<PAGE>
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

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

               FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001,

                                       OR

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

                     FOR THE TRANSITION PERIOD FROM      TO

                         COMMISSION FILE NUMBER 1-15603

                                NATCO GROUP INC.
             (Exact name of registrant as specified in its charter)


                     DELAWARE                                    22-2906892
  (State or other jurisdiction of incorporation               (I.R.S. Employer
                 or organization)                           Identification No.)

              2950 NORTH LOOP WEST,
                    7TH FLOOR,
                  HOUSTON, TEXAS                                   77092
     (Address of principal executive offices)                    (Zip Code)

                                  713-683-9292
              (Registrant's telephone number, including area code)

     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 [X] No [ ]

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:

   As of November 1, 2001 Class A, $0.01 par value per share, 15,127,209 shares
                          Class B, $0.01 par value per share,    542,071 shares

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



<PAGE>

                                NATCO GROUP INC.

                                    FORM 10-Q
                    FOR THE QUARTER ENDED SEPTEMBER 30, 2001

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                          PAGE
                                                                           NO.
                                                                          ----
<S>                                                                        <C>
PART I -- FINANCIAL INFORMATION

Item 1.       Financial Statements....................................     3
              Unaudited Condensed Consolidated Balance Sheets --
              September 30, 2001 and December 31, 2000................     3
              Unaudited Condensed Consolidated Statements of
              Operations -- Three Months Ended September 30, 2001
              and 2000, and Nine Months Ended September 30, 2001
              and 2000................................................     4
              Unaudited Condensed Consolidated Statements of Cash
              Flows -- Nine Months Ended September 30, 2001 and 2000..     5
              Notes to Unaudited Condensed Consolidated Financial
              Statements..............................................     6

Item 2.       Management's Discussion and Analysis of Financial
              Condition And Results of Operations.....................    12

Item 3.       Quantitative and Qualitative Disclosures About
              Market Risk.............................................    20

PART II -- OTHER INFORMATION

Item 1.       Legal Proceedings.......................................    21

Item 2.       Changes in Securities and Use of Proceeds...............    21

Item 3.       Defaults Upon Senior Securities.........................    21

Item 4.       Submission of Matters to a Vote of Security Holders.....    21

Item 5.       Other Information.......................................    21

Item 6.       Exhibits and Reports on Form 8-K........................    21

Signatures............................................................    24

</Table>



                                       2
<PAGE>

                                     PART I

ITEM 1. FINANCIAL STATEMENTS

                        NATCO GROUP INC. AND SUBSIDIARIES

                 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<Table>
<Caption>
                                                                           SEPTEMBER 30,     DECEMBER 31,
                                                                               2001              2000
                                                                           -------------     ------------
<S>                                                                        <C>               <C>
                                          ASSETS
Current assets:
  Cash and cash equivalents ..........................................     $      1,899      $      1,031
  Trade accounts receivable, net .....................................           81,459            53,807
  Inventories ........................................................           38,829            28,677
  Prepaid expenses and other current assets ..........................            7,938             2,965
                                                                           ------------      ------------
        Total current assets .........................................          130,125            86,480
Property, plant and equipment, net ...................................           28,606            23,430
Goodwill, net ........................................................           80,925            36,534
Deferred income tax assets, net ......................................            5,378             5,409
Other assets, net ....................................................            2,409             1,273
                                                                           ------------      ------------
        Total assets .................................................     $    247,443      $    153,126
                                                                           ============      ============

                           LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Current installments of long-term debt .............................     $      7,000      $         --
  Notes payable ......................................................               --             1,005
  Accounts payable ...................................................           38,590            23,133
  Accrued expenses and other .........................................           39,196            12,098
  Customer advances ..................................................           13,090             1,163
                                                                           ------------      ------------
        Total current liabilities ....................................           97,876            37,399
Long-term debt, excluding current installments .......................           47,559            14,959
Postretirement benefit and other long-term liabilities ...............           14,303            14,589
                                                                           ------------      ------------
        Total liabilities ............................................          159,738            66,947
                                                                           ------------      ------------
Stockholders' equity:
  Preferred stock $.01 par value. Authorized 5,000,000
    shares; no shares issued and outstanding .........................               --                --
  Class A Common stock, $.01 par value. Authorized
    45,000,000 shares; issued and outstanding 15,170,645 and
    14,977,354 shares as of September 30, 2001 and December 31,
    2000, respectively ...............................................              152               150
  Class B Common stock, $.01 par value. Authorized 5,000,000
    shares; issued and outstanding 542,071 and 699,874 shares
    as of September 30, 2001 and December 31, 2000, respectively .....                5                 7
  Additional paid-in capital .........................................           96,998            96,601
  Accumulated earnings/(deficit) .....................................            3,157              (506)
  Treasury stock, 716,938 and 677,238 shares at cost as of
    September 30, 2001 and December 31, 2000, respectively ...........           (6,608)           (6,316)
  Accumulated other comprehensive loss ...............................           (2,788)           (1,864)
  Note receivable from officer and stockholder .......................           (3,211)           (1,893)
                                                                           ------------      ------------
        Total stockholders' equity ...................................           87,705            86,179
                                                                           ------------      ------------
Commitments and contingencies
        Total liabilities and stockholders' equity ...................     $    247,443      $    153,126
                                                                           ============      ============
</Table>

                  See accompanying notes to unaudited condensed
                       consolidated financial statements.


                                       3
<PAGE>



                        NATCO GROUP INC. AND SUBSIDIARIES

            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<Table>
<Caption>
                                                                 THREE MONTHS ENDED                NINE MONTHS ENDED
                                                                     SEPTEMBER 30,                    SEPTEMBER 30,
                                                              ----------------------------      ----------------------------
                                                                 2001             2000             2001             2000
                                                              -----------      -----------      -----------      -----------
<S>                                                           <C>              <C>              <C>              <C>
Revenues ................................................     $    74,522      $    60,244      $   219,991      $   168,034
Cost of goods sold ......................................          53,905           43,979          163,076          122,473
                                                              -----------      -----------      -----------      -----------
          Gross profit ..................................          20,617           16,265           56,915           45,561
Selling, general and administrative expense .............          13,767            9,690           38,444           28,979
Depreciation and amortization expense ...................           2,176            1,307            5,962            3,850
Unusual charges .........................................              --               --            1,600            1,528
Interest expense ........................................           1,456              355            3,745            1,129
Interest cost on postretirement benefit liability .......             122              322              766              965
Interest income .........................................            (129)             (19)            (237)            (159)
                                                              -----------      -----------      -----------      -----------
          Income before income taxes ....................           3,225            4,610            6,635            9,269
Income tax provision ....................................           1,458            1,973            2,972            3,967
                                                              -----------      -----------      -----------      -----------
          Net income ....................................     $     1,767      $     2,637      $     3,663      $     5,302
                                                              ===========      ===========      ===========      ===========
EARNINGS PER SHARE:
  Basic .................................................     $      0.11      $      0.17      $      0.23      $      0.37
  Diluted ...............................................     $      0.11      $      0.17      $      0.23      $      0.35
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING:
  Basic .................................................          15,747           15,144           15,732           14,358
  Diluted ...............................................          15,941           15,688           16,009           14,959
</Table>

                  See accompanying notes to unaudited condensed
                       consolidated financial statements.

                                       4
<PAGE>


                        NATCO GROUP INC. AND SUBSIDIARIES

            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                    NINE MONTHS ENDED
                                                                      SEPTEMBER 30,
                                                                 ----------------------
                                                                   2001          2000
                                                                 --------      --------
<S>                                                              <C>           <C>
Cash flows from operating activities:
  Net income ...............................................     $  3,663      $  5,302
  Adjustments to reconcile net income to net cash
    provided by (used in) operating activities:
      Deferred income tax expense (benefit) ................          507          (403)
      Depreciation and amortization expense ................        5,962         3,850
      Non-cash interest income .............................         (140)          (67)
      Interest cost on postretirement benefit liability ....          766           965
      Gain on the sale of property, plant and equipment ....         (156)          (75)
      Change in assets and liabilities, net of acquisitions:
        (Increase) decrease in trade accounts receivable ...        4,044       (10,483)
        Increase in inventories ............................       (9,615)       (8,219)
        Increase in prepaid expense and other current
          assets ...........................................       (1,372)         (326)
        (Increase) decrease in long-term assets ............       (1,526)          716
        Increase in accounts payable .......................        6,180         3,596
        Increase (decrease) in accrued expenses and other ..       (5,177)        1,090
        Increase (decrease) in customer advances ...........       11,816          (134)
                                                                 --------      --------
          Net cash provided by (used in) operating
            activities .....................................       14,952        (4,188)
                                                                 --------      --------
Cash flows from investing activities:
  Capital expenditures for property, plant and equipment ...       (6,388)       (6,138)
  Proceeds from the sale of property, plant and equipment ..          257           276
  Acquisitions, net of cash acquired .......................      (48,224)      (17,239)
  Proceeds of note receivable ..............................           --         1,067
  Issuance of related party note receivable ................       (1,178)           --
  Proceeds from settlement .................................        1,500            --
                                                                 --------      --------
          Net cash used in investing activities ............      (54,033)      (22,034)
                                                                 --------      --------
Cash flows from financing activities:
  Change in bank overdrafts ................................        2,929         1,831
  Net borrowings (repayments) under long-term revolving
    credit facilities ......................................       (6,577)        5,231
  Repayments of short-term borrowings ......................       (1,001)           --
  Repayments of long-term debt .............................       (3,500)      (27,858)
  Borrowings of long-term debt .............................       50,000            --
  Issuance of common stock, net ............................           98        47,199
  Receipt from affiliate of remainder of net present
    value of postretirement benefit liability...............           --           600
  Payments on postretirement benefit liability .............       (1,449)       (1,414)
  Treasury shares repurchased ..............................         (292)           --
  Other, net ...............................................          138           220
                                                                 --------      --------
          Net cash provided by financing activities ........       40,346        25,809
                                                                 --------      --------
Effect of exchange rate changes on cash and cash
  equivalents ..............................................         (397)         (471)
                                                                 --------      --------
Change in cash and cash equivalents ........................          868          (884)
Cash and cash equivalents at beginning of period ...........        1,031         1,747
                                                                 --------      --------
Cash and cash equivalents at end of period .................     $  1,899      $    863
                                                                 ========      ========
Cash payments for:
  Interest .................................................     $  2,689      $    788
  Income taxes .............................................     $  1,691      $  1,801
Significant non-cash investing and financing activities:
  Promissory notes issued for business acquisition .........     $     --      $  1,026
  Partial settlement of a note arrangement with
    treasury shares ........................................     $     --      $  1,525
  Debt assumed in acquisition ..............................     $     --      $  2,862
  Issuance of common stock for acquisition .................     $     85      $  4,077
</Table>

                  See accompanying notes to unaudited condensed
                       consolidated financial statements.


