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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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Form 10-K/ A

Amendment No. 1


ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT of 1934


For the fiscal year ended December 31,
2002

Commission file number 0-30417



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Philip Services Corporation

(Exact name of Registrant as Specified in its
Charter)


|                                                                                            |  |                                            
|------------------------------------------------------------------------------------------- |  | -------------------------------------------
|Delaware                                                                                    |  | 98-0131394                                 
|(State or Other Jurisdiction of
    Incorporation or Organization)                          |  | (I.R.S. Employer
    Identification Number)
|                                                                                           
|5151 San Felipe, Suite 1600,
    Houston, Texas(Address of Principal Executive
    Offices) |  | 77056(Zip Code)                            

(713) 623-8777

(Registrants Telephone Number, Including
Area Code)


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

Title of Class

Common Stock, $0.01 par value

Indicate by check mark whether the Registrant
(1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and
(2) has been subject to such filing requirements for the
past
90 days.     Yes þ          No o

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

Indicate by check mark whether the Registrant is
an accelerated filer (as defined in Exchange Act
Rule 12b-2).     Yes o          No þ

The aggregate market value of the voting stock
held by non-affiliates of the Registrant, based on the closing
price of shares of common stock on the NASDAQ stock market on
June 28, 2002, was approximately $13,367,327 (assumes
officers, directors and all stockholders beneficially owning 5%
or more of the outstanding shares of Common Stock are
affiliates).

Indicate by check mark whether the registrant has
filed all documents and reports required to be filed by
Section 12, 13, or 15(d) of the Securities Exchange Act of
1934 subsequent to the distribution of securities under a plan
confirmed by a
court.     Yes þ          No o

The number of shares of common stock of the
Registrant outstanding on April 11, 2003 was 27,909,342.



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EXPLANATORY NOTE:The Registrant is hereby amending its Form 10-K to add the
information required by Part III Items 10 through 13.
The remaining items of Form 10-K continue to speak as of
the date of the original filing of the Registrants
Form 10-K, and the Registrant is not updating the
disclosure in these items. The filing of this Form 10-K/ A
is not a representation that any statements contained in items
of Form 10-K other than Part III Items 10 through
13 are true or complete as of any date subsequent to the date of
the original filing of Form 10-K.

PART III



|         |                                                       
|-------- | ------------------------------------------------------
|Item 10. | Directors and Executive Officers of the
    Registrant

Set forth below is certain information concerning
the Companys directors.

Directors

|                 |  |     |    |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|---------------- |  | --- | -- | -------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name             |  | Age |    | Position
|                 |  |     |    |         
|Harold First     |  |     | 66 |          |  | Harold First has been a director of the Company
    since April 2000. He also served as a director of Oldco from
    November 1998 until April 2000. Since 1993, Mr. First has
    been a consultant specializing in financial structuring, tax
    planning and accounting. Mr. First is also on the Board of
    PANACO, Inc. and GB Holdings Inc., which operates the Sands
    Hotel and Casino in Atlantic City, New Jersey.                                                                                                                                                                                                                                                                                                                                      
|                
|Edmund B. Frost  |  |     | 60 |          |  | Edmund B. Frost has been a director of the
    Company since April 2000. He has been a member of the law firm
    of Leonard Frost Levin & Van Court, P.C. since
    1998. From 1994 to 2000, he was the Senior Vice President and
    General Counsel of Clean Sites, Inc., an environmental
    non-profit corporation specializing in hazardous waste
    remediation issues.                                                                                                                                                                                                                                                                                                                                                                                       
|                
|Robert L. Knauss |  |     | 72 |          |  | Robert L. Knauss has been a director of the
    Company since April 2000. He was Chairman of the Board from
    April 2000 to May 2001 and was again elected Chairman in April
    2002. In May 2002, Mr. Knauss became an employee of the
    Company with the title of Principal Executive Officer.
    Mr. Knauss served as a director of Oldco from August 1997
    until April 2000 and as Chairman of the Board of Oldco from June
    1998 until April 2000. From January 1994 to the present he has
    been Chairman and Chief Executive Officer of Baltic
    International USA, Inc., an investment company. He is currently
    a director of the investment funds, Equus II, Inc. and The
    Mexico Fund, Inc., and Seitel Inc., an oil services company.

1



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|                   |  |     |    |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------------------ |  | --- | -- | -------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name               |  | Age |    | Position
|                   |  |     |    |         
|                  
|Robert J. Mitchell |  |     | 56 |          |  | Mr. Mitchell has been a director of the Company
    since October 2001. He has been Senior Vice
    President  Finance of ACF Industries, Inc., a
    privately held railcar leasing and manufacturing company, since
    1985. Mr. Mitchell has also served as President and
    Treasurer of ACF Industries Holding Corp., a privately held
    holding company for ACF, since August 1993, as VP Liaison
    Officer of Icahn Associates Corp. since 1984 and as Secretary
    and Treasurer of Lowestloan.com, Inc. since 2000. He currently
    serves as a director of National Energy Group, Inc. and the
    Stratosphere Hotel and Casino in Las Vegas, Nevada.
|                  
|Stanley N. Nortman |  |     | 63 |          |  | Mr. Nortman has been a director of the Company
    since October 2001. Since 1988, he has been the President of
    Nortman Associates, a marketing and consulting company. From
    1988 to 1992, he was Chairman of the Galaxy Group, a completion
    and bonding company. Mr. Nortman currently serves as a
    director of PANACO, Inc.                                                                                                                                                                                                                                                                                                                             
|                  
|Felix Pardo(1)     |  |     | 65 |          |  | Felix Pardo has been a director of the Company
    since April 2000. He also served as a director of Oldco from
    March 1994 until April 2000, and as President and Chief
    Executive Officer of Oldco from April 1998 until November 1998.
    Mr. Pardo has served as non-executive Chairman of
    Dyckerhoff, Inc. from July to December 1998 and as Chairman and
    Chief Executive Officer from January 1999 to December 2002. From
    1992 to 1998, Mr. Pardo was President and Chief Executive
    Officer of Ruhr-American Coal Corp., a coal sales and trading
    company. He currently serves as a director of Newalta
    Corporation.                



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|    |                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Served as an executive officer of Oldco within
    two years before Oldco filed voluntary petitions under United
    States and Canadian bankruptcy and insolvency laws.

