 0.4% for the
year ended December 31, 2001. Net sales increased primarily due to higher
sales of hardware products at Deflecto, $5.2 million. Partially offsetting
this increase is lower sales of thermoplastic colorants at Sate-Lite, $0.9
million, decreased sales of plastic injection molded products and


                                   -22-
<PAGE>

fabricated products at Beemak, $1.5 million and $0.5 million, respectively,
and lower sales of office products at Deflecto, $1.9 million. The decrease
in sales at Beemak is due to lower advertising dollars being spent due to
the slowing economy, and competition from various plastic injection molding
companies. The lower sales of office products at Deflecto are primarily due
to the loss of wall pocket business at Office Depot during 2001.

Operating income increased $0.1 million or 6.7% for the year ended December
31, 2001. This increase is due to higher operating income at Sate-Lite and
Deflecto, $0.5 million each. Partially offsetting these increases is lower
operating income at Beemak, $0.7 million, and increased corporate expenses,
$0.2 million. The increase in operating income at Deflecto and Sate-Lite is
due to better overhead absorption, even at lower sales levels, cost cutting
instituted in late 2000, as well as the ramp up of Sate-Lite's China
facility. The decreased operating income at Beemak is primarily due to the
lower sales mentioned above as well as an increase in accounts receivable
write-offs due to the depressed economic climate. Operating margin remained
relatively consistent in 2001 primarily due to the better overhead
absorption mentioned above.

2000 Compared to 1999. Net sales increased $12.1 million or 14.0% for the
year ended December 31, 2000. The increase in net sales was primarily due
to increases in sales at Deflecto and Sate-Lite, $12.0 million and $1.5
million, respectively, partially offset by decreased sales at Beemak, $1.4
million. The increase in sales at Deflecto is due to the acquisitions of
Yearntree and IDL in December 1999 and June 2000, respectively, which added
$5.1 million and $4.6 million to 2000 sales, in addition to increased sales
of hardware products of $7.1 million. These increases were partially offset
by decreased sales in Deflecto's office product line of $4.8 million.
Sate-Lite's increase in sales resulted from the addition of the
Tilt-Bin(TM) product line which was transitioned from Beemak to Sate-Lite
in August 2000, $0.8 million, and increased sales at Midwest Color of $0.7
million. Beemak's sales decreased due to the transfer of the Tilt-Bin(TM)
product line to Sate-Lite. Beemak's sales from the Tilt-Bin(TM) product
line for the period from January to July 2000 amounted to $1.3 million as
compared to $2.7 million for the full year of 1999.

Operating income decreased $2.4 million or 55.4% for the year ended
December 31, 2000. Lower operating income was due to decreases at Beemak
and Deflecto, $0.9 million and $1.6 million, respectively, partially offset
by increases at Sate-Lite of $0.1 million. Decreased operating income at
Beemak is attributable to the Tilt-Bin(TM) transfer to Sate-Lite and a
shift of product mix to more fabricated product, which is a lower margin
product. Deflecto's decrease in operating income was due to a $1.5 million
management severance accrual in December. Increased operating income at
Sate-Lite was due to greater operating efficiencies and the increased sales
resulting from the Tilt-Bin(TM) addition to their product line.

Jordan Auto Aftermarket. As of December 31, 2001, the Jordan Auto
Aftermarket group consisted of DACCO, Alma, and Atco.

2001 Compared to 2000. Net sales increased $5.8 million or 4.1% for the
year ended December 31, 2001. This increase is primarily due to the
acquisition of Atco in July 2001. Atco manufactures accumulators, driers,
fittings, hose assemblies, and other air conditioning components for the
automotive and heavy truck industries. Atco contributed net sales of $5.8
million from its acquisition date through December 31, 2001. In addition,
net sales of soft parts increased at Dacco and sales of air compressors
increased at Alma. Partially offsetting these increases were lower sales of
remanufactured torque converters and drive train components at Alma and


                                   -23-
<PAGE>

DACCO. The increase in soft parts at DACCO is primarily due to the addition
of two new DACCO stores around the country while higher sales of air
compressors is due to the sales of new compressors through existing sales
channels. Sales of rebuilt torque converters decreased due to the
unseasonably warm winter experienced around the country.

Operating income decreased $1.0 million or 4.7% for the year ended December
31, 2001. The lower operating income is primarily due to decreased
operating income at both DACCO and Alma due to the lower sales levels
mentioned above. This decrease is partially offset by the contribution of
operating income of $0.7 million from Atco from its acquisition date
through December 31, 2001. Operating margin decreased to 13.3% due to the
decreases in sales.

2000 Compared to 1999. Net sales increased $9.3 million or 7.0% for the
year ended December 31, 2000. The increase was due to increased sales at
Alma of $11.9 million, including increased sales of drive train components
and air compressors, partially offset by a decrease in sales at DACCO. The
primary reason for the increase at Alma was due to a full year's results
being included in 2000 as compared with approximately nine months results
included in 1999. The decrease in DACCO's sales resulted from lower sales
of converters, other hard parts, and scrap sales, partially offset by
increased sales of soft parts.

Operating income increased $3.8 million or 22.6% for the year ended
December 31, 2000. Increases at Alma and DACCO were $2.6 million and $1.8
million, respectively, partially offset by increased corporate expenses of
$0.6 million. The major reason for the increase in operating income at Alma
is due to the increase in 2000 sales, as mentioned above. DACCO's operating
income increased as a result of focused cost cutting efforts aimed at
achieving production efficiencies and a price increase instituted in
October 2000.

Kinetek. As of December 31, 2001, the Motors and Gears group consisted of
Imperial, Gear, Merkle-Korff, FIR, ED&C, Motion Control, and Advanced DC.

2001 Compared to 2000. Net sales decreased $29.3 million or 9.3% for the
year ended December 31, 2001. Sales of the Company's motors segment
declined 11.6% in 2001 and sales of the controls segment declined 2.8%.
Sales in all of Kinetek's principal markets were down in 2001 primarily as
a result of the recessionary conditions experienced in the U.S. and Europe.
Subfractional motor sales decreased 17.4% in 2001 as compared with 2000,
driven by continued contraction of the bottle and can vending market in
addition to general economic weakness that hurt the division's appliance,
general vending, and other product lines. Sales of fractional/integral
motor products declined 7.5% from 2000 levels, mainly due to sharp declines
in demand for DC powered motors sold to material handling customers in the
last nine months of 2001. Sales to customers of floor care, elevator, and
other fractional/integral motor products in the U.S. and Europe were down
by modest rates in line with the general industrial economic recession. The
fall in sales of the controls segment was a result of lower sales in the
elevator modernization market caused by a flat market and a shift in
product mix toward demand for lower priced units.

Operating income increased $0.8 million or 2.1%, for the year ended
December 31, 2001. The slight increase in operating income was a result of
three key factors: 1) Amortization of goodwill and other intangible assets
was $15.3 million lower in 2001, due to the $14.6 million goodwill
impairment charge at ED&C in 2000. See Note 22 to the Company's


                                   -24-
<PAGE>

consolidated financial statements regarding the circumstances that
triggered the impairment and how the impairment was determined. 2)
Kinetek's gross profit declined $12.7 million or 10.9% as a result of the
sales declines discussed above. Gross margins fell from 36.9% of sales in
2000 to 36.2% in 2001 due to unfavorable manufacturing cost leverage caused
by the lower volume and to sales declines concentrated in Kinetek's higher
margin product lines. 3) Selling, general, and administrative expenses
increased $2.2 million, or 4.6% in 2001 compared with 2000 as a result of
costs incurred related to facility closures and Kinetek's continued focus
on research and development of new products and markets.

2000 Compared to 1999. Net sales increased $8.8 million or 2.9% for the
year ended December 31, 2000. The increase in net sales was primarily due
to increased sales of fractional/integral products, 3.4%. This growth is
the result of strong performance in the material handling, utility vehicle
and European markets (net of unfavorable Euro exchange rates). Sales of
electronic motion control systems increased by 15.2% as a result of
continued strength in the elevator modernization market. The increase in
sales was partially offset by decreases in subfractional motor sales, 6.4%,
due to weakness in the bottle and can vending market.

Operating income decreased $14.1 million or 27.9% for the year ended
December 31, 2000. The decrease was primarily the result of the $14.6
million goodwill impairment charge at ED&C (see note 22 to the financial
statements). Excluding the impact of the goodwill impairment, operating
income would have increased 1.1%, primarily as a result in the increased
sales and gross margin. The improvement to gross margin was driven by the
company's continued product design changes, manufacturing process
improvements, and outsourcing and insourcing of component purchases.
Offsets to the gross margin improvement include increased selling, general
and administrative expenses.

Consumer and Industrial Products. As of December 31, 2001, the Consumer and
Industrial Products group consisted of Cape Craftsmen, Welcome Home,
Cho-Pat, Online Environs, Flavorsource, ISMI and GramTel.

2001 Compared to 2000. Net sales decreased $50.8 million or 39.6% for the
year ended December 31, 2001. This decrease is primarily due to the
divestiture of Riverside in February 2001, $50.7 million. In addition,
sales decreased due to lower sales of home accessories at Cape Craftsmen,
$3.7 million, decreased retail sales at Welcome Home, $0.9 million, lower
sales of orthopedic supports at Cho-Pat, $0.3 million, and decreased sales
of web site development services at Online Environs, $1.9 million.
Partially offsetting these decreases are higher sales of internet services
at ISMI, $1.7 million, and increased sales of flavors at Flavorsource, $5.0
million. The decrease in sales at Cape Craftsmen, a wholesaler of home
accessories and gift items, and Welcome Home, a retail store chain, are
primarily due to the drop in overall retail sales due to the current
economic slowdown and the September 11th tragedy. Online Environs has seen
a drastic drop in demand for web site development and modification, which
is also consistent with the negative economic climate and lower information
technology spending. The increase in sales at ISMI and Flavorsource are
primarily due to the acquisitions of those subsidiaries in October 2000.



                                   -25-
<PAGE>

Operating income decreased $6.6 million or 213.5% for the year ended
December 31, 2001. This decrease is due to lower operating income at Cape
Craftsmen, $1.3 million, Welcome Home, $0.5 million, Cho-Pat, $0.3 million,
Online Environs, $1.6 million, GramTel, $1.4 million, and ISMI, $0.3
million. In addition, operating income decreased $1.4 million due to the
divestiture of Riverside in February 2001. Partially offsetting these
decreases is higher operating income at Flavorsource, $0.2 million. The
decreases in operating income are due to the decreases in sales mentioned
previously, mostly due to the negative economic climate, as well as a
decrease in gross profit margin due to competition, and the negative impact
on absorbed overhead resulting from lower sales. These decreases resulted
in operating margin decreasing to (4.5%).

2000 Compared to 1999. Net sales increased $5.5 million or 4.5% for the
year ended December 31, 2000. Net sales increased primarily due to higher
sales at Welcome Home, $19.1 million, sales to third parties at Cape of
$1.9 million, and sales of knee straps and related products at Cho-Pat,
$0.2 million. In addition, ISMI, Online Environs, GramTel and Flavorsource
were added to the group in 2000, increasing net sales by $0.5 million, $3.1
million, $0.3 million and $0.7 million, respectively. The increase in sales
was offset by decreases in Riverside sales of $2.0 million, and the sale of
Parsons and Pex, which had 1999 net sales of $10.8 million and $1.2 million
respectively. Total consolidated sales at Cape decreased $6.3 million due
to a twelve month elimination of Cape's intercompany sales to Welcome Home
in the current year versus six months in 1999 due to Welcome Home's
reconsolidation in mid 1999. Welcome Home's sales increase was the result
of being consolidated for a full year in 2000 versus six months in 1999.

Operating income decreased $4.8 million or 61.0% for the year ended
December 31, 2000. The decrease in operating income is primarily the result
of lower operating income at Welcome Home, $5.5 million, resulting from
their reconsolidation. Due to the seasonality of Welcome Home's business,
the majority of its operating income is recorded in the fourth quarter,
therefore, because of the timing of Welcome Home's reconsolidation, its
typical slow season was not included in the 1999 consolidated results. Also
contributing to the decrease in operating income were the dispositions of
Parsons and Pex, which contributed operating income in 1999 of $2.3 million
and $0.4 million respectively. Offsetting the decrease in operating income
were increases at Cape, $1.1 million and Riverside, $2.2 million. In
addition, Cho-Pat recorded increased operating income of $0.1 million.


Consolidated Operating Results.  (See Consolidated Statements of Operations).


2001 Compared to 2000. Net sales decreased $84.5 million or 10.5% for the
year ended December 31, 2001. This decrease was partially attributed to the
divestiture of Riverside in February 2001. Riverside contributed net sales
of $54.8 million in 2000 compared to $4.1 million in 2001. In addition, net
sales decreased due to lower sales of outside specialties and calendars at
JII Promotions, decreased sales of screen printing and rollstock at
Valmark, lower sales of labels at Pamco, decreased sales of thermoplastic
colorants at Sate-Lite, lower sales of plastic injection molded product at
Beemak, decreased sales of office products at Deflecto, decreased sales of
both motors and controls at Kinetek, lower sales of home accessories at
Cape Craftsmen, and decreased sales of web site development services at
Online Environs. Partially offsetting these decreases were sales due to the
acquisitions of Pioneer in the Specialty Printing and Labeling group and
Atco in the Jordan Auto Aftermarket group, both of which occurred in 2001,
and ISMI and Flavorsource in the Consumer and Industrial Products group,
both of which occurred in late 2000. In addition, net sales of hardware
products increased at Deflecto and net sales of soft parts and air
compressors increased at DACCO and Alma.



                                   -26-
<PAGE>

Operating income decreased $26.3 million or 47.8% for the year ended
December 31, 2001. This decrease was partially due to the sale of
Riverside, as mentioned above. In addition, operating income declined due
to losses at the East Coast facility of Pamco, accounts receivable
write-offs at JII Promotions and Beemak, lower gross margin at Kinetek due
to unfavorable product mix, increased operating expenses at Kinetek due to
facility closures, and decreased retail sales stemming from the negative
economic climate which greatly impacted Cape Craftsmen and Welcome Home.
Partially offsetting these decreases is better overhead absorption at
Deflecto and Sate-Lite due to cost cutting measures implemented in late
2000 and the ramp up of Sate-Lite's China facility. In addition, operating
income was positively impacted by the acquisitions of Pioneer, Atco, ISMI
and Flavorsource, as mentioned above, and the reduction in amortization
expense at Kinetek. Kinetek's operating income was negatively impacted in
2000 by $14.6 million due to the goodwill impairment charge at ED&C.

2000 Compared to 1999. Net sales increased $40.6 million or 5.3% for the
year ended December 31, 2000 as compared to 1999. The increase in sales
partially resulted from Welcome Home's inclusion in the consolidated
financial statements for the full year due to its reconsolidation in mid
1999, $19.1 million, and the Company's acquisitions of Yearntree and
Rolite, $5.1 million and $4.6 million, respectively. In addition, increased
sales of outside specialties at JII Promotions, greater sales of membrane
switches and screen printing at Valmark, increased sales of drive trains
and air compressors at Alma, higher sales of fractional/integral products
and electronic motion control systems in the Motors and Gears group and an
increase of sales to third parties at Cape also contributed to higher 2000
sales. Sales also increased due to the acquisitions of ISMI, GramTel,
Online Environs and Flavorsource in the Consumer and Industrial Products
group. Offsetting these increases were lower calendar sales at JII
Promotions, decreased sales in Deflecto's office products division, lower
converter sales at DACCO, a decrease in sub fractional motor sales in the
Motors and Gears group, and the sale of Parsons and Pex in 1999.

Operating income decreased $14.2 million or 20.6% for the year ended
December 31, 2000. The decrease in operating income was due to a $14.6
million goodwill impairment charge in the Motors and Gears group relating
to ED&C. SPL had lower operating income due to Pamco's new operations in
Pennsylvania. In addition, the sales of Parsons and Pex contributed to the
decrease. Partially offsetting these decreases was increased operating
income in the Auto Aftermarket group for both DACCO and Alma due to DACCO's
price increase and cost cutting efforts and Alma's increase in sales as
mentioned above. Operating income for SPL increased slightly due to
Valmark's increased sales to Apple.

Interest expense stayed relatively consistent between 2001 and 2000.


Income taxes - See note 13 of Notes to Consolidated Financial Statements.


Liquidity and Capital Resources

The Company had approximately $159.1 million of working capital from
continuing operations at the end of 2001 compared to approximately $154.6
million at the end of 2000.


                                   -27-
<PAGE>

The Company has acquired businesses through
leveraged buyouts, and as a result has significant debt in relation to
total capitalization. See "Business". Most of this acquisition debt was
initially financed through the issuance of bonds, which were subsequently
refinanced in 1997. See note 12 to the Consolidated Financial Statements.

Management expects modest growth in net sales and operating income in
2002. Capital spending levels in 2002 are anticipated to be consistent with
2001 levels and, along with working capital requirements, will be financed
internally from operating cash flow. Operating margins and operating cash
flow are expected to be favorably impacted by ongoing cost reduction
programs, improved efficiencies and sales growth. Management believes that
the Company's cash on hand and anticipated funds from operations will be
sufficient to cover its working capital, capital expenditures, debt service
requirements and other fixed charge obligations for at least the next 12
months.

The Company is, and expects to continue to be, in compliance with the
provisions of its Indentures.

None of the subsidiaries require significant amounts of capital spending to
sustain their current operations or to achieve projected growth.