                                        5
<PAGE>

                        NATCO GROUP INC. AND SUBSIDIARIES

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) BASIS OF PRESENTATION

    The accompanying condensed consolidated interim financial statements and
related disclosures are unaudited and have been prepared by NATCO Group Inc.,
("the Company") pursuant to generally accepted accounting principles for interim
financial statements and the rules and regulations of the Securities and
Exchange Commission. As permitted by these regulations, certain information and
footnote disclosures that would typically be required in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted. However, the Company's management believes that these
statements reflect all the normal recurring adjustments necessary for a fair
presentation, in all material respects, of the results of operations for the
periods presented, so that these interim financial statements are not
misleading. These condensed consolidated financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's Form 10-K filing for the year ended December 31, 2000.

    To prepare financial statements in accordance with generally accepted
accounting principles, the Company's management is required to make estimates
and assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the date of the financial
statements, and reported amounts of revenues and expenses incurred during the
reporting period. Actual results could differ from those estimates. Furthermore,
certain reclassifications have been made to fiscal year 2000 amounts in order to
present these results on a comparable basis with amounts for fiscal year 2001.

    References to "NATCO" and "the Company" are used throughout this document
and relate collectively to NATCO Group Inc. and its consolidated subsidiaries.

(2) CAPITAL STOCK

    On February 1, 2001, NATCO issued 8,520 shares of Class B Common Stock to
the former shareholders of The Cynara Company ("Cynara"), in connection with the
achievement of certain performance criteria defined in the November 1998
purchase agreement. Goodwill was increased $85,000 as a result of this
transaction.

    During September 2001, the Company reacquired 39,700 shares of its Class A
common stock pursuant to a stock repurchase plan for $292,000, an average cost
of $7.35 per share. The cost to reacquire these shares has been recorded as
treasury stock at September 30, 2001.

(3) EARNINGS PER SHARE

    Basic earnings per share was computed by dividing net income by the weighted
average number of shares outstanding for the period. Diluted earnings per common
and common equivalent share was computed by dividing net income by the weighted
average number of common and common equivalent shares outstanding for the
period. For purposes of this calculation, outstanding employee stock options
were considered common stock equivalents. Included in diluted shares were common
stock equivalents related to employee stock options of 193,523 shares and
277,180 shares for the quarter and nine-month period ended September 30, 2001,
respectively. For the same periods in 2000, common stock equivalents related to
employee stock options totaled 543,829 shares and 601,038 shares. Anti-dilutive
stock options were excluded from the calculation of common stock equivalents.
The impact of these anti-dilutive shares would have been a reduction of 211,514
shares and 79,011 shares for the quarter and nine-month period ended September
30, 2001, respectively. The impact of anti-dilutive shares would have been a
reduction of 13,834 shares and 8,717 shares for the quarter and nine-month
period ended September 30, 2000, respectively.

(4) ACQUISITIONS

     On March 19, 2001, the Company acquired all the outstanding share capital
of Axsia Group Limited ("Axsia"), a privately held company based in the United
Kingdom, for approximately $42.8 million, net of cash acquired. Axsia
specializes in the design and



                                       6
<PAGE>

supply of water reinjection systems for oil and gas fields, oily water
treatment, oil separation, hydrogen production and other process equipment
systems. This acquisition was financed with borrowings under NATCO's term loan
facility, and was accounted for using the purchase method of accounting. Results
of operations for Axsia have been included in NATCO's condensed consolidated
financial statements since the date of acquisition. The excess of the purchase
price over the fair values of the net assets acquired is being amortized over a
twenty-year period. Goodwill and accumulated amortization related to the Axsia
acquisition were $48.4 million and $1.3 million, respectively, at September 30,
2001. Although the Axsia purchase price allocation has not yet been finalized,
NATCO's management does not believe that the final purchase price allocation
will differ materially from that as of September 30, 2001.

     Assuming the Axsia acquisition occurred on January 1 of the respective
year, the unaudited pro forma results of the Company for the nine-month periods
ended September 30, 2001 and 2000, respectively, would have been as follows:

<Table>
<Caption>
                                        PRO FORMA RESULTS
                                        NINE MONTHS ENDED
                                 -------------------------------
                                 SEPTEMBER 30,     SEPTEMBER 30,
                                     2001              2000
                                 -------------     -------------
                                  (UNAUDITED)       (UNAUDITED)
<S>                            <C>               <C>
Revenues .....................   $    234,938      $    197,444
Income before income taxes ...          3,685             6,431
Net income ...................          1,592      $      2,948
Net income per share:
  Basic ......................   $       0.10      $       0.21
  Diluted .....................  $       0.10      $       0.20
</Table>

     These pro forma results assume debt service costs associated with the Axsia
acquisition, net of tax effect, calculated at the Company's effective tax rate
for the applicable period, and nondeductible goodwill amortization. Although
prepared on a basis consistent with NATCO's condensed consolidated financial
statements, these pro forma results do not purport to be indicative of the
actual results which would have been achieved had the acquisition been
consummated on January 1 of the respective year, and are not intended to be a
projection of future results.

    Effective January 8, 2001, the Company entered into a Compromise Settlement
Agreement with Phlipco, Inc., successor by merger to Enterra Petroleum Equipment
Group, Inc. and Weatherford International, Inc., which resulted in a cash
payment of $1.5 million to NATCO on May 31, 2001, to settle certain
contingencies related to NATCO's acquisition of Total Engineering Systems Team,
Inc. ("TEST") in 1997. The proceeds of this payment, net of related costs, were
used to reduce goodwill associated with the TEST acquisition.

(5) UNUSUAL CHARGES

    In June 2001, the Company recorded an unusual charge of $1.6 million. The
charge consisted of $920,000 pursuant to an approved plan to close and merge an
existing NATCO office into the operations of Axsia, acquired in March 2001. This
charge included costs for severance, office consolidation and other expenses.
Also, the Company withdrew a public debt offering and recorded an unusual charge
of $680,000 for costs incurred related to the proposed offering.

    Pursuant to an employment agreement, an executive officer was entitled to a
bonus upon the occurrence of any sale or public offering of the Company. The
bonus equaled one and one-half percent (1.5%) of the value of all securities
owned by stockholders of the Company prior to the sale or offering, including
common stock valued at the price per share received in either the sale or public
offering, and any debt held by such stockholders. In July 1999, the Company
amended the employment agreement to eliminate the bonus and agreed to lend the
officer $1.2 million to purchase 136,832 shares of common stock. Per the
agreement, the officer would receive a bonus equal to the outstanding principal
and interest of the note upon the sale or public offering of the Company. During
February 2000, after the Company completed an initial public offering of its
Class A common stock, NATCO recorded expense of $1.3 million in settlement of
its obligation under this agreement. The officer used the proceeds, net of tax,
to repay the Company approximately $665,000. The outstanding balance of this
note, including accrued interest, at September 30, 2001, was approximately
$642,000. The loan accrues interest at 6% annually.

    During the first quarter of 2000, NATCO incurred relocation charges of
approximately $208,000 associated with the consolidation of an existing Company
facility with a facility that was acquired in connection with the acquisition of
Porta-Test International, Inc. ("Porta-Test").



                                       7
<PAGE>

(6) INVENTORIES

    Inventories consisted of the following amounts:
<Table>
<Caption>
                                        SEPTEMBER 30,      DECEMBER 31,
                                            2001               2000
                                        -------------      ------------
                                         (UNAUDITED)
                                                (IN THOUSANDS)
<S>                                     <C>                <C>
Finished goods ....................     $       8,511      $      7,641
Work-in-process ...................            15,029            10,403
Raw materials and supplies ........            16,039            11,203
                                        -------------      ------------
  Inventories at FIFO .............            39,579            29,247
Excess of FIFO over LIFO cost .....              (750)             (570)
                                        -------------      ------------
                                        $      38,829      $     28,677
                                        =============      ============
</Table>

(7) COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

    Cost and estimated earnings on uncompleted contracts were as follows:
<Table>
<Caption>
                                                              SEPTEMBER 30,      DECEMBER 31,
                                                                  2001               2000
                                                              -------------      ------------
                                                              (UNAUDITED)
                                                                       (IN THOUSANDS)
<S>                                                           <C>                <C>
Cost incurred on uncompleted contracts ..................     $     160,350      $     67,477
Estimated earnings ......................................            56,329            34,475
                                                              -------------      ------------
                                                                    216,679           101,952
Less billings to date ...................................           199,683            91,301
                                                              -------------      ------------
                                                              $      16,996      $     10,651
                                                              =============      ============
Included in the accompanying balance sheet under the
captions:
  Trade accounts receivable .............................     $      19,622      $     10,651
  Advance payments ......................................            (2,626)               --
                                                              -------------      ------------
                                                              $      16,996      $     10,651
                                                              =============      ============
</Table>

(8) SHORT-TERM DEBT

    In conjunction with the purchase of Porta-Test in January 2000, the Company
issued a one-year promissory note for $1 million denominated in Canadian
dollars, which accrued interest at 15% per annum. On January 24, 2001, the note
was repaid along with accrued interest.

    During February 2000, the Company issued a one-year promissory note for
$338,000, with interest payable per annum at 10%, in conjunction with the
acquisition of Modular Production Equipment, Inc. ("MPE"). In February 2001, the
Company paid $206,000 as principal and interest.

(9) LONG-TERM DEBT

    The consolidated borrowings of the Company were as follows:
<Table>
<Caption>
                                                                  SEPTEMBER 30,    DECEMBER 31,
                                                                       2001           2000
                                                                  -------------    ------------
                                                                    (UNAUDITED)
                                                                          (IN THOUSANDS)
<S>                                                                 <C>             <C>
BANK DEBT
Term loan with variable interest rate (5.99% at September
  30, 2001) and quarterly payments of principal ($1,750)
  and interest, due March 16, 2006 ............................     $   46,500      $       --
Revolving credit bank loans with variable interest rate
  (8.58% at December 31, 2000) and quarterly payment of
  interest, due November 30, 2001 .............................             --          14,959
Revolving credit bank loans with variable interest rate
  (6.23% at September 30, 2001)  and quarterly payment
  of interest, due March 15, 2004 .............................          8,059              --
          Less current installments ...........................         (7,000)             --
                                                                    ----------      ----------
          Long-term debt ......................................     $   47,559      $   14,959
                                                                    ==========      ==========
</Table>

    On March 16, 2001, the Company entered into a new credit facility that
consisted of a $50.0 million term loan, a $35.0 million U.S. revolving facility,
a $10.0 million Canadian revolving facility and a $5.0 million U.K. revolving
facility. The term loan matures on March 15, 2006, and each of the revolving
facilities matures on March 15, 2004.


                                       8
<PAGE>

    Amounts borrowed under the term loan bear interest at a rate of 5.99% per
annum as of September 30, 2001. Amounts borrowed under the revolving portion of
the facility bear interest as follows:

     o    until April 1, 2002, at a rate equal to, at the Company's election,
          either (1) the London Interbank Offered Rate ("LIBOR") plus 2.25% or
          (2) a base rate plus 0.75%; and

     o    on and after April 1, 2002, at a rate based upon the ratio of funded
          debt to EBITDA (as defined in the credit facility) and ranging from,
          at the Company's election, (1) a high of LIBOR plus 2.50% to a low of
          LIBOR plus 1.75% or, (2) a high of a base rate plus 1.0% to a low of a
          base rate plus 0.25%.