Executive Officers

Set forth below is certain information concerning
the Companys executive officers who are not also directors.

|               |  |     |    |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-------------- |  | --- | -- | -------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name           |  | Age |    | Position
|               |  |     |    |         
|James M. Boggs |  |     | 46 |          |  | Mr. Boggs has been the Companys Senior Vice
    President of Health, Safety and Environment since April 2000. He
    also served in the same position for Oldco from January 2000
    through April 2000. Mr. Boggs served as Oldcos Senior
    Vice President, By-Products Management Group from January 1998
    through September 1999 and as Vice President Business Manager,
    By-Products, Midwest Region from January 1997 through January
    1998. Prior to that time, Mr. Boggs served as Vice
    President, Health, Safety and Environment and Engineering for
    Oldcos By-Products Management Group.

2



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|                    |  |     |    |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|------------------- |  | --- | -- | -------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name                |  | Age |    | Position
|                    |  |     |    |         
|Donald J. Forlani   |  |     | 56 |          |  | Mr. Forlani has been the Companys Senior
    Vice President and President, Metals Services Group since
    February 2002. From October 1997 through April 2000, he was the
    Executive Vice President, Commercial of Oldcos Metals
    Services Group, and continued in that position with the Company
    through January 2002. Prior to that time, he served as Senior
    Vice President Commercial for Luria Brothers & Co.                                                                                                                                                                                                                                                                                                                                                                         
|                   
|Robert J. Millstone |  |     | 59 |          |  | Mr. Millstone has been the Companys Senior
    Vice President and General Counsel since August 2000. He was
    Corporate Secretary from August 2000 until August 2002 and
    resumed that position in January 2003. Previously, Mr. Millstone
    was Vice President and General Counsel of Lyondell Chemical
    Company from July 1998 through March 2000 and Vice President and
    General Counsel of ARCO Chemical Company from 1994 through July
    1998.                                                                                                                                                                                                                                                                                                                                         
|                   
|Michael W. Ramirez  |  |     | 46 |          |  | Mr. Ramirez has been the Companys Senior
    Vice President and Chief Financial Officer since June 2002.
    Mr. Ramirez was Vice President Operations Finance for
    Encompass Services Corporation from October 2001 to May 2002.
    From June 2000 to September 2001, he was a private consultant
    specializing in company turnarounds. Prior to that he was Chief
    Financial Officer for the Industrial Services Group of Oldco
    from August 1997 until June 2000.                                                                                                                                                                                                                                                                                                                          
|                   
|Brian J. Recatto    |  |     | 38 |          |  | Mr. Recatto has been the Companys Senior
    Vice President and President of the Companys Industrial
    Services Group since November 2002, at which time the industrial
    cleaning services business of the former Industrial Outsourcing
    Group and all businesses of the former Environmental Services
    Group were combined. Prior to November 2002, he served as Senior
    Vice President and President of the Environmental Services Group
    from April 2000. From December 1997 through April 2000, he
    served as Oldcos Group Vice President for the Central
    Region Industrial Outsourcing Group and Director of Operations
    for the Western Region Industrial Outsourcing Group. From July
    1991 until December 1997, Mr. Recatto served as President of
    Meklo, Inc.

Section 16(a) Beneficial Ownership
Reporting Compliance

Section 16(a) of the Securities Exchange Act
of 1934 requires that the Companys officers, its directors
and persons who own more than 10% of a registered class of the
Companys equity securities report their beneficial
ownership and changes in their beneficial ownership of the
Companys equity securities by filing reports with the
Securities and Exchange Commission. Such persons are required by
SEC regulations to furnish the Company with copies of all
Section 16(a) forms so filed. Based solely on a review of
the copies of such forms furnished to the Company for 2002, the
Companys officers, directors and greater than 10%
stockholders complied with all applicable Section 16(a)
filing requirements.

3



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|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation

Management Changes

The Company has undergone significant management
changes since the end of 2001. In particular, Anthony G.
Fernandes, formerly President, Chairman and CEO, departed the
Company on March 31, 2002, and Mr. Knauss became
Chairman of the Board and Principal Executive Officer in May
2002. Mr. Knauss also became an employee rather than a
non-employee director. In connection with the foregoing changes,
the Board of Directors determined that the Company should not
have a chief executive officer. Rather, for operating purposes,
the Operating Presidents, Messrs. Forlani and Recatto,
report directly to the Board. Mr. Knauss holds the title of
Principal Executive Officer for certain limited
administrative purposes, and performs some but not all of the
duties performed in the traditional role of a CEO.

Additionally, after the Company determined in
November 2002 to combine certain operations of its then existing
Industrial Outsourcing Group with the operations of its then
existing Environmental Services Group to create the Industrial
Services Group, David E. Fanta, who had served as the
Companys Senior Vice President and President, Industrial
Outsourcing Group departed the Company on November 30, 2002.

Executive Compensation

The following table sets forth information with
respect to compensation paid or earned for services rendered to
the Company during the years ended December 31, 2002 and
2001 and the nine months ended December 31, 2000 by its
Principal Executive Officer and its four other most highly
compensated executive officers employed by the Company as of the
end of 2002 and two additional individuals, one who served as
the Companys chief executive officer for a part of 2002
and the other who would have been among the four other most
highly compensated except that he was not serving as an
executive officer at the end of the fiscal year (together, the
Named Executive Officers).

