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, 2005     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

            Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act.

                             Yes ___                                  No _X_

            Indicate  by check mark if the  registrant  is not  required to file
reports pursuant to Section 13 or Section 14 (d) of the Act.
                             Yes _X_                                  No ___

            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_ .


                                      -1-
<PAGE>


              Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer. See
definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of
the Exchange Act.

   Large Accelerated Filer __ Accelerated Filer __  Non-Accelerated Filer _X_


       Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12 b-2 of the Exchange 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 24, 2006:98,501.0004.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None
















                                      -2-

<PAGE>


                                TABLE OF CONTENTS

Part I                                                                     Page
-----

Item 1.      Business                                                        4
Item 1A.     Risk Factors                                                   16
Item 1B.     Unresolved Staff Comments                                      18
Item 2.      Properties                                                     19
Item 3.      Legal Proceedings                                              21
Item 4.      Submission of Matters to a Vote of Security Holders            21

Part II
-------

Item 5.      Market for the Registrant's Common Equity and Related
             Stockholder Matters                                            22
Item 6.      Selected Financial Data                                        23
Item 7.      Management's Discussion and Analysis of Financial
             Condition and Results of Operations                            24
Item 7A.     Quantitative and Qualitative Disclosures About
             Market Risks                                                   39
Item 8.      Financial Statements and Supplementary Data                    40
Item 9.      Changes in and Disagreements with Accountants on
             Accounting and Financial
             Disclosure                                                     85
Item 9A.     Controls and Procedures                                        85
Item 9B.     Other Information                                              85

Part III
--------

Item 10.     Directors and Executive Officers                               86
Item 11.     Executive Compensation                                         89
Item 12.     Security Ownership of Certain Beneficial Owners
             and Management                                                 90
Item 13.     Certain Relationships and Related Transactions                 91

Part IV
-------

Item 14.     Principal Accountant Fees and Services                         95
Item 15.     Exhibits and Financial Statement Schedules                     96

             Signatures                                                     97
















                                      -3-

<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 17 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.

The Company believes that its businesses are characterized by leading positions
in niche industries, 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 as of December 31, 2005.



























                                      -4-
<PAGE>

                             Jordan Industries, Inc.
                         $729.5 Million of Net Sales (1)

SPECIALTY PRINTING AND LABELING            -  Pamco
$50.0 Million of Net Sales                 -  Valmark
                                           -  Seaboard

CONSUMER AND INDUSTRIAL PRODUCTS (2)       -  Welcome Home LLC
$66.2 Million of Net Sales                 -  GramTel

JORDAN SPECIALTY PLASTICS                  -  Beemak
$156.6 Million of Net Sales                -  Sate-Lite
                                           -  Deflecto

JORDAN AUTO AFTERMARKET                    -  Dacco
$119.2 Million of Net Sales                -  Alma
                                           -  Atco

Kinetek                                    -  Imperial Group
$337.5 Million of Net Sales                -  Merkle-Korff
                                           -  FIR
                                           -  Motion Control
                                           -  Advanced D.C.
                                           -  Kinetek 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)  Includes sales from Cho-Pat of $0.4 million prior to its sale on
     March 24, 2005.























                                       -5-
<PAGE>

The Company's operations were conducted through the following business units as
of December 31, 2005:

Specialty Printing and Labeling

The Specialty Printing and Labeling Group manufactures and markets (i) labels,
tapes, and printed graphic panel overlays for electronics and other
manufacturing companies and (ii) 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, 2005, the Specialty
Printing and Labeling group generated net sales of $50.0 million. Each of the
Specialty Printing and Labeling subsidiaries is discussed below:

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 53% of Valmark's 2005 net sales of $16.0
million were derived from the sales of membrane switch control panels, 37% from
graphic panel overlays, and 10% from labels and other products.

Valmark sells to four primary markets: medical instrumentation, general
electronics, turn-key services serving primarily the telecommunications market,
and personal computers. During 2005, Valmark's products were subject to
increased foreign price competition in all of its market segments. Although
Valmark does not operate free of foreign competition within any of its markets,
it does maintain advantages over foreign competitors 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, exceptional customer service and excellent quality
ratings.

Pamco. Pamco, which was founded in 1953 and acquired 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 candy, housewares, health and beauty aids
and food packaging. All of Pamco's products are made to customer specifications
and approximately 84% of all sales were manufactured in-house in 2005. The
remaining 16% of sales were purchased printed products and included such items
as business cards and stationery.

Pamco's products are marketed by a team of 11 sales representatives who procure
new accounts and service existing accounts. Existing accounts are serviced by 8
customer service representatives. Pamco's customers represent many different
industries with the five largest customers accounting for approximately 13% of
2005 net sales of $18.4 million.

Pamco competes in a highly  fragmented  industry.  Pamco  emphasizes its 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.





                                       -6-
<PAGE>



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 48% of Seaboard's 2005 net sales of $15.6
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 at competitive prices.

Consumer and Industrial Products

Consumer and Industrial Products serves multiple product segments. It
manufactures and imports gift items; is a specialty retailer of gifts and
decorative home furnishings and provides data storage services at a Secure
Network Access Center. For the year ended December 31, 2005, the Consumer and
Industrial Products subsidiaries generated consolidated net sales of $66.2
million (including sales from Cho-Pat of $0.4 million prior to its sale in March
2005). Each of the current Consumer and Industrial Products subsidiaries is
discussed below.

Welcome Home LLC. During 2002, Cape Craftsmen and Welcome Home were combined
into one entity, Welcome Home LLC. Cape Craftsmen remains a division of Welcome
Home LLC that imports gifts, wooden furniture, framed art and other accessories
from the Far East, while the Welcome Home division is a retailer specializing in
such imports.

Cape Craftsmen sells its products through 3 in-house salespeople and 100
independent sales representatives. Cape Craftsmen competes in a highly
fragmented industry and has therefore found it most effective to compete with
most wood manufacturers and importers on the basis of price. Cape Craftsmen also
strives to deliver better quality and service than its competitors. Net sales of
the Cape Craftsmen division in 2005 were $11.8 million, excluding sales to the
Welcome Home division, of $18.3 million.

Welcome Home currently operates 122 stores located in factory outlet centers and
regional malls in 38 states. Welcome Home offers a broad product line of 2,500
to 4,000 items consisting of 8 basic groups, including furniture, candles,
lighting, decorative accessories, decorative garden items, 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 $51.3 million for the year ended December
31, 2005.

GramTel. GramTel USA, Inc. was started by the Company in December 2000. GramTel
is a information technology infrastructure and disaster recovery company. It






                                       -7-
<PAGE>

owns and operates a state-of-the-art data center that houses clients'
business-critical computer systems, applications, and data. The facility
provides alternate sites for companies to continue operations in the event of a
disaster or emergency. GramTel leverages its infrastructure and technical staff
to support the data storage needs of businesses at a fraction of the cost that
businesses would incur to perform these tasks in-house or with higher-priced
providers. It provides the facilities, technical personnel and network
connectivity to keep the critical operations of businesses available 24 hours a
day. GramTel had net sales of $2.7 million for the year ended December 31, 2005.

Jordan Specialty Plastics

Jordan Specialty Plastics serves a broad range of wholesale and retail markets
within the highly-fragmented specialty plastics industry. The group primarily
designs, manufactures and sells (1) "take-one" point of purchase brochure,
folder and application display holders, (2) plastic injection-molded hardware
and office supply products, (3) extruded vinyl chairmats, and (4) safety
reflectors for bicycles and commercial truck manufacturers. 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, 2005, the Jordan Specialty Plastics subsidiaries generated
consolidated net sales of $156.6 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 a manufacturer and distributor 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. Beemak's
net sales for 2005 were $6.8 million.

Beemak's products are both injection-molded and custom fabricated. Injection
molded products consists primarily of polystyrene plastic with production being
outsourced to affiliated companies. Custom fabrication consists primarily of
heat bent acrylic plastic sheets with processing performed in-house. Beemak also
provides silk screening of decals and logos onto the final product.

Beemak sells its products through a direct sales force 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.

Sate-Lite Manufacturing. Sate-Lite specializes in safety reflectors for
bicycles, heavy duty commercial vehicles, and disposable health care products.
Sate-Lite was founded in 1968 and acquired by the Company in 1988. Bicycle
reflectors and plastic bicycle parts accounted for 33% of Sate-Lite's net sales
in 2005, sales of emergency warning triangles and specialty reflectors and
lenses to commercial truck customers accounted for approximately 20% of net
sales in 2005, and sales of disposable health care products accounted for
approximately 9% of net sales. An additional 38% of 2005 net sales were derived
from other miscellaneous plastic injection molded products. Sate-Lite's net
sales for 2005 were $16.5 million, excluding sales to Deflecto and Beemak,
related parties, of $8.6 million and $0.9 million, respectively.





                                       -8-
<PAGE>



Sate-Lite's bicycle and truck/auto products are sold directly to a number of
OEMs. The two largest OEM customers are Truck-Lite, and Giant Phoenix (China)
which accounted for approximately 11% of Sate-Lite's net sales in 2005. The
disposable health care products are sold primarily to a single distributor who
has a long-term supply agreement with a major domestic health care products
supplier. In 2005, Sate-Lite's five largest customers accounted for
approximately 30% 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. Sate-Lite's
net export sales accounted for approximately 15% of its total 2005 sales. The
principal raw materials used in manufacturing Sate-Lite's products are plastic
resins. Sate-Lite purchases these materials from several independent suppliers.
In 1998, Sate-Lite opened a wholly owned manufacturing factory in China.
Sate-Lite sells to a variety of companies in Asia including Tandem, Ideal,
Giant/Phoenix, and other bicycle manufacturers who have increased their sales to
the North American bicycle market through mass market branded companies such as
Huffy, Pacific Cycle (Mongoose, Schwinn, Roadmaster, GT), Kent and Magna.

The markets for bicycle and truck/auto parts are highly competitive. Sate-Lite
competes in these markets by being a low cost producer, offering innovative
products and by relying on its established reputation for producing high quality
plastic components in the industries served. Sate-Lite's principal competitors
in the bicycle parts market consist primarily of foreign companies and Cortina,
James King, and Accutek in the truck/auto markets.

Deflecto Corporation. Founded in 1960 and acquired by the Company in 1998,
Deflecto designs, manufactures and markets plastic injection-molded products for
mass merchandisers, major retailers and large wholesalers. Deflecto sells its
products in two product categories: hardware products and office supply
products. Hardware products, which comprised approximately 66% of Deflecto's net
sales in 2005, 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 33% of net sales in 2005 and include such
items as wall pockets, literature displays, file and chart holders, business
card holders, chairmats and other top-branded office supply products. The
remaining 1% of net sales are for bicycle reflectors. Deflecto's consolidated
net sales for 2005 were $133.3 million.

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

Deflecto sells its products through an in-house salaried sales force and the use
of independent sales representatives. Deflecto has the critical mass to command
strong positions and significant shelf space with the major mass merchandisers
and retailers. In the hardware products line, Deflecto sells to major national
retailers such as Ace Hardware, Wal-Mart, Lowes 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 Stationers and S.P. Richards. Deflecto has





                                       -9-
<PAGE>

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
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, 2005, the Jordan Auto Aftermarket subsidiaries generated
consolidated net sales of $119.2 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, is a fluid drive
coupling between the engine and transmission and smoothly transfer 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 47 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 2005, no single customer accounted for more than 2% of
Dacco's net sales. Net sales were $53.0 million during the year ended December
31, 2005.

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,
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-stop procurement of a broad variety of both hard and soft products.







                                       -10-
<PAGE>

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 $52.3 million during the year ended December 31, 2005.

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 believes it 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.
Management believes 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
original equipment service products is very demanding, requiring stringent
quality standards, thereby 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 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,
evaporators, 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. Also, Atco acquired CoolStar, Inc. in 2005.
This move added evaporators to Atco's product line. 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 Atco's QS-9000
certified plant in Ennis, Texas. Atco has led the way with innovations such as
the patented portable hand-operated model 3700 crimping tool. Net sales were
$13.9 million during the year ended December 31, 2005.

Kinetek

Kinetek is a manufacturer of specialty purpose electric motors, gearmotors,
gearboxes, gears, transaxles and electronic motion controls, serving a diverse







                                       -11-
<PAGE>

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, and elevators.

Kinetek operates in the businesses of electric motors ("motors") which includes
the subsidiaries Imperial Group, Merkle-Korff, Fir, Advanced D.C. and Kinetek De
Sheng; and electronic motion control systems ("controls") which includes the
subsidiary Motion Control Engineering. For the year ended December 31, 2005
Kinetek generated net sales of $337.5 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, 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
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
care equipment, commercial dishwashers, commercial sewing machines, industrial
ventilation equipment, golf carts, lift trucks and elevators.





                                       -12-
<PAGE>


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 a range of
elevators. The components utilized in an elevator 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.

Backlog

As of December 31, 2005 the Company had a backlog of approximately $106.6
million compared with a backlog of $91.5 million as of December 31, 2004. The
backlog is primarily due to motor sales at Merkle-Korff and controls sales at
Motion Control, both subsidiaries of Kinetek, printing and graphic component
sales at Valmark, folding boxes at Seaboard, plastic products at Deflecto and
air conditioning assemblies and parts at Atco. Management believes that the
Company will ship substantially its entire backlog during 2006.

Seasonality

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

Research and Development

As a general matter, the Company operates businesses that do not require
substantial capital or research and development expenditures. However,
development efforts are targeted at certain subsidiaries as market opportunities
are identified.

Patents, Trademarks, Copyrights and Licenses

The Company protects its confidential, proprietary information as trade secrets.
With some exceptions noted in the business descriptions above, 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








                                       -13-
<PAGE>

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, 2005, the Company and its subsidiaries employed approximately
6,363 people. Approximately 1,245 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 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 the handling or release of
hazardous chemicals. The Company believes it is in substantial compliance with
such laws and regulations.

In 2003, the USEPA has sent the Company letters which indicate that it may be a
potential responsible party at two Superfund sites. The first alleged that, JII
Promotions had shipped lead typeface to the Pittsburgh Metal & Equipment site in
New Jersey. In October 2005, the Company settled this matter through an
Administrative Consent Order for a deminimus payment of less than $3 thousand.
The second alleged that Alma sent wastes to the proposed Lake Calumet Cluster
site in Illinois. Alma made a claim under the environmental indemnity from the
former owner of Alma and the former owner has assumed responsibility for this
matter.

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










                                       -14-
<PAGE>

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, Michigan that are contaminated by chlorinated
solvent and oil contamination, the main plant on Michigan Avenue and a satellite
plant on North Court Street. The former owner retained full responsibility for
the continued investigation and remediation of the contaminated groundwater and
soil at the properties when Alma acquired them in April 1999. The Michigan
Avenue property has been the subject of investigation by the Michigan Department
of Environmental Quality, ("MDEQ"), since 1982. By 1985, the former owner had
cleaned out, closed and capped the lagoons that were the source of the
contamination and in 1992, installed a groundwater remediation system. In
January 1999, the former owner submitted to the MDEQ a proposed remedial action
plan that recommends that the groundwater treatment system continue to operate
for up to 30 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 that
prohibits the private use of groundwater for drinking water. The MDEQ 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 MDEQ has approved the
additional investigation. Some of the sampling was conducted in 2004 and the
rest in 2005. The former owner submitted the data to MDEQ and asked for approval
of the remedial action plan. The second property is contaminated with petroleum
constituents and chlorinated solvents and the former owner, under the
supervision of the MDEQ, is investigating the scope and extent of the
contamination. In May 2003, the former owner also submitted a remedial action
plan with respect to this property to the MDEQ and an interim response plan for
removed contaminated soils deemed to be the source of contamination.
Contamination soils were excavated in 2004 and ground soil sampling was
conducted and the data was submitted to DEQ 2005.

Alma has received two claims for contribution to the investigation and cleanup
of waste materials at offsite locations. One is the notice letter from the USEPA
referenced above regarding the Lake Calumet Cluster site. USEPA sent a follow-up
information request letter in December 2004. The other is a claim by TPI
Petroleum for the removal or remediation of asbestos-containing clutch plates
allegedly discarded in the 1950s or 1960s at TPI's property in Alma.

In connection with its 1999 acquisition of the Alma properties and other assets,
the Company obtained indemnification and a $1.5 million environmental escrow.
Claims for losses against the environmental escrow were to be filed by March
2004. Prior to the deadline, Alma filed claims for the Michigan Avenue











                                      -15-
<PAGE>

contamination, the North Court Street contamination, the TPI Petroleum claim and
the proposed Lake Calumet Cluster site. Although undisputed amounts remaining in
environmental escrow are to be distributed to the former owners in March 2004,
the claims filed put the total amount in the environmental escrow in dispute.
The $1.5 million remains in escrow to cover the outstanding claims.

Since October 1997, Dacco has engaged in investigation and remediation of
possible releases of petroleum and other chemicals into the soil and groundwater
from underground storage tanks and facility operations at its Cookeville,
Tennessee property under the direction of the Tennessee Department of
Environmental Conservation, ("TNDEC"). In 2002 and 2003, Dacco conducted
extensive monitoring of the extent of the contamination, the potential for
offsite migration and the methods for remediation. In July 2002, Dacco installed
a simple, free product recovery system in one of the monitoring wells located in
the area with the most extensive contamination. The investigation concluded that
the contamination was relatively small and contained, and the consultant
recommended that Dacco continue to use the free product recovery well until
quarterly monitoring results confirm that the release was contained onsite.
Dacco submitted this proposal to the TNDEC in August 2003 and has continued to
operate the free product recovery system. It estimates that the total potential
cost for the Cookeville site will be between $10 and $200 over the next five
years.

Item 1A  RISK FACTORS
         ------------
Risk Factors

Certain principals, partners, officers, employees and affiliates of The Jordan
Company control all fundamental matters affecting the Company.
Certain principals, partners, officers, employees and affiliates of The Jordan
Company and their respective family members, collectively referred to as the
Jordan Group, own a majority of the outstanding common and other voting stock of
the Company. The Jordan Group has sufficient votes to elect all of the Company's
directors and control the management and financing decisions of the Company. In
addition, as owner of a majority of the outstanding common stock and other
voting stock of the Company, the Jordan Group is able to approve any action
requiring the approval of its shareholders, including the adoption of amendments
to its certificate of incorporation and the approval of mergers or sales of all
or substantially all of its assets.

The Company, through its respective subsidiaries, operates in highly competitive
industries and competes with many larger and better capitalized companies.
Each of the business lines that the Company operates compete with a substantial
number of national, regional and local competitors, many of which have greater
financial and other resources than the Company. Many of these competitors can be
expected to continue to improve the design and performance of their products and
to introduce new products with competitive price and performance
characteristics. Although the Company believes that it has certain advantages
over its competitors, realizing and maintaining those advantages will require
continued investment by it in research and development, quality standards,
marketing and customer service and support. There can be no assurance that the
Company will have sufficient resources to continue to make those investments or
that they will be successful in maintaining those advantages. Failure to make
those investments or to maintain those advantages could have a material adverse










                                      -16-
<PAGE>

effect on each of its respective businesses, financial conditions and results of
operations and the Company's ability to generate cash flow to service its
obligations.

The Company's operations are subject to substantial environmental regulation.
The Company and its respective operating subsidiaries are subject to federal,
state, provincial, local and foreign laws, regulations and ordinances related to
the storage, use, discharge and disposal of toxic, volatile or otherwise
hazardous materials used in their respective manufacturing processes. Under
applicable environmental laws, the Company's subsidiaries may be responsible for
the remediation of environmental conditions and may be subject to associated
liabilities relating to the facilities and the land on which their facilities
are situated, regardless of whether they lease or own the facilities in
question, and regardless of whether such environmental conditions were created
by the Company, any of their respective subsidiaries, by a prior owner or tenant
or by any other person. Moreover, we anticipate that such laws and regulations
will become increasingly stringent in the future. We cannot assure you that the
need to comply with environmental laws and regulations or that environmental
conditions relating to prior, existing or future facilities and operations of
the Company's subsidiaries will not have a material adverse effect on their
respective businesses, financial conditions and results of operations.

Increases in the prices of raw materials could adversely affect our
subsidiaries' operations.
The Company's subsidiaries purchase most of the raw materials for their products
on the open market, and their sales may be affected by changes in the market
price of such raw materials. We do not generally engage in commodity hedging
transactions for raw materials. Although the Company's subsidiaries attempt to
pass on increases in the price of raw materials to their customers, there have
been delays in the subsidiaries' ability to pass on such increases in the past
and there can be no assurance that they will be able to do so in the future on a
timely basis, or at all. Additionally, significant increases in the prices of
the Company's subsidiaries' products due to increases in the cost of raw
materials could have a negative effect on demand for their respective products
and a material adverse effect on their respective businesses, financial
conditions and results of operations.

We are highly dependent on our key personnel.
The Company is highly dependent on a small number of executive officers and key
employees, both individually and as a group. The Company's future performance
will be substantially dependent on their ability to retain and motivate these
individuals and to attract and retain additional qualified personnel in the
future. The loss of the services of any of the Company's executive officers or
key employees or the inability to identify, hire and retain other highly
qualified technical and managerial personnel could have a material adverse
effect on their respective businesses, financial conditions and results of
operations.

We are subject to the risks of doing business in foreign countries.
The Company has significant operations outside the United States. The risks of
doing business in foreign countries include:
     o  Adverse changes or greater volatility in the economies of those
        countries;
     o  Adverse effects of currency exchange controls;
     o  Adverse changes to the regulatory environment of those countries;
     o  Adverse changes to the tax laws and regulations of those countries
     o  Restrictions on the withdrawal of foreign investment and earnings;










                                     -17-
<PAGE>

     o  The nationalization of our businesses
     o  The potential instability of foreign governments, including from
        domestic insurgency movements; and
     o  The challenge of managing culturally and geographically diverse
        operations.

Operations in foreign countries are also subject to economic uncertainties,
including, among others, risk or renegotiation or modification of existing
agreements or arrangements with governmental authorities, exportation and
transportation tariffs, foreign exchange restrictions and changes in taxation
structure.

The Company's businesses could be negatively impacted if they fail to maintain
satisfactory labor relations.
Collectively, over 19% of the Company's subsidiaries' employees currently belong
to unions and operate under collective bargaining agreements. There can be no
assurance that future issues with their respective labor unions will be resolved
favorably or that they will not experience a work stoppage that could adversely
affect their respective businesses. The Company's current collective bargaining
agreements are with various unions and generally expire over the next one to
three years. There can be no assurances that new agreements will be reached or
that the Company will be able to negotiate extensions of such agreements on
favorable terms. Any work stoppage could have a material adverse effect on the
Company's business and financial condition and results of operations.

The Company has a substantial amount of debt maturing in 2006.
The Company's subsidiary, Kinetek, has Senior Notes with a principal amount of
$270 million, maturing in November of 2006. While the Company is currently
evaluating multiple scenarios for either the repayment or refinancing of that
debt prior to its maturity date, there can be no assurance that the Company will
complete the necessary transactions prior to that date. Should the Company be
unable to repay or refinance this debt prior to its maturity date, the Company
would risk a default of its debt covenants and significant stress on its access
to cash for ongoing operations. Such defaults or reduction in available cash
could have a material adverse effect on the Company's business and financial
condition and results of operations.

Item 1B. UNRESOLVED STAFF COMMENTS
         -------------------------

Not applicable to the Company.


















