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, 2002     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
Indicate 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 ___


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

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

         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
March 31, 2003:98,501.0004.
<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 22 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., a leading manufacturer of electric
motors, gears, and motion control systems.

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, 2002.



                                      2

<PAGE>


                             Jordan Industries, Inc.
                         $720.0 Million of Net Sales (1)


SPECIALTY PRINTING AND LABELING                    -   JII Promotions
$104.6 Million of Net Sales                        -   Pamco
                                                   -   Valmark
                                                   -   Seaboard

CONSUMER AND INDUSTRIAL PRODUCTS                   -   Cape Craftsmen
$69.0 Million of Net Sales                         -   Welcome Home
                                                   -   Cho-Pat
                                                   -   GramTel

JORDAN SPECIALTY PLASTICS (2)                      -   Beemak
$108.0 Million of Net Sales                        -   Sate-Lite
                                                   -   Deflecto

JORDAN AUTO AFTERMARKET (2)                        -   Dacco
$155.7 Million of Net Sales                        -   Alma
                                                   -   Atco

Kinetek                                            -   Imperial
$282.7 Million of Net Sales                        -   Gear
                                                   -   Merkle-Korff
                                                   -   FIR
                                                   -   ED&C
                                                   -   Motion Control
                                                   -   Advanced D.C.
                                                   -   DeSheng
---------------------------

     (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. See note 5 to the financial statements.




                                      3
<PAGE>

The Company's operations were conducted through the following business units as
of December 31, 2002:

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, 2002, the Specialty
Printing and Labeling group generated net sales of $104.6 million. Each of the
Specialty Printing and Labeling subsidiaries is discussed below:

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 2002 were $52.3 million. Approximately 61%
of JII Promotions' 2002 net sales were derived from distributing a broad variety
of corporate recognition, 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 25% of JII Promotions' 2002 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 14% of 2002 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 1,000 suppliers. Calendars and specialty advertising products are sold
through a 575 person sales force, most of whom 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
lines include graphic panel overlays, membrane switch control panels, and
adhesive-backed labels. Approximately 40% of Valmark's 2002 net sales of $13.7

                                      4
<PAGE>

million were derived from the sales of membrane switch control panels, 42% from
graphic panel overlays, and 18% from labels and other products.

Valmark sells to four primary markets: personal computers, general electronics,
turn-key services, and medical instrumentation. During 2002, Valmark's specialty
screen print products were subject to increased foreign price competition,
primarily in the personal computers and telecommunications markets. Valmark does
operate relatively free of foreign competition in its other product markets, due
primarily to the high level of communication and long history with its
customers, the relatively short time frame required to produce orders of
non-membrane switch products, and the significant engineering and product
development investments required to secure and manufacture orders for its
membrane switch control panel customers.

Valmark is able to provide OEMs 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 2002. The remaining 7% of sales were
purchased printed products and included business cards and stationery.

Pamco's products are marketed by a team of eight sales representatives who
procure new accounts and service existing accounts. Existing accounts are
serviced by eight customer service representatives and two internal salespeople.
Pamco's customers represent several different industries with the five largest
customers accounting for approximately 18% of 2002 net sales of $18.3 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 38% of Seaboard's 2002 net sales of $20.3
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.

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.


                                      5
<PAGE>

Consumer and Industrial Products

Consumer and Industrial Products serves many product segments. It manufactures
and imports gift items; is a specialty retailer of gifts and decorative home
furnishings; manufactures orthopedic supports and pain reducing medical devices;
and provides data storage services at a Secure Network Access Center. For the
year ended December 31, 2002, the Consumer and Industrial Products subsidiaries
generated combined net sales of $69.0 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 an importer of gifts, wooden furniture, framed art and other
accessories. Cape Craftsmen is located in North Carolina and imports from the
Far East. Cape Craftsmen sells its products through three in-house salespeople
and 200 independent sales representatives. Net sales in 2002 were $12.7 million,
excluding sales to Welcome Home, a related party, of $17.2 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
118 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 $51.9 million in the year ended December
31, 2002.

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 20
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 Cho-Pat's Original Knee
Strap, designed to reduce the pain from patellar tendonitis. Cho-Pat
manufactures most of its products in-house. Cho-Pat sells its products to
medical professionals, all branches of the military, college, high school and
professional team coaches and trainers, medical product distributors and
wholesalers, retail drug and sporting goods stores, and direct to individuals
domestically and internationally. Cho-Pat had net sales of $1.4 million in 2002.

GramTel. GramTel Communications, Inc. was started by the Company in December
2000. GramTel is a data storage and information technology disaster recovery
company. It owns and operates a state-of-the-art technology center that houses


                                      6
<PAGE>

business-critical computer systems, applications, and data. Their facility
provides alternate sites for companies to continue operations in the event of a
disaster or emergency event. GramTel leverages its infrastructure and technical
staff to support business's data storage needs at a fraction of the cost of
performing these tasks in-house. It provides the facilities, technical personnel
and network connectivity to keep business's critical operations available 24
hours a day. GramTel had net sales of $1.2 million in the year ended December
31, 2002.

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, 2002,
the Jordan Specialty Plastics subsidiaries generated combined net sales of
$108.0 million. Each of the Jordan Specialty Plastics subsidiaries is discussed
below:

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 3,000 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
2002 were $5.5 million.

Beemak's products are both injection-molded and custom fabricated. 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, 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.

The display holder industry is very fragmented, consisting of a few other known
holder and display firms and regionally-based sheet fabrication shops.
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 accounted for approximately 35% of
Sate-Lite's net sales in 2002. Sales of emergency warning triangles and
specialty reflectors and lenses to commercial truck customers accounted for
approximately 21% of net sales in 2002. Sales of colorants to the thermoplastics
industry accounted for approximately 24% of net sales in 2002. Sales of storage

                                      7
<PAGE>

containers accounted for approximately 11% of net sales. The remaining 9% of
2002 net sales were derived from other miscellaneous plastic injection-molded
products. Sate-Lite's net sales for 2002 were $14.0 million, excluding sales to
Deflecto, a related party, of $0.9 million.

Sate-Lite's bicycle and truck/auto products are sold directly to a number of
OEMs. The three largest OEM customers are Tandem (China), Truck Light and Ideal,
which account for a total of approximately 15% of Sate-Lite's net sales in 2002.
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 2002,
Sate-Lite's ten largest customers accounted for approximately 41% of net sales.

Sate-Lite's bicycle products are marketed to bicycle OEMs 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 30% of its total 2002 net sales. 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, 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 colorants market.

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 65% of Deflecto's net
sales in 2002, 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 35% of net sales in 2002 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 2002 were $88.5 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

                                      8
<PAGE>

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.

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 OEMs. For the year
ended December 31, 2002, the Jordan Auto Aftermarket subsidiaries generated
combined net sales of $155.7 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, transmission
repair shops and mechanics. Dacco's independent sales representatives sell
nationwide to independent warehouse distributors and transmission repair shops.
Dacco also operates 42 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 2002, no single customer accounted for more than 3% of
Dacco's net sales. Net sales were $62.7 million during the year ended December
31, 2002.

The domestic market for Dacco's hard products is fragmented and Dacco's
competitors consist of a number of small regional and local re-builders, as well
as several larger national suppliers. Dacco believes that it competes strongly
against these re-builders by offering a broader product line, quality products,

                                      9
<PAGE>

and competitive 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 at least one of its competitors is larger than Dacco in this
area. Dacco competes in the soft products market on the basis of its competitive
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 OEMs, as well as numerous direct aftermarket customers.
Torque converters and clutch and disc assemblies are also referred to as drive
trains. Net sales were $78.3 million during the year ended December 31, 2002.

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. Alma also
supplies air conditioning compressors to retailers, independent warehouse
distributors, and air conditioning repair specialists. 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.

Alma competes based on quality, price, and customer service. The market for OE
service products is very demanding, requiring stringent quality standards,
therefore providing some barriers to entry to smaller, less capable competitors.
Through the years, Alma has been recognized by its customers for its high levels
of service and quality.

Atco. Atco Products, Inc. was founded in 1968 and was acquired by the Company in
July 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 their ISO-9000 certified plant in Ennis,

                                      10
<PAGE>

Texas. Atco has led the way with innovations such as the patented portable
hand-operated model 3700 crimping tool. Net sales were $14.7 million during the
year ended December 31, 2002.

Kinetek

Kinetek is a 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, Advanced D.C. and De Sheng;
and electronic motion control systems ("controls") which includes the
subsidiaries Electrical Design & Control and Motion Control Engineering. For the
year ended December 31, 2002 Kinetek generated net sales of $282.7 million.

Kinetek has established itself as a reliable niche manufacturer of high-quality,
economical, custom electric motors, gearmotors, gears and electronic motion
control systems used in a wide variety of applications including vending
machines, refrigerator ice dispensers, commercial dishwashers, commercial floor
care equipment, golf carts, lift trucks, automated material handling systems and
elevators. Kinetek's products are custom designed to meet specific application
requirements. Less than 5% of Kinetek's products are sold as stock products.

Kinetek offers a wide variety of options to provide greater flexibility in its
custom designs. These options include thermal protectors, special mounting
brackets, custom leads and terminals, single or double shaft extensions, brakes,
cooling fans, special heavy gearing, custom shaft machining and custom software
solutions. Kinetek also provides value-added assembly work, incorporating some
of the above options into its final motor and control products. All of the
custom-tailored motors, gearmotors and control systems are designed for long
life, quiet operation, and superior performance.

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

                                      11
<PAGE>

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 OEMs 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 Kinetek's motion control products
control elevators and automated conveyor systems used in automotive
manufacturing.

Backlog

As of December 31, 2002 the Company had a backlog of approximately $79.1
million. The backlog is primarily due to motor sales at Merkle-Korff, a Kinetek
subsidiary, printing and graphic component sales at Valmark, folding boxes at
Seaboard and air conditioning assemblies and parts at Atco. Management believes
that the Company will ship substantially all of its backlog during 2003.

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.

                                      12
<PAGE>


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, 2002, the Company and its subsidiaries employed approximately
7,200 people. Approximately 2,400 of these employees were members of various
labor unions. The Company believes that its subsidiaries' relations with their
respective employees are good.

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

                                      13
<PAGE>

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 held off approving the plan until the former owner delineates the horizontal
and vertical extent of contamination to the agency's satisfaction. In November
2002, the former owner submitted a revised sampling plan and is waiting for DEQ
approval to proceed. The second property is contaminated with petroleum
constituents and chlorinated solvents and the former owner, under the
supervision of DEQ is investigating the scope and extent of the contamination.
The former owner also submitted a remedial action plan to DEQ in November 2002.
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.

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

                                      14
<PAGE>

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.