Net cash provided by operating activities for the year ended December 31,
2001 was $30.3 million, compared to $4.3 million provided by operating
activities during the same period in 2000. The increase is primarily
attributed to decreased accounts receivable balances and increased
non-current liabilities.

Net cash used in investing activities for year ended December 31, 2001 was
$7.6 million, compared to $61.4 million provided by investing activities
during the same period in 2000. The decrease is due primarily to the
proceeds from the sale of discontinued operations in the prior year,
partially offset by decreased spending on acquisitions in the current year.

Net cash used in financing activities for the year ended December 31, 2001
was $17.6 million, compared to $59.6 million used in financing activities
during the same period in 2000. The decrease is primarily due to lower
repayments on the Company's revolving credit facilities of $52.3 million,
partially offset by the payment of financing costs of $6.0 million in 2001.

The Company and its subsidiaries are party to two credit agreements under
which the Company is able to borrow up to $160 million, based on the value
of certain assets, to fund acquisitions, provide working capital and for
other general corporate purposes. The credit agreements mature in 2005 and
2006. The agreements are secured by a first priority security interest in
substantially all of the Company's assets. As of December 31, 2001, the
Company had approximately $76.7 million of available funds under these
arrangements. See note 12 to the financial statements for additional
details.


                                   -28-
<PAGE>


The Company may, from time to time, use cash, including borrowings under
its credit agreements, to purchase either its 11 3/4% Senior Subordinated
Discount Debentures due 2009 or its 10 3/8% Senior Notes due 2007, or any
combination thereof, through open market purchases, privately negotiated
purchases or exchanges, tender offers, redemptions or otherwise, and may,
from time to time, pursue various refinancing or financial restructurings,
including pursuant to current solicitations and waivers involving those
securities, in each case, without public announcement or prior notice to
the holders thereof, and if initiated or commenced, such purchases or
offers to purchase may be discontinued at any time.

If the Company's EBITDA and cash flow continue through 2002 at the levels
experienced in the fourth quarter and year ended December 31, 2001, the
Company would barely generate sufficient cash to cover its interest payment
obligations in respect of its bank debt, Senior Notes and Senior
Subordinated Discount Notes (which cease to accrue, and become cash-pay
obligations in the fourth quarter of 2002). This assumes no further
general, economic or industry declines, which may necessitate the Company
to further reduce capital expenditures and acquisitions, and no assurances
can be given that, at the end of 2002, the Company will have sufficient
financial resources to pay its cash interest obligations.


Foreign Currency Impact

The Company is exposed to fluctuations in foreign currency exchange rates.
Decreases in the value of foreign currencies relative to the U.S. dollar
have not resulted in significant losses from foreign currency translation.
However, there can be no assurance that foreign currency fluctuations in
the future would not have an adverse effect on the Company's business,
financial condition or results of operations.


Impact of Inflation

General inflation has had only a minor effect on the operations of the
Company and its internal and external sources for liquidity and working
capital, as the Company has been able to increase prices to reflect cost
increases, and expects to be able to do so in the future.


Critical Accounting Policies and Estimates

Our significant accounting policies are described in Note 2 to the
consolidated financial statements included in Item 8 of this Form 10-K. Our
discussion and analysis of financial condition and results from operations
are based upon our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of the financial statements requires us to
make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues, and expenses. On an on-going basis, we evaluate the
estimates that we have made. These estimates have been based upon
historical experience and on various other assumptions that we believe to
be reasonable under the circumstances. However, actual results may differ
from these estimates under different assumptions or conditions.

We believe the following critical accounting policies affect the more
significant judgments and estimates we have used in the preparation of the
consolidated financial statements.

     Goodwill and Other Intangible Assets

The valuation and classification of goodwill and other intangible assets
and the assignment of useful amortization lives involves significant
judgments and the use of estimates. The testing of these intangibles for
impairment also requires significant use of judgment and assumptions.

We assess the impairment of goodwill and other identifiable intangibles
whenever events or changes in circumstances indicate that the carrying
value may not be recoverable. Some factors we consider important which
could trigger an impairment review include: (1) significant


                                   -29-
<PAGE>

underperformance relative to expected historical or projected future
operating results, (2) significant changes in the manner of our use of the
acquired assets or the strategy for our overall business, and (3)
significant negative industry or economic trends. When we determine that
the carrying value of goodwill and other identified intangibles may not be
recoverable based upon the existence of one or more indicators of
impairment, we measure any impairment based on the undiscounted forecasted
cash flows of the business to which the goodwill and other identified
intangibles relate. During 2000, the Company recorded a goodwill impairment
charge of $14.6 million related to ED&C, a Kinetek subsidiary. See Note 22
to the consolidated financial statements.

In accordance with SFAS No. 142, "Goodwill and Other Intangible Assets," on
January 1, 2002 we will cease to amortize goodwill arising from
acquisitions we completed prior to July 1, 2001. In lieu of amortization,
we are required to perform an initial impairment review of our goodwill in
2002 and an annual impairment review thereafter. If we determine through
the impairment review process that goodwill has been impaired, we must
record the impairment charge in our statement of operations.

     Investments in Affiliates

Periodically, we make strategic investments in debt and/or equity
securities of affiliated companies. See Note 8 to the consolidated
financial statements for details of these investments. These debt and/or
equity securities are not currently publicly traded on any major exchange.
The cost method of accounting is used to account for these investments as
we hold a non-material ownership percentage. Each quarter, we assess the
value of these investments by using information acquired from industry
trends, the management of these companies and other external sources. Based
on the information acquired, we record an impairment charge when we believe
an investment has experienced a decline in value that is other than
temporary. Future adverse changes in market conditions or poor operating
results of underlying investments could result in losses or an inability to
recover the carrying value of the investments that may not be reflected in
an investment's current carrying value, thereby possibly requiring an
impairment charge in the future.

     Allowance for Doubtful Accounts

Allowances for doubtful accounts are estimated at the individual operating
companies based on estimates of losses on customer receivable balances.
Estimates are developed by using standard quantitative measures based on
historical losses, adjusting for current economic conditions and, in some
cases, evaluating specific customer accounts for risk of loss. The
establishment of reserves requires the use of judgment and assumptions
regarding the potential for losses on receivable balances. Though we
consider our allowance for doubtful accounts balance to be adequate and
proper, changes in economic conditions in specific markets in which we
operate could have a material effect on reserve balances required.

     Excess and Obsolete Inventory

We record reserves for excess and obsolete inventory equal to the
difference between the cost of inventory and its estimated market value
using assumptions about future product life-cycles, product demand and
market conditions. If actual product life-cycles, product demand and market
conditions are less favorable than those projected by management,
additional inventory reserves may be required.



                                   -30-
<PAGE>

     Income Taxes

As part of the process of preparing our consolidated financial statements,
we are required to estimate our income taxes in each of the jurisdictions
in which we operate. This process involves estimating our actual current
tax expense together with assessing temporary differences resulting from
differing treatment of items for tax and accounting purposes. These
differences result in deferred tax assets and liabilities, which are
included within our consolidated balance sheet. We must then assess the
likelihood that our deferred tax assets will be recovered from future
taxable income and to the extent we believe that recovery is not likely, we
must establish a valuation allowance. Increases (decreases) in the
valuation allowance are included as an increase (decrease) to our
consolidated income tax provision in the statement of operations.

Contractual Obligations

The following table summarizes our contractual obligations as of December
31, 2001 (in thousands):

<TABLE>
<CAPTION>
                                                 Payments by Period
                       -----------------------------------------------------------------
                                      Less than        1-3         4-5        After 5
                          Total        1 year         years       years        years
                       -----------------------------------------------------------------
<S>                    <C>           <C>            <C>         <C>          <C>
Long-term debt and
  capital leases        $849,373      $17,137        $26,494     $307,282     $498,460
Operating leases          52,664       12,874         17,888       10,350       11,552
                       -----------------------------------------------------------------
Total                   $902,037      $30,011        $44,382     $317,632     $510,012
                       -----------------------------------------------------------------
</TABLE>


Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

The Company's debt obligations are primarily fixed-rate in nature and, as
such, are not sensitive to changes in interest rates. At December 31, 2001,
the Company had $30.4 million of variable rate debt outstanding. A one
percentage point increase in interest rates would increase the annual
amount of interest paid by approximately $0.3 million. The Company does not
believe that its market risk financial instruments on December 31, 2001
would have a material effect on future operations or cash flows.

The Company is exposed to market risk from changes in foreign currency
exchange rates, including fluctuations in the functional currency of
foreign operations. The functional currency of operations outside the
United States is the respective local currency. Foreign currency
translation effects are included in accumulated other comprehensive income
in shareholder's equity.








                                   -31-
<PAGE>


Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                                                        Page No.

Reports of Independent Auditors...................................         33

Consolidated Balance Sheets as of
December 31, 2001 and 2000........................................         37


Consolidated Statements of Operations for the years
ended December 31, 2001, 2000, and 1999...........................         38

Consolidated Statements of Changes in Shareholder's
Equity (Net Capital Deficiency) for the years ended
December 31, 2001, 2000 and 1999..................................         39

Consolidated Statements of Cash Flows for the years
ended December 31, 2001, 2000, and 1999 ..........................         40

Notes to Consolidated Financial Statements........................         42



































                                   -32-
<PAGE>


                       REPORT OF INDEPENDENT AUDITORS
                       ------------------------------

The Board of Directors and Shareholders
Jordan Industries, Inc.


We have audited the accompanying consolidated balance sheets of Jordan
Industries, Inc. as of December 31, 2001 and 2000 and the related
consolidated statements of operations, shareholder's equity (net capital
deficiency), and cash flows for each of the three years in the period ended
December 31, 2001. Our audits also included the financial statement
schedule listed in the Index at Item 14(a). 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 did not audit the financial statements of
certain subsidiaries whose statements reflect net sales constituting 21%
for the year ended December 31, 1999, of the related consolidated total.
Those statements were audited by other auditors whose reports have been
furnished to us, and our opinion, insofar as it relates to data included
for these subsidiaries, is based solely on the reports of the other
auditors.


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 and the reports of other auditors provide a reasonable
basis for our opinion.


In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Jordan Industries, Inc. at
December 31, 2001 and 2000, and the consolidated results of its operations
and its cash flows for each of the three years in the period 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 forth therein.



     /s/ ERNST & YOUNG LLP


Chicago, Illinois
March 19, 2002










                                   -33-
<PAGE>




                  REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                  ----------------------------------------

To the Shareholder of Alma Products I, Inc.:

We have audited the balance sheet of ALMA PRODUCTS I, INC. (a Michigan
corporation) as of December 31, 1999, and the related statements of
operations, shareholder's equity and cash flows for the period from
March 22, 1999 to December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Alma Products I, Inc.
as of December 31, 1999, and the results of its operations and its cash
flows for the period from March 22, 1999 to December 31, 1999 in conformity
with accounting principles generally accepted in the United States.



                                                /s/ ARTHUR ANDERSEN LLP

Detroit, Michigan
February 18, 2000











                                   -34-
<PAGE>


                  REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                  ----------------------------------------

To the Board of Directors of
Motion Control Engineering, Inc.:

We have audited the balance sheet of MOTION CONTROL ENGINEERING, INC. (a
California corporation and a wholly-owned subsidiary of Kinetek, Inc.
formerly known as Motors and Gears, Inc.) as of December 31, 1999, and the
related statements of income, shareholder's equity and cash flows for the
year then ended (not presented herein). These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Motion Control
Engineering, Inc. as of December 31, 1999 and the results of its operations
and its cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States.


                                                /s/ ARTHUR ANDERSEN LLP

Sacramento, California
January 21, 2000















                                   -35-
<PAGE>



                       INDEPENDENT AUDITOR'S REPORT
                       ----------------------------

To the Board of Directors
FIR Group Holding Italia S.p.A.

         We have audited the consolidated balance sheet of FIR Group
Holding Italia S.p.A. (a wholly-owned subsidiary of Kinetek, Inc., formerly
Motors and Gears, Inc.) as of October 31, 1999, and the related
consolidated statements of income, shareholders' equity and cash flows for
the year then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatements. 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 audit
provides a reasonable basis for our opinion.

         In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
FIR Group Holding Italia S.p.A. as of October 31, 1999, and the results of
its operations and its cash flow for the year then ended, in conformity
with generally accepted accounting principles.



                                          /s/ PRICEWATERHOUSECOOPERS S.p.A.


Bologna, 26 January 2000








                                   -36-
<PAGE>
<TABLE>
<CAPTION>

                          JORDAN INDUSTRIES, INC.
                        CONSOLIDATED BALANCE SHEETS
                           (dollars in thousands)

                                                                        December 31,
                                                                   ----------------------
                                                                   2001              2000
                                                                   ----              ----
<S>                                                              <C>              <C>
Current assets:
  Cash and cash equivalents                                       $26,050            $21,713
  Accounts receivable, net of allowance of
  $4,497 and $4,384 in 2001 and 2000, respectively                109,384            128,265
  Inventories                                                     122,528            139,046
  Income tax receivable                                            12,245                  -
  Deferred income taxes                                             8,100              9,001
  Prepaid expenses and other current assets                        19,030             27,455
                                                                  -------            -------
     Total current assets                                         297,337            325,480

Property, plant and equipment, net                                 99,602            107,526
Investments in and advances to affiliates                          36,443             41,402
Goodwill, net                                                     358,970            371,487
Deferred income taxes                                                   -              2,851
Other assets                                                       37,044             38,755
                                                                  -------            -------
  Total Assets                                                   $829,396           $887,501
                                                                 ========           ========

LIABILITIES AND SHAREHOLDER'S EQUITY (NET CAPITAL DEFICIENCY)
-------------------------------------------------------------


Current liabilities:
  Accounts payable                                                $47,848            $68,236
  Accrued liabilities                                              71,372             65,108
  Advance deposits                                                  1,853              1,937
  Current portion of long-term debt                                17,137             35,600
                                                                   ------             ------
      Total current liabilities                                   138,210            170,881

Long-term debt                                                    819,406            787,694
Other non-current liabilities                                       8,668              8,528
Minority interest                                                       4                410
Preferred stock                                                     2,164              1,998


Shareholder's equity (net capital deficiency):
Common stock $.01 par value: authorized - 100,000
  shares; issued and outstanding - 98,501 shares                        1                  1
Additional paid-in capital                                          2,116              2,116
Accumulated other comprehensive loss                              (15,249)           (16,641)
Accumulated deficit                                              (125,924)           (67,486)
                                                                 ---------          --------
Total shareholder's equity (net capital
 deficiency)                                                     (139,056)           (82,010)
                                                                 ---------          --------
  Total Liabilities and Shareholder's Equity (Net
  Capital Deficiency)                                            $829,396           $887,501
                                                                 ========          =========


                               See accompanying notes.



                                   -37-
<PAGE>

<CAPTION>

                          JORDAN INDUSTRIES, INC.
                   CONSOLIDATED STATEMENTS OF OPERATIONS
                           (dollars in thousands)

                                                             Year ended December 31,
                                                             -----------------------
                                                     2001             2000            1999
                                                     ----             ----            ----

<S>                                               <C>              <C>             <C>
Net sales                                          $722,823         $807,296        $766,655
Cost of sales, excluding depreciation               460,004          513,755         497,223
Selling, general, and administrative
 expense, excluding depreciation                    177,291          173,370         153,582
Depreciation                                         23,387           24,070          20,647
Amortization of goodwill and other
 intangibles                                         15,709           31,108          15,504
Management fees and other                            17,714            9,980          10,454
                                                    -------          -------         -------
   Operating income                                  28,718           55,013          69,245
Other income and expenses:
  Interest expense                                   91,344           92,009          87,058
  Interest income                                      (791)          (1,464)         (1,083)
  Loss (gain) on sale of subsidiaries                     -            2,798         (10,037)
  Other                                               2,166              554             (90)
                                                    -------          -------         -------
                                                     92,719           93,897          75,848
                                                    -------          -------         -------

Loss from continuing operations before

 income taxes and minority interest                 (64,001)         (38,884)         (6,603)
Income tax benefit                                   (5,323)          (3,191)           (952)
                                                    -------          -------          ------
Loss from continuing operations before
 minority interest                                  (58,678)         (35,693)         (5,651)
Minority interest                                      (406)             353              80
                                                    -------          -------         -------
Loss from continuing operations                     (58,272)         (36,046)         (5,731)
Discontinued operations, net of taxes
 (Note 4)                                                 -          203,924         (12,848)
                                                    -------          -------         -------
    Net (loss) income                              $(58,272)        $167,878        $(18,579)
                                                   ========         ========        ========


                          See accompanying notes.









                                   -38-
<PAGE>

<CAPTION>

                          JORDAN INDUSTRIES, INC.
         CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
                          (NET CAPITAL DEFICIENCY)
                           (dollars in thousands)

                                  Common Stock
                                  ------------               Accumulated
                                Number           Additional      Other
                                  of              Paid-In    Comprehensive    Accumulated
                                Shares    Amount  Capital    Income (Loss)     Deficit            Total
                                ------    ------ ----------  -------------    -----------     -------------

<S>                          <C>        <C>       <C>          <C>            <C>            <C>

Balance at
December 31, 1998             98,501     $    1       $2,116       $ 2,038      $(212,299)      $(208,144)
Non-cash dividends to
third parties                      -          -            -             -         (4,334)         (4,334)
Translation
adjustments                        -          -            -        (7,778)             -          (7,778)
Net loss                           -          -            -             -         (18,579)       (18,579)

Comprehensive loss                 -          -            -             -               -        (26,357)
                              ------     ------       ------       -------      ----------       --------
Balance at
December 31, 1999             98,501          1        2,116        (5,740)       (235,212)      (238,835)
Non-cash dividends
to third parties                   -          -            -             -            (152)          (152)
Translation
adjustments                        -          -            -       (10,901)              -        (10,901)
Net income                         -          -            -             -         167,878        167,878
                                                                                                  -------
Comprehensive income               -          -            -             -               -        156,977
                              ------     ------       ------       -------      ----------        -------
Balance at
December 31, 2000             98,501          1        2,116       (16,641)        (67,486)       (82,010)
Non-cash dividends
to third parties                   -          -            -             -            (166)          (166)
Translation
adjustments                        -          -            -         1,392               -          1,392
Net loss                           -          -            -             -         (58,272)       (58,272)
                                                                                                 --------
Comprehensive loss                 -          -            -             -               -        (56,880)
                              ------     ------       ------       -------      ----------       --------
Balance at
December 31, 2001             98,501     $    1       $2,116      $(15,249)      $(125,924)     $(139,056)
                              ======     ======       ======      ========      ==========      =========


                          See accompanying notes.