SUMMARY COMPENSATION TABLE

|                            |                                |                     |      |                               |  |            |         |                 |  |             |   |            |  |         |        |                 |  |  |       |        |  |  |         |           |  |  |   |   |  |  |         |        |    
|--------------------------- | ------------------------------ | ------------------- | ---- | ----------------------------- |  | ---------- | ------- | --------------- |  | ----------- | - | ---------- |  | ------- | ------ | --------------- |  |  | ----- | ------ |  |  | ------- | --------- |  |  | - | - |  |  | ------- | ------ | ---
|                            |                                |                     |      |                              
|                            |                                | Annual Compensation |      | Long Term Compensation Awards
|                            |                                |                     |      |                              
|                            |                                |                     |      | Other                         |  | Restricted |         | Securities      |  |            
|                            |                                |                     |      | Annual                        |  | Stock      |         | Underlying      |  | LTIP        |   | All Other 
|Name and Principal Position |                                | Year(1)             |      | Salary($)                     |  | Bonus($)   |         | Compensation($) |  | Award(s)($) |   | Options(#) |  | Payouts |        | Compensation($)
|                            |                                |                     |      |                               |  |            |         |                 |  |             |   |            |  |         |        |                
|Robert L. Knauss(2)         |                                |                     | 2002 |                               |  |            | 131,538 |                 |  |             |  |            |  |         | 248    | (3)             |  |  | 3,814 |        |  |  | 125,000 |           |  |  |  |   |  |  | 14,500  | (4)   
|                            | Chairman and Principal         |                     |      | 2001                          |  |            |         |                |  |             |   |           |  |         |        |                |  |  |       | 3,510  |  |  |         | 20,000    |  |  |   |  |  |  |         | 40,365 | (4)
|                            | Executive Officer              |                     |      | 2000                          |  |            |         |                |  |             |   |           |  |         |        |                |  |  |       |       |  |  |         | 20,000    |  |  |   |  |  |  |         | 45,000 | (4)
|Michael W. Ramirez(5)       |                                |                     | 2002 |                               |  |            | 139,423 |                 |  |             |  |            |  |         | 215    | (3)             |  |  |      |        |  |  | 75,000  |           |  |  |  |   |  |  |        |       
|                            | SVP, Chief Financial Officer   |                     |      | 2001                          |  |            |         |                |  |             |   |           |  |         |        |                |  |  |       |       |  |  |         |          |  |  |   |  |  |  |         |       |    
|                            |                                |                     |      | 2000                          |  |            |         |                |  |             |   |           |  |         |        |                |  |  |       |       |  |  |         |          |  |  |   |  |  |  |         |       |    
|Robert J. Millstone(6)      |                                |                     | 2002 |                               |  |            | 411,154 | (7)             |  |             |  |            |  |         | 10,103 | (3)             |  |  |      |        |  |  | 75,000  |           |  |  |  |   |  |  | 286,349 | (8)   
|                            | SVP, General Counsel           |                     |      | 2001                          |  |            |         | 245,096         |  |             |   |           |  |         |        | 4,981           |  |  |       | 22,174 |  |  |         | 19,382    |  |  |   |  |  |  |         | 26,684 | (8)
|                            | and Secretary                  |                     |      | 2000                          |  |            |         | 102,437         |  |             |   | 50,000     |  |         |        |                |  |  |       |       |  |  |         | 50,000    |  |  |   |  |  |  |         |       |    
|Brian J. Recatto            |                                |                     | 2002 |                               |  |            | 230,000 |                 |  |             |  |            |  |         | 10,000 | (3)             |  |  |      |        |  |  | 75,000  |           |  |  |  |   |  |  |        |       
|                            | SVP, Industrial Services Group |                     |      | 2001                          |  |            |         | 223,651         |  |             |   |           |  |         |        | 7,063           |  |  |       | 20,000 |  |  |         | 20,318    |  |  |   |  |  |  |         |       |    
|                            |                                |                     |      | 2000                          |  |            |         | 109,962         |  |             |   | 100,000    |  |         |        | 92              |  |  |       |       |  |  |         | 50,000    |  |  |   |  |  |  |         |       |    
|Donald J. Forlani(9)        |                                |                     | 2002 |                               |  |            | 283,000 |                 |  |             |  |            |  |         | 9,209  | (3)             |  |  |      |        |  |  | 75,000  |           |  |  |  |   |  |  |        |       
|                            | SVP, Metals Services Group     |                     |      | 2001                          |  |            |         | 274,014         |  |             |   |           |  |         |        | 12,714          |  |  |       |       |  |  |         |          |  |  |   |  |  |  |         |       |    
|                            |                                |                     |      | 2000                          |  |            |         | 201,303         |  |             |   | 52,576     |  |         |        | 202             |  |  |       |       |  |  |         |          |  |  |   |  |  |  |         |       |    
|Anthony G. Fernandes(10)    |                                |                     | 2002 |                               |  |            | 223,307 |                 |  |             |  |            |  |         | 14,032 | (3)             |  |  |      |        |  |  |        |           |  |  |  |   |  |  | 443,942 | (11)  
|                            | Former President & CEO         |                     |      | 2001                          |  |            |         | 519,616         |  |             |   |           |  |         |        | 7,221           |  |  |       | 46,957 |  |  |         | 58,145    |  |  |   |  |  |  |         |       |    
|                            |                                |                     |      | 2000                          |  |            |         | 375,000         |  |             |   | 325,000    |  |         |        | 276             |  |  |       |       |  |  |         | 1,000,000 |  |  |   |  |  |  |         | 44,951 | (8)
|David E. Fanta(12)          |                                |                     | 2002 |                               |  |            | 254,432 |                 |  |             |  |            |  |         | 10,082 | (3)             |  |  |      |        |  |  | 75,000  |           |  |  |  |   |  |  | 416,460 | (11)  
|                            | Former SVP, Industrial         |                     |      | 2001                          |  |            |         | 263,515         |  |             |   |           |  |         |        | 256             |  |  |       | 23,478 |  |  |         | 23,445    |  |  |   |  |  |  |         |       |    
|                            | Outsourcing Group              |                     |      | 2000                          |  |            |         | 160,989         |  |             |   | 120,000    |  |         |        | 108             |  |  |       |       |  |  |         | 65,000    |  |  |   |  |  |  |         |       |    




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| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | The following amounts were paid by Oldco to the
    Named Executive Officers for the three months ended
    March 31, 2000: Mr. Recatto (salary of $36,346 and a
    retention bonus of $20,000); Mr. Fernandes (salary of
    $125,000); and Mr. Fanta (salary of $59,312 and a retention
    bonus of $45,000).                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | (2) | Mr. Knauss became an employee of the Company
    in May 2002 when he became Principal Executive Officer. Prior to
    such time he was a non-employee director of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | (3) | Includes premiums paid in 2002 by the Company on
    group life insurance for the benefit of certain Named Executive
    Officers in the following amounts: Mr. Knauss 
    $248, Mr. Ramirez  $215,
    Mr. Millstone  $578,
    Mr. Recatto  $475, Mr. Forlani 
    $584, Mr. Fernandes  $1,032 and
    Mr. Fanta  $557. Also includes amounts paid in
    2002 by the Company for personal financial planning services on
    behalf of certain Named Executive Officers in the following
    amounts: Mr. Millstone  $9,525,
    Mr. Recatto  $9,525,
    Mr. Fernandes  $13,000 and
    Mr. Fanta  $9,525. In the case of
    Mr. Forlani, also includes $8,625 of auto-related expenses
    reimbursed by the Company.
|
| | (4) | Reflects directors fees paid to Mr. Knauss
    prior to the time that he became the Companys Principal
    Executive Officer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | (5) | Mr. Ramirez began his employment with the
    Company on June 1, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | (6) | Mr. Millstone began his employment with the
    Company on August 28, 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | (7) | Includes $140,000 of severance payments made to
    Mr. Millstone under an agreement pursuant to which his
    employment was to terminate February 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | (8) | Represents moving expenses paid by the Company
    and other costs of the Company borne in connection with such
    moves.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | (9) | Mr. Forlani became SVP, Metals Services
    Group, as of February 1, 2002. During 2000 and 2001,
    Mr. Forlani was not an executive officer of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          



|     |                                                                                               
|---- | ----------------------------------------------------------------------------------------------
|(10) | Mr. Fernandess employment with the
    Company terminated on March 31, 2002.                 
|    
|(11) | Represents amounts paid to executive in
    connection with the termination of his employment.
|    
|(12) | Mr. Fantas employment with the Company
    terminated on November 30, 2002.                  