In 1990 Dacco removed two underground storage tanks ("UST") from its Cookeville,
Tennessee property which had stored waste transmission oil. Groundwater
monitoring wells (5) revealed limited levels of petroleum contaminants. Until
May 2002, Dacco, under the direction of DEC, had periodically monitored for the
presence of petroleum in the wells. The costs of the investigation and
monitoring had been relatively low and had been reimbursed by the DEC
Underground Storage Tank Fund ("UST Fund"). In May 2002, because of the
lingering presence of some petroleum in one of the wells, DEC directed the
installation of four additional groundwater monitoring wells in the vicinity of
the former USTs. In June, a substantial quantity of petroleum product was found
in one of the wells. In July 2002, with DEC's permission, Dacco installed a
petroleum recovery system in the well and, at DEC's direction, Dacco installed
an additional ten groundwater monitoring wells. All monitoring wells were
sampled and analyzed in September and December 2002. This sampling revealed that
the USTs removed in 1990 were not the likely source of the petroleum product. In
February 2003, DEC, relying on the September and December 2002 sampling results,
reassigned the site from the list of UST Fund eligible sites to the Solid Waste
Management Program. Dacco has instructed its environmental consultants to define
the scope and extent of the petroleum product plume in order to determine
whether additional product recovery is required and, if so, to prepare a
proposal for the DEC. DEC has directed Dacco to submit a proposed monitoring and
product recovery plan by May 1, 2003. Dacco has filed claims for reimbursement
of approximately $110 for the costs it incurred for the investigation of the
site prior to reassignment to the Solid Waste Program. To date, DEC has not paid
the claims. Dacco will bear full responsibility for payment of future costs for
the site investigation and product recovery.


                                      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, 2002, and the location, the primary use, the capacity,
and ownership status thereof, are set forth in the table below.

                                                             SQUARE    OWNED/
COMPANY LOCATION         USE                                  FEET     LEASED
----------------         ---                                 ------    ------

Advanced DC
 Syracuse, NY            Manufacturing/Administration       49,600       Owned
 Syracuse, NY            Manufacturing                      45,600       Leased
 Carrollton, TX          Warehouse                          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
  Athens, TX              Manufacturing                      67,000      Leased

Atco
  Ferris, TX              Manufacturing                      93,100       Owned
  Ennis, TX               Manufacturing                      24,100       Owned


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
  Cookeville, TN          Administration                      7,000      Leased

Deflecto
  Indianapolis, IN        Manufacturing/Administration      182,600       Owned
  Fishers, IN             Distribution                      134,400      Leased
  St. Catherines, Ont.    Manufacturing/Administration       53,000       Owned
  St. Catherines, Ont.    Assembly                           80,000      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
  Houston, TX             Subleased                          21,000      Leased
  Jefferson, GA           Manufacturing                      30,000      Leased
  Dover, OH               Assembly                           20,000      Leased

De Sheng
  Shunde, Guangdong       Manufacturing/Administration      926,000       Owned


                                      16
<PAGE>

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/            33,000      Leased
                          Manufacturing
Gear
  Grand Rapids, MI        Manufacturing/Administration       45,000       Owned

GramTel
  South Bend, IN          Sales/Administration/Other         19,000       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
  Perry, OH               Research & Development              5,000      Leased

JII Promotions
  Columbus, OH            Sales                              11,000      Leased
  Coshocton, OH           Manufacturing/Administration      218,000       Owned
  Red Oak, IA             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      108,300      Leased
  New York, NY            Sales                                 600      Leased

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

Sate-Lite
  Niles, IL               Manufacturing/Administration       70,650      Leased
  Shunde, Guangdong       Manufacturing/Administration/     142,000      Leased
                          Assembly
Seaboard
  Fitchburg, MA           Manufacturing/Administration      260,000       Owned
  Miami, FL               Manufacturing/Administration       68,100      Leased
  Carlstadt, NJ           Manufacturing                      49,700      Leased

Valmark
  Livermore, CA           Manufacturing/Administration       74,200      Leased

Welcome Home
  Wilmington, NC          Administration/Warehouse           29,500      Leased



                                      17
<PAGE>

Dacco also owns or leases 42 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, Wisconsin and Kentucky.

Welcome Home leases 118 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 and New York, 5 stores in
North Carolina, Georgia and Missouri, and 4 stores in Pennsylvania, Oregon 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 2003, 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, 2002.

                                      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, 2002, there were 21 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 Indentures, dated as of
        July 25, 1997 and March 22, 1999, by and between the Company and U.S.
        Bank Trust 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, 2002. The financial data has 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)
                                          ---------------------------------------------------------------
                                             2002          2001         2000        1999        1998
                                             ----          ----         ----        ----        ----
<S>                                        <C>           <C>         <C>         <C>          <C>

Operating data: (1)
Net sales........................          $720,032      $722,823    $807,296    $766,655     $633,579
Cost of sales, excluding                    460,312       460,004     513,755     497,223      406,970
                                            -------       -------     -------     -------      -------
 depreciation....................
Gross profit, excluding                     259,720       262,819     293,541     269,432      226,609
 depreciation....................
Selling, general and                        179,189       177,291     173,370     153,582      131,055
 administrative expense,
 excluding depreciation..........
Operating income.................            46,819        28,718      55,013      69,245       57,977
Interest expense.................            89,372        91,344      92,009      87,058       70,184
Interest income..................            (1,249)         (791)     (1,464)     (1,083)      (1,656)
Loss from continuing                        (35,984)      (64,001)    (38,884)     (6,603)     (10,912)
 operations before income
 taxes and minority interest(2).
Loss from continuing                        (29,870)      (58,272)    (36,046)     (5,731)     (15,081)
 operations......................

Balance sheet data (at end
  of period):
Cash and cash equivalents........            20,109        26,050      21,713      19,973       14,967
Working capital..................           115,739       159,127     154,599     161,570      144,474
Total assets.....................           709,244       829,396     887,501   1,159,496      955,405
Long-term debt (less                        715,516       819,406     787,694     837,712    1,054,327
  current portion)...............
Net capital deficiency (3).......          (199,806)     (139,056)    (82,010)   (238,835)    (208,144)
-----------------------------------------
</TABLE>


(1)  The Company has made several acquisitions and divestitures 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 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 3 to the financial statements) and a loss on the sale of
     a subsidiary of $2,798 (see note 14 to the financial statements). Loss from
     continuing operations before income taxes and minority interest in 2002
     includes a gain on the liquidation of a subsidiary of $1,888 (see note 15
     to the financial statements), a gain on the sale of a facility of $1,431,
     and the write-down of certain assets held for sale of $1,800.


(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, 2002, 2001, and 2000. 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,
                                                                              -----------------------
                                                                       2002              2001              2000
                                                                       ----              ----              ----
                                                                               (Dollars in thousands)
<S>                                                                       <C>              <C>              <C>

    Net Sales:
    Specialty Printing & Labeling                                         $104,594         $112,123          $122,691
    Jordan Specialty Plastics                                              108,043           98,733            98,353
    Jordan Auto Aftermarket                                                155,754          147,047           141,213
    Kinetek                                                                282,666          287,362           316,666
    Consumer and Industrial Products                                        68,975           77,558           128,373
                                                                          --------         --------          --------
       Total                                                              $720,032         $722,823          $807,296
                                                                          ========         ========          ========

    Operating Income (Loss) (1):
    Specialty Printing & Labeling                                           $3,707            $(984)           $7,210
    Jordan Specialty Plastics                                                7,501            2,057             1,928
    Jordan Auto Aftermarket                                                 17,488           17,194            20,449
    Kinetek                                                                 38,444           37,272            36,497
    Consumer and Industrial Products                                         1,037           (3,485)            3,071
                                                                           -------          --------          --------
       Total                                                               $68,177          $52,054           $69,155
                                                                           =======          ========          ========

    Operating Margin (2):
    Specialty Printing & Labeling                                             3.5%             (0.9%)             5.9%
    Jordan Specialty Plastics                                                 6.9%              2.1%              2.0%
    Jordan Auto Aftermarket                                                  11.2%             11.7%             14.5%
    Kinetek                                                                  13.6%             13.0%             11.5%
    Consumer and Industrial Products                                          1.5%             (4.5%)             2.4%
    Combined                                                                  9.5%              7.2%              8.6%
</TABLE>

     (1) Before corporate overhead of $21,358, $23,336, and $14,142 for the
         years ended December 31, 2002, 2001, and 2000, respectively. Certain
         amounts in the prior year have been reclassified to conform with the
         current year presentation.

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



                                      21
<PAGE>



Specialty Printing & Labeling. As of December 31, 2002, the Specialty Printing
& Labeling group consisted of JII Promotions, Valmark, Pamco, and Seaboard.

2002 Compared to 2001. Net sales for the year ended December 31, 2002 decreased
$7.5 million, or 6.7%, from 2001. This decrease is primarily due to lower sales
of calendars and outside specialties at JII Promotions, $1.6 million and $1.5
million, respectively, decreased sales of screen printed products, membrane
switches, and rollstock at Valmark, $3.3 million, $0.9 million, and $0.5
million, respectively, and lower sales of folding boxes at Seaboard, $0.4
million. Partially offsetting these decreases were higher sales of school
annuals at JII Promotions, $0.4 million, and increased sales of labels at Pamco,
$0.3 million.

Operating income for the year ended December 31, 2002 increased $4.7 million
from 2001. This increase is due in part to the non-amortization provisions of
Statement of Accounting Standards ("SFAS") No. 142, "Goodwill and Other
Intangible Assets", which positively affected operating income by $1.4 million
in 2002 (see note 3 to the consolidated financial statements). In addition, this
increase is due to higher operating income at JII Promotions, $1.2 million, and
Pamco, $3.5 million. Partially offsetting these increases was lower operating
income at Valmark, $1.1 million, and Seaboard, $0.3 million. The increase in
operating income at Pamco is primarily due to the closing of Pamco's East Coast
facility in October 2001, and the increase at JII Promotions is due to the
closing of the Red Oak facility in December 2001.


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.

Jordan Specialty Plastics. As of December 31, 2002 the Jordan Specialty Plastics
group consisted of Sate-Lite, Beemak, and Deflecto.

2002 Compared to 2001. Net sales for the year ended December 31, 2002 increased
$9.3 million, or 9.4%, over 2001. This increase is primarily due to increased


                                      22
<PAGE>

sales of hardware products and office products at Deflecto, $9.2 million and
$0.4 million, respectively, higher sales of tooling and truck reflectors at
Sate-Lite, $0.2 million and $0.2 million, respectively, and increased sales of
plastic injection-molded and fabricated products at Beemak, $0.2 million and
$0.5 million, respectively. Partially offsetting these increases were lower
sales of warning triangles, Tilt Bins and thermoplastic colorants at Sate-Lite,
$0.2 million, $0.5 million, and $0.7 million.

Operating income for the year ended December 31, 2002 increased $5.4 million, or
264.7%, over 2001. This increase is due in part to the non-amortization
provisions of SFAS No. 142 which positively affected operating income by $1.4
million in 2002 (see note 3 to the consolidated financial statements). In
addition, this increase is due to higher operating income at Deflecto and
Beemak, $4.9 million and $0.1 million, respectively, partially offset by lower
operating income at Sate-Lite, $1.0 million. The increase in operating income at
Deflecto is due to increased sales, ongoing headcount reductions and continued
focus on operational efficiencies.

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 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.

Jordan Auto Aftermarket. As of December 31, 2002, the Jordan Auto Aftermarket
group consisted of Dacco, Alma, and Atco. 2002 Compared to 2001. Net sales for
the year ended December 31, 2002 increased $8.7 million, or 5.9%, over 2001.
This increase is primarily due to the acquisition of Atco in June 2001. Atco
contributed net sales of $14.7 million in 2002 compared with net sales of $5.8
million in 2001. In addition, sales of air conditioning compressors increased
at Alma. Partially offsetting these increases was lower sales of
remanufactured torque converters, soft parts and drive trains at Dacco and
Alma.