                                   -39-
<PAGE>

<CAPTION>

                          JORDAN INDUSTRIES, INC.
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (dollars in thousands)

                                                                     Year ended December 31,
                                                                     -----------------------
                                                             2001             2000              1999
                                                             ----             ----              ----
<S>                                                       <C>              <C>               <C>
Cash flows from operating activities:
  Net (loss) income                                        $(58,272)        $167,878           $(18,579)
Adjustments to reconcile net (loss)
 income to net cash provided by
 operating activities:
  Amortization of deferred financing
   costs                                                      4,666            5,067             4,679
  Depreciation and amortization                              39,096           55,178            36,151
  Deferred taxes                                              3,752            3,999           (12,542)
  Loss(gain) on sale of
    subsidiaries                                                  -            2,798           (10,037)
  Loss on disposal of fixed assets                            1,691            3,342               653
  Gain on sale of discontinued
   operations, net of tax                                         -         (213,520)                -
  Minority interest                                           (406)                4                80
  Extraordinary loss                                              -                -                 -
  Non-cash interest expense                                  22,642           20,160            30,085
Changes in operating assets and liabilities (net
of acquisitions and dispositions):
  Accounts receivable                                        13,107            1,384              (457)
  Inventories                                                 3,903           (6,454)           (5,517)
  Prepaid expenses and other current
   assets                                                   (12,390)         (13,729)            3,640
  Non-current assets                                            542           (5,008)           (1,702)
  Accounts payable and accrued
   liabilities                                                 (470)         (24,716)            7,798
  Advance deposits                                              (84)             286              (190)
  Non-current liabilities                                    12,642            7,830            (4,954)
  Other                                                        (118)            (169)              806
  Net current assets of discontinued
   operations                                                     -                -            (7,277)
                                                            -------          -------           -------
Net cash provided by operating
 activities                                                  30,301            4,330            22,637


Cash flows from investing activities:
Proceeds from sale of discontinued
 operations                                                       -          149,285                 -
Proceeds from sale of fixed assets                            1,391            1,296                73
Capital expenditures                                        (12,814)         (21,246)          (24,044)
Acquisitions of subsidiaries                                (12,384)         (48,154)         (133,233)
Additional purchase price payments
 and SAR payments                                              (260)          (3,093)           (9,359)
Net cash acquired in purchase of
 subsidiaries                                                    14            1,196             2,534
Net proceeds from sale of subsidiary                         16,663                -            17,965
Investments in affiliates                                      (161)         (17,842)         _(13,942)
                                                            -------         --------         ---------
Net cash (used in) provided by
 investing activities                                       $(7,551)         $61,442          $(160,006)


                                      (Continued on following page.)
                                          See accompanying notes.



                                   -40-
<PAGE>
<CAPTION>

                          JORDAN INDUSTRIES, INC.
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (dollars in thousands)
                                (continued)


                                                                     Year ended December 31,
                                                                     -----------------------
                                                                 2001          2000          1999
                                                                 ----          ----          ----
<S>                                                       <C>              <C>            <C>
Cash flows from financing activities:
Proceeds of debt issuance                                         -               -        149,761
(Repayments) proceeds from revolving
 credit facilities, net                                      (1,265)        (53,614)        22,100
Payment of financing costs                                   (6,047)              -        (12,930)
Repayment of long-term debt                                 (10,261)         (8,420)       (18,851)
Other borrowings                                                  -           2,449            135
                                                            -------         -------        -------
Net cash (used in) provided by
 financing activities                                       (17,573)        (59,585)       140,215
Effect of exchange rate changes on
 cash                                                          (840)         (4,447)        (5,881)
                                                            -------         -------        -------
Net increase (decrease) in cash and
 cash equivalents                                             4,337           1,740         (3,035)
Cash and cash equivalents at beginning
 of year                                                     21,713          19,973         23,008
                                                            -------         -------        -------
Cash and cash equivalents at end of
 year                                                       $26,050         $21,713        $19,973
                                                            =======         =======        =======


Supplemental disclosures of cash flow
 Information:
   Cash paid during the year for:
        Interest                                            $63,626         $66,370        $59,281
        Income taxes, net                                    $4,555         $31,958         $9,595
   Non-cash investing activities:
        Capital leases                                       $2,321          $6,648         $5,008

</TABLE>

                          See accompanying notes.







                                   -41-

<PAGE>




                             JORDAN INDUSTRIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (dollars in thousands)

Note 1 - Organization

Jordan Industries, Inc. ("the Company"), an Illinois corporation, was formed
by Chicago Group Holdings, Inc. on May 26, 1988 for the purpose of combining
into one corporation certain companies in which partners and affiliates of the
Jordan Company (the Jordan Group) acquired ownership interests through
leveraged buy-outs. Chicago Group Holdings, Inc. was formed on February 8,
1988 and had no operations. The Company was merged with Chicago Group
Holdings, Inc. on May 31, 1988 with the Company being the surviving company.

The Company's continuing business is divided into five groups. The Specialty
Printing and Labeling group consists of JII Promotions, Inc. ("JII
Promotions"), Valmark Industries, Inc. ("Valmark"), Pamco Printed Tape and
Label Co., Inc. ("Pamco") and Seaboard Folding Box, Inc. ("Seaboard"). The
Jordan Specialty Plastics group consists of Beemak Plastics, Inc. ("Beemak"),
Sate-Lite Manufacturing Company ("Sate-Lite"), and Deflecto Corporation
("Deflecto"). The Jordan Auto Aftermarket group consists of Dacco Incorporated
("Dacco"), Alma Products Company ("Alma") and Atco Products ("Atco"). The
Kinetek group consists of The Imperial Electric Company ("Imperial") and its
subsidiary, Gear Research, Inc. ("Gear"), Merkle-Korff Industries, Inc.
("Merkle-Korff"), FIR Group Companies ("FIR"), Electrical Design & Control
("ED&C"), Motion Control Engineering ("Motion Control") and Advanced D.C.
Motors ("Advanced DC"). The remaining businesses comprise the Company's
Consumer and Industrial Products group. This group consists of Cape Craftsmen,
Inc. ("Cape"), Welcome Home, Inc. ("Welcome Home"), Cho-Pat, Inc. ("Cho-Pat"),
Online Environs, Inc. ("Online Environs"), Flavorsource, Inc.
("Flavorsource"), Internet Services of Michigan ("ISMI") and GramTel
Communications, Inc. ("GramTel"). All of the foregoing corporations are
collectively referred to herein as the "Subsidiaries", and individually as a
"Subsidiary."

As a result of the 2000 transactions described in note 4 to the financial
statements, the Jordan Telecommunication Products segment and the Capita
Technologies segment have been reported as discontinued operations for
financial reporting purposes in accordance with Accounting Principles Board
("APB") Opinion No. 30.

All of the Subsidiaries, exclusive of the Kinetek subsidiaries, are
classified as Restricted Subsidiaries ("Restricted Subsidiaries") for
purposes of certain of the Company's debt instruments.


Note 2 - Significant accounting policies

           Principles of consolidation

The consolidated financial statements include the accounts of the Company
and the Subsidiaries. All significant intercompany balances and
transactions have been eliminated. Operations of FIR are included for the
period ended two months prior to the Company's year-end and interim periods
to ensure timely preparation of the consolidated financial statements.

                                     -42-
<PAGE>


      Cash and cash equivalents

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

      Inventories

Inventories are stated at lower of cost or market. Inventories are
primarily valued at either average or first-in, first-out (FIFO) cost.


      Property, Plant and Equipment

Property, plant and equipment are stated at cost, less accumulated
depreciation. Depreciation and amortization of property, plant and
equipment is calculated over the estimated useful lives, or over the lives
of the underlying leases, if less, using the straight-line method.
Amortization of leasehold improvements and assets under capital leases is
included in depreciation expense.


The useful lives of plant and equipment for the purpose of computing book
depreciation are as follows:

      Machinery and equipment              3-10 years
      Buildings and improvements           5-35 years
      Furniture and fixtures               3-10 years


      Intangible Assets

Goodwill is being amortized using the straight-line method over periods
ranging from 3 to 40 years. Goodwill at December 31, 2001 and 2000 is net
of accumulated amortization of $91,221 and $78,011, respectively. The
Company evaluates the recoverability of long-lived assets by measuring the
carrying amounts of the assets against the estimated undiscounted future
cash flows associated with them. At the time such evaluations indicate that
the future undiscounted cash flows of long-lived assets are not sufficient
to recover the carrying value of such assets, the assets are adjusted to
their fair values. Based on these evaluations, the Company recorded a
non-cash impairment charge in the third quarter of 2000 of $14,636
associated with one of Kinetek's businesses, ED&C. (See note 22.)

Patents are amortized over the remainder of their legal lives, which
approximate their useful lives, on the straight-line basis. Deferred
financing costs amounting to $30,058 and $28,709, net of accumulated
amortization of $27,496 and $22,830 at December 31, 2001 and 2000,
respectively, are amortized over the terms of the loans or, if shorter, the
period such loans are expected to be outstanding. Non-compete covenants and
customer lists amounting to $388 and $755, net of accumulated amortization
of $25,959 and $25,562 at December 31, 2001 and 2000, respectively, are
amortized on the straight-line basis over their estimated useful lives,
ranging from three to ten years.

     Income taxes

Deferred tax assets and liabilities are determined based on differences
between the financial reporting and tax basis of assets and liabilities and
are measured using the enacted tax rates and laws that are expected to be
in effect when the differences reverse. The Company has not provided for


                                      -43-
<PAGE>

U.S. Federal and State income taxes on undistributed earnings of foreign
subsidiaries to the extent the undistributed earnings are considered to be
permanently reinvested.

      Revenue recognition

Revenues are recognized when products are shipped and title passes to
customers.

      Shipping and Handling Costs

Shipping and handling costs are classified in cost of goods sold in the
statements of operations.

      Derivative Financial Instruments

On January 1, 2001, the Company adopted Financial Accounting Standards
Board Statement No. 133, Accounting for Derivative Instruments and Hedging
Activities, as amended. The adoption of Statement 133 did not have a
significant impact on the Company. As a result of the adoption of Statement
133, the Company must recognize derivative instruments as either assets or
liabilities in the balance sheet at fair value. The accounting for changes
in fair value (i.e. gains or losses) of a derivative financial instrument
depends on whether it has been designated and whether it qualifies as part
of an effective hedging relationship and, further, on the type of hedging
relationship. The fair value of derivative financial instruments was not
significant as of December 31, 2001 and 2000.

      Use of estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.

      New pronouncements

In June 2001, the Financial Accounting Standards Board ("FASB")issued
Statements of Financial Accounting Standards ("SFAS") No. 141, Business
Combinations, and No. 142, Goodwill and Other Intangible Assets, effective
for fiscal year's beginning after December 15, 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 non-amortization provisions of Statement 142 is expected to result in
an increase in pretax income of approximately $14,000 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.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets, which addresses financial accounting and
reporting for the impairment or disposal of long-lived assets and
supercedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets

                                      -44-
<PAGE>

and for Long-Lived Assets to be Disposed of. Statement 144 is effective for
the Company beginning on January 1, 2002. The Company does not expect that
the adoption of SFAS 144 will have a significant impact on the Company's
financial position or results of operations.

      Concentration of credit risk

Financial instruments, which potentially subject the Company to a
concentration of credit risk, consist principally of cash and cash
equivalents and accounts receivable. The Company deposits cash and cash
equivalents with high quality financial institutions, and is restricted by
its revolving credit facilities as to its investment instruments.
Concentration of credit risk relating to accounts receivable is limited due
to the large number of customers from many different industries and
locations. The Company believes that its allowance for doubtful accounts is
adequate to cover potential credit risk.

At December 31, 2001 and 2000 the Company has approximately $15,382 and
$14,446, respectively, of investments in Russia related to unsecured
advances made to two affiliates (see note 8). The Company will continue to
monitor the underlying economics of doing business in this region, but
currently believes that such amounts are fully recoverable.

      Foreign currency translation

The functional currencies of the Company's foreign operations are the
respective local currencies. Accordingly, assets and liabilities of the
Company's foreign operations are translated from foreign currencies into
U.S. dollars at year-end rates while income and expenses are translated at
the weighted average exchange rates for the year. Adjustments resulting
from the translations of foreign currency financial statements are deferred
and classified as a separate component of shareholder's equity.

      Reclassifications

Certain amounts in the prior year financial statements have been
reclassified to conform to the current year presentation.

Note 3 - Welcome Home Chapter 11 Filing

On January 21, 1997, Welcome Home filed a voluntary petition for relief
under Chapter 11 ("Chapter 11") of title 11 of the United States code in
the United States Bankruptcy Court for the Southern District of New York
("Bankruptcy Court"). In Chapter 11, Welcome Home continued to manage its
affairs and operate its business as a debtor-in-possession. The results of
Welcome Home were not consolidated with the Company's results for the
period between January 21, 1997 and July 21, 1999 as the Company no longer
had the ability to control the operations and financial affairs of Welcome
Home. On July 21, 1999, Welcome Home emerged from bankruptcy, whereupon the
Company now owns approximately 96% of the outstanding common stock of
Welcome Home, for consideration paid to creditors of approximately $2,274.
The results of Welcome Home are consolidated with the Company's results
from the day of the emergence, as the Company has regained operational and
financial control of Welcome Home.


                                      -45-
<PAGE>


The operating results of Welcome Home included in the consolidated results
of the Company over the last three years are as follows:

                                     Year ended December 31,
                                     -----------------------
                                     2001      2000     1999
                                     ----      ----     ----


Net Sales                         $53,487    $54,373   $35,272
Operating (loss) income            (1,589)    (1,085)    4,006
(Loss) income before income       $(2,733)   $(2,031)  $ 3,465
 taxes

Note 4 - Discontinued Operations

On July 25, 1997, the Company recapitalized its investment in Jordan
Telecommunication Products, Inc. ("JTP") and JTP acquired the Company's
telecommunications and data communications products business from the
Company for total consideration of approximately $294,027, consisting of
$264,027 in cash, $10,000 of assumed indebtedness and preferred stock, and
the issuance to the Company of $20,000 aggregate liquidation preference of
JTP Junior Preferred Stock. The Company's stockholders and affiliates and
JTP management invested in and acquired the JTP common stock. As a result
of the recapitalization, certain of the Company's affiliates and JTP
management owned substantially all of the JTP common stock. The Company's
investment in JTP was represented solely by the JTP Junior Preferred Stock.
The JTP Preferred Stock controlled over 80% of JTP's stockholder voting
rights and accreted 95% of JTP's net income or loss. The Company had
obtained an independent opinion as to the fairness, from a financial point
of view, of the recapitalization for the Company and its public
bondholders.

On January 18, 2000, the Company's affiliates sold the common stock of JTP
to an unaffiliated third party and the Company sold its interest in the JTP
Junior Preferred Stock for $54,100. The Company also received $6,535 for
reimbursement of expenses, $12,000 for the buyout of the management
services agreements, and $3,900 for an advisory and indemnity fee. The
Company recognized a gain on the sale of its interests in JTP of $200,078
in 2000, net of taxes of approximately $28,000.

For the period from January 1, 2000 to January 18, 2000 and the year ended
December 31, 1999, JTP's net sales were $20,724 and $431,310, respectively.
The losses from discontinued operations related to JTP in the Company's
Statements of Operations for the period from January 1, 2000 to January 18,
2000 and the year ended December 31, 1999, included income tax expense of
$406 and $3,270, respectively.

On June 22, 2000, the shareholders of Capita Technologies, Inc. ("Capita")
(including the Company) exchanged their stock in Capita, which included its
subsidiaries Protech, Aurora, Garg, and Raba, for shares in The Interpublic
Group of Companies, Inc. ("IPG") in a reorganization of Capita. In the
reorganization, the Company received registered common shares in IPG having
a value of $10,000 in exchange for its Capita stock. The Company also
received registered common shares in IPG having a value of $60,750 for its
intercompany notes and $2,000 in cash for the buyout of its management
services agreements. The Company's common shares in IPG were sold for cash
of $70,750 in August 2000. In 2000, the Company recognized a gain, for
financial reporting purposes, on the sale of its stock in IPG of $13,442,
net of taxes of $7,000.

For the period from January 1, 2000 to June 22, 2000 and the year ended
December 31, 1999, Capita's net sales were $17,225 and $10,207,

                                     -46-
<PAGE>


respectively. The losses from discontinued operations related to Capita in
the Company's Statements of Operations for the period from January 1, 2000
to June 22, 2000 and the year ended December 31, 1999, included tax
expenses of $0 and $(80), respectively.