     NATCO will pay commitment fees of 0.50% per year until April 1, 2002 and
0.30% to 0.50% per year following 2002, depending upon the ratio of funded debt
to EBITDA, on and after April 1, 2002, in each case on the undrawn portion of
the facility.

     The revolving credit facility is guaranteed by all the Company's domestic
subsidiaries and is secured by a first priority lien on all inventory, accounts
receivable and other material tangible and intangible assets. NATCO has also
pledged 65% of the voting stock of its active foreign subsidiaries.

    Borrowings of $50.0 million under the term loan facility were used primarily
for the acquisition of Axsia. The remaining borrowings, along with additional
borrowings under the revolving credit facility, were used to repay $16.5 million
outstanding under a predecessor revolving credit and term loan facility.

    As of September 30, 2001, the Company was in compliance with all restrictive
debt covenants. NATCO had letters of credit outstanding under the revolving
credit facilities totaling $18.9 million at September 30, 2001. These letters of
credit constitute contract performance and warranty collateral and expire at
various dates through October 2004.

    The Company maintains a working capital facility for export sales that
provides for aggregate borrowings of $10.0 million, subject to borrowing base
limitations, under which no borrowings were outstanding at September 30, 2001.
Letters of credit outstanding under the export sales credit facility as of
September 30, 2001 totaled $1.2 million. The export sales credit facility is
secured by specific project inventory and receivables, and is partially
guaranteed by the EXIM Bank. The export sales credit facility loans mature in
July 2003.

    The Company had unsecured letters of credit totaling $946,000 at September
30, 2001.

(10) INCOME TAXES

    NATCO's effective income tax rate for the quarter ended September 30, 2001
was 45%, which exceeded the amount that would have resulted from applying the
U.S. federal statutory tax rate, and was due primarily to non-deductible
goodwill amortization expense of $1.1 million. A tax benefit associated with the
exercise of employee stock options of $214,000 was allocated to equity during
the nine-month period ended September 30, 2001. No stock options were exercised
during the quarter ended September 30, 2001.

(11) INDUSTRY SEGMENTS

    The accounting policies of the reportable segments were consistent with the
policies used to prepare the Company's condensed consolidated financial
statements for the respective periods presented. The Company evaluates the
performance of its operating segments based on income before net interest
expense, income taxes, depreciation and amortization expense, accounting
changes, and nonrecurring items.

    In the first quarter of 2001, the Company changed the presentation of its
reportable segments by combining the traditional production equipment and
services business segment with the NATCO Canada business segment, to form the
North American Operations business segment. This change has been retroactively
reflected in all periods presented.

    In July 2000, the Company changed its presentation of certain assets
acquired from Cynara in November 1998, and the related operating results, for
segment reporting purposes. The majority of the assets were reclassified to the
North American operations business segment from the engineered systems business
segment. This change has been retroactively reflected in all periods presented.

    Summarized financial information concerning the Company's reportable
segments is shown in the following table.


                                       9
<PAGE>



<Table>
<Caption>
                                               NORTH                       AUTOMATION
                                              AMERICAN      ENGINEERED      & CONTROL     CORPORATE &
                                             OPERATIONS       SYSTEMS        SYSTEMS      ELIMINATIONS       TOTAL
                                             ----------     ----------     ----------     ------------      --------
                                                                   (UNAUDITED, IN THOUSANDS)
<S>                                          <C>            <C>            <C>            <C>               <C>
Three Months Ended
  September 30, 2001
Revenues from unaffiliated customers ...     $   37,326     $   26,980     $   10,216     $         --      $ 74,522
Revenues from affiliates ...............          1,302            580            858           (2,740)           --
Segment profit (loss) ..................          3,103          4,314            897           (1,464)        6,850
Total assets ...........................         97,356        115,904         19,351           14,832       247,443
Capital expenditures ...................          2,063            910             84              221         3,278
Depreciation and amortization ..........          1,243            823            100               10         2,176
Three Months Ended
  September 30, 2000
Revenues from unaffiliated customers ...     $   33,145     $   17,936     $    9,163     $         --      $ 60,244
Revenues from affiliates ...............          1,617             96          1,143           (2,856)           --
Segment profit (loss) ..................          2,428          3,902          1,261           (1,017)        6,574
Total assets ...........................         94,443         27,074         18,989           10,242       150,748
Capital expenditures ...................            273          1,296             73              156         1,798
Depreciation and amortization ..........            761            375            141               30         1,307
Nine Months Ended
  September 30, 2001
Revenues from unaffiliated customers ...     $  107,221     $   79,350     $   33,420     $         --      $219,991
Revenues from affiliates ...............          3,569            618          2,752           (6,939)           --
Segment profit (loss) ..................          9,138          9,038          3,566           (4,871)       16,871
Total assets ...........................         97,356        115,904         19,351           14,832       247,443
Capital expenditures ...................          3,068          2,322            340              658         6,388
Depreciation and amortization ..........          2,748          2,651            361              202         5,962
Nine Months Ended
  September 30, 2000
Revenues from unaffiliated customers ...     $   86,865     $   52,721     $   28,448     $         --      $168,034
Revenues from affiliates ...............          4,809             96          3,157           (8,062)           --
Segment profit (loss) ..................          5,602         10,286          3,759           (4,593)       15,054
Total assets ...........................         94,443         27,074         18,989           10,242       150,748
Capital expenditures ...................          1,475          3,886            214              563         6,138
Depreciation and amortization ..........          2,307          1,017            421              105         3,850
</Table>

(12) DERIVATIVE ARRANGEMENTS

     As of September 30, 2001, the Company was party to several foreign currency
derivative arrangements as a result of the acquisition of Axsia on March 19,
2001. Specifically, the Company held foreign currency forward contracts used to
mitigate risk associated with foreign currency exchange rates. In accordance
with Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities," the Company's policy is to
record these contracts on the balance sheet at fair market value and to record
any changes in fair value as charges to income in the current period. The
Company had no derivative financial instruments as of January 1, 2001.

     The objective of these derivative arrangements is to absorb the cash flow
impact of possible exchange rate changes for Axsia projects that were required
to settle in a currency other than British pounds sterling. During the quarter
ended September 30, 2001, the Company terminated the majority of these
contracts, which resulted in a loss of approximately $188,000, reflected as a
component of general and administrative expense in the accompanying statements
of operations for the quarter and nine-month period ended September 30, 2001.

     The following table summarizes the Company's commitments to sell British
pounds sterling under derivative forward contracts as of September 30, 2001:
<Table>
<Caption>
                                                                  LOCAL                                 POUNDS          FAIR VALUE
                                              LOCAL             CURRENCY        STRIKE PRICE           STERLING         IN POUNDS
CONTRACT TYPE          DATES                 CURRENCY            AMOUNT            RANGE              EQUIVALENT         STERLING
<S>           <C>                          <C>                 <C>            <C>                      <C>              <C>
Sell          10/1/2001 to 1/31/2002       Euros                 620,751      1.6211 to 1.6223           382,671          384,461
Sell          12/1/2001 to 2/28/2002       US dollars          3,643,886      1.4710 to 1.4719         2,475,919        2,480,353
</Table>

     At September 30, 2001, the Company confirmed the fair market value of its
forward contracts with the counter-party financial institutions. The Company
intends to fulfill these foreign currency contract commitments that extend
through February 2002 and does not currently intend to enter into new derivative
arrangements as part of its risk management strategy.



                                       10
<PAGE>

(13) COMMITMENTS AND CONTINGENCIES

    The Porta-Test purchase agreement, executed in January 2000, contains a
provision to calculate a payment to certain former stockholders of Porta-Test
Systems, Inc. for a three-year period ended January 24, 2003, based upon sales
of a limited number of specified products designed by or utilizing technology
that existed at the time of the acquisition. Liability under this arrangement is
contingent upon attaining certain performance criteria, including gross margins
and sales volumes for the specified products. If applicable, payment is required
annually. In April 2001, the Company paid $226,000 under this arrangement
related to the year ended January 24, 2001. Any future liabilities incurred
under this arrangement will result in an increase in goodwill.

(14) POSTRETIREMENT BENEFITS

    On May 1, 2001, the Company amended a postretirement benefit plan that
provided medical and dental coverage to retirees of a predecessor company. Under
the amended plan, retirees bear additional costs of coverage. Significant plan
changes include higher deductibles, prescription coverage under a drug card
program and the elimination of dental benefits. As of July 1, 2001, the Company
obtained a third-party valuation of its liability under this plan arrangement,
as amended, resulting in a cumulative unrecognized gain of $3.3 million. In
accordance with SFAS No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions," this unrecognized gain will be amortized to income over
the remaining life expectancy of the plan participants.

(15) NEW ACCOUNTING PRONOUNCEMENTS

    In June 2001, the Financial Accounting Standards Board ("FASB") approved
statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations." This standard requires that any business combination initiated
after June 30, 2001 be accounted for using the purchase method of accounting.
This standard became effective on July 1, 2001. The Company does not expect this
pronouncement to have a material effect on its financial condition or results of
operations.

    The FASB approved SFAS No. 142, "Goodwill and Other Intangible Assets" in
June 2001. This pronouncement requires that intangible assets with indefinite
lives, including goodwill, cease being amortized and be evaluated on an
impairment basis. Intangible assets with a defined term, such as patents, would
continue to be amortized over the useful life of the asset. This pronouncement
becomes effective on January 1, 2002, for companies with a calendar year end.
The Company had net goodwill of $80.9 million as of September 30, 2001. Goodwill
amortization totaled $2.6 million for the nine months ended September 30, 2001.
The Company has not yet determined the impact that this pronouncement will have
on its financial condition or results of operations. As permitted by the
standard, the Company will determine and quantify its exposure under this
pronouncement during fiscal 2002, after completing the required impairment
testing.

    In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations." This standard provides guidance on reporting and accounting for
obligations associated with the retirement of long-lived tangible assets and the
associated retirement costs. This standard is effective for financial statements
issued for fiscal years beginning after June 15, 2002. The Company has not yet
determined the impact that this pronouncement will have on its financial
condition or results of operations.

    In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." This statement replaces SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," and standardizes the accounting model to be used for
asset dispositions and related implementation issues. This pronouncement becomes
effective for financial statements issued for fiscal years beginning after
December 15, 2001. The Company has not yet determined the impact that this
pronouncement will have on its financial condition or results of operations.

(16) SUBSEQUENT EVENTS

    During October 2001, the Company settled all remaining derivative
arrangements acquired through the acquisition of Axsia on March 19, 2001, and
recorded a loss of approximately $61,000 related to these settlements.

    In October 2001, the Company amended its revolving debt facility to reduce
the borrowing capacity in the U.S. from $35.0 million to $30.0 million, and to
increase its borrowing capacity in the U.K. from $5.0 million to $10.0 million.
No other material modifications were made to the agreement.