Operating income for the year ended December 31, 2002 increased $0.3 million, or
1.7%, from 2001. Operating income increased $2.0 million due to the


                                      23
<PAGE>

non-amortization provisions of SFAS No. 142 (see note 3 to the consolidated
financial statements). The group also benefited from a full year of sales at
Atco and the higher sales of air conditioning compressors mentioned above.
Partially offsetting these increases were higher corporate expenses and the
decline in operating income related to the decrease in sales of soft parts and
drive trains.

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 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 $3.3 million or 15.9% 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.

Kinetek. As of December 31, 2002, the Motors and Gears group consisted of
Imperial, Gear, Merkle-Korff, FIR, ED&C, Motion Control, Advanced DC and De
Sheng.

2002 Compared to 2001. Consolidated net sales for the year ended December 31,
2002 decreased $4.7 million, or 1.6%, from 2001. Continued economic weakness
depressed all of Kinetek's principal market resulting in a net sales decrease of
$10.9 million, while moderate pricing pressure throughout Kinetek's product
lines totaled a $3.4 million reduction in sales. These decreases were partially
offset by the addition of the partial year sales from the formation of the De
Sheng joint venture, $7.7 million, the impact of the stronger Euro on
translation of European sales, $1.3 million, and the net impact of market share
gains and losses, $1.6 million.

Sales of Kinetek's motors segment declined from $206.2 million in 2001 to $202.4
million in 2002, a decline of 1.8%. Subfractional motor sales declined by 1.0%
compared to 2001, driven largely by pricing pressure in all markets and weak
demand in vending markets. Sales of fractional/integral motor products declined
2.3% from 2001, primarily due to continued sharp declines in demand for DC
motors used in the material handling market and weak demand in Europe. These
declines were partially offset by gains in market share and new product
introductions in floor care and elevator markets, as well as the addition of De
Sheng and the translation gains from European sales as described above.

Sales of Kinetek's controls segment declined from $81.2 million in 2001 to $80.2
million in 2002, a decrease of 1.2%. The decline is primarily due to lower sales
of elevator control products to the New York City market, where activity in the

                                      24
<PAGE>

real estate and construction sectors has been lower since the events of
September 11, 2001. Sales to other geographic regions increased, but by less
than the declines in New York.

Kinetek's operating income for the year ended December 31, 2002 increased $1.2
million, or 3.1%, over 2001. The increase in operating income was primarily
driven by the non-amortization provisions of SFAS No. 142 (see note 3 to the
consolidated financial statements). This adoption resulted in an $8.0 million
reduction in amortization expense, $6.6 million for the motors segment and $1.4
million for the controls segment. This increase was offset by two principal
factors: 1) Kinetek's gross profit fell from $104.1 million (36.2% of sales) in
2001 to $100.4 million (35.5% of sales) in 2002. This decline is attributable to
the sales volume and selling price declines discussed previously, which were
partially offset by Kinetek's continued variable cost productivity and material
cost reduction initiatives. 2) Operating expenses increased from $49.3 million
in 2001 to $52.0 million in 2002. The increase is due to the addition of the
operating expenses of De Sheng, and to increased corporate expenses related to
Kinetek's ongoing reorganization and restructuring.

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 3 to the 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.

Consumer and Industrial Products. As of December 31, 2002, the Consumer and
Industrial Products group consisted of Cape Craftsmen, Welcome Home, Cho-Pat and
GramTel.


                                      25
<PAGE>

2002 Compared to 2001. Net sales for the year ended December 31, 2002 decreased
$8.6 million, or 11.1%, from 2001. This decrease is primarily due to the
divestiture of Riverside in January 2001, $4.1 million, and Flavorsource in
January 2002, $5.7 million, as well as the shut down of Online Environs in
September 2002, $0.7 million. In addition, retail sales at Welcome Home
decreased $1.6 million, sales of orthopedic supports at Cho-Pat decreased $0.1
million, and sales of Internet connection services at ISMI decreased $0.9
million, prior to ISMI's divestiture in December 2002. Partially offsetting
these decreases were higher sales of home accessories at Cape, $3.7 million, and
increased sales of data storage and disaster recovery services at GramTel, $0.8
million.

Operating income for the year ended December 31, 2002 increased $4.5 million
over 2001. This increase is due in part to the non-amortization provisions of
SFAS No. 142, which positively affected operating income by $0.6 million in 2002
(see note 3 to the consolidated financial statements). This increase is also due
to the divestiture of Riverside and the shut down of Online Environs, as
Riverside had an operating loss of $0.4 million in 2001 and Online Environ's
operating loss decreased, $0.8 million. In addition, operating income increased
at Cape, $1.7 million and Welcome Home, $0.8 million, and GramTel's operating
loss decreased by $1.0 million. Partially offsetting these increases was lower
operating income at Flavorsource of $0.8 million, due to its sale in January
2002.

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.

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%).

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

                                      26
<PAGE>


2002 Compared to 2001. Net sales for the year ended December 31, 2002 decreased
$2.8 million, or 0.4%, from 2001. This decrease is due to lower sales of
calendars and outside specialties at JII Promotions, decreased sales of screen
printed products at Valmark, lower sales of Tilt Bins and thermoplastic
colorants at Sate-Lite, decreased sales of remanufactured torque converters and
drive trains at Dacco and Alma, lower sales of fractional/integral motor
products at Kinetek and decreased retail sales at Welcome Home. In addition,
sales decreased due to the divestitures of Riverside in January 2001 and
Flavorsource in January 2002, as well as the shut down of Online Environs in
September 2002. Partially offsetting these decreases were higher sales of school
annuals at JII Promotions, labels at Pamco, hardware and office products at
Deflecto, fabricated products at Beemak, air conditioning compressors at Alma,
home accessories at Cape, and data storage and disaster recover services at
GramTel. In addition, sales increased due to the acquisition of Atco in June
2001 and the addition of De Sheng in April 2002.

Operating income increased $18.1 million, or 63.0%, over 2001. Operating income
increased $14.1 million related to the adoption of SFAS No. 142 (see note 3 to
the consolidated financial statements). In addition, operating income increased
at JII Promotions, Pamco, Deflecto, Cape, Welcome Home, and GramTel. Operating
income also increased due to the acquisitions mentioned above. Partially
offsetting these increases was lower operating income at Valmark, Sate-Lite, and
Kinetek. In addition, operating income decreased due to the sale of Flavorsource
as mentioned above. The increased operating income at Pamco was due to the
closing of Pamco's East Coast facility, the increase at JII Promotions was due
to the closing of the Red Oak facility, and the increase at Deflecto is due to
ongoing headcount reductions and continued focus on operational efficiencies.
The decreased operating income at Kinetek is due to lower gross profit resulting
from a decline in sales prices and increased operating expenses related to
Kinetek's ongoing reorganization and restructuring.

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 products 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.

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

                                      27
<PAGE>

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.

Interest expense stayed relatively consistent between 2002 and 2001.

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

Liquidity and Capital Resources

The Company had approximately $115.7 million of working capital at the end of
2002 compared to approximately $159.1 million at the end of 2001.

The Company has acquired businesses through leveraged buyouts, and, as a result,
has significant debt in relation to total capitalization. See "Item 1 -
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 2003.
Capital spending levels in 2003 are anticipated to be consistent with 2002
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, 2002
was $21.8 million, compared to $30.3 million provided by operating activities
during the same period in 2001. This decrease is primarily due to a lower
reduction in accounts receivable and an increase in inventories, as well as an
increased reduction in accounts payable and accrued expenses from 2001,
partially offset by an increased reduction in prepaids and other current assets
from 2001.

Net cash used in investing activities for year ended December 31, 2002 was $20.4
million, compared to $7.6 million used in investing activities during the same
period in 2001. The increase is due primarily to the proceeds from the sale of a
subsidiary in the prior year and increased additional purchase price payments in
the current year, partially offset by decreased spending on acquisitions in the
current year.

                                      28
<PAGE>


Net cash used in financing activities for the year ended December 31, 2002 was
$10.6 million, compared to $17.6 million used in financing activities during the
same period in 2001. The decrease is primarily due to lower repayments on the
Company's revolving credit facilities of $8.1 million, decreased payments of
financing costs of $4.2 million in 2002 and the issuance of senior notes at
Kinetek, $20.5 million. Partially offsetting these increases was the repurchase
of a portion of the Company's 2009 Debentures of $31.4 million.

The Company and its subsidiaries are party to two credit agreements under which
the Company is able to borrow up to $145 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, 2002, the Company had
approximately $57.5 million of available funds under these arrangements. (See
note 12 to the consolidated financial statements.)

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. Additionally, the Company
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.

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 or find alternative sourcing to
mitigate 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

                                      29
<PAGE>

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

In accordance with SFAS No. 142, we discontinued recording goodwill amortization
effective January 1, 2002. SFAS No. 142 prescribes a two-step process for
impairment testing of goodwill. The first phase screens for potential
impairment, while the second phase, if necessary, measures the impairment.
Goodwill is potentially impaired if the net book value of a reporting unit
exceeds its estimated fair value. The Company performed the transitional
impairment review of its reporting units during the year and recorded a non-cash
after-tax charge of $87.1 million. This charge has been recorded as a cumulative
effect of a change in accounting principle. See note 3 to the consolidated
financial statements for further details.

     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. Either the cost method or
equity method of accounting is used to account for these investments depending
on the level of the Company's ownership in these affiliates. Each quarter, we
review the carrying amount of these investments and record an impairment charge
when we believe an investment has experienced a decline in value below its
carrying amount 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

                                      30
<PAGE>

favorable than those projected by management, additional inventory reserves may
be required.

     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,
2002 (in thousands):

                                        Payments by Period
                       ---------------------------------------------------------

                         Total       Less       1-3        4-5       After 5
                                    than 1     years      years       years
                                    year
                       ---------------------------------------------------------

Long-term debt and     $755,718     $34,893    $12,749    $609,964    $98,112
  capital leases
Operating leases         66,804      16,888     22,243      13,060     14,613
                       ---------------------------------------------------------

Total                  $822,522     $51,781    $34,992    $623,024   $112,725
                       ---------------------------------------------------------




                                      31
<PAGE>

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, 2002, the
Company had $37.2 million of variable rate debt outstanding. A one percentage
point increase in interest rates would increase the annual amount of interest
paid by approximately $0.4 million. The Company does not believe that its market
risk financial instruments on December 31, 2002 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.



                                      32
<PAGE>

Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                                                       Page No.
                                                                       --------
Report of Independent Auditors................................ .          34

Consolidated Balance Sheets as of December 31, 2002 and                   35
2001.......................................................... .

Consolidated Statements of Operations for the years ended December        36
31, 2002, 2001, and 2000...................................... .          37

Consolidated Statements of Changes in Shareholder's Equity (Net           37
Capital Deficiency) for the years ended December 31, 2002, 2001 and
2000.......................................................... .

Consolidated Statements of Cash Flows for the years ended
December 31, 2002, 2001, and 2000............................. .          38

Notes to Consolidated Financial Statements.................... .          40


                                      33
<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, 2002 and 2001 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, 2002.
Our audits also included the financial statement schedule listed in the Index at
Item 15(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 conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

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

In 2002, as discussed in Note 3, the Company changed its method of accounting
for goodwill to conform with Financial Accounting Standards Board Statement No.
142.