The following table summarizes the Company's discontinued operations:

                                               2000           1999
                                               ----           ----

Loss from discontinued operations

 before income taxes                            $(9,190)       $(9,658)
Provision for income taxes                         (406)        (3,190)
                                               ---------        -------
Net loss from discontinued
 operations                                      (9,596)       (12,848)
Gain on sale of discontinued
 operations                                     248,520              -
Provision for income taxes                      (35,000)             -
                                                --------        -------
Gain on sale, net of taxes                      213,520               -
Discontinued operations, net of taxes           --------        -------
                                                203,924       $(12,848)
                                                =======       =========

Note 5-Investments in JAAI, JSP, and M&G Holdings

JAAI

During 1999, the Company completed the recapitalization of Jordan Auto
Aftermarket, Inc. ("JAAI"). As a result of the recapitalization, certain of
the Company's affiliates and JAAI management own substantially all of the
JAAI common stock and the Company's investment in JAAI is represented
solely by the Cumulative Preferred Stock of JAAI. The JAAI Cumulative
Preferred Stock controls over 97.5% of the combined voting power of JAAI
capital stock outstanding and accretes at plus or minus 97.5% of the
cumulative JAAI net income or net loss, as the case may be, through the
earlier of an Early Redemption Event (as defined) or the fifth anniversary
of issuance (unless redemption is prohibited by a JAAI or Company debt
covenant).

The Company recapitalized JAAI in order to establish JAAI as a more
independent, stand-alone, industry-focused company. The Company continues
to consolidate JAAI and its subsidiaries, for financial reporting purposes,
as subsidiaries of the Company. The Company's consolidation of the results
of JAAI will be discontinued upon redemption of the JAAI Cumulative
Preferred Stock, or at such time as the JAAI Cumulative Preferred Stock
ceases to represent at least a majority of the voting power and a majority
share in the earnings of JAAI and its subsidiaries. The JAAI Cumulative
Preferred Stock is mandatorily redeemable upon certain events and is
redeemable at the option of JAAI, in whole or in part, at any time.

JSP

During 1998, the Company recapitalized Jordan Specialty Plastics, Inc.
("JSP"). As a result of the recapitalization, certain of the Company's
affiliates and JSP management own substantially all of the JSP common stock
and the Company's investment in JSP is represented solely by the Cumulative
Preferred Stock of JSP. The JSP Cumulative Preferred Stock controls over
97.5% of the combined voting power of JSP capital stock outstanding and
accretes at plus or minus 97.5% of the cumulative JSP net income or net
loss, as the case may be, through the earlier of an Early Redemption Event

                                     -47-
<PAGE>

(as defined) or the fifth anniversary of issuance (unless redemption is
prohibited by a JSP or Company debt covenant).

The Company continues to consolidate JSP and its subsidiaries, for
financial reporting purposes, as subsidiaries of the Company. The Company's
consolidation of the results of JSP will be discontinued upon redemption of
the JSP Cumulative Preferred Stock, or at such time as the JSP Cumulative
Preferred Stock ceases to represent at least a majority of the voting power
and a majority share in the earnings of JSP and its subsidiaries. The JSP
Cumulative Preferred Stock is mandatorily redeemable upon certain events
and is redeemable at the option of JSP, in whole or in part, at any time.

M&G Holdings

Motors and Gears Holdings, Inc., ("M&G Holdings" or "M&G") along with its
wholly-owned subsidiary, Kinetek, Inc. ("Kinetek") (formerly Motors and
Gears, Inc.), was formed to combine a group of companies engaged in the
manufacturing and sale of fractional and sub-fractional motors and gear
motors primarily to customers located throughout the United States and
Europe.

At the end of 1996, M&G was comprised of Merkle-Korff and its wholly-owned
subsidiary, Barber-Colman, and Imperial and its wholly-owned subsidiaries,
Scott and Gear. All of the outstanding shares of Merkle-Korff were
purchased by M&G in September 1995 and the net assets of Barber-Colman were
purchased by Merkle-Korff in March 1996. Barber-Colman was legally merged
into Merkle-Korff as of January 1, 1997 and now operates as a division of
Merkle-Korff. The net assets of Imperial, Scott, and Gear were purchased by
M&G, from the Company, at an arms length basis on November 7, 1996, with
the proceeds from a debt offering. The purchase price was $75,656, which
included the repayment of $6,008 in Imperial liabilities owed to the
Company, and a contingent payment payable pursuant to a contingent earnout
agreement. Under the terms of the contingent earnout agreement, 50% of
Imperial, Scott, and Gear's cumulative earnings before interest, taxes,
depreciation and amortization, as defined, exceeding $50,000 during the
five fiscal years from December 31, 1996, through December 31, 2000, was
paid to the Company.   $174 was paid to the Company in April 2001.

As a result of this sale to M&G, the Company recognized approximately
$67,400 of deferred gain at the time of sale for U.S. Federal income tax
purposes. A portion of this deferred gain is recognized as M&G reports
depreciation and amortization over approximately 15 years on the step-up in
basis of those purchased assets. As long as M&G remains in the Company's
affiliated group, the gain recognized and the depreciation on the step-up
in basis should exactly offset each other. Upon any future de-consolidation
of M&G from the Company's affiliated group for U.S. Federal income tax
purposes, any unreported gain would be fully reported and subject to tax.

On May 16, 1997, the Company participated in a recapitalization of M&G
Holdings. In connection with the recapitalization, M&G Holdings issued
16,250 shares of M&G Holdings common stock (representing approximately
82.5% of the outstanding shares of M&G Holdings common stock) to certain
stockholders and affiliates of the Company and M&G Holdings management for
total consideration of $2,200 (of which $1,110 was paid in cash and $1,090
was paid through delivery of 8.0% zero coupon notes due 2007). As a result
of the recapitalization, certain of the Company's affiliates and M&G
Holdings management own substantially all of the M&G Holdings common stock
and the Company's investment in M&G Holdings is represented solely by the

                                     -48-
<PAGE>

Cumulative Preferred Stock of M&G Holdings (the "M&G Holdings Junior
Preferred Stock"). The M&G Holdings Junior Preferred Stock represents 82.5%
of M&G Holdings' stockholder voting rights and 80% of M&G Holdings' net
income or loss is accretable to the M&G Holdings Junior Preferred Stock.
The Company has obtained an independent opinion as to the fairness, from a
financial point of view, of the recapitalization to the Company and its
public bondholders. The Company continues to consolidate M&G Holdings and
its subsidiaries, for financial reporting purposes, as subsidiaries of the
Company. The M&G Holdings Junior Preferred Stock discontinues its
participation in M&G Holdings' earnings on the fifth anniversary of
issuance. The Company's consolidation of the results of M&G Holdings will
be discontinued upon redemption of the M&G Holdings Junior Preferred Stock,
or at such time as the M&G Holdings Junior Preferred Stock ceases to
represent at least a majority of the voting power and a majority share in
the earnings of M&G Holdings and its subsidiaries. As long as the M&G
Holdings Junior Preferred Stock is outstanding, the Company expects the
vote test to be satisfied. The M&G Holdings Junior Preferred Stock is
mandatorily redeemable upon certain events and is redeemable at the option
of M&G Holdings, in whole or in part, at any time.

The Company expects to continue to include M&G Holdings and its
subsidiaries in its consolidated group for U.S. Federal income tax
purposes. This consolidation would be discontinued, however, upon the
redemption of the M&G Holdings Junior Preferred Stock, which could result
in recognition by the Company of substantial income tax liabilities arising
out of the recapitalization. If such deconsolidation had occurred at
December 31, 2001, the Company believes that the amount of taxable income
to the Company attributable to M&G Holdings would have been approximately
$55,600 (or approximately $22,200 of tax liabilities, assuming a 40.0%
combined Federal, state, and local tax rate). The Company currently expects
to offset these tax liabilities arising from deconsolidation with
redemption proceeds from the M&G Holdings Junior Preferred Stock.
Deconsolidation would also occur with respect to M&G Holdings if the M&G
Holdings Junior Preferred Stock ceased to represent at least 80.0% of the
voting power and 80.0% of the combined stock value of the outstanding M&G
Holdings Junior Preferred Stock and common stock of M&G Holdings. As long
as the M&G Holdings Junior Preferred Stock is outstanding, the Company
expects the vote test to be satisfied. The value test depends on the
relative values of the M&G Holdings Junior Preferred Stock and common stock
of M&G Holdings. The Company believes the value test is satisfied at
December 31, 2001. It is possible that on or before the fifth anniversary
of its issuance, the M&G Holdings Junior Preferred Stock would cease to
represent 80.0% of the relevant total combined stock value. In the event
that deconsolidation for U.S. Federal income tax purposes occurs without
redemption of the M&G Holdings Junior Preferred Stock, the tax liabilities
discussed above would be incurred without the Company receiving the
proceeds of the redemption.

Note 6 - Inventories

Inventories consist of:

                                    Dec. 31, 2001           Dec. 31, 2000
                                    -------------           -------------


Raw Materials                            $52,493                $51,814
Work-in-process                           17,329                 16,760
Finished goods                            52,706                 70,472
                                        --------               --------
                                        $122,528               $139,046
                                        ========               ========

                                     -49-
<PAGE>


Note 7 - Property, plant and equipment

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

                                            Dec. 31, 2001      Dec. 31, 2000
                                            -------------      -------------


Land                                            $9,480                $ 8,014
Machinery and equipment                        138,356                136,323
Buildings and improvements                      33,596                 35,067
Furniture and fixtures                          61,375                 59,271
                                              ---------               ---------
                                               242,807                238,675

Accumulated depreciation and amortization     (143,205)              (131,149)
                                                ---------            ----------

                                              $ 99,602               $107,526


Note 8 - Investments in and advances to affiliates

The Company holds 75.6133 shares of Class A PIK Preferred Stock and 151.28
shares of common stock of Fannie May Holdings, Inc. ("Fannie May"),
representing a total investment of $1,721 and approximately 15.1% of the
outstanding common stock of Fannie May on a fully diluted basis. The
Company is accounting for this investment under the cost method. Fannie
May's Chief Executive Office is Mr. Quinn, and its stockholders include Mr.
Jordan, Mr. Quinn, Mr. Zalaznick, and Mr. Boucher, who are directors and
stockholders of the Company, as well as other partners, principals, and
associates of the Jordan Company, who are also stockholders of the Company.
Fannie May, which is also known as "Fannie May Candies", is a manufacturer
and marketer of kitchen-fresh, high-end boxed chocolates and other
confectionary items, through its company-owned retail stores and through
specialty sales channels. Its products are marketed under the "Fannie May
Candy", "Fanny Farmer Candy", "Sweet Factory", and "Laura Secord" brand
names.

The Company has unsecured advances totaling $15,382 and $14,446 as of
December 31, 2001 and 2000, respectively, due from JIR Broadcast, Inc. and
JIR Paging, Inc. Each of these companies' Chief Executive Officer is Mr.
Quinn and its stockholders include Messrs. Jordan, Quinn, Zalaznick, and
Boucher, who are the Company's directors and stockholders, as well as other
partners, principals and associates of The Jordan Company who are also the
Company's stockholders. These companies are engaged in the development of
businesses in Russia, including the broadcast and paging sectors. The
Company receives notes in exchange for these advances, which bear interest
at a range from 10.75% to 12.0%.

In November 1998, the Company, through Kinetek, invested $5,585 in Class A
Preferred Units and $1,700 in Class B Preferred Units of JZ International,
LLC. In April 2000, the Company, through Kinetek, invested an additional
$5,059 in Class A Preferred Units of JZ International, LLC. This increases
the Company's investment in JZ International to $12,344 at December 31,
2001 and 2000, respectively. JZ International's Chief Executive Officer is
David W. Zalaznick, and its members include Messrs. Jordan, Quinn,
Zalaznick and Boucher, who are the Company's directors and stockholders, as
well as other members. JZ International and its subsidiaries are focused on
making European and other international investments. The Company is
accounting for this investment under the cost method.

The Company has made unsecured advances totaling $11,331 and $10,701 as of
December 31, 2001 and 2000, respectively, to Internet Services Management

                                     -50-
<PAGE>

Group ("ISMG"), an Internet service provider with over 100,000 customers.
ISMG's stockholders include Mr. Jordan, Mr. Quinn, Mr. Zalaznick, and Mr.
Boucher, who are directors and stockholders of the Company, as well as
other partners, principals, and associates of the Jordan Company, who are
also stockholders of the Company. The Company receives notes in exchange
for these advances, which bear interest at 10.75%. The Company also holds a
5% ownership interest in ISMG's common stock and $1,000 of ISMG's 5%
mandatorily redeemable cumulative preferred stock. The Company is
accounting for these investments under the cost method.

The Company made aggregate investments of $200 and $1,550 in the capital
stock of three different businesses in technology-related industries in
2001 and 2000, respectively. The Company's ownership in these businesses
ranges from 1-15% on a fully diluted basis. The Company is accounting for
these investments under the cost method.

The Company has a 20% limited partnership interest in a partnership that
was formed during 2000 for the purpose of making equity investments
primarily in datacom/telecom infrastructure and software, e-commerce
products and services, and other Internet-related companies. The Company
has a $10,000 capital commitment, of which $840 and $1,390 was contributed
during 2001 and 2000, respectively. The Company is accounting for this
investment using the equity method of accounting. Certain stockholders of
the Company are also stockholders in the general partner of the
partnership. The Company has an agreement with the partnership's general
partner to provide management services to the partnership for annual fees
of $1,250.

The Company had reserves of $8,800 and $1,500 at December 31, 2001 and
2000, respectively, related to the above investments in affiliates. The
increase of $7,300 and $1,500 in 2001 and 2000, respectively, is reflected
in "management fees and other" in the Company's statements of operations.


See note 15 for additional discussion of related party transactions.

Note 9 - Accrued liabilities

Accrued liabilities consist of:

                                      Dec. 31, 2001   Dec. 31, 2000
                                      -------------   -------------


Accrued vacation                            $ 2,548        $ 2,635
Accrued income taxes                              -            823
Accrued other taxes                           1,484          1,394
Accrued commissions                           2,315          1,974
Accrued interest payable                     16,316         18,205
Accrued payroll and payroll taxes             4,857          4,777
Accrued rebates                               3,824          3,637
Insurance reserve                             4,971          5,353
Accrued management fees                       8,092          7,425
Accrued other expenses                       26,965         18,885
                                            --------       --------
                                             $71,372       $65,108
                                            ========       ========


Note 10 - Operating leases


Certain subsidiaries lease land, buildings, and equipment under
non-cancelable operating leases.

                                     -51-
<PAGE>


Total minimum rental commitments under non-cancelable operating leases at
December 31, 2001 are:

           2002                              $ 12,874
           2003                                10,222
           2004                                 7,666
           2005                                 6,134
           2006                                 4,216
        Thereafter                             11,552
                                             --------
                                             $ 52,664

Rental expense amounted to $18,229, $16,285, and $13,302 for 2001, 2000,
and 1999, respectively.

Two subsidiaries of Kinetek, Merkle-Korff and Motion Control, lease certain
production and office space from related parties. Rent expense, including
real estate taxes attributable to these leases, was $1,588, $1,544, and
$1,657 for the years ended December 31, 2001, 2000, and 1999, respectively.

Note 11 - Benefit plans and pension plans

Certain of the Company's subsidiaries participate in the JII 401(k) Savings
Plan (the "Plan"), a defined-contribution plan for salaried and hourly
employees. In order to participate in the Plan, employees must be at least
21 years old and have worked at least 1,000 hours during the first 12
months of employment. Each eligible employee may contribute from 1% to 15%
of his or her before-tax wages into the Plan. In addition to the JII 401(k)
Plan, certain subsidiaries have additional defined contribution plans in
which employees may participate. The Company made contributions to these
plans totaling approximately $2,464, $2,345 and $1,698 for the years ended
December 31, 2001, 2000 and 1999, respectively.

FIR, a Kinetek subsidiary located in Italy, provides for a severance
liability for all employees at 7.4% of each respective employee's annual
salary. In addition, the amount accrued is adjusted each year according to
an official index (equivalent to 0.75% of the retail price index). This
obligation is payable to employees when they leave the employ of FIR. The
accrued liability approximated $2,609 and $2,277 at December 31, 2001 and
2000, respectively.

The Company has two defined benefit pension plans at Alma that cover
substantially all of the employees of that subsidiary. The following table
sets forth the change in benefit obligation, change in plan assets and net
amount recognized as of December 31, 2001 and 2000.