                                      -18-
<PAGE>




Item 2.  Properties
         ----------

The Company leases approximately 13,411 square feet of office space for its
headquarters in Illinois. The principal properties of each subsidiary of the
Company at December 31, 2005, and the location, the primary use, the capacity,
and ownership status thereof, are set forth in the table below.
<TABLE>
<CAPTION>

                                                                           SQUARE            OWNED/
COMPANY LOCATION                      USE                                  FEET              LEASED
----------------                      ---                                  -------           ------
<S>                                   <C>                                     <C>             <C>

Advanced DC
  Syracuse, NY                        Manufacturing/Administration            49,600           Owned
  Syracuse, NY                        Manufacturing                           18,500          Leased
  Syracuse, NY                        Manufacturing                           14,000          Leased
  Eternoz, France                     Manufacturing/Administration            19,000          Leased
  Putzbrunn, Germany                  Warehouse                                1,200          Leased

Alma
  Alma, MI                            Manufacturing/Warehouse                276,200           Owned
  Alma, MI                            Manufacturing/Warehouse                103,000           Owned
  Alma, MI                            Warehouse                               46,000           Owned
  Alma, MI                            Warehouse                               33,400           Owned
  Alma, MI                            Warehouse                                9,600           Owned
  Alma, MI                            Warehouse                               43,000          Leased

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

Beemak
  Cerritos, CA                        Manufacturing/Administration            40,000          Leased

Cape Craftsmen
  Elizabethtown, NC                   Warehouse/Administration               175,000          Leased
  Elizabethtown, NC                   Warehouse/Outlet Store                  10,000          Leased
  Elizabethtown, NC                   Warehouse                               30,000          Leased
  Wilmington, NC                      Administration                           6,250          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                                88,700          Leased
  Pearland, TX                        Manufacturing/Assembly                  80,000          Leased
  Newport, Wales                      Manufacturing/Administration            92,000           Owned
  Aurora, Ontario                     Manufacturing/Administration            34,000          Leased
  Ontario, CA                         Manufacturing                           36,500          Leased
  Jefferson, GA                       Manufacturing                           51,000          Leased
  Dover, OH                           Manufacturing/Administration            56,000          Leased
  Houston, TX                         Manufacturing/Assembly                  33,000          Leased
  Mira Loma, CA                       Warehouse                               44,000          Leased

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

FIR
  Casalmaggiore via Vanoni, Italy     Manufacturing                            4,000          Leased
  Casalmaggiore via Vanoni, Italy     Manufacturing                           18,000           Owned
  Casalmaggiore via Roma, Italy       Manufacturing/Administration           189,000           Owned
  Casalmaggiore via Cazumenta, Italy  Manufacturing/Administration            52,000          Leased
  Varano, Italy                       Manufacturing                           97,000           Owned
  Genova, Italy                       Research & Development/Manufacturing    34,000          Leased




                                      -19-
<PAGE>
<CAPTION>
<S>                                  <C>                                    <C>              <C>
GramTel
  South Bend, IN                      Sales/Administration/Other              19,000           Owned

Imperial Group
  Akron, OH                           Manufacturing                          106,000          Leased
  Middleport, OH                      Manufacturing                           85,000           Owned
  Alamagordo, NM                      Manufacturing                           40,200          Leased
  Perry, OH                           Research & Development                   5,000          Leased
  Solon, OH                           Manufacturing/Administration            66,500          Leased
  Grand Rapids, MI                    Manufacturing/Administration            45,000           Owned

JII Promotions
  Coshocton, OH                       Manufacturing/Administration           218,000           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            63,000          Leased
  San Luis Potosi,                    Manufacturing                           70,000          Leased
    Mexico

Motion Control
  Rancho Cordova, CA                  Manufacturing/Administration           108,000          Leased
  Glendale, NY                        Manufacturing/Administration            11,200          Leased

Pamco
  Des Plaines, IL                     Manufacturing/Administration            52,000           Owned

Sate-Lite
  Niles, IL                           Manufacturing/Administration            70,650          Leased
  Shunde, Guangdong                   Manufacturing/Administration/Assembl   166,800          Leased

Seaboard
  Fitchburg, MA                       Manufacturing/Administration           260,000           Owned
  Miami, FL                           Warehouse                               11,500          Leased
  Carlstadt, NJ                       Manufacturing                           49,700          Leased
  Enfield, NC                         Warehouse                               50,000          Leased

Valmark
  Livermore, CA                       Manufacturing/Administration            74,200          Leased

Welcome Home
  Wilmington, NC                      Administration/Storage                  10,000          Leased
  Wilmington, NC                      Administration/Warehouse                12,000          Leased


</TABLE>





                                      -20-
<PAGE>

Dacco also owns or leases 47 distribution centers, which average 5,400 square
feet in size. Dacco maintains five distribution centers in Florida and Alabama,
four distribution centers in Tennessee, three distribution centers in Illinois,
Georgia, California, Ohio and Indiana, two distribution centers in each of
Virginia, Arizona, and Texas, with the remaining distribution centers located in
South Carolina, Michigan, Pennsylvania, Minnesota, Missouri, Nebraska, West
Virginia, Oklahoma, Nevada, New York, Maryland and Wisconsin.

Welcome Home leases 122 specialty retail stores in 38 states, with the majority
of store locations in outlet malls. Welcome Home maintains 11 stores in
California, 9 stores in Florida, 8 stores in Ohio and Pennsylvania, 6 stores in
Texas, 5 stores in North Carolina, Georgia, and Missouri, and 4 stores in New
York and Washington. The remaining stores are located throughout the United
States.

Merkle-Korff, Motion Control and Seaboard lease certain production, office and
warehouse 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 2006, 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, 2005.


















                                      -21-
<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, 2005, 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 February
      18, 2004 and February 16, 2005, by and between the Company and U.S. Bank
      National Association, as Trustee, (the "Trustee") with respect to the 13%
      Senior Secured Notes, the Indentures dated as of July 25, 1997 and March
      22, 1999, by and between the Company and 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.





























                                      -22-
<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, 2005. The financial data has been derived from the
consolidated financial statements of the Company and its subsidiaries. As a
result of the divestitures of JII Promotions entity within the Specialty
Printing and Labeling segment and the sale of Electrical Design & Control
("ED&C"), a subsidiary of Kinetek, these segments and entities have been
reported as discontinued operations for financial reporting purposes in
accordance with Accounting Principles Board ("APB") Opinion No. 30 and Statement
of Financial Accounting Standards ("SFAS") No. 144, and their results have been
excluded from the information shown below.
<TABLE>
<CAPTION>


                                                              Year Ended December 31,
                                                              (Dollars in thousands)
                                          ----------------------------------------------------------------
                                             2005         2004        2003          2002         2001
                                             ----         ----        ----          ----         ----

<S>                                        <C>          <C>         <C>           <C>          <C>
Operating data:
Net sales ........................         $729,485     $723,279    $666,931      $667,151     $665,962
Cost of sales, excluding
 depreciation ....................          517,625      502,368     450,308       431,511      428,459
                                            -------     --------     --------      -------      -------
Gross profit, excluding
 depreciation ....................          211,860      220,911     216,623       235,640      237,503
Selling, general and
 administrative expense,
 excluding depreciation ..........          143,786      151,211     151,986       156,036      151,638
Operating income .................           56,048       57,372      42,797        46,981       30,397
Interest expense (1)..............           54,720       66,048      83,215        89,332       91,312
Interest income ..................             (240)      (2,267)     (1,352)       (1,248)        (784)
(Loss) income from continuing
 operations before income
 taxes and minority interest(2)                (121)      (4,901)    (35,096)       53,390      (62,145)

(Loss) income from continuing
 operations ......................           (4,097)      (8,406)    (43,725)       23,181      (56,378)

Balance sheet data (at end
  of period):
Cash and cash equivalents ........           15,699       15,412      15,517        19,717        25,565
Working capital (4)...............         (164,691)      98,872     103,571       102,218       151,045
Total assets .....................          611,367      662,406     690,632       703,510       826,431
Long-term debt (less
  current portion) ...............          361,673      689,399     728,124       715,516       819,406
Net capital deficiency (3)  ......         (251,361)    (242,981)   (227,363)     (201,558)     (139,056)
--------------------------------------
</TABLE>

(1)   Interest expense decreased in 2004 and 2005 primarily due to the treatment
      of the Company's Exchange Offer as a troubled debt restructuring pursuant
      to SFAS No. 15. In addition, certain of the Company's 2009 Debenture note
      holders entered into a Modification Agreement which provides for a
      reduction in their stated maturity value and a reduction of their
      applicable interest rate. See Note 12 to the financial statements.

(2)  Income from continuing operations before income taxes and minority interest
     in 2002 includes a gain on the extinguishment of long-term debt of $88,882,
     a gain on the liquidation of a subsidiary of $1,888, a gain on the sale of
     a facility of $1,431, and the write-down of certain assets held for sale of
     $1,800. Loss from continuing operations before income taxes and minority
     interest in 2003 includes a loss on the sale of a division of a subsidiary
     of $401. Loss from continuing operations before income taxes and minority
     interest in 2004 includes income from the sale of three affiliates of
     $7,954 and a goodwill impairment loss of $3,676. Loss from continuing
     operations before income taxes and minority interest in 2005 includes
     income from the sale of an affiliate of $4,410, income from the refinancing
     of an affiliate of $8,584, gain on sale of a subsidiary of $251, and
     $14,727 of income related to the sale of affiliates. Offsetting these gains
     was a goodwill impairment loss of $24,277.

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

(4)  The negative working capital in 2005 is the result of the reclassification
     of $270.0 million of Kinetek's Senior Notes from long-term to current based
     on their maturity date.


                                       23
<PAGE>


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

Historical Results of Operations

         Summarized below are the historical net sales, operating income and
     operating margin (as defined below) for each of the Company's business
     groups for the fiscal years ended December 31, 2005, 2004, and 2003. Due to
     the divestiture of the net assets of the School Annual division of JII
     Promotions in September 2003 and the subsequent sale of certain assets of
     the Ad Specialty and Calendar product lines in January 2004, the operations
     of JII Promotions have been classified as discontinued operations in the
     Company's Consolidated Statement of Operations in all periods. JII
     Promotions was part of the Specialty Printing and Labeling segment. (See
     Note 5 to the financial statements.) Additionally, due to the sale of ED&C
     in May 2005, a subsidiary of Kinetek, the results of ED&C have also been
     classified as discontinued operations in all periods presented. (See Note 5
     to the financial statements.) This discussion should be read in conjunction
     with the historical consolidated financial statements and the related notes
     thereto contained elsewhere in this Annual Report.


                                                Year ended December 31,
                                               -----------------------
                                             2005          2004           2003
                                             ----          ----           ----

                                                (Dollars in thousands)

    Net Sales:
    Specialty Printing & Labeling          $49,977        $51,085       $48,647
    Jordan Specialty Plastics              156,593        147,665       125,974
    Jordan Auto Aftermarket                119,171        141,862       144,874
    Kinetek                                337,524        313,867       278,309
    Consumer and Industrial Products        66,220         68,800        69,127
                                          --------       --------      --------
       Total                              $729,485       $723,279      $666,931
                                          ========       ========      ========

    Operating Income (1):
    Specialty Printing & Labeling           $3,379         $1,689        $3,663
    Jordan Specialty Plastics                2,662          9,832         5,482
    Jordan Auto Aftermarket                (24,101)         3,783         7,266
    Kinetek                                 40,652         34,153        30,048
    Consumer and Industrial Products         (640)          1,919         2,297
                                           -------        -------       -------
       Total                               $21,952        $51,376       $48,756
                                           =======        =======       =======

    Operating Margin (2):
    Specialty Printing & Labeling             6.8%           3.3%          7.5%
    Jordan Specialty Plastics                 1.7%           6.7%          4.4%
    Jordan Auto Aftermarket                 (20.2)%          2.7%          5.0%
    Kinetek                                  12.0%          10.9%         10.8%
    Consumer and Industrial Products         (1.0)%          2.8%          3.3%
    Combined                                  3.0%           7.1%          7.3%

(1)  Before corporate overhead of $(34,096), $(5,996), and $5,959 for the
     years ended December 31, 2005, 2004, and 2003, respectively. Certain
     amounts in the prior year have been reclassified to conform with the
     current year presentation.

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



                                      -24-
<PAGE>


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

2005 Compared to 2004. Net sales for continuing operations increased $6.2
million, or 0.9%, to $729.5 million for 2005 from $723.3 million for 2004. The
increase in sales was primarily due to solid growth at Kinetek and Jordan
Specialty Plastics, which grew 7.5% and 6.0%, respectively. These increases were
largely offset by a 16.0% decline in the Jordan Automotive Aftermarket segment.
The discontinuation of business with a large customer in the Automotive
Aftermarket segment represented $18.3 million of the sales decrease and was the
primary reason for the precipitous sales decline in this segment. The improved
economy helped both the Kinetek and Jordan Specialty Plastics segments but most
of the growth in these segments continues to come from the introduction of the
new products and market share gains in several niche markets.

Operating income of continuing operations decreased $1.4 million, or 2.3%, to
$56.0 million for 2005 from $57.4 million for 2004. Operating income, excluding
the impact of the goodwill impairment charges of $24.3 million for 2005 and $3.7
million for 2004, income from the sale of affiliates of $4.4 million for 2005
and $8.0 million for 2004, proceeds from the refinancing of an affiliate of $8.6
million for 2005 and income in 2005 of $14.7 million from the reversal of
reserves previously recorded against the receivables from JIR Broadcast and JIR
Paging would have decreased $0.5 million to $52.6 million in 2005 compared
with similarly adjusted operating income of $53.1 million for 2004.

Operating income in 2005 was positively impacted by the gain on the sale of
affiliates of $19,137 (See Note 15) and the proceeds to the Company from the
refinancing of an affiliate of $8,584 (See Note 15). 2005 operating income was
negatively impacted by goodwill impairment charges of $24,277.

The decrease in operating income, excluding goodwill impairment charges and
income from affiliate transactions, was primarily due to decreases at Jordan
Auto Aftermarket and Jordan Specialty Plastics. These decreases were mostly
offset by increased operating income at Kinetek and to a lesser extent the
Specialty Printing and Labeling segment. Raw material inflation continued to
challenge product margins at Kinetek and Jordan Specialty Plastics although to a
lesser degree than in the prior year. The operating income related to the Jordan
Auto Aftermarket climate control product line was adversely impacted by the much
lower sales volume described above. The Automotive Aftermarket segment
management team worked diligently to reduce the cost structure in the climate
control product lines in response to significantly lower sales volume. Operating
income for 2005 was also adversely impacted by costs associated with product
transitions and plant rationalizations at Kinetek and Jordan Specialty Plastics.

2004 Compared to 2003. Net sales increased $56.3 million, or 8.5%, to $723.3
million for 2004 from $666.9 million for 2003. The increase in sales was
primarily due to strong growth for Kinetek and Jordan Specialty Plastics which
grew 12.8% and 17.2%, respectively. These increases were partially offset by a
2.1% decline in the Jordan Auto Aftermarket segment. The improved economy helped
both the Kinetek and Jordan Specialty Plastics segments, and much of the growth
in these segments came from the introduction of new products and market share
gains in several niche markets.

Operating income increased $14.6 million, or 34.1%, to $57.4 million for 2004
from $42.8 million for 2003. The increase in operating income was primarily due
to increases at Kinetek and Jordan Specialty Plastics which grew 13.7% and











                                      -25-
<PAGE>

79.4%, respectively. In addition, operating income was positively impacted by
income from the sales of three affiliates of $8.0 million. These increases were
largely offset by decreases for the Jordan Auto Aftermarket and Specialty
Printing and Labeling segments. Additionally, raw material inflation compressed
product margins at Kinetek and Jordan Specialty Plastics. These segments were
unable to pass through much of the increased commodity prices for copper, steel,
wire, and resin throughout the year. Beginning in the second half of 2004, all
companies began to pass along some of these costs with greater success. The
Jordan Auto Aftermarket segment incurred several costs in 2004 associated with
the introduction of a new product line, and production inefficiencies during
peak demand for climate control products in the second and third quarters. Also,
2004 results included non recurring costs associated with the planned exit of
certain low-margin Jordan Auto Aftermarket business. The decrease in operating
income for the Specialty Printing and Labeling segment includes a non-cash
pretax goodwill impairment charge of $3.7 million.

Income taxes - See Note 13 of to the financial statements.

Specialty Printing & Labeling. As of December 31, 2005, the Specialty Printing &
Labeling group consisted of Valmark, Pamco, and Seaboard.

2005 Compared to 2004. Net sales of continuing operations decreased $1.1
million, or 2.2%, to $50.0 million for 2005 from $51.1 million for 2004.
Revenues for the Valmark product line increased 11.3%, while sales of Pamco
labels and Seaboard folding box products declined 6.9% and 8.1% respectively for
2005. Sales related to Valmark's membrane switches were up well over last year
largely driven by sales in medical equipment and navigation products. Pamco and
Seaboard product lines have been negatively impacted by a small number of
customers moving a portion of their packaging and end products offshore, which
has been only partially offset by the acquisition of several new customers and
growth with existing customers.

Operating income from continuing operations increased $1.7 million, or 100%, to
$3.4 million for 2005 from $1.7 million for 2004. The increase in operating
income is largely due to improved operating margins at Seaboard partially offset
by the product margins associated with the loss of a large customer in the
printing and labeling market that moved its product source to Asia. Cost savings
generated by the 2004 management reorganization and reduction in employment at
Valmark also contributed significantly to the increased operating income. In
addition, a non-cash pretax goodwill impairment of $3.4 million was less than
the prior year goodwill impairment of $3.7 million. Excluding the impact of the
goodwill impairment charges for both years, operating income would have
increased $1.4 million from 2004 to $6.8 million in 2005.

2004 Compared to 2003. Net sales increased $2.4 million, or 5.0%, to $51.1
million for 2004 from $48.6 million for 2003. Revenues for Valmark and Pamco
product lines were up 14.6% and 8.3% respectively, while sales of the Seaboard
folding box products declined 5% in 2004. Sales related to screen printed,
rollstock, and membrane switch products were up well over last year partially
driven by a new product for pest control and increased sales in the medical
equipment market.

Operating income decreased $2.0 million, or 53.9%, to $1.7 million for 2004 from
$3.7 million for 2003. The decrease in operating income is largely due to a
non-cash pretax goodwill impairment charge of $3.7 million. Excluding this
charge, operating income would have increased $1.7 million, or 46.5%, to $5.4








                                      -26-
<PAGE>

million. Cost savings generated by a management reorganization and reduction in
employment at Valmark partially offset the goodwill impairment charge.

Jordan Specialty Plastics. As of December 31, 2005 the Jordan Specialty Plastics
group consisted of Sate-Lite, Beemak, and Deflecto.

2005 Compared to 2004. Net sales increased $8.9 million, or 6.0%, to $156.6
million for 2005 from $147.7 million for 2004. The increased sales were the
result of a stronger economy, the introduction of several new products, market
share gains, and selling price increases which only partially offset the
increase in raw material costs. Increased sales of Office Products, Reflectors
and Hardware Products were the largest contributors to the 2005 sales increase.
Revenues were up significantly at several of the superstore retailers for both
hardware and office products as a result of market share gains and the
introduction of several new products. Chairmat sales increased over 16% for 2005
with increased market shares at superstores, distributors, and international
distributors. Increased sales of bike related products and safety reflectors for
commercial trucks also contributed to the overall sales growth. Sales of certain
hardware products to the wholesale distribution channel were negatively impacted
by the limited availability of insulation material used in the product. The
increased sales of office products continue to be partially offset by lower
selling prices of private label office products as super stores migrate to
private labeling strategies. JSP was successful in passing along a much greater
percentage of the raw material price increases in 2005 as compared with 2004,
largely offsetting the carry-over effect of the significant inflation
experienced in the second half of 2004.

Operating income decreased $7.2 million, or 72.9%, to $2.7 million for 2005 from
$9.8 million for 2004. The customer sales mix and to a lesser extent raw
material inflation experienced in 2005 both contributed to the decrease in
operating income. In addition, costs incurred in 2005 include expenses
associated with the closing of the Niles manufacturing operations and start up
costs in Indianapolis associated with the transferred products. Costs associated
with other product transitions and business reorganizations were also expensed
in 2005 and negatively impacted operating income. JSP recorded expenses of
approximately $1.0 million in the second quarter of 2005 primarily due to
increased accruals and reserves in foreign operations. The Company continues to
pursue cost reduction initiatives and price increases to overcome the increased
raw material costs.

2004 Compared to 2003. Net sales increased $21.7 million, or 17.2%, to $147.7
million for 2004 from $126.0 million for 2003. The increased sales were the
result of a stronger economy, the introduction of several new products, market
share gains, and selling price increases which only partially offset the
dramatic increase in raw material costs in 2004. Revenues were up significantly
at several of the superstore retailers and large distributors for both hardware
and office products as a result of market share gains and the introduction of
several new products. Chairmat sales increased significantly for 2004 with
increased market shares at superstores, distributors, and wholesalers. Increased
sales of bike related products and safety reflectors for commercial trucks also
contributed to the overall sales growth. Partially offsetting the increased
sales of office products were lower selling prices of private label office
products as super stores continue migrating to private labeling strategies. In
addition, 2003 net sales included $2.3 million of thermoplastic colorants which
were not included in the 2004 results. The thermoplastic colorants product line
was divested in September of 2003.








                                      -27-
<PAGE>


Operating income increased $4.4 million, or 79.4%, to $9.8 million for 2004 from
$5.5 million for 2003. The increase in operating income is largely due to the
increased sales volume and selling price increases in 2004 and non-recurring
costs included in 2003 results. The selling price increases were more than
offset by significant raw material price increases for steel, aluminum, and
resin. Cost reduction initiatives continue to be pursued and several products
have been successfully transitioned to lower cost manufacturing operations in
China.

Jordan Auto Aftermarket. As of December 31, 2005, the Jordan Auto Aftermarket
group consisted of Dacco, Alma, and Atco.

2005 Compared to 2004. Net sales decreased $22.7 million, or 16.0%, to $119.2
million for 2005 from $141.9 million for 2004. Alma's discontinuation of
business with a large customer in the climate control market represented $18.3
million of the sales decrease and was the primary reason for the precipitous
sales decline. Sales of torque converters to original equipment manufacturers
decreased only slightly in 2005 as compared with the prior year and were
significantly higher in the fourth quarter of 2005 compared with the prior year.
Sales of air compressors decreased only slightly as compared with the prior year
after excluding the impact of the discontinuation of business with the large
retailer as described above. Sales of torque converters to the non-OEM
automotive aftermarket declined $3.3 million or 5.8% in 2005 compared with the
prior year. The prolific hurricane season and special new car incentive programs
from the domestic automotive manufacturers partially drove lower sales of torque
converters in the non-OEM aftermarket segment. This decrease was partially
offset by the introduction of new torque converter and transmission products and
the continued expansion of new DACCO retail distribution centers in targeted
locations. Sales of tubing assemblies and fittings for the truck market were up
over 30% for 2005 due to a stronger economy and many companies updating their
fleets in advance of the new emissions standards set to become effective in
2007.

Operating income decreased $27.9 million to an operating loss of $24.1 million
for 2005 from operating income of $3.8 million for 2004. The most significant
decrease in operating income was the result of a non-cash pretax goodwill
impairment charge of $20.9 million recorded in 2005. Operating income, excluding
the impact of the goodwill impairment charge, would have decreased $7.0 million
to an operating loss of $3.2 million in 2005 compared with operating income of
$3.8 million for 2004.

The sales decline in the torque converter non-OEM aftermarket segment had a
significant impact on the decline in operating income specifically due to the
high fixed cost nature of the business. In addition, operating income was
negatively impacted by a contractual price reduction for a large customer and
production inefficiencies resulting from consigned parts shortages in the torque
converter business earlier in the year. The operating income related to the
climate control product line was adversely impacted by the much lower sales
volume described above. Partially in response to the reduced sales volume,
management initiated cost reductions through lean manufacturing, headcount
reductions and other cost reduction initiatives, positioning the business to
pursue growth opportunities. The decreases in operating income for the OE torque
converter and climate control segments were nominally offset by increased
operating income associated with the sales of tubing assemblies and fittings in
the truck market.

2004 Compared to 2003. Net sales decreased $3.0 million, or 2.1%, to $141.9
million for 2004 from $144.9 million for 2003. The decrease was primarily the
result of the continued reduction in the volume of transmission repairs due to
improved original equipment quality and the implementation of new warranty









                                      -28-
<PAGE>

policies of automotive manufacturers in 2003. This decrease was partially offset
by the introduction of new torque converter products in the second half of 2004
as well as the opening of new DACCO retail distribution centers in targeted
locations. Continued softness in the climate control market was offset by higher
sales volumes to certain large customers in this segment. Sales of tubing
assemblies and fittings for the truck market were up significantly for 2004 due
to a stronger economy and many companies updating their fleets in advance of the
new emissions standards set to become effective in 2007. Selling price increases
on certain product lines in the third and fourth quarters of 2004 also partially
offset the market softness in both the climate control and torque converter
remanufacturing segments.

Operating income decreased $3.5 million, or 47.9%, to $3.8 million for 2004 from
$7.3 million for 2003. The decline in operating income was primarily the result
of several contributing factors including (i) operating inefficiencies resulting
from peak demand in the second and third quarters for climate control products,
(ii) supply chain issues associated with new products introduced in 2004 that
resulted in increased quality and freight costs, and (iii) production
inefficiencies resulting from consigned parts shortages in the torque converter
business, which also coincided with the peak of the climate control products
season.

In addition, during 2004 severance costs were recorded related to a management
reorganization associated with de-layering and changing certain management
personnel. Also, 2004 results include non-recurring costs associated with the
planned exit of certain low-margin business. The combined impact in 2004 of
these non-recurring costs was $1.5 million.

Kinetek. As of December 31, 2005, the Kinetek group consisted of Imperial Group,
Merkle-Korff, FIR, Motion Control, Advanced DC and De Sheng.