     /s/ ERNST & YOUNG LLP

Chicago, Illinois
March 18, 2003






                                      34
<PAGE>



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

                                                             ___December 31,___
                                                          2002           2001
                                                          ----           ----
ASSETS
Current assets:
  Cash and cash equivalents                              $20,109         $26,050
  Accounts receivable, net of allowance of               109,101         109,384
  $6,560 and $4,497 in 2002 and 2001, respectively
  Inventories                                            130,453         122,528
  Income tax receivable                                    3,745          12,245
  Deferred income taxes                                        -           8,100
  Prepaid expenses and other current assets               25,857          19,030
                                                          ------        --------
     Total current assets                                289,265         297,337

Property, plant and equipment, net                       101,907          99,602
Investments in and advances to affiliates                 42,353          36,443
Goodwill, net                                            245,351         358,970
Other assets                                              30,368          37,044
                                                        --------        --------
  Total Assets                                          $709,244        $829,396
                                                        ========        ========

LIABILITIES AND SHAREHOLDER'S EQUITY
 (NET CAPITAL DEFICIENCY)

Current liabilities:
  Accounts payable                                       $58,631        $47,848
  Accrued liabilities                                     78,582         71,372
  Advance deposits                                         1,420          1,853
  Current portion of long-term debt                       34,893         17,137
                                                          ------       --------
      Total current liabilities                          173,526        138,210

Long-term debt                                           715,516        819,406
Other non-current liabilities                             14,484          8,668
Deferred income taxes                                      2,904              -
Minority interest                                            278              4
Preferred stock of a subsidiary                            2,342          2,164

Shareholder's equity (net capital deficiency):
Common stock $.01 par value: authorized - 100,000              1              1
  shares; issued and outstanding - 98,501 shares
Additional paid-in capital                                 2,116          2,116
Accumulated other comprehensive loss                     (11,877)       (15,249)
Accumulated deficit                                     (190,046)      (125,924)
                                                        ---------      ---------
Total shareholder's equity (net capital                 (199,806)      (139,056)
                                                        ---------      ---------
 deficiency)
  Total Liabilities and Shareholder's Equity (Net       $709,244       $829,396
                                                        =========      =========
  Capital Deficiency)
                         See accompanying notes.



                                      35
<PAGE>





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

                                                   Year ended December 31,
                                                   -----------------------
                                               2002         2001      2000
                                               ----         ----      ----

Net sales                                    $720,032     $722,823   $807,296
Cost of sales, excluding depreciation         460,312      460,004    513,755
Selling, general, and administrative          179,189      177,291    173,370
 expense, excluding depreciation
Depreciation                                   22,832       23,387     24,070
Amortization of goodwill and other              1,694       15,709     31,108
 intangibles
Management fees and other                       9,186       17,714      9,980
                                              -------     ---------   -------
   Operating income                            46,819       28,718     55,013

Other (income) and expenses:
  Interest expense                             89,372       91,344     92,009
  Interest income                              (1,249)        (791)    (1,464)
  Gain on deconsolidation of liquidated        (1,888)           -          -
    subsidiary
  Loss on sale of subsidiaries                    518            -      2,798
  Other, net                                   (3,950)       2,166        554
                                              --------    ---------   --------
                                               82,803       92,719     93,897
                                              --------    ---------   --------
Loss from continuing operations before
 income tax benefit and minority interest     (35,984)     (64,001)   (38,884)
Income tax benefit                             (6,388)      (5,323)    (3,191)
                                              --------    ---------   --------
Loss from continuing operations before
 minority interest                            (29,596)     (58,678)   (35,693)
Minority interest                                 274         (406)       353
                                              --------    ---------   --------
Loss from continuing operations               (29,870)     (58,272)   (36,046)
Discontinued operations, net of taxes               -            -   (203,924)
Extraordinary gain, net of tax                (52,518)           -          -
Cumulative effect of change in accounting      87,065            -          -
principle, net of tax                        ---------    ----------  ---------
    Net (loss) income                        $(64,417)    $(58,272)   $167,878
                                             =========    ==========  =========


                                      36
<PAGE>

                            See accompanying notes.
                            JORDAN INDUSTRIES, INC.
          CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
                           (NET CAPITAL DEFICIENCY)
                            (dollars in thousands)
<TABLE>
<CAPTION>


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

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

Balance at December 31, 1999             98,501        $     1        $ 2,116       $(5,740)            $(235,212)      $(238,835)
Non-cash dividends on preferred stock         -              -              -            -                   (152)           (152)
of subsidiary
Comprehensive income(loss):
  Translation                                 -              -              -       (10,901)                    -         (10,901)
  Net income                                  -              -              -             -               167,878         167,878
                                                                                                                        -----------
Total comprehensive income                                                                                                156,977
                                         -------       -------        ---------     ---------           -----------     -----------
Balance at December 31, 2000              98,501             1          2,116       (16,641)              (67,486)        (82,010)
Non-cash dividends on preferred stock          -             -              -             -                  (166)           (166)
of subsidiary
Comprehensive income(loss):
  Translation                                  -             -              -          1,972                    -           1,972
  Minimum pension liability                    -             -              -           (580)                   -            (580)
  adjustment
  Net loss                                     -             -              -             -               (58,272)        (58,272)
                                                                                                                        -----------
Total comprehensive loss                                                                                                  (56,880)
                                         -------       -------        ---------     -----------         -----------     -----------
Balance at December 31, 2001              98,501             1          2,116        (15,249)            (125,924)       (139,056)
Non-cash dividends on preferred stock          -             -              -              -                 (178)           (178)
of subsidiary
Gain on sale of subsidiary to an               -             -              -              -                  473             473
affiliate
Comprehensive income(loss):
  Translation                                  -             -              -          6,107                    -           6,107
  Minimum pension liability                    -             -              -         (2,735)                   -          (2,735)
  adjustment
  Net loss                                     -             -              -              -              (64,417)        (64,417)
                                                                                                                        -----------
Total comprehensive loss                                                                                                  (61,045)
                                         -------       -------        ---------     -----------         -----------     -----------
Balance at December 31, 2002              98,501       $     1        $ 2,116       $ (11,877)          $(190,046)      $(199,806)
                                         =======       =======        =========     ===========         ===========     ===========
</TABLE>


                                      37
<PAGE>

                             See accompanying notes.
                             JORDAN INDUSTRIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (dollars in thousands)
<TABLE>
<CAPTION>


                                                              Year ended December 31,
                                                              -----------------------
                                                      2002            2001          2000
                                                      ----            ----          ----
<S>                                                  <C>              <C>            <C>

Cash flows from operating activities:
  Net (loss) income                                  $(64,417)         $(58,272)   $167,878
Adjustments to reconcile net (loss)
 income to net cash provided by
 operating activities:
  Cumulative effect of accounting change               87,065                 -           -
  Extraordinary gain on early extinguishment          (52,518)                -           -
   of debt
  Gain on deconsolidation of liquidated                (1,888)                -           -
   subsidiary
  Write-down of assets held for sale                    1,800                 -           -
  Loss on sale of subsidiaries                            518                 -       2,798
  (Gain)/loss on disposal of fixed assets              (1,238)            1,691       3,342
  Gain on sale of discontinued                              -                 -    (213,520)
   operations, net of tax
  Amortization of deferred financing                    6,193             4,666       5,067
   costs
  Depreciation and amortization                        24,526            39,096      55,178
  Deferred income taxes                                11,004             3,752       3,999
  Minority interest                                       274              (406)          4
  Non-cash interest expense                             6,145            22,642      20,160
Changes in operating assets and liabilities
 (net of acquisitions and  dispositions):
  Accounts receivable                                   2,358            13,107       1,384
  Inventories                                          (5,437)            3,903      (6,454)
  Prepaid expenses and other current                   23,280           (12,390)    (13,729)
   assets
  Non-current assets                                   (1,861)              542      (5,008)
  Accounts payable and accrued                        (12,293)             (470)    (24,716)
   liabilities
  Advance deposits                                       (433)              (84)        286
  Non-current liabilities                               3,433            12,642       7,830
  Other                                                (4,719)             (118)       (169)
                                                      ---------         --------   ----------
Net cash provided by operating                         21,792            30,301       4,330
 activities

Cash flows from investing activities:
Proceeds from sale of discontinued                           -                -     149,285
 operations                                              3,242            1,391       1,296
Proceeds from sale of fixed assets                     (13,895)         (12,814)    (21,246)
Capital expenditures
Acquisitions of subsidiaries                            (9,503)         (12,384)    (48,154)
Additional purchase price payments                      (1,002)            (260)     (3,093)
Net cash acquired in purchase of                           788               14       1,196
 subsidiaries
Net proceeds from sale of subsidiary                         -           16,663           -
Investments in affiliates                                    -             (161)    (17,842)
                                                      ---------         --------   ----------
Net cash (used in) provided by                        $(20,370)         $(7,551)    $61,442
 investing activities
</TABLE>


                         (Continued on following page.)
                             See accompanying notes.


                                       38
<PAGE>


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

                                                  Year ended December 31,
                                             2002          2001           2000
                                             ----          ----           ----
Cash flows from financing activities:
Proceeds of debt issuance - Kinetek         $20,456         $ -          $    -
Repurchase of 2009 Debentures               (31,360)          -               -
Proceeds from (payments on) revolving         6,833      (1,265)        (53,614)
 credit facilities, net
Payment of deferred financing costs          (1,891)     (6,047)            -
Payment of long-term debt                    (8,134)     (10,261)        (8,420)
Proceeds from other borrowings                3,472           -           2,449
                                            --------     --------       --------
Net cash used in financing activities       (10,624)     (17,573)       (59,585)
Effect of exchange rate changes on            3,261         (840)        (4,447)
                                            --------     --------       --------
 cash
Net (decrease) increase in cash and          (5,941)       4,337          1,740
 cash equivalents
Cash and cash equivalents at beginning       26,050       21,713         19,973
 of year                                    --------      --------      --------

Cash and cash equivalents at end of         $20,109       $26,050       $21,713
  year                                      ========      ========      ========

Supplemental disclosures of cash flow
 information:
   Cash paid during the year for:           $70,289        $63,626      $66,370
        Interest                             $3,699         $4,555      $31,958
        Income taxes, net
   Non-cash investing activities:              $845         $2,321       $6,648
        Capital leases
                             See accompanying notes.


                                       39
<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"), Advanced D.C. Motors
("Advanced DC") and Shunde De Sheng Electric Motor Co., Ltd. ("De Sheng"). 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"), 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.

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 certain subsidiaries outside the United States
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.

          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.


                                      40
<PAGE>

          Accounts Receivable and Allowance for Doubtful Accounts

The Company carries its accounts receivable at their face amounts less an
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
Company's policy is to generally not charge interest on trade accounts
receivable after the invoice becomes past due.

          Inventories

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

          Goodwill and Other Long-Lived Assets

Through 2001, goodwill was amortized using the straight-line method over a
period of 3 to 40 years. On January 1, 2002, the Company adopted SFAS No. 142,
Goodwill and Other Intangible Assets. Under the new rules, goodwill is no longer
amortized but is subject to annual impairment tests. See note 3 for additional
details.

Other long-lived assets are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of the related asset may not
be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of the asset to future undiscounted cash flows
expected to be generated by the asset. If the asset is determined to be
impaired, the impairment recognized is measured by the amount by which the
carrying value of the asset exceeds its fair value.

          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

          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 U.S.
Federal and State income taxes on undistributed earnings of foreign
subsidiaries ($12,483 at December 31, 2002) to the extent the undistributed
earnings are considered to be permanently reinvested.

                                      41
<PAGE>


          Deferred Financing Fees

Deferred financing costs amounting to $25,487 and $30,058, net of accumulated
amortization of $33,689 and $27,496 at December 31, 2002 and 2001,
respectively, are amortized over the terms of the loans or, if shorter, the
period such loans are expected to be outstanding. Deferred financing costs are
included in "other assets" on the balance sheet.