                                                 2001            2000
                                                 ----            ----
Change in Benefit Obligation:

Benefit obligation at beginning of period      $11,785           $ 10,688

  Service cost                                     550                519
  Interest cost                                    893                832
  Plan amendments                                    -                464
  Actuarial loss (gain)                            396               (253)
  Benefits paid                                   (460)              (465)
                                               --------           --------

Benefit obligations at end of period           $13,164            $ 11,785
                                               --------           --------

                                     -52-
<PAGE>


Change in Plan Assets:

                                                 2001                2000

Fair value of plan assets                      $11,672            $ 11,205
 at beginning of period
  Actual return on assets                           38                 311
  Contributions received                           363                 621
  Benefits paid                                   (460)               (465)
                                                  ----            ---------
Fair value of plan assets                      $11,613            $ 11,672
 at end of period                              -------            --------

  Funded status                                 (1,551)               (113)
  Unrecognized net loss (gain)                     367                (997)
  Unrecognized prior service cost                  397                 431
  Employer contribution                             58                  49
                                                ------            ---------

  Accrued benefit cost                         $ (729)              $(630)
                                               =======            =========


Net periodic pension expense included the following components:


                                               Year ended December 31,
                                               -----------------------
                                                 2001     2000     1999
                                                 ----     ----     ----

  Service cost                                 $ 550     $ 519     $ 352
  Interest cost                                  893       832       533
  Expected return on plan assets                (986)     (952)     (601)
  Amortization of unrecognized                    33        33         -
  prior service cost
  Amortization of unrecognized net gain          (21)      (31)        -
                                                 ---      ----    -------

  Net periodic pension expense                 $ 469     $ 401     $ 284
                                               =====     =====     =====


The following assumptions were used in determining the actuarial present
value of the projected benefit obligations:


                                               Year ended December 31,
                                               ----------------------
                                                2001      2000      1999
                                                ----      ----      ----

Discount rate                                    7.50%     7.75%    7.75%
Average annual salary increase                   4.50%     4.50%    4.50%
Expected long term rate of return on plan
 assets                                          8.50%     8.50%    8.00%


Note 12 - Debt

Long-term debt consists of:

                                                December 31,    December 31,
                                                   2001            2000
                                                 --------        --------

Revolving Credit Facilities (A)                  $30,408          $ 31,673
Notes payable (B)                                    530               670
Subordinated promissory notes (C)                 26,840            30,912
Capital lease obligations (D)                     20,193            23,884
Bank Term Loans (E)                                5,587             5,868
Senior Notes (F)                                 544,887           544,643
Senior Subordinated Discount Debentures (F)      208,098           185,644
                                                 -------          --------
                                                 836,543           823,294
Less current portion                             (17,137)          (35,600)
                                                ---------        ---------
                                                $819,406         $ 787,694
                                                ========         =========

                                     -53-
<PAGE>



Aggregate maturities of long-term debt at December 31, 2001 are as follows:

            2002                                    $ 17,137
            2003                                      21,592
            2004                                       4,902
            2005                                      30,145
            2006                                     277,137
            Thereafter                               498,460
                                                    --------
                                                    $849,373
                                                    ========

A.       On August 16, 2001, the Company entered into a new Loan and
         Security Agreement ("JII Agreement") with Congress
         Financial Corporation ("Congress") and First Union National
         Bank ("First Union"). The JII Agreement provides for
         borrowings up to $110,000 based on the value of certain
         assets, including inventory, accounts receivable and fixed
         assets. Interest on borrowings is at the Prime Rate plus an
         applicable margin, or at the Company's option, the
         Eurodollar Rate plus an applicable margin (4.8% and 4.2%,
         respectively, at December 31, 2001). At December 31, 2001,
         the Company had outstanding borrowings of $5,574,
         outstanding letters of credit of $9,528, and excess
         availability of $63,433. The JII Agreement is secured by
         the assets of substantially all of the Company's domestic
         Subsidiaries, excluding Kinetek and its subsidiaries. The
         JII Agreement expires on August 16, 2006.

         On December 18, 2001, Kinetek, Inc. entered into a new Loan
         and Security Agreement ("Kinetek Agreement") with Fleet
         Bank ("Fleet"). The Kinetek Agreement provides for
         borrowings up to $50,000 based on the value of certain
         assets, including inventory, accounts receivable,
         inventory, machinery and equipment, and real estate.
         Outstanding borrowings carry a floating rate of LIBOR plus
         2.85% or Prime plus 1.35% (4.7% and 6.1%, respectively at
         December 31, 2001). Kinetek had $24,834 of outstanding
         borrowings, $0 of outstanding letters of credit, and
         $13,261 of excess availability under the Kinetek Agreement
         at December 31, 2001. Borrowings are secured by the stock
         and substantially all of the assets of Kinetek. The Kinetek
         Agreement expires on December 18, 2005.


B.       Notes payable are due in monthly or annual  installments  and
         bear interest at rates ranging from 6.0% to 8.0%.

C.       Subordinated promissory notes payable are due to minority
         interest shareholders and former shareholders of certain
         Subsidiaries in annual installments through 2004, and bear
         interest ranging from 8% to 9%. The loans are unsecured.

D.       Interest rates on capital leases range from 3% to 9.5% and mature in
         installments through 2008.


         The future minimum lease payments as of December 31, 2001
         under capital leases consist of the following:

            2002                                           $9,494
            2003                                            8,616
            2004                                            2,136
            2005                                            1,016
            2006                                            1,055
            Thereafter                                        519
              Total                                        ------
            Less amount representing interest              22,836
            Present value of future minimum lease          (2,643)
            payments                                      $20,193
                                                          ========

                                     -54-
<PAGE>

         The present value of the future minimum lease payments
         approximates the book value of property, plant and
         equipment under capital leases at December 31, 2001.

E.       Bank term loans consist of a mortgage on the Pamco
         facility, which bears interest at 8.1% and is due in
         monthly installments through 2003. The mortgage is secured
         by the Pamco facility. There is also a mortgage on the
         Deflecto facility, which bears interest at .25% below the
         prime rate and is due in 2028.

F.       In April 1997, the Company issued $214,036 aggregate principal amount
         of 11 3/4% Senior Subordinated Discount Debentures due 2009 ("2009
         Debentures"). The 2009 Debentures were issued at a substantial
         discount from the principal amount. Interest on the 2009 Debentures
         is payable in cash semi-annually on April 1 and October 1 of each
         year beginning October 1, 2002. The 2009 Debentures are redeemable
         for 105.875% of the accreted value from April 1, 2002 to March 31,
         2003, 102.937% from April 1, 2003 to March 31, 2004 and 100% from
         April 1, 2004 and thereafter plus any accrued and unpaid interest
         from April 1, 2002 to the redemption date if such redemption occurs
         after April 1, 2002. The fair value of the 2009 Debentures was
         approximately $27,825 at December 31, 2001. The fair value was
         calculated using the 2009 Debentures' December 31, 2001 market price
         multiplied by the face amount. The 2009 Debentures are unsecured
         obligations of the Company.

         In July 1997, the Company issued $120,000 of 10 3/8% Senior
         Notes due 2007 ("2007 Seniors"). These notes bear interest
         at a rate of 10 3/8% per annum, payable semi-annually in
         cash on February 1 and August 1 of each year. The 2007
         Seniors are redeemable for 105.188% of the principal amount
         from August 1, 2002 to July 31, 2003, 102.594% from August
         1, 2003 to July 31, 2004 and 100% from August 1, 2004 and
         thereafter plus any accrued and unpaid interest to the date
         of redemption. The fair value of the 2007 Seniors was
         approximately $60,000 at December 31, 2001. The fair value
         was calculated using the 2007 Seniors' December 31, 2001
         market price multiplied by the face amount. The 2007
         Seniors are unsecured obligations of the Company.

         In March 1999, the Company issued $155,000 of 10 3/8%
         Senior Notes due 2007 ("New 2007 Seniors"). These notes
         have the identical interest and redemption terms as the
         2007 Seniors. The notes were issued at a discount of 96.62%
         of face value including accrued interest, resulting in net
         cash to the Company of $149,761. The fair value of the New
         2007 Seniors was approximately $77,500 at December 31,
         2001. The fair value was calculated using the New 2007
         Seniors' December 31, 2001 market price multiplied by the
         face amount. The New 2007 Seniors are unsecured obligations
         of the Company.

         Kinetek has outstanding $270,000 of 10 3/4% Senior Notes
         due November 2006 ("Kinetek Notes"). Interest on the
         Kinetek Notes is payable in arrears on May 15 and November
         15. The notes are redeemable at the option of Kinetek, in
         whole or in part, at any time on or after November 15,
         2001. The fair value of the Kinetek Notes at December 31,
         2001 was $234,900. The fair value was calculated using the
         Kinetek Notes' December 31, 2001 market price multiplied by
         the face amount. The Kinetek Notes are unsecured
         obligations of Kinetek, Inc.


                                     -55-
<PAGE>

The Indentures relating to the 2009 Debentures, the 2007 Seniors, and the
New 2007 Seniors (collectively the "JII Notes") restrict the ability of the
Company to incur additional indebtedness at its Restricted Subsidiaries.
The Indentures also restrict: the payment of dividends, the repurchase of
stock and the making of certain other restricted payments; certain dividend
payments to the Company by its subsidiaries; significant acquisitions; and
certain mergers or consolidations. The Indentures also require the Company
to redeem the JII Notes upon a change of control and to offer to purchase a
specified percentage of the JII Notes if the Company fails to maintain a
minimum level of capital funds (as defined).

The Indenture governing the Kinetek Notes contains certain convenants
which, among other things, restricts the ability of Kinetek to incur
additional indebtedness, to pay dividends or make other restricted
payments, engage in transactions with affiliates, to complete certain
mergers or consolidations, or to enter into certain guarantees of
indebtedness.

The Company is, and expects to continue to be, in compliance with the
provisions of these Indentures.

Included in interest expense are $4,666, $5,067 and $4,679 of amortization
of debt issuance costs for the years ended December 31, 2001, 2000, and
1999, respectively.

Note 13 - Income taxes

Loss from continuing operations before income taxes and minority interest
is as follows:


                                        Year ended December 31,
                                        -----------------------
                                        2001      2000      1999
                                        ----      ----      ----

        Domestic                     $(71,458)   $(45,200)  $(10,140)
        Foreign                         7,457       6,316      3,537
                                     --------    --------   --------
         Total                       $(64,001)   $(38,884)  $ (6,603)
                                     =========   =========  =========

The benefit for income taxes from continuing operations consists of the
following:


                                    Year ended December 31,
                                    -----------------------
                                     2001           2000        1999
                                     ----           ----        ----

Current:

Federal                          $(13,711)         $(9,601)     $3,191
Foreign                             3,242            3,664       4,793
State and Local                     1,394           (1,253)      3,606
                                  --------         --------    --------
                                   (9,075)          (7,190)     11,590
Deferred                            3,752            3,999     (12,542)
                                  --------          -------    --------
   Total                          $(5,323)          $(3,191)     $(952)
                                  ========          ========   ========

Significant components of the Company's deferred tax liabilities and assets
are as follows:


                                        December 31,      December 31,
                                           2000              2000
Deferred tax liabilities:               ---------          --------

Intangibles                                $16,567           $11,918
Tax over book depreciation                   9,177            10,494
Inter company tax gains                      5,205             5,869
Acquisition related liabilities              3,046             3,046
Other                                        2,011             1,718
                                           -------           -------
   Total deferred tax liabilities          $36,006           $33,045
                                           =======           =======

                                     -56-
<PAGE>

                                          Dec 31,           Dec 31,
                                           2001              2000
Deferred tax assets:

NOL carryforward                          $13,605           $13,605
Accrued interest on discount
 debentures                               15,553            15,553
Pension obligation                           681               796
Vacation accrual                           1,122             1,216
Uniform capitalization of
 inventory                                2,739              2,751
Allowance for doubtful accounts           4,283              1,754
Deferred financing fees                     538                623
Intangibles                               6,141              5,913
Book over tax depreciation                3,998              3,542
Medical claims reserve                    1,855                873
Accrued commissions and bonuses             357                281
Warranty accrual                            558                135
Inventory reserves                        2,356              1,867
Restructuring reserve                     1,756                595
Loss on sale of subsidiary                  -                1,107
Deferred income                             198                592
Interest income                             620                309
Other                                    12,761              6,990
                                         ------              -----
   Total deferred tax assets           $ 69,121            $58,502
Valuation allowance for deferred
 tax assets                            $(25,015)         $ (13,605)
                                       ---------          ---------
   Total deferred tax assets           $ 44,106          $  44,897
                                       --------           --------
   Net deferred tax assets             $  8,100          $  11,852
                                       ========          =========

The increase in the valuation allowance during 2001 and 2000 was $11,410
and $495, respectively.

The benefit for income taxes from continuing operations differs from the
amount of income tax benefit computed by applying the United States federal
income tax rate to loss before income taxes. A reconciliation of the
differences is as follows:


                                         Year ended December 31,
                                         -----------------------
                                        2001             2000         1999
                                        ----             ----         ----


Computed statutory tax benefit         $(22,400)       $(13,609)     $(2,311)
Increase (decrease) resulting from:
  Amortization of goodwill                1,616           6,836        1,280
  Meals and entertainment                   238             285          273
  State and local tax                       289           (1,953)       (164)
  Increase in valuation allowance        11,410             495          636
  Foreign tax rate differential           1,268           1,879        1,427
  Foreign tax holidays                     (152)           (313)           -
  Other items, net                        2,408           3,189       (2,093)
                                        -------         -------       -------
Benefit for income taxes                $(5,323)        $(3,191)       $(952)
                                        ========        ========      ========

As of December 31, 2001, consolidated net operating loss carryforwards are
approximately $34,400 for regular tax purposes, and expire in various
years through 2016. These loss carryforwards, entirely attributable to
Welcome Home, are subject to separate return limitation year rules. A full
valuation allowance has been provided against these loss carryforwards.

A consolidated net operating loss carryback of approximately $40,000
for federal income tax purposes was generated during 2001. The Company
recorded an income tax receivable at December 31, 2001 related to this
item.



                                     -57-
<PAGE>

Note 14 - Sale of Subsidiaries

On February 2, 2001, the Company sold the assets of Riverside to a
third-party for cash proceeds of $16,663. Riverside is a publisher of
Bibles and a distributor of Bibles, religious books and music recordings.
The Company recognized a loss on the sale of $2,798, which was recorded in
the fourth quarter of 2000.

On March 19, 1999, the Company sold the assets of Consolidated Plumbing
Industries ("CPI" or "Retube" or "Pex"), a part of JTP, for $3,389. There
was no gain or loss associated with the sale.

On November 9, 1999, the Company sold the net assets of Parsons Precision
Products ("Parsons") for $22,000. The Company recorded a gain of $10,037
associated with the sale.

Note 15 - Related party transactions

An individual who is shareholder, Director, General Counsel, and Secretary
for the Company is also a partner in a law firm used by the Company. The
firm was paid $1,757, $1,688, and $2,880 in fees and expenses in 2001,
2000, and 1999, respectively. The rates charged to the Company were at
arms-length.

Certain shareholders of TJC Management Corporation ("TJC") are also
shareholders of the Company. On July 25, 1997, a previous agreement with
TJC was amended and restated. Effective January 1, 2000, the Company pays
TJC a $250 quarterly fee for management services. The Company accrued fees
to TJC of $1,000, $1,000, and $3,000 in 2001, 2000, and 1999, respectively,
related to this agreement. These expenses are classified in "management
fees and other" in the Company's statements of operations.

On July 25, 1997, a previous agreement with TJC was amended and restated.
Under the new agreement, the Company pays TJC an investment banking fee of
up to 1%, based on the aggregate consideration paid, for its assistance in
acquisitions undertaken by the Company or its subsidiaries, and a financial
consulting fee not to exceed 0.5% of the aggregate debt and equity
financing that is arranged by TJC, plus the reimbursement of
out-of-pocket and other expenses. The Company paid $0, $0 and $1,176 in
2001, 2000, and 1999, respectively, to TJC for their assistance in relation
to acquisition and refinancing activities.  At December 31, 2001, $8,092 was
accrued related to this agreement and is included in "accrued liabilities" on
the Company's balance sheet.

The Company has agreements to provide management and consulting services to
various entities whose shareholders are also shareholders of the Company.
The Company also has agreements to provide investment banking and financial
consulting services to these entities. Fees for management and consulting
services are typically a percentage of the entity's net sales or earnings
before interest, taxes, depreciation and amortization. Fees for investment
banking and financial consulting services are based on the aggregate
consideration paid for acquisitions or the aggregate debt and equity
financing that is arranged by the Company, plus the reimbursement of out-of
pocket and other expenses. Amounts due from affiliated entities as a result
of providing the services described above were $3,810 and $2,469 as of
December 31, 2001 and 2000, respectively, and are classified in "prepaid
expenses and other current assets" in the Company's balance sheets. The
Company has also made unsecured advances to certain of these entities for
the purpose of funding operating expenses and working capital needs. These
advances totaled $12,470 and $9,081 in 2001 and 2000, respectively, and are

                                     -58-
<PAGE>

classified in "prepaid expenses and other current assets" in the Company's
balance sheets. The Company had reserves of $10,400 and $4,700 at December
31, 2001 and 2000, respectively, related to these management and consulting
services and advances. The increase of $5,700 and $4,700 in 2001 and 2000,
respectively, is reflected in "management fees and other" in the Company's
statements of operations.

Note 16 - Capital stock

Under the terms of a restricted common stock agreement with certain
shareholders and members of management, the Company has the right, under
certain circumstances, for a specified period of time to reacquire shares
from certain shareholders and management at their original cost. Starting
in 1993 or within 60 days of termination, the Company's right to repurchase
may be nullified if $1,800, in the aggregate, is paid to the Company by
management.

Note 17 - Preferred Stock

M&G Holdings has $1,500 of senior, non-voting 8.0% cumulative preferred
stock outstanding to its minority shareholders. The liquidation value of
the preferred stock was $2,164 and $1,998 as of December 31, 2001 and 2000,
respectively.

Note 18 - Business segment information

The Company's business operations are classified into five business
segments: Specialty Printing and Labeling, Jordan Specialty Plastics,
Jordan Auto Aftermarket, Kinetek, and Consumer and Industrial Products. As
of July 21, 1999, Welcome Home is consolidated in the Company's results of
operations and is included in the Consumer and Industrial Products segment
(see note 3).