    In October and November 2001, the Company reacquired 57,536 shares of its
Class A common stock pursuant to a stock repurchase plan for $432,000, an
average cost of $7.50 per share. The cost to reacquire these shares has been
recorded as treasury stock.

                                       11
<PAGE>

     ITEM 2. Management's Discussion and Analysis of Financial Condition and
             Results of Operations

FORWARD-LOOKING STATEMENTS

    Management's Discussion and Analysis includes forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended (each a
"Forward-Looking Statement"). The words "believe," "expect," "plan," "intend,"
"estimate," "project," "will," "could," "may" and similar expressions are
intended to identify Forward-Looking Statements. Forward-Looking Statements in
this document include, but are not limited to, discussions regarding indicated
trends in the level of oil and gas exploration and production and the effect of
such conditions on the Company's results of operations (see " -- Industry and
Business Environment"), future uses of and requirements for financial resources
(see " -- Liquidity and Capital Resources"), and anticipated backlog levels for
2001 (see " -- Liquidity and Capital Resources"). The Company's expectations
about its business outlook, customer spending, oil and gas prices and the
business environment for the Company and the industry in general are only its
expectations regarding these matters. No assurance can be given that actual
results may not differ materially from those in the Forward-Looking Statements
herein for reasons including, but not limited to: market factors such as pricing
and demand for petroleum related products, the level of petroleum industry
exploration and production expenditures, the effects of competition, world
economic conditions, the level of drilling activity, the legislative environment
in the United States and other countries, policies of the Organization of
Petroleum Exporting Countries, conflict in major petroleum producing or
consuming regions, the development of technology which could lower overall
finding and development costs, weather patterns and the overall condition of
capital and equity markets for countries in which the Company operates.

    The following discussion should be read in conjunction with the financial
statements, related notes and other financial information appearing elsewhere in
this Form 10-Q. Readers are also urged to carefully review and consider the
various disclosures advising interested parties of the factors that affect the
Company, including without limitation, the disclosures made under the caption
"Risk Factors" and the other factors and risks discussed in the Company's
Registration Statement on Form S-1/A and subsequent reports filed with the
Securities and Exchange Commission. The Company expressly disclaims any
obligation or undertaking to release publicly any updates or revisions to any
Forward-Looking Statement to reflect any change in the Company's expectations
with regard thereto or any change in events, conditions or circumstances on
which any Forward-Looking Statement is based.

OVERVIEW

    References to "NATCO" and "the Company" are used throughout this document
and relate collectively to NATCO Group Inc. and its consolidated subsidiaries.

    NATCO's operations are organized into three separate business segments:
North American operations, a segment which primarily provides standardized
components, replacement parts and used components and equipment servicing;
engineered systems, a segment which primarily provides customized, large scale
integrated oil and gas production systems; and automation and control systems, a
segment which provides control panels and systems that monitor and control oil
and gas production.

    NATCO recognizes revenues from significant contracts (contracts greater than
$250,000 and longer than four months in duration) and all automation and control
systems contracts and orders on the percentage of completion method. The Company
records revenues and profits on other sales as shipments are made. Earned
revenue is based on the percentage that costs incurred to date bear to total
estimated costs. If estimated total costs on any contract or work-in-process
indicate a loss, the Company recognizes the entire loss immediately. NATCO
generally recognizes revenue and earnings to which the percentage of completion
method applies over a period of two to six quarters. Customers typically retain
an interest in uncompleted projects.

ACQUISITIONS

    On March 19, 2001, the Company acquired all the outstanding share capital of
Axsia Group Limited ("Axsia"), a privately held company based in the United
Kingdom, for approximately $42.8 million, net of cash acquired. Axsia
specializes in the design and supply of water reinjection systems for oil and
gas fields, oily water treatment, oil separation, hydrogen production and other
process equipment systems. This acquisition was financed with borrowings under
NATCO's term loan facility, and was accounted for using the purchase method of
accounting. Results of operations for Axsia have been included in NATCO's
condensed consolidated financial statements since the date of acquisition. The
excess of the purchase price over the fair values of the net assets acquired is
being amortized over a twenty-year period. Goodwill and accumulated amortization
related to the Axsia acquisition were $48.4 million and $1.3 million,
respectively, at September 30, 2001. The purchase price allocation has not yet
been finalized, but NATCO's management does not believe that the final purchase
price allocation will differ materially from that as of September 30, 2001.


                                       12
<PAGE>

INDUSTRY AND BUSINESS ENVIRONMENT

    NATCO is a leading provider of equipment, systems and services used in the
production of crude oil and natural gas, primarily at the wellhead, to separate
oil and gas within a production stream and to remove contaminants. The Company's
products and services are used in onshore and offshore fields in most major oil
and gas producing regions of the world. Separation and decontamination of a
production stream is needed at almost every producing well in order to meet the
specifications of transporters and end users.

    One indicator of capital spending in the oil and gas industry is commodity
prices. Energy prices were low in early 1999 but began to rise steadily mid-year
as production cuts by OPEC and other oil producing countries reduced excess
inventory levels. Energy prices remained high until the spring of 2000 when
these same producers elected to increase production to bring energy prices down
to more sustainable levels. Thus, the trend in crude oil prices in recent years
has been an increase, as evidenced by the average spot price of West Texas
Intermediate crude which was $30 per barrel for fiscal year 2000, compared to
$19 per barrel for fiscal year 1999 and only $14 per barrel for fiscal year
1998. In early 2001, energy prices declined modestly to an average of
approximately $27 per barrel, until September 2001, when prices dropped to $22
per barrel. This decrease in hydrocarbon prices during September 2001 was the
result of a general slow-down in the U.S. economy, accelerated by significant
terrorist acts in the United States on September 11, 2001. The long-term effect
of this slow-down on hydrocarbon prices cannot be determined at this time.
However, prices remained constant at approximately $22 per barrel throughout
October 2001. The average natural gas price per MMBtu using the NYMEX Henry Hub
price was $2 per MMBtu for fiscal years 1998 and 1999, and $4 per MMBtu for
fiscal year 2000. At September 30, 2001, the spot prices of West Texas
Intermediate crude and Henry Hub natural gas were approximately $22 per barrel
of oil and $2 per MMBtu of natural gas, respectively.

    Another indicator of capital spending in the oil and gas industry is the
number of operating rigs in the U.S. and Canada, which has increased from 1,370
at September 30, 2000 to 1,472 at September 30, 2001, as published by Baker
Hughes. This overall increase in rig count when comparing year to year may
decline as the rig count in the United States has begun to trend downward
in recent months.

    The increase in oil prices in recent years has had a positive effect on the
Company's overall sales for 2000 and 2001. Current price levels and recent rig
count improvements have contributed to improved overall industry conditions and
should also cause NATCO's customers to maintain their current level of
exploration and development efforts. Although energy price levels and rig count
increases are indicators that additional oil and gas production may occur
throughout 2001, there can be no assurance that overall production will
increase, that an increase in production trends will continue through 2001 or
that such an increase in production would result in an increase in revenues for
the Company.

    The following discussion of NATCO's historical results of operations and
financial condition should be read in conjunction with the Company's condensed
consolidated financial statements and notes thereto.


RESULTS OF OPERATIONS

    In the first quarter of 2001, the Company changed the presentation of its
reportable segments by combining the traditional production equipment and
services business segment with the NATCO Canada business segment, to form the
North American operations business segment. This change has been reflected
retroactively in all periods presented.

    In July 2000, the Company changed its presentation of certain assets that
were acquired from The Cynara Company ("Cynara") in November 1998, and the
related operating results, for segment reporting purposes. The majority of the
assets were reclassified to the North American operations business segment from
the engineered systems business segment. This change has been retroactively
reflected in all periods presented.


Three Months Ended September 30, 2001 Compared to Three Months Ended September
30, 2000

    Revenues. Revenues of $74.5 million for the three months ended September 30,
2001 increased $14.3 million, or 24%, from $60.2 million for the three months
ended September 30, 2000. The following table summarizes revenues by business
segment for the quarters ended September 30, 2001 and 2000, respectively.

                                       13
<PAGE>
<Table>
<Caption>
                                          THREE MONTHS ENDED
                                             SEPTEMBER 30,
                                        ------------------------                    PERCENTAGE
                                           2001           2000          CHANGE        CHANGE
                                        ---------      ---------      ---------      ---------
                                                              (UNAUDITED)
                                               (IN THOUSANDS, EXCEPT PERCENTAGE CHANGE)
<S>                                     <C>            <C>            <C>            <C>
North American Operations .........     $  38,628      $  34,762      $   3,866            11%
Engineered Systems ................        27,560         18,032          9,528            53%
Automation and Control Systems ....        11,074         10,306            768             7%
Corporate and Other ...............        (2,740)        (2,856)           116             4%
          Total ...................     $  74,522      $  60,244      $  14,278            24%
</Table>

    North American operations revenues increased $3.9 million, or 11%, for the
quarter ended September 30, 2001, as compared to the quarter ended September 30,
2000, due to an increase in oilfield activity that resulted from improved gas
prices in recent years. Throughout fiscal 2000 and into fiscal 2001, production
activity increased and operating rig count rose in the United States, resulting
in higher demand for the Company's traditional production process equipment,
finished goods and domestic parts and services. These increases in equipment
sales were partially offset by a decline in revenues in Canada, as several large
projects in fiscal 2000 were completed. In addition, recovery in the oil and gas
industry for Canada has stalled, as Canadian rig count declined from 355 at
September 30, 2000 to 304 at September 30, 2001. Affiliated revenues for this
business segment were $1.3 million for the quarter ended September 30, 2001, as
compared to $1.6 million for the quarter ended September 30, 2000.

    Revenues for the engineered systems business segment increased $9.5 million,
or 53%, for the quarter ended September 30, 2001, as compared to the quarter
ended September 30, 2000. This increase was primarily due to the acquisition of
Axsia in March 2001, which provided revenues of $17.9 million for three months
ended September 30, 2001. This increase was partially offset due to a decline in
revenues recognized under long-term engineering projects, including the
Carigali-Triton Operating Company SDN BHD ("CTOC") contract, which provided $1.1
million of revenue for the quarter ended September 30, 2001, as compared to
$11.6 million for the quarter ended September 30, 2000. Excluding the impact of
the Axsia acquisition and the CTOC project, revenues for this business segment
increased $2.2 million for the quarter ended September 30, 2001, compared to the
respective period in 2000, primarily due to an increase in export projects.
Engineered systems revenues of $27.6 million for the quarter ended September 30,
2001 included approximately $580,000 of affiliated revenues, as compared to
$96,000 of affiliated revenues for the quarter ended September 30, 2000.

    Revenues for the automation and control systems business segment increased
$768,000, or 7%, for the quarter ended September 30, 2001, as compared to the
quarter ended September 30, 2000. This increase in revenues was the result of
higher demand for the Company's products and an increase in field services for
both time and materials and quote job projects. Affiliated revenues of
approximately $858,000 and $1.1 million were included in the results for the
quarters ended September 30, 2001 and 2000, respectively.