          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

The Company recognizes 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, 2002 and 2001.

          Use of estimates

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

          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, 2002 and 2001 the Company had approximately $16,323 and
$15,382, 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 local
currencies. Accordingly, assets and liabilities of the Company's foreign
operations are translated from foreign currencies into U.S. dollars at the
exchange rates in effect at the balance sheet date while income and expenses are
translated at the weighted-average exchange rates for the year. Adjustments
resulting from the translation of foreign currency financial statements are

classified as a separate component of shareholder's equity. The accumulated


                                      42
<PAGE>

balance in other comprehensive income pertaining to foreign currency
translation was $8,562 as of December 31, 2002.

                Reclassifications

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

Note 3 - Goodwill

The Company adopted SFAS No. 142, Goodwill and Other Intangible Assets, on
January 1, 2002 and completed the transitional impairment review of its
reporting units during the second quarter, resulting in a non-cash pretax
charge of $108,595 ($87,065 after-tax). This charge has been recorded as a
cumulative effect of a change in accounting principle effective January 1,
2002.

The impaired goodwill relates to the acquisitions of JII Promotions, Valmark,
and Pamco in the Specialty Printing and Labeling group, Sate-Lite and Beemak in
the Jordan Specialty Plastics group, Alma in the Jordan Auto Aftermarket group,
FIR and the L'Europa product line in the Kinetek group and Online Environs in
the Consumer and Industrial Products group. The Company determined the fair
value of each reporting unit using a discounted cash flow approach taking into
consideration projections based on the individual characteristics of the
reporting units, historical trends and market multiples for comparable
businesses. The resulting impairment is primarily attributable to a change in
the evaluation criteria for goodwill utilized under previous accounting
guidance, to the fair value approach stipulated in SFAS No. 142.

Income (loss) before extraordinary items and net income (loss), adjusted to
exclude goodwill amortization expense, would have been ($47,571) and $192,920
for the years ended December 31, 2001 and 2000, respectively.

The changes in the carrying amount of goodwill by operating segment for the year
ended December 31, 2002 were as follows:
<TABLE>
<CAPTION>


                                      Specialty       Jordan                                       Consumer
                                      Printing       Specialty       Jordan Auto                  Industrial
                                     & Labeling       Plastics       Aftermarket      Kinetek      Products            Consolidated
                                     ----------      ---------       -----------      -------      ----------          -------------
<S>                                   <C>             <C>            <C>             <C>             <C>                 <C>

Balance as of                          $43,389         $41,253        $64,737         $194,622       $14,969             $358,970
January 1, 2002

Acquisition of                               -               -              -            2,142             -                2,142
Subsidiary

Additional Purchase Price                    -             902              -                -             -                  902
Payments

Sale of subsidiaries                         -               -               -               -         (9,892)             (9,892)

Impairment loss                        (31,653)         (6,694)         (43,464)       (21,992)        (4,792)           (108,595)
Foreign exchange and other                (312)           (228)            (411)         2,036            739               1,824
                                       ---------        ---------     ----------      ---------       --------           ---------

Balance at                             $11,424          $35,233         $20,862       $176,808         $1,024            $245,351
December 31, 2002                      =========        =========     ==========      =========       ========           =========

Goodwill at December 31, 2002 is net of accumulated amortization of $91,221.
</TABLE>

                                      43
<PAGE>

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 goodwill was 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 was written down to zero.

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 JTP's net sales were $20,724.

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, Capita's net sales were
$17,225.


                                      44
<PAGE>

The following table summarizes the Company's discontinued operations for the
year ended December 31, 2000:

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

                                      45
<PAGE>

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 under
this agreement 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 May 16, 1997 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). The Company's
investment in M&G Holdings was represented solely by the Cumulative Preferred
Stock of M&G Holdings (the "M&G Holdings Junior Preferred Stock"). The M&G
Holdings Junior Preferred Stock represented 82.5% of M&G Holdings' stockholder
voting rights and 80% of M&G Holdings' net income or loss was accretable to
the M&G Holdings Junior Preferred Stock. The Company 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 has
continued to consolidate M&G Holdings and its subsidiaries, for financial
reporting purposes, as subsidiaries of the Company. The M&G Holdings Junior
Preferred Stock was scheduled to discontinue its participation in M&G
Holdings' earnings on the fifth anniversary of issuance but was extended to
the sixth anniversary.


                                      46

<PAGE>


The Company has continued to include M&G Holdings and its subsidiaries in its
consolidated group for U.S. Federal income tax purposes. If a deconsolidation
had occurred at December 31, 2002, the Company believes that the amount of
taxable income to the Company attributable to M&G Holdings would have been
approximately $54,000 (or approximately $21,600 of tax liabilities, assuming a
40.0% combined Federal, state, and local tax rate). Deconsolidation would have
occurred 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. The voting power test was always satisfied. The value
test depended 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 was
satisfied at all times prior to December 12, 2002 when the Company participated
in another recapitalization of M&G Holdings.

In the December 12, 2002 recapitalization, the 20,000 shares of authorized M&G
Holdings common stock were reclassified as 20,000 shares of Class B Common Stock
and the M&G Holdings Junior Preferred Stock was reclassified as 80,000 shares of
Class A Common Stock. The Class A Common Stock has a liquidation preference of
$46,800, is entitled to a cumulative preferential dividend of 6% per annum, and
after the preference is satisfied, each share of Class A Common Stock
participates on a pro rata basis with each share of Class B Common Stock. Each
share of Class A Common Stock and each share of Class B Common Stock are
entitled to one vote. Thus, after the December 12, 2002 recapitalization, the
Class A Common Stock will always satisfy the voting and value tests required for
tax consolidation. M&G Holdings will also remain a consolidated subsidiary of
the Company for financial accounting purposes.

Note 6 - Inventories
--------------------
Inventories consist of:

                                        Dec. 31, 2002         Dec. 31, 2001
                                        -------------         -------------

Raw Materials                              $52,450                $52,493
Work-in-process                             20,417                 17,329
Finished goods                              57,586                 52,706
                                          --------               --------
                                          $130,453               $122,528
                                          ========               ========


Note 7- Property, plant and equipment
-------------------------------------
Property, plant and equipment, at cost, consists of:

                                                Dec. 31, 2002    Dec. 31, 2001
                                                -------------    -------------

Land                                              $ 12,971         $  9,480
Machinery and equipment                            147,400          138,356
Buildings and improvements                          37,530           33,596
Furniture and fixtures                              67,766           61,375
                                                   -------          --------
                                                   265,667          242,807

Accumulated depreciation and amortization         (163,760)        (143,205)
                                                   --------         --------

                                                  $101,907         $ 99,602
                                                  =========        =========

Note 8 - Investments in and advances to affiliates
--------------------------------------------------
The Company had unsecured advances totaling $16,323 and $15,382 as of December
31, 2002 and 2001, respectively, due from JIR Broadcast, Inc. and JIR Paging,
Inc. Each of these companies' Chief Executive Officer is Mr. Quinn and its


                                      47
<PAGE>

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 increased the Company's
investment in JZ International to $12,344 at December 31, 2002 and 2001,
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 made unsecured advances totaling $11,201 and $11,331 through
December 17, 2002 and December 31, 2001, respectively, to Internet Services
Management Group ("ISMG") an Internet service provider with approximately 93,000
customers. ISMG's stockholders were 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. The Company received notes in exchange for these
advances, which accrued interest at 10.75%. The Company also held a 5% ownership
interest in ISMG's common stock and $1,000 of ISMG's 5% mandatorily redeemable
cumulative preferred stock. On December 17, 2002, the Company sold its
investments in ISMG for a nominal amount, and no gain or loss was recognized
after consideration of previously established reserves.

The Company received a $10,100 note as consideration for the sale of
Flavorsource to Flavor & Fragrance Group Holdings effective on January 1, 2002.
This note bears interest at 8.0% and matures on April 30, 2012. (See note 14 for
additional details.)

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 $2,640 and $2,230 was contributed at December 31, 2002 and
2001, respectively. In addition, the Company funded $845 in promissory notes to
the partnership for working capital needs. 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 to provide management services to
the partnership for annual fees of 1.875% and 2.5% of total partnership
committed capital of $50,000 for 2002 and 2001, respectively.

See note 16 for additional discussion of related party transactions.



                                      48
<PAGE>


Note 9 - Accrued liabilities
----------------------------
Accrued liabilities consist of:

                                                   Dec. 31,      Dec. 31,
                                                   --------      --------
                                                     2002          2001
                                                     ----          ----

Accrued vacation                                   $ 2,982       $ 2,548
Accrued income taxes                                 1,779             -
Accrued other taxes                                  1,870         1,484
Accrued commissions                                  2,949         2,315
Accrued interest payable                            20,483        16,316
Accrued payroll and payroll taxes                    4,715         4,857
Accrued rebates                                      3,083         3,824
Accrued medical & worker's compensation             11,081         4,971
Accrued management fees                              8,429         8,092
Accrued other expenses                              21,211        26,965
                                                   -------       -------
                                                   $78,582       $71,372
                                                   =======       =======

Note 10 - Operating leases
--------------------------
Certain subsidiaries lease land, buildings, and equipment under non-cancelable
operating leases.

Total minimum rental commitments under non-cancelable operating leases at
December 31, 2002 are:

               2003                               $16,888
               2004                                12,989
               2005                                 9,254
               2006                                 7,073
               2007                                 5,987
            Thereafter                             14,613
                                                  -------
                                                  $66,804
                                                  =======

Rental expense amounted to $18,275, $18,229, and $16,285 for 2002, 2001, and
2000, 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 $1,848, $1,588, and $1,544 for
the years ended December 31, 2002, 2001, and 2000, respectively.

Note 11 - Benefit plans and pension plans
-----------------------------------------
Substantially all 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 $2,014, $2,023 and $2,345 for the years ended December 31, 2002,
2001 and 2000, 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


                                      49
<PAGE>

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 $2,843 and $2,609 at December 31, 2002 and 2001, 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, 2002 and 2001.

                                                          2002          2001
Change in Benefit Obligation:                             ----          ----

Benefit obligation at beginning of period               $13,164       $11,785

  Service cost                                              587           550
  Interest cost                                             995           893
  Plan amendments                                           364             -
  Actuarial loss                                          1,459           396
  Benefits paid                                            (511)         (460)
                                                        --------      --------

Benefit obligations at end of period                    $16,058       $13,164
                                                        --------      --------

Change in Plan Assets:

Fair value of plan assets at beginning of period        $11,613       $11,672

  Actual return on assets                                  (673)           38
  Contributions received                                    579           363
  Benefits paid                                            (511)         (460)
                                                        --------      --------
Fair value of plan assets at end of period              $11,008       $11,613
                                                        --------      --------

  Funded status                                          (5,050)       (1,551)
  Unrecognized net loss (gain)                            3,487           367
  Unrecognized prior service cost                           703           397
  Employer contribution                                      66            58
                                                        -------       --------

  Accrued benefit cost                                  $  (794)      $  (729)
                                                        ========      ========

The accumulated balance in other comprehensive income pertaining to minimum
pension liability adjustments was ($3,315) as of December 31, 2002.