Specialty Printing and Labeling includes distribution of corporate
recognition, promotion, and specialty advertising products and the
production and distribution of calendars by JII Promotions; manufacture of
pressure sensitive label products for the electronics OEM market by
Valmark; manufacture of a wide variety of printed tape and labels by Pamco;
and manufacture of printed folding cartons and boxes, insert packaging and
blister pack cards at Seaboard.

Jordan Specialty Plastics includes the manufacturing of point-of-purchase
advertising displays by Beemak; manufacture and marketing of safety
reflectors, lamp components, bicycle reflector kits, modular storage units,
colorants and emergency warning triangles by Sate-Lite; and design,
manufacture, and marketing of plastic injection-molded products for mass
merchandisers, major retailers, and large wholesalers and manufacture of
extruded vinyl chairmats for the office products industry by Deflecto.

Jordan Auto Aftermarket includes the remanufacturing of transmission
sub-systems for the U.S. automotive aftermarket by Dacco; the
remanufacturing and manufacturing of transmission sub-systems and the
manufacturing of clutch and discs and air conditioning compressors for the
U.S. automotive aftermarket at Alma; and manufacture of air-conditioning
components for the US automotive aftermarket, heavy duty truck OE, and
international markets at Atco.

Kinetek includes the manufacture of specialty purpose electric motors for
both industrial and commercial use by Imperial; precision gears and
gearboxes by Gear; AC and DC gears and gear motors and sub-fractional AC
and DC motors and gear motors for both industrial and commercial use by
Merkle Korff and FIR; and electronic motion control systems for use in
industrial and commercial processes such as conveyor systems, packaging

                                     -59-
<PAGE>

systems, elevators and automated assembly operations by ED&C and Motion
Control.

Consumer and Industrial Products includes the manufacturing and importing
of decorative home furnishing accessories by Cape; the specialty retailing
of gifts and decorative home accessories by Welcome Home; manufacture of
orthopedic supports and pain reducing medical devices at Cho-Pat,
manufacture and development of flavors used in beverages and foods at
Flavorsource; the development of Internet business solutions by Online
Environs; the providing of Internet access to Midwestern markets by ISMI;
and the storage of data and access to dedicated Internet connectivity at
GramTel.

Measurement of Segment Operating Income and Segment Assets

The Company evaluates performance and allocates resources based on
operating income. The accounting policies of the reportable segments are
the same as those described in Note 2 - Significant Accounting Policies.

Inter-segment sales exist between Cape and Welcome Home. These sales were
eliminated in consolidation and are not presented in segment disclosures.
No single customer accounts for 10% or more of segment or consolidated net
sales.

Operating income by business segment is defined as net sales less operating
costs and expenses, excluding interest and corporate expenses.

Identifiable assets are those used by each segment in its operations.
Corporate assets consist primarily of cash and cash equivalents, equipment,
notes receivable from affiliates and deferred financing costs.

The operating results and assets of entities acquired during the three year
period are included in the segment information since their respective dates
of acquisition. The operating results of JTP and Capita have not been
included in the segment information below, as these businesses have been
classified as discontinued operations in accordance with APB 30.


                                     -60-
<PAGE>



Factors Used to Identify the Enterprise's Reportable Segments

The Company's reportable segments are business units that offer different
products. The reportable segments are each managed separately because they
manufacture and distribute distinct products with different production
processes.

Summary financial information by business segment is as follows:

                                         Year ended December 31,
                                        ------------------------
                                         2001      2000           1999
                                         ----      ----           ----
Net Sales:
  Specialty Printing and Labeling        $112,123     $122,691    $117,678
  Jordan Specialty Plastics                98,733       98,353      86,284
  Jordan Auto Aftermarket                 147,047      141,213     131,935
  Kinetek                                 287,362      316,666     307,877
  Consumer and Industrial Products         77,558      128,373     122,881
    Total                                 --------    --------    --------
                                          $722,823    $807,296    $766,655
                                          ========    ========    ========


Operating income (loss):
  Specialty Printing and Labeling        $(984)        $7,210      $7,638
  Jordan Specialty Plastics              2,057          1,928       4,319
  Jordan Auto Aftermarket               19,494         20,449      16,675
  Kinetek                               37,272         36,497      50,597
  Consumer and Industrial Products      (3,485)         3,071       7,867
    Total business segment operating
     income                             54,354         69,155      87,096

  Corporate expense                    (25,636)       (14,142)    (17,851)
    Total consolidated operating       --------       --------    --------
     income                            $28,718        $55,013     $69,245
                                       ========       ========    ========


Depreciation and Amortization:
  Specialty Printing and Labeling       $4,980         $4,786       $4,563
  Jordan Specialty Plastics              6,677          6,312        5,174
  Jordan Auto Aftermarket                4,595          4,234        3,100
  Kinetek                               14,611         29,964       14,594
  Consumer and Industrial Products       3,509          4,134        3,228
    Total business segment               -----          -----        -----
     amortization and depreciation      34,372         49,430       30,659
  Corporate                              4,724          5,748        5,492
     and amortization                  $39,096        $55,178      $36,151
                                       =======        =======      =======
Capital expenditures:
  Specialty Printing and Labeling       $1,882        $3,083       $1,591
  Jordan Specialty Plastics              2,623         5,630        2,852
  Jordan Auto Aftermarket                1,209         1,992        1,244
  Kinetek                                4,577         5,275        4,327
  Consumer and Industrial Products       1,045         3,984        1,296
  Corporate                              1,478         1,282        1,002
    Total capital expenditures           -----         -----        -----
                                         $12,814     $21,246      $12,312
                                         =======     =======     ========




                                     -61-
<PAGE>








                                                   December 31,


                                                  2001           2000
                                                  ----           ----
Identifiable assets:

  Specialty Printing and Labeling              $100,422          $103,895
  Jordan Specialty Plastics                     114,103           119,749
  Jordan Auto Aftermarket                       154,491           152,618
  Kinetek                                       354,098           359,197
  Consumer and Industrial Products               44,441            82,887
   Total consolidated business segment         --------          --------
    assets                                      767,555           818,346
  Corporate assets                               61,841            69,155
   Total consolidated identifiable             --------          --------
     assets                                    $829,396          $887,501
                                               ========          ========


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

Summary financial information by
 geographic area is as follows:          Year ended December 31,
                                         -----------------------
                                          2001           2000       1999
                                          ----           ----       ----
Net sales to unaffiliated customers:
United States                            $648,955    $728,714    $709,986
Foreign                                    73,868      78,582      66,669
  Total                                  $722,823    $807,296    $776,655
Identifiable assets:                     =========   ========    =========
United States
Foreign                                 $752,944     $817,013   $1,087,351
  Total                                   76,452       70,488       72,145
                                        --------     --------   ----------
                                        $829,396     $887,501   $1,159,496
                                        ========     ========   ==========


Note 19 - Acquisition and formation of subsidiaries

On July 23, 2001, the Company purchased the customer lists of The George
Kreisler Corporation ("Kreisler") for $204 in cash. Kreisler has been fully
integrated into Pamco.

On July 3, 2001, the Company purchased the assets of Pioneer Paper Corp.
("Pioneer"). Pioneer is a manufacturer of printed folding paperboard boxes,
insert packaging, and blister pack cards. The Company paid $3,134 in cash
for the assets. The purchase price was preliminarily allocated to accounts
receivable of $1,343, inventory of $298, property, plant and equipment of
$1,000, net operating liabilities of $(303), and resulted in an excess
purchase price over identifiable assets of $796. Pioneer has been fully
integrated into Seaboard.

On June 30, 2001, the Company purchased Atco Products ("Atco"). Atco is a
manufacturer of air-conditioning components for the automotive aftermarket,
heavy duty truck OE and international markets. The Company paid $7,344 in
cash for the assets of Atco. The purchase price has been preliminarily
allocated to working capital of $4,264 and property, plant and equipment of
$3,080.

On April 6, 2001, Kinetek, through its wholly-owned subsidiary
Merkle-Korff, acquired substantially all of the assets, properties, and
business of Koford Engineering, Inc. for $690. The purchase price has been
preliminarily allocated to working capital of $121, property, plant and
equipment of $130, and resulted in an excess purchase price over
identifiable assets of $439.

On March 7, 2001, the Company purchased the assets of J.A. Larson Company
("JA Larson"). JA Larson is a flexographic printer of pressure sensitive
labels, tags and seals, which are manufactured in a wide variety of shapes
and sizes. JA Larson has been fully integrated into Pamco. The Company paid
$433 in cash for the assets. The purchase price was allocated to inventory

                                     -62-
<PAGE>

of $100, property and equipment of $20 and resulted in an excess purchase
price over identifiable assets of $313. JA Larson has been fully integrated
into Pamco.

In December 2000, the Company completed the formation of GramTel USA, Inc.
("GramTel USA").  The Company sold the stock of GramTel, a Restricted Subsidiary
under the Company's Indenture, to GramTel USA for $500 of GramTel USA Preferred
Stock, which accretes at 51% of the GramTel USA net income or net loss, as the
case may be, through the earlier of an Early Redemption Event (as defined)
or the end of year five (unless such redemption is prohibited by a GramTel USA
or a Company debt covenant).  Certain of the Company's affiliates and GramTel
USA's management own substantially all of GramTel USA's common stock with the
Company owning only 5.6% of the common stock.

In December 2000, the Company started investing in GramTel.  GramTel is an
information technology infrastructure outsourcing company that allows its
customers to transfer, protect and store their mission critical data at
regionally located Secure Network Access Centers. The Company has invested
$5,418 in GramTel through December 31, 2001 for property, equipment and other
start-up related expenses.

On October 23, 2000, the Company purchased the stock of Flavorsource, Inc.
("Flavorsource") for $10,293 including costs directly related to the
transaction. Flavorsource is a developer and compounder of flavors for use
in beverages of all kinds, including coffee, tea, juices, bar mixes, sodas,
and cordials, as well as in nutritional foods, bakery products and ice
cream and dairy products. The acquisition was financed with $9,043 in cash
and a $1,250 subordinated seller note. The purchase price has been
allocated to working capital of $270 and property, plant and equipment of
$66, and resulted in an excess purchase price over net identifiable assets
of $9,957.

On October 10, 2000, the Company purchased the assets of Internet Services
of Michigan, Inc. ("ISMI") for $1,181. ISMI is an Internet service provider
with approximately 9,500 customers located in Michigan. ISMI offers
standard dial up resources as well as high-speed Internet connections such
as DSL, Satellite and ISDN. ISMI also provides website development and
creation services and web hosting features. The acquisition was financed
with cash and the purchase price has been allocated to net operating
liabilities of $(659), and property, plant and equipment of $350, and
resulted in an excess purchase price over net identifiable assets of
$1,490.

On June 2, 2000, the Company purchased Instachange Displays Limited and
Pique Display Systems, Inc. (collectively "IDL") for approximately $12,805
including costs directly related to the transaction. IDL is Canada's
leading manufacturer and distributor of point-of-purchase display and
retail merchandising products. The acquisition was financed with $10,316 of
cash and a $2,489 subordinated seller note. The purchase price has been
allocated to working capital of $1,629, and property, plant and equipment
of $1,389, and resulted in an excess purchase price over net identifiable
assets of $9,787. IDL is a division of Deflecto.

On June 2, 2000, the Company completed the formation of Specialty Internet
Holdings, LLC ("SIH").  The Company sold the stock of Online Environs, a
Restricted Subsidiary under the Company's Indenture, for $60 of SIH
Preferred Stock, which accretes at plus or minus 51% of the SIH net income or
net loss, as the case may be, through the earlier of an Early Redemption
Event (as defined) or the end of year five (unless such redemption is
prohibited by a SIH or Company debt covenant), and a $2,800 note.  Certain of
the Company's affiliates and SIH management own substantially all of the SIH
common units with the Company owning only 8.3% of SIH common units.

On March 14, 2000, the Company purchased Online Environs, Inc. ("Online
Environs"), an international Internet business solutions developer and
consultant, for $5,093 including costs directly associated with the
transaction. The acquisition was financed with $3,593 in cash and a $1,500
subordinated seller note. Online Environs' digital communications solutions
are designed to help clients increase sales, improve communications, and
create and enhance business identities over the Internet, commonly known as
eBusiness. The purchase price has been allocated to working capital of
$258, property, plant and equipment of $194, non current assets of $2, and
long-term liabilities of $(43) and resulted in an excess purchase price
over net identifiable assets of $4,682.

On December 31, 1999, Kinetek, through its wholly owned subsidiary FIR,
acquired certain net assets of the L'Europea Electric Hoist division
("L'Europea") from Pramac Industriale for approximately $2,568 in cash and
a $2,632 subordinated seller note. L'Europea hoists are electric pulleys
and elevators used for lifting applications mainly found at construction

                                     -63-
<PAGE>

sites. As FIR's operations are included for periods ending two months prior
to the Company's year-end and interim periods, the effects of this
transaction were not included in the Company's results until 2000. The
purchase price was allocated to working capital of approximately $1,236 and
resulted in an excess purchase price over net identifiable assets of
$3,964.

On December 20, 1999, the Company purchased the stock of Yearntree, Ltd.
("Yearntree") for $3,603. Yearntree is a manufacturer of injection molded
office products in the United Kingdom. The purchase was financed with cash
of $2,946 and assumed debt of $657. The purchase price has been allocated
to working capital of $1,117 and property, plant and equipment of $1,845,
and resulted in an excess purchase price over net identifiable assets of
$641. Yearntree is a subsidiary of Deflecto.

On July 30, 1999, the Company purchased Tele-Flow, Inc. ("Tele-Flow") for
$3,660. Tele-Flow is a manufacturer of polystyrene plastic injection molded
heating, ventilation and air conditioning ("HVAC") registers, air diffusers
and flexible air ducts. The purchase price was allocated to working capital
of $232, property, plant, and equipment of $1,811 and non-current
liabilities of ($185), resulting in an excess purchase price over
identifiable assets of $1,802. Tele-Flow has been fully integrated into
Deflecto.

On July 1, 1999, the Company acquired Supreme Die Cutting, Inc.
("Supreme"). Supreme is a manufacturer of folding cartons and specialty
paperboard products. The purchase price of $514 including costs directly
related to the transaction, was allocated to inventory of $50 and property,
plant and equipment of $450, and resulted in an excess purchase price over
identifiable assets of $14. Supreme has been fully integrated into
Seaboard.

On March 22, 1999, the Company purchased Alma Products, Inc. ("Alma") for
$86,166 including costs directly related to the transaction. Alma is
comprised of three primary product lines: (i) high quality remanufactured
torque converters used to supply warranty replacements for auto
transmissions originally sold to Ford, Chrysler, John Deere and
Caterpillar, (ii) new and remanufactured air conditioning compressors for
original equipment manufacturers including Ford, Chrysler and General
Motors, and (iii) new and remanufactured clutch and disc assemblies used in
standard transmissions sold primarily to Ford. The purchase price of
$88,084 is made up of cash of $85,995 and the assumption of a $2,089
long-term liability for retiree healthcare benefits. The purchase price was
allocated to working capital of $18,722, property, plant and equipment of
$9,455, retiree healthcare benefit obligations of ($2,089), and resulted in
an excess purchase price over net identifiable assets of $59,907.

The above acquisitions have been accounted for as purchases and their
operating results have been consolidated with the Company's results since
the respective dates of acquisition. Unaudited pro forma information with
respect to the Company as if the above acquisitions and the divestitures
(see Note 14) had occurred at the beginning of the respective period, is as
follows:
                                                       Year ended
                                                      December 31,
                                                     2001           2000
                                                     ----           ----

Net sales                                            $728,228     $782,945
Net loss                                             (57,593)      (24,728)


                                     -64-
<PAGE>

Note 20 - Additional Purchase Price Agreements

The Company has a contingent purchase price agreement relating to its
acquisition of Deflecto in 1998. The plan is based on Deflecto achieving
certain earnings before interest and taxes and is payable on April 30,
2008. If Deflecto is sold prior to April 30, 2008, the plan is payable 120
days after the transaction.

The Company has a deferred purchase price agreement relating to its
acquisition of Yearntree in December 1999. The agreement is based on
Yearntree achieving certain agreed upon cumulative net income before
interest and taxes for the 24 months beginning January 1, 2000 and ending
December 31, 2001. The agreement is payable 30 days after the receipt of
the December 31, 2001 audited financial statements. On March 8, 2002, the
Company paid $560 related to the above agreement.

The Company also has a deferred purchase price agreement relating to its
acquisition of Teleflow in July 1999. This agreement is based upon Teleflow
achieving certain agreed upon earnings before interest, taxes,
depreciation, and amortization for each year through the year ended
December 31, 2002. The Company paid $260 and $500 in 2001 and 2000,
respectively, related to this agreement.

Kinetek has an additional purchase price agreement relating to its
acquisition of Advanced DC in May 1998. The terms of this agreement provide
for additional consideration to be paid if the acquired entity's results of
operations exceed certain targeted levels. Targeted levels are set
substantially above the historical experience of the acquired entity at the
time of acquisition. Kinetek made a payment related to this agreement of
$3,093 to the sellers of Advanced DC in March 2000 and a payment of $3,200
in March 1999. These contingent payments are recorded as an addition to
goodwill.

Kinetek also has a contingent purchase price agreement relating to its
acquisition of Motion Control on December 18, 1997. The terms of this
agreement provide for additional consideration to be paid to the sellers.
The agreement is exercisable at the sellers' option during a five year
period beginning in 2003. When exercised, the additional consideration will
be based on Motion Control's operating results over the two preceding
fiscal years. Payments, if any, under the contingent agreement will be
placed in a trust and paid out in cash over a four-year period, in annual
installments according to a schedule, which is included in the agreement.
Additional consideration, if any, will be recorded as an addition to
goodwill.