    The change in revenues for corporate and other represents the elimination of
revenues of affiliates as discussed above.

    Gross Profit. Gross profit for the quarter ended September 30, 2001
increased $4.4 million, or 27%, to $20.6 million, compared to $16.3 million for
the quarter ended September 30, 2000. As a percentage of revenue, gross margins
increased from 27% for the quarter ended September 30, 2000 to 28% for the
quarter ended September 30, 2001. The following table summarizes gross profit by
business segment for the quarters then ended:
<Table>
<Caption>
                                         THREE MONTHS ENDED
                                           SEPTEMBER 30,
                                        ---------------------                  PERCENTAGE
                                          2001         2000        CHANGE         CHANGE
                                        --------     --------     --------       --------
                                                      (UNAUDITED)
                                       (IN THOUSANDS, EXCEPT PERCENTAGE CHANGE)
<S>                                     <C>          <C>          <C>                 <C>
North American Operations .........     $  9,019     $  7,531     $  1,488            20%
Engineered Systems ................        9,543        6,476        3,067            47%
Automation and Control Systems ....        2,055        2,258         (203)           (9)%
          Total ...................     $ 20,617     $ 16,265     $  4,352            27%
</Table>

    Gross profit for the North American operations business segment increased
$1.5 million, or 20%, for the quarter ended September 30, 2001, as compared to
the respective period in 2000. This increase in margin was due primarily to an
11% increase in revenues. In addition, the Company's CO2 field service
operations and traditional production equipment provided more favorable margins
in fiscal 2001 as compared to fiscal 2000. As a percentage of revenue, gross
margins were 23% and 22% for the quarters ended September 30, 2001 and 2000,
respectively.

                                       14
<PAGE>

    Gross profit for the engineered systems business segment for the quarter
ended September 30, 2001 increased $3.1 million, or 47%, primarily due to a $7.1
million contribution from Axsia, which was acquired in March 2001, offset by a
decline in contribution from large higher margin engineered systems projects,
including CTOC. Excluding the impact of Axsia and the CTOC project, gross margin
for the engineered systems business segment increased approximately $928,000 due
to an increase in export projects. Gross margin for engineered systems
represented 35% and 36% of the segment's revenues for the quarters ended
September 30, 2001 and 2000, respectively.

    Gross profit for the automation and control systems business segment
decreased $203,000, or 9%, for the quarter ended September 30, 2001, as compared
to the quarter ended September 30, 2000. This decrease was related to a shift in
sales mix from higher margin quote jobs to time and materials jobs. However, an
increase in time and materials jobs resulted in an overall 7% increase in
revenues for the segment. Gross margin as a percentage of revenue for the
quarters ended September 30, 2001 and 2000, was 19% and 22%, respectively.

    Selling, General and Administrative Expense. Selling, general and
administrative expense of $13.8 million increased $4.1 million, or 42%, for the
quarter ended September 30, 2001, as compared to the quarter ended September 30,
2000. This increase was largely related to the following factors: (1) the
results of operations for Axsia which was acquired on March 19, 2001, (2)
start-up costs related to the Singapore office opened in March 2001 to increase
marketing efforts in Southeast Asia, (3) increased spending for technology and
product development, and (4) higher employee medical costs.

    Depreciation and Amortization Expense. Depreciation and amortization expense
of $2.2 million for the quarter ended September 30, 2001, increased $869,000, or
66%, compared to $1.3 million for the quarter ended September 30, 2000.
Depreciation expense of $1.0 million for the quarter ended September 30, 2001,
increased $269,000, or 36%, as compared to the respective period for 2000. This
increase was primarily due to the acquisition of Axsia in March 2001 and the
addition of constructed assets placed in service in the fourth quarter of fiscal
2000. Amortization expense of $1.2 million for the quarter ended September 30,
2001, increased $600,000, or 107%, as compared to $563,000 for the quarter ended
September 30, 2000. This increase was primarily due to amortization of goodwill
associated with the Axsia acquisition.

    Interest Expense. Interest expense was $1.5 million for the quarter ended
September 30, 2001, as compared to $355,000 for the respective period in 2000.
This increase of $1.1 million, or 310%, was due primarily to an increase in
borrowings under the Company's term loan and revolving credit facilities. The
Company borrowed $50.0 million against its new term loan facility to acquire
Axsia in March 2001 and retire borrowings under its predecessor revolving credit
facility. Outstanding debt at September 30, 2001 under the Company's credit
facilities totaled $54.6 million, as compared to $11.2 million at September 30,
2000.

    Interest Cost on Postretirement Benefit Liability. Interest cost on
postretirement benefit liability decreased $200,000, or 62%, from $322,000 for
the quarter ended September 30, 2000 to $122,000 for the quarter ended September
30, 2001. This decrease in interest cost was due to an amendment of the plan
that provides medical and dental coverage to retirees of a predecessor company.
Under the amended plan, retirees will bear more cost for coverages, thereby
reducing the Company's projected liability and the related interest cost.

    Provision for Income Taxes. Income tax expense of $1.5 million for the
quarter ended September 30, 2001, decreased $515,000 from $2.0 million for the
quarter ended September 30, 2000. The primary reason for this decrease in tax
expense was a decrease in income before income taxes, which was $3.2 million for
the quarter ended September 30, 2001, as compared to $4.6 million for the
respective period in 2000. The effective tax rate increased from 43% in 2000 to
45% in 2001, due to the impact of non-deductible goodwill amortization expense.

Nine Months Ended September 30, 2001 Compared to Nine Months Ended September 30,
2000

    Revenues. Revenues of $220.0 million for the nine months ended September 30,
2001 increased $52.0 million, or 31%, from $168.0 million for the nine months
ended September 30, 2000. The following table summarizes revenues by business
segment for the nine-month periods ended September 30, 2001 and 2000,
respectively.

                                       15
<PAGE>

<Table>
<Caption>
                                           NINE MONTHS ENDED
                                              SEPTEMBER 30,
                                        ------------------------                     PERCENTAGE
                                           2001          2000           CHANGE         CHANGE
                                        ---------      ---------      ---------       --------
                                                              (UNAUDITED)
                                                (IN THOUSANDS, EXCEPT PERCENTAGE CHANGE)
<S>                                     <C>            <C>            <C>                  <C>
North American Operations .........     $ 110,790      $  91,674      $  19,116            21%
Engineered Systems ................        79,968         52,817         27,151            51%
Automation and Control Systems ....        36,172         31,605          4,567            14%
Corporate and Other ...............        (6,939)        (8,062)         1,123            14%
          Total ...................     $ 219,991      $ 168,034      $  51,957            31%
</Table>


    North American operations revenues increased $19.1 million, or 21%, for the
nine months ended September 30, 2001, as compared to the nine months ended
September 30, 2000, due to an increase in oilfield activity that resulted from
improved gas prices in fiscal 2000. Throughout fiscal 2000 and into fiscal 2001,
production activity increased and rig count rose in the United States, resulting
in higher demand for the Company's traditional production process equipment,
finished goods, domestic parts and services, export parts and services and CO2
membrane technology products. These increases in equipment sales were offset
slightly by a decline in Canadian operations, due to a slower recovery in crude
oil development in Canada and a delay in activity for several key customers.
Affiliated revenues for this business segment were $3.6 million for the nine
months ended September 30, 2001, as compared to $4.8 million for the nine months
ended September 30, 2000.

    Revenues for the engineered systems business segment increased $27.2
million, or 51%, for the nine months ended September 30, 2001, as compared to
the nine months ended September 30, 2000. This increase was primarily due to the
acquisition of Axsia in March 2001, which provided revenues of $48.9 million
since the date of acquisition. This increase was partially offset by a decline
in revenues recognized under long-term engineering projects, including the CTOC
contract, which provided $34.8 million of revenue for the nine months ended
September 30, 2000 as compared to $10.0 million for the nine months ended
September 30, 2001. Excluding the impact of Axsia and the CTOC project, revenues
for this business segment increased $3.1 million for the nine months ended
September 30, 2001 as compared to the respective period in 2000, due primarily
to an increase in export projects. Engineered systems revenues of $80.0 million
for the nine months ended September 30, 2001 included approximately $618,000 of
affiliated revenues, as compared to $96,000 of affiliated revenues for the nine
months ended September 30, 2000.

    Revenues for the automation and control systems business segment increased
$4.6 million, or 14%, for the nine months ended September 30, 2001, as compared
to the respective period in 2000. This increase in revenues was the result of
higher demand for the Company's electrical and instrumentation products and an
increase in field services for both time and materials and quote job projects.
Affiliated revenues of approximately $2.8 million and $3.2 million were included
in the results for the nine-month periods ended September 30, 2001 and 2000,
respectively.

    The change in revenues for corporate and other represents the elimination of
revenues of affiliates as discussed above.

    Gross Profit. Gross profit for the nine months ended September 30, 2001
increased $11.4 million, or 25%, to $56.9 million, compared to $45.6 million for
the nine months ended September 30, 2000. As a percentage of revenue, gross
margins declined from 27% for the nine months ended September 30, 2000 to 26%
for the nine months ended September 30, 2001. The following table summarizes
gross profit by business segment for the periods then ended:

<Table>
<Caption>
                                        NINE MONTHS ENDED
                                          SEPTEMBER 30,
                                        ------------------             PERCENTAGE
                                         2001       2000      CHANGE     CHANGE
                                        ------     ------      -----   ----------
                                                      (UNAUDITED)
                                       (IN THOUSANDS, EXCEPT PERCENTAGE CHANGE)
<S>                                   <C>          <C>        <C>          <C>
North American Operations.........    $ 26,555     $20,869    $5,686       27%
Engineered Systems................      23,297     17,866      5,431       30%
Automation and Control Systems....       7,063      6,826        237        3%
          Total...................    $ 56,915     $45,561    $11,354      25%
</Table>

    Gross profit for the North American operations business segment increased
$5.7 million, or 27%, for the nine months ended September 30, 2001, as compared
to the respective period in 2000. This increase in margin was due primarily to a
21% increase in revenues. In addition, the Company's CO2 field service
operations and traditional production equipment provided more favorable margins
in fiscal 2001 as compared to fiscal 2000. As a percentage of revenue, gross
margins were 24% and 23% for the nine-month periods ended September 30, 2001 and
2000, respectively.



                                       16
<PAGE>

    Gross profit for the engineered systems business segment for the nine months
ended September 30, 2001 increased approximately $5.4 million, or 30%, primarily
due to a $15.1 million contribution from Axsia, offset by a decline in large
engineered systems projects such as the CTOC project which provided gross margin
of $14.5 million for the nine months ended September 30, 2000, as compared to
$3.9 million for the nine months ended September 30, 2001. Excluding the impact
of Axsia and the CTOC project, gross margin for the engineered systems business
segment increased approximately $964,000 in 2001 as compared to 2000, and
related primarily to export projects. Gross margin represented 29% and 34% of
the segment's revenues for the nine-month periods ended September 30, 2001 and
2000, respectively. The decline in gross margin as a percentage of revenues was
consistent with a decline in results from large, high margin projects such as
CTOC.

