UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K
Mark One

[X]           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2002
                                       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: 000-29358
                            DENISON INTERNATIONAL PLC
--------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

               England and Wales                      Not Applicable
        (State or other Jurisdiction                 (I.R.S. Employer
      of incorporation or organization)           Identification Number)

      14249 Industrial Parkway
           Marysville, Ohio                                43040
(Address of principal executive offices)                 (Zip Code)

       (Registrant's telephone number, including area code) (937) 644-4500

              Securities registered or to be registered pursuant to
                         Section 12(b) of the Act.: None

Securities registered or to be registered pursuant to Section 12(g) of the Act:
   American Depositary Shares (as evidenced by American Depositary Receipts),
    each representing one Ordinary Share, $0.01 par value, of the registrant

                                (title of class)

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

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

     The aggregate market value of the voting and non-voting common equity held
by non-affiliates of the Registrant as of June 28, 2002 was $143,645,635.

     The number of outstanding shares of each of the registrant's classes of
capital or common stock as of March 26, 2003 was as follows:

                   9,986,400 Ordinary Shares, $0.01 par value
                7,015 `A' Ordinary Shares, (pound)8.00 par value

                       Documents Incorporated by Reference

     The Registrant's Definitive Proxy Statement on schedule 14A relating to the
Annual Meeting of Shareholders to be held on May 22, 2003 is incorporated by
reference in Part I and Part III of the Form 10-K to the extent stated herein.

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                                TABLE OF CONTENTS
                                                                            Page
                                                                            ----

PART I

     Item 1.   Business........................................................2
     Item 2.   Properties.....................................................12
     Item 3.   Legal Proceedings..............................................13
     Item 4.   Submission of Matters to a Vote of Security Holders............13
     Item 4A.  Executive Officers of the Company..............................13

PART II

     Item 5.   Market for the Company's Common Equity And Related
                    Stockholder Matters.......................................14
     Item 6.   Selected Consolidated Financial Data...........................15
     Item 7.   Management's Discussion and Analysis of Financial
                    Condition and Results of Operations.......................16
     Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.....24
     Item 8.   Financial Statements and Supplementary Data....................25
     Item 9.   Changes in and Disagreements with Accountants on
                    Accounting and Financial Disclosure.......................49

PART III

     Item 10.  Directors and Officers of the Registrant.......................49
     Item 11.  Executive Compensation.........................................49
     Item 12.  Security Ownership of Certain Beneficial Owners
                    and Management............................................49
     Item 13.  Certain Relationships and Related Transactions.................49
     Item 14.  Controls and Procedures........................................49


PART IV

     Item 15.  Exhibits, Financial Statement Schedules and Reports on
                    Form 8-K..................................................50

SIGNATURES....................................................................53

CERTIFICATIONS................................................................54

SCHEDULE II..................................................................F-1

EXHIBIT INDEX................................................................E-1


                                      (i)

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     References to Shares herein refer to (i) the Ordinary Shares of Denison,
$0.01 par value per Ordinary Share (the "Ordinary Shares") and (ii) Denison's
American Depositary Shares ("ADSs"), each of which represents one Ordinary
Share. The ADSs are evidenced by American Depositary Receipts ("ADRs").

     Denison publishes its financial statements in U.S. dollars. In this Form
10-K, references to "dollars" or "$" are to U.S. dollars and references to
"pounds sterling," "(pound)" or "p" are to U.K. currency. Except as otherwise
stated herein, all monetary amounts in this Form 10-K have been presented in
dollars.

     The Company publishes annual reports containing annual audited consolidated
financial statements and opinions thereon by independent public auditors. Such
financial statements are prepared on the basis of accounting principles
generally accepted in the United States ("US GAAP") expressed in U.S. dollars.
The Company has published quarterly updates containing unaudited financial
information prepared on the same basis as its audited US GAAP consolidated
financial statements.

                Special Note Regarding Forward-looking Statements

     This Form 10-K includes and incorporates forward-looking statements within
the meaning of section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. All statements, other than statements of
historical facts, included or incorporated in this Form 10-K regarding the
Company's strategy, future operations, financial position, future revenues,
projected costs, prospects, plans and objectives of management are
forward-looking statements. The words "anticipates", "believes", "estimates",
"expects", "intends", "may", "plans", "projects", "will", "would" and similar
expressions are intended to identify forward-looking statements, although not
all forward-looking statements contain these identifying words. The Company
cannot guarantee that it actually will achieve the plans, intentions or
expectations disclosed in its forward-looking statements and undue reliance
should not be placed on the Company's forward-looking statements. Actual results
or events could differ materially from the plans, intentions and expectations
disclosed in the forward-looking statements. The Company has included important
factors in the cautionary statements included or incorporated in this Form 10-K
that the Company believes could cause actual results or events to differ
materially from the forward-looking statements made. The Company's
forward-looking statements do not reflect the potential impact of any future
acquisitions, mergers, dispositions, joint ventures or investments the Company
may make. The Company does not assume any obligation to update any
forward-looking statements.

<PAGE>


                                     PART I

ITEM 1. BUSINESS

Overview

     Denison International plc and its subsidiaries ("Denison" or the "Company")
design, manufacture, sell and service highly-engineered components for use in
hydraulic fluid power systems, as well as complete hydraulic fluid power
systems. Hydraulic systems, which are part of larger pieces of machinery and
equipment, provide the force to move and position very heavy materials and
equipment as well as the precision to move and position very light loads with a
high degree of accuracy. The components manufactured by the Company for these
systems include hydraulic pumps, motors, manifolds, and valves. Many of
Denison's products are designed to be used under demanding conditions, such as
elevated pressure, high temperature, variable speed and low decibel levels. The
Company sells its products globally to a diverse group of end-users for use in a
broad array of industrial applications, such as machine tools and material
handling equipment, various mobile applications, such as construction,
agricultural and utility equipment, and in marine applications, such as military
equipment.

     The Company focuses on the specialty segment of the hydraulic power market
and works closely with its customers to meet their specified performance
objectives. Denison's product offerings include a wide variety of piston pumps
and motors; vane pumps and motors; manifold systems; pressure, directional and
proportional valve products; radial piston motors; and electronic control
products. Denison's products enjoy excellent brand recognition and significant
market share in certain sectors of the market targeted by the Company. The
Company markets and sells its products primarily through a global network of
regional sales and service subsidiaries, independent fluid power equipment
distributors and, to a lesser extent, directly to end-users. In the United
States, the Company relies primarily on independent fluid power distributors
that also distribute other products that do not generally compete with
Denison's. In Europe and Asia, Denison primarily sells its products directly to
OEMs through its regional sales and service subsidiaries. For certain
information concerning the Company's revenue, operating profit and identifiable
assets attributable to each of the Company's geographical market segments, see
Note 16 of "Notes to Consolidated Financial Statements".

     Denison, whose operations date back to the early 1930s, is a pioneer in the
hydraulic products market. The Company's long history of innovation can be
traced back to its first product, the hydraulic-powered car pusher, a
revolutionary development which led to widespread application of hydraulic power
as a solution for numerous industrial and mobile requirements. Denison's
research and development efforts have resulted in its being granted
approximately 600 patents since its inception. The business of the Company was
acquired by its present owners in 1993 from Hagglund & Soner AB. The Company has
conducted business under the "Denison" name since 1932.

     The Company was incorporated in England and Wales as a private company
limited by shares in March 1993 and was re-registered as a public limited
company on July 28, 1997. On August 8, 1997, the Company completed an initial
public offering in which it issued and sold 450,000 Ordinary Shares at $16.00
per share. The net proceeds from the offering were $4,480,000. In December 1998
the Company acquired 100% of the shares of Lokomec Oy, a manufacturer and
distributor of highly engineered manifold systems located in Tampere, Finland.
In April 2000 the Company acquired 100% of the shares of Riva Calzoni
Oleodinamica, a manufacturer and distributor of radial piston motors located in
Bologna, Italy. During 2000 the Company entered into an agreement whereby the
Company acquired ownership of a business in Shanghai, China that manufactures
certain vane motors. In December 2001 the Company's U.S. subsidiary acquired the
assets of a distributor located in Anaheim and Sacramento, In May 2002, the
Company


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acquired 100% of the shares of Rander & Company Hydraulick-Systeme und
Anlagenbau GmbH ("Rander"), a manufacturer and distributor of hydraulic systems
located in Bremen, Germany.

     The Company's principal U.S. executive offices are located at 14249
Industrial Parkway, Marysville, Ohio 43040 and its telephone number is
937-644-4500. The Company's U.K. executive offices are located at Masters House,
107 Hammersmith Road, London W14 0QH, England and its telephone number is
44-20-7603-1515.

Industry Overview

     Hydraulics, or fluid power, is a motion control technology that is used to
transfer and control force and power through fluids under pressure. Hydraulic
systems are typically comprised of a pump, valves, manifolds and actuators.
Pumps are used to move fluid from one location to another. Pressure is generated
when the fluid encounters resistance. Valves and manifolds control the flow of
fluids, and actuators, such as cylinders and rotary motors, convert pressure
into mechanical energy.