2005 Compared to 2004. Net sales for continuing operations increased $23.6
million, or 7.5%, to $337.5 million for 2005 from $313.9 million in 2004. The
increased net sales were driven by $10.6 million in sales of new products and
net gains in market share compared to the prior year. The full year impact of
Kinetek's 2004 acquisition of O. Thompson (see Note 19 to "Notes to Consolidated
Financial Statements") contributed $5.4 million in higher sales. The net impact
of improved markets in Kinetek's principal markets in North America and China,
partially offset by weaker markets in Europe, contributed approximately $4.2
million in higher sales. The net impact of price increases and decreases charged
to customers added $1.9 million in increased sales. The continued revaluation of
the Euro against the dollar during 2005 caused a $1.5 million improvement in
sales due to favorable translation impact on Kinetek's European business.

Sales in Kinetek's Motors segment increased to $252.1 million in 2005 from
$230.4 million in 2004, a gain of $21.7 million or 9.4%. Sales of subfractional
motor products were virtually identical with the prior year, as generally
improved markets for Kinetek's main products, the full year impact of an ice
crusher first sold to a major appliance customer in 2004, sales of various new
products and the impact of general price increases offset losses of share of
vending and refrigeration products and price decreases to refrigeration
customers. Both the share losses and price decreases were driven by global
competition from Kinetek's principal rival in these markets. Sales of fractional
and integral motors increased $21.7 million, driven by significant gains in
share of the North American market for electric golf car motors and gains in the
Chinese elevator motor market. General improvement in Kinetek's North American

                                      -29-
<PAGE>

and Chinese markets, selective price increases passed to customers, and the
aforementioned improvement of the Euro all further contributed to the sales
increases. These gains were partially offset by weakness in Kinetek's markets in
Europe and share losses in those markets.

Sales in Kinetek's Controls segment increased $1.9 million, or 2.3%, to $85.4
million in 2005 from $83.5 million in 2004. The sales growth was driven by the
aforementioned full year impact of Kinetek's 2004 acquisition of O. Thompson
(see Note 19 to "Notes to Consolidated Financial Statements"), which contributed
$5.4 million in higher sales in 2004. The ramp up of Kinetek's recently
introduced "I" family of control products added higher sales in the form of
higher prices per controller sold in comparison with traditional controller
products. These increases were partially offset by a generally weaker market for
elevator controllers.

Operating income of continuing operations increased $6.5 million, or 19.0%, to
$40.7 million in 2005 from $34.2 million in 2004. Operating income from
continuing operations increased to 12.0% of sales in 2005 from 10.9% of sales in
2004. Gross profit increased to $100.6 million (29.8% of net sales), from the
prior year level of $99.4 million (31.7% of net sales). The increase in gross
profit is a result of the sales increases described earlier, partially offset by
a number of factors, the most significant of which is inflation. Over the past
two years, Kinetek has experienced severe increases in market prices paid for
parts used in the assembly of motors, especially copper, steel and zinc, and
increases in the prices of plastic components and freight and transportation
associated with rising global oil prices. Gross margin and gross margin as a
percentage of sales are also negatively affected by shifts of product mix, as
gains in market share reflected in net sales growth are frequently achieved by
competing aggressively on price, diluting Kinetek's total margin as a percentage
of sales. Selling, general and administrative expenses decreased by $5.4
million, from $56.5 million in 2004 to $51.0 million in 2005. This decrease
reflects Kinetek's continued cost reduction activities across its business
units; the impact of costs incurred in 2004 associated with the relocation of
operations of the Grand Rapids, MI, Des Plaines, IL and Oakwood Village, OH
facilities; the capitalization of certain costs in 2005 for development of
software that is central to Kinetek's "I" family of elevator control products,
and to a reduction of $1.2 million of charges for corporate overhead under the
Transition Agreement.

2004 Compared to 2003. Net sales increased $35.6 million, or 12.8%, to $313.9
million for 2004 from $278.3 million in 2003. The increased sales were driven by
the introduction of new products and net gains in market share, which
contributed approximately $20.0 million, and improvements in Kinetek's principal
markets in North America and Europe, which account for approximately $8.4
million in increased sales. The continued revaluation of the Euro against the
dollar during 2004 caused a $4.5 million improvement in sales due to the
favorable translation impact on Kinetek's European businesses. The acquisition
of O Thompson contributed $4.3 million in sales since the acquisition date. The
net impact of increases and decreases in selling prices is estimated to reduce
sales from the prior year by approximately $1.6 million, reflecting the
competitive global market for Kinetek's core products.

Sales in Kinetek's Motors segment increased to $230.4 million in 2004 from
$201.7 million in 2003, a gain of $28.7 million, or 14.2%. Subfractional motor
sales increased $3.7 million on the strength of an improved market for products
used in consumer refrigeration appliances, the partial year impact of a new ice
crusher product sold to a major appliance manufacturer, and numerous share gains






                                      -30-
<PAGE>

in smaller product categories. These gains were partly offset by the loss of
"value-added subassembly" ice crusher products sold to several key refrigeration
customers, for whom Kinetek continues to supply the ice crusher motor. Sales of
fractional and integral motors increased $25.0 million on significant gains in
market share and the sale of new products used in commercial floor care, and
recovery in the markets for material handling and golf car motor products.
Kinetek's European markets remained difficult during 2004, with sales down 4.6%
from 2003, due to general market conditions and the impact of net share losses.
The European sales declines were more than offset by the aforementioned increase
in sales due to favorable Euro translation. Sales of Kinetek's products in China
have benefited from that country's overall market strength and from share gains
in elevator motors as Kinetek expands its market presence geographically.

Sales in Kinetek's Controls segment increased $6.8 million, to $83.5 million in
2004, an increase of 8.9% from $76.7 million in the prior year. The increase in
sales was led by the inclusion of the partial year sales of O Thompson, which
contributed $4.3 million in sales. Sales of elevator controls and accessory
products increased $2.5 million, led by higher sales of the "I" family of
control products, the SmarTraq door operator system, and other non-controller
products.

Operating income increased to $4.1 million, or 13.7%, to $34.2 million in 2004
from $30.0 million in 2003. Gross profit increased to $99.4 million (31.7% of
net sales), from the prior year level of $94.2 million, (33.9% of net sales).
The increase in gross profit is mainly attributable to the increases in sales
described above. The impact of higher sales is partly offset by the unfavorable
impact of net reductions in selling prices resulting from global market
competition (approximately $1.6 million) and higher prices for purchased
components and services, particularly steel, copper, zinc, aluminum, and
freight. Gross margin as a percentage of sales declined in 2004 due to the
impacts of net selling price reductions, purchased cost inflation, and the
introduction of certain new products and share gains at competitive margins
which are lower than Kinetek's historical average. Selling, general, and
administrative expenses increased from $54.4 million in 2003 to $56.5 million.
Operating expenses increased modestly in line with the increases in sales, and
from costs associated with the relocation of operations of the Grand Rapids, MI,
Des Plaines, IL, and Oakwood Village, OH facilities. These increases were offset
in part by a one-time charge of $1.0 million in 2003 for excess medical claims
incurred by Kinetek's subsidiaries during 2001 and 2002.

Consumer and Industrial Products. As of December 31, 2005, the Consumer and
Industrial Products group consisted of Welcome Home LLC and its two divisions,
Cape Craftsmen and Welcome Home, and GramTel.

2005 Compared to 2004. Net sales decreased $2.6 million, or 3.8%, to $66.2
million for 2005 from $68.8 million for 2004. Sales for Cape and Welcome Home
consolidated decreased 2.8% in 2005 compared with prior year. Comparable store
sales at Welcome Home decreased 0.4% in 2005. Cape Craftsman sales to third
parties decreased 9.5% in 2005 primarily as a result of increased competition at
key accounts and an overall decline in retail sales for the home furnishings
segment in which Cape Craftsman participates. Cho-Pat was sold in March of 2005
and represents $1.3 million of the CIP sales decrease in 2005 as compared with
prior year.

Operating income decreased $2.6 million to a loss of $0.6 million for 2005 from
operating income of $1.9 million for 2004. Merchandise margins decreased at
Welcome Home largely due to promotional discounts used to increase sales and







                                      -31-
<PAGE>

reduce inventory. Operating income at Cape Craftsman decreased due to the
decline in third party sales.

2004 Compared to 2003. Net sales decreased $0.3 million, or 0.5%, to $68.8
million for 2004 from $69.1 million for 2003. Sales for Welcome Home decreased
2.0% in 2004 while third party sales for Cape Craftsmen were consistent with
prior year. Comparable store sales at Welcome Home decreased 4.1% in 2004. The
decline in comparable Welcome Home store sales was primarily the result of a
difficult retail environment in Welcome Home's category in outlet malls. Welcome
Home closed four underperforming stores and opened eight new stores in 2004.
Cho-Pat sales of orthopedic supports grew 28.1% in 2004.

Operating income decreased $0.4 million, or 16.5%, to $1.9 million for 2004 from
$2.3 million for 2003. Merchandise margins decreased at Welcome Home largely due
to promotional discounts used to increase the turnover of slower moving
inventory. The decrease in operating income at Welcome Home was partially offset
by the non-cash Cho-Pat goodwill impairment charge of $0.7 million recorded in
2003.

Liquidity and Capital Resources

The Company had negative working capital of $(164.7) million at the end of 2005
compared to approximately $98.9 million at the end of 2004. The negative working
capital in 2005 is the result of the reclassification of $270.0 million of
Kinetek's Senior Notes from long term to current based on their maturity date.
Currently, the Company is contemplating various avenues of refinancing this
debt, and management is confident that it will do so prior to the maturity.

The Company has acquired businesses through leveraged buyouts, and, as a result,
has significant debt in relation to total capitalization. See "Item 1 -
Business." See Note 12 to the Consolidated Financial Statements.

Management expects modest growth in net sales and operating income in 2006.
Capital spending levels in 2006 are anticipated to be consistent with 2005
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, price increases,
improved efficiencies and sales growth. Management believes that the Company's
cash on hand and anticipated funds from operations in conjunction with
opportunistic sales of assets, refinancings or market transactions 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, 2005
was $14.8 million compared to $6.2 million used in operating activities in 2004.

Net cash provided by investing activities for the year ended December 31, 2005
was $25.1 million compared to $26.1 million provided by investing activities in
2004. In 2005, net cash provided by investing activities primarily includes $1.0







                                      -32-
<PAGE>

million from proceeds of a sale of discontinued operations, $6.6 million from
the sale of an affiliate, $1.2 million in proceeds from the sale of Cho-Pat,
$9.4 million from sale of an affiliate promissory note and $15.0 million in
proceeds from a refinancing transaction executed by an affiliate. This is
compared to $6.2 million of proceeds from the sale of discontinued operations
and $27.2 million of proceeds from the sale of affiliates in 2004.

Net cash used in financing activities for the year ended December 31, 2005 is
$38.0 million compared to $35.3 million used in financing activities in 2004.
The increase in cash used in financing activities is primarily due to higher
repayments of borrowings under revolving credit facilities and long-term debt in
2005.

The Company and its subsidiaries are party to two credit agreements under which
the Company is able to borrow up to $95.0 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 2006. The agreements are
secured by a first priority security interest in substantially all of the
Company's assets. As of December 31, 2005, the Company had approximately $37.7
million of available funds under these arrangements.
(See Note 12 to the consolidated financial statements.)

In conjunction with the Exchange Offer completed by the Company in February 2004
(see discussion below), one of the Company's revolving credit facilities was
amended to reduce, over time, the maximum loan commitment under the facility. As
of December 31, 2004, the maximum loan commitment under the facility was $75.0
million. As of June 1, 2005, that commitment was reduced to $55.0 million and to
$45.0 million as of March 1, 2006 for the remaining life of the agreement. At
this time, the Company does not expect the decrease in available funds to have a
material impact on its operations.

Both of the Company's credit agreements expire in 2006. If necessary, the
Company intends to replace these facilities in 2006. Management is confident
such refinancings can be obtained under favorable terms to the Company and
Kinetek, however, such terms will be subject to market conditions which may
change significantly.

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, its 10 3/8% Senior Notes due 2007, or its 13% Exchange
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.

As discussed above, one of the Company's revolving credit facilities contains a
provision for the step-down in maximum borrowing capacity during 2006. As of
March 1, 2006 the Company's maximum borrowings under this agreement decreased
from $55.0 million to $45.0 million. This, coupled with the facts that the
Company's Kinetek subsidiary has a significant portion of its Senior debt due in
2006, the Company has experienced operating losses in recent years and has used
cash in operating activities, has caused the Company's executive management to





                                      -33-
<PAGE>

evaluate various options to improve the Company's liquidity. To this end, the
Company has restructured some of its outstanding debt through the Exchange Offer
discussed below and in Note 12 to the financial statements and the Modification
and Waiver Agreements also discussed below and in Note 12 to the financial
statements. The effect of these transactions has been to reduce cash paid for
interest in the current year as well as to provide for further reductions in
debt maturity payments if certain financial performance is not achieved. In
addition, the Company expects improved operating performance in all segments
over the prior year. Specifically, new product development and the continued
shift of manufacturing to China in the Specialty Plastics and Kinetek groups are
expected to improve results. In addition, plans to improve production
efficiencies within the Auto Aftermarket Group will increase operating margins.
Further, the Company has evaluated its holdings of investments in affiliates
(See Note 8) and, when appropriate, will sell certain investments, similar to
the sale of the Company's investments in DMS Holdings Inc, Mabis Healthcare
Holdings Inc., Flavor and Fragrance Holdings Inc. and JIR Broadcast, Inc. as
described in Note 15 to the financial statements. The Company believes that
through its efforts discussed above, in conjunction with opportunistic sales of
assets, refinancings or market transactions the Company will have sufficient
liquidity to meet its obligations in the coming year.

On February 18, 2004, the Company completed an Exchange Offer, whereby it
exchanged $173.3 million of new Senior Notes (the "Exchange Notes") for $104.8
million of 2007 Seniors and $142.8 million of New 2007 Seniors (collectively,
"Old Senior Notes"). The Exchange Notes were co-issued by JII Holdings LLC, a
wholly owned subsidiary of the Company, and its wholly owned subsidiary, JII
Holdings Finance Corporation. The Exchange Notes bear interest at 13% per annum
which is payable semi annually on February 1 and August 1 of each year, and
mature on April 1, 2007. The notes that were exchanged bore interest at 10 3/8%
per annum and paid interest semi annually on February 1 and August 1. The
remaining Old Senior Notes mature on August 1, 2007.

The Exchange Offer has been accounted for as a troubled debt restructuring in
conformity with Statement of Financial Accounting Standards No. 15 "Accounting
by Debtors and Creditors for Troubled Debt Restructurings" (SFAS No. 15). SFAS
No. 15 requires that, when there is a modification of terms such as this, if the
total debt service of the new debt is less than the carrying amount on the
balance sheet of the old debt, the carrying amount should be reduced to the
total debt service amount. This reduction resulted in a gain of $2.0 million,
which was required by SFAS No. 15 to be offset by fees incurred on the
transaction. Fees of $7.5 million which were in excess of the gain were recorded
as interest expense during 2004. There will be no interest expense recognized on
the Exchange Notes, and the cash interest payments made will be accounted for as
a reduction of the carrying amount of the Exchange Notes. During 2005, the
reduction in interest expense attributable to this treatment was $22.5 million.

On January 31, 2004, the Company and holders of $89.9 million of the Company's
2009 Debentures and $0.2 million of the Company's Discount Debentures
(collectively, the "Waived Debentures") entered into a Waiver Agreement which
provides that the participating note holders waive any rights to claim an event
of default if the Company does not make the scheduled interest payments as
required in the applicable indenture. The Company may pay interest on these
Waived Debentures only if such payment complies with the restricted payments
covenant in the indenture governing the Exchange Notes. Should the Company be
prohibited from or elect not to make interest payments on these notes, the






                                    -34-
<PAGE>

interest will continue to accrue on the Waived Debentures at the original rate
of 11 3/4% per year and will be due and payable to the holders at the maturity
date of the notes. Pursuant to the Waiver Agreement, the maturity date of the
participating notes is the earlier of (1) the date on which all of the
outstanding principal and interest on the Exchange Notes and the 2009 and
Discount Debentures not participating in the Waiver Agreement have been paid in
full, (2) the date six months after the original maturity of the participating
notes, or (3) the date on which the Company enters into a bankruptcy proceeding.

On February 18, 2004, certain of the Company's 2009 Debenture note holders
entered into a Modification Agreement which provides for a reduction in their
stated maturity value and a reduction of their applicable interest rate. The
aggregate maturity value of the notes held by the parties to the Modification
Agreement is $23.0 million which has been reduced to $6.9 million. The interest
rate on these notes has been reduced to a stated rate of 1.61% from 11 3/4%. On
April 1, 2004 certain holders of an additional $1.7 million of the Company's
2009 Debentures elected to participate in the Modification Agreement. The
maturity value of these notes has been reduced to $0.5 million. The holders of
these modified notes retain the right to collect the original maturity value and
interest thereon at the original interest rate if the Company meets certain
financial tests and ratios including the Available Cash requirements (as defined
in the Modification Agreement) and the Fixed Charge Coverage Ratio (as defined
in the Indenture to the Exchange Notes). The Available Cash requirements states
that the Company must have at least $20 million in cash on hand or available
under any credit agreements of the Company or certain subsidiaries (excluding
Kinetek) after giving effect to a pro forma payment of the interest on the
Debentures at the original interest rate, and that cash availability must have
existed for all days since the last interest payment date on the Exchange Notes.
The Fixed Charge Coverage Ratio measures the ratio between Consolidated Cash
Flow (as defined) and Fixed Charges (as defined) and must have been at least 2.0
to 1 for the twelve month period preceding the payment of any contingent
principal or contingent interest. Since entering into the Modification
Agreement, the Company has not met the Available Cash requirement or the Fixed
Charge Ratio as described above. At this time we can not estimate when and if
these targets will be met.

Under the Modification Agreement, the modified 2009 Debentures mature on the
earlier of (1) the date that all other 2009 Debenture note holders have been
paid in full, (2) the date that is six months after the original maturity date,
or (3) the date on which the Company enters into a bankruptcy proceeding.

The Company has determined that this modification will be accounted for as a
troubled debt restructuring as required by SFAS No. 15. The effect of this
accounting treatment will not reduce the carrying value of the modified notes;
however, the interest expense associated with the modified notes will be
calculated using the modified stated interest rate of 1.61% per annum and the
reduced maturity amount.

The remaining 2009 and Discount Debentures that are not party to the
Modification Agreement will continue to accrue interest at 11 3/4% and represent
$70.2 million of the total outstanding principal amount of $94.9 million.







                                      -35-
<PAGE>
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

The Company purchases certain raw materials for use in the manufacture of its
products, including steel, aluminum, copper, and resin which are generally
available from multiple sources with adequate supply. While certain commodities
have experienced greater pricing volatility in the past year, the Company has
used a number of programs to address this risk such as entering into longer term
purchase contracts with suppliers of certain commodities and implementing
selling price adjustments over time. The Company believes it is not
significantly dependent on a limited number of suppliers and that practices are
in place to ensure an adequate supply of raw materials in the future.

Critical Accounting Policies and Estimates

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

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

     Goodwill

Goodwill represents the excess of cost over fair value of identifiable net
assets acquired through business purchases. In accordance with Statement of
Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets
("SFAS 142"), goodwill is reviewed for impairment on at least an annual basis by
applying a fair-value-based test. In evaluating the recoverability of the
carrying value of goodwill and other indefinite-lived intangible assets, we must
estimate the fair values of our reporting units, as defined under SFAS 142. Our
estimate of the fair value of each of our reporting units was based primarily on
projected future operating results and cash flows, and other assumptions.
Although we believe our projections and resulting fair values are reasonable,
our past projections have not always been achieved. The failure of a reporting
unit to achieve projected future operating results and cash flows, or
adjustments to other valuation assumptions, could change our estimate of
reporting unit fair value, in which case we may be required to record an
impairment charge related to goodwill and other indefinite-lived intangible
assets.

     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

                                      -36-
<PAGE>

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. Annual review of previously
recorded impairment charges may result in a reversal of those charges if the
Company has substantial evidence that the value of the investment has increased.
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, changes in economic conditions in specific
markets in which we operate could have a material effect on future reserve
balances required.

     Excess and Obsolete Inventory

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

     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.






                                      -37-
<PAGE>

Contractual Obligations

The following table summarizes our contractual obligations as of December 31,
2005 (in thousands):
<TABLE>
<CAPTION>



                                                     Payments by Period
                      ------------------------------------------------------------------------------
                      Total        2006        2007        2008        2009       2010    Thereafter
                      ------------------------------------------------------------------------------
<S>                   <C>       <C>        <C>          <C>        <C>           <C>      <C>

Long-term debt        $645,225   $316,883   $229,933     $ 2,084    $ 95,015      $ 408    $   902
Interest                95,430     63,978     17,161       9,070       4,474        129        618
Capital leases           7,441      2,174      1,292       3,252         315        408          -
Operating leases        59,065     13,902     11,926      10,236       7,796     10,105      5,100
Pension contributions    1,180      1,180          -           -           -          -          -
                      ------------------------------------------------------------------------------
Total                 $808,341   $398,117   $260,312     $24,642    $107,600    $11,050    $ 6,620
                      ------------------------------------------------------------------------------














</TABLE>

                                      -38-
<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, 2005, the
Company had $37.7 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, 2005 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 shareholders' deficit.























                                      -39-
<PAGE>




Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
         -------------------------------------------

                                                                       Page No.
                                                                       --------
Report of Independent Registered Public Accounting Firm ...........       41

Consolidated Balance Sheets as of December 31, 2005 and
2004...............................................................       42

Consolidated Statements of Operations for the years ended December
31, 2005, 2004, and 2003...........................................       43

Consolidated Statements of Changes in Shareholders' Deficit for
the years ended December 31, 2005, 2004 and 2003   ................       44

Consolidated Statements of Cash Flows for the years ended
December 31, 2005, 2004,  and 2003.................................       45

Notes to Consolidated Financial Statements.........................       47

















                                      -40-
<PAGE>




             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
             -------------------------------------------------------

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, 2005 and 2004 and the related consolidated
statements of operations, shareholders' deficit, and cash flows for each of the
three years in the period ended December 31, 2005. Our audits also included the
financial statement schedule listed in the Index at Item 15. 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 the standards of the Public Company
Accounting Oversight Board (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. We were not engaged to perform an
audit of the Company's internal control over financial reporting. Our audit
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
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, 2005 and 2004, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2005, in conformity with U.S. generally accepted accounting
principles. 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.

The accompanying financial statements have been prepared assuming that Jordan
Industries, Inc. will continue as a going concern. As more fully described in
Note 12, the Company has substantial debt maturing within the next year, which
raises substantial doubt about the Company's ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.


     /s/ ERNST & YOUNG LLP


Chicago, Illinois
March 15, 2006






                                      -41-
<PAGE>

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

                                                             December 31,
                                                           ----------------
                                                           2005        2004
                                                           ----        ----

ASSETS
------
Current assets:
  Cash and cash equivalents                              $15,699       $15,412
  Accounts receivable, net of allowance of
  $4,979 and $7,233 in 2005 and 2004, respectively       110,090       109,554
  Inventories                                            124,529       130,033
  Assets of discontinued operations                          728         3,432
  Income tax receivable                                    1,926         3,631
  Investment in and advances to affiliates                23,015             -
  Prepaid expenses and other current assets               10,513        12,363
                                                       ---------      --------
     Total current assets                                286,500       274,425

Property, plant and equipment, net                        79,639        85,036
Investments in and advances to affiliates                 14,044        40,882
Goodwill, net                                            220,514       245,309
Other assets                                              10,670        16,754
                                                       ---------     ---------
  Total Assets                                          $611,367      $662,406
                                                       =========      ========

LIABILITIES AND SHAREHOLDERS' DEFICIT
-------------------------------------

Current liabilities:
  Accounts payable                                       $58,159       $62,796
  Accrued liabilities                                     73,215        81,451
  Liabilities of discontinued operations                       -           698
  Current portion of long-term debt                      319,089        27,874
                                                       ---------     ---------
      Total current liabilities                          450,463       172,819

Long-term debt                                           361,673       689,399
Other non-current liabilities                             32,152        25,167
Deferred income taxes                                     14,093        14,255
Minority interest                                          1,377         1,003
Preferred stock of a subsidiary                            2,970         2,744

Shareholders' deficit:
Common stock $.01 par value: authorized - 100,000
  shares; issued and outstanding - 98,501 shares               1             1
Additional paid-in capital                                 2,116         2,116
Accumulated other comprehensive income                     1,542         3,685
Accumulated deficit                                     (255,020)     (248,783)
                                                       ----------     --------
Total shareholders' deficit                             (251,361)     (242,981)
                                                       ----------     --------

  Total Liabilities and Shareholders' Deficit            $611,367     $662,406
                                                         ========     ========

                             See accompanying notes.