    Gross profit for the automation and control systems business segment
increased $237,000, or 3%, for the nine months ended September 30, 2001, as
compared to the nine months ended September 30, 2000. This increase was directly
related to a 14% increase in revenues partially offset by a shift in sales mix
from higher margin quote jobs to time and materials jobs. Gross margin as a
percentage of revenue for the nine-month periods ended September 30, 2001 and
2000, was 20% and 22%, respectively.

    Selling, General and Administrative Expense. Selling, general and
administrative expense of $38.4 million increased $9.5 million, or 33%, for the
nine months ended September 30, 2001, as compared to the nine months ended
September 30, 2000. This increase was largely related to the following factors:
(1) the results of operations for Axsia which was acquired on March 19, 2001,
(2) start-up costs related to the Singapore office opened in March 2001 to
increase marketing efforts in Southeast Asia, (3) increased spending for
technology and product development, and (4) higher employee medical costs.

    Depreciation and Amortization Expense. Depreciation and amortization expense
of $6.0 million for the nine months ended September 30, 2001, increased $2.1
million, or 55%, compared to $3.9 million for the nine months ended September
30, 2000. Depreciation expense of $3.0 million for the nine months ended
September 30, 2001, increased $634,000, or 26%, as compared to the respective
period for 2000. This increase was primarily due to the acquisition of Axsia in
March 2001 and the addition of constructed assets placed in service in the
fourth quarter of fiscal 2000. Amortization expense of $2.9 million for the nine
months ended September 30, 2001, increased $1.5 million, or 102%, as compared to
$1.5 million for the nine months ended September 30, 2000. This increase was
primarily due to amortization of goodwill associated with the Axsia, Porta-Test
International, Inc. ("Porta-Test"), Modular Production Equipment, Inc. ("MPE")
and Engineered Specialties, Inc. ("ESI") acquisitions completed in March 2001,
January 2000, February 2000 and April 2000, respectively. Also, amortization
expense increased due to an increase in goodwill related to the acquisition of
Cynara in November 1998. Pursuant to the Cynara purchase agreement, NATCO issued
8,520 shares and 418,145 shares of the Company's Class B common stock during
February 2001 and June 2000, respectively, to Cynara's former shareholders based
upon the achievement of certain performance criteria, and the cost of such
shares was charged to goodwill.

    Unusual Charges. Unusual charges for the nine months ended September 30,
2001 were $1.6 million, compared to $1.5 million for the nine months ended
September 30, 2000. Costs incurred in 2001 include approximately $920,000
related to certain restructuring costs to streamline activities and consolidate
offices in connection with the Company's acquisition of Axsia in March 2001, and
an additional $680,000 related to the Company's decision to withdraw a public
debt offering. Costs incurred for the nine months ended September 30, 2000 were
primarily for compensation expense associated with the employment agreement of
an executive officer. The terms of the agreement entitled the officer to a sum
equal to an outstanding note and accrued interest, totaling $1.2 million at
December 31, 1999, upon the sale of the Company's Class A common stock in an
initial public offering. NATCO completed its initial public offering on January
27, 2000, and, per the agreement, the Company recorded compensation expense for
the amount of the note and accrued interest, including related payroll burdens,
totaling $1.3 million. In addition, the Company recorded relocation expenses
totaling $208,000 associated with the consolidation of an existing Company
facility with a facility that was acquired with the acquisition of Porta-Test.

    Interest Expense. Interest expense was $3.7 million for the nine months
ended September 30, 2001, as compared to $1.1 million for the respective period
in 2000. This 232% increase in interest expense was due primarily to an increase
in long-term debt under the new term loan and revolving credit facilities from
$11.2 million at September 30, 2000 to $54.6 million at September 30, 2001. The
Company borrowed $50.0 million against its new term loan facility to acquire
Axsia and to retire borrowings under its predecessor revolving credit facility.

    Interest Cost on Postretirement Benefit Liability. Interest cost on
postretirement benefit liability decreased $199,000, or 21%, from $965,000 for
the nine months ended September 30, 2000 to $766,000 for the nine months ended
September 30, 2001. This decrease in interest cost was due to an amendment of
the plan that provides medical and dental coverage to retirees of a predecessor
company. Under the amended plan, retirees will bear more cost for coverages,
thereby reducing the Company's projected liability and the related interest
cost.



                                       17
<PAGE>

     Provision for Income Taxes. Income tax expense of $3.0 million for the nine
months ended September 30, 2001, decreased $995,000 from $4.0 million for the
nine months ended September 30, 2000. The primary reason for this decrease in
tax expense was a decrease in income before income taxes, which was $6.6 million
for the nine months ended September 30, 2001, as compared to $9.3 million for
the respective period in 2000. This decline in tax expense was partially offset
by an increase in the effective tax rate from 43% in 2000 to 45% in 2001, due
primarily to non-deductible goodwill amortization expense.

LIQUIDITY AND CAPITAL RESOURCES

    As of September 30, 2001, the Company had cash and working capital of $1.9
million and $32.2 million, respectively, as compared to cash and working capital
of $1.0 million and $49.1 million, respectively, at December 31, 2000.

    Net cash provided by operating activities for the nine months ended
September 30, 2001 was $15.0 million, compared to net cash used in operations of
$4.2 million for the nine months ended September 30, 2000. Factors that
contributed to the increase in cash provided by operating activities during 2001
included an increase in customer advance payments on long-term projects and a
decline in trade receivables due to collection of progress billings at Axsia.

    Net cash used in investing activities for the nine months ended September
30, 2001 was $54.0 million, of which $48.3 was used to acquire Axsia and $6.4
million was used for capital expenditures. For the nine months ended September
30, 2000, $22.0 million was used for investing activities primarily to acquire
Porta-Test, MPE and ESI, and for capital expenditures.

    Net cash provided by financing activities for the nine months ended
September 30, 2001 was $40.3 million, as compared to net cash provided by
financing activities for the nine months ended September 30, 2000 of $25.8
million. The primary source of funds for financing activities for the nine
months ended September 30, 2001 was net borrowings of $46.5 million under the
term loan facility, partially offset by net repayments of $6.6 million under the
Company's revolving credit facility. The primary source of funds for financing
activities during the nine months ended September 30, 2000 was the issuance of
the Company's Class A common stock through an initial public offering and the
exercise of an over-allotment option by NATCO's underwriters, which provided
$37.7 million and $10.5 million, respectively. These proceeds were used
primarily to retire $27.9 million of outstanding debt under a term loan
arrangement, to repay $3.0 million borrowed under the revolving credit agreement
for the purchase of Porta-Test, and to repay $2.9 million of debt assumed in the
acquisitions of Porta-Test and MPE.

    On March 16, 2001, the Company entered into a new credit facility that
consisted of a $50.0 million term loan, a $35.0 million U.S. revolving facility,
a $10.0 million Canadian revolving facility and a $5.0 million U.K. revolving
facility. The term loan matures on March 15, 2006, and each of the revolving
facilities matures on March 15, 2004.

    Amounts borrowed under the term loan facility bear interest at 5.99% per
annum as of September 30, 2001. Amounts borrowed under the revolving facilities
bear interest as follows:

     o    until April 1, 2002, at a rate equal to, at the Company's election,
          either (1) the London Interbank Offered rate ("LIBOR") plus 2.25% or
          (2) a base rate plus 0.75%; and

     o    on and after April 1, 2002, at a rate based upon the ratio of funded
          debt to EBITDA (as defined in the credit facility) and ranging from,
          at the Company's election, (1) a high of LIBOR plus 2.50% to a low of
          LIBOR plus 1.75% or, (2) a high of a base rate plus 1.0% to a low of a
          base rate plus 0.25%.

     As of September 30, 2001, the weighted average interest rate of NATCO's
borrowings under its revolving credit facility was 6.23%.

     NATCO will pay commitment fees of 0.50% per year until April 1, 2002 and
0.30% to 0.50% per year following 2002, depending upon the ratio of funded debt
to EBITDA, on and after April 1, 2002, in each case on the undrawn portion of
the facility.

     The revolving credit facility is guaranteed by all the Company's domestic
subsidiaries and is secured by a first priority lien on all inventory, accounts
receivable and other material tangible and intangible assets. NATCO has also
pledged 65% of the voting stock of its active foreign subsidiaries.

     On March 19, 2001, NATCO borrowed the entire $50.0 million available under
the term loan portion of this new facility and used $45.0 million to purchase
all the outstanding share capital of Axsia. The remaining borrowings of $5.0
million, along with additional borrowings under the revolving credit facility,
were used to repay $16.5 outstanding under a predecessor revolving credit and
term loan facility. As of September 30, 2001, the Company had borrowings of
$46.5 million outstanding under the term loan facility.

                                       18
<PAGE>

    As of September 30, 2001, the Company was in compliance with all restrictive
debt covenants. NATCO had letters of credit outstanding under the revolving
credit facilities totaling $18.9 million at September 30, 2001. These letters of
credit constitute contract performance and warranty collateral and expire at
various dates through October 2004.

    The Company maintains a working capital facility for export sales that
provides for aggregate borrowings of $10.0 million, subject to borrowing base
limitations, under which no borrowings were outstanding at September 30, 2001.
Letters of credit outstanding under this facility at September 30, 2001 totaled
$1.2 million. The export sales credit facility is secured by specific project
inventory and receivables, and is partially guaranteed by the EXIM Bank. The
export sales credit facility loans mature in July 2003.

     The Company has unsecured letters of credit outstanding at September 30,
2001 of $946,000.

    The Company's sales backlog at September 30, 2001 was $95.7 million and
included backlog of $13.6 million related to Axsia, which was acquired on March
19, 2001. In addition, backlog at September 30, 2001 included $2.4 million
related to the CTOC project, which contributed $23.5 million to backlog at
September 30, 2000. Excluding the impact of the Axsia acquisition and the CTOC
project, backlog at September 30, 2001 was $79.7 million as compared to $23.5
million at September 30, 2000. This increase in backlog was partially due to
bookings of production equipment systems for large offshore projects in West
Africa, Brazil and the Gulf of Mexico. Management expects to continue to build
backlog in modest increments throughout fiscal 2001, with the potential for
additional increases due to planned Southeast Asian CO2 separation projects for
2002.

    During September 2001, NATCO repurchased 39,700 shares of its Class A common
stock pursuant to a stock repurchase plan approved by the Company's board of
directors in fiscal 2000.

    At September 30, 2001, borrowing base limitations reduced the Company's
available borrowing capacity under the term loan and revolving credit agreement
and export sales credit agreement to $42.7 million and $1.7 million,
respectively. However, NATCO's management believes that the Company's operating
cash flow, supported by its borrowing capacity, will be adequate to fund
operations throughout 2001. Should the Company decide to pursue additional
acquisition opportunities during the remainder of 2001, the determination of the
Company's ability to finance these acquisitions will be a critical element of
the analysis of the opportunities.