     Hydraulic systems offer greater flexibility of layout, compact design and
higher performance-to-weight ratio than other forms of motion control, such as
mechanical and electrical systems. Hydraulic systems provide the force to move
and position materials and equipment weighing several tons as well as the
precision to move and position very light loads with a high degree of accuracy.
For example, hydraulics is a tool powerful enough for heavy-duty steel
production in blast furnaces and precise enough for handling of steel ingots in
a stamping mill. As a result, hydraulic systems are integral to a wide variety
of industrial, mobile and marine applications. Although generally not noticed by
most end-product users, virtually every production process uses hydraulic power
as does almost every machine, vehicle and aircraft.

     The hydraulic pump and valve market is a highly-fragmented, multi-billion
dollar worldwide industry. The hydraulics market is divided broadly into two
product segments: specialty and commodity. The specialty segment is comprised of
highly-engineered, high-performance, specialized hydraulic products, which are
generally more complex and used in demanding applications. Specialty products
tend to be less price sensitive, generally have higher margins and are more
likely to utilize servicing and maintenance. The commodity segment is comprised
of lower performance products, which are sold for use in price-sensitive
applications.

     Demand and growth in different application sectors of the hydraulics
industry have typically been driven by various external economic factors. The
industrial sector of the hydraulics industry has typically been affected by the
cyclicality of the overall economy. Sales of mobile hydraulic systems and
components have been driven by infrastructure development factors such as
construction and new housing starts. Sales of marine systems have been largely
influenced by military expenditures and, thus, are less affected by cyclical
economic factors. Demand and growth in each of the industrial, mobile and marine
sectors of the hydraulics market are also affected by the replacement cycle of
the hydraulic products.

Products

     The Company designs, manufactures, sells and services a broad range of
components for use in hydraulic fluid power systems, as well as complete
hydraulic fluid power systems, for applications with high reliability,
performance, precision and durability requirements. The Company's primary
products are piston pumps and motors, vane pumps and motors, manifolds, radial
piston motors, and valves. In 2002, vane pumps and motors accounted for 29.5% of
the Company's net sales, piston pumps and motors accounted for 26.2% of the
Company's net sales, valves accounted for 18.7% of the Company's net sales,
radial piston motors accounted for 7.7% of the Company's net sales, and
manifolds accounted for 4.6% of the Company's net sales. In addition, the
Company manufactures electronic control products and certain other


                                      -3-

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components and accessories used in hydraulic systems and are classified as other
products. Other product sales accounted for 13.3% of the Company's net sales
during 2002.

     The markets served by the Company are substantial and diversified, with no
single customer accounting for more than 4% of its net sales in 2002. The
Company's products are used in many different industrial, mobile and marine
applications, including mining machinery, drilling equipment, excavators,
cranes, machine tools, die casting and plastics processing machinery.

Pumps and Motors

     Hydraulic pumps include piston pumps and motors, which provide adjustable
flow and variable displacement, and vane pumps and motors, which provide
continuous flow and fixed displacement. Each type of pump or motor is suitable
for particular uses, depending upon variables such as speed, pressure, operating
temperature, noise level, life expectancy and cost. Piston pumps and motors are
used in tractors, tanks, machine tools, sophisticated winches, such as anchors
on a ship or deck cranes on an aircraft carrier, as well as in other products
with complex performance requirements, such as varying or multiple speeds or
pressures. Vane pumps and motors are used in less complex applications generally
requiring low noise levels but little or no variation in flow, such as refuse
trucks, cranes and large presses.

     All hydraulic pumps operate on the displacement principle in which a fluid
(typically petroleum-based oil) is transferred from an inlet (suction port) into
a mechanically-sealed, low-pressure chamber and subsequently, to a high-pressure
chamber having the outlet (pressure port). The transfer of the fluid inside the
pump can be accomplished by the movement of screws, gears, vanes or pistons
which compact the fluid and create pressure.

     Hydraulic motors operate on a principle, which is the reverse of the
hydraulic pump process, absorbing hydraulic flow and pressure and converting
them into mechanical energy and rotary motion. This rotary motion can then be
used for various industrial applications, including the rotation of the wheels
of a mobile loader, driving winches on mobile crane systems or turning the
rollers on a conveyor belt.

     Pumps and motors operate in either an open or closed-loop system. In an
open-loop system, the hydraulic fluid is drawn into one or more pumps to produce
flow and then travels to a number of different actuators performing independent
functions. For example, an industrial conveyor belt system, involving many
unrelated functions, may use an open-loop system. In a closed-loop system, the
pump is dedicated to a single motor or set of motors performing a single
function. Unlike in an open-loop system, in which the hydraulic fluid goes to a
storage "reservoir" after passing through the motor, in a closed-loop system,
the oil returns to the pump before being transferred back to the motor. The
closed-loop system enables the flow direction of the hydraulic fluid to be
reversed while the system is operating. This, in turn, allows for rapid changes
in direction and speed of the motor, which is useful in applications such as
rotating the wheels of a front-loader. In general, piston pumps are specifically
manufactured for use in either an open-loop or closed-loop system, while vane
pumps are typically used only in open-loop systems. A motor can generally be
used in either an open or closed-loop system.

     Piston Pumps and Motors. Piston pumps are distinguished from vane pumps by
their ability to produce variable displacement; the amount of hydraulic fluid
passing through the pump, and thus the pressure generated by the hydraulic
system, can be varied to meet the changing requirements of the application.
Variable displacement generally reduces the cost of operating the hydraulic
system because the pump can operate at lowered displacement when the system
requirements are lowered, thus saving energy. Piston pumps are also typically
used with high horsepower applications because their design enables them to
operate at greater pressures than vane pumps.


                                      -4-

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     Denison manufactures a full range of piston pumps which operate at
pressures as high as 7,250 pounds per square inch ("psi") and which vary in size
from 0.9 cubic inches to 38.9 cubic inches, and in displacement from 11 to 303
gallons per minute ("gpm"). Denison is particularly well-known in the hydraulics
industry for its large-size piston pumps, such as the larger piston pumps in the
Company's Gold Cup Series and in the Premier Series. Denison is one of very few
manufacturers that offer very large piston pumps as a standard, rather than a
custom-made, product. Denison's large-size piston pumps are distinguished from
those of its competitors by its proprietary "barrel-bearing" design, which
enables the pump to run in a stable condition at high speed and pressure.
Management believes the "barrel-bearing" design gives the larger Denison piston
pumps a sturdier construction than other piston pump designs, resulting in a
longer life cycle in severe duty applications such as heavy mining equipment and
aircraft carrier steering systems.

     All Denison piston pumps are manufactured at the Company's Marysville, Ohio
facility. During 2002, the Marysville plant produced and shipped in excess of
13,000 units.

     Vane Pumps and Motors. Vane pumps and motors are ideal for applications
that require a fixed displacement in which the pressure produced does not need
to be adjusted during operation. Vane pumps and motors typically produce a low
noise level and are ideal for applications which require low noise output, such
as garbage trucks, injection-molding machines and other devices found in
workplaces where OSHA regulations mandate reduced noise levels. In addition, due
to their simpler design, vane pumps and motors are less susceptible than piston
products to contamination from impurities in the hydraulic system, a feature
that makes vane pumps and motors ideal for use in steel production and mining,
which produce many contaminants.

     Denison is the second-largest manufacturer of vane pumps in the world in
terms of net sales. The Company produces a full range of vane pumps and motors
which operate at pressures in excess of 4,500 psi and which vary in size from
0.35 cubic inches to 16 cubic inches, and in displacement from 1 to 250 gpm.
Denison's newest vane products are the M5BF series fan-drive motor and the T7
double and triple vane pumps. The M5BF is designed for use in industrial
applications, and offers less noise and leakage and higher operating pressure
than earlier vane pump models. The T7 represents Denison's newest range of high
pressure, low noise vane pumps.

     Denison's vane pumps are recognized as among the strongest products in the
hydraulics industry and are distinguished from competitors' vane pumps by
Denison's double-lip design, in which the vane is in contact with the cam ring
at two points rather than at one as with the single-lip design. This double-lip
design makes Denison's vane pumps less susceptible to contamination than
single-lip pumps. The Company believes that no other manufacturer currently
offers the double-lip design, a feature of all vane pumps manufactured by
Denison since the 1940's.

     All Denison vane pumps are manufactured at the Company's Vierzon, France
and Shanghai, China facilities. During 2002, the Company produced and dispatched
in excess of 66,000 units.

Radial Piston Motors

     Radial piston motors are a unique design of low speed, high torque
hydraulic motors that are utilized in a variety of applications including
industrial machinery, agriculture and natural resource exploration. The unique
design relates to the principle of transmitting power to the rotary shaft by
means of a pressurized column of oil contained in a telescopic cylinder, as
opposed to the more common approach of utilizing connecting rods, pistons, pads
and pins. The Denison radial piston motor offers advantages of high torque at
very low speeds, reduced wear on moving parts, and a significant reduction in
weight and overall size compared to other motors with the same capacity.


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     Denison manufactures three types of radial piston motors: fixed
displacement, dual displacement, and variable displacement. This product
offering allows Denison to offer our customers components that are less
standard, but more suitable to respond to the customer's specific requirements.
Denison's radial piston motor products respond to the hydraulic market's
evolution towards products offering optimum performance and maximum efficiency.