Note 21 - Contingencies

The Company is subject to legal proceedings and claims which arise in the
ordinary course of its business. The Company believes that the final
disposition of such matters will not have a material adverse effect on the
financial position or results of operations of the Company.

Note 22 - Goodwill Impairment

During the third quarter of 2000, the Company recorded a non-cash
impairment charge of $14,636 associated with the write-down of goodwill
relating to one of the Kinetek businesses, ED&C. This write-down of

                                     -65-
<PAGE>

goodwill is not deductible for income tax purposes. Significant adverse
changes in ED&C's business environment as well as historical, current and
projected cash flow losses led management to evaluate the operations of
ED&C. As a result of this evaluation, management concluded that ED&C's
goodwill was impaired, and accordingly, it has been written down to zero,
the Company's best estimate of its fair value was determined using expected
future cash flows. Considerable management judgment is necessary to
determine fair value. Accordingly, actual results could vary significantly
from these estimates.

Note 23 - Quarterly Financial Information (Unaudited)
<TABLE>
<CAPTION>


                                                   Three Months Ended
                             December 31         September 30       June 30          March 31
                             -----------         ------------       --------         --------
<S>                           <C>                 <C>              <C>                <C>

2001:
Net sales                     $175,218            $180,026          $184,973          $182,606
Cost of sales,
 excluding depreciation        109,991             115,218           117,751           117,044
Loss from continuing
 operations                    (18,616)            (24,862)           (6,705)           (8,089)
Net loss                       (18,616)            (24,862)           (6,705)           (8,089)


2000:

Net sales                     $205,297            $203,798          $207,083          $191,118
Cost of sales,
 excluding depreciation        130,963             130,604           129,809           122,379
(Loss) income from continuing
 operations                    (14,354)            (18,967)              552            (3,277)
Net (loss) income               (9,120)            (19,098)            9,350           186,746

</TABLE>

                                     -66-
<PAGE>




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


      None.

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

The following sets fourth the names and ages of each of the Company's
directors and executive officers and the positions they hold at the
Company:

Name                   Age  Position with the Company


  John W. Jordan II   54   Chairman of the Board of Directors and Chief
                              Executive Officer.
  Thomas H. Quinn     54   Director, President and Chief Operating Officer.
  Joseph S. Steinberg 58   Director.
  David W. Zalaznick  47   Director.
  Jonathan F. Boucher 45   Director, Vice President and Assistant Secretary.
  G. Robert Fisher    62   Director, General Counsel and Secretary.

Each of the directors and executive officers of the Company will serve
until the next annual meeting of the stockholders or until their death,
resignation or removal, whichever is earlier. Directors are elected
annually and executive officers for such terms as may be determined by the
Company's board of directors (the "Board of Directors").

Set fourth below is a brief description of the business experience of each
director and executive officer of the Company.

Mr. Jordan has served as Chairman of the Board of Directors and Chief
Executive Officer of the Company since 1988. Mr. Jordan is a managing partner
of The Jordan Company, a private merchant banking firm which he founded in
1982. Mr. Jordan is also a director of Ameriking, Inc., Carmike Cinemas, Inc.,
Archibald Candy Corporation, GFSI Inc., GFSI Holdings, Inc., Kinetek, Inc.,
Rockshox, Inc., Welcome Home and Apparel Ventures, Inc., as well as other
privately held companies.

Mr. Quinn has served as a director, President and Chief Operating Officer of
the Company since 1988. From November 1985 to December 1987, Mr. Quinn was
Group Vice President and a corporate officer of Baxter International
("Baxter"). From September 1970 to November 1985, Mr. Quinn was employed by
American Hospital Supply Corporation ("American Hospital"), where he was a
Group Vice President and corporate officer when American Hospital was acquired
by Baxter. Mr. Quinn is also the Chairman of the Board and Chief Executive
Officer of Archibald Candy Corporation, Chairman of the Board of Kinetek, Inc.
as well as a director of Welcome Home, Ameriking, Inc. and other privately
held companies.

Mr. Steinberg has served as a director of the Company since 1988. Since 1979,
Mr. Steinberg has been the President and a director of Leucadia National
Corporation, a holding company. He is also a Trustee of New York University.

Mr. Zalaznick has served as a director of the Company since June 1997. Since
1982, Mr. Zalaznick has been a managing partner of The Jordan Company. Mr.
Zalaznick is also a director of Carmike Cinemas, Inc., Ameriking, Inc., Marisa

                                     -67-
<PAGE>

Christina, Inc., Kinetek, Inc., GFSI Inc., GFSI Holdings Inc. and Apparel
Ventures, Inc., as well as other privately held companies. Mr. Boucher has
served as a Vice President, Assistant Secretary and a director of the Company
since 1988. Since 1983, Mr. Boucher has been a partner of The Jordan Company.
Mr. Boucher is also a director of Kinetek, Inc., as well as several other
privately held companies.

Mr. Fisher has served as a director, General Counsel and Secretary since 1988.
Since February 1999, Mr. Fisher has been a member of the law firm of
Sonnenschein, Nath & Rosenthal, a firm that represents the Company in various
legal matters. From June 1995 until February 1999, Mr. Fisher was a member of
the law firm of Bryan Cave LLP. For the prior 27 years, Mr. Fisher was a
member of the law firm of Smith, Gill, Fisher & Butts, P.C., which combined
with Bryan Cave LLP in June 1995.











                                     -68-
<PAGE>





Item 11.        EXECUTIVE COMPENSATION


The following table shows the cash compensation paid by the Company, for
the three years ended December 31, 2001, for services in all capacities to
the President and Chief Operating Officer of the Company.


                                 Summary Compensation Table(1)

                                      Annual Compensation
                                ------------------------------------------------
Name and Principal Position      Year     Salary    Bonus    Other Compensation
---------------------------      ----     ------    -----    ------------------
John W. Jordan II, Chief
Executive Officer(2)
                                  2001        -              -              -
                                  2000        -              -              -
                                  1999        -              -              -
Thomas H. Quinn,
President and Chief
Operating Officer                 2001     750,000      250,000        13,800
                                  2000     750,000    1,250,000        13,800
                                  1999     700,000    1,906,150        13,800



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

(1)    The aggregate number of shares of restricted Common Stock held by
       the Company's executive officers and directors at December 31, 2001
       was 5,000 shares, consisting of 4,000 shares held by Mr. Quinn and
       1,000 shares held by Mr. Boucher. The value of the restricted shares
       is not able to be calculated because there is no market price for
       shares of the Company's unrestricted Common Stock. Dividends will be
       paid on the restricted shares to the same extent paid on
       unrestricted shares. See "Management-Restricted Stock Agreements".


(2)    Mr. Jordan derived his compensation from The Jordan Company for his
       services to the Company and its subsidiaries. He received no
       compensation from the Company or its subsidiaries for his services
       as Chief Executive Officer.







                                     -69-
<PAGE>



     Employment Agreement. Mr. Quinn has entered into an employment agreement
with the Company which provides for his employment as President and Chief
Operating Officer of the Company. The employment agreement can be terminated
at any time by the Company. His base salary is $750,000 per year, and he is
provided with a guaranteed bonus of $100,000 per year, which amounts are
inclusive of any compensation, fees, salary, bonuses or other payments to Mr.
Quinn by any of the subsidiaries or affiliates of The Jordan Company. Under
the employment agreement, if Mr. Quinn's employment is terminated for reasons
other than voluntary termination, cause, disability or death, he will be paid
a severance equal to the greater of $350,000 or the sum of his most recent
base annual salary plus $100,000. If employment is terminated for reasons of
cause or voluntary termination, no severance payment is made.

     Restricted Stock Agreements. The Company is a party to restricted stock
agreements, dated as of February 25, 1988, with each Messrs. Quinn and
Boucher, pursuant to which they were issued shares of Common Stock which, for
purposes of such restricted stock agreements, were classified as "Group 1
Shares" or "Group 2 Shares". Messrs. Quinn and Boucher were issued 3,500 and
1,870.7676 Group 1 Shares, respectively, and 4,000 and 1,000 Group 2 Shares,
respectively, at $4.00 per share. The Group 1 Shares are not subject to
repurchase or contractual restrictions on transfer pursuant to the Restricted
Stock Agreements. The Group 2 Shares are subject to repurchase at cost, in the
event that Messrs. Quinn or Boucher ceases to be employed (as a partner,
officer, or employee) by the Company, The Jordan Company, Jordan/Zalaznick
Capital Company ("JZCC"), or any reconstitution thereof conducting similar
business activities in which they are a partner, officer or employee. If such
person ceases to be so employed prior to January 1, 2003, the Group 2 Shares
can also be repurchased at cost, unless such person releases and terminates
such repurchase option by making a payment of $300.00 per share to the
Company. Certain adjustments to the foregoing occur in the event of the death
or disability of any of the partners of The Jordan Company or JZCC, the death
or disability of such person, or the sale of the Company. On January 1, 1992,
the Company issued Messrs. Quinn and Boucher 600 and 533.8386 shares,
respectively, at $107.00 per share pursuant to similar Restricted Stock
Agreements, under which such shares were effectively treated as "Group 1
Shares". On December 31, 1992 the Company issued an additional 400 shares to
Mr. Quinn for $107.00 per share pursuant to similar Restricted Stock
Agreements, under which such shares were effectively treated as "Group 1
Shares". The purchase price per share was based upon an independent
appraiser's valuation of the shares of Common Stock at the time of their
issuance. These shares were issued by the Company to provide a long-term
incentive to the recipients to advance the Company's business and financial
interest.

     Directors Compensation. The Company compensates its directors quarterly
at $20,000 per year for each director. The Indenture permits directors fees of
up to $250,000 per year in the aggregate. In addition, the Company reimburses
directors for their travel and other expenses incurred in connection with
attending Board meetings (and committees thereof) and otherwise performing
their duties as directors of the Company.




                                     -70-
<PAGE>

Item 12.        PRINCIPAL STOCKHOLDERS


The following table furnishes information, as of April 3, 2002, as to the
beneficial ownership of the Company's Common Stock by (i) each person known
by the Company to beneficially own more than 5% of the outstanding shares
of Common Stock (ii) each director and executive officer of the Company,
and (iii) all officers and directors of the Company as a group.


                                            Amount of Beneficial Ownership
                                         ---------------------------------------
                                           Number of       Percentage Owned(1)
                                           Shares
Executive Officers and Directors           -----
John W. Jordan, II (2) (3) (4)              41,820.9087           42.5%
David W. Zalaznick (3) (5) (6)              19,965.0000           20.3%
Thomas H. Quinn (7)                         10,000.0000           10.2%
Leucadia Investors, Inc. (3)                 9,969.9999           10.1%
Jonathan F. Boucher (8)                      5,533.8386            5.6%
G. Robert Fisher (4) (9)                       624.3496            0.6%
Joseph S. Steinberg (10)                         0.0000            0.0%
All directors and officers as a group
(5 persons) (3)                             87,914.0968           89.3%


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


(1)    Calculated pursuant to Rule 13d-3 (d) under the Exchange Act. Under
       Rule 13d-3 (d), shares not outstanding which are subject to options,
       warrants, rights of conversion privileges exercisable within 60 days
       are deemed outstanding for the purpose of calculating the number and
       percentage owned by such person, but not deemed outstanding for the
       purpose of calculating the percentages owned by each other person
       listed. As of December 31, 2001, there were 98,501.0004 shares of
       Common Stock issued and outstanding.

(2)    Includes 1 share held personally and 41,819.9087 shares held by the
       John W. Jordan II Revocable Trust. Does not include 309.2933 shares held
       by Daly Jordan O'Brien, the sister of Mr. Jordan, 309.2933 shares held by
       Elizabeth O'Brien Jordan, the mother of Mr. Jordan, or 309.2933 shares
       held by George Cook Jordan, Jr., the brother of Mr. Jordan.

(3)    Does not include 100 shares held by The Jordan/Zalaznick Capital Company
       ("JZCC") or 3,500 shares held by Mezzanine Capital & Income Trust 2001
       PLC ("MCIT"), a publicly traded U.K. investment trust advised by an
       Affiliate of The Jordan Company (controlled by Messrs. Jordan and
       Zalaznick). Mr. Jordan, Mr. Zalaznick and Leucadia, Inc. are the sole
       partners of JZCC. Mr. Jordan and Mr. Zalaznick own and manage the advisor
       to MCIT.

(4)   Does not include 3,248.3332 shares held by the Jordan Family Trust, of
      which John W. Jordan II, George Cook Jordan, Jr., and G. Robert Fisher
      are the trustees.

(5)   Does not include 82.1697 shares held by Bruce Zalaznick, the brother
      of Mr. Zalaznick.

(6)   Excludes 2,541.4237 shares that are held by John W. Jordan II
      Revocable Trust, but which may be purchased by Mr. Zalaznick, and must
      be purchased by Mr. Zalaznick, under certain circumstances, pursuant to
      an agreement, dated as of October 27, 1988, between Mr. Jordan and Mr.
      Zalaznick.

(7)   Includes 4,000 shares which are treated as "Group 2 Shares" pursuant
      to the terms of a Restricted Stock Agreement between Mr. Quinn and the
      Company. See "Management-Restricted Stock Agreements".

(8)   Includes 1,000 shares which are treated as "Group 2 Shares" pursuant
      to the terms of a Restricted Stock Agreement between Mr. Boucher and the
      Company. See "Management-Restricted Stock Agreements".

(9)   Includes 624.3496 shares held by G. Robert Fisher, as trustee of the
      G. Robert Fisher Irrevocable Gift Trust, U.T.I., dated December 26,
      1990.

(10)  Excludes 9,969.9999 shares held by Leucadia Investors, Inc., of which
      Joseph S. Steinberg is President and a director.

                                     -71-
<PAGE>


     Stockholder Agreement. Each holder of outstanding shares of Common Stock
of the Company is a party to a Stockholder Agreement, dated as of June 1, 1998
(the "Stockholder Agreement"), by and among the Company and such stockholders.
The Stockholder Agreement subjects the transfer of shares of Common Stock by
such stockholders to a right of first refusal in favor of the Company and
"co-sale" rights in favor of the other stockholders, subject to certain
restrictions. Under certain circumstances, stockholders holding 60% or more of
the outstanding shares of Common Stock, on a fully diluted basis, have certain
rights to require the other stockholders to sell their shares of Common Stock.

Item 13. CERTAIN TRANSACTIONS

Employment Agreements; Stock Transactions. On February 25, 1988, the Company
entered into an employment agreement with Thomas H. Quinn, pursuant to which
Mr. Quinn became the President and Chief Operating Officer of the Company,
effective January 1, 1988. See "Item 11-Employment Agreement".

Fannie May. In 1995, the Company acquired 151.28 shares of common stock of
Fannie May (representing 15.1% of the outstanding common stock of Fannie
May on a fully-diluted basis) for $0.2 million. These shares of common
stock were purchased from the John W. Jordan II Revocable Trust, which
purchased them in July 1995 for $0.2 million. Fannie May's Chief Executive
Officer is Mr. Quinn, and its stockholders include Messrs. Jordan, Quinn,
Zalaznick, and Boucher, who are directors and stockholders of the Company,
as well as other partners, principals, and associates of The Jordan Company
who are also stockholders of the Company. Fannie May, which is also known
as "Fannie May Candies" is a manufacturer and marketer of kitchen-fresh,
high-end boxed chocolates and other confectionary items through its
company-owned retail stores and third-party retail outlets. Fannie May also
sells through quantity order, mail order, and fund raising programs in the
United States and Canada. Its products are marketed under the "Fannie May",
and "Fanny Farmer", "Sweet Factory" and "Laura Secord" brand names.

JIR. The Company has $15.4 million of unsecured advances due from JIR
Broadcast, Inc. and JIR Paging, Inc. Each of these company's Chief
Executive Officer is Mr. Quinn and its stockholders include Messrs. Jordan,
Quinn, Zalaznick and Boucher, who are the Company's directors and
stockholders, as well as other, partners, principals and associates of The
Jordan Company who are also the Company's stockholders. These companies are
engaged in the development of businesses in Russia, including the broadcast
and paging sectors.

JZ International, LLC. In November 1998, the Company, through Kinetek,
invested $5.6 million in Class A Preferred Units and $1.7 million in Class
B Preferred Units of JZ International, LLC. In April 2000, the Company,
through Kinetek, invested an additional $5.0 million in Class A Preferred
Units of JZ International, LLC. This increases the Company's investment in
JZ International to $12.3 million at December 31, 2001. JZ International's
Chief Executive Officer is David W. Zalaznick, and its members include
Messrs. Jordan, Quinn, Zalaznick and Boucher, who are the Company's
directors and stockholders, as well as other members. JZ International is
focused on making European and other international investments.

ISMG. As of December 31, 2001, the Company has made unsecured advances of
approximately $11.3 million to Internet Services Management Group ("ISMG").
ISMG is an Internet services provider ("ISP") for more than 100,000
customers. The Company also owns $1.0 million of ISMG's 5% mandatorily
redeemable cumulative preferred stock and 5% of the common stock of ISMG,
with the remainder owned by the Company's stockholders and management of
ISMG.


                                     -72-
<PAGE>

Certain Other Transactions.  See notes 4, 5, 8, and 15 to the Consolidated
Financial Statements for additional information regarding certain
transactions involving the Company and other companies and entities in which
the Company's stockholders, directors, officers and affiliates have an
interest.