Option Grants in Last Fiscal Year

The following table sets forth the number of
stock options granted to the Named Executive Officers during
2002.

OPTION GRANTS IN LAST FISCAL YEAR

|                     |  |                   |         |                  |  |                  |    |                 |  |           |      |        |  |  |            |  |  |  |        |  |  |  |        | 
|-------------------- |  | ----------------- | ------- | ---------------- |  | ---------------- | -- | --------------- |  | --------- | ---- | ------ |  |  | ---------- |  |  |  | ------ |  |  |  | ------ | 
|                     |  |                   |         |                  |  |                  |    |                 |  |          
|                     |  |                   |         |                  |  |                  |    |                 |  | Potential
|                     |  |                   |         | Realizable Value
|                     |  | Individual Grants |         | at Assumed      
|                     |  |                   |         | Annual Rates    
|                     |  | Number of         |         | % of Total       |  |                  |    | of Stock Price 
|                     |  | Securities        |         | Options          |  |                  |    | Appreciation   
|                     |  | Underlying        |         | Granted to       |  |                  |    | for Option Term
|                     |  | Options           |         | Employees in     |  | Exercise or Base |    | Expiration      |  |          
|Name                 |  | Granted(#)        |         | Fiscal Year      |  | Price($/Sh)      |    | Date            |  | 5%($)     |      | 10%($)
|                     |  |                   |         |                  |  |                  |    |                 |  |           |      |       
|Robert L. Knauss     |  |                   | 100,000 | (1)              |  |                  | 10 | %               |  |           | .50  |        |  |  | 12/19/2012 |  |  |  |       |  |  |  |       | 
|                     |  |                   | 25,000  |                  |  |                  | 3  |                 |  |           | 1.04 |        |  |  | 4/12/2012  |  |  |  | 15,944 |  |  |  | 40,789 | 
|Michael W. Ramirez   |  |                   | 75,000  |                  |  |                  | 8  |                 |  |           | .79  |        |  |  | 6/1/2012   |  |  |  | 26,267 |  |  |  | 76,921 | 
|Robert J. Millstone  |  |                   | 75,000  |                  |  |                  | 8  |                 |  |           | .50  |        |  |  | 8/7/2012   |  |  |  |       |  |  |  |       | 
|Brian J. Recatto     |  |                   | 75,000  |                  |  |                  | 8  |                 |  |           | .50  |        |  |  | 8/7/2012   |  |  |  |       |  |  |  |       | 
|Donald J. Forlani    |  |                   | 75,000  |                  |  |                  | 8  |                 |  |           | .50  |        |  |  | 8/7/2012   |  |  |  |       |  |  |  |       | 
|Anthony G. Fernandes |  |                   |        |                  |  |                  |   |                 |  |           |     |        |  |  |           |  |  |  |       |  |  |  |       | 
|David E. Fanta       |  |                   | 75,000  | (2)              |  |                  | 8  |                 |  |           | .50  |        |  |  | 8/7/2012   |  |  |  |       |  |  |  |       | 



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|    |                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The vesting of these options was contingent upon
    the sale of certain PSD assets, which contingency was satisfied
    by the sale of the PSD businesses in the Fluor divestiture.
|   
|(2) | Options for all of these shares of common stock
    were forfeited by Mr. Fanta in connection with the
    termination of his employment in November 2002.                          

Aggregated Fiscal Year-End Option
Values

The following table provides information
regarding the exercisable and unexercisable stock options held
by the Named Executive Officers as of December 31, 2002.

AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND

FISCAL YEAR-END OPTION VALUES


|                     |  |                       |         |                       |  |             |         |               |  |  |   |  |  |  |   | 
|-------------------- |  | --------------------- | ------- | --------------------- |  | ----------- | ------- | ------------- |  |  | - |  |  |  | - | 
|                     |  |                       |         |                       |  |            
|                     |  | Number of Securities  |         |                      
|                     |  | Underlying            |         | Value of Unexercised 
|                     |  | Unexercised Options   |         | In-the-Money Options 
|                     |  | at Fiscal Year-End(#) |         | at Fiscal Year-End($)
|                     |  |                       |         |                      
|Name                 |  | Exercisable           |         | Unexercisable         |  | Exercisable |         | Unexercisable
|                     |  |                       |         |                       |  |             |         |              
|Robert L. Knauss     |  |                       | 40,000  |                       |  |             | 125,000 |               |  |  |  |  |  |  |  | 
|Michael W. Ramirez   |  |                       | 25,000  |                       |  |             | 50,000  |               |  |  |  |  |  |  |  | 
|Robert J. Millstone  |  |                       | 29,846  |                       |  |             | 114,536 |               |  |  |  |  |  |  |  | 
|Brian J. Recatto     |  |                       | 30,080  |                       |  |             | 115,239 |               |  |  |  |  |  |  |  | 
|Donald J. Forlani    |  |                       | 0       |                       |  |             | 75,000  |               |  |  |  |  |  |  |  | 
|Anthony G. Fernandes |  |                       | 500,000 |                       |  |             | 0       |               |  |  |  |  |  |  |  | 
|David E. Fanta       |  |                       | 0       |                       |  |             | 0       |               |  |  |  |  |  |  |  | 

Director Compensation

Each non-employee director is entitled to receive
(i) an award of stock options to purchase 8,000 shares
of Company common stock upon becoming a director; (ii) an
annual award of options to purchase 4,000 shares of common
stock; (iii) an annual retainer of $10,000; (iv) an
annual award of $10,000 paid in restricted shares of common
stock; and (v) $1,000 for every Board or Board Committee
meeting attended (or $500 if such meeting was telephonic).
Grants of options to directors are made under the 2000 Plan and
under the 2002 Plan and grants of restricted stock are made
under the Directors Plan. Committee chairs also receive an
annual stipend of $5,000. Non-employee directors are also
reimbursed for actual expenses in connection with attendance at
Board and Board Committee meetings. In addition, during 2002,
two non-employee directors were reimbursed actual expenses and
paid a per diem of $1,000 for travel on Company
business in conjunction with the transition of the Company
headquarters to Houston, Texas, and the personnel changes that
took place during the year.