     All Denison radial piston motors are manufactured in the Company's Bologna,
Italy facility. During 2002, the Bologna facility produced approximately 7,500
radial piston motors.

Manifolds

     Manifolds are machined steel or aluminum blocks, which act as housing for
surface mounted, or cartridge valves, which control the operation of a wide
variety of hydraulic equipment such as presses, bailers, lifting devices, and
mobile machinery and equipment. Manifolds are utilized in conjunction with
pumps, motors, cylinders, and valves to form a complete hydraulic system.

     Systems are a growing trend in the hydraulics industry as customers are
essentially outsourcing the hydraulics engineering expertise and component
integration to a single supplier offering a complete "package". The manufacture
and sale of manifolds offers the Company an avenue to utilize its engineering
expertise to sell additional valves, which are often not competitive if sold as
individual items. Substantially all of Denison's manifolds are manufactured at
the Company's Tampere, Finland facility. During 2002, the Tampere factory
produced and sold in excess of 10,000 manifolds.

Valves

     Valves function by changing the size or direction of the orifice through
which the pressurized fluid passes as it travels from the pump to the piston or
motor. This function provides control over the direction, pressure and flow of
the pressurized fluid depending upon the requirements of the system in which the
valve is operating. Often, electronic controllers are used to control the size
and direction of the valve orifice.

     Denison manufactures four basic types of valves: directional control valves
which alter the path of pressurized fluid through the hydraulic systems;
pressure control valves which regulate the pressure of the hydraulic fluid; flow
control valves which match the hydraulic fluid's flow with the requirements of
the system; and check valves which allow fluid to pass in one direction and not
the other. Denison's valves are used in a variety of commercial settings,
including injection molding, metal and material forming, mobile equipment such
as cranes, and marine systems such as ship-mounted winches.

     Denison is one of the few manufacturers of flange mounted pressure control
valves, a design which enables the valve to be attached directly to another
hydraulic component, such as a pump or a motor. Most competitors' valves must be
connected to the associated component with hydraulic lines, which tend to be
more expensive and are less effective at controlling leaks than flange mounting.

     All Denison valves are manufactured at the Company's Hilden, Germany plant,
with the exception of a line of pressure control valves, manufactured for
Denison by a Swiss company, and a line of cartridge valves, manufactured for
Denison by an English company. In each case, the manufacturing company produces
the valves using Denison's specification. During 2002, the Hilden factory
supplied approximately 230,000 units, substantially all of which were
manufactured at the Hilden factory.


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Electronics

     The Company researches, designs, manufacturers and outsources for
manufacture innovative electronic controllers for the valve, piston and systems
markets. These controllers are the critical interface between operator and
hydraulics giving finite control of the application or process being managed
while withstanding the rigors of the typical hydraulics operating environment
with reliability and integrity.

     Further progress has given the Company the opportunity, while keeping in
touch with the fundamental controls available today, to advance from older
technology and the original "Venus Microprocessor Unit" to new state of the art
DSP (Digital Signal Processing) controls that afford the user precise operation,
increased repeatability and the flexibility to fully tailor the hydraulic
characteristics to fulfill the required operating parameters. This new
generation of digital controllers offer unprecedented facilities such as real
time diagnostics, data logging, alarms and high speed information exchange and
are intended to give seamless product integration into systems with minimal user
effort. Adjustment, if required, is via a standard PC running application
software that has been specifically designed to be clear, concise and
"user-friendly" which builds client confidence while offering tamper proof
security as well as all of the sophisticated options normally associated with
and expected by the industry from an intelligent controller.

     The Company's capabilities in the electronic segment have also produced the
innovative electronics utilized in the new OASIS system and the award winning
HyrdaCool Systems.

Service

     The Company provides a full array of aftermarket services, consisting
primarily of upgrades and replacement of its own and other manufacturers'
hydraulic related products and systems, and to a lesser extent field service,
repairs and maintenance. The Company provides these aftermarket services through
its own regional sales and service subsidiaries and through its network of
independent fluid power equipment distributors.

     Denison's large installed customer base provides it with significant
aftermarket sales of spare parts and services. The highest levels of aftermarket
service are piston pumps, which tend to be more complex and require more
maintenance than vane pumps. Approximately 148,000 piston pumps and 508,000 vane
pumps have been manufactured by Denison and are currently in use and therefore
may be subject to service. In 2002, 12.2% of the Company's net sales were
derived from aftermarket services, primarily the sales of spare and replacement
parts, versus 12.1% for 2001.

Systems

     Customers in the hydraulics markets are continually looking for "one stop
solutions" to all of their hydraulics needs, not simply a component supplier.
The Company has recognized this opportunity in the hydraulics industry and has
been a provider of hydraulics systems, from the fabrication of hydraulics drives
to the complete engineered manifold solutions provided by our Denison Lokomec
subsidiary. Several of our sales locations and manufacturing facilities are
currently providing system solutions, based on exacting customer specifications,
and the Company is increasing its systems' capabilities on an ongoing basis.

     Recent advances by the Company in the "one stop solutions" arena have
produced the OASIS and award winning HydraCool packed systems, allowing the
Company to not only provide a complete solution for our customers, but also to
control the system in a more effective manner, thereby improving productivity on
multiple levels, from increasing operational life and efficiency to reducing
machine maintenance and fuel usage.


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Product Development

     Denison has a long history of emphasizing research and development, dating
back to the formation of the Company in 1932. Denison was an early technological
leader within the hydraulics industry and has been granted approximately 600
patents since the Company's inception. Denison has remained strongly committed
to being on the forefront of technological innovation, as evidenced by the
Company's continuing focus on development of new products and enhancements to
existing products.

     As of December 31, 2002, Denison's research and development staff consisted
of a total of 62 employees. Thirty four of these employees conduct research and
development on piston pumps and motors at Denison's Ohio facility; ten focus on
research and development related to vane pumps and motors at Denison's France
facility; six focus on research and development related to manifolds at
Denison's Finland facility; and twelve perform research and development on
industrial valves at Denison's Germany facility. The main activities of the
research and development staff involve developing new concepts and new product
designs, and modifying and improving existing products and designing variations
of existing products to suit specific customer needs. Denison currently has no
plans to significantly change the number of its R&D employees. Denison incurred
research and development costs of $4.8 million, $5.2 million and $5.0 million in
the years ended December 31, 2002, 2001 and 2000, respectively.

Manufacturing and Suppliers

     The Company's production facilities are located in Marysville, Ohio;
Vierzon, France; Shanghai, China; Bologna, Italy; Tampere, Finland and Hilden
and Bremen, Germany. The Marysville plant manufactures piston pumps and motors,
the Vierzon plant manufactures vane pumps and motors, the Shanghai plant
manufactures vane motors, the Bologna plant manufactures radial piston motors,
the Tampere plant manufactures manifolds, and the Hilden plant manufactures
valves and the Bremen facility manufacturers hydraulic systems for industrial
and mobile hydraulic applications. The manufacturing plants have undergone
significant upgrade and rationalization in recent years and are in superior
manufacturing condition. Currently, the facilities are operated in two to three
shifts with the possibility of increasing capacity with existing machinery by
increasing working hours. Approximately 38% of the manufacturing workforce is
dedicated to the production of vane pumps and motors, 21% to the production of
piston pumps and motors, 22% to the production of valves, 13% to the production
of radial piston motors, and 6% to the production of manifolds. Each facility is
equipped with testing equipment to maintain the Company's high quality control
standards. The Company's manufacturing facilities in Ohio, France, Italy,
Finland and Germany are ISO9001 certified.

     The Company manufactures internally virtually all of the high value-added
or quality critical components such as the rotating groups, body components and
controls used to build its products. The Company has computerized numerically
controlled type flexible machinery and equipment that is organized in a series
of work cells, utilizing just-in-time production scheduling techniques. The
Company has spent in excess of $32.5 million on new production equipment in the
last five years. As a result of these investments, significant gains in
productivity efficiency have been realized. Management believes that the
improvement programs in progress will further add to efficiency and promote cost
reductions, particularly in piston pump, radial piston motor and valve
production.

     The Company's ability to produce components to high-level standards of
complex design makes it difficult for competitors to offer products of equal
performance for certain demanding applications. Modern and innovative machining
practices are employed to produce a wide array of products, while assuring
process control. The Company also utilizes specialized and precision grinding
methods that allow superior speed, precision and efficiency, and innovative
fabrication and manufacturing processes. All manufacturing


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processes employed are well proven and support the Company's efforts to produce
products that are both highly durable and reliable.

     The primary products purchased from suppliers are castings (all products),
solenoids (valves), turned parts (valves), steel bars (vane and piston), steel
and aluminum stock (manifolds), bearings (vane and piston), brass (piston) and
shafts. The Company has implemented an aggressive program of consolidating
suppliers of component parts and raw materials. This program has resulted in an
increased supply of component parts, improved quality, and reduced costs of
production materials. Currently, there are few common suppliers between the
different manufacturing facilities. Management anticipates that the continuation
of this program will yield additional savings in the future.