Legal Counsel. Mr. G. Robert Fisher, a director of, and the general counsel
and secretary to, the Company, is also a partner of Sonnenschein, Nath &
Rosenthal. Mr. Fisher and his law firm have represented the Company and The
Jordan Company in the past, and expect to continue representing them in the
future. In 2001, Sonnenschein, Nath & Rosenthal were paid approximately $1.8
million in fees and expenses by the Company.

Directors and Officers Indemnification. The Company has entered into
indemnification agreements with each member of the Board of Directors
whereby the Company has agreed, subject to certain exceptions, to indemnify
and hold harmless each director from liabilities incurred as a result of
such persons status as a director of the Company. See "Item 10-Directors
and Executive Officers of the Company".

Future Arrangements. The Company has adopted a policy that future
transactions between the Company and its officers, directors and other
affiliates (including the Kinetek Subsidiaries) must (i) be approved by a
majority of the members of the Board of Directors and by a majority of the
disinterested members of the Board of Directors and (ii) be on terms no
less favorable to the Company than could be obtained from unaffiliated
third-parties.

Service Agreements.  Certain shareholders of TJC Management Corporation ("TJC")
are also shareholders of the Company.  On July 25, 1997, a previous agreement
with TJC was amended and restated.  Effective January 1, 2000, the Company pays
TJC a $0.3 million quarterly fee for management services.  The Company accrued
fees to TJC of $1.0 million, $1.0 million, and $3.0 million in 2001, 2000, and
1999, respectively, related to this agreement.

On July 25, 1997, a previous agreement with TJC was amended and restated.
Under the new agreement, the Company pays TJC an investment banking fee of
up to 1%, based on the aggregate consideration paid, for its assistance in
acquisitions undertaken by the Company or its subsidiaries, and a financial
consulting fee not to exceed 0.5% of the aggregate debt and equity
financing that is arranged by TJC, plus the reimbursement of out-of-pocket
and other expenses. The Company paid $0, $0, and $1.2 million in 2001,
2000, and 1999, respectively, to TJC for their assistance in relation to
acquisition and refinancing activities. At December 31, 2001, $8.1 million
was accrued related to this agreement.




                                     -73-
<PAGE>


                                  Part IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
         --------------------------------------------------------------

(a)      Documents filed as part of this report:

(1)      Financial Statements

         Reference is made to the Index to Consolidated Financial
         Statements appearing at Item 8, which is incorporated herein by
         reference.

(2)      Financial Statement Schedule

         The following financial statement schedule for the years ended
         December 31, 2001, 2000, and 1999 is submitted herewith:


         Item                                                     Page Number
         ----                                                     -----------
         Schedule II - Valuation and qualifying accounts              77


         All other schedules for which provision is made in the applicable
         accounting regulations of the Securities and Exchange Commission
         are not required under the related instructions, are not
         applicable and therefore have been omitted, or the information has
         been included in the consolidated financial statements.

(3)      Exhibits

         An index to the exhibits required to be listed under this Item
         14(a) (3) follows the "Signatures" section hereof and is
         incorporated herein by reference.

(a)      Reports on Form 8-K


         8-K filed on August 16, 2001 regarding Loan and Security Agreement
         with Congress Financial and First Union National Bank.



                                     -74-
<PAGE>



                                 SIGNATURES

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



                                          JORDAN INDUSTRIES, INC.


                                        By   /s/ John W. Jordan II
                                            -----------------------------------
                                             John W. Jordan II
Dated:    April 3, 2002                      Chief Executive Officer


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



                                        By   /s/ John W. Jordan II
                                             -----------------------------------
                                              John W. Jordan, II
Dated:    April 3, 2002                       Chairman of the Board of
                                              Directors and Chief
                                              Executive Officer








                                        By   /s/ Thomas H. Quinn
                                             -----------------------------------
                                             Thomas H. Quinn
Dated:     April 3, 2002                     Director, President and
                                             Chief Operating Officer









                                        By   /s/ Jonathan F. Boucher
                                             -----------------------------------
                                             Jonathan F. Boucher
Dated:            April 3, 2002              Director, Vice President,
                                             and Assistant Secretary



                                     -75-
<PAGE>







                                        By   /s/ G. Robert Fisher
                                             -----------------------------------
                                              G. Robert Fisher
Dated:            April 3, 2002               Director, General Counsel
                                              and Secretary









                                        By   /s/ David W. Zalaznick
                                             -----------------------------------
                                             David W. Zalaznick
Dated:            April 3, 2002              Director









                                        By   /s/ Joseph S. Steinberg
                                             -----------------------------------
                                             Joseph S. Steinberg
Dated:            April 3, 2002              Director









                                        By   /s/ Thomas C. Spielberger
                                        ----------------------------------------
                                           Thomas C. Spielberger
Dated:            April 3, 2002            Sr. Vice President,
                                           Finance and Accounting
                                          (Principal Financial Officer)







                                     -76-
<PAGE>



                                                                 Schedule II

                            JORDAN INDUSTRIES, INC.
                       VALUATION AND QUALIFYING ACCOUNTS
                            (dollars in thousands)
<TABLE>
<CAPTION>


                                                                           Uncollectible
                                                         Additions        balances written                Balance at
                                       Balance at     charged to cost        off net of                     end of
                                      beginning of      and expenses         recoveries       Other        period
                                          period
<S>                                     <C>              <C>                  <C>             <C>         <C>

December 31, 1999:


Allowance for doubtful accounts           3,256            1,923               (2,043)         (327)       2,809
Valuation allowance for deferred
   tax assets
                                         12,474              636                    -            -        13,110

December 31, 2000:


Allowance for doubtful accounts
                                          2,809            2,849               (1,178)          (96)       4,384
Valuation allowance for deferred
   tax assets
                                         13,110              495                    -             -       13,605

December 31, 2001:

Allowance for doubtful accounts
                                          4,384            2,720               (2,419)         (188)       4,497
Valuation allowance for deferred
   tax assets
                                         13,605           11,410                    -              -      25,015



</TABLE>



                                     -77-
<PAGE>


                               EXHIBIT INDEX


1(a)8   -- Purchase Agreement, dated March 22, 1999, by and among Jordan
           Industries, Inc., Donaldson, Lufkin & Jenrette Securities
           Corporation, Jeffries & Company, Inc. and BancBoston Robertson
           Stephens Inc.*
1(b)7   -- Purchase Agreement,  dated July 21, 1997, by and among Jordan
           Industries,  Inc., Jeffries & Company, Inc. and Donaldson, Lufkin &
           Jenrette Securities Corporation.
1(c)7   -- Purchase and Sale Agreement,  dated as of April 2, 1997, by and
           between Jordan  Industries,  Inc. and the  holders of 11 3/4% Senior
           Subordinated Discount Debentures due 2005 parties thereto.
1(d)7   -- Purchase and Sale Agreement,  dated as of April 2, 1997, by and
           between Jordan  Industries,  Inc. and the holders of 11 3/4%
           Senior Subordinated Discount Debentures due 2005 parties thereto.
1(e)7   -- Exchange Agreement, dated as of April 2, 1997, by and between Jordan
           Industries,  Inc. and the holders of 11 3/4% Senior Subordinated
           Discount Debentures due 2005 parties thereto.
2(a)4   -- Agreement and Plan of Merger between Thos. D. Murphy Company and
           Shaw-Barton, Inc.
2(b)5  --  Asset Purchase  Agreement between Alma Piston  Company and Alma
           Products  Holdings,  Inc.  dated as of February 26, 1999.
3(a)1  --  Articles of Incorporation of the Registrant.
3(b)1  --  By-Laws of the Registrant.
4(a)8  --  Series C and Series D 10 3/8% Senior Notes Indenture,  dated
           March 22, 1999,  between Jordan  Industries, Inc. and U.S. Bank
           Trust National Association.
4(b)7  --  Series A and Series B 10 3/8% Senior Notes  Indenture,  dated
           July 25, 1997,  between Jordan  Industries,  Inc. and First Trust
           National Association, as Trustee.
4(c)8  --  First Supplemental Indenture, dated March 9, 1999, between Jordan
           Industries,  Inc. and U.S. Bank & Trust Company f/k/a First Trust
           National Association,  as Trustee, to the 10 3/8% Senior Notes
           Indenture, dated July 25, 1997.
4(d)7  --  Series A and Series B 11 3/4% Senior Subordinated Discount
           Debentures  Indenture,  dated April 2, 1997, between Jordan
           Industries, Inc. and First Trust National Association, as Trustee.
4(e)7  --  First Supplemental Indenture, dated as of July 25, 1997, between
           Jordan Industries,  Inc. and First Trust National  Association,
           as Trustee,  to the 11 3/4% Senior Subordinated  Discount
           Debentures  Indenture, dated as of April 2, 1997.
4(f)8  --  Second  Supplemental  Indenture,  dated as of March 9, 1999,
           between Jordan  Industries,  Inc. and First Trust National
           Association,  as  Trustee,  to the  11  3/4%  Senior  Subordinated
           Discount  Debentures Indenture, dated as of April 2, 1997.
4(g)8  --  Global Series D Senior Note.
4(h)7  --  Global Series B Senior Note.
4(i)7  --  Global Series B Senior Subordinated Discount Debenture.
10(a)1 --  Stockholders Agreement, dated as of June 1, 1988, by and among the
           Registrant's holders of Common Stock.
10(b)1 --  Employment Agreement, dated as of February 25, 1988, between the
           Registrant and Thomas H. Quinn.
10(c)1 --  Restricted Stock Agreement, dated February 25, 1988, between the
           Registrant and Jonathan F. Boucher.
10(d)1 --  Restricted Stock Agreement, dated February 25, 1988, between the
           Registrant and Jack R. Lowden.
10(e)1 --  Restricted Stock Agreement, dated February 25, 1988, between the
           Registrant and Thomas H. Quinn.
10(f)1 --  Stock Purchase Agreement, dated June 1, 1988, between Leucadia
           Investors, Inc. and John W. Jordan, II.
10(g)1 --  Zero Coupon Note, dated June 1, 1988, issued by John W. Jordan, II
           to Leucadia Investors, Inc.
10(h)1 --  Pledge, Security and Assignment Agreement, dated June 1, 1988 by
           John W. Jordan, II.
10(i)* --  Non-Negotiable  Subordinated  Note,  dated as of  January  3,  1994,
           issued by  Valmark  (f/k/a  Valmark Holdings, Inc.) in the initial
           principal amount of $4,000,000.

                                     -78-
<PAGE>

10(j)*   --  Non-Negotiable  Subordinated Note, dated as of May 20, 1994,
             issued by Pamco (f/k/a Pamco Holdings, Inc.) in the initial
             principal amount of $2,116,000.
10(k)2*  --  Tax Sharing  Agreement, dated as of June 29, 1994, among the
             Company  and the  subsidiaries  signatory  thereto.
10(l)7,2 --  Properties  Services  Agreement, dated as of July 25, 1997,
             between  Jordan  Industries,  Inc. and its
             subsidiaries.
10(m)7,2 --  Transition Agreement, dated as of July 25, 1997, between Jordan
             Industries, Inc. and Motors & Gears, Inc.
10(n)7   --  New TJC Management  Consulting  Agreement,  dated as of
             July 25, 1997,  between TJC Management  Corp. and Jordan
             Industries, Inc.
10(o)7   --  Termination Agreement, dated as of July 25, 1997, between Jordan
             Industries, Inc. and its subsidiaries.
10(p)7   --  Form of  Indemnification  Agreement between Jordan Industries,
             Inc. and its subsidiaries and their directors.

10(q)*   --  Non-Negotiable  Subordinated  Note, dated as of February 11, 1998,
             issued by Deflecto  (f/k/a  Deflecto
             Holdings, Inc.) in the initial principal amount of $5,000,000.
10(r)*   --  Non-Negotiable  Subordinated  Note,  dated as of  February  27,
             1998,  issued  by Rolite  (f/k/a  Rolite Holdings, Inc.) in the
             initial principal amount of $900,000.
10(s)*   --  Non-Negotiable  Subordinated  Note,  dated as of April 14, 1999,
             issued by Pamco (f/k/a Pamco  Holdings, Inc.) in the initial
             principal amount of $1,884,000.
10(t)11* --  Non-Negotiable  Subordinated  Notes, dated as of March 13, 2000,
             issued by Online (f/k/a Online Environs Holdings, Inc.) in the
             initial principal amount of $391,500.
10(u)*   --  Non-Negotiable Subordinated Note, dated as of June 2, 2000,
             issued by Instachange (f/k/a IDL Holdings Limited) in the initial
             principal amount of $3,714,285 (Canadian Dollars).
10(v)*   --  Non-Negotiable  Subordinated  Note,  dated as of  October  23,
             2000, issued by Flavor Source  (f/k/a Flavorsource Holdings, Inc.)
             in the initial principal amount of $1,000,000.
10(w)*   --  Non-Negotiable  Junior  Subordinated  Note, dated as of October
             23, 2000,  issued by Flavor Source (f/k/a Flavorsource Holdings,
             Inc.) in the initial principal amount of $250,000.
10(x)2*  --  Management Consulting Agreement, dated as of August 10, 2001,
             among JII,  Inc. and the subsidiaries signatory thereto.
10(y)2*  --  Transaction Advisory Agreement, dated as of August 10, 2001,
             among JII,  Inc.  and the  subsidiaries signatory thereto.
10(z)9   --  Loan and Security Agreement, dated as of August 16,
             2001, among JII, Inc. as borrower, the Company as parent
             guarantor, the subsidiaries signatory thereto as
             subsidiary guarantors, Congress Financial Corporation
             (Central) as agent and First Union Bank as lender.
10(aa)2* --  Intercompany Loan Agreement,  dated as of August 16, 2001,
             among JII, Inc. and the subsidiaries signatory  thereto, and
             accompanying Demand Notes.
10(bb)10 --  Loan and Security Agreement, dated as of December 18, 2001,
             among Kinetek Industries,  Inc. as borrower,
             Kinetek,  Inc. as parent  guarantor,  the  subsidiaries  signatory
             thereto as  borrowers  or  subsidiary guarantors and Fleet Capital
             Corporation as agent.
10(cc)10 --  Management  Consulting  Agreement,  dated as of December  14, 2001,
             among the Company,  Motors and Gears Holdings, Inc. and the
             subsidiaries signatory thereto.
10(dd)10 --  Transaction Advisory  Agreement, dated as of December  14, 2001,
             among the  Company,  Motors and Gears Holdings, Inc. and the
             subsidiaries signatory thereto.
10(ee)10 --  Properties  Services  Agreement,  dated as of December 14, 2001,
             among JI Properties,  Inc.,  Motors and Gears Holdings, Inc. and
             the subsidiaries signatory thereto.
10(ff)10 --  Agreement to Join in the Filing of Consolidated Income Tax
             Returns,  dated as of December 14, 2001, among
             the Company, Motors and Gears Holdings, Inc. and the subsidiaries
             signatory thereto.
10(gg)10 --  Merkle-Korff Industries,  Inc. Non-Negotiable Subordinated  Note
             in the principal  aggregate amount of $5,000,000 payable to
             John D. Simms Revocable Trust Under Agreement.
10(hh)10 --  Electrical Design and Control Company, Inc.  Non-Negotiable
             Subordinated Note in the principal aggregate amount of $1,333,333
             payable to Tina Levire.

                                     -79-
<PAGE>

10(ii)10 --  Electrical Design and Control Company, Inc. Non-Negotiable
             Subordinated Note in the principal aggregate amount of $1,333,333
             payable to Marta Monson.
10(jj)10 --  Electrical Design and Control Company, Inc. Non-Negotiable
             Subordinated Note in the principal aggregate amount of $1,333,334
             payable to Eric Monson.
12*      --  Statements re. Computation of Ratios.
21*      --  Subsidiaries of the Registrant.






                                     -80-
<PAGE>


1.    Incorporated by reference to the Company's Registration Statement on
      Form S-1 (no. 33-24317)

2     The Company entered into Inter-company Demand Notes, Inter-company
      Management Consulting Agreements, Inter-company Transaction Advisory
      Agreements, Inter-company Properties Services Agreements and
      Inter-company Tax Sharing Agreements with each subsidiary  not a
      signatory to the agreements incorporated by reference in this report,
      which are identical in all material respects with the notes and
      agreements incorporated by reference in this Report. Copies of such
      additional notes and agreements have therefore not been included as
      exhibits to this filing, in accordance with Instruction 2 to Item
      601 of Regulation S-K.
3     Incorporated by reference to the Company's 1988 Form 10-K.
4     Incorporated by reference to the Company's 1989 First Quarter Form 10-Q.
5     Incorporated by reference to the Company's Form 8-K filed April 1, 1999.
6     Incorporated by reference to the Company's 1990 Third Quarter Form 10-Q.
7     Incorporated  by  reference  to the  Company's  Registration  Statement
      on Form S-4 (No.
      333-34529) filed September 9, 1997.
8     Incorporated  by  reference  to the  Company's  Registration  Statement
      on Form S-4 (No.
      333-77667) filed May 4, 1999.
9     Incorporated by reference to the Company's Form 8-K filed August 31, 2001.
10    Incorporated by reference to the 2001 Form 10-K of Kinetek, Inc. filed
      March 28, 2002.
11    The  referenced  note is one of a  series  of  twenty-four
      Non-Negotiable  Subordinated
      Notes issued by Online in the aggregated initial
      principal amount of $1,500,000. Each of the
      Non-Negotiable Subordinated Notes is identical in all
      material respects with the referenced note. Copies of
      such additional Non-Negotiable Subordinated Notes have
      therefore not been included as exhibits to this filing,
      in accordance with Instruction 2 to Item 601 of
      Regulation S-K.

*     Filed herewith.








                                     -81-