Directors who are employees or officers of the
Company do not receive additional compensation for service as a
director, but are reimbursed actual expenses in connection with
attendance at Board and Board Committee meetings.
Mr. Knauss is currently the only director who is an
employee and receives a salary of $15,000 per month.

The type and amount of compensation of
non-employee directors is currently limited under the
Companys revolving operating facility and under the
Companys Credit Facility.

Employment and Severance
Arrangements

Mr. Ramirez.In
June 2002, the Company entered into an employment agreement with
Mr. Ramirez, providing for payment of an annual base salary
of $250,000 plus the opportunity to earn a target bonus of 40%
of his base salary in accordance with Company policy and
incentive plans as may be in effect from time to time.

6



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##### 



If Mr. Ramirezs employment is
terminated by the Company without cause, the Company will pay
Mr. Ramirez an amount equal to six months salary (or
more if any senior executive of the Company employed in such
role after June 2002 receives more favorable severance
benefits). Such amount is to be paid over six months in
accordance with the Companys normal payroll practice. If
Mr. Ramirezs employment is terminated in certain
circumstances following a change of control, the Company will
pay Mr. Ramirez an amount equal to 24 months of his
base salary. In addition, in all such circumstances, the Company
will pay for continuing medical and dental coverage, earned but
unpaid bonus and outplacement services.

Mr. Ramirez has certain confidentiality
obligations under the employment agreement and is subject to a
non-competition provision for a period of one year following
termination.

Mr. Millstone.In August 2000, the Company entered
into an employment agreement with Mr. Millstone, providing
for an annual base salary of $235,000 subject to increase at the
discretion of the Board of Directors from time to time. Under
the agreement, Mr. Millstone was eligible to participate in
the Companys incentive plans, as may be in effect from
time to time, with a target bonus of 40% of his base salary.

During 2002, Mr. Millstone entered into an
agreement with the Company pursuant to which his employment was
to terminate in February 2003. Under the agreement,
Mr. Millstone received a series of monthly severance
payments between September 2002 and December 2002
cumulating $140,000. Prior to the termination of his employment
in February 2003, the Company and Mr. Millstone agreed that
Mr. Millstone should continue his employment in the same
position.

In February 2003, the Company entered into an
employment agreement with Mr. Millstone, providing for
payment of an annual base salary of $280,000 plus the
opportunity to earn a target bonus of 40% of his base salary in
accordance with Company policy and incentive plans as may be in
effect from time to time.

If Mr. Millstones employment is
terminated by the Company without cause, the Company will pay
Mr. Millstone an amount equal to six months salary
(or more if any senior executive of the Company employed in such
role after February 2003 receives more favorable severance
benefits). Such amount is to be paid over six months in
accordance with the Companys normal payroll practice. If
Mr. Millstones employment is terminated in certain
circumstances following a change of control, the Company will
pay Mr. Millstone an amount equal to 24 months of his
base salary. In addition, in all such circumstances, the Company
will pay for continuing medical and dental coverage, earned but
unpaid bonus and outplacement services.

Mr. Millstone has certain confidentiality
obligations under the employment agreement and is subject to a
non-competition provision for a period of one year following
termination.

Mr. Recatto.In
December 1997, a subsidiary of the Company entered into an
employment agreement with Mr. Recatto, providing for
payment of an annual base salary, which amount may be increased
from time to time. Currently, Mr. Recattos base
salary is $230,000. Under the agreement, Mr. Recatto is
eligible to participate in the Companys incentive plans,
as may be in effect from time to time. The agreement provides
for an initial three-year term, which automatically renews for
one-year terms. If Mr. Recattos employment is
terminated by the Company without cause, the Company will pay
Mr. Recatto a lump-sum amount equal to 12 months pay.

Mr. Recatto has certain confidentiality
obligations under the employment agreement and is subject to a
non-competition provision during the employment term and for a
period of two years following termination.

Mr. Forlani.In
February 2002, the Company entered into an employment agreement
with Mr. Forlani, providing for payment of an annual base
salary of $275,000 plus the opportunity to earn a target bonus
of 35% of his base salary in accordance with Company policy and
incentive plans as may be in effect from time to time.

If Mr. Forlanis employment is
terminated by the Company without cause, the Company will pay
Mr. Forlani an amount equal to 18 months salary.
Such amount is to be paid over 18 months in accordance with
the Companys normal payroll practice. If
Mr. Forlanis employment is terminated in certain
circum-

7



---



##### 



stances following a change of control, the
Company will pay Mr. Forlani an amount equal to
24 months of his base salary. In addition, in all such
circumstances, the Company will pay for continuing medical and
dental coverage, earned but unpaid bonus and outplacement
services.


Mr. Forlani has certain confidentiality
obligations under the employment agreement and is subject to a
non-competition provision for a period of one year following
termination.

Mr. Fernandes.In August 1999, the Company and Oldco
entered into an employment agreement with Mr. Fernandes
providing for an annual base salary of $500,000, which amount
could be increased by the Board of Directors from time to time.
Mr. Fernandess employment with the Company terminated
on March 31, 2002. Pursuant to the terms of his employment
agreement, 500,000 of the options to acquire shares of common
stock that Mr. Fernandes received pursuant to the agreement
vested and were kept by Mr. Fernandes when he left the
Company. These options are exercisable at a price of
$5.96 per share until their expiration on April 7,
2010.

In addition, pursuant to the employment agreement
as amended and supplemented by an agreement with
Mr. Fernandes dated February 22, 2002, the Company was
obligated to pay him an amount equal to one year of base salary
plus 50% of base salary prorated for time employed during 2002.
Such amount was paid over one year in accordance with the
Companys normal payroll practice. In addition,
Mr. Fernandes was entitled to receive certain continued
vision plan and life insurance benefits, as well as payment for
certain unused vacation and a tax gross-up payment in the amount
of $26,000. The Company has fulfilled its obligations to
Mr. Fernandes under the terms of this agreement.