     The Company's operations involve the handling and use of substances that
are subject to foreign, federal, state and local environmental laws and
regulations that impose limitations on the discharge of pollutants into the
soil, air, and water and establish standards for their storage and disposal. The
Company is not involved in any pending or threatened proceedings that would
require curtailment of its operations because of such regulations. The Company
believes that it is in material compliance with all of such laws in the United
States, and it continually expends funds to assure that it remains in material
compliance. Investigations of the Company's European facilities have identified
areas of contamination and practices, which may be in violation of applicable
regulations. Compliance with foreign and domestic environmental laws has not
had, and is not expected to have, any material effect on the Company's earnings
or competitive position.

Sales and Marketing

     Denison has an extensive and well-trained international sales network
comprised of 16 regional sales and service subsidiaries and 192 independent
fluid power equipment distributors in 52 countries. Distributors buy products
from the Company and resell them to end-users. To a small extent, other
manufacturers' products are distributed through the Company's channels; however,
the Company's distributors do not typically carry products that compete with the
Company's products. Denison's sales and service subsidiaries are full service
offices engaged in the customized modification, design, manufacture, packaging,
sales and servicing of the Company's hydraulic components and systems.
Typically, the sales and service subsidiaries as well as the distributors are
staffed with professional engineers who are capable of designing hydraulic
systems to meet the requirements of customers' applications. The network is
divided into three main geographical regions: Europe, North America and the
Asia-Pacific region.

     The Company's sales and marketing network in North America is comprised of
45 sales and marketing employees, as well as 40 independent distributors.
Denison's regional sales and service subsidiaries are located in 16 countries
around the world, including Germany, the United Kingdom, France, Italy, Denmark,
Sweden, Finland, Spain, Singapore, China, Japan and Australia. Denison's plants
supply pumps, motors, manifolds and valves to its regional subsidiaries, which
maintain small inventories of the components and parts with the highest customer
demand. Each of the regional subsidiaries has the capacity to modify or convert
pumps, motors and valves on-site to meet specific needs of customers, thus
allowing the subsidiaries to offer a flexible product line without maintaining
an extensive inventory. The regional subsidiaries also have sophisticated test
rigs to permit on-site diagnosis and repair of Denison products. Together with
the additional 192 distributors throughout the world, the regional subsidiaries
constitute an international sales network providing extensive support in
application engineering, service and repair parts for Denison products
worldwide.

     OEMs and distributors are normally updated with technical developments
through meetings, training sessions and product brochures, while promotion
efforts to other customers are handled by the distributors themselves. The OEMs
prefer to purchase all their required equipment from a single source


                                      -9-

<PAGE>


supplier. In order to capitalize on this trend, the Company intends to become a
full range supplier within chosen niches in various market sectors. These chosen
niches include metal forming, material forming, capital plant and machine tools
in the industrial sector; earthmoving and construction, special purpose
machinery (including mining) and agriculture in the mobile sector; and a number
of applications in the commercial and military marine sector. These have been
selected not only on the basis of fit with existing products, but also on the
basis of product overlap and management's expectation of above-average growth in
demand for these products in the foreseeable future. Management estimates that
it is possible for Denison to increase its presence as a full range supplier
within these niches through relatively few additions to its existing product
range.

Customers

     Denison's broad base of well-known customers in the hydraulics industry in
the United States, Europe and the Asia-Pacific region attests to the high
reliability and quality of the Company's products. In 2002, Denison's top ten
OEM and direct end-user customers accounted for approximately 12% of net sales,
and the top ten customers overall accounted for approximately 11% of net sales.
The markets served by the Company are substantial and diversified, with no
single customer accounting for more than 4% of the Company's net sales in 2002.

     The Company's products are primarily utilized in industrial, mobile and
marine applications. Industrial applications involve equipment that generally is
stationary in factories or processing plants, such as presses, injection molding
equipment, power units, drilling equipment, test stands, mining machinery,
metal-forming and metal-cutting machinery and machine tools. The requirements of
the industrial marketplace are more demanding than most mobile applications
since industrial equipment typically operates at significantly higher cycles.
The Company's products are designed to meet these operating imperatives.
Denison's industrial customers include Cincinnati Milacron (machine tools and
injection molding equipment); Ingersoll-Rand and Driltech (rotary drills);
General Electric and Solar Turbines (power generation); Harris Waste Management
(refuse handling equipment); Kershaw Manufacturing (presses and boilers); and
Husky (injection molding equipment).

     Mobile applications involve equipment that generally is not fixed in place,
such as construction, demolition, agricultural, mining, lumber and pulp harvest,
and utility equipment. These industries tend to place a premium on
considerations of space, weight and cost. Mobile customers include Komatsu
(construction equipment); Case, Caterpillar and Volvo (wheel loaders); Plasser &
Theurer (railroad repair machinery); and PPM Crane (mobile cranes and
excavators).

     Marine applications involve equipment used on sea vessels by both
commercial and military end-users, such as anchors, ship-mounted winches and
deck cranes on aircraft carriers. Marine customers include the U.S. Navy and
Hepburn Engineering.

     End users who purchase the Company's products through distributors include
Bethlehem Steel and Kaiser Aluminum (primary metals); Boeing and Textron
(aerospace); Boise Cascade and Roseberg Forest Products (pulp and paper
industry); and Westinghouse and Stewart & Stevenson (power generation). Other
major customers include large OEMs such as Grove Manufacturing and Tamrock in
the United States; Grange (France), Hagglund & Soner AB (Sweden), Krupp
(Germany); and IHI, Kawasaki and Mitsubishi in Japan.


                                      -10-

<PAGE>


Backlog

     The Company's backlog of unfilled firm orders was $26.3 million at December
31, 2002, compared with $24.2 million at December 31, 2001. The Company
estimates that approximately 98% of the December 31, 2002 backlog will be filled
by December 31, 2003.

Competition

     The hydraulics industry is highly fragmented and intensely competitive. The
Company competes primarily on the basis of the performance, quality and
durability of its products, as well as the availability of aftermarket support
through its regional sales and service subsidiaries and through its network of
independent fluid power equipment distributors.

     The Company competes with divisions of large corporations, such as
Bosch/Rexroth and divisions of Eaton and Parker Hannifin, as well as companies
with more limited product lines. Some of the Company's competitors are larger
and have greater financial and other resources than the Company and thus can
better withstand adverse economic or market conditions as compared to the
Company. In addition, companies not currently in direct competition with the
Company may introduce competing products in the future.

     The Company has a large number of competitors, some of which are full-line
producers and others that are niche suppliers like the Company. The most
significant competitors market globally. In addition, the Company faces
competition from a number of local companies in regional markets. Full-line
producers have the ability to provide integrated hydraulic systems to customers,
including components functionally similar to those manufactured by the Company.
There has been some consolidation activity in recent years, with large,
full-line producers filling out their product lines with the acquisition of
smaller, privately held producers. The Company's main competitors by product
include Bosch/Rexroth, Oilgear, Hydrakraft and Parker Hannifin (piston
products); Eaton, Atos and Parker Hannifin (vane products); and Bosch/Rexroth,
Eaton, Atos and Parker Hannifin (valve products). In addition, various small
regional companies compete with the Company's manifold and radial piston motor
product lines.

Employees

     As of December 31, 2002, the Company had 1,147 full-time employees,
including 577 employees in manufacturing and operations, 62 employees in product
development, 327 employees in sales and marketing and 181 employees in
management and administration. In addition, the Company utilizes the services of
up to approximately 70 temporary employees. Of the Company's full-time
employees, 231 are working in the United States, 192 in Germany, 258 in France,
116 in Italy, 107 in China, 53 in Finland and the remainder in the Company's
sales and service facilities. The Company considers its relations with its
employees to be satisfactory.

     A collective bargaining agreement with the International Association of
Machinists and Aerospace Workers AFL-CIO/CLC, Denison Lodge 427, District Lodge
28, which covers all hourly-paid production and maintenance employees in the
Company's Marysville, Ohio facility (118 employees overall) expires in June
2005. Management at the US facility knows of no grievances, which are likely to
threaten work stoppage. The French facility has a collective bargaining
agreement, the "Convention Collective de la Metallurgie," which covers all
employees and is mandatory in French companies which engage in activities such
as those of the Company. The non-management personnel are represented by several
unions. While the German facility is not directly subject to collective
bargaining agreements, it does adopt certain provisions of collective bargaining
agreements applicable to the metalworking industry in its employment contracts.
Such provisions relate to matters such as working conditions, wages and year-end
bonuses. The


                                      -11-

<PAGE>


Italian facility is covered under the National Collective Labor Agreement
("NLCA"), which covers all employees and is mandatory in Italian companies,
which engage in activities such as those of the Company. The NLCA includes
collective bargaining agreement provisions relating to issues such as wage and
salary arrangements, working conditions and other matters. Management at each of
the facilities believes labor relations to be good.

Environmental Matters

     The Company's operations involve the handling and use of substances that
are subject to foreign, federal, state and local environmental laws and
regulations that impose limitations on the discharge of pollutants into the
soil, air and water and establish standards for their storage and disposal. A
risk of environmental liability is inherent in manufacturing activities.