                                      -42-
<PAGE>

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

                                                   Year ended December 31,
                                                   -----------------------
                                                2005         2004       2003
                                                ----         ----       ----


Net sales                                    $729,485     $723,279    $666,931
Cost of sales, excluding depreciation         517,625      502,368     450,308
Selling, general, and administrative
 expense, excluding depreciation              143,786      151,211     151,986
Depreciation                                   14,382       16,082      20,228
Amortization                                      172          158         497
Goodwill impairment loss                       24,277        3,676         696
Income from sale of affiliates                (12,994)      (7,954)          -
Management fees and other                     (13,811)         366         419
                                              --------    --------      ------
   Operating income                            56,048       57,372      42,797

Other (income) and expenses:
  Interest expense                             54,720       66,048      83,215
  Interest income                                (240)      (2,267)     (1,352)
  (Gain)/loss on sale of subsidiaries            (251)          -          401
  Other, net                                    1,940       (1,508)     (4,371)
                                              --------    ---------   ---------
                                               56,169       62,273      77,893
                                             ---------    ---------    --------
Loss from continuing operations before
 income taxes and minority  interest             (121)      (4,901)    (35,096)
Provision for income taxes                      3,602        2,973       8,436
                                               -------    ---------   ---------
Loss from continuing operations before
 minority interest                            (3,723)      (7,874)     (43,532)
Minority interest                                374          532          193
                                              --------    --------    ---------
Loss from continuing operations               (4,097)      (8,406)     (43,725)
Discontinued Operations:
  Loss from discontinued operations, net of
   tax(See Note 5)                            (3,416)     (10,529)        (942)
  Gain (loss) on sale of discontinued
   operations, net of tax (See Note 5)         1,502       (1,171)       8,190
                                             --------     ---------     ------
                                              (1,914)     (11,700)       7,248
                                             --------     ---------     ------
    Net loss                                 $(6,011)    $(20,106)    $(36,477)
                                             ========    ==========   =========

                             See accompanying notes.















                                      -43-
<PAGE>

                             JORDAN INDUSTRIES, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT
                             (dollars in thousands)

<TABLE>
<CAPTION>

                                          Common Stock
                                          ------------
                                                                                 Accumulated
                                        Number                    Additional        Other
                                         of                        Paid-in      Comprehensive     Accumulated
                                        Shares      Amount         Capital      Income (Loss)       Deficit            Total
                                        ------      ------         -------      -------------       -------            -----
<S>                                     <C>            <C>             <C>             <C>             <C>              <C>

Balance at December 31, 2002            98,501           1             2,116          (11,877)         (191,798)       (201,558)
Non-cash dividends on preferred
 stock of subsidiary                         -           -                 -                -              (193)           (193)
Comprehensive income(loss):
  Translation                                -           -                 -           10,437                 -          10,437
  Minimum pension liability
  adjustment, net of tax                     -           -                 -              428                 -             428
  Net loss                                   -           -                 -                -           (36,477)        (36,477)
                                                                                                                      ----------
Total comprehensive loss                                                                                                (25,612)
                                       -------      ------          --------         ----------       ---------       ----------
Balance at December 31, 2003           98,501            1             2,116            (1,012)        (228,468)       (227,363)
Non-cash dividends on preferred
 stock of subsidiary                         -           -                 -                -              (209)           (209)
Comprehensive income(loss):
  Translation                                -           -                 -            5,463                 -           5,463
  Minimum pension liability
  adjustment, net of tax                     -           -                 -             (766)                -            (766)
  Net loss                                   -           -                 -                -           (20,106)        (20,106)
                                                                                                                      ---------
Total comprehensive loss                                                                                                (15,409)
                                       -------      ------          --------         --------        ----------       ----------
Balance at December 31, 2004            98,501      $    1         $   2,116       $    3,685        $ (248,783)      $(242,981)
Non-cash dividends on preferred
 stock of subsidiary                         -           -                 -                -              (226)           (226)
Comprehensive income(loss):
  Translation                                -           -                 -           (1,386)                -          (1,386)
  Minimum pension liability
  adjustment, net of tax                     -           -                 -             (757)                -            (757)
  Net income                                 -           -                 -                -            (6,011)         (6,011)
                                                                                                                         -------
Total comprehensive loss                                                                                                 (6,768)
                                       -------      ------         ---------           ------         ----------      ----------
Balance at December 31, 2005            98,501      $    1        $    2,116           $1,542         $(255,020)      $(251,361)
                                       =======      ======        ==========           ======         ==========      ==========


</TABLE>

                             See accompanying notes.












                                      -44-
<PAGE>





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

                                                   Year ended December 31,
                                                   -----------------------
                                                2005         2004       2003
                                                ----         ----       ---

Cash flows from operating activities:
  Net loss                                   $ (6,011)   $(20,106)   $(36,477)
Adjustments to reconcile net loss to net
 cash provided by (used in) operating
 activities:
  (Gain)/loss on sale of discontinued
   operation (See Note 5)                      (1,502)      1,171      (8,190)
  Gain on refinancing of affiliate             (8,584)          -           -
  Income from reversal of reserves related
   to sale of affiliate                       (14,727)          -           -
  Gain on sale of affiliates                   (4,410)     (7,954)          -
  (Gain)/loss on sale of subsidiaries            (251)          -         401
  Loss/(gain) on disposal of fixed assets         429        (231)     (3,711)
  Goodwill impairment loss                     24,277       3,676         696
  Amortization of deferred financing
   costs                                        6,451       8,358       6,196
  Depreciation and amortization                14,554      16,240      20,725
  Deferred income taxes                          (269)      5,351       5,881
  Minority interest                               374         532         193
  Non-cash interest expense                     8,269      11,181          26
Changes in operating assets and
liabilities (net of acquisitions and
 dispositions):
  Accounts receivable                            (676)    (16,369)     (3,219)
  Inventories                                   5,472      (7,081)       (507)
  Prepaid expenses and other current
   assets                                       1,618      (3,089)     (1,197)
  Non-current assets                            2,182          13      (4,668)
  Accounts payable and accrued
   liabilities                                (12,355)      7,017       9,390
  Non-current liabilities                        (813)     (1,539)        531
  Net assets of discontinued operations         2,007       9,963       1,707
  Other                                        (1,247)       (952)        111
                                             ---------    --------     -------
Net cash provided by (used in) operating
 activities                                    14,788       6,181     (12,112)

Cash flows from investing activities:
Proceeds from sale of fixed assets                809       1,107       3,845
Capital expenditures                           (8,041)     (8,014)    (10,515)
Acquisitions of subsidiaries                     (955)       (372)          -
Additional purchase price payments                  -           -        (750)
Net proceeds from sale of subsidiaries          1,209           -         678
Net proceeds from sales of discontinued
 operations (See Note 5)                        1,002       6,155       9,400
Net proceeds from sales of affiliates           6,600      27,207           -
Net proceeds from sales of affiliated
 promissory notes                               9,449           -           -
Net proceeds from refinancing by an
 affiliate                                     15,000           -           -
                                             --------     -------    --------
Net cash provided by investing activities      25,073      26,083       2,658


                         (Continued on following page.)






                                      -45-
<PAGE>

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

                                                 Year ended December 31,
                                                 -----------------------
                                             2005          2004           2003
                                             ----          ----           ----

Cash flows from financing activities:
(Payments on) proceeds from  revolving
 credit facilities, net                    (8,811)       (3,042)        11,802
Payment of deferred financing costs            --        (3,942)          (150)
Payment of long-term debt                 (38,191)      (36,918)       (15,441)
Proceeds from other borrowings              9,011         8,583          2,849
                                          -------       -------        -------
Net cash used in financing activities     (37,991)      (35,319)          (940)
Effect of exchange rate changes on
 cash                                      (1,583)        2,950          6,194
                                         ---------       ------        -------
Net increase/(decrease) in cash and
 cash equivalents                             287          (105)        (4,200)
Cash and cash equivalents at beginning
 of year                                   15,412        15,517         19,717
                                          -------      --------       --------
Cash and cash equivalents at end of
 year                                    $ 15,699      $ 15,412       $ 15,517
                                          =======      =========      ========

Supplemental disclosures of cash flow
 information:
   Cash paid during the year for:
        Interest                         $ 61,895     $63,296          $75,831
        Income taxes, net                $  6,968     $ 2,328          $ 5,883
   Non-cash investing activities:
        Capital leases                   $    898     $ 1,404          $   881


                             See accompanying notes.



















                                      -46-
<PAGE>

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

Note 1 - Organization
---------------------

The Company's business is divided into five groups. The Specialty Printing and
Labeling group consists of 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 Group("Imperial"),
Merkle-Korff Industries, Inc. ("Merkle-Korff"), FIR Group Companies ("FIR"),
Motion Control Engineering ("Motion Control"), Advanced D.C. Motors ("Advanced
DC") and Kinetek De Sheng Electric Motor Co., Ltd. ("De Sheng"). The remaining
businesses comprise the Company's Consumer and Industrial Products group. This
group consists of Welcome Home LLC and its two divisions Cape Craftsmen, Inc.
("Cape") and Welcome Home, Inc. ("Welcome Home"), Cho-Pat, Inc. ("Cho-Pat")
(until March 2005), and GramTel Communications, Inc. ("GramTel"). All of the
foregoing corporations are collectively referred to herein as the
"Subsidiaries", and individually as a "Subsidiary."

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.

                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. A
receivable is considered past due if payments have not been received within
agreed upon invoice terms. Uncollectible receivables are charged against the






                                      -47-
<PAGE>

allowance for doubtful accounts when approved by operating company management
after all collection efforts have been exhausted.

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

Goodwill represents the excess of cost over fair value of identifiable net
assets acquired through business purchases. In accordance with Statement of
Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets
("SFAS 142"), goodwill is reviewed for impairment on at least an annual basis by
applying a fair-value-based test. In evaluating the recoverability of the
carrying value of goodwill and other indefinite-lived intangible assets, we must
estimate the fair values of our reporting units, as defined under SFAS 142. Our
estimate of the fair value of each of our reporting units was based primarily on
projected future operating results and cash flows, and other assumptions.
Although we believe our projections and resulting fair values are reasonable,
our past projections have not always been achieved. The failure of a reporting
unit to achieve projected future operating results and cash flows, or
adjustments to other valuation assumptions, could change our estimate of
reporting unit fair value, in which case we may be required to record an
impairment charge related to goodwill and other indefinite-lived intangible
assets. 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 determined the U.S. Federal and State
income tax liability on undistributed earnings of foreign subsidiaries to the
extent the undistributed earnings are considered to be permanently reinvested
($25,242 at December 31, 2005), as such determination is not practical.






                                     -48-
<PAGE>


                Deferred Financing Fees
                -----------------------

Deferred financing costs amounting to $6,566 and $13,017 net of accumulated
amortization of $60,265 and $53,814 at December 31, 2005 and 2004, respectively,
are amortized using the straight-line method, 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
                -------------------

The Company's revenue is derived primarily from product sales. Revenue is
recognized in accordance with the terms of the sale, primarily upon shipment to
customers, once the sales price is fixed or determinable, and collectibility is
reasonably assured. Estimated discounts and rebates are recorded as a reduction
of sales in the same period revenue is recognized. Sales returns and allowances
are estimated and recorded based upon historical experience. If actual future
sales returns and allowances are higher than past experience, additional
accruals may be required. If any significant obligations to the customer with
respect to such sale remain to be fulfilled following shipment, typically
involving obligations relating to installation and acceptance by the buyer,
revenue recognition is deferred until such obligations have been fulfilled.

                Shipping and Handling Costs
                ---------------------------

Shipping and handling costs are classified in cost of sales in the statement of
operations.

                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, 2005 and 2004 the Company had approximately $23,015 and $21,942,
respectively, of investments in Russia and Austria related to unsecured advances
including net interest receivables made to two affiliates (see Note 8). In 2006,
the Company's investments in Russia and Austria were sold to third parties. All
amounts invested by the Company were fully recovered.

                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.






                                      -49-
<PAGE>

Adjustments resulting from the translation of foreign currency financial
statements are classified as a separate component of shareholders' deficit. The
accumulated balance in other comprehensive income pertaining to foreign currency
translation was $5,953 and $7,339 as of December 31, 2005 and 2004,
respectively.

                Reclassifications
                -----------------

Certain amounts in the prior year financial statements have been reclassified to
conform to the current year presentation. In 2004, the non-cash reduction in the
Exchange Notes, as a result of troubled debt accounting, in the amount of
$19,591 was reclassified from the "accounts payable and accrued liabilities"
line in the operating activities section of the Consolidated Statement of Cash
Flows to the "payment of long-term debt" line in the financing activities
section. In addition, $10,830 of waived interest on the Waived Debentures was
reclassified from the "accounts payable and accrued liabilities" line in the
Consolidated Statement of Cash Flows to the "non-cash interest expense" line.
This reclass was entirely within the operating activities section of the
Consolidated Statement of Cash Flow. Both reclassifications were made to more
accurately classify the nature of these transactions consistently with 2005
presentation.

                Fair Value of Financial Instruments
                -----------------------------------

The Company's financial instruments include cash and cash equivalents, accounts
receivable, investments in and advances to affiliates and long-term debt. The
carrying values of such financial instruments approximate their estimated fair
value, except for long-term debt for which the fair value is disclosed in
footnote 12.

                New Accounting Pronouncements
                -----------------------------

In January 2003, the FASB issued Interpretation No. 46 (FIN 46), "Consolidation
of Variable Interest Entities - An Interpretation of Accounting Research
Bulletin (ARB) No. 51." This interpretation provides guidance on how to identify
variable interest entities and how to determine whether or not those entities
should be consolidated. The Company was required to apply FIN 46 by March 31,
2005 for entities which were created before February 1, 2003. The adoption of
FIN 46 was immediate for variable interest entities created after January 31,
2003. The Company has not created any significant variable interest entities
since January 31, 2003. The Company has evaluated its interests in entities
created before February 1, 2003 and has determined that FIN 46 is not
applicable.

In May 2005, the FASB issued Statement No. 154, Accounting Changes and Error
Corrections ("FAS 154"), a replacement of APB Opinion No. 20, Accounting
Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim
Financial Statements ("FAS 3"). FAS 154 replaces the provisions of FAS 3 with
respect to reporting accounting changes in interim financial statements. FAS 154
is effective for accounting changes and corrections of errors made in fiscal
years beginning after December 15, 2005. Early adoption is permitted for
accounting changes and corrections of errors made in fiscal years beginning
after June 1, 2005. The Company does not expect FAS 154 will significantly
impact its financial statements upon its adoption on January 1, 2006.

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 of 2002, resulting in a non-cash
pretax charge of $108,595 ($87,065 after-tax). This charge was recorded as a
cumulative effect of a change in accounting principle effective January 1, 2002.







                                      -50-
<PAGE>

The impairment charge recorded related to 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. During the fourth quarter of 2002, the Company
performed its annual impairment review which resulted in no impairment.

The Company determines 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 Company is required to complete impairment
reviews of its subsidiaries on at least an annual basis. In the fourth quarter
of 2005, the annual impairment review resulted in a non-cash pre-tax charge of
$3,415 related to Seaboard, which is part of the Specialty Printing and Labeling
group and $13,086 at Alma and $7,776 at Dacco, which are part of the Jordan Auto
Aftermarket group. These charges are included in "goodwill impairment loss" in
the Company's statement of operations.

The changes in the carrying amount of goodwill by operating segment for the year
ended December 31, 2005 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
 January 1, 2004                  $11,436       $37,174         $20,862         $178,100          $328              $247,900

Adjustments                             -          (700)              -                -             -                  (700)

Goodwill impairment                (3,676)            -               -                -             -                (3,676)
loss
Currency translation
 impact                                 -         1,005               -              780             -                 1,785
                                   ------       -------         --------        --------        ------              --------

Balance at
 December 31, 2004                  7,760        37,479          20,862          178,880           328               245,309

Additional Purchase                     -             -               -               81             -                    81
 Price Payments and
 Adjustments

Goodwill impairment                (3,415)            -         (20,862)               -             -               (24,277)
loss
Sale of subsidiary                      -             -               -                -          (328)                 (328)

Currency translation
 impact                                 -           215               -             (486)            -                  (271)
                                   ------       -------         --------        ---------        ------              --------

Balance at
 December 31, 2005                 $4,345       $37,694         $     -         $178,475         $   -              $220,514
                                   ======       =======         ========        ========         ======             ========
</TABLE>

Note 4 -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 was represented solely by the
Cumulative Preferred Stock of JAAI. The JAAI Cumulative Preferred Stock
controlled over 97.5% of the combined voting power of JAAI capital stock
outstanding and accreted at plus or minus 97.5% of the cumulative JAAI net






                                      -51-
<PAGE>

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).

In December 2004, the Company participated in another recapitalization of JAAI.
As part of this recapitalization, the JAAI Cumulative Preferred Stock discussed
above was exchanged for 386,100 shares of Class A Common Stock. The initial
liquidation value of each Class A common share was $212.38. In addition, each
Class A share is entitled to a 6.0% cumulative preferred return. Thereafter,
each Class A share participates on an equal basis with each Class B share. The
Class A shares hold 100% of the voting rights. In addition, 99,000 of
pre-recapitalization common shares were exchanged for 9,900 shares of Class B
Common Stock. The Class B common shares carry no voting rights.

The Company continues to consolidate JAAI and its subsidiaries, for financial
reporting purposes, as subsidiaries of the Company.

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 was represented solely by the Cumulative Preferred Stock of
JSP. The JSP Cumulative Preferred Stock controlled over 97.5% of the combined
voting power of JSP capital stock outstanding and accreted 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).

In December 2004, the Company participated in another recapitalization of JSP.
As part of this recapitalization, the JSP Cumulative Preferred Stock discussed
above and $33,089 of intercompany debt was exchanged for 388,050 shares of Class
A Common Stock. The initial liquidation value of each Class A common share was
$85.81. In addition, each Class A share is entitled to a 6.0% cumulative
preferred return. Thereafter, each Class A share participates on an equal basis
with each Class B share. The Class A shares hold 100% of the voting rights. In
addition, 99,500 of pre-recapitalization common shares were exchanged for 9,950
shares of Class B common stock. The Class B common shares carry no voting
rights.

The Company continues to consolidate JSP and its subsidiaries, for financial
reporting purposes, as subsidiaries of the Company.

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.

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






                                      -52-
<PAGE>

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 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.

On December 12, 2002, the Company participated in another recapitalization of
M&G Holdings. At that time, 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.
After the recapitalization, M&G Holdings will continue to remain a consolidated
subsidiary of the Company.

Note 5 - Discontinued Operations
--------------------------------

During 2004, the Company undertook a plan to sell Electrical Design & Control
("ED&C"), a subsidiary of Kinetek and accordingly reflected ED&C as a
discontinued operation. On May 2, 2005, the Company sold certain inventory,
equipment, intellectual property assets and contracts of ED&C to a third party.
The sales price was $0.1 million which was offset by a $0.2 million payment to
the buyer to complete those contracts which were not sold. Therefore, the net
payment related to the sale was $0.1 million. The Company no longer has any
ownership interest in ED&C, however, it will continue to collect on the
outstanding receivables which were not sold.

On January 20, 2004, the Company sold certain assets and liabilities of JII
Promotions' Ad Specialty and Calendar product lines to a third party for $6,155.
Concurrent with the above transaction, the Company agreed to wind down the
remaining activities of JII Promotions and to ultimately retain only the
pension-related liabilities and various immaterial capital leases. The
consolidated financial statements reflect JII Promotions as a discontinued
operation for all periods presented. Assets and liabilities of discontinued
operations in the condensed consolidated balance sheets represent assets and
liabilities of JII Promotions, excluding the retained liabilities discussed
above. The Company recorded a loss on the sale of this division of $1,171. There
was no tax benefit on the loss on sale or on the loss from operations. JII
Promotions had been a part of the Specialty Printing and Labeling segment.

On September 19, 2003, the Company sold the net assets of the School Annual
division of JII Promotions to a third party for cash proceeds, net of fees, of
$9,400. The Company recognized a gain of $8,190 related to the sale of this
division.

Summarized selected financial information for the combined discontinued
operations is as follows:

                                          2005         2004         2003
                                          ----         ----         ----

        Revenues                          $1,079       $5,723       $58,291
        Loss from discontinued
         operations                       (3,416)     (10,529)        (942)







                                      -53-
<PAGE>

The major classes of assets and liabilities of the combined discontinued
operations are as follows:

                                                         2005           2004
                                                         ----           ----
        Current assets                                   $  415      $   2,267
        Property, plant and equipment, net                  313          1,134
        Other long-term assets                                -             31
                                                         ------      ----------
           Total assets                                     728          3,432
        Current liabilities                                   -            698
                                                         ------      ----------
           Net assets of discontinued
             operations                                  $  728         $2,734
                                                         ======         ======

Note 6 - Inventories
--------------------

Inventories consist of:

                                           Dec. 31, 2005       Dec. 31, 2004
                                           -------------       -------------
Raw Materials                                  $55,149           $57,453
Work-in-process                                 16,230            13,693
Finished goods                                  53,150            58,887
                                              --------          --------
                                              $124,529          $130,033
                                              ========          ========

Note 7- Property, plant and equipment
-------------------------------------

Property, plant and equipment, at cost, consists of:
                                                 Dec. 31, 2005    Dec. 31, 2004

Land                                                $13,569          $13,666
Machinery and equipment                             142,139          157,833
Buildings and improvements                           37,474           37,785
Furniture and fixtures                               51,013           53,867
                                                   --------         --------
                                                    244,195          263,151

Accumulated depreciation and amortization          (164,556)        (178,115)
                                                   ---------        ---------

                                                   $ 79,639         $ 85,036
                                                   ========         ========

Note 8 - Investments in and advances to affiliates
--------------------------------------------------

As of December 31, 2005 and 2004 the Company had $23,015 and $21,942,
respectively, of unsecured advances, including net interest receivable, due from
JIR Broadcast, Inc. and JIR Paging, Inc. The Chief Executive Officer of each of
these companies was Mr. Quinn the Company's President, COO and director, and its
stockholders included 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.
These companies are engaged in the development of businesses in Russia and
Austria, including the broadcast and paging sectors. In February and March 2006,
the Company sold, to a third party, 100% of its investment in JIR Broadcast,
Inc. and JIR Paging, Inc.

On May 18, 2005, JIR Paging, Inc. repurchased from the Company its promissory
note in the amount of $9,200. The proceeds to the Company were $9,449 and
consisted of the principal amount of the note plus accrued and unpaid interest







                                      -54-
<PAGE>

of $249. As discussed above, JIR Paging was subsequently sold in March 2006 to a
third party. At closing, the Company received net cash proceeds of $274 for
amounts previously invested in JIR Paging. The Company recorded income of $274
in 2005 as a result of reversing reserves previously recorded against the
receivable from JIR Paging.

JIR Broadcast, Inc. was sold on February 28, 2006 and resulted in cash proceeds
to the Company of $30,250. The proceeds included repayment of amounts previously
loaned to, and paid on behalf of, JIR Broadcast of $15,610, accrued interest of
$9,187, accrued and unpaid management fees of $1,679, a fee for the termination
of the management fee agreement of $3,400, and reimbursement of expenses
incurred by the Company during the sale process of $374. Income of $14,453 has
been recorded in the Company's financial statements during 2005 related to the
JIR Broadcast sale in 2006 due to the reversal of reserves previously recorded
by the Company against the loans, interest on its loans, and the recognition of
management fee income from JIR Broadcast which was not previously accrued. In
2006, the Company will record income of approximately $5,107 related to the
termination of management fee agreement and the collection of previously written
off receivables.

The Company, through Kinetek, has a $12,344 investment in the Class A and Class
B Preferred Units of JZ International, LLC. These debt securities are not
publicly traded and do not have a determinable fair value. The cost method of
accounting is used to account for this investment. The Preferred Units have a
cumulative 5% annual return. The Class A Preferred Units may be redeemed at any
time at the discretion of the Board of Directors of JZ International, but no
later than December 31, 2017, whereas the Class B Preferred Units may be
redeemed at any time at the discretion of the Board of Directors of JZ
International, but no later than December 31, 2018. The Company will record an
impairment charge when it believes the investment has experienced a decline in
value below its current carrying amount that is other than temporary. JZ
International's Chief Executive Officer is David W. Zalaznick, and its members
include Messrs. Jordan, Quinn, Zalaznick and Boucher, who are directors and
stockholders of the Company. 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.