Mr. Fernandes continues to be bound by
certain confidentiality and non-competition obligations under
the employment agreement.

Mr. Fanta.In
October 1998, a subsidiary of the Company entered into an
employment agreement with Mr. Fanta, providing for payment
of an annual base salary, which amount could be increased from
time to time. Mr. Fantas employment with the Company
terminated on November 30, 2002. At the time of his
departure, Mr. Fantas base salary was $270,000. The
agreement also entitled Mr. Fanta to participate in the
Companys incentive plans, as in effect from time to time.
Under the terms of the agreement, the Company was obligated to
pay Mr. Fanta a lump-sum amount equal to his base salary
for 18 months and certain medical and dental benefits.

Mr. Fanta has certain confidentiality
obligations under the employment agreement and is subject to a
non-competition provision for a period of two years following
termination.

Compensation Committee Interlocks and Insider
Participation

The members of the Compensation Committee during
2002 were Messrs. Mitchell and Pardo. Mr. Knauss
served on the Committee until May, 2002 when he became the
Principal Executive Officer of the Company. During 2002, no
Company executive officer served on the board of directors or
compensation committee of any other corporation with respect to
which any member of the Compensation Committee was engaged as an
executive officer. No member of the Compensation Committee was a
Company employee in 2002 and none was formerly a Company
executive officer. Mr. Pardo was formerly President and
Chief Executive Officer of Oldco, the Companys former sole
stockholder.

Mr. Mitchell, a director of the Company, is
an employee of Icahn Associates Corp., a corporation controlled
by Carl C. Icahn. Mr. Icahn and his affiliates constitute
the Companys largest stockholder and are a significant
lender to the Company. As of December 31, 2002, the Company
was indebted to entities controlled by Mr. Icahn in the
aggregate principal amount of $187.1 million.

Compensation Committee Report on Executive
Compensation

The Companys executive compensation program
is administered by the Compensation Committee of the Board of
Directors. The Compensation Committee is composed of
non-employee directors responsible for the oversight, approval
and reporting to the Board of Directors on all elements of
compensation for elected

8



---



##### 



corporate officers. The Compensation
Committees report on executive compensation for fiscal
year 2002 is set forth below.




| |                        
| | -----------------------
| | Compensation Philosophy

The executive compensation program provides a
total compensation package composed of base pay, annual
performance-based cash incentives and long-term
performance-based equity incentives, all of which are designed
to provide incentives to and reward executives for superior
performance and the creation of stockholder value. The
Compensation Committee believes that a pay-for-performance
culture based on accountability and linkage to business
objectives is critical for future business success.

The practice of the Company is to target total
compensation for the Companys executives at the median
level for comparable positions at similarly sized companies (in
terms of revenue) in general industry, with the opportunity to
earn total compensation at up to the 75th percentile, although
with respect to certain positions, the compensation paid by the
Company currently may be lower than these levels.



| |                                             
| | --------------------------------------------
| | Principal Executive Officer
    Compensation

The Board of Directors has determined that the
Company should not have a chief executive officer. Rather, for
operating purposes, the Operating Presidents,
Messrs. Forlani and Recatto, report directly to the Board.
Mr. Knauss holds the title of Principal Executive
Officer for certain limited administrative purposes, and
performs some but not all of the duties performed in the
traditional role of a CEO. Mr. Knauss does not have a
written employment agreement and receives a salary of
$15,000 per month for his services. The Compensation
Committee does not make annual determinations with respect to
the base salary or annual incentives for Mr. Knauss, and
there are presently no plans to make adjustments to his base
salary or to pay him incentive compensation. Mr. Knauss was
granted options covering 100,000 shares of common stock at
a strike price of $0.50 per share in December 2002 the
vesting of which was contingent upon the sale of certain PSD
assets. He received options covering 25,000 shares of
common stock at a strike price of $1.04 per share upon
being named Principal Executive Officer and 3,814 shares of
restricted common stock for his service as a director in 2002
prior to becoming Principal Executive Officer.



| |                                   
| | ----------------------------------
| | Executive Compensation
    Program

The Companys executive compensation program
presently consists of three key components: base salary, annual
incentives and long-term incentives. Each component is discussed
below. The Company does not presently have a pension plan, a
deferred compensation plan or a supplemental retirement plan for
executives. Since its emergence from bankruptcy, the Company has
adopted the following stock-based compensation plans which are
or have been used to make grants to executives of the Company
generally: (i) the 2000 Plan, which was adopted by the
Company in connection with the Reorganization; (ii) the
Officers Plan, which was adopted by the Company on
May 9, 2001 but supplanted and frozen on December 19,
2002; and (iii) the 2002 Plan, which was adopted by the
Company on December 19, 2002.



| |            
| | -----------
| | Base Salary

Base salaries of executive officers are targeted
to be competitive relative to comparable companies. In
determining salaries, the Compensation Committee also takes into
account individual experience and performance.



| |                  
| | -----------------
| | Annual Incentives

Although the Company has awarded annual
incentives in the past, no such awards were granted for 2002.



| |                     
| | --------------------
| | Long-Term Incentives

During 2002, the Companys long-term
incentives consisted of awards of stock options, restricted
shares to executive officers and other employees under the
Companys 2000 Plan, the Officers Plan and the 2002

9



---



##### 



Plan. The 2002 Plan was adopted following
stockholder approval on December 19, 2002. The Board
recommended that plan for approval by stockholders because
options are only issuable under the 2000 Plan at a strike price
of not less than $5.96 per share and options are only
issuable under the Officers Plan to officers of the
Company. On December 19, 2002, Mr. Knauss was awarded
options to purchase 100,000 shares of the Companys
common stock under the 2002 Plan at an exercise price of $.50, a
price in excess of the market price for the Companys
shares at the date of grant.




| |                                            
| | -------------------------------------------
| | Deductibility of Executive
    Compensation

Section 162(m) of the Internal Revenue Code,
enacted in 1993, generally disallows a tax deduction to public
companies for compensation in excess of $1 million paid to
the Companys Chief Executive Officer or any of the four
other most highly compensated executive officers. The limitation
does not apply to compensation based on the attainment of
objective performance goals. The Compensation Committee has
considered the impact of the deduction limitation and has
determined that it is not in the best interests of the Company
or its stockholders to base compensation solely on objective
performance criteria. Rather, the Compensation Committee
believes that it should retain the flexibility to base
compensation on its subjective evaluation of performance as well
as on the attainment of objective goals.