Net periodic pension expense included the following components:

                                                     Year ended December 31,
                                                     -----------------------
                                                   2002       2001       2000
                                                   ----       ----       ----

Service cost                                      $ 587      $ 550      $ 519
Interest cost                                       995        893        832
Expected return on plan assets                     (988)      (986)      (952)
Amortization of unrecognized prior service cost      59         33         33
Amortization of unrecognized net gain                 -        (21)       (31)
                                                  -----      -----      -----

Net periodic pension expense                      $ 653      $ 469      $ 401
                                                  =====      =====      =====



                                      50
<PAGE>

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

                                                 Year ended December 31,
                                                 -----------------------
                                             2002           2001         2000
                                             ----           ----         ----

Discount rate                                6.75%          7.50%        7.75%
Average annual salary increase               4.00%          4.50%        4.50%
Expected long term rate of return on
 plan Assets                                 8.50%          8.50%        8.50%


Note 12 - Debt
--------------
Long-term debt consists of:

                                                December 31,      December 31,
                                                    2002              2001
                                                ------------      ------------

Revolving Credit Facilities (A)                  $ 37,241          $ 30,408
Bank Term Loans (B)                                14,571             5,587
Capital lease obligations (C)                      17,162            20,193
Senior Notes (D)                                  565,690           544,887
Senior Subordinated Discount Debentures (D)        94,886           208,098
Subordinated promissory notes (E)                  19,086            26,840
Other                                               1,773               530
                                                 ---------         ---------
                                                  750,409           836,543
Less current portion                              (34,893)          (17,137)
                                                 ---------         ---------
                                                 $715,516          $819,406
                                                 =========         =========


Aggregate maturities of long-term debt at December 31, 2002, excluding
unamortized premiums and discounts, are as follows:

                2003                                  $ 34,893
                2004                                     7,861
                2005                                     4,888
                2006                                   308,532
                2007                                   301,432
                Thereafter                              98,112
                                                      --------
                                                      $755,718
                                                      ========


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 (4.3% and 4.0%, respectively, at December 31, 2002).
       At December 31, 2002, the Company had outstanding borrowings of
       $37,241, outstanding letters of credit of $2,579, and excess
       availability of $34,678. 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 $35,000 based on the
       value of certain assets, including inventory, accounts receivable,
       machinery and equipment, and real estate. Outstanding borrowings bear
       interest at a rate of prime plus 1.35% (5.6% at December 31, 2002).


                                      51
<PAGE>

       Kinetek had $0 of outstanding borrowings, $7,554 of outstanding letters
       of credit, and $22,776 of excess availability under the Kinetek
       Agreement at December 31, 2002. Borrowings are secured by the stock and
       substantially all of the assets of Kinetek. The Kinetek Agreement
       expires on December 18, 2005.

B.     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.

       The Company also has various bank loans related to one of Kinetek's
       foreign subsidiaries. These loans are for real estate and working
       capital needs. These loans bear interest from 4.9% to 5.8% and mature
       throughout 2003.

C.     Interest rates on capital leases range from 4.3% to 11% and mature
       in installments through 2008.

       The future minimum lease payments as of December 31, 2002 under
       capital leases consist of the following:

       2003                                                        $13,210
       2004                                                          2,326
       2005                                                          1,175
       2006                                                          1,168
       2007                                                            179
       Thereafter                                                      394
                                                                   --------
         Total                                                      18,452
       Less amount representing interest                            (1,290)
                                                                   --------
       Present value of future minimum lease payments              $17,162
                                                                   ========

       The present value of the future minimum lease payments approximates
       the book value of property, plant and equipment under capital leases at
       December 31, 2002.

D.     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
       $67,200 at December 31, 2002. The fair value was calculated using the
       2007 Seniors' December 31, 2002 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 fair value of the New 2007
       Seniors was approximately $86,800 at December 31, 2002. The fair value
       was calculated using the New 2007 Seniors' December 31, 2002 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,
       2002 was $243,000. The fair value was calculated using the Kinetek
       Notes' December 31, 2002 market price multiplied by the face amount.
       The Kinetek Notes are unsecured obligations of Kinetek, Inc.



                                      52
<PAGE>

       On April 12, 2002, Kinetek issued $15,000 principal amount of 5%
       Senior Secured Notes and $11,000 principal amount of 10% Senior Secured
       Notes ("2007 Kinetek Notes") for net proceeds of $20,456. The notes are
       due on April 30, 2007 and are guaranteed by Kinetek, Inc. and
       substantially all of its domestic subsidiaries. The notes are also
       secured by a second priority lien on substantially all of the assets of
       Kinetek and its subsidiaries, which lien is subordinate to the existing
       lien securing Kinetek, Inc.'s credit facility. Interest on the notes is
       payable semi-annually on May 1 and November 1 of each year.

       In April 1997, the Company issued $213,636 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. The 2009 Debentures
       are unsecured obligations of the Company.

       Between May 29, 2002 and June 5, 2002, the Company repurchased
       $119,000 principal amount of its 2009 Debentures, for total
       consideration of $31,360, including expenses. After the purchase,
       $94,636 principal amount of 2009 Debentures were outstanding. The
       Company has reported an extraordinary gain of $52,518, net of taxes of
       $36,364 in the statement of operations related to this purchase. The
       fair value of the remaining 2009 Debentures was approximately $19,164
       at December 31, 2002. The fair value was calculated using the 2009
       Debentures' December 31, 2002 market price multiplied by the face
       amount.

       In July 1993, the Company issued $133,075 of 11 3/4% Senior
       Subordinated Discount Debentures ("Discount Debentures") due 2005. In
       April 1997, the Company refinanced substantially all of the Discount
       Debentures and issued the 2009 Debentures. At December 31, 2002, $250
       of the Discount Debentures were still outstanding. The interest on the
       Discount Debentures is payable in cash semi annually on February 1 and
       August 1.

       The Indentures relating to the 2009 Debentures, the Discount
       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 Indentures governing the Kinetek Notes and 2007 Kinetek Notes
       contain certain covenants 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.

E.     Subordinated promissory notes payable are due to minority interest
       shareholders and former shareholders of certain subsidiaries in
       installments through 2005, and bear interest ranging from 8% to 9%.
       The loans are unsecured.

Interest expense includes $6,193, $4,666 and $5,067 of amortization of debt
issuance costs for the years ended December 31, 2002, 2001, and 2000,
respectively.

                                      53
<PAGE>


Note 13 - Income taxes
----------------------
Loss from continuing operations before income taxes and minority interest
is as follows:

                                           Year ended December 31,
                                           -----------------------
                                      2002          2001           2000
                                      ----          ----           ----
      Domestic                     $(43,350)      $(71,458)      $(45,200)
      Foreign                         7,366          7,457          6,316
                                   ---------      ---------      ---------
       Total                       $(35,984)      $(64,001)      $(38,884)
                                   =========      =========      =========

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

                                              Year ended December 31,
                                              -----------------------
                                          2002          2001          2000
                                          ----          ----           ----
Current:
Federal                                $(39,246)      $(13,711)     $(9,601)
Foreign                                  (1,531)         3,242        3,664
State and Local                           1,588          1,394       (1,253)
                                       ---------      ---------     --------
                                        (39,189)        (9,075)      (7,190)
Deferred:
Federal                                  30,096          4,219        3,487
Foreign                                      35            483          113
State and Local                           2,670           (950)         399
                                       ---------      ---------     --------
                                         32,801          3,752        3,999
                                       ---------      ---------     --------
Total                                  $ (6,388)      $ (5,323)     $(3,191)
                                       =========      =========     ========

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

                                                 December 31,     December 31,
                                                     2002             2001

Deferred tax liabilities:
Goodwill                                         $    854          $ 16,383
Property, plant and equipment                       3,840             5,015
Inter company tax gains                             4,579             5,205
Acquisition related liabilities                     3,046             3,046
Foreign deferred tax liabilities                    2,051             1,372
Other                                               2,257               484
                                                 ---------         ---------
   Total deferred tax liabilities                $ 16,627          $ 31,505
                                                 =========         =========
Deferred tax assets:
NOL carryforwards                                $  8,712          $ 13,605
Accrued interest on discount debentures             6,977            15,553
Pension obligation                                  1,454               681
Vacation accrual                                    1,214             1,122
Uniform capitalization of inventory                 2,577             2,739
Allowance for doubtful accounts                     4,696             4,283
Deferred financing fees                               464               538
Intangibles other than goodwill                     5,151             5,639
Medical claims reserve                              1,905             1,855
Accrued commissions and bonuses                     1,090               357
Warranty accrual                                      438               558
Inventory reserves                                  2,097             2,322
Restructuring reserve                                 743             1,789
Deferred income                                         -               198
Interest income                                       930               620
Other accrued liabilities                           7,688            11,311
Other                                               1,450             1,450
                                                 ---------         ---------
   Total deferred tax assets                     $ 47,586          $ 64,620
Valuation allowance for deferred tax assets      $(33,863)         $(25,015)
                                                 ---------         ---------
   Total deferred tax assets                     $ 13,723          $ 39,605
                                                 ---------         ---------
   Net deferred tax (liabilities) assets         $ (2,904)         $ 8,100
                                                 =========         =========


                                      54
<PAGE>

In 2002, the Company adopted SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 142 provides that goodwill no longer be amortized and
establishes new requirements to test goodwill for impairment. For tax purposes,
goodwill continues to be amortized over a fifteen-year life. As such, the tax
amortization generates a temporary difference and a corresponding deferred tax
liability arises for financial statement purposes. Since goodwill is no longer
amortized for book purposes, the Company cannot determine when the resulting
deferred tax liabilities will be realized. Therefore, the Company has not
considered any future reversal of the deferred tax liability related to goodwill
to support the realization of the deferred tax assets.

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,
                                                  -----------------------
                                             2002          2001          2000
                                             ----          ----          ----

Computed statutory tax benefit            $(12,595)     $(22,400)     $(13,609)
(Increase) decrease resulting from:
  Amortization of goodwill                       -         1,616         6,836
  Meals and entertainment                      279           238           285
  State and local tax                        3,702           289        (1,953)
  Valuation allowance                        5,804        11,410           495
  Foreign tax rate differential              1,064         1,861         2,355
  Foreign tax holidays                         (59)         (152)         (313)
  Tax credits in foreign jurisdictions      (5,080)         (593)         (476)
  Other items, net                             497         2,408         3,189
                                          ---------     ---------     ---------
Benefit for income taxes                  $ (6,388)     $ (5,323)     $ (3,191)
                                          =========     =========     =========

As of December 31, 2002, consolidated federal net operating loss carryforwards
are approximately $20,400 for regular tax purposes, and expire in various years
through 2017. 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. As of December 31, 2002, the
Company has foreign net operating loss carryforwards of approximately $643 which
expire in 2007.

Note 14 - Sale of Subsidiaries
------------------------------
On December 17, 2002, the Company sold the assets of Internet Services of
Michigan, Inc. ("ISMI") to a third party for a nominal amount. ISMI is an
Internet service provider with approximately 6,000 customers located in
Michigan. The Company recorded a loss of $518 related to the sale of ISMI. ISMI
was a part of the Consumer & Industrial Products segment prior to its disposal.

Effective January 1, 2002, the Company sold its subsidiary, Flavorsource, Inc.,
("Flavorsource") to Flavor & Fragrance Group Holdings, Inc. ("FFG") for a
$10,100 note. FFG's Chief Executive Officer is Mr. Quinn, and its stockholders


                                      55
<PAGE>

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. As
the transaction was among entities under common control, the difference between
the note received and the net assets of Flavorsource of $473 has been reflected
in retained earnings. Flavorsource is a developer and compounder of flavors for
use in beverages of all kinds, including coffee, tea, juices, and cordials, as
well as bakery products and ice cream and dairy products. Flavorsource was a
part of the Consumer & Industrial Products segment prior to its disposal.