     Investigations of the Company's European facilities have identified areas
of contamination and some practices, which may be in violation of applicable
regulations. The Company is in the process of determining whether any
remediation and/or any changes in current practices are necessary. There can be
no assurance that remediation of these facilities will not be required or that
fines or sanctions will not be imposed on the Company for violations of
environmental law, if any are determined to exist. While management does not
believe that compliance with environmental requirements is likely to have a
material adverse effect on the Company, there can be no assurance that future
additional environmental compliance or remediation obligations will not arise at
one or more of the Company's facilities or that such obligations could not have
a material adverse effect on the Company's financial condition or results of
operations. The Company has an accrual of $1.3 million at December 31, 2002 for
anticipated future costs related to environmental liabilities. See Note 15 of
Notes to Consolidated Financial Statements.

Patents and Trademarks

     The Company believes that the growth of its business is dependent upon the
quality of its products, its ability to produce products that meet the
requirements of its customers and its relationships in the marketplace, rather
than the extent of its patents and trademarks. The Company currently has over
100 patents and has been granted approximately 600 patents since its inception.
The loss of any single patent is not likely to have a material adverse effect on
the Company's business, financial condition and results of operations. In
addition the "Denison" name, as well as other brand names, is trademarked
throughout the world.

Access to Information

     The Company makes available, free of charge, its annual reports on Form
10-K, its quarterly reports on Form 10-Q, current reports on Form 8-K and all
other filings with the Securities and Exchange Commission ("SEC"), as
applicable, through its internet website. Such SEC filings are made available as
soon as reasonably practicable after they have been electronically filed with or
furnished to the SEC. To access these reports, interested parties should log on
to the Company's website at www.denisonhydraulics.com, and then click on the
Investor Relations tab.


ITEM 2.  PROPERTIES

     Denison has administrative, sales and manufacturing facilities located in
Marysville, Ohio; Vierzon, France; Shanghai, China; Bologna, Italy; Tampere,
Finland; and Hilden and Bremen, Germany. The facilities in the United States,
France, Finland and Germany are owned by the Company and occupy


                                      -12-

<PAGE>


170,000, 174,100, 120,000 and 146,600 and 42,000 square feet, respectively. The
Company's facility in Bologna, Italy is a leased facility occupying 120,000
square feet. The Company's facility in Shanghai, China is a leased facility
occupying 12,300 square feet. The Marysville plant manufactures piston pumps and
motors, the Vierzon plant manufactures vane pumps and motors, the Bologna plant
manufactures radial piston product, the Shanghai plant manufactures vane motors,
the Tampere plant manufactures manifolds, the Hilden plant manufactures valves
and the Bremen facility manufactures hydraulic systems for industrial
applications. The manufacturing plants have undergone significant upgrading and
rationalization in recent years and are in superior manufacturing condition.
Each facility is equipped with testing equipment to maintain the Company's high
quality control standards. The Company's manufacturing facilities in Ohio,
France, Italy, Finland and Germany are ISO9001 certified.

     The Company also owns a sales and service facility in Wakefield, England.
In addition, the Company leases or subleases facilities for its regional sales
and service subsidiaries in the following countries: Australia, Belgium, Canada,
Denmark, Finland, France, Germany, China, Italy, Japan, Luxembourg, the
Netherlands, Singapore, Spain, Sweden, the United Kingdom and the United States.
The Company believes that its existing facilities are sufficient for its current
needs, and that suitable additional or alternative space will be available in
the future on commercially reasonable terms as needed.


ITEM 3. LEGAL PROCEEDINGS

     The Company is involved in certain legal proceedings incidental to the
normal conduct of its business. The Company does not believe that any
liabilities relating to any of the legal proceedings to which it is a party are
likely to be, individually or in the aggregate, material to its consolidated
financial position or results of operations.


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

     None.


ITEM 4A. EXECUTIVE OFFICERS OF THE COMPANY

     The following table sets forth the name and position of the executive
officers of the Registrant.

                                                                  Present Office
Name              Age     Position                                  Held Since
----              ---     --------                                  ----------
J. Colin Keith    58      Chairman of the Board of Directors            1993
David L. Weir     49      Chief Executive Officer, President and        1997
                          Director
Anders C.H. Brag  49      Managing Director and Director                1993
Bruce A. Smith    47      Chief Financial Officer and Director          1998
Paul G. Dumond    47      Company Secretary                             1993


                                      -13-

<PAGE>


                                     PART II

ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED
        STOCKHOLDER MATTERS

     The principal trading market for the Company's securities is ADSs listed on
the Nasdaq National Market. The Company's ADSs have traded in the U.S. since
August 8, 1997 under the symbol "DENHY". Each ADS represents one Ordinary Share,
par value $0.01 per Ordinary Share. Each ADS is evidenced by an ADR. Bankers
Trust Company is the Depositary for the ADRs. As of December 31, 2002,
10,114,303 ADSs were held by 18 registered ADR holders. The largest holder, The
Depository Trust Company, holds 5,139,198 ADSs representing 56 participants. At
the annual meeting of shareholders held on May 28, 2002, the shareholders
granted authority to the Company to repurchase up to 1,056,770 shares of the
Company's stock at market prices. Throughout 2002 the Company re-purchased a
total of 550,000 shares at an average price of $14.836. (See Note 9 of Notes to
Consolidated Financial Statements).

     The following table shows the high and low sales prices of the ADSs on the
Nasdaq National Market for each quarterly period for the two years ended
December 31, 2002.

                                                    Price per ADS (US$)
                                                    -------------------
     Quarterly Period Ending                    High                   Low
     -----------------------                    ----                   ---
     March 31, 2001                            $19.00                $13.38
     June 30, 2001                              18.75                 14.80
     September 30, 2001                         17.75                 14.40
     December 31, 2001                          16.60                 13.30
     March 31, 2002                             20.40                 16.35
     June 30, 2002                              19.80                 17.30
     September 30, 2002                         18.55                 14.75
     December 31, 2002                          16.84                 13.80

     At March 26, 2003, the last reported price for an ADS on the Nasdaq
National Market was $15.76.

     The Company has never declared or paid dividends on its Ordinary Shares.
The Company currently intends to retain its earnings to finance the growth and
development of its business and, consequently, does not anticipate paying any
dividends on the Ordinary Shares in the foreseeable future. Under the Companies
Act 1985, as amended, of Great Britain (the "Companies Act"), dividends are
payable on the Ordinary Shares only out of profits available for distribution
determined in accordance with accounting principles generally accepted in the
United Kingdom, which differ in certain respects from US GAAP.


                                      -14-

<PAGE>


ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

     The selected consolidated financial data for each of the five years in the
period ended December 31, 2002 are derived from the Consolidated Financial
Statements of the Company. The selected consolidated financial data of the
Company set forth below are qualified by reference to, and should be read in
conjunction with the Consolidated Financial Statements, Related Notes and other
financial information included in this Form 10-K.

Consolidated Statement of Operations Data:

<TABLE>
<CAPTION>
                                                    Year Ended December 31,
                                                    -----------------------
                                    2002         2001        2000        1999         1998
                                    ----         ----        ----        ----         ----
                                                 (U.S. dollars in thousands)
<S>                              <C>          <C>         <C>         <C>          <C>
Net sales                        $ 158,011    $ 155,446   $ 153,095   $ 135,543    $ 145,253
Cost of sales                      102,600      100,207      99,993      90,430       90,917
                                 ---------    ---------   ---------   ---------    ---------
Gross profit                        55,411       55,239      53,102      45,113       54,336
Selling, general and
  administrative expenses           39,217       36,689      34,735      31,966       33,028
                                 ---------    ---------   ---------   ---------    ---------
Operating income                    16,194       18,550      18,367      13,147       21,308
Other income/(expense)                (486)         109         279        (693)           0
Interest income, net                 1,117        1,258       1,030         354          938
                                 ---------    ---------   ---------   ---------    ---------
Income before taxes                 16,825       19,917      19,676      12,808       22,246
Provision for income taxes           3,705        6,195       5,917       4,522        5,956
                                 ---------    ---------   ---------   ---------    ---------
Net income, before cumulative
effect of a change in
accounting principle             $  13,120    $  13,722   $  13,759   $   8,286    $  16,290
                                 ---------    ---------   ---------   ---------    ---------
Cumulative effect of a change
in accounting principle, net
of taxes                             1,858            0           0           0            0
                                 ---------    ---------   ---------   ---------    ---------
Net income                       $  14,978    $  13,722   $  13,759   $   8,286    $  16,290
                                 =========    =========   =========   =========    =========

Basic earnings per share, before
cumulative effect of a
Change in accounting principle   $    1.25    $    1.30   $    1.25   $     .75    $    1.47
Cumulative effect of a change
in accounting principle                .18            0           0           0            0
                                 ---------    ---------   ---------   ---------    ---------

Basic earnings per share         $    1.43    $    1.30   $    1.25   $     .75    $    1.47
                                 =========    =========   =========   =========    =========

Diluted earnings per share       $    1.43    $    1.30   $    1.25   $     .74    $    1.46
                                 =========    =========   =========   =========    =========


Consolidated Balance Sheet Data:

<CAPTION>
                                                    Year Ended December 31,
                                                    -----------------------
                                    2002         2001        2000        1999         1998
                                    ----         ----        ----        ----         ----
                                                 (U.S. dollars in thousands)


                                      -15-

<PAGE>


<S>                              <C>          <C>         <C>         <C>          <C>
Cash & cash equivalents          $  39,752    $  43,245   $  32,097   $  31,174    $  35,799
Working capital                     88,397       75,123      67,812      66,533       66,432
Total assets                       169,539      156,815     144,394     128,820      143,457
Total debt (1)                         898       10,545       6,560       5,697       12,881
Total shareholders' equity         116,356       96,225      84,958      81,060       78,527

(1)  Total debt comprises bank lines of credit with a maturity of less than one year.
</TABLE>


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

     The following should be read in conjunction with "Item 6. Selected
Consolidated Financial Data" and the Company's Consolidated Financial Statements
and the Notes related thereto appearing elsewhere in this Form 10-K.