| |                   
| | ------------------
| | Robert J. Mitchell
| | Felix Pardo       

10



---



##### 



Performance Graph

The following graph sets forth a comparison of
the cumulative total stockholder return on the Companys
common stock for the period beginning May 22, 2000, the
date the Companys common stock began trading on the Nasdaq
National Market following its deemed registration under
Section 12 of the Securities Exchange Act of 1934 by virtue
of the consummation of the Plan and ending December 31,
2002, as compared with the cumulative total return of the
S&P SmallCap 600 Index and the Russell 2000 Index.
Due to the breadth of the Companys business, no published
industry or line-of-business index exists and the Company does
not believe it can reasonably identify a peer group for
comparison. The Company has selected the Russell 2000 Index
as an index of issuers with similar market capitalizations. This
graph assumes an investment of $100 on May 22, 2000 in the
Companys common stock and on April 30, 2000 in the
S&P SmallCap 600 Index and the Russell 2000 Index,
and assumes reinvestment of dividends, if any. The stock price
performance shown on the graph below is not necessarily
indicative of future stock price performance.

(PERFORMANCE GRAPH)

11



---



##### 





|         |                                                                                                       
|-------- | ------------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder
    Matters

The following table sets forth certain
information as of April 11, 2003, regarding the beneficial
ownership of shares of the Companys common stock by
(i) each person known by the Company to own beneficially
more than 5% of its outstanding shares, (ii) each director,
(iii) each Named Executive Officer, and (iv) all
executive officers and directors as a group. Beneficial
ownership has been determined for this purpose in accordance
with Rule 13d-3 under the Securities Exchange Act of 1934,
as amended, under which a person is deemed to be the beneficial
owner of securities if he or she has or shares voting power or
investment power in respect of such securities or has the right
to acquire beneficial ownership of securities within
60 days of April 11, 2003. Except as otherwise
indicated, the Company believes that the persons listed below,
based on information provided by such persons, have sole
investment and voting power with respect to the shares shown
opposite their names. Unless otherwise indicated, the address of
each of the persons listed below is the Companys principal
executive office.

|                                                                        |  |                    |            |            |  |  |      |  
|----------------------------------------------------------------------- |  | ------------------ | ---------- | ---------- |  |  | ---- | -
|                                                                        |  |                   
|                                                                        |  | Common Stock      
|                                                                        |  | Beneficially Owned
|                                                                        |  |                   
|                                                                        |  |                    |            | Percent of
|Name of Beneficial Owner                                                |  | Number             |            | Class(1)  
|                                                                        |  |                    |            |           
|High River Limited Partnership(2,3)                                     |  |                    | 11,935,637 |            |  |  | 37.6 | %
|Meadow Walk Limited Partnership(4)                                      |  |                    | 2,546,926  |            |  |  | 9.1  | %
|Barberry Corp.(2,5)                                                     |  |                    | 14,482,563 |            |  |  | 45.6 | %
|American Real Estate Holdings L.P.(6,7)                                 |  |                    | 3,050,312  |            |  |  | 10.5 | %
|American Real Estate Partners, L.P.(6,7)                                |  |                    | 3,050,312  |            |  |  | 10.5 | %
|American Property Investors, Inc.(6,7)                                  |  |                    | 3,050,312  |            |  |  | 10.5 | %
|Beckton Corp.(6,7)                                                      |  |                    | 3,050,312  |            |  |  | 10.5 | %
|Carl C. Icahn(2,8)                                                      |  |                    | 17,532,875 |            |  |  | 53.5 | %
|Stephen Feinberg(9)                                                     |  |                    | 6,419,843  |            |  |  | 21.6 | %
|Cerberus International, Ltd.(9)                                         |  |                    | 3,021,139  |            |  |  | 10.5 | %
|Harold First(10)                                                        |  |                    | 42,178     |            |  |  | *    |  
|Edmund B. Frost(10)                                                     |  |                    | 53,178     |            |  |  | *    |  
|Robert L. Knauss(10)                                                    |  |                    | 57,360     |            |  |  | *    |  
|Felix Pardo(10,11)                                                      |  |                    | 69,584     |            |  |  | *    |  
|Robert J. Millstone(10)                                                 |  |                    | 34,691     |            |  |  | *    |  
|Brian J. Recatto(10)                                                    |  |                    | 67,660     |            |  |  | *    |  
|Donald J. Forlani(10)                                                   |  |                    | 0          |            |  |  | *    |  
|Michael W. Ramirez(10)                                                  |  |                    | 43,857     |            |  |  | *    |  
|James M. Boggs(10)                                                      |  |                    | 42,856     |            |  |  | *    |  
|Stanley N. Nortman(10)                                                  |  |                    | 26,792     |            |  |  | *    |  
|Robert J. Mitchell(10)                                                  |  |                    | 26,792     |            |  |  | *    |  
|Anthony G. Fernandes(10,12)                                             |  |                    | 556,946    |            |  |  | 2.0  | %
|David E. Fanta(10)                                                      |  |                    | 85,042     |            |  |  | *    |  
|All directors and executive officers as a group
    (13 persons)(10,11) |  |                    | 1,106,936  |            |  |  | 3.9  | %



---

*     Less than 1%



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Percentage of beneficial ownership is based on
    27,909,342 share of common stock outstanding as of
    April 11, 2003. Includes 654,291 shares to be issued
    in connection with bankruptcy proceedings of Oldco (of which
    250,680 were issued on April 15, 2003), which shares are
    treated as outstanding for purposes of this table. Also assumes
    exercise by only the person or group named in each row of all
    options and convertible debt held by such person or group and
    exercisable or convertible within 60 days of April 11,
    2003.
|
| | (2) | Based solely upon information provided in the
    Schedule 13D filed July 2, 2002. Barberry Corp., High
    River Limited Partnership, and Mr. Icahn have shared voting
    and investing power with respect to the                                                                                                                                                                                                                                                                                                                                                      

12



---



##### 



| |  |                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Companys common stock. Barberry Corp. is
    the general partner of High River Limited Partnership and is
    100% owned by Mr. Icahn. The address of these entities
    (other than Mr. Icahn) is: 100 South Bedford Road, Mount
    Kisco, New York 10549. Mr. Icahns address is: Carl C.
    Icahn, c/o Icahn Associates Corp., 767 Fifth Avenue, 47th
    Floor, New York, New York 10153.



| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (3) | Assumes issuance of 3,831,274 shares of the
    Companys common stock upon conversion of the convertible
    PIK debt.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | (4) | Based solely upon information provided in the
    Schedule 13D filed July 2, 2002. Barberry Corp.,
    Meadow Walk Limited Partnership, and Mr. Icahn have shared
    voting and investing power with respect to the shares of the
    Companys common stock. Barberry Corp. is the general
    partner of Meadow Walk Limited Partnership and is 100% owned by
    Mr. Icahn. The address of Meadow Walk Limited Partnership
    is: 100 South Bedford Road, Mount Kisco, New York 10549.                                                                                                                                                                                                                                                                                                                                                                        
|
| | (5) | Based solely upon information provided in the
    Schedule 13D filed July 2, 2002. Barberry Corp. and
    Mr. Icahn have shared voting and investing power with
    respect to the shares of the Companys common stock.
    Barberry Corp. is 100% owned by Mr. Icahn.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | (6) | Based solely upon information provided in the
    Schedule 13D filed July 2, 2002, American Real Estate
    Partners, L.P., American Property Investors, Inc., Beckton Corp.
    and Mr. Icahn have shared voting and investment power with
    respect to the shares of the Companys common stock.
    American Property Investors, Inc. is the general partner of both
    American Real Estate Holdings L.P. and American Real Estate
    Partners, L.P. and American Real Estate Partners, L.P. is a
    limited partner of American Real Estate Holdings L.P. owning
    100% of the limited partnership interests therein. American
    Property Investors, Inc. is 100% owned by Beckton Corp., which
    is 100% owned by Mr. Icahn. The address of these entities
    (other than Mr. Icahn) is: 100 South Bedford Road, Mount
    Kisco, New York 10549.
|
| | (7) | Assumes issuance of 1,048,763 shares of the
    Companys common stock upon conversion of the PIK debt.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | (8) | Assumes issuance of 4,880,037 shares of the
    Companys common stock upon conversion of the PIK debt.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | (9) | Based solely upon information provided in the
    Schedule 13D filed May 5, 2002 and the Form 4
    filed June 5, 2002. Mr. Feinberg serves as investment
    manager for Cerberus International Ltd. Includes
    1,823,499 shares of the Companys common stock
    issuable to Mr. Feinberg and 957,580 shares issuable
    to Cerberus International Ltd., in each case, upon conversion of
    the Companys PIK debt. The address of Mr. Feinberg
    and Cerberus International, Ltd. is: 450 Park Avenue, 28th
    Floor, New York, New York 10022.                                                                                                                                                                                                                                                                                                        



|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Includes shares of the Companys common
    stock which may be acquired pursuant to options which are
    exercisable within 60 days of April 11, 2003 as
    follows: Mr. First (11,000 shares); Mr. Frost
    (11,000 shares); Mr. Knauss (50,000 shares);
    Mr. Pardo (11,000 shares); Mr. Millstone
    (34,691 shares); Mr. Recatto (47,660 shares);
    Mr. Ramirez (41,666 shares); Mr. Boggs
    (29,376 shares); Mr. Nortman (2,250 shares);
    Mr. Mitchell (2,250 shares); Mr. Fernandes
    (500,000 shares); Mr. Fanta (60,473 shares); and
    all directors and officers as a group (801,366 shares).
|    
|(11) | Includes 22,162 shares of the Companys
    common stock issuable upon conversion of the Companys 3%
    unsecured subordinated payment-in-kind notes due in 2020, and
    includes 9,244 shares are held by Mr. Pardo as trustee
    for the Felix Pardo Revocable Trust.                                                                                                                                                                                                                                                                                                                                            
|    
|(12) | Includes 15,000 shares of the Companys
    common stock held by Mr. Fernandess wife.
    Mr. Fernandes disclaims beneficial ownership of such shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                

Information regarding the securities authorized
for issuance under the Companys equity compensation plans
is incorporated by reference from Item 5 of this
Form 10-K.

Item 13.     Certain
Relationships and Related Transactions

Mr. Mitchell, a director of the Company, is
an employee of Icahn Associates Corp., a corporation controlled
by Carl C. Icahn. Mr. Icahn and his affiliates constitute
the Companys largest stockholder and are

13



---



##### 



a significant lender to the Company. As of
December 31, 2002, the Company was indebted to entities
controlled by Mr. Icahn in the aggregate principal amount
of $187.1 million.


14



---



##### 



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



| |                            
| | ---------------------------
| | PHILIP SERVICES CORPORATION



| |     |                     
| | --- | --------------------
| | By: | /s/ ROBERT L. KNAUSS

| |                              
| | -----------------------------
| |                              
| | Robert L. Knauss             
| | Chairman                     
| | (Principal Executive Officer)



| |     |                       
| | --- | ----------------------
| | By: | /s/ MICHAEL W. RAMIREZ

| |                                                      
| | -----------------------------------------------------
| |                                                      
| | Michael W. Ramirez                                   
| | Senior Vice President and Chief Financial
    Officer
| | (Principal Financial and Accounting
    Officer)     

Dated: April 29, 2003

15



---



##### 



CERTIFICATIONS

I, Robert L. Knauss, certify that:

1. I have reviewed this annual report on
Form 10-K/ A (Amendment No. 1) of Philip Services
Corporation;

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

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

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



| |                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) Designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this annual report is being prepared;
|
| | (b) Evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | (c) Presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                

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



| |                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) All significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | (b) Any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    

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



| |     |                     
| | --- | --------------------
| | By: | /s/ ROBERT L. KNAUSS

| |                                                             
| | ------------------------------------------------------------
| |                                                             
| | Name: Robert L. Knauss                                      
| | Title: Chairman of the Board and Principal Executive Officer

| | 
| | 
| | 

Date: April 29, 2003

15



---



##### 



I, Michael W. Ramirez, certify that:

1. I have reviewed this annual report on
Form 10-K/ A (Amendment No. 1) of Philip Services
Corporation;

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

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

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



| |                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) Designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this annual report is being prepared;
|
| | (b) Evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | (c) Presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                

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



| |                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) All significant deficiencies in the
    design or operation of internal controls which could adversely
    affect the registrants ability to record, process,
    summarize and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | (b) Any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    

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



| |     |                       
| | --- | ----------------------
| | By: | /s/ MICHAEL W. RAMIREZ

| |                                                         
| | --------------------------------------------------------
| |                                                         
| | Name: Michael W. Ramirez                                
| | Title: Senior Vice President and Chief
Financial Officer

| | 
| | 
| | 

Date: April 29, 2003

16