As of December 31, 2005, 2004 and 2003, the Company had $1,700, $2,452 and
$2,162, respectively, of net unsecured advances due from Healthcare Products
Holdings, Inc. Healthcare Products Holdings' 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.

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 $3,110 was contributed as of December 31, 2005 and 2004. In
addition, the Company funded $80 in promissory notes to the partnership during
2004 for working capital needs. The Company is accounting for this investment
using the equity method of accounting. The Company and certain stockholders of
the Company are also members in the general partner of the partnership. The
Company has an agreement with the partnership to provide management services to







                                      -55-
<PAGE>

the partnership for annual fees of 1.25% of total partnership committed capital
of $50,000 for 2005 and 2004. One half of 2004 and the entire 2005 management
fees were waived by the general partner of JZVP.

Management routinely reviews the realizability of these investments, and when
necessary, reserves all or a portion of their value.

See Notes 15 and 16 for additional discussion of affiliated and related party
transactions.

Note 9 - Accrued liabilities
-----------------------------

Accrued liabilities consist of:

                                                 Dec. 31, 2005    Dec. 31, 2004
                                                 -------------    -------------

Accrued vacation                                    $2,539           $2,756
Accrued income taxes                                   272            3,552
Accrued other taxes                                  2,435            2,082
Accrued commissions                                  2,224            2,805
Accrued interest payable                            15,893           16,047
Accrued payroll and payroll taxes                    4,368            3,749
Accrued rebates                                      3,636            4,828
Accrued professional fees                            1,465            6,175
Accrued medical & worker's compensation             11,331            9,534
Accrued management fees                              9,652            9,641
Accrued other expenses                              19,400           20,282
                                                   -------         --------
                                                   $73,215          $81,451
                                                   =======          =======

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, 2005 are:

           2006                 $13,902
           2007                  11,926
           2008                  10,236
           2009                   7,796
           2010                  10,105
        Thereafter                5,100
                                -------
                                $59,065
                                =======

Rental expense amounted to $17,879, $15,751, and $14,929 for 2005, 2004, and
2003, respectively.

Two subsidiaries of Kinetek, Merkle-Korff and Motion Control, in addition to
Seaboard, lease certain production, office and warehouse space from related
parties. Rent expense, including real estate taxes attributable to these leases,
was $1,563, $1,664, and $1,703 for the years ended December 31, 2005, 2004, and
2003, 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





                                      -56-
<PAGE>

subsidiaries have additional defined contribution plans in which employees may
participate. The Company made contributions to these plans totaling
approximately $1,939, $1,563 and $1,830 for the years ended December 31, 2005,
2004 and 2003, respectively.

FIR, a Kinetek subsidiary located in Italy, provides for a severance liability
for all employees at 7.8% of each respective employee's annual salary. In
addition, the amount accrued is adjusted each year according to an official
index (equivalent to 0.75% of the retail price index). This obligation is
payable to employees when they leave the company and approximated $3,007 and
$3,358 at December 31, 2005 and 2004, respectively.

The Company has two defined benefit pension plans at Alma and retains one
defined benefit pension plan at JII Promotions (see Note 5) that cover
substantially all of the employees of those subsidiaries. Due to the shutdown of
JII Promotions during 2004, all active employees were terminated as of February
13, 2004 and curtailment accounting was performed as of that date. In addition,
settlement accounting was performed as of July 31, 2004 and again as of December
31, 2005 as a result of the large amount of lump sums paid during both years.
One-time charges of $558 and $53 were recognized immediately due to the
settlement accounting in 2004 and 2005, respectively. The following table sets
forth the change in benefit obligations, change in plan assets and net amount
recognized as of the measurement dates of December 31, 2005 and 2004.

During the second quarter of 2005, one of the Company's subsidiaries, Alma
Products, negotiated and approved certain changes to its retirement plan for
hourly employees. The effect of these changes resulted in a one-time curtailment
charge of $355 to cost of sales in the financial statement as calculated
pursuant to FAS 88.

Pension Plans

The funded status of the defined benefit plans were as follows:

                                                   2005            2004
                                                   ----            ----
Change in Benefit Obligation:

Benefit obligation at beginning of period        $21,131         $20,241

  Service cost                                       732             706
  Interest cost                                    1,298           1,259
  Actuarial loss                                     901           1,367
  Benefits paid                                     (944)         (2,596)
  Settlements                                         18             441
  Curtailments                                         -            (287)
                                                 -------         --------

Benefit obligations at end of period             $23,136         $21,131
                                                 -------         -------

Change in Plan Assets:

Fair value at beginning of year                  $15,391         $14,856

  Actual return on assets                          1,025           1,427
  Contributions received                           2,069           1,704
  Benefits paid                                     (836)           (930)
  Settlements paid                                  (109)         (1,666)
                                                 --------        --------
Fair value at end of year                        $17,540         $15,391
                                                 --------        --------

  Underfunded status of the Plan                  (5,596)         (5,740)
  Unrecognized net actuarial loss                  4,987           4,005
  Unrecognized prior service cost                    188             584
                                                 --------        --------
  Accrued benefit cost                           $  (421)        $(1,151)
                                                 ========        ========





                                      -57-
<PAGE>


The following table provides amounts recognized in the balance sheet as of
December 31:

                                                   Year ended December 31,
                                                   -----------------------
                                                     2005          2004
                                                     ----          ----

  Intangible asset                                 $   188       $   580
  Accumulated other comprehensive loss               4,411         3,563
  Accrued benefit liability                         (5,020)       (5,294)
                                                   --------      --------

  Net amount recognized                            $  (421)      $(1,151)
                                                   ========      ========

The total accumulated benefit obligation for the defined benefit pension plans
was $22,558 and $20,619 at December 31, 2005 and 2004, respectively.

The plans' expected long-term rates of return on plan assets range from 7.5% to
8.5% and is based on the aggregate historical returns of the investments that
comprise the defined benefit plan portfolio.

The components of net pension costs are as follows:

                                                 Year ended December 31,
                                                 -----------------------
                                             2005         2004        2003
                                             ----         ----        ----

  Service cost                               $732         $ 706        $780
  Interest cost                             1,298         1,259       1,238
  Expected return on plan assets           (1,338)       (1,184)     (1,080)
  Prior service costs recognized               42            59          59
  Recognized net actuarial loss (gain)        198           128         126
                                           ------        ------       ------
  Net periodic benefit cost                $  932        $  968       $1,123
                                           ======        ======       ======

Assumptions used to determine benefit obligations at the end of the year for the
defined benefit plans are as follows:

                                             Year ended December 31,
                                             -----------------------
                                             2005               2004
                                             ----               ----

Discount rates                            5.50%-6.00%       6.00%-6.25%
Rates on increase in compensation leve          4.00%       3.00%-4.00%

Assumptions used to determine net costs for the defined benefit plans are as
follows:

                                                 Year ended December 31,
                                                 -----------------------
                                              2005        2004        2003
                                              ----        ----        ----

Discount rates                            6.00%-6.25%        6.50%        6.50%
Long-term rates of return on plan assets  7.50%-8.50%  7.50%-8.50%  7.50%-8.50%
Rates of increase in compensation levels        4.00%  3.00%-4.00%  3.00%-4.00%

The Company's strategy is to fund its defined benefit plan obligations. The need
for further contributions will be based on changes in the value of plan assets
and the movements of interest rates during the year. During the year, management
at Alma periodically reviews with its actuaries its investment strategy and
funding needs.

                                      -58-
<PAGE>

The Company's actual pension plan asset allocation, which approximates the
target plan allocation, at December 31, 2005 and 2004 by asset category are as
follows:

                  Asset Category                Percentage of Plan Assets
           ------------------------------    --------------------------------
                                                  2005             2004
                                                  ----             ----
           Cash and equivalents                    3.9%            1.8%
           Fixed income securities                35.8%           36.4%
           Equity securities                      60.3%           61.8%
                                                 ------          ------
                                                 100.0%          100.0%

The Company's expected contributions related to these pension plans for 2006 are
$1,180, and the estimated future benefit payments related to these pension plans
are as follows:


                   2006                         $696
                   2007                          702
                   2008                          706
                   2009                          720
                   2010                          750
                   2011-2015                   4,262

Other Post-Retirement Benefit Plans

During 2005, the Company had one retiree health care plan at Alma and during
2004, the Company had one retiree health care plan at Alma and one at JII
Promotions (see Note 5) that covered substantially all of the employees of those
subsidiaries. The plans provided for certain medical and prescription drug
benefits for those individuals that choose to participate in the plans. Due to
the shutdown of JII Promotions during 2004, all active participants of the JII
Promotions retiree health care plan were terminated and curtailment accounting
was performed on this plan as of February 13, 2004. In addition, the plan was
subsequently eliminated for all participants, active and retired, as of March
31, 2004. The impact of this change was reflected as a negative plan amendment
in 2004, and a SFAS 106 one-time credit of $932 was recognized immediately. As
of December 31, 2005, the Company has no remaining liability to the JII
Promotions retiree health care plan.

The funded status of the Company's other post-retirement healthcare benefit plan
was as follows as of the measurement dates of December 31, 2005 and 2004:

                                                   2005               2004
                                                   ----               ----
Change in Benefit Obligation:

Benefit obligation at beginning of period        $ 3,755            $ 5,312

  Service cost                                       164                147
  Interest cost                                      275                218
  Plan amendments                                    169             (1,916)
  Actuarial loss                                     942              1,262
  Benefits paid                                     (203)              (270)
  Settlements                                       (269)                 -
  Curtailments                                         -               (998)
                                                 --------           --------

Benefit obligations at end of period             $ 4,833             $3,755
                                                 --------           --------


                                      -59-
<PAGE>


Change in Plan Assets:

Fair value at beginning of year                  $     -            $     -

  Actual return on plan assets                         -                  -
  Employer contributions                             203                270
  Benefits paid                                     (203)              (270)
                                                 --------          ---------
Fair value at end of year                        $     -            $     -
                                                 --------          ---------

  Underfunded status of the plan                  (4,833)            (3,755)
  Unrecognized prior service costs                   161                  -
  Unrecognized net actuarial loss                  1,464                884
                                                 --------          ---------

  Accrued benefit cost                           $(3,208)           $(2,871)
                                                 ========          =========

The following table provides amounts recognized in the balance sheet as of
December 31:

                                                       2005           2004
                                                       ----           ----

  Accrued benefit liability                          $(3,208)       $(2,871)
                                                     --------       --------
  Net amount recognized                              $(3,208)       $(2,871)
                                                     ========       ========

The components of net periodic post-retirement benefit costs are as follows:

                                            2005         2004         2003
                                            ----         ----         ----

  Service cost                             $ 164        $ 147        $ 184
  Interest cost                              275          218          359
  Prior service costs recognized               8            -            -
  Recognized net actuarial loss               93           19          192
                                           -----        -----        -----

  Net periodic benefit cost                $ 540        $ 384        $ 735
                                           =====        =====        =====

Assumptions used to determine benefit obligations for the Company's
post-retirement benefit plans are as follows:

                                            2005         2004
                                            ----         ----

Discount rate                               6.00%     6.00%-6.25%

Assumptions used to determine net costs for the Company's post-retirement
benefit plans are as follows:

                                            2005         2004
                                            ----         ----

Discount rate                               6.25%        6.50%

A 7.7% annual rate of increase for medical and a 9.5% annual rate of increase
for prescription drugs in the per capita cost of covered post-retirement
benefits was assumed for 2005. The rate was assumed to decrease gradually to 5%
for 2014 and remain at that level thereafter.

Increasing or decreasing the health care trend rates by one percentage point
each year would have the following effect:

                                        1% Increase    1% Decrease
                                        -----------    -----------
Effect on post-retirement
benefit obligation                         $446           $(394)
Effect on total of service and
interest cost components                   $ 42           $ (37)


                                    - 60 -
<PAGE>

Note 12 - Debt
--------------

Long-term debt consists of:
                                                 December 31,     December 31,
                                                     2005             2004
                                                     ----             ----

Revolving Credit Facilities (A)                   $ 37,184         $ 46,001
Bank Term Loans (B)                                 11,147           14,038
Capital lease obligations (C)                        7,441            8,802
Senior Notes (D)                                   523,640          545,604
Senior Subordinated Discount Debentures (D)         94,786           94,886
Subordinated promissory notes (E)                    5,449            6,476
Other                                                1,115            1,466
                                                 ----------       ----------
                                                   680,762          717,273
Less current portion                              (319,089)         (27,874)
                                                 ----------       ----------
                                                  $361,673         $689,399
                                                 ==========       ==========

The components of the senior note balance above consist of the following at
carrying value:

           Description                              2005             2004
           -----------                              ----             ----

10.75% Senior Notes (including
 unamortized premium  of $666 for
 2005 and $1,327 for 2004)                        $270,666        $271,327
5% Senior Secured Notes (including
 unamortized discount of $1,433 for
 2005 and $2,358 for 2004)                          13,567          12,642
10% Senior Secured Notes (including
 unamortized discount of $396 for
 2005 and $652 for 2004)                            10,604          10,348
10.375% Series B Senior Notes                       15,219          15,219
10.375% Series D Senior Notes
 (including unamortized discount of
 $78 for 2005 and $127 for 2004)                    12,084          12,035
13% Exchange Notes                                 201,500         224,033
                                                 ----------      ----------
Total                                             $523,640        $545,604
                                                 ==========      ==========

The net amount of amortization of debt discount/premium included in the
Company's income statement for the year ended December 31, 2005 was $569 and
$587 for the year ended December 31, 2004.

Aggregate maturities of long-term debt at December 31, 2005, excluding
unamortized premiums and discounts, are as follows:

              2006                            $318,423
              2007                             233,022
              2008                               5,343
              2009                              95,317
              2010                                 816
              Thereafter                           902
                                             ----------
                                              $653,823

As noted above, 49% of the Company's long-term debt matures within the next
year. Currently, the Company is contemplating various avenues of refinancing
this debt, and Management is confident that it will do so prior to the maturity.

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 of 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


                                    - 61 -
<PAGE>

         applicable margin, or at the Company's option, the Eurodollar Rate
         plus an applicable margin (7.6% and 7.1%, respectively, at December
         31, 2005). At December 31, 2005, the Company had outstanding
         borrowings of $20,212, which approximates the carrying value,
         outstanding letters of credit of $1,531, and excess availability of
         $18,007. 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. The
         Company intends to replace the agreement in 2006. Management is
         confident such refinancing can be obtained under favorable terms to
         the Company, however, such terms will be subject to market conditions
         which may change significantly.

         In conjunction with the Exchange Offer completed by the Company in
         February 2004 (see discussion below), the JII Agreement was amended to
         reduce, over time, the maximum loan commitment under the facility. As
         of December 31, 2004, the maximum loan commitment under the facility
         was $75,000. As of June 1, 2005, that commitment was reduced to $55,000
         as of March 1, 2006 it was reduced to $45,000 through the remaining
         life of the agreement.

         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 of 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% (8.4% at December 31, 2005).
         Kinetek had $16,972 of outstanding borrowings, which approximates the
         carrying value, $8,702 of outstanding letters of credit, and $6,118 of
         excess availability under the Kinetek Agreement at December 31, 2005.
         Borrowings are secured by the stock and substantially all of the assets
         of Kinetek. The Kinetek Agreement was renewed and extended during 2005
         to its new maturity date of December 18, 2006 or 30 days prior to
         maturity date of the Senior Notes. The terms of the agreement remain
         unchanged.

B.       Bank term loans consist of a mortgage on the Pamco facility, which
         bears interest at 6.25% and is due in monthly installments through
         2008. The mortgage is secured by the Pamco facility which has a
         carrying value of $1,992. There are also mortgages on two Deflecto
         facilities, which bear interest at .25% below the prime rate and are
         due in 2006 and 2015. The carrying value of these two facilities is
         $4,231.

         The Company 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 5.6% to 6.1% and mature in 2006.
         Kinetek plans to renew the loans as they mature.

         The Company, through its wholly owned subsidiary GramTel, has a term
         loan with 1st Source Bank. The balance on this loan was $202, which
         approximates the carrying value, at December 31, 2005 and bears
         interest at a rate of 6.58% per year. The term loan matures in 2008.

C.       Interest rates on capital leases range from 2.0% to 11.0% and mature
         in installments through 2010.


                                    - 62 -
<PAGE>



         The future minimum lease payments as of December 31, 2005 under capital
         leases consist of the following:

                2006                                             $2,699
                2007                                              1,634
                2008                                              3,472
                2009                                                370
                2010                                                435
                Thereafter                                            -
                                                                      -
                                                                -------
                  Total                                           8,610
                Less amount representing interest                (1,169)
                                                                --------
                Present value of future minimum lease
                 payments                                        $7,441
                                                                ========

         The present value of the future minimum lease payments approximates the
         book value of property, plant and equipment under capital leases at
         December 31, 2005.

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 100% of the principal
         amount from August 1, 2004 and thereafter plus any accrued and unpaid
         interest to the date of redemption. The 2007 Seniors are unsecured
         obligations of the parent 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 New 2007 Seniors are
         unsecured obligations of the parent Company.

         On February 18, 2004, the Company completed an Exchange Offer, whereby
         it exchanged $173,334 of new Senior Notes (the "Exchange Notes") for
         $104,781 of 2007 Seniors and $142,838 of New 2007 Seniors
         (collectively, "Old Senior Notes"). The Exchange Notes were co-issued
         by JII Holdings LLC, a wholly owned subsidiary of the Company, and its
         wholly owned subsidiary, JII Holdings Finance Corporation. The Exchange
         Notes bear interest at 13% per annum which is payable semi annually on
         February 1 and August 1 of each year, and mature on April 1, 2007. The
         notes that were exchanged bore interest at 10 3/8% per annum and paid
         interest semi annually on February 1 and August 1. The remaining Old
         Senior Notes have a fair value of approximately $16,429 at December 31,
         2005 and mature on August 1, 2007. The fair value of the Exchange Notes
         was approximately $150,800 at December 31, 2005. The fair value was
         calculated using the Old Senior Notes' and Exchange Notes' respective
         December 31, 2005 market prices multiplied by the respective face
         amounts.

         The Exchange Offer has been accounted for as a troubled debt
         restructuring in conformity with Statement of Financial Accounting
         Standards No. 15, "Accounting by Debtors and Creditors for Troubled
         Debt Restructurings" (SFAS No. 15). SFAS No. 15 requires that, when
         there is a modification of terms such as this, if the total debt
         service of the new debt is less than the carrying amount on the balance
         sheet of the old debt, the carrying amount should be reduced to the
         total debt service amount. This reduction resulted in a gain of $2,015
         at the time of the Exchange, which was required by SFAS No. 15 to be
         offset by fees incurred on the transaction. Fees of $7,505, which were
         in excess of the gain, were recorded as interest expense during 2004.
         There will be no interest expense recognized on the Exchange Notes, and


                                    - 63 -
<PAGE>

         the cash interest payments made will be accounted for as a reduction of
         the carrying amount of the Exchange Notes.

         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,
         2005 was $253,800. The fair value was calculated using the Kinetek
         Notes' December 31, 2005 market price multiplied by the face amount.
         The Kinetek Notes are unsecured obligations of Kinetek, Inc.

         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 100% of the
         accreted value 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 reported a gain
         of $52,518, net of taxes of $36,364 in the 2002 statement of operations
         related to this purchase. The fair value of the remaining 2009
         Debentures was approximately $18,957 at December 31, 2005. The fair
         value was calculated using the 2009 Debentures' December 31, 2005
         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 August 1,
         2005. In April 1997, the Company refinanced substantially all of the
         Discount Debentures and issued the 2009 Debentures. At December 31,
         2005, $150 of the Discount Debentures were still outstanding and party
         to the Waiver Agreement discussed below. As a result of their inclusion
         in this agreement, the interest and principal payments on the
         outstanding Discount Debentures are subject to the payment limitations
         discussed in the following paragraph.

         On January 31, 2004, the Company and holders of $89,917 of the
         Company's 2009 Debentures and $150 of the Company's Discount Debentures
         (collectively, the "Waived Debentures") entered into a Waiver Agreement
         which provides that the participating note holders waive any rights to
         claim an event of default if the Company does not make the scheduled
         interest payments as required in the applicable indenture. The Company
         may pay interest on these Waived Debentures only if such payment
         complies with the restricted payments covenant in the indenture


                                    - 64 -
<PAGE>

         governing the Exchange Notes. Should the Company be prohibited from or
         elect not to make interest payments on these notes, the interest will
         continue to accrue on the Waived Debentures at the original rate of 11
         3/4% per year and will be due and payable to the holders at the
         maturity date of the notes. Pursuant to the Waiver Agreement, the
         maturity date of the participating notes is the earlier of (1) the date
         on which all of the outstanding principal and interest on the Exchange
         Notes and the 2009 and Discount Debentures not participating in the
         Waiver Agreement have been paid in full, (2) the date six months after
         the original maturity of the participating notes, or (3) the date on
         which the Company enters into a bankruptcy proceeding.

         On February 18, 2004, certain of the Company's 2009 Debenture note
         holders entered into a Modification Agreement which provides for a
         reduction in their stated maturity value and a reduction of their
         applicable interest rate. The aggregate maturity value of the notes
         held by the parties to the Modification Agreement was $22,978 which has
         been reduced to $6,893. The interest rate on these notes has been
         reduced to a stated rate of 1.61% from 11 3/4%. On April 1, 2004
         certain holders of an additional $1,745 of the Company's 2009
         Debentures elected to participate in the Modification Agreement. The
         maturity value of these notes has been reduced to $524. The holders of
         these modified notes retain the right to collect the original maturity
         value and interest thereon at the original interest rate if the Company
         meets certain financial tests and ratios. Under the terms of the
         Modification Agreement, the holders of the modified notes retain the
         right to collect the original maturity value and interest thereon at
         the original interest rate if the Company meets the Available Cash
         requirements (as defined in the Modification Agreement) and the Fixed
         Charge Coverage Ratio (as defined in the Indenture to the Exchange
         Notes). The Available Cash requirement states that the Company must
         have at least $20 million in cash on hand or available under any credit
         agreements of the Company or certain subsidiaries (excluding Kinetek)
         after giving effect to a pro forma payment of the interest on the
         Debentures at the original interest rate, and that cash availability
         must have existed since the last interest payment date on the Exchange
         Notes. The Fixed Charge Coverage Ratio measures the ratio between
         Consolidated Cash Flow and Fixed Charges and must have been at least
         2.0 to 1 for the twelve month period preceding the payment of any
         contingent principal or contingent interest. At no time since entering
         into the Modification Agreement, has the Company met the Available Cash
         requirement or the Fixed Charge Coverage Ratio as described above. At
         this time we can not estimate when and if these targets will be met.

         Under the Modification Agreement, these notes mature on the earlier of
         (1) the date that all other 2009 Debenture note holders have been paid
         in full, (2) the date that is six months after the original maturity
         date, or (3) the date on which the Company enters into a bankruptcy
         proceeding.

         The Company has determined that this modification will be accounted for
         as a troubled debt restructuring as required by SFAS No. 15. The effect
         of this accounting treatment will not reduce the carrying value of the
         modified notes; however, the interest expense associated with the
         modified notes will be calculated using the modified stated interest
         rate of 1.61% per annum and the reduced maturity amount.

         The remaining 2009 and Discount Debentures that are not party to the
         Modification Agreement will continue to accrue interest at 11 3/4% and
         represent $70,163 of the total outstanding principal amount of $94,886.



                                    - 65 -
<PAGE>

         The Indentures relating to the 2009 Debentures, the Discount
         Debentures, the 2007 Seniors, the New 2007 Seniors, and the Exchange
         Notes (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, restrict 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 2006, and bear interest ranging from 8% to 9%. The
         loans are unsecured. The approximate carrying value of the promissory
         notes at December 31, 2005 is $5,449.

         Interest expense includes $6,451, $13,929 and $6,196 of amortization of
         debt issuance costs for the years ended December 31, 2005, 2004, and
         2003, respectively.