     Although the Company reports its financial results in U.S. dollars,
approximately 77% of the Company's revenues and expenses are incurred in foreign
currencies. The fluctuation of the functional currencies earned by the Company
against the U.S. dollar has had the effect of increasing or decreasing (as
applicable) U.S. dollar reported denominated income statement amounts in such
foreign currencies when translated into U.S. dollars as compared to prior
periods.

Critical Accounting Policies and Estimates

     Management's Discussion and Analysis of Financial Condition and Results of
Operations discuss the Company's consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. On an on-going basis, management evaluates its
estimates and judgments, including those related to revenue recognition,
allowance for doubtful accounts, inventories, warranty obligations and deferred
tax assets. Management bases its estimates and judgments on historical
experience and on various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates
under different assumptions or conditions.

     Management believes the following critical accounting policies, among
others, affect its more significant judgments and estimates used in the
preparation of its consolidated financial statements.

Revenue Recognition

     The Company recognizes revenue in accordance with SEC Staff Accounting
Bulletin No. 101, Revenue Recognition in Financial Statements (SAB 101), as
amended by SAB 101A and 101B. SAB 101 requires that four basic criteria must be
met before revenue can be recognized: (1) persuasive evidence of an arrangement
exists; (2) delivery has occurred or services rendered; (3) the fee is fixed and
determinable; and (4) collectibility is reasonably assured. Determination of
criteria (3) and (4) are based on management's judgments regarding the fixed
nature of the fee charged for services rendered and products delivered and the
collectibility of those fees. Should changes in conditions cause management to
determine these criteria are not met for certain future transactions, revenue
recognized for any reporting period could be adversely affected.


                                      -16-

<PAGE>


Allowance for Doubtful Accounts

     The Company maintains allowances for doubtful accounts for estimated losses
resulting from the inability of its customers to make required payments. If the
financial condition of the Company's customers were to deteriorate, resulting in
an impairment of their ability to make payments, additional allowances may be
required.

Inventory

     The Company establishes reserves against its inventory for estimated
obsolescence or unmarketable inventory based upon the difference between the
cost of inventory and the estimated market value based upon assumptions about
future demand and market conditions. If actual future demand or market
conditions are less favorable than those projected by management, additional
inventory reserves may be required.

Goodwill

     Effective January 1, 2002 the Company adopted SFAS 141, "Business
Combinations". SFAS 141 requires that the purchase method of accounting be used
for all business combinations initiated after June 30, 2001 and prohibits the
use of the pooling-of-interests method. Additionally, SFAS 141 requires that in
a business combination in which the fair value of the net assets acquired
exceeds cost, any residual negative goodwill is recognized as an extraordinary
gain in the period in which the business combination is initially recognized.
The transition provisions of SFAS 141 require that upon adoption of the new
standard, any existing negative goodwill be adjusted as a cumulative effect of a
change in accounting principle in the statement of operations. In the first
quarter of 2002, the Company recorded a cumulative effect of a change in
accounting principle for its remaining unamortized negative goodwill of $1.9
million. Had the Company not amortized goodwill in the years 2001 and 2000, net
income for 2001 and 2000 would have been approximately $1.2 million lower in
both periods, than the amounts recorded.

     Effective January 1, 2002 the Company adopted SFAS 142, "Goodwill and other
Intangible Assets". Goodwill and intangible assets with indefinite lives are not
amortized; rather, they are tested for impairment at minimum on an annual basis.
Had the Company not amortized goodwill in the years 2001 and 2000, net income
for 2001 and 2000 would have been approximately $0.3 million higher in both
periods, than the amounts recorded. Pursuant to SFAS 142, the Company was
required to complete a transitional impairment test of goodwill in the initial
year of adopting the standard, with any impairment charges recorded as a
cumulative effect of a change in accounting principal. Additionally, the Company
completed its annual impairment test in the fourth quarter of 2002. Both tests
determined that no impairment existed.

Warranties

     Products sold are generally covered by a warranty for a period of one year.
The Company accrues a warranty reserve for estimated costs to provide warranty
services. The Company's estimate of costs to service its warranty obligations is
based on historical experience and expectation of future conditions. To the
extent the Company experiences increased warranty claim activity or increased
costs associated with servicing those claims, its warranty accrual will increase
resulting in decreased profits.

Deferred Tax Assets

     Carrying value of the Company's net deferred tax assets assumes that the
Company will be able to generate sufficient future taxable income in certain tax
jurisdictions, based on estimates and assumptions.


                                      -17-

<PAGE>


If these estimates and related assumptions change in the future, the Company may
be required to record additional valuation allowances against its deferred tax
assets resulting in additional income tax expense in the Company's consolidated
statement of operations. Likewise, should the Company determine that it would be
able to realize its deferred tax assets in the future in excess of its net
recorded amount, an adjustment to the deferred tax asset would result in a
decrease in the Company's income tax expense in the Company's consolidated
statement of operations. Management evaluates the extent to which it will
realize the future benefits of the deferred tax assets annually and assesses the
need for adjustments in its valuation allowances.


Results of Operations

Year Ended December 31, 2002 Compared with Year Ended December 31, 2001

     The Company's net sales increased 1.7% to $158.0 million in fiscal 2002
from $155.4 million in fiscal 2001, despite weak economic conditions both
domestically and internationally. During the same period, net sales in North
America decreased 6.0% to $45.2 million from $48.1 million; net sales in Europe
increased 5.2% to $89.7 million from $85.3 million; and net sales in
Asia-Pacific region increased 5.0% to $23.1 million from $22.0 million. Strong
demand in the Asia-Pacific region, particularly in the Company's China
operations, was partially offset by lower demand in the North America hydraulics
market. Actual volume net sales in the Company's European operations was flat to
2001 (see restated net sales results below), however on an actual basis European
net sales benefited from the strengthening Euro against the dollar for 2002.

     Restated (at average exchange rates for fiscal 2001), net sales for fiscal
2002 were $153.6 million, a 1.2% decrease versus 2001. The increased sales
revenue for the period attributable to the changes in exchange rate was $4.4
million. Restated (at average exchange rates for fiscal 2001), net sales for
fiscal 2002 for the Company's European operations decreased .2% to $85.1 million
from $85.3 million; and net sales for fiscal 2002 for the Company's Asia-Pacific
region increased 5.2% to $23.2 million from $22.0 million. Restated net sales in
North America were $45.4 million, $2.8 million or 5.7% unfavorable to 2001.

     The Company's gross profit increased to $55.4 million in fiscal 2002 from
$55.2 million in fiscal 2001. Gross profit as a percentage of net sales
decreased slightly to 35.1% in fiscal 2002 from 35.5% in fiscal 2001. The
increased gross profit was primarily attributable to the slightly higher volume
experienced; while the decreased gross profit as a percentage of net sales
reflects a lower value mix of products sold in 2002 versus 2001.

     Gross profit in North America increased 10.4% to $13.8 million in fiscal
2002 from $12.5 million in fiscal 2001. Gross profit in Europe decreased 1.2% to
$34.5 million in fiscal 2002 from $34.9 million in fiscal 2001, and Asia-Pacific
gross profit decreased 11.1% to $7.2 million in fiscal 2002 from $8.1 million in
fiscal 2001. Restated (at average exchange rates for fiscal 2001), gross profit
in Europe was $32.7 million, or a 6.1% decrease over fiscal 2001, and gross
profit in the Asia-Pacific region was $7.2 million, or a 11.7% decrease over
fiscal 2001. The total gross profit decrease for the period attributable to the
exchange rate differences was $1.6 million. Restated (at average exchange rates
for fiscal 2001), consolidated gross profit as a percentage of net sales
decreased to 35.1% for fiscal 2002 compared to 35.6% for fiscal 2001.

     Selling, General and Administrative ("SG&A") expenses increased 6.9% to
$39.2 million for fiscal 2002 from $36.7 million for fiscal 2001. These expenses
as a percentage of net sales were 24.8%


                                      -18-

<PAGE>


for fiscal 2002 as compared to 23.6% for fiscal 2001. Restated (at average
exchange rates for fiscal 2001), SG&A increased 3.9% to $38.1 million (24.8% of
net sales) in fiscal 2002 from $36.7 million (23.6% of net sales) in fiscal
2001. The increase in these expenses for fiscal 2002 as compared to fiscal 2001
is due primarily to the impact of the absence of negative goodwill amortization
in 2002 of $1.2 million, recorded as a cumulative effect of a change in
accounting principle in 2002 due to the adoption of SFAS 141, combined with the
effects of a full year of expenses for the Company's operations in Shanghai,
China, whose operations began in June 2001. For comparison purposes, if the
negative goodwill amortization were also absent from 2001 operating expenses,
the 2001 expenses, as a percentage of net sales would have risen to 24.4%, in
line with the 24.8% recorded for 2002.