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. Riverside was a part of the Consumer & Industrial Products
segment prior to its disposal.

Note 15 - Liquidation of Online Environs
----------------------------------------
On March 14, 2000 the Company purchased Online Environs, Inc. ("Online
Environs"), an Internet business solutions developer and consultant. Online
Environs sales deteriorated sharply from the acquisition date through September
20, 2002. On September 20, 2002, the Company shut down the operations of Online
Environs and liquidated the entity. At the time of its liquidation, the
liabilities of Online Environs exceeded its assets by $1,888, which, upon
deconsolidation, are no longer liabilities of the consolidated group.
Accordingly, the Company has recorded a gain of $1,888 classified as other
income, to remove the net liabilities from the consolidated financial
statements. Online Environs was part of the Consumer & Industrial Products
segment prior to its liquidation.

Note 16 - 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 $1,251, $1,757, and $1,688 in fees and expenses in 2002, 2001, and 2000,
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 owes TJC a $250 quarterly fee
for management services. The Company accrued and paid fees to TJC of $500 in
2002, accrued fees of $1,000 and paid fees of $1,250 in 2001, and accrued fees
of $1,000 and paid fees of $1,500 in 2000 related to this agreement. The Company
does not expect to accrue or pay any more money 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


                                      56
<PAGE>

by TJC, plus the reimbursement of out-of-pocket and other expenses. The Company
made no payments in 2002, 2001, and 2000, to TJC for their assistance in
relation to acquisition and refinancing activities. At December 31, 2002 and
2001, $8,429 and $8,092, respectively, was accrued related to this agreement and
is included in "accrued liabilities" on the Company's balance sheets.

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 $4,820 and $3,810 as of December 31, 2002 and 2001, 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 $15,967 and $13,318 at December 31, 2002 and 2001,
respectively, and are classified in "prepaid expenses and other current assets"
in the Company's balance sheets. The Company had reserves of $10,000 and $10,400
at December 31, 2002 and 2001, respectively, related to these fees for
management and consulting services and working capital advances.

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 $2,342 and $2,164 as of December 31, 2002 and 2001, 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.

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.



                                      57
<PAGE>

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 and De Sheng; 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 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, 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.

Intra-segment sales exist between Cape and Welcome Home and between Sate-Lite
and Deflecto. 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. Certain amounts
in the prior year have been reclassified to conform with the current year
presentation.

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.



                                      58
<PAGE>
<TABLE>
<CAPTION>

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,
                                                       -----------------------
                                                   2002          2001         2000
                                                   ----          ----         ----
<S>                                             <C>           <C>          <C>
Net Sales:
  Specialty Printing and Labeling                $104,594      $112,123     $122,691
  Jordan Specialty Plastics                       108,043        98,733       98,353
  Jordan Auto Aftermarket                         155,754       147,047      141,213
  Kinetek                                         282,666       287,362      316,666
  Consumer and Industrial Products                 68,975        77,558      128,373
                                                 ---------     ---------    ---------
    Total                                        $720,032      $722,823     $807,296
                                                 =========     =========    =========

Operating income (loss):
  Specialty Printing and Labeling                $  3,707      $   (984)    $  7,210
  Jordan Specialty Plastics                         7,501         2,057        1,928
  Jordan Auto Aftermarket                          17,488        17,194       20,449
  Kinetek                                          38,444        37,272       36,497
  Consumer and Industrial Products                  1,037        (3,485)       3,071
                                                 ---------     ---------    ---------
    Total business segment operating income        68,177        52,054       69,155

  Corporate expense                               (21,358)      (23,336)     (14,142)
                                                 ---------     ---------    ---------
    Total consolidated operating income          $ 46,819      $ 28,718     $ 55,013
                                                 =========     =========    =========

Depreciation and Amortization:
  Specialty Printing and Labeling                $  2,882      $  4,980     $  4,786
  Jordan Specialty Plastics                         5,391         6,677        6,312
  Jordan Auto Aftermarket                           2,420         4,595        4,234
  Kinetek                                           7,103        14,611       29,964
  Consumer and Industrial Products                  1,998         3,509        4,134
                                                 ---------     ---------    ---------
    Total business segment amortization
     and depreciation                              19,794        34,372       49,430
  Corporate                                         4,732         4,724        5,748
                                                 ---------     ---------    ---------
    Total consolidated depreciation
      and amortization                           $ 24,526      $ 39,096     $ 55,178
                                                 =========     =========    =========


Capital expenditures:
  Specialty Printing and Labeling                $  1,720      $  1,882     $  3,083
  Jordan Specialty Plastics                         4,319         2,623        5,630
  Jordan Auto Aftermarket                           1,381         1,209        1,992
  Kinetek                                           4,681         4,577        5,275
  Consumer and Industrial Products                    896         1,045        3,984
  Corporate                                           898         1,478        1,282
                                                 ---------     ---------    ---------
    Total capital expenditures                   $ 13,895      $ 12,814     $ 21,246
                                                 =========     =========    =========




                                      59
<PAGE>
<CAPTION>

                                                         December 31,
                                                  ---------------------------
                                                    2002              2001
                                                    ----              ----
<S>                                              <C>               <C>
Identifiable assets (end of year):
  Specialty Printing and Labeling                 $ 62,149          $100,422
  Jordan Specialty Plastics                        110,071           114,103
  Jordan Auto Aftermarket                          106,130           154,491
  Kinetek                                          354,213           354,098
  Consumer and Industrial Products                  23,188            44,441
                                                  ---------         ---------
   Total consolidated business segment assets      655,751           767,555
  Corporate assets                                  53,493            61,841
                                                  ---------         ---------
   Total consolidated identifiable assets         $709,244          $829,396
                                                  =========         =========


<CAPTION>

Summary financial information by
 geographic area is as follows:                     Year ended December 31,
                                                     ----------------------
                                                   2002           2001         2000
                                                   ----           ----         ----
<S>                                             <C>            <C>           <C>
Net sales to unaffiliated customers:
United States                                    $638,729       $648,955      $728,714
Foreign                                            81,303         73,868        78,582
                                                 --------       --------      --------
  Total                                          $720,032       $722,823      $807,296
                                                 ========       ========      ========
Identifiable assets (end of year):
United States                                    $612,163       $752,944
Foreign                                            97,081         76,452
                                                 --------       --------
  Total                                          $709,244       $829,396
                                                 ========       ========
</TABLE>


Note 19 - Acquisition and formation of subsidiaries
---------------------------------------------------
On April 11, 2002, Kinetek, Inc. formed a cooperative joint venture with
Shunde De Sheng Electric Motor Group Co., Ltd. ("De Sheng Group"), which is
named Kinetek De Sheng (Shunde) Motor Co., Ltd. (the "JV"). Kinetek, Inc.
initially contributed approximately $9,503, including costs associated with
the transaction, for 80% ownership of the JV, with an option to purchase the
remaining 20% in the future. The JV acquired all of the net assets of Shunde
De Sheng Electric Motor Co., Ltd. ("De Sheng"), a subsidiary of De Sheng
Group. The JV also assumed approximately $7,198 of outstanding debt.

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 was 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 was 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 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.



                                      60
<PAGE>

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 a Secure
Network Access Center. The Company has invested $6,483 in GramTel through
December 31, 2002 for property, equipment and other start-up related expenses.

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 5.6% of the common stock.

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 was 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. Effective January 1,
2002, the Company sold Flavorsource to Flavor & Fragrance Group Holdings, Inc.
for a $10,100 note (see note 14).

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 6,000 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
was 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 December 17, 2002, the Company sold the assets
of ISMI to a third party for a nominal amount (see note 14).

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 was 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 8.3% of SIH common units.



                                      61
<PAGE>

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 was 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 September
20, 2002, the Company shut down the operations of Online Environs and liquidated
the entity (see note 15).

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. Pro forma results of operations, assuming the acquisitions
occurred as of the beginning of the prior year, would not differ materially from
reported amounts.

Note 20 - Additional Purchase Price Agreements/Deferred Purchase Price
----------------------------------------------------------------------
Agreements
----------
The Company has a contingent purchase price agreement relating to its
acquisition of Deflecto in 1998. The agreement 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 had an additional purchase price agreement relating to its
acquisition of Yearntree in December 1999. The agreement was 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. On
March 8, 2002, the Company paid $574 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 $328, $260 and $500 in 2002, 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
were 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.



                                      62
<PAGE>

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

                                                              Three Months Ended
                                                              ------------------
                                                                                             Restated
                                      December 31       September 30         June 30 (2)     March 31 (1)
                                      -----------       ------------         -------         --------
<S>                                   <C>                <C>                <C>               <C>
2002:
Net sales                              $175,958           $186,942           $191,640          $165,492
Cost of sales,
 excluding depreciation                 113,676            119,949            121,558           105,129
Loss from continuing
  operations                            (19,170)            (1,315)              (245)           (9,140)
Net (loss) income                       (19,175)            (1,476)            52,439           (96,205)

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)


(1)   The net loss for the restated first quarter of 2002, as shown above,
      differs from the originally filed amounts by $87,065 due to the adoption
      of SFAS No. 142, as described in note 3.

(2)   The net income for the second quarter of 2002 includes an extraordinary
      gain net of tax of $52,518, related to early extinguishment of debt, as
      described in note 12.

</TABLE>








                                      63
<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      55     Chairman of the Board of Directors and Chief
                              Executive Officer.
Thomas H. Quinn        55     Director, President and Chief Operating Officer.
Joseph S. Steinberg    59     Director.
David W. Zalaznick     48     Director.
Jonathan F. Boucher    46     Director, Vice President and Assistant Secretary.
G. Robert Fisher       63     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., GFSI Inc.,
GFSI Holdings, Inc., Kinetek, Inc., Welcome Home, and Jackson Products, 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 Kinetek, Inc.
as well as a director of Welcome Home, Ameriking, Inc. and other privately held
companies. He is also a partner of The Jordan Company.

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 director of White Mountains
Insurance Group Limited, Allcity Insurance Company, Finova Group, Inc. and
Olympus Reinsurance Company, Limited. He also serves as 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
Christina, Inc., Kinetek, Inc., GFSI Inc., GFSI Holdings Inc., Jackson
Products, Inc., and Safety Insurance Group, Inc., as well as other privately
held companies.



                                      64
<PAGE>

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. and Jackson
Products, 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.

Item 11. EXECUTIVE COMPENSATION
         ----------------------

The following table shows the cash compensation paid by the Company, for the
three years ended December 31, 2002, for services in all capacities to the Chief
Executive Officer and President and Chief Operating Officer of the Company.

<TABLE>
<CAPTION>

                                                            Summary Compensation Table

                                                                Annual Compensation
                                           --------------------------------------------------------
Name and Principal Position                Year       Salary        Bonus        Other Compensation
---------------------------                ----       ------        -----        ------------------
<S>                                       <C>      <C>           <C>                <C>
John W. Jordan II, Chief Executive         2002             -             -                 -
Officer(1)
                                           2001             -             -                 -
                                           2000             -             -                 -
Thomas H. Quinn, President and Chief       2002     1,000,000       750,000            13,800
Operating Officer
                                           2001       750,000       250,000            13,800
                                           2000       750,000     1,250,000            13,800

__________________________

(1)    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.
</TABLE>


         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 $1,000,000 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.