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

                                             Year ended December 31,
                                             -----------------------
                                          2005         2004         2003
                                          ----         ----         ----
         Domestic                      $(10,004)    $(12,314)    $(41,070)
         Foreign                          9,883        7,413        5,974
                                       ---------    ---------    ---------
         Total                         $   (121)    $ (4,901)    $(35,096)
                                       =========    =========    =========

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

                                            Year ended December 31,
                                            -----------------------
                                         2005          2004        2003
                                         ----          ----        ----
Current:
Federal                                $(2,114)      $(5,588)     $    -
Foreign                                  5,031         2,453       1,987
State and Local                            847           757       1,155
                                       --------      --------     -------
                                         3,764        (2,378)      3,142
Deferred:
Federal                                   (171)        3,050       3,893
Foreign                                     42         1,381         466
State and Local                            (33)          920         935
                                       --------      --------     -------
                                          (162)        5,351       5,294
                                       --------      --------     -------
Total                                  $ 3,602       $ 2,973      $8,436
                                       ========      ========     =======


                                    - 66 -
<PAGE>


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

                                                December 31,      December 31,
                                                    2005              2004
                                                    ----              ----

Deferred tax liabilities:
Goodwill                                         $ 10,153         $ 10,357
Property, plant and equipment                         644            2,278
Inter company tax gains                             3,133            3,587
Foreign deferred tax liabilities                    3,940            3,897
Other                                                 676              160
                                                  -------         ---------
   Total deferred tax liabilities                $ 18,546         $ 20,279
                                                  =======         =========

Deferred tax assets:
NOL carryforwards                                $ 27,411         $ 39,793
Deferred interest                                  19,485                -
Accrued interest on discount debentures             6,977            6,977
Pension obligation                                  1,087            1,273
Vacation accrual                                      863            1,014
Uniform capitalization of inventory                 2,361            2,540
Allowance for doubtful accounts                     1,402            4,636
Deferred financing fees                               241              315
Intangibles other than goodwill                     3,505            4,061
Medical claims reserve                              2,830            2,844
Accrued commissions and bonuses                     1,687            2,425
Warranty accrual                                      549              756
Inventory reserves                                  2,137            1,405
Restructuring reserve                                 333              372
Interest income                                         -            1,550
Other accrued liabilities                           3,517            6,168
Other                                               1,606            3,048
                                                 ---------        ---------
   Total deferred tax assets                     $ 75,991         $ 79,177
Valuation allowance for deferred tax assets       (71,538)         (73,153)
                                                 ---------        ---------
   Total deferred tax assets                       $4,453         $  6,024
                                                 ---------        ---------
   Net deferred tax liabilities                  $ 14,093         $ 14,255
                                                 =========        =========

In 2002, the Company adopted SFAS No. 142 which provides that goodwill no longer
be amortized for financial reporting purposes. 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. Because goodwill is no longer
amortized for financial reporting purposes, the Company cannot determine when
the resulting deferred tax liabilities will reverse. 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.

During 2004, the Company realized $90,404 of cancellation of indebtedness income
for federal income tax purposes as a result of modifications to certain of its
outstanding debt obligations. Such cancellation of indebtedness income was
offset by the consolidated group's net operating losses.

The provision for income taxes from continuing operations differs from the
amount of income tax benefit computed by applying the United States federal


                                    - 67 -
<PAGE>

income tax rate to loss before income taxes. A reconciliation of the differences
is as follows:

                                                  Year ended December 31,
                                                  -----------------------
                                               2005        2004        2003
                                               ----        ----        ----

Computed statutory tax (benefit)
 provision                                  $   (42)    $ (1,715)    $(12,284)
(Increase) decrease resulting from:
  Taxable/(non-taxable) income                  922        1,336       (2,168)
  Non-deductible expenses                       693          384          612
  Goodwill impairment loss                    2,722            -            -
  State and local tax, net of federal
   benefit                                      813          463        1,383
  Valuation allowance                        (2,285)      13,633       24,099
  Foreign tax rate differential               1,614         (186)        (540)
  Reserve decrease                           (2,114)      (5,589)           -
  Other items, net                            1,279       (5,353)      (2,666)
                                            --------    ---------    ---------
Provision for income taxes                  $ 3,602     $  2,973     $  8,436
                                            ========    =========    =========

As of December 31, 2005, total consolidated federal net operating loss
carryforwards are approximately $62,220 for regular tax purposes, and expire in
various years through 2025. A full valuation allowance has been provided against
the federal loss carryforwards.

Note 14 - Sale of Subsidiaries
------------------------------
On September 8, 2003, the Company sold the net assets of the Midwest Color
division of Sate-Lite to a third party for cash proceeds, net of fees, of $678.
The Midwest Color division manufactures colorants for the thermoplastics
industry. The Company recognized a loss of $401 related to the sale of this
division. Sate-Lite is a part of the Jordan Specialty Plastics segment.

On March 24, 2005, the Company sold the assets of Cho-Pat, Inc. ("Cho-Pat") to
Cho-Pat's management team for proceeds of $1,209. Cho-Pat is a designer and
manufacturer of orthopedic related sports medicine devices and was part of the
Consumer and Industrial Products segment. The Company recognized a gain of $251
related to the sale of Cho-Pat.

Note 15 - Affiliate Transactions
--------------------------------
On May 4, 2004, two of the Company's affiliates, DMS Holdings, Inc. and Mabis
Healthcare Holdings, Inc., ("DMS/Mabis") were sold to a third party. A portion
of the proceeds from the sale was used to repay the Company for unsecured
advances and operating expenses which the Company paid on behalf of DMS/Mabis in
prior periods, as well as accrued and unpaid management fees due the Company.
These repayments totaled $806 and $1,069, respectively. Also as a result of the
sale, the Company was paid a fee of $1,725 for the termination of its management
fee arrangement with DMS/Mabis, and a fee of $1,600 pursuant to certain advisory
agreements. The Company recorded income of approximately $4,309 in the second
quarter of 2004 as a result of this transaction.

On May 13, 2004, one of the Company's affiliates, Flavor and Fragrance Holdings,
Inc., ("FFG") was sold to a third party. A portion of the proceeds was used to
repay the principal and accrued interest on the note the Company received when
the net assets of Flavorsource were sold to FFG on January 1, 2002. This
principal and accrued interest totaled $12,181. In addition, a portion of the
proceeds from the sale was used to repay the Company for unsecured advances and
operating expenses which the Company paid on behalf of FFG in prior periods, as
well as accrued and unpaid management fees due the Company. These repayments
totaled $4,509 and $1,672, respectively. Also as a result of the sale, the
Company was paid a fee of $1,705 for the termination of its management fee


                                    - 68 -
<PAGE>

arrangement with FFG, and a fee of $1,940 pursuant to certain advisory
agreements. The Company recorded income of approximately $3,645 in the second
quarter of 2004 as a result of this transaction.

On May 18, 2005, JIR Paging, Inc. repurchased from the Company its promissory
note in the amount of $9,200. The proceeds to the Company were $9,449 and
consisted of the principal amount of the note plus accrued and unpaid interest
since the last interest payment date of $249. JIR Paging was subsequently sold
in March 2006 to a third party. At closing, the Company received net cash
proceeds of $274 for amounts previously invested in JIR Paging. The Company
recorded a gain of $274 in 2005 as a result of reversing reserves previously
recorded against the receivable from JIR Paging.

On June 10, 2005, the Company's affiliate, Fleet Graphics Holdings, was sold to
management of that Company for $6,600. A portion of the proceeds from the sale
was used to pay the Company accrued and unpaid management fees and operating
expenses which were paid by the Company on behalf of Fleet Graphics Holdings.
These repayments totaled $1,577 and $613; respectively. Also as a result of the
sale, the Company was paid $1,400 for the termination of its management fee
arrangement with Fleet Graphics Holdings and a fee of $1,160 pursuant to certain
advisory agreements. The Company also received $1,850 for various fees and
charges associated with the transaction. The Company recorded income of $4,410
in the second quarter of 2005 as a result of this transaction.

On July 29, 2005, Healthcare Products Holdings, Inc. ("HPI"), an affiliate of
the Company based on partial common ownership, and its operating subsidiary
Hoveround, undertook an independent refinancing of its obligations with several
new third party lenders. A portion of the proceeds from the refinancing was used
to repay obligations to the Company. The Company received proceeds of $15,000
for payment of notes, accrued interest, accrued and unpaid management fees,
amounts previously paid by the Company on behalf of HPI and accrued and unpaid
financing fees. Due to previous concerns regarding the collectibility of these
amounts the Company had reserved against these receivables leaving an unreserved
amount of $7,034. As a result, the Company recorded a gain of $7,966 on the
transaction. In the fourth quarter, the Company reversed additional reserves
related to HPI resulting in an addition to the previously recorded gain of $618.
This gain has been recorded as a component of operating income by the Company
due to the fact that the original reserves taken by the Company were charged to
operating income. At December 31, 2005, the Company had unreserved amounts due
from HPI of $1,700.

JIR Broadcast was sold on February 28, 2006 and resulted in cash proceeds to the
Company of $30,250. The proceeds included repayment of amounts previously loaned
to and paid on behalf of, JIR Broadcast of $15,610, accrued interest of $9,187,
accrued and unpaid management fees of $1,679, a fee for the termination of the
management fee agreement of $3,400, and reimbursement of expenses incurred by
the Company during the sale process of $374. Income of $14,453 has been recorded
in the Company's financial statements during 2005 related to the JIR Broadcast
sale due to the reversal of reserves previously recorded by the Company against
the loans, interest on its loans, and the recognition of management fee income
from JIR Broadcast which was not previously accrued. In 2006, the Company will
record income of approximately $5,107 related to the termination of management
fee agreement fees received by the Company at the close of the transaction.



                                    - 69 -
<PAGE>

Note 16 - Related party transactions
------------------------------------
Transaction Advisory Agreement. Each of the Company's subsidiaries are parties
to an advisory agreement with the Company, referred to as the Transaction
Advisory Agreement, pursuant to which, such subsidiaries pay to the Company (i)
investment banking and sponsorship fees of up to 2.0% of the aggregate
consideration paid in connection with acquisitions, joint ventures, minority
investments or sales by each such subsidiary of all or substantially all of its
or its subsidiaries capital stock, businesses or properties; (ii) financial
advisory fees of up to 1.0% of the amount obtained or made available pursuant to
any debt, equity or other financing or refinancing involving such subsidiary, in
each case, arranged with the assistance of the Company or its affiliates; and
(iii) reimbursement for the Company's out-of-pocket costs in connection with
providing such services. Each Transaction Advisory Agreement contains
indemnities in favor of the Company and its affiliates, and The Jordan Company
and certain of its affiliates, including TJC Management Corporation, in
connection with the Transaction Advisory Agreement and such services. The
Transaction Advisory Agreement will expire in December 2007, but is
automatically renewed after such date for successive one-year terms, unless any
party provides written notice of termination 60 days prior to the scheduled
renewal date. The Company recorded fees pursuant to the Transaction Advisory
Agreement of $0, $73 and $0 for the years 2005, 2004 and 2003, respectively.

TJC Management Consulting Agreement. JII has entered into a consulting services
agreement with TJC Management Corporation, an affiliate of The Jordan Company,
referred to as the TJC Management Consulting Agreement, pursuant to which the
Company will in turn pay to TJC Management Corporation (i) one-half of the
investment banking, sponsorship and financing advisory fees paid to the Company
pursuant to the Transaction Advisory Agreement, unless otherwise determined by
our Board of Directors; (ii) (A) investment banking and sponsorship fees of up
to 2.0% of the purchase price of acquisitions, joint ventures and minority
investments or sales involving the Company or its other subsidiaries and (B)
financial advisory fees of up to one-half of 1.0% of any debt, equity or other
financing or refinancing involving the Company or such subsidiaries, in each
case, arranged with the assistance of TJC Management Corporation or its
affiliates, unless otherwise determined by the Company's Board of Directors; and
(iii) reimbursement for TJC Management Corporation's and The Jordan Company's
out-of-pocket costs incurred in connection with such services. The TJC
Management Consulting Agreement also contains indemnities in favor of TJC
Management Corporation and its affiliates and The Jordan Company and its
affiliates in connection with such services. In consideration for these fees,
the services of Mr. Jordan and the investment banking, sponsorship and advisory
services of TJC Management Corporation will be provided to the Company. The TJC
Management Consulting Agreement will expire in December 2007, but is
automatically renewed after such date for successive one-year terms, unless
either party provides written notice of termination 60 days prior to the
scheduled renewal date. The Company did not pay to TJC Management Corporation or
The Jordan Company any fees or cost reimbursements for the years 2005, 2004, and
2003 under this agreement. Approximately, $9,652 and $9,641 of such fees and
cost reimbursements are accrued and unpaid under this agreement as of December
31, 2005 and December 31, 2004, respectively.

Service and Fee Agreements. Two companies that are not subsidiaries - Healthcare
Products Holdings, Inc. and Staffing Consulting Holdings, Inc., - are parties to
service and fee agreements or arrangements with the Company and/or TJC
Management Corporation, pursuant to which such companies will pay to the Company
and/or TJC Management Corporation (i) investment banking and sponsorship fees of
up to 2.0% of the aggregate consideration paid in connection with acquisitions,


                                    - 70 -
<PAGE>


joint ventures, minority investments or sales by such companies of all or
substantially all of their or their subsidiaries' capital stock, businesses or
properties; (ii) financial advisory fees of up to 1.0% of any amount obtained or
made available pursuant to debt, equity or other financing or refinancing
involving such company, in each case, arranged with the Company's assistance or
that of its affiliates; (iii) fees based upon a percentage of net EBITDA (as
defined) or net sales; and (iv) reimbursement for the Company's and/or TJC
Management Corporation's out of pocket costs in connection with providing such
services. These fee agreements or arrangements contain indemnities in favor of
the Company and its affiliates, including TJC Management Corporation, in
connection with such services. Pursuant to the TJC Management Consulting
Agreement, the Company, in turn, will also pay to TJC Management Corporation
one-half of such investment banking, sponsorship and financial advisory fees and
its portion of such cost reimbursements, unless otherwise determined by the
Company's Board of Directors. These fee agreements or arrangements will expire
at various times from 2007 through 2009, but are automatically renewed after
such date for successive one year terms, unless any party provides written
notice of termination 60 days prior to the scheduled renewal date. Pursuant to
these services and fee arrangements the Company received approximately $5,378,
$6,648, and $338 for the years ended December 31, 2005, 2004 and 2003
respectively, which includes companies no longer under these agreements.

Legal Counsel. Mr. G. Robert Fisher, a director of, and secretary to, the
Company, is a partner of Sonnenschein, Nath & Rosenthal LLP. Mr. Steven L. Rist,
the general counsel and assistant secretary to the Company, is also a partner of
Sonnenschein, Nath & Rosenthal LLP. Mr. Fisher, Mr. Rist and their law firm have
represented the Company and The Jordan Company in the past, and expect to
continue representing them in the future. Sonnenschein, Nath & Rosenthal LLP was
paid approximately $761, $1,215 and $956 in fees and expenses by the Company in
2005, 2004 and 2003, respectively. The Company believes that the fees paid were
equivalent to what it would have paid to an unaffiliated third party law firm
for similar services.

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 $2,970 and $2,744 as of December 31, 2005 and 2004, 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 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, 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.


                                    - 71 -
<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 Group and De Sheng; precision gears
and gearboxes by Imperial Group; 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 elevators by Motion Control.

Consumer and Industrial Products includes the manufacturing and importing of
decorative home furnishing accessories and the specialty retailing of gifts and
decorative home accessories by Welcome Home LLC, 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, between Sate-Lite,
Beemak and Deflecto and between Atco and Alma. These sales were eliminated in
consolidation and are not presented in segment disclosures. No single customer
accounts for 15% 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. The assets
of discontinued operations related to JII Promotions and ED&C are included in
identifiable assets of Specialty Printing and Labeling and Kinetek,
respectively. 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.

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.



                                    - 72 -
<PAGE>
<TABLE>
<CAPTION>

Summary financial information by business segment is as follows:

                                                             Year ended December 31,
                                                             -----------------------
                                                        2005           2004           2003
                                                        ----           ----           ----
<S>                                                  <C>             <C>           <C>
Net Sales:
  Specialty Printing and Labeling                     $ 49,977        $ 51,085      $ 48,647
  Jordan Specialty Plastics                            156,593         147,665       125,974
  Jordan Auto Aftermarket                              119,171         141,862       144,874
  Kinetek                                              337,524         313,867       278,309
  Consumer and Industrial Products                      66,220          68,800        69,127
                                                      ---------       ---------     ---------
    Total                                             $729,485        $723,279      $666,931
                                                      =========       =========     =========

Operating income (loss):
  Specialty Printing and Labeling                     $  3,379        $  1,689      $  3,663
  Jordan Specialty Plastics                              2,662           9,832         5,482
  Jordan Auto Aftermarket                              (24,101)          3,783         7,266
  Kinetek                                               40,652          34,153        30,048
  Consumer and Industrial Products                        (640)          1,919         2,297
                                                      ---------       ---------     ---------
    Total business segment operating income             21,952          51,376        48,756
  Corporate (expense)/income                            34,096           5,996        (5,959)
                                                      ---------       ---------     ---------
    Total consolidated operating income               $ 56,048        $ 57,372      $ 42,797
                                                      =========       =========     ==========

Depreciation and Amortization:
  Specialty Printing and Labeling                     $    991        $  1,318      $  1,464
  Jordan Specialty Plastics                              3,339           4,624         5,021
  Jordan Auto Aftermarket                                2,488           2,545         2,289
  Kinetek                                                5,503           5,621         6,890
  Consumer and Industrial Products                       1,470           1,002         1,151
                                                      ---------       ---------     ---------
    Total business segment amortization and
     depreciation                                       13,791          15,110        16,815
  Corporate                                                763           1,130         3,910
                                                      ---------       ---------     ---------
    Total consolidated depreciation
     and amortization                                 $ 14,554        $ 16,240      $ 20,725
                                                      =========       =========     =========

Capital expenditures:
  Specialty Printing and Labeling                     $    134        $    264      $     77
  Jordan Specialty Plastics                              2,406           1,905         2,563
  Jordan Auto Aftermarket                                  636             826         2,511
  Kinetek                                                4,067           3,881         4,063
  Consumer and Industrial Products                         753             837           971
  Corporate                                                 45             301           330
                                                      ---------       ---------     ---------
    Total capital expenditures                        $  8,041        $  8,014      $ 10,515
                                                      =========       =========     =========

                                                               December 31,
                                                               ------------
                                                         2005             2004
                                                         ----             ----
Identifiable assets (end of year):
  Specialty Printing and Labeling                     $ 29,819         $ 34,020
  Jordan Specialty Plastics                            113,403          118,224
  Jordan Auto Aftermarket                               69,312           99,782
  Kinetek                                              363,610          365,746
  Consumer and Industrial Products                      17,725           22,262
                                                      ---------        ---------
   Total consolidated business segment assets          593,869          640,034
  Corporate assets                                      17,498           22,372
                                                      ---------        ---------
   Total consolidated identifiable assets             $611,367         $662,406
                                                      =========        =========

Summary financial information by
 geographic area is as follows:                           Year ended December 31,
                                                          -----------------------
                                                        2005             2004         2003
                                                        ----             ----         ----
Net sales to unaffiliated customers:
United States                                         $621,052         $611,430     $581,838
Foreign                                                108,433          111,849       85,093
                                                      ---------        ---------    ---------
  Total                                               $729,485         $723,279     $666,931
                                                      =========        =========    =========
Identifiable assets (end of year):
United States                                         $490,626         $536,957     $574,268
Foreign                                                120,741          125,449      116,364
                                                      ---------        ---------    ---------
  Total                                               $611,367         $662,406     $690,632
                                                      =========        =========    =========
</TABLE>

                                    - 73 -
<PAGE>

Note 19 - Acquisition and formation of subsidiaries
---------------------------------------------------
On September 28, 2005, the Company, through its wholly owned subsidiary, Atco,
acquired certain assets including inventory and machinery of Coolstar, Inc. for
$393 including fees. Coolstar is a manufacturer of evaporators for the
automotive climate control market and its operations were fully integrated into
Atco.

On March 28, 2005, the Company, through its wholly owned subsidiary, Kinetek,
paid in cash the remaining acquisition cost for its September 30, 2004
acquisition of O'Thompson, a New York City-based elevator control company. The
total acquisition cost was originally $968 which was subsequently adjusted to
$853 during the first quarter of 2005. Of the total acquisition price, $315 was
paid through the end of the third quarter in 2004, $57 was paid during the
fourth quarter of 2004, and the remaining $562 was paid during the first quarter
of 2005. The operating results of O'Thompson are included with those of
Kinetek's wholly owned subsidiary, Motion Control.

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 agreement is payable 120 days
after the transaction.

The Company also had a deferred purchase price agreement relating to its
acquisition of Teleflow in July 1999. This agreement was based upon Teleflow
achieving certain agreed upon earnings before interest, taxes, depreciation, and
amortization for each year through the year ended December 31, 2003. The Company
paid $750 and $328 in 2003 and 2002, respectively, related to this agreement. In
2004, the Company and previous management of Teleflow reached an agreement
whereby the recipients of the above payments agreed to repay $950 to the Company
over time. The final payment in the repayment schedule was made in December
2005. No other amounts are due by either party in connection with this
agreement.

Kinetek 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 that began 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
three or 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.



                                    - 74 -
<PAGE>

Note 21 - Settlement of Litigation
----------------------------------
In June 2003, the Company reached a settlement with the former shareholders of
ED&C, a subsidiary of Kinetek, in which the Company received $1,150 in cash, and
long-term debt of $3,850 plus accrued interest of $693, was extinguished. The
Company recorded a gain of $5,693 which is included in "loss (income) of
discontinued operations" for 2003 in the Company's condensed consolidated
statements of operations.

Note 22 - 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 23 - Quarterly Financial Information (Unaudited)
-----------------------------------------------------
<TABLE>
<CAPTION>

                                                                Three Months Ended

                                     December 31 (3)    September 30 (2)      June 30 (1)       March 31
                                     ---------------    ----------------       ----------       --------
<S>                                     <C>                <C>                 <C>             <C>
2005:
Net sales                                $177,969           $187,918            $188,145        $175,453
Cost of sales,
 excluding depreciation                   124,733            132,912             134,371         125,609
(Loss) income from
 continuing operations                     (3,932)             5,934               2,061          (8,160)
Net (loss) income                          (3,391)             4,123               2,773          (9,516)

2004:
Net sales                                $176,380           $187,663            $190,827        $168,409
Cost of sales,
 excluding depreciation                   124,879            131,541             131,081         114,867
(Loss) income from
 continuing operations                     (3,406)               665              10,914         (16,579)
Net (loss) income                          (9,600)            (1,100)              8,773         (18,179)

(1)    Income from continuing operations for the second quarter of 2005
       includes income from the sale of an affiliate of $4,410. Income from
       continuing operations for the second quarter of 2004 includes income
       from the sale of affiliates of $7,954.
(2)    Income from continuing operations for the third quarter of 2005
       includes income from the refinancing of an affiliate for $7,966.

(3)    Loss from continuing operations for the fourth quarter of 2005
       includes income related to the sale of an affiliate of $14,727 offset
       by a goodwill impairment loss of $24,277.

</TABLE>

Note 24 - Warranties
--------------------
The Company provides warranties on certain products for varying lengths of time.
The Company estimates the costs that may be incurred and records a liability in
the amount of such costs at the time product revenue is recognized. Changes to
the Company's product warranty accrual during the year are as follows:

                                          2005            2004
                                          ----            ----

Balance, beginning of year              $ 2,315         $ 1,700
Warranties issued                         1,331           1,697
Change in estimate                         (428)              -
Settlements                              (1,596)         (1,082)
                                        --------        --------
Balance, end of year                    $ 1,622         $ 2,315
                                        ========        ========

Note 25 - Research and Development Costs
----------------------------------------
The Company incurred $4,895, $4,818 and $4,190 of research and development costs
during 2005, 2004 and 2003, respectively.


                                    - 75 -
<PAGE>

Note 26 - Management Discussion of Liquidity
--------------------------------------------
As discussed in Note 12, one of the Company's revolving credit facilities
contains a provision for the step-down in maximum borrowing capacity during
2006. As of March 1, 2006, the Company's maximum borrowings under this agreement
decreased from $55,000 to $45,000. This, coupled with the facts that the Company
has experienced operating losses in recent years and has used cash in operating
activities, has caused the Company's executive management to evaluate various
options to improve the Company's liquidity. During 2004, the Company has
restructured some of its outstanding debt through the Exchange Offer discussed
in Note 12 to the financial statements and the Modification and Waiver
Agreements also discussed in Note 12 to the financial statements. The effect of
these transactions has been to reduce cash paid for interest in the current year
as well as to provide for further reductions in debt maturity payments if
certain financial performance is not achieved. In addition, the Company expects
improved operating performance in all segments over the prior year.
Specifically, new product development and the continued shift of manufacturing
to China in the Specialty Plastics and Kinetek groups are expected to improve
results. In addition, plans to improve production efficiencies within the Auto
Aftermarket Group will increase operating margins. Further, the Company has
evaluated its holdings of investments in affiliates (See Note 8) and, when
appropriate, will sell certain investments, similar to the sale of the Company's
investments in DMS Holdings Inc, Mabis Healthcare Holdings Inc., Flavor and
Fragrance Holdings Inc. and JIR Broadcast, Inc. as described in Note 15 to the
financial statements. The Company believes that through its efforts discussed
above, in conjunction with opportunistic sales of assets, refinancings or market
transactions, the Company will have sufficient liquidity to meet its obligations
in the coming year. As noted, the Company's subsidiary Kinetek has long-term
debt that matures within the next year. Currently, the Company is contemplating
various avenues of refinancing this debt, and management is confident that it
will do so prior to the maturity. If the Company is unable to refinance or enter
into a transaction that allows it to pay off this debt, then there is
substantial doubt about the Company's ability to continue as a going concern.