     Operating income decreased 12.7% to $16.2 million in fiscal 2002 from $18.6
million in fiscal 2001. Restated, without the impact of negative goodwill
amortization in the 2001 operating earnings, 2001 operating earnings would have
been $17.4 million. Operating income as a percentage of net sales for fiscal
2002 was 10.2% versus operating income as a percentage of net sales of 11.9% for
fiscal 2001. Adjusting 2001 for the impact of the negative goodwill
amortization, operating income as a percentage of net sales would have been
11.2%. Restated (at average exchange rates for fiscal 2001), operating income
decreased 15.6% to $15.7 million (10.2% of net sales) in fiscal 2002 from $18.6
million (11.9% of net sales) in fiscal 2001. The changes in exchange rates had
the effect of decreasing operating income for the period by $0.5 million.

     Other expenses were recorded in fiscal 2002 of $0.5 million loss in fiscal
2002 versus other income of $0.1 million recorded in fiscal 2001. The reversal
of other income to expense in 2002 was the result of recognition of non-cash
currency gains on inter-company loans for 2002 versus gains recognized in fiscal
2001.

     Net interest income was $1.1 million in fiscal 2002 compared to $1.3
million in fiscal 2001. The decrease in interest income was primarily due to
lower worldwide investment rates on the Company's cash balances, partially
offset by increased interest bearing cash balances held at the Company's
subsidiaries.

     The effective tax rate for fiscal 2002 was 22.0% compared with 31.1% for
fiscal 2001. This change is the result of deferred tax assets recognized in the
Company's German subsidiary in 2002 totaling $0.4 million, a tax credit in the
Company's Italian subsidiary totaling $0.3 million arising from a change in
Italian tax law and changes in the mix in the country sources of the Company's
profits, in each case at tax rates that vary among jurisdictions. Adjusting for
these items the effective tax rate for 2002 would have been 28.5%, in line with
the effective rate recorded in 2001. The provision for taxes decreased 40.2% to
$3.7 million in fiscal 2002 compared to $6.2 million in fiscal 2001. This
provision as a percentage of net sales decreased to 2.3% in fiscal 2002 from
4.0% in fiscal 2001.


Year Ended December 31, 2001 Compared with Year Ended December 31, 2000

     The Company's net sales increased 1.5% to $155.4 million in fiscal 2001
from $153.1 million in fiscal 2000. During the same period, net sales in North
America decreased 1.6% to $48.1 million from $48.9 million; net sales in Europe
increased 2.6% to $85.3 million from $83.1 million; and net sales in
Asia-Pacific region increased 4.7% to $22.0 million from $21.0 million. Strong
demand for the Company's products in the European and Asia-Pacific regions,
combined with a full year of sales revenues from the Company's operations in
Bologna, Italy, acquired in April of 2000, were the primary reasons for the
increased revenues realized. Partially offsetting these factors were the
decreased demand


                                      -19-

<PAGE>


in the North American hydraulics market and the continuing impact of the strong
dollar against a majority of the Company's functional currencies worldwide.

     Restated (at average exchange rates for fiscal 2000), net sales for fiscal
2001 were $161.3 million, a 5.4% increase versus 2000. The decreased sales
revenue for the period attributable to the changes in exchange rate was $5.9
million. Restated (at average exchange rates for fiscal 2000), net sales for
fiscal 2001 for the Company's European operations increased 6.9% to $88.8
million from $83.1 million; and net sales for fiscal 2001 for the Company's
Asia-Pacific region increased 14.1% to $24.0 million from $21.0 million.

     The Company's gross profit increased to $55.2 million in fiscal 2001 from
$53.1 million in fiscal 2000. Gross profit as a percentage of net sales
increased to 35.5% in fiscal 2001 from 34.7% in fiscal 2000. The increased gross
profit was primarily attributable to the impact of cost reductions implemented
in the Company's manufacturing facilities during fiscal 2001 and fiscal 2000,
partially offset by the impact of decreased production volume experienced in the
later portion of fiscal 2001 as the Company adjusted its production volume to
match worldwide demand. Also partially offsetting the cost reduction benefits
was the continued impact of the strong US dollar, which results in higher
acquisition costs for the Company's US manufactured products, particularly in
Company's European sales companies.

     Gross profit in North America decreased less than 1 percentage point to
$12.5 million in fiscal 2001 from $12.6 million in fiscal 2000. Gross profit in
Europe increased 5.4% to $34.9 million in fiscal 2001 from $33.1 million in
fiscal 2000, and Asia-Pacific gross profit increased 13.1% to $8.1 million in
fiscal 2001 from $7.2 million in fiscal 2000. Restated (at average exchange
rates for fiscal 2000), gross profit in Europe was $36.0 million, or a 8.8%
increase over fiscal 2000, and gross profit in the Asia-Pacific region was $8.8
million, or a 22.3% increase over fiscal 2000. The total gross profit decrease
for the period attributable to the exchange rate differences was $2.2 million.
Restated (at average exchange rates for fiscal 2000), consolidated gross profit
as a percentage of net sales increased to 35.6% for fiscal 2001 compared to
34.7% for fiscal 2000.

     SG&A expenses increased 5.6% to $36.7 million for fiscal 2001 from $34.7
million for fiscal 2000. These expenses as a percentage of net sales were 23.6%
for fiscal 2001 as compared to 22.7% for fiscal 2000. Restated (at average
exchange rates for fiscal 2000), SG&A increased 9.7% to $38.1 million (23.6% of
net sales) in fiscal 2001 from $34.7 million (22.7% of net sales) in fiscal
2000. The increase in these expenses for fiscal 2001 as compared to fiscal 2000
is due primarily to the impact of a full year of expenses for the Company's
operations in Bologna, Italy, for which operations began in April 2000, and the
operations in Shanghai, China, whose operations began in June 2001. In addition,
the Company experienced increases in certain insurance costs during 2001, along
with costs for headcount increases at certain locations to support higher sales
volumes.

     Operating income increased 1.0% to $18.6 million in fiscal 2001 from $18.4
million in fiscal 2000. Operating income as a percentage of net sales for fiscal
2001 of 11.9% was in line with operating income as a percentage of net sales of
12.0% for fiscal 2000. Restated (at average exchange rates for fiscal 2000),
operating income increased 5.1% to $19.3 million (12.0% of net sales) in fiscal
2001 from $18.4 million (12.0% of net sales) in fiscal 2000. The changes in
exchange rates had the effect of decreasing operating income for the period by
$0.8 million.

     Other income decreased to $0.1 million in fiscal 2001 from $0.3 million in
fiscal 2000. The decrease in other income was the result of recognition of
non-cash currency gains on inter-company loans at a lower level throughout
fiscal 2001, than those recognized in fiscal 2000.


                                      -20-

<PAGE>


     Net interest income was $1.3 million in fiscal 2001 compared to $1.0
million of net interest income in fiscal 2000. The increase in interest income
was primarily due to increased interest bearing cash balances held at the
subsidiary level, partially offset by lower worldwide investment rates on the
Company's cash balances.

     The effective tax rate for fiscal 2001 was 31.1% compared with 30.0% for
fiscal 2000. This change is the result of year to date variations in the country
sources of the Company's profits, in each case at tax rates that vary among
jurisdictions. The provision for taxes increased 4.6% to $6.2 million in fiscal
2001 compared to $5.9 million in fiscal 2000. This provision as a percentage of
net sales decreased to 4.0% in fiscal 2001 from 3.9% in fiscal 2000.

<TABLE>
     Liquidity and Capital Resources
<CAPTION>
                                                            Year Ended and At December 31,
                                                           2002          2001          2000
                                                           ----          ----          ----
                                                             (U.S. dollars in thousands)
<S>                                                     <C>           <C>           <C>
Cash & cash equivalents                                 $ 39,752      $ 43,245      $ 32,097
Net cash provided by operating activities                 16,972        21,238        16,576
Net cash used in investing activities                     (9,155)      (12,436)       (7,475)
Net cash provided by (used in) financing activities      (17,881)        4,130        (6,849)
Effect of exchange rate changes on cash                    6,571        (1,784)       (1,329)
</TABLE>

     Historically the Company has funded its cash requirements through cash flow
from operations, although short-term fluctuations in working capital
requirements for some of the Company's subsidiaries have been met through
borrowings under revolving lines of credit obtained locally. The Company's
primary uses of cash have been to fund capital expenditures, acquisitions, stock
repurchases and to service and repay debt.

     Net cash provided by operating activities for fiscal 2002 decreased to
$17.0 million from $21.2 million in fiscal 2001. The $4.2 million decrease in
net cash provided by operating activities for fiscal 2002 compared to fiscal
2001 was primarily attributable to a $5.4 million decrease in cash provided from
changes in operating assets and liabilities, resulting from increases in
operating assets to support increased business levels and the timing of certain
tax payments. The Company anticipates that operating cash and capital
expenditure requirements will continue to be funded by cash flow from operations
and cash on hand.