RECENT ACCOUNTING PRONOUNCEMENTS

    In June 2001, the Financial Accounting Standards Board ("FASB") approved
statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations." This standard requires that any business combination initiated
after June 30, 2001 be accounted for using the purchase method of accounting.
This standard became effective on July 1, 2001. The Company does not expect this
pronouncement to have a material effect on its financial condition or results of
operations.

    The FASB approved SFAS No. 142, "Goodwill and Other Intangible Assets" in
June 2001. This pronouncement requires that intangible assets with indefinite
lives, including goodwill, cease being amortized and be evaluated on an
impairment basis. Intangible assets with a defined term, such as patents, would
continue to be amortized over the useful life of the asset. This pronouncement
becomes effective on January 1, 2002, for companies with a calendar year end.
The Company had net goodwill of $80.9 million as of September 30, 2001. Goodwill
amortization totaled $2.6 million for the nine months ended September 30, 2001.
The Company has not yet determined the impact that this pronouncement will have
on its financial condition or results of operations. As permitted by the
standard, the Company will determine and quantify its exposure under this
pronouncement during fiscal 2002, after completing the required impairment
testing.

    In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations." This standard provides guidance on reporting and accounting for
obligations associated with the retirement of long-lived tangible assets and the
associated retirement costs. This standard is effective for financial statements
issued for fiscal years beginning after June 15, 2002. The Company has not yet
determined the impact that this pronouncement will have on its financial
condition or results of operations.

    In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." This statement replaces SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," and standardizes the accounting model to be used for
asset dispositions and related implementation issues. This pronouncement becomes
effective for financial statements issued for fiscal years beginning after
December 15, 2001. The Company has not yet determined the impact that this
pronouncement will have on its financial condition or results of operations.

                                       19
<PAGE>


ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    The Company's operations are conducted around the world in a number of
different countries. Accordingly, future revenues and earnings are exposed to
changes in foreign currency exchange rates when transactions are denominated in
currencies other than the Company's functional currencies, the primary
currencies in which the Company conducts its business in various jurisdictions.
The majority of the Company's foreign currency transactions are denominated in
the Canadian dollar and British pounds sterling, which are the functional
currencies of NATCO Canada and Axsia, respectively. At NATCO Canada, contracts
are generally denominated and settled in the functional currency, thereby
mitigating risks associated with currency fluctuations. At Axsia, contracts may
be denominated and settled in currencies other than its functional currency. At
the date of acquisition, Axsia had entered into certain currency forward
contract arrangements whereby Axsia purchased foreign currencies at a specified
strike price in order to hedge exposure to currency fluctuations on contracts
denominated in currencies other than the functional currency. NATCO assumed
these contracts upon the purchase of Axsia in March 2001. The Company's policy
is to record these contracts and their underlying balance sheet accounts at fair
market value and to record any changes in fair value as charges to income in the
current period. The nature of these derivative arrangements is to offset any
negative impact of changes in foreign currency exchange rates, as any gain or
loss recorded on the underlying asset or liability would be offset by a
contrasting gain or loss on the derivative asset or liability. As such, these
contracts mitigate exchange rate exposure related to these transactions. At
September 30, 2001, the Company obtained the fair market value of the forward
contracts from the counter-party financial institutions (See Note 12,
"Derivative Arrangements)". The Company intends to fulfill these contractual
commitments. NATCO does not intend to enter into new derivative arrangements as
part of its risk management strategy.

    The Company's financial instruments are subject to change in interest rates,
including its revolving credit and term loan facility and its working capital
facility for export sales. At September 30, 2001, the Company had borrowings of
$46.5 million outstanding under the term loan portion of the revolving credit
and term loan facility, at an interest rate of 5.99%. Borrowings, which bear
interest at floating rates, outstanding under the revolving credit agreement at
September 30, 2001, totaled $8.1 million. As of September 30, 2001, the weighted
average interest rate of the Company's borrowings under its revolving credit
facility was 6.23%. No borrowings were outstanding under the working capital
facility for export sales at September 30, 2001.

    Based on past market movements and possible near-term market movements, the
Company's management does not believe that potential near-term losses in future
earnings, fair values or cash flows from changes in interest rates are likely to
be material. Assuming the Company's current level of borrowings, a 100 basis
point increase in interest rates under its variable interest rate facilities
would decrease the Company's current quarter net income and cash flow from
operations by less than $100,000. In the event of an adverse change in interest
rates, the Company could take action to mitigate its exposure. However, due to
the uncertainty of actions that could be taken and the possible effects, this
calculation assumes no such actions. Furthermore, this calculation does not
consider the effects of a possible change in the level of overall economic
activity that could exist in such an environment.



                                       20
<PAGE>

                                     PART II

ITEM 1. Legal Proceedings

    The Company is a party to various routine legal proceedings that are
incidental to its business activities. The Company insures against the risk of
these proceedings to the extent deemed prudent by its management, but the
Company offers no assurance that the type or value of this insurance will meet
the liabilities that may arise from any pending or future legal proceedings
related to its business activities. The Company's management does not, however,
believe the pending legal proceedings, individually or taken together, will have
a material adverse effect on the Company's results of operations or financial
condition.

ITEM 2. Changes in Securities and Use of Proceeds

         None.

ITEM 3. Defaults upon Senior Securities

         None.

ITEM 4. Submission of Matters to a Vote of Security Holders

         None.

ITEM 5. Other Information

         None.

ITEM 6. Exhibits and Reports on Form 8-K

    (a) See Index of Exhibits for a list of those exhibits filed herewith, which
        index includes and identifies management contracts or compensatory plans
        or arrangements required to be filed as exhibits to this Form 10-Q by
        Item 601(10)(iii) of Regulation S-K.

    (b) Reports on Form 8-K. No reports were filed on Form 8-K for the quarter
        ended September 30, 2001.

    (c) Index of Exhibits

<Table>
<Caption>
 EXHIBIT NO.                              DESCRIPTION
 -----------                              -----------
<S>         <C>
2.1         -- Amended and Restated Agreement and Plan of Merger dated
               November 17, 1998 but effective March 26, 1998 among the Company,
               NATCO Acquisition Company, National Tank Company and The Cynara
               Company (incorporated by reference to Exhibit 2.1 of the
               Company's Registration Statement No. 333-48851 on Form S-1).

2.2         -- Stock Purchase Agreement dated as of May 7, 1997 among Enterra
               Petroleum Equipment Group, Inc., National Tank Company and
               Weatherford Enterra, Inc. (incorporated by reference to Exhibit
               2.2 of the Company's Registration Statement No. 333-48851 on Form
               S-1).

2.3         -- Stock Purchase Agreement dated as of January 25, 2001 but
               effective March 16, 2001 between the Company and Axsia Group
               Limited (incorporated by reference to Exhibit 2.3 of the
               Company's Annual Report on Form 10-K for the period ended
               December 31, 2000).

2.4         -- Amendment of Stock Purchase Agreement dated as of March 16,
               2001 between the Company and Axsia Group Limited (incorporated by
               reference to Exhibit 2.4 of the Company's Annual Report on Form
               10-K for the period ended December 31, 2000).

3.1         -- Restated Certificate of Incorporation of the Company, as
               amended by Certificate of Amendment dated November 18, 1998 and
               Certificate of Amendment dated November 29, 1999 (incorporated by
               reference to Exhibit 3.1 of the Company's Registration Statement
               No. 333-48851 on Form S-1).
</Table>


                                       21
<PAGE>
<Table>
<CAPTION>
 EXHIBIT NO.                              DESCRIPTION
 -----------                              -----------
<S>         <C>
3.2         -- Certificate of Designations of Series A Junior Participating
               Preferred Stock (incorporated by reference to Exhibit 3.2 of the
               Company's Registration Statement No. 333-48851 on Form S-1).

3.3         -- Amended and Restated Bylaws of the Company, as amended
               (incorporated by reference to Exhibit 3.3 of the Company's
               Quarterly Report on Form 10-Q for the period ended March 31,
               2000).

4.1         -- Specimen Common Stock certificate (incorporated by reference
               to Exhibit 4.1 of the Company's Registration Statement No.
               333-48851 on Form S-1).

4.2         -- Rights Agreement dated as of May 15, 1998 by and among the
               Company and ChaseMellon Shareholder Services, L.L.C., as Rights
               Agent (incorporated by reference to Exhibit 4.2 of the Company's
               Registration Statement No. 333-48851 on Form S-1).

4.3         -- Registration Rights Agreement dated as of November 18, 1998
               among the Company and Capricorn Investors, L.P. and Capricorn
               Investors II, L.P. (incorporated by reference to Exhibit 4.3 of
               the Company's Registration Statement No. 333-48851 on Form S-1).


4.4         -- Registration Rights Agreement dated as of November 18, 1998
               among the Company and the former stockholders of The Cynara
               Company (incorporated by reference to Exhibit 4.4 of the
               Company's Registration Statement No. 333-48851 on Form S-1).

10.1**      -- Directors Compensation Plan (incorporated by reference to
               Exhibit 10.1 of the Company's Registration Statement No.
               333-48851 on Form S-1).

10.2**      -- Form of Nonemployee Director's Option Agreement (incorporated
               by reference to Exhibit 10.2 of the Company's Registration
               Statement No. 333-48851 on Form S-1).

10.3**      -- Employee Stock Incentive Plan (incorporated by reference to
               Exhibit 10.3 of the Company's Registration Statement No.
               333-48851 on Form S-1).

10.4**      -- Form of Nonstatutory Stock Option Agreement (incorporated by
               reference to Exhibit 10.24 to the Company's Registration
               Statement No. 333-48851 on Form S-1).

10.5        -- Commitment Letter dated November 24, 1994 from The Bank of
               Nova Scotia to NATCO Canada, Ltd. (incorporated by reference to
               Exhibit 10.5 of the Company's Registration Statement No.
               333-48851 on Form S-1).

10.6        -- Service and Reimbursement Agreement dated as of July 1, 1997
               between the Company and Capricorn Management, G.P. (incorporated
               by reference to Exhibit 10.6 of the Company's Registration
               Statement No. 333-48851 on Form S-1).

10.7**      -- Form of Indemnification Agreement between the Company and its
               officers and directors (incorporated by reference to Exhibit 10.0
               of the Company's Registration Statement No. 333-48851 on Form
               S-1).

10.8        -- Securities Exchange Agreement dated as of March 5, 1998 by and
               among the Company, Capricorn Investors, L.P. and Capricorn
               Investors II, L.P. (incorporated by reference to Exhibit 10.10 of
               the Company's Registration Statement No. 333-48851 on Form S-1).

10.9        -- Stockholders' Agreement by and among the Company, Capricorn
               Investors, L.P. and Capricorn Investors II, L.P. (incorporated by
               reference to Exhibit 10.11 of the Company's Registration
               Statement No. 333-48851 on Form S-1).
</Table>



                                       22
<PAGE>

<Table>
<CAPTION>
 EXHIBIT NO.                              DESCRIPTION
 -----------                              -----------
<S>         <C>
10.10**     -- Employment Agreement dated as of July 31, 1997 between the
               Company and Nathaniel A. Gregory, as amended as of July 12, 1999
               (incorporated by reference to Exhibit 10.12 of the Company's
               Registration Statement No. 333-48851 on Form S-1).