                                      65
<PAGE>

        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.

Item 12. PRINCIPAL STOCKHOLDERS
         ----------------------

The following table furnishes information, as of March 31, 2003, 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
                                             ----------------------------------
                                                                    Percentage
                                              Number of Shares      Owned (1)
                                              ----------------      ----------
Executive Officers and Directors
John W. Jordan, II (2) (3) (4) (5)              17,772.9119           18.0%
David W. Zalaznick (3) (6)                      19,965.0000           20.3%
Thomas H. Quinn (7)                                  0.0000            0.0%
Leucadia Investors, Inc. (3)                     9,969.9999           10.1%
Jonathan F. Boucher                              5,533.8386            5.6%
G. Robert Fisher (4) (8)                           624.3496            0.6%
Joseph S. Steinberg (9)                              0.0000            0.0%
All directors and officers as a
group (5 persons) (3)                           53,866.1000           54.6%
____________________________

(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, 2002, there were 98,501.0004 shares of
       Common Stock issued and outstanding.

(2)    Includes 1 share held personally and 17,771.9119 shares held by the John
       W. Jordan II Revocable Trust. Does not include 309.2933 shares held by
       Daly Jordan O'Brien, a sister of Mr. Jordan, 309.2933 shares held by
       Elizabeth O'Brien Jordan, also a sister 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 JZ Equity Partners PLC ("JZEP"), 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 JZEP.

(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 12,000 shares held by the John W. Jordan II Family
       Limited Liability Company of which John W. Jordan II is a Manager.

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

(7)    Excludes 13,000 shares held by TQF, LLC of which Thomas H. Quinn is
       the Manager.

(8)    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.

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


                                      66
<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".

JIR. The Company has $16.3 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 increased the Company's investment in JZ International
to $12.3 million at December 31, 2002. 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. Through December 17, 2002, the Company had made unsecured advances of
approximately $11.2 million to Internet Services Management Group ("ISMG"). ISMG
is an Internet services provider ("ISP") for more than 93,000 customers. The
Company also owned $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. On December 17, 2002, the
Company sold its investments in ISMG for a nominal amount.

Certain Other Transactions. See notes 4, 5, 8, and 16 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 2002,
Sonnenschein, Nath & Rosenthal were paid approximately $1.3 million in fees and
expenses by the Company.



                                      67
<PAGE>

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 owes
TJC a $0.3 million quarterly fee for management services. The Company accrued
fees to TJC of $0.5 million, $1.0 million, and $1.0 million, in 2002, 2001, and
2000, respectively, related to this agreement. The Company does not expect to
accrue or pay any more money 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
made no payments in 2002, 2001 and 2000, to TJC for their assistance in relation
to acquisition and refinancing activities. At December 31, 2002, $8.4 million
was accrued related to this agreement.

Item 14. CONTROLS AND PROCEDURES
         -----------------------

         Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14 of
the Securities Exchange Act of 1934 ("Exchange Act") promulgated thereunder, our
chairman and chief financial officer have evaluated the effectiveness of our
disclosure controls and procedures as of a date within 90 days prior to the date
of the filing of this report (the "Evaluation Date") with the Securities and
Exchange Commission. Based on such evaluation, our chairman and chief financial
officer have concluded that our disclosure controls and procedures were
effective as of the Evaluation Date to ensure that information required to be
disclosed in reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in SEC
rules and forms.

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



                                      68
<PAGE>

                                     Part IV

Item 15. 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, 2002, 2001, and 2000 is submitted herewith:

         Item                                                      Page Number
         ----                                                      -----------
         Schedule II - Valuation and qualifying accounts               76

         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 15(a)
         (3) follows the "Signatures" section hereof and is incorporated herein
         by reference.

(a)      Reports on Form 8-K

         None



                                      69
<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:            March 31, 2003                  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:            March 31, 2003                 Chairman of the Board of
                                                 Directors and Chief
                                                 Executive Officer








                                              By   /s/ Thomas H. Quinn
                                                  -----------------------
                                                  Thomas H. Quinn
Dated:            March 31, 2003                  Director, President and
                                                  Chief Operating Officer






                                      70
<PAGE>



                                              By   /s/ Jonathan F. Boucher
                                                  -----------------------
                                                  Jonathan F. Boucher
Dated:            March 31, 2003                  Director, Vice President,
                                                  and Assistant Secretary








                                              By   /s/ G. Robert Fisher
                                                  -----------------------
                                                  G. Robert Fisher
Dated:            March 31, 2003                  Director, General Counsel
                                                  and Secretary








                                              By   /s/ David W. Zalaznick
                                                  -----------------------
                                                  David W. Zalaznick
Dated:            March 31, 2003                  Director








                                              By   /s/ Joseph S. Steinberg
                                                  -----------------------
                                                  Joseph S. Steinberg
Dated:            March 31, 2003                  Director








                                              By   /s/ Thomas C. Spielberger
                                                  -----------------------
                                                  Thomas C. Spielberger
Dated:            March 31, 2003                  Sr. Vice President,
                                                  Finance and Accounting
                                                  (Principal Financial Officer)




                                      71
<PAGE>

                                   CERTIFICATE

I, John W. Jordan II, certify that:

1)   I have reviewed this annual report on Form 10-K of Jordan Industries, Inc;

2)   Based on my knowledge, this annual report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this annual report;

3)   Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4)   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)  Designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this annual report is
         being prepared;

     b)  Evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         annual report (the "Evaluation Date"); and

     c)  Presented in this annual report our conclusions about the effectiveness
         of the disclosure controls and procedures based on our evaluation as of
         the Evaluation Date;

5)   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

     a)  All significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

     b)  Any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and

6)   The registrant's other certifying officers and I have indicated in this
     annual report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Date:  March 31, 2003                                 /s/  John W. Jordan II
                                                      ------------------------
                                                      Name: John W. Jordan II
                                                      Title: Chairman and CEO


                                      72
<PAGE>

                                   CERTIFICATE

I, Thomas C. Spielberger, certify that:

1.   I have reviewed this annual report on Form 10-K of Jordan Industries, Inc;

2.   Based on my knowledge, this annual report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all material
     respects the financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)  Designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this annual report is
         being prepared;

     b)  Evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         annual report (the "Evaluation Date"); and

     c)  Presented in this annual report our conclusions about the effectiveness
         of the disclosure controls and procedures based on our evaluation as of
         the Evaluation Date;

5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

     a)  All significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

     b)  Any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and

6.   The registrant's other certifying officers and I have indicated in this
     annual report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Date:  March 31, 2003                         /s/  Thomas C. Spielberger
                                              ----------------------------
                                              Name: Thomas C. Spielberger
                                              Title: SVP, Finance & Accounting
                                              Principal Financial Officer






                                      73
<PAGE>
<TABLE>
<CAPTION>


                                                                                                Schedule II


                                            JORDAN INDUSTRIES, INC.
                                       VALUATION AND QUALIFYING ACCOUNTS
                                            (dollars in thousands)



                                                                     Uncollectible
                                                       Additions       balances
                                        Balance at     charged to     written off                  Balance at
                                        beginning       cost and         net of                      end of
                                        of period       expenses       recoveries       Other        period
                                        ---------       --------       ----------       -----        ------
<S>                                      <C>            <C>            <C>            <C>           <C>
December 31, 2000:

Allowance for doubtful accounts           $2,809         2,849           (1,178)         (96)        $4,384

December 31, 2001:

Allowance for doubtful accounts           $4,384         2,720           (2,419)        (188)        $4,497

December 31, 2002:

Allowance for doubtful accounts           $4,497         4,583           (2,449)         (71)        $6,560

</TABLE>











                                      74
<PAGE>

                                  EXHIBIT INDEX
                                  -------------

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.
4(j) 11     --Indenture, dated November 7, 1996, between Kinetek, Inc. and
              Fleet National Bank.
4(k) 12     --First Supplemental Indenture, dated December 17, 1997, between
              Kinetek, Inc. and State Street Bank and Trust Company, as
              Trustee.
4(l) 12     --Indenture, dated December 17, 1997, between Kinetek, Inc. and
              State Street Bank and Trust Company, as Trustee.
4(m) 13     --5% Indenture, dated as of April 12, 2002, among Kinetek
              Industries, Inc., U.S. Bank National Association, as Trustee and
              the Guarantors listed therein.
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) *     --Amended and Restated  Non-Negotiable  Subordinated  Note,
              dated as of June 30, 2002,  issued by Pamco Printed
              Tape and Label (f/k/a Pamco Holdings, Inc.) in the initial
              principal amount of $6,112,501.


                                      75
<PAGE>

10(j) 2,14  --Tax Sharing Agreement, dated as of June 29, 1994, among the
              Company and the subsidiaries signatory thereto.
10(k) 7,2   --Properties Services Agreement, dated as of July 25, 1997,
              between Jordan Industries, Inc. and its subsidiaries.
10(l) 7,2   --Transition Agreement, dated as of July 25, 1997, between Jordan
              Industries, Inc. and Motors & Gears, Inc.
10(m) 7     --New TJC Management Consulting  Agreement,  dated as of July 25,
              1997, between TJC Management Corp. and Jordan Industries, Inc.
10(n) 7     --Termination Agreement, dated as of July 25, 1997, between
              Jordan Industries, Inc. and its subsidiaries.
10(o) 7,15  --Form of Indemnification Agreement between Jordan Industries,
              Inc. and its subsidiaries and their directors.
10(p) 14    --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(q) 14    --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(r) 14    --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(s) 2,14  --Management Consulting Agreement, dated as of August 10, 2001,
              among JII, Inc. and the subsidiaries signatory thereto.
10(t) 2,14  --Transaction Advisory Agreement, dated as of August 10, 2001,
              among JII, Inc. and the subsidiaries signatory thereto.
10(u) 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(v) 2,14  --Intercompany Loan Agreement, dated as of August 16, 2001, among
              JII, Inc. and the subsidiaries signatory thereto, and
              accompanying Demand Notes.
10(w) 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(x) 10    --Management Consulting Agreement, dated as of December 14, 2001,
              among the Company, Motors and Gears Holdings, Inc. and the
              subsidiaries signatory thereto.
10(y) 10    --Transaction Advisory Agreement, dated as of December 14, 2001,
              among the Company, Motors and Gears Holdings, Inc. and the
              subsidiaries signatory thereto.
10(z) 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(aa) 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(bb) 11   --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(cc) 12   --Electrical Design and Control Company, Inc. Non-Negotiable
              Subordinated Note in the principal aggregate amount of
              $1,333,333 payable to Tina Levire.
10(dd) 12   --Electrical Design and Control Company, Inc. Non-Negotiable
              Subordinated Note in the principal aggregate amount of
              $1,333,333 payable to Marta Monson.
10(ee) 12   --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.






                                      76
<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          Incorporated by reference to the 1996 Form S-4 Registration
            Statement of Kinetek, Inc.
12          Incorporated by reference to the 1998 Form S-4 Registration
            Statement of Kinetek, Inc.
13          Incorporated by reference to the 8-K of Kinetek, Inc., dated
            May 8, 2002.
14          Incorporated by reference to the Company's 2001 Form 10-K.
15          The form of indemnification agreement was entered into with all
            of the Company's directors and is identical in all material
            respects with the form included. Copies of the additional
            indemnification agreements have therefore not been included as
            exhibits to this filing, in accordance with Instruction 2 to
            Item 601 of Regulation S-K.

*           Filed herewith.