Note 27 - Condensed Consolidating Financial Statements
------------------------------------------------------
Pursuant to the Exchange Offer described in Note 12, wholly owned subsidiaries
of the Company, JII Holdings LLC and JII Holdings Finance Corporation, issued
senior secured notes which have been guaranteed by the Company and certain of
the Company's subsidiaries. Each of the subsidiary guarantors is "100% owned"
(as defined in Rule 3-10 of Regulation S-X) by the Company, and in all cases,
the guarantees are full and unconditional and joint and several. The following
condensed consolidating financial information is provided in lieu of separate
financial statements for the issuers of these notes.




                                    - 76 -
<PAGE>
<TABLE>
<CAPTION>


Year ended December 31, 2005
                                        Jordan         JII         JII                      Non-
                                      Industries     Holdings    Finance    Guarantors   Guarantors   Eliminations   Consolidated
                                      ----------     --------    -------    ----------   ----------   ------------   ------------
<S>                                   <C>           <C>          <C>       <C>          <C>           <C>           <C>
Net Sales                              $       -     $      -     $   -     $ 366,315    $ 363,170     $      -      $ 729,485
Cost of sales,
 excluding depreciation                        -            -         -       259,967      257,658            -        517,625
Selling, general, and
 administrative expenses,
 excluding depreciation                   (3,676)          64         -        88,788       58,890         (280)       143,786
Depreciation                                 721            -         -         7,415        6,246            -         14,382
Amortization of
 goodwill and other
 intangibles                                   5            -         -            41          126            -            172
Goodwill impairment loss                       -            -         -        26,727            -       (2,450)        24,277
Income from sale of
 affiliates                              (12,994)           -         -             -            -            -        (12,994)
Management fees and other                (14,592)           -         -         1,765         (984)           -        (13,811)
                                       ---------    ---------    --------   ---------    ---------     --------      ---------
Operating income                          30,536          (64)        -       (18,388)      41,234        2,730         56,048

Other (income) and
 expenses:
    Interest expense                      11,288        2,838         -         4,452       36,142            -         54,720
    Intercompany interest
     (income) expense                     (6,758)     (22,026)        -        21,636        7,147            1              -
    Interest income                          (44)           -         -           (62)        (283)         149           (240)
    Intercompany
     management fee
     (income) expense                     (3,366)      (3,745)        -         3,179        3,932            -              -
    Gain on sale of
     subsidiaries                           (273)           -         -            22            -            -           (251)
    Equity in losses of
     subsidiaries                         32,424       46,876         -             -            -      (79,300)             -
    Other, net                             5,442            -         -           359       (3,857)          (4)         1,940
                                       ---------    ---------    --------   ---------    ---------     --------      ---------
                                          38,713       23,943         -        29,586       43,081      (79,154)        56,169
(Loss) income from
 continuing operations
 before taxes and
 minority interest                        (8,177)     (24,007)        -       (47,974)      (1,847)      81,884           (121)
(Benefit) provision for
 income taxes                             (2,166)           -         -        (2,052)       7,820            -          3,602
                                       ---------    ---------    --------   ---------    ---------     --------      ---------
(Loss) income from
 continuing operations
 before minority interest                 (6,011)     (24,007)        -       (45,922)      (9,667)      81,884         (3,723)

Minority interest                              -            -         -           374            -            -            374
                                       ---------    ---------    --------   ---------    ---------    ---------      ---------
(Loss) income from
 continuing operations                    (6,011)     (24,007)        -       (46,296)      (9,667)      81,884         (4,097)
Discontinued Operations:
 Loss from operations,
   net of tax                                  -            -         -        (2,082)      (1,334)           -         (3,416)
 Gain (loss) on sale of
   operations, net of tax                      -            -         -         1,502            -            -          1,502
                                       ---------    ---------    --------   ---------    ---------    ---------      ---------


Net (loss) income                      $  (6,011)   $ (24,007)    $   -     $ (46,876)   $ (11,001)   $  81,884      $  (6,011)
                                       =========    =========    ========   =========    =========    =========      =========


                                                              - 77 -
<PAGE>
<CAPTION>


Year ended December 31, 2004
                                        Jordan         JII         JII                      Non-
                                      Industries     Holdings    Finance    Guarantors   Guarantors   Eliminations   Consolidated
                                      ----------     --------    -------    ----------   ----------   ------------   ------------
<S>                                   <C>           <C>          <C>        <C>          <C>           <C>           <C>
Net Sales                             $       -       $    -     $      -    $ 388,280    $ 334,999     $      -      $ 723,279
Cost of sales,
 excluding depreciation                       -            -            -      272,331      230,037            -        502,368
Selling, general, and
 administrative expenses,
 excluding depreciation                   1,947            -            -       84,910       64,354            -        151,211
Depreciation                               (413)           -            -        8,700        7,795            -         16,082
Amortization of
 goodwill and other
 intangibles                                  5            -            -           19          134            -            158
Goodwill impairment loss                      -            -            -        3,676            -            -          3,676
Income from sale of
 affiliates                              (7,954)           -            -            -            -            -         (7,954)
Management fees and other                   365         (375)           -          299           77            -            366
                                      ---------    ---------    ---------    ---------    ---------    ---------      ---------
Operating income                          6,050          375            -       18,345       32,602            -         57,372

Other (income) and
 expenses:
    Interest expense                     15,612        9,871            -        4,609       35,956            -         66,048
    Intercompany interest
     (income) expense                   (11,840)     (20,764)           -       24,444        8,159            1              -
    Interest income                      (2,095)           -            -           (1)        (309)         138         (2,267)
    Intercompany
     management fee
     (income) expense                    (3,762)      (3,229)           -        2,984        4,007            -              -
    Loss on sale of
     subsidiaries                             -            -            -            -            -            -              -
    Equity in losses of
     subsidiaries                        31,777       26,006            -            -            -      (57,783)             -
    Other, net                            5,596            -            -          478       (7,581)          (1)        (1,508)
                                      ---------    ---------    ---------    ---------    ---------    ---------      ---------
                                         35,288       11,884            -       32,514       40,232      (57,645)        62,273
(Loss) income from
 continuing operations
 before taxes and
 minority interest                      (29,238)     (11,509)           -      (14,169)      (7,630)      57,645         (4,901)
(Benefit) provision for
 income taxes                            (5,977)           -            -        2,305        6,645            -          2,973
                                      ---------    ---------    ---------    ---------    ---------    ---------      ---------
(Loss) income from
 continuing operations
 before minority interest               (23,261)     (11,509)           -      (16,474)     (14,275)      57,645         (7,874)

Minority interest                             -            -            -          532            -            -            532
                                      ---------    ---------    ---------    ---------    ---------    ---------      ---------
(Loss) income from
 continuing operations                  (23,261)     (11,509)           -      (17,006)     (14,275)      57,645         (8,406)
Discontinued Operations:
 Loss from operations,
   net of tax                                 -            -            -       (4,674)      (5,855)           -        (10,529)
 Gain (loss) on sale of
   operations, net of tax                 3,155            -            -       (4,326)           -            -         (1,171)
                                      ---------    ---------    ---------    ---------    ---------    ---------      ---------
                                          3,155            -            -       (9,000)      (5,855)           -        (11,700)
                                      ---------    ---------    ---------    ---------    ---------    ---------      ---------

Net (loss) income                     $ (20,106)   $ (11,509)   $       -    $ (26,006)   $ (20,130)   $  57,645      $ (20,106)
                                      =========    =========    =========    =========    =========    =========      =========




                                                              - 78 -


<PAGE>
<CAPTION>



Year ended December 31, 2003
                                        Jordan         JII         JII                      Non-
                                      Industries     Holdings    Finance    Guarantors   Guarantors   Eliminations   Consolidated
                                      ----------     --------    -------    ----------   ----------   ------------   ------------
<S>                                  <C>             <C>        <C>         <C>          <C>          <C>            <C>
Net Sales                             $       -      $      -    $      -    $ 373,063    $ 293,868    $       -      $ 666,931
Cost of sales, excluding
depreciation                                  -             -           -      255,665      194,643            -        450,308
Selling, general, and
 administrative
 expenses, excluding
 depreciation                             2,708             -           -       87,381       61,897            -        151,986
Depreciation                              1,503             -           -        8,892        9,833            -         20,228
Amortization of
 goodwill and other
 intangibles                                  5             -           -          323          169            -            497
Goodwill impairment loss                      -             -           -          696            -            -            696
Management fees and
 other                                       43             -           -          376            -            -            419
                                      ---------     ---------    --------    ---------    ---------    ---------      ---------
Operating (loss) income                  (4,259)            -           -       19,730       27,326            -         42,797

Other (income) and
 expenses:
    Interest expense                     43,028             -           -        4,906       35,281            -         83,215
    Intercompany
     interest (income)
     expense                             (3,970)      (24,597)          -       24,315        4,251            1              -
    Interest income                      (1,209)            -           -           (1)        (260)         118         (1,352)
    Intercompany
     management fee
     (income) expense                    (2,917)       (4,074)          -        3,321        3,669            1              -
    Loss on sale of
     subsidiaries                             -             -           -          401            -            -            401
    Equity in losses
     of subsidiaries                      5,419        21,268           -            -            -      (26,687)             -
    Other, net                            1,102             -           -          601       (6,073)          (1)        (4,371)
                                      ---------     ---------    --------    ---------    ---------    ---------      ---------
                                         41,453        (7,403)          -       33,543       36,868      (26,568)        77,893
(Loss) income from
 continuing operations
 before taxes and
 minority interest                      (45,712)        7,403           -      (13,813)      (9,542)      26,568        (35,096)
Provision for income
 taxes                                        -             -           -        3,487        4,949            -          8,436
                                      ---------     ---------    --------    ---------    ---------    ---------      ---------
(Loss) income from
 continuing operations
 before minority
 interest                               (45,712)        7,403           -      (17,300)     (14,491)      26,568        (43,532)

Minority interest                             -             -           -          193            -            -            193
                                      ---------     ---------    --------    ---------    ---------    ---------      ---------
(Loss) income from
 continuing operations                  (45,712)        7,403           -      (17,493)     (14,491)      26,568        (43,725)
Discontinued Operations:
 Loss (income) from
 operations, net of
  tax                                         -             -           -       (2,729)       1,787            -           (942)
 Gain (loss) on sale
  of operations, net
  of tax                                  9,235             -           -       (1,045)           -            -          8,190
                                      ---------     ---------    --------    ---------    ---------    ---------      ---------
                                          9,235             -           -       (3,774)       1,787            -          7,248
                                      ---------     ---------    --------    ---------    ---------    ---------      ---------

Net (loss) income                     $ (36,477)    $   7,403    $      -    $ (21,267)   $ (12,704)   $  26,568      $ (36,477)
                                      =========     =========    ========    =========    =========    =========      =========


                                                              - 79 -

<PAGE>
<CAPTION>


Balance Sheet as of December 31, 2005
                                        Jordan       JII           JII         Non-
                                      Industries   Holdings      Finance    Guarantors   Guarantors   Eliminations    Consolidated
                                      ----------   --------      -------    ----------   ----------   ------------    ------------
<S>                                   <C>          <C>          <C>         <C>          <C>          <C>             <C>
Current assets:
    Cash and equivalents               $   2,135    $       -    $      -    $   1,315    $  12,249     $      -       $  15,699
    Intercompany receivables              38,896      (38,516)          -       (4,364)      16,803      (12,819)              -
    Accounts receivable, net                   -            -           -       41,270       68,820            -         110,090
    Inventories                                -            -           -       67,803       56,726            -         124,529
    Assets of discontinued
     operations                                -            -           -          313          415            -             728
    Income tax receivable                      -            -           -            -        1,926            -           1,926
    Investment in and
     advances to affiliates               23,015            -           -            -            -            -          23,015
    Prepaids and other
     current assets                        2,890            -           -        8,338        4,079       (4,794)         10,513
                                       ---------    ---------    --------    ---------    ---------    ---------       ---------
    Total current assets                  66,936      (38,516)          -      114,675      161,018      (17,613)        286,500

Property, plant and
 equipment, net                            1,045            -           -       42,888       35,706            -          79,639
Investments and advances to
 affiliates                                1,700            -           -            -       12,344            -          14,044
Investments in subsidiaries               55,476      211,890           -            -            -     (267,366)              -
Equity in earnings of
 subsidiaries                           (259,593)    (114,472)          -            -            -      374,065               -
Goodwill, net                                  -            -           -       51,808      181,980      (13,274)        220,514
Intercompany notes
 receivable                               (1,000)     206,345           -            -        1,000     (206,345)              -
Other assets                                 140        3,548           -        2,175        4,807            -          10,670
                                       ---------    ---------    --------    ---------    ---------    ---------       ---------
    Total assets                       $(135,296)   $ 268,795    $      -    $ 211,546    $ 396,855    $(130,533)      $ 611,367
                                       =========    =========    ========    =========    =========    =========       =========

Current liabilities:
    Accounts payable                   $       -    $       -    $      -    $  20,921    $  37,238    $       -       $  58,159
    Accrued liabilities                   27,775        9,389           -       23,845       17,438       (5,232)         73,215
    Intercompany payables                      -            -           -      (10,087)      13,189       (3,102)              -
    Current portion of long
     term debt                               530            -           -       24,598      293,961            -         319,089
                                       ---------    ---------    --------    ---------    ---------    ---------       ---------
    Total current
     liabilities                          28,305        9,389           -       59,277      361,826       (8,334)        450,463

Long term debt                           121,559      201,500           -        7,401       31,213            -         361,673
Other non current
 liabilities                              18,628            -           -        8,321        5,203            -          32,152
Intercompany note payables               (50,424)           -           -      226,596       31,722     (207,894)              -
Deferred income taxes                     (1,653)           -           -      (17,281)      33,027            -          14,093
Minority interest                              -            -           -        1,377            -            -           1,377
Preferred stock of a
 subsidiary                                 (350)           -           -       40,327        2,970      (39,977)          2,970
Shareholders' equity
(deficit)                               (251,361)      57,906           -     (114,472)     (69,106)     125,672        (251,361)
                                       ---------    ---------    --------    ---------    ---------    ---------       ---------
    Total liabilities and
     shareholders deficit              $(135,296)   $ 268,795    $      -    $ 211,546    $ 396,855    $(130,533)      $ 611,367
                                       =========    =========    ========    =========    =========    =========       =========



                                                              - 80 -

<PAGE>
<CAPTION>


Balance Sheet as of December 31, 2004
                                        Jordan       JII           JII         Non-
                                      Industries   Holdings      Finance    Guarantors   Guarantors   Eliminations    Consolidated
                                      ----------   --------      -------    ----------   ----------   ------------    ------------
<S>                                   <C>          <C>          <C>         <C>          <C>          <C>             <C>
Current assets:
    Cash and equivalents               $   2,152    $       -     $    -     $   1,693    $  11,567    $       -        $  15,412
    Intercompany receivables               9,543      (25,053)         -        (2,245)      14,931        2,824                -
    Accounts receivable, net                   -            -          -        42,656       66,898            -          109,554
    Inventories                                -            -          -        73,883       56,150            -          130,033
    Assets of discontinued
     operations                                -            -          -         1,409        2,023            -            3,432
    Income tax receivable                      -            -          -             -        3,631            -            3,631
    Prepaids and other
     current assets                        4,625            -          -         9,236        4,878       (6,376)          12,363
                                       ---------    ---------    -------     ---------    ---------    ---------        ---------
    Total current assets                  16,320      (25,053)         -       126,632      160,078       (3,552)         274,425

Property, plant and
 equipment, net                            1,721            -          -        45,828       37,487            -           85,036
Investments and advances to
 affiliates                               28,538            -          -             -       12,344            -           40,882
Investments in subsidiaries               52,241      202,512          -             -            -     (254,753)               -
Equity in earnings of
 subsidiaries                           (222,701)     (82,684)         -             -            -      305,385                -
Goodwill, net                                  -            -          -        78,648      182,385      (15,724)         245,309
Intercompany notes
 receivable                               (1,000)     204,871          -             -        1,000     (204,871)               -
Other assets                                 395        6,387          -         3,887        6,085            -           16,754
                                       ---------    ---------    -------     ---------    ---------    ---------        ---------
    Total assets                       $(124,486)   $ 306,033    $     -     $ 254,995    $ 399,379    $(173,515)       $ 662,406
                                       =========    =========    =======     =========    =========    =========        =========

Current liabilities:
    Accounts payable                   $       -    $       -    $     -     $  25,662    $  37,134    $       -        $  62,796
    Accrued liabilities                   37,895        9,389          -        22,662       18,277       (6,772)          81,451
    Liabilities of
     discontinued
     operations                                -            -          -           150          548            -              698
    Intercompany payables                      -            -          -       (15,740)       4,501       11,239                -
    Current portion of long
     term debt                               250            -          -         5,387       22,237            -           27,874
                                       ---------    ---------    -------     ---------    ---------    ---------        ---------
    Total current
     liabilities                          38,145        9,389          -        38,121       82,697        4,467          172,819

Long term debt                           121,890      224,033          -        41,779      301,697            -          689,399
Other non current
 liabilities                              10,830            -          -         8,711        5,626            -           25,167
Intercompany note payables               (50,384)           -          -       223,537       31,722     (204,875)               -
Deferred income taxes                     (1,636)           -          -       (13,497)      29,388            -           14,255
Minority interest                              -            -          -         1,003            -            -            1,003
Preferred stock of a
 subsidiary                                 (350)           -          -        38,025        2,744      (37,675)           2,744
Shareholders' equity
(deficit)                               (242,981)      72,611          -       (82,684)     (54,495)      64,568         (242,981)
                                       ---------    ---------    -------     ---------    ---------    ---------        ---------
    Total liabilities and
     Shareholders' deficit             $(124,486)   $ 306,033    $     -     $ 254,995    $ 399,379    $(173,515)       $ 662,406
                                       =========    =========    =======     =========    =========    =========        =========










                                                              - 81 -

<PAGE>
<CAPTION>



Year ended December 31, 2005
                                        Jordan       JII           JII         Non-
                                      Industries   Holdings      Finance    Guarantors   Guarantors   Eliminations    Consolidated
                                      ----------   --------      -------    ----------   ----------   ------------    ------------
<S>                                   <C>          <C>          <C>         <C>          <C>          <C>             <C>
Net cash provided by
 operating activities                  $  2,947     $     -      $     -     $  4,937     $  6,904     $       -       $ 14,788

Cash flows from investing
 activities:
    Proceeds from sales of
     fixed assets                             -           -            -          665          144             -            809
    Capital expenditures                    (45)          -            -       (3,483)      (4,513)            -         (8,041)
    Intercompany transfers              (22,533)     22,533            -            -            -             -              -
    Net proceeds from sale
     of discontinued
     operations                           1,002           -            -            -            -             -          1,002
    Net proceeds from sale
     of affiliates                        6,600           -            -            -            -             -          6,600
    Acquisiton of
      subsidiaries                            -           -            -         (393)        (562)            -           (955)
    Net proceeds from sales
     of subsidiaries                      1,209           -            -            -            -             -          1,209
    Net proceeds from sale
     of affiliate
     promissory note                      9,449           -            -            -            -             -          9,449
    Net proceeds from
     refinancing of
     affiliate                           15,000           -            -            -            -             -         15,000
                                       --------    --------      -------     --------     --------     ---------       --------
Net cash provided by (used
 in) investing activities                10,682      22,533            -      (3,211)       (4,931)            -         25,073

Cash flows from financing
 activities:
    (Payments on) proceeds
     from revolving
     credit facility                    (13,546)          -            -           6         4,729             -         (8,811)
    Payment of deferred
     financing costs                          -           -            -           -             -             -              -
    Repayment of long term
     debt                                  (100)    (22,533)           -      (2,631)      (12,927)            -        (38,191)
    Proceeds from other
     borrowings                               -           -            -         521         8,490             -          9,011
                                       --------    --------      -------     --------     --------     ---------       --------
Net cash (used in) provided
  by financing activities               (13,646)    (22,533)           -      (2,104)          292             -        (37,991)

Effect of exchange rate
 changes on cash                              -           -            -           -        (1,583)            -         (1,583)
                                       --------    --------      -------     --------     --------     ---------       --------
Net (decrease) increase in
 cash and equivalents                       (17)          -            -        (378)          682             -            287
Cash and equivalents at
 beginning of year                        2,152           -            -        1,693       11,567             -         15,412
                                       --------    --------      -------     --------     --------     ---------       --------
Cash and equivalents at
 end  of year                          $  2,135    $      -      $     -     $  1,315     $ 12,249     $       -       $ 15,699
                                       ========    ========      =======     ========     ========     =========       ========



                                                              - 82 -

<PAGE>
<CAPTION>


Year ended December 31, 2004
                                        Jordan       JII           JII         Non-
                                      Industries   Holdings      Finance    Guarantors   Guarantors   Eliminations    Consolidated
                                      ----------   --------      -------    ----------   ----------   ------------    ------------
<S>                                   <C>          <C>          <C>         <C>          <C>          <C>             <C>
Net cash (used in) provided
  by operating activities              $(13,835)    $     -      $    -      $ 23,396     $ (3,380)    $       -       $  6,181

Cash flows from investing
 activities
    Proceeds from sales of
     fixed assets                             -           -           -           487          620             -          1,107
    Capital expenditures                   (115)          -           -        (3,677)      (4,222)            -         (8,014)
    Intercompany transfers              (23,533)     23,533           -             -            -             -              -
    Net proceeds from sale
     of discontinued
     operations                           6,155           -           -             -            -             -          6,155
    Net proceeds from sale
     of affiliates                       27,207           -           -             -            -             -         27,207
    Acquisiton of
      subsidiaries                            -           -           -             -         (372)            -           (372)
    Additional purchase
    price payments                            -           -           -             -            -             -              -
    Proceeds from sales of
     subsidiaries                             -           -           -             -            -             -              -
                                       --------    --------    --------      --------     --------     ---------       --------
Net cash provided by (used
 in) investing activities                 9,714      23,533           -        (3,190)      (3,974)            -         26,083

Cash flows from financing
 activities
    (Payments on) proceeds
     from revolving                           -           -           -       (15,286)      12,244             -         (3,042)
     credit facility
    Payment of deferred
     financing costs                          -      (3,942)          -             -            -             -         (3,942)
    Repayment of long term
     debt                                   (28)    (19,591)          -        (5,465)     (11,834)            -        (36,918)
    Proceeds from other
     borrowings                               -           -           -           500        8,083             -          8,583
                                       --------    --------    --------      --------     --------     ---------       --------
Net cash (used in) provided
  by financing activities                   (28)    (23,533)          -       (20,251)       8,493             -        (35,319)

Effect of exchange rate
 changes on cash                              -           -           -             -        2,950             -          2,950
                                       --------    --------    --------      --------     --------     ---------       --------
Net (decrease) increase in
 cash and equivalents                    (4,149)          -           -           (45)       4,089             -           (105)
Cash and equivalents at
 beginning of year                        6,301           -           -         1,738        7,478             -         15,517
                                       --------    --------    --------      --------     --------     ---------       --------
Cash and equivalents at end
 of year                               $  2,152    $      -    $      -      $  1,693     $ 11,567     $       -       $ 15,412
                                       ========    ========    ========      ========     ========     =========       ========



                                                              - 83 -

<PAGE>
<CAPTION>


Year ended December 31, 2003
                                        Jordan       JII           JII         Non-
                                      Industries   Holdings      Finance    Guarantors   Guarantors   Eliminations    Consolidated
                                      ----------   --------      -------    ----------   ----------   ------------    ------------
<S>                                   <C>          <C>          <C>         <C>          <C>          <C>             <C>

Net cash (used in) provided
 by operating activities               $(6,998)     $    -       $    -      $  305       $(5,419)     $      -        $(12,112)

Cash flows from investing
 activities
    Proceeds from sales of
     fixed assets                            -           -            -           57        3,788             -           3,845
    Capital expenditures                   (72)          -            -       (5,034)      (5,409)            -         (10,515)
    Acquisitions of
     subsidiaries                            -           -            -            -            -             -               -
    Additional purchase
     price payments                          -           -            -         (750)           -             -            (750)
    Cash acquired in
     purchase of
     subsidiaries                            -           -            -            -            -             -               -
    Proceeds from sales of
     subsidiaries                          678           -            -            -            -             -             678
    Proceeds from sale of
     discontinued
     operations                          9,400           -            -            -            -             -           9,400
    Proceeds from sale of
     affiliates                              -           -            -            -            -             -               -
                                       -------      ------       ------      -------      -------       -------         -------
Net cash provided by (used
 in) investing activities               10,006           -            -       (5,727)      (1,621)            -           2,658

Cash flows from financing
 activities
    Proceeds of debt
     issuance - Kinetek                      -           -            -            -            -             -               -
    Repurchase of 2009
     debentures                              -           -            -            -            -             -               -
    Proceeds from revolving
     credit facility                         -           -            -       11,802            -             -          11,802
    Payment of financing
     fees                                   (8)          -            -         (142)           -             -            (150)
    Repayment of long term
     debt                                  (33)          -            -       (7,495)      (7,913)            -         (15,441)
    Proceeds from other
     borrowings                              -           -            -        1,975          874             -           2,849
                                       -------      ------       ------      -------      -------      --------         --------
Net cash (used in) provided
  by financing activities                  (41)          -            -        6,140       (7,039)            -            (940)

Effect of exchange rate
 changes on cash                             -           -            -            -        6,194             -           6,194
                                       -------      ------       ------      -------      -------      --------         -------
Net increase (decrease) in
 cash and equivalents                    2,967           -            -          718       (7,885)            -          (4,200)
Cash and equivalents at
 beginning of year                       3,334           -            -        1,020       15,363             -          19,717
                                       -------      ------       ------      -------      -------      --------         --------
Cash and equivalents at end
 of year                               $ 6,301      $    -       $    -      $ 1,738      $ 7,478      $      -         $15,517
                                       =======      ======       ======      =======      =======      ========         =======


</TABLE>


                                                              - 84 -



<PAGE>



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

         None.