10.11       -- Stockholder's Agreement dated as of November 18, 1998 among
               the Company, Capricorn Investors, L.P., Capricorn Investors II,
               L.P. and the former stockholders of The Cynara Company
               (incorporated by reference to Exhibit 10.19 of the Company's
               Registration Statement No. 333-48851 on Form S-1).

10.12**     -- Change of Control Policy dated as of September 28, 1999
               (incorporated by reference to Exhibit 10.20 of the Company's
               Registration Statement No. 333-48851 on Form S-1).

10.13**     -- Severance Pay Summary Plan Description (incorporated by
               reference to Exhibit 10.21 of the Company's Registration
               Statement No. 333-48851 on Form S-1).

10.14       -- Loan Agreement ($22,000,000 U.S. Revolving Loan Facility,
               $10,000,000 Canadian Revolving Loan Facility and $32,500,000 Term
               Loan Facility) dated as of November 20, 1998 among National Tank
               Company, NATCO Canada, Ltd., Chase Bank of Texas, National
               Association, The Bank of Nova Scotia and the other lenders
               parties thereto and joined in by NATCO Group, Inc., as amended
               (incorporated by reference to Exhibit 10.22 to the Company's
               Registration Statement No. 333-48851 on Form S-1).

10.15       -- International Revolving Loan Agreement dated as of June 30,
               1997 between National Tank Company and Texas Commerce Bank,
               National Association, as amended (incorporated by reference to
               Exhibit 10.23 to the Company's Registration Statement No.
               333-48851 on Form S-1).

10.16       -- Loan Agreement ($35,000,000 U.S. Revolving Loan Facility,
               $10,000,000 Canadian Revolving Loan Facility, $5,000,000 U.K.
               Revolving Loan Facility and $50,000,000 Term Loan Facility) dated
               as of March 16, 2001 among NATCO Group Inc., NATCO Canada, Ltd.,
               Axsia Group Limited, The Chase Manhattan Bank, Royal Bank of
               Canada, Chase Manhattan International Limited, Bank One, N.A.
               (Main Office Chicago, Illinois), Wells Fargo Bank Texas, National
               Association, JP Morgan, a Division of Chase Securities, Inc., and
               the other lenders now or hereafter Parties hereto (incorporated
               by reference to Exhibit 10.16 of the Company's Annual Report on
               Form 10-K for the period ended December 31, 2000).
</Table>
----------

** Management contracts or compensatory plans or arrangements.



                                       23
<PAGE>



                                   SIGNATURES

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

                                          NATCO Group Inc.
                                          (Registrant)

                                          By: /s/ J. MICHAEL MAYER
                                             ----------------------------------
                                              Name: J. Michael Mayer
                                              Senior Vice President and
                                              Chief Financial Officer

Date: November 14, 2001

                                          By: /s/ RYAN S. LILES
                                             ----------------------------------
                                              Name: Ryan S. Liles
                                              Vice President and Controller
                                              (Principal Accounting Officer)

Date: November 14, 2001



                                       24
<PAGE>

                                 EXHIBIT INDEX

<Table>
<Caption>
EXHIBIT NO.                              DESCRIPTION
-----------                              -----------
<S>         <C>
2.1         -- Amended and Restated Agreement and Plan of Merger dated
               November 17, 1998 but effective March 26, 1998 among the Company,
               NATCO Acquisition Company, National Tank Company and The Cynara
               Company (incorporated by reference to Exhibit 2.1 of the
               Company's Registration Statement No. 333-48851 on Form S-1).

2.2         -- Stock Purchase Agreement dated as of May 7, 1997 among Enterra
               Petroleum Equipment Group, Inc., National Tank Company and
               Weatherford Enterra, Inc. (incorporated by reference to Exhibit
               2.2 of the Company's Registration Statement No. 333-48851 on Form
               S-1).

2.3         -- Stock Purchase Agreement dated as of January 25, 2001 but
               effective March 16, 2001 between the Company and Axsia Group
               Limited (incorporated by reference to Exhibit 2.3 of the
               Company's Annual Report on Form 10-K for the period ended
               December 31, 2000).

2.4         -- Amendment of Stock Purchase Agreement dated as of March 16,
               2001 between the Company and Axsia Group Limited (incorporated by
               reference to Exhibit 2.4 of the Company's Annual Report on Form
               10-K for the period ended December 31, 2000).

3.1         -- Restated Certificate of Incorporation of the Company, as
               amended by Certificate of Amendment dated November 18, 1998 and
               Certificate of Amendment dated November 29, 1999 (incorporated by
               reference to Exhibit 3.1 of the Company's Registration Statement
               No. 333-48851 on Form S-1).

3.2         -- Certificate of Designations of Series A Junior Participating
               Preferred Stock (incorporated by reference to Exhibit 3.2 of the
               Company's Registration Statement No. 333-48851 on Form S-1).

3.3         -- Amended and Restated Bylaws of the Company, as amended
               (incorporated by reference to Exhibit 3.3 of the Company's
               Quarterly Report on Form 10-Q for the period ended March 31,
               2000).

4.1         -- Specimen Common Stock certificate (incorporated by reference
               to Exhibit 4.1 of the Company's Registration Statement No.
               333-48851 on Form S-1).

4.2         -- Rights Agreement dated as of May 15, 1998 by and among the
               Company and ChaseMellon Shareholder Services, L.L.C., as Rights
               Agent (incorporated by reference to Exhibit 4.2 of the Company's
               Registration Statement No. 333-48851 on Form S-1).

4.3         -- Registration Rights Agreement dated as of November 18, 1998
               among the Company and Capricorn Investors, L.P. and Capricorn
               Investors II, L.P. (incorporated by reference to Exhibit 4.3 of
               the Company's Registration Statement No. 333-48851 on Form S-1).

4.4         -- Registration Rights Agreement dated as of November 18, 1998
               among the Company and the former stockholders of The Cynara
               Company (incorporated by reference to Exhibit 4.4 of the
               Company's Registration Statement No. 333-48851 on Form S-1).

10.1**      -- Directors Compensation Plan (incorporated by reference to
               Exhibit 10.1 of the Company's Registration Statement No.
               333-48851 on Form S-1).

10.2**      -- Form of Nonemployee Director's Option Agreement (incorporated
               by reference to Exhibit 10.2 of the Company's Registration
               Statement No. 333-48851 on Form S-1).
</Table>



                                       25
<PAGE>

<Table>
<CAPTION>
 EXHIBIT NO.                              DESCRIPTION
 -----------                              -----------
<S>         <C>
10.3**      -- Employee Stock Incentive Plan (incorporated by reference to
               Exhibit 10.3 of the Company's Registration Statement No.
               333-48851 on Form S-1).

10.4**      -- Form of Nonstatutory Stock Option Agreement (incorporated by
               reference to Exhibit 10.24 to the Company's Registration
               Statement No. 333-48851 on Form S-1).

10.5        -- Commitment Letter dated November 24, 1994 from The Bank of
               Nova Scotia to NATCO Canada, Ltd. (incorporated by reference to
               Exhibit 10.5 of the Company's Registration Statement No.
               333-48851 on Form S-1).

10.6        -- Service and Reimbursement Agreement dated as of July 1, 1997
               between the Company and Capricorn Management, G.P. (incorporated
               by reference to Exhibit 10.6 of the Company's Registration
               Statement No. 333-48851 on Form S-1).

10.7**      -- Form of Indemnification Agreement between the Company and its
               officers and directors (incorporated by reference to Exhibit 10.0
               of the Company's Registration Statement No. 333-48851 on Form
               S-1).

10.8        -- Securities Exchange Agreement dated as of March 5, 1998 by and
               among the Company, Capricorn Investors, L.P. and Capricorn
               Investors II, L.P. (incorporated by reference to Exhibit 10.10 of
               the Company's Registration Statement No. 333-48851 on Form S-1).

10.9        -- Stockholders' Agreement by and among the Company, Capricorn
               Investors, L.P. and Capricorn Investors II, L.P. (incorporated by
               reference to Exhibit 10.11 of the Company's Registration
               Statement No. 333-48851 on Form S-1).

10.10**     -- Employment Agreement dated as of July 31, 1997 between the
               Company and Nathaniel A. Gregory, as amended as of July 12, 1999
               (incorporated by reference to Exhibit 10.12 of the Company's
               Registration Statement No. 333-48851 on Form S-1).

10.11       -- Stockholder's Agreement dated as of November 18, 1998 among
               the Company, Capricorn Investors, L.P., Capricorn Investors II,
               L.P. and the former stockholders of The Cynara Company
               (incorporated by reference to Exhibit 10.19 of the Company's
               Registration Statement No. 333-48851 on Form S-1).

10.12**     -- Change of Control Policy dated as of September 28, 1999
               (incorporated by reference to Exhibit 10.20 of the Company's
               Registration Statement No. 333-48851 on Form S-1).

10.13**     -- Severance Pay Summary Plan Description (incorporated by
               reference to Exhibit 10.21 of the Company's Registration
               Statement No. 333-48851 on Form S-1).

10.14       -- Loan Agreement ($22,000,000 U.S. Revolving Loan Facility,
               $10,000,000 Canadian Revolving Loan Facility and $32,500,000 Term
               Loan Facility) dated as of November 20, 1998 among National Tank
               Company, NATCO Canada, Ltd., Chase Bank of Texas, National
               Association, The Bank of Nova Scotia and the other lenders
               parties thereto and joined in by NATCO Group, Inc., as amended
               (incorporated by reference to Exhibit 10.22 to the Company's
               Registration Statement No. 333-48851 on Form S-1).

10.15       -- International Revolving Loan Agreement dated as of June 30,
               1997 between National Tank Company and Texas Commerce Bank,
               National Association, as amended (incorporated by reference to
               Exhibit 10.23 to the Company's Registration Statement No.
               333-48851 on Form S-1).
</Table>

                                       26
<PAGE>

<Table>
<CAPTION>
 EXHIBIT NO.                              DESCRIPTION
 -----------                              -----------
<S>         <C>
10.16       -- Loan Agreement ($35,000,000 U.S. Revolving Loan Facility,
               $10,000,000 Canadian Revolving Loan Facility, $5,000,000 U.K.
               Revolving Loan Facility and $50,000,000 Term Loan Facility) dated
               as of March 16, 2001 among NATCO Group Inc., NATCO Canada, Ltd.,
               Axsia Group Limited, The Chase Manhattan Bank, Royal Bank of
               Canada, Chase Manhattan International Limited, Bank One, N.A.
               (Main Office Chicago, Illinois), Wells Fargo Bank Texas, National
               Association, JP Morgan, a Division of Chase Securities, Inc., and
               the other lenders now or hereafter Parties hereto (incorporated
               by reference to Exhibit 10.16 of the Company's Annual Report on
               Form 10-K for the period ended December 31, 2000).
</Table>
----------

** Management contracts or compensatory plans or arrangements.


                                       27