Item 9A. Controls and Procedures
         -----------------------
Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-15 of the
Securities Exchange Act of 1934 ("Exchange Act") promulgated thereunder, we,
with the participation of our chairman and our chief financial officer, have
evaluated the effectiveness of our disclosure controls and procedures as of
December 31, 2005. Based on such evaluation, our chairman and our chief
financial officer have concluded that our disclosure controls and procedures
were effective as of such time.

Since December 31, 2005, there have been no changes in the internal control over
financial reporting that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.


Item 9B. Other Information
         -----------------
         None.


























                                    - 85 -
<PAGE>



Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
         -----------------------------------------------

The following sets forth 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              58     Chairman of the Board of Directors and
                                      Chief Executive Officer.
Thomas H. Quinn                58     Director, President and Chief Operating
                                      Officer.
Gordon L. Nelson               48     Senior Vice President and Treasurer.
Norman R. Bates                44     Chief Financial Officer, Vice President
                                      and Assistant Secretary.
Joseph S. Steinberg            61     Director.
David W. Zalaznick             50     Director.
Jonathan F. Boucher            49     Director, Vice President and Assistant
                                      Secretary.
G. Robert Fisher               66     Director and Secretary.
Steven L. Rist                 47     General Counsel and Assistant Secretary.
Jesse Clyde Nichols III        66     Director.

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 forth 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 principal of The
Jordan Company, a private merchant banking firm which he founded in 1982. Mr.
Jordan is also President of Jordan Zalaznick Advisors, Inc. and TJC Management
Corporation, Manager of JZ International, LLC, Managing Partner of Jordan
Zalaznick Capital Company and Managing Member of Resolute Fund Partners, LLC.
Mr. Jordan is also a director of Sensus Metering Systems, Inc., TAL
International Group, Inc. and Kinetek, 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 a Group
Vice President for Baxter International, Inc. ("Baxter"). From September 1970
through 1985, Mr. Quinn was employed by American Hospital Supply Corporation
("American Hospital") in a variety of management capacities, where he was a
Group Vice President of the Hospital Group and a corporate officer when American
Hospital was acquired by Baxter. Mr. Quinn is also Chairman and a member of the
board of directors of a number of privately held companies. He is also a senior
principal of The Jordan Company LP.

Mr. Nelson has served as the Company's Senior Vice President and Treasurer since
he joined the Company in 1996.

Mr. Bates has served as Chief Financial Officer, Vice President, and Assistant
Secretary of the Company since June 2004. Prior to that, Mr. Bates had been the
Vice President of Business Development of Kinetek since April 2000, and Chief
Financial Officer of Kinetek from April 1997 through March 2000.


                                    - 86 -
<PAGE>


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 and Finova Group, Inc. Mr. Steinberg is also Chairman of
the Board of Home Fed.

Mr. Zalaznick has served as a director of the Company since June 1997. Since
1982, Mr. Zalaznick has been a managing principal of The Jordan Company. Mr.
Zalaznick is also LP and Chief Executive Officer of JZ International, LLC,
Managing Member of Resolute Fund Partners, LLC, President of TJC Management
Corporation and chairman of Jordan/Zalaznick Advisors, Inc. and President of
Jordan/Zalaznick Capital Company. Mr. Zalaznick is a director of Sensus Metering
Systems, Inc., TAL International Group, Inc., Marisa Christina, Inc., and
Kinetek, Inc. as well as other privately held companies.

Mr. Boucher has served as a Vice President, Assistant Secretary and director of
the Company since 1988. Since 1983, Mr. Boucher has been a partner of The Jordan
Company. Mr. Boucher is also a Senior Principal of The Jordan Company, LLC and a
Consultant to TJC Management Corporation. Mr. Boucher is also a director of
Sensus Metering Systems, Inc., Motors & Gears Holdings, Inc. and W-H Energy
Sources, Inc., and Jackson Products, Inc. as well as several other privately
held companies.

Mr. Fisher has served as a director and Secretary of the Company since 1988. Mr.
Fisher also served as General Counsel of the Company from 1988 until 1996. Since
February 1999, Mr. Fisher has been a member of the law firm of Sonnenschein,
Nath & Rosenthal LLP, 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.

Mr. Rist has served as General Counsel of the Company since 1996 and as an
Assistant Secretary of the Company since 1998. Since January 1999, Mr. Rist has
been a member of the law firm of Sonnenschein, Nath & Rosenthal LLP, a firm that
represents the Company in various legal matters. From June 1995 until January
1999, Mr. Rist was a member of the law firm of Bryan Cave LLP. For the prior 12
years, Mr. Rist was a member of the law firm of Smith, Gill, Fisher & Butts.
P.C., which combined with Bryan Cave LLP in June 1995.

Mr. Nichols has served as a director since 2005. Mr. Nichols is a private
investor and from May 1974 through 2000, he was President of Nichols Industries,
Inc. Mr. Nichols is also a director of Leucadia National Corporation, a holding
company.

Code of Ethics. The Board of Directors has adopted a Code of Ethics for the
Chief Executive Officer, the Chief Financial Officer, the Chief Operating
Officer, and other senior financial personnel. A copy of the Code is available
on the Company's website at www.jordanind.com. The Company will disclose any
amendments or waivers of the Code of Ethics on the same website.

Audit Committee. The Company is not a "listed company" under SEC rules and is
therefore not required to have an audit committee comprised of independent
directors. The Company does not currently have an audit committee and does not
have an audit committee financial expert. The Board of Directors has determined
that each of its members is able to read and understand fundamental financial
statements and has substantial business experience that results in that member's



                                    - 87 -
<PAGE>


financial sophistication. Accordingly, the Board of Directors believes that
each of its members have the sufficient knowledge and experience necessary to
fulfill the duties and obligations that an audit committee would have.

































                                    - 88 -
<PAGE>


Item 11. EXECUTIVE COMPENSATION
         ----------------------
The following table shows the cash compensation paid by the Company, for the
three years ended December 31, 2005, for services in all capacities to the Chief
Executive Officer, President and Chief Operating Officer, and Chief Financial
Officer of the Company.

                                            Summary Compensation Table

                                                Annual Compensation
                                 ----------------------------------------------
                                                                       Other
Name and Principal Position       Year      Salary         Bonus    Compensation
---------------------------       ----      ------         -----    ------------
John W. Jordan II, Chief
Executive Officer(1)              2005    $       -      $     -      $    -
                                  2004    $       -      $     -      $    -
                                  2003            -            -           -
Thomas H. Quinn, President
and Chief Operating Officer       2005       500,000           -      13,800
                                  2004     1,000,000     825,000      13,800
                                  2003     1,000,000           -      13,800
Norman R. Bates, Chief
Financial Officer                 2005       243,000     100,000           -
                                  2004       223,000      55,000           -
                                  2003             -           -           -


________________________
(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.

         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. In
2005, Mr. Quinn, waived $500,000 of his base salary. All provisions of his
employment contract remain in force in 2006 and through the termination date of
his contract. 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.

         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.




                                    - 89 -
<PAGE>




Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
         --------------------------------------------------------------

The following table furnishes information, as of March 24, 2006, as to the
beneficial ownership of the Company's Common Stock by (i) each person known by
the Company to beneficially own more than 5% of the outstanding shares of Common
Stock (ii) each director and executive officer of the Company, and (iii) all
officers and directors of the Company as a group.

                                             Amount of Beneficial Ownership
                                             ------------------------------
                                               Number of        Percentage
                                                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%
Jesse Clyde Nichols III                            0.0000           0.0%
Norman R. Bates                                    0.0000           0.0%
All directors and officers as a group
(5 persons) (3)                               53,866.1000          54.6%

University of Notre Dame                       8,547.9968           8.7%

______________________

(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,
       and 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, 2005, 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.



                                    - 90 -
<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,
1988 (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 RELATIONSHIPS AND RELATED 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. As of December 31, 2003, 2004 and 2005 the Company had $18.5 million, $21.9
million and $23.0 million, respectively, of unsecured advances due from JIR
Broadcast, Inc. and JIR Paging, Inc. The Chief Executive Officer of each of
these companies is Mr. Quinn and its stockholders include Messrs. Jordan, Quinn,
Zalaznick and Boucher, who are directors and stockholders of the Company as well
as other partners, principals and associates of The Jordan Company who are also
stockholders of the Company. These companies are engaged in the development of
businesses in Russia and Austria, including the broadcast and paging sectors. In
February and March of 2006, the Company sold 100% of their interests in JIR
Broadcast and JIR Paging to a third party. The cash proceeds from the sales
repaid the net receivables on the Company's books from these entities.
Subsequent to the sales, the Company has no amounts due and owing from JIR
Broadcast or JIR Paging.

JZ International, LLC. The Company, through Kinetek, has a $12.3 million
investment in the Class A and Class B Preferred Units of JZ International, LLC.
These debt securities are not publicly traded and do not have a determinable
fair value. The cost method of accounting is used to account for this
investment. The Preferred Units have a cumulative 5% annual return. The Class A
Preferred Units may be redeemed at any time at the discretion of the Board of
Directors of JZ International, but no later than December 31, 2017, whereas the
Class B Preferred Units may be redeemed at any time at the discretion of the
Board of Directors of JZ International, but no later than December 31, 2018.
Each quarter, the Company evaluates the recoverability of this investment using
information obtained from the management of this company. Based on the
information obtained, the Company will record an impairment charge when it
believes the investment has experienced a decline in value below its current
carrying amount that is other than temporary. JZ International's Chief Executive
Officer is David W. Zalaznick, and its members include Messrs. Jordan, Quinn,
Zalaznick and Boucher, who are directors and stockholders of the Company. 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.

Healthcare Products Holdings, Inc. As of December 31, 2003, 2004 and 2005, the
Company had $2.2 million, $2.5 million and $1.7 million, respectively, of net
unsecured advances due from Healthcare Products Holdings, Inc. Healthcare
Products Holdings' Chief Executive Officer is Mr. Quinn, and its stockholders


                                    - 91 -
<PAGE>

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.

Transaction Advisory Agreement. Each of the Company's subsidiaries are parties
to an advisory agreement with the Company, referred to as the Transaction
Advisory Agreement, pursuant to which, such subsidiaries pay to the Company (i)
investment banking and sponsorship fees of up to 2.0% of the aggregate
consideration paid in connection with acquisitions, joint ventures, minority
investments or sales by each such subsidiary of all or substantially all of its
or its subsidiaries capital stock, businesses or properties; (ii) financial
advisory fees of up to 1.0% of the amount obtained or made available pursuant to
any debt, equity or other financing or refinancing involving such subsidiary, in
each case, arranged with the assistance of the Company or its affiliates; and
(iii) reimbursement for the Company's out-of-pocket costs in connection with
providing such services. Each Transaction Advisory Agreement contains
indemnities in favor of the Company and its affiliates, and The Jordan Company
and certain of its affiliates, including TJC Management Corporation, in
connection with the Transaction Advisory Agreement and such services. The
Transaction Advisory Agreement will expire in December 2007, but is
automatically renewed after such date for successive one-year terms, unless any
party provides written notice of termination 60 days prior to the scheduled
renewal date. The Company recorded fees pursuant to the Transaction Advisory
Agreement of $0 million, $0.1 million and $0 million for the years 2003, 2004
and 2005, respectively.

TJC Management Consulting Agreement. JII has entered into a consulting services
agreement with TJC Management Corporation, an affiliate of The Jordan Company,
referred to as the TJC Management Consulting Agreement, pursuant to which the
Company will in turn pay to TJC Management Corporation (i) one-half of the
investment banking, sponsorship and financing advisory fees paid to the Company
pursuant to the Transaction Advisory Agreement, unless otherwise determined by
our Board of Directors; (ii) (A) investment banking and sponsorship fees of up
to 2.0% of the purchase price of acquisitions, joint ventures and minority
investments or sales involving the Company or its other subsidiaries and (B)
financial advisory fees of up to one-half of 1.0% of any debt, equity or other
financing or refinancing involving the Company or such subsidiaries, in each
case, arranged with the assistance of TJC Management Corporation or its
affiliates, unless otherwise determined by the Company's Board of Directors; and
(iii) reimbursement for TJC Management Corporation's and The Jordan Company's
out-of-pocket costs incurred in connection with such services. The TJC
Management Consulting Agreement also contains indemnities in favor of TJC
Management Corporation and its affiliates and The Jordan Company and its
affiliates in connection with such services. In consideration for these fees,
the services of Mr. Jordan and the investment banking, sponsorship and advisory
services of TJC Management Corporation will be provided to the Company. The TJC
Management Consulting Agreement will expire in December 2007, but is
automatically renewed after such date for successive one-year terms, unless
either party provides written notice of termination 60 days prior to the
scheduled renewal date. The Company did not pay TJC Management Corporation or
The Jordan Company any fees or cost reimbursements for the years 2003, 2004 or
2005 under this agreement. Approximately, $9.7 million of such fees and cost
reimbursements are accrued and unpaid under this agreement as of December 31,
2005.


                                    - 92 -
<PAGE>

Management Consulting Agreement. Each of the Company's subsidiaries are party to
a consulting agreement with the Company, referred to as the Management
Consulting Agreement, pursuant to which they pay to the Company annual
consulting fees of up to the greater of (i) 3% of the net EBITDA (as defined)
and other non-cash charges of each such subsidiary in each case, charged,
expensed or accrued against such net income or (ii) 1.0% of such subsidiary's
net sales for such services, payable quarterly, and will reimburse the Company
for its out-of-pocket costs related to its services. The Management Consulting
Agreement expires in December 2007, but is automatically renewed for successive
one year terms, unless either party to the agreement provides written notice of
termination 60 days prior to the scheduled renewal date.

JI Properties Services Agreement. The Company's nonrestricted subsidiary, JI
Properties, Inc., entered into a services agreement, referred to as the JI
Properties Services Agreement, with the Company and each of its other
subsidiaries, pursuant to which JI Properties grants to the Company the right to
use certain of its assets and provides certain services to the Company and such
subsidiaries in connection with the use and/or operation of such assets.
Pursuant to the JI Properties Services Agreement, the Company's subsidiaries
will be charged the costs incurred in the use and/or operation of such assets
used or operated by the Company and their allocable portion of costs associated
with owning such assets which are not directly attributable to the operation or
use of such assets and their relative revenues as compared with other
subsidiaries. The JI Properties Services Agreement will expire in December 2007,
but is automatically renewed for successive one year terms, unless either party
provides written notice of termination 60 days prior to the scheduled renewal
date. None of the Company's subsidiaries paid any fees to JI Properties under
the JI Properties Service Agreement for the years 2003, 2004 or 2005.

The Company also allocates overhead, general and administrative charges and
expenses among the Company's subsidiaries based on the respective revenues and
usage of corporate overhead by its subsidiaries. The Company received
approximately $7.1 million, $5.8 million and $4.6 million for the years ended
December 31, 2003, 2004 and 2005, respectively, in respect of overhead
allocation reimbursement.

Service and Fee Agreements. Two companies that are not subsidiaries - Healthcare
Products Holdings, Inc. and Staffing Consulting Holdings, Inc. - are parties to
service and fee agreements or arrangements with the Company and/or TJC
Management Corporation, pursuant to which such companies will pay to the Company
and/or TJC Management Corporation (i) investment banking and sponsorship fees of
up to 2.0% of the aggregate consideration paid in connection with acquisitions,
joint ventures, minority investments or sales by such companies of all or
substantially all of their or their subsidiaries' capital stock, businesses or
properties; (ii) financial advisory fees of up to 1.0% of any amount obtained or
made available pursuant to debt, equity or other financing or refinancing
involving such company, in each case, arranged with the Company's assistance or
that of its affiliates; (iii) fees based upon a percentage of net EBITDA (as
defined) or net sales; and (iv) reimbursement for the Company's and/or TJC
Management Corporation's out of pocket costs in connection with providing such
services. These fee agreements or arrangements contain indemnities in favor of
the Company and its affiliates, including TJC Management Corporation, in
connection with such services. Pursuant to the TJC Management Consulting
Agreement, the Company, in turn, will also pay to TJC Management Corporation
one-half of such investment banking, sponsorship and financial advisory fees and


                                    - 93 -
<PAGE>

its portion of such cost reimbursements, unless otherwise determined by the
Company's Board of Directors. These fee agreements or arrangements will expire
at various times from 2007 through 2009, but are automatically renewed after
such date for successive one year terms, unless any party provides written
notice of termination 60 days prior to the scheduled renewal date. Pursuant to
these services and fee arrangements, the Company received approximately $0.3
million, $6.6 million, and $5.4 million for the years ended December 31, 2003,
2004 and 2005 respectively, which includes companies no longer under these
agreements.

Tax Sharing Agreements. Each of the Company's subsidiaries and the Company are
parties to a tax sharing agreement. Pursuant to the tax sharing agreement, each
of the Company's consolidated subsidiaries owes to the Company, on an annual
basis, an amount determined by reference to the separate return tax liability of
the subsidiary as defined in Treasury Regulation Section 1.1552-1(a)(2)(ii).
These income tax liabilities reflected a U.S. federal income tax rate of
approximately 35% of each subsidiary's pre-tax income.

Legal Counsel. Mr. G. Robert Fisher, a director of, and secretary to, the
Company, is a partner of Sonnenschein, Nath & Rosenthal LLP. Mr. Steven L. Rist,
the general counsel and assistant secretary to the Company, is also a partner of
Sonnenschein, Nath & Rosenthal LLP. Mr. Fisher, Mr. Rist and their law firm have
represented the Company and The Jordan Company in the past, and expect to
continue representing them in the future. In 2005, Sonnenschein, Nath &
Rosenthal LLP was paid approximately $0.8 million in fees and expenses by the
Company. The Company believes that the fees paid were equivalent to what it
would have paid to an unaffiliated third party law firm for similar services.

Directors and Officers Indemnification. The Company has entered into
indemnification agreements with certain members of the Company's 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 director of the Company.

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














                                    - 94 -
<PAGE>


Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
         --------------------------------------

The following table presents fees for professional services rendered by Ernst &
Young LLP for the audit of the Company's annual financial statements for the
years ended December 31, 2005 and 2004, and fees billed for other services
rendered by Ernst & Young during those periods.

                                       Year Ended December 31,
                                       -----------------------
                                       2005               2004
                                       ----               ----

         Audit                        $1,392             $1,499
         Audit related                    23                123
         Tax                             352                682
                                      -------            -------
            Total                     $1,767             $2,304
                                      =======            =======

















                                    - 95 -
<PAGE>




                                     Part IV

Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
         ------------------------------------------


(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, 2005, 2004, and 2003 is submitted herewith:

         Item                                                    Page Number
         ----                                                    -----------
         Schedule II - Valuation and qualifying accounts              99

         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.























                                    - 96 -
<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 24, 2006                        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 24, 2006                        Chairman of the Board of
                                              Directors and Chief
                                              Executive Officer








                                           By   /s/ Thomas H. Quinn
                                              ---------------------------------
                                              Thomas H. Quinn
Dated:  March 24, 2006                        Director, President and
                                              Chief Operating Officer








                                           By   /s/ Jonathan F. Boucher
                                              ---------------------------------
                                              Jonathan F. Boucher
Dated:  March 24, 2006                        Director, Vice President,
                                              and Assistant Secretary







                                    - 97 -
<PAGE>




                                           By   /s/ G. Robert Fisher
                                              ---------------------------------
                                              G. Robert Fisher
Dated:  March 24, 2006                        Director, General Counsel
                                              and Secretary








                                           By   /s/ David W. Zalaznick
                                              ---------------------------------
                                              David W. Zalaznick
Dated:  March 24, 2006                        Director








                                           By   /s/ Joseph S. Steinberg
                                              ---------------------------------
                                              Joseph S. Steinberg
Dated:  March 24, 2006                        Director








                                           By   /s/ Norman R. Bates
                                              ---------------------------------
                                              Norman R. Bates
Dated:  March 24, 2006                        Vice President, Chief
                                              Financial Officer
















                                    - 98 -
<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
                                 beginning       cost and         net of                      at end of
                                 of period       expenses       recoveries         Other        period
                                 ---------      ----------     -------------       -----      ---------
<S>                             <C>            <C>              <C>               <C>         <C>
December 31, 2003:

Allowance for
  doubtful accounts                6,298          2,947           (2,366)            433         7,312

December 31, 2004:

Allowance for
  doubtful accounts                7,312          2,528           (2,695)             88         7,233
December 31, 2005:

Allowance for
  doubtful accounts                7,233          1,336           (3,823)            233         4,979

December 31, 2003:

Valuation allowance
                                  33,863         21,562               -                -        55,425
December 31, 2004:

Valuation allowance
                                  55,425         17,728               -                -        73,153
December 31, 2005:

Valuation allowance               73,153         (1,615)              -                -        71,538


</TABLE>









                                    - 99 -
<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.
4(n)(16)      -- 13% Senior Secured Notes Indenture, dated February 18, 2004,
                 by and among JII Holdings, LLC, JII Holdings Finance
                 Corporation, Jordan Industries, Inc. and U.S. Bank National
                 Association, as Trustee.
4(o)(16)      -- 13% Senior Secured Notes issued by JII Holdings, LLC and JII
                 Holdings Finance Corporation (included in Exhibit 4(n)).
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.



                                    - 100 -
<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.


                              - 101 -
<PAGE>

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.
10(ff)(16)    -- Amendment No. 5 to Loan and Security Agreement, dated as of
                 February 18, 2004 by and among the financial institutions
                 listed on the signature pages thereto, Congress Financial
                 Corporation (Central), as agent for the lenders, and JII LLC.
10(gg)(16)    -- Intercreditor Agreement, dated as of February 18, 2004, by
                 and between U.S. Bank National Association, as Collateral
                 Agent, and Congress Financial Corporation (Central), as
                 Administrative Agent.
10(hh)(16)    -- Waiver Agreement, dated as of January 31, 2004, by and
                 between Jordan Industries, Inc. and the other persons
                 signatory thereto.
10(ii)(16)    -- Modification Agreement, dated as of February 18, 2004, by
                 and among Jordan Industries, Inc. and those holders of Jordan
                 Industries' 11 3/4% Senior Subordinated Discount Debentures
                 due 2009 identified on Schedule A attached thereto, including
                 Addendum thereto dated April 1, 2004.
12*           -- Statements re. Computation of Ratios.
21*           -- Subsidiaries of the Registrant.
31(a)*        -- Certification of John W. Jordan II
31(b)*        -- Certification of Norman R. Bates
32(a)*        -- Certification of John W. Jordan II pursuant to Section 906 of
                 The Sarbanes-Oxley Act of 2002.
32(b)*        -- Certification of Norman R. Bates pursuant to Section 906 of
                 The Sarbanes-Oxley Act of 2002.

















                                   - 102 -
<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.
(16)     Incorporated by reference to the 2004 Form S-4 Registration
         Statement (File No. 333-116554) of Jordan Industries, Inc.

*        Filed herewith.














                                   - 103 -