     Net cash used in investing activities was $9.2 million for fiscal 2002,
compared to $12.4 million for fiscal 2001. Investing activities in 2002
consisted of the investment in manufacturing equipment for the Company's six
production facilities and investments in equipment at the Company's sales
locations for $6.2 million, along with the acquisition of Rander for $2.7
million. The Company anticipates that it will incur approximately $6.7 million
for capital expenditures for fiscal 2003, excluding any acquisitions of new
businesses.

     Net cash used by financing activities was $17.9 million for fiscal 2002
compared to net cash provided by financing activities of $4.1 million for fiscal
2001. Cash utilized in fiscal 2002 by financing activities was comprised mainly
of $8.2 million utilized to re-purchase 550,000 shares of the Company's stock
and repayment on lines of credit of $9.7 million.

     The effect of exchange rate changes on cash and cash equivalents was an
increase of $6.6 million for fiscal 2002 and a $1.7 million loss for fiscal
2001. As greater than two thirds of the Company's business is transacted in
currencies other than the U.S. dollar, foreign currency fluctuations had a


                                      -21-

<PAGE>


significant impact on dollar reported balances for fiscal 2002 compared to
fiscal 2001. The $6.6 million impact of exchange rate changes on cash and cash
equivalents was attributable to a weakening US dollar against most of the
functional currencies earned by the Company in its European operations for 2002,
versus a strengthening dollar experienced for 2001. The average dollar-weighted
foreign currency decrease for fiscal 2002 for the Company's European operations
was 4.1%.

     In April 2002, the Company's Japanese subsidiary entered into a bank loan
with a bank that provided $2.4 million for working capital and acquisitions.
Borrowings under the agreement are secured by a guarantee by the Company. At
December 31, 2002, $0.2 million was outstanding under the bank loan. Interest on
the loan accrues at a rate of 1.75%. Interest on the loan is payable quarterly.
The bank loan is due April 20, 2003.

     Short-term borrowings outside the United States under available informal
credit facilities are typically a result of overdrafts. At December 31, 2002,
the Company had an additional $ 0.7 million of other foreign debt outstanding.
The Company also has an additional $1.7 million of unused foreign credit
facilities. The banks may withdraw these facilities at any time.

     The weighted average interest rates on short-term borrowings as of December
31, 2002 and 2001 were 3.9% and 3.6% respectively.

Contractual Obligations

     As of December 31, 2002, the Company had the following contractual
obligations (U.S. dollars in thousands):

<TABLE>
                                                 Payments Due By Period
                                                 ----------------------
<CAPTION>
                                                 Less Than                               After 5
                                       Total       1 Year      1-3 Years    4-5 Years     Years
                                       -----       ------      ---------    ---------     -----
<S>                                   <C>          <C>          <C>          <C>          <C>
Notes payable to bank (i)             $  198       $  198       $   --       $   --       $  --
Short-term borrowings                    700          700           --           --          --
Purchase commitments                   1,600        1,600           --           --          --
Non-cancelable operating leases        4,100        2,074        1,805          221          --
                                      ---------------------------------------------------------
Total contractual cash                $6,598       $4,572       $1,805       $  221       $--
   Obligations
                                      =========================================================

(i) The company expects to renew these revolving credit notes prior to the April 2003 maturity dates.
</TABLE>

Impact of Inflation

     The impact of inflation on the operating results of the Company has been
moderate in recent years reflecting generally lower rates of inflation in the
economy and relative stability in the Company's cost structure. Although
inflation has not had, and the Company does not expect that it will have, a
material impact on operating results, there is no assurance that the Company's
business will not be affected by inflation in the future.

Exposure to Currency Fluctuations


                                      -22-

<PAGE>


     Approximately 77% of the Company's business in 2002 and 74% in 2001 was
conducted in currencies other than the dollar, including pounds sterling,
equivalent European euro currencies and Japanese yen. The Company's financial
statements are prepared in dollars, and therefore fluctuations in exchange rates
in the pound sterling and other currencies in which the Company does business
relative to the dollar may cause fluctuations in reported financial information,
which are not necessarily related to the Company's operations. In 2002, for
example, the Company experienced a 0.2% decrease in net sales in the European
region (denominated in local currencies); however, the dollar-translated net
sales figures showed a net increase due to the fluctuation of the dollar against
the local currencies of 5.2%. Due to the volatility of currency exchange rates,
the Company cannot predict the effect of exchange rate fluctuations upon future
operating results. Although the Company currently engages in transactions to
hedge a portion of the risks associated with fluctuations in currency exchange
rates, it may not do so in the future. There can be no assurance that the
Company's business, financial condition and results of operations will not be
materially adversely affected by exchange rate fluctuations or that any hedging
techniques implemented by the Company will be effective.

     The following table illustrates the effect of the currency exchange rates
on certain of the Company's income items in fiscal 2002 and fiscal 2001 which
have been recalculated to show what such amounts would have been applying 2000
average exchange rates to fiscal 2001 amounts and 2001 average exchange rates to
fiscal 2002 amounts.

                                          Year Ended December 31,
                                                                2002 at 2001
                                2001 Actual     2002 Actual    Exchange Rates
                                -----------     -----------    --------------
                              (U.S. dollars in thousands, except per share data)
Net sales                         $155,446        $158,011        $153,640
Gross profit                        55,239          55,411          53,782
Operating income                    18,550          16,194          15,653
Net income                          13,722          14,978          14,559
Basic earnings per share              1.30            1.43            1.39
Diluted earnings per share            1.30            1.43            1.39

                                          Year Ended December 31,
                                                                2001 at 2000
                                2000 Actual     2001 Actual    Exchange Rates
                                -----------     -----------    --------------
                              (U.S. dollars in thousands, except per share data)
Net sales                         $153,095        $155,446        $161,309
Gross profit                        53,102          55,239          57,423
Operating income                    18,367          18,550          19,333
Net income                          13,759          13,722          14,268
Basic earnings per share              1.25            1.30            1.35
Diluted earnings per share            1.25            1.30            1.35

New Accounting Pronouncements

     See Note 3, "Significant Accounting Policies" in the footnotes to the
Financial Statements for the effect of pending adoption of new accounting
pronouncements.


                                      -23-

<PAGE>


Special Note Regarding Forward-looking Information

     This Form 10-K includes and incorporates forward-looking statements within
the meaning of section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. All statements, other than statements of
historical facts, included or incorporated in this Form 10-K regarding the
Company's strategy, future operations, financial position, future revenues,
projected costs, prospects, plans and objectives of management are
forward-looking statements. The words "anticipates", "believes", "estimates",
"expects", "intends", "may", "plans", "projects", "will", "would" and similar
expressions are intended to identify forward-looking statements, although not
all forward-looking statements contain these identifying words. The Company
cannot guarantee that it actually will achieve the plans, intentions or
expectations disclosed in its forward-looking statements and undue reliance
should not be placed on the Company's forward-looking statements. Actual results
or events could differ materially from the plans, intentions and expectations
disclosed in the forward-looking statements. The Company has included important
factors in the cautionary statements included or incorporated in this Form 10-K
that the Company believes could cause actual results or events to differ
materially from the forward-looking statements made. The Company's
forward-looking statements do not reflect the potential impact of any future
acquisitions, mergers, dispositions, joint ventures or investments the Company
may make. The Company does not assume any obligation to update any
forward-looking statements.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Market risks relating to the Company's operations result primarily from
changes in exchange rates or interest rates or weak economic conditions in the
markets in which the Company sells its products. The Company does not use
financial instruments for trading purposes and is not a party to any leveraged
derivatives.

     Foreign Currency Risk

     The Company enters into foreign exchange contracts to hedge some of its
foreign currency exposure. The Company uses such contracts to hedge exposure to
foreign currency exchange rates associated with anticipated costs to be incurred
in a foreign currency. The Company seeks to minimize the risk that the expenses
incurred by a subsidiary in a currency other than its functional currency will
be affected by changes in the exchange rates. The Company believes that the
possible financial statement impact of its foreign currency forward contracts is
immaterial. A significant portion of the Company's business is conducted in
currencies other than the US dollar. See Item 7 "Exposure to Currency
Fluctuations".

     Interest Rate Risk

     The Company's interest bearing liabilities are most sensitive to changes in
the London InterBank Offered Rate (LIBOR) and substantially all of its short
term investments bear minimal interest rate risk.

     As of December 31, 2002, the Company had approximately $.9 million
outstanding on its revolving line of credit and short term credit agreements.
The potential loss to the Company over one year that would result from a
hypothetical, instantaneous, and unfavorable change of 100 basis points in the
interest rates of all applicable assets and liabilities would be approximately
be $0.1 million.


                                      -24-

<PAGE>


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                            DENISON INTERNATIONAL plc

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                            Page

Report of Independent Auditors                                                26

Consolidated Balance Sheets as of December 31, 2002 and 2001                  27

Consolidated Statements of Income for each of the years ended
  December 31, 2002, 2001 and 2000                                            28

Consolidated Statements of Changes in Shareholders' Equity for
  each of the years ended December 31, 2002, 2001 and 2000                    29

Consolidated Statements of Cash Flows for each of the years ended
  December 31, 2002, 2001 and 2000                                            30

Notes to Consolidated Financial Statements                                    31


                                      -25-

<PAGE>


                         REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholders
Denison International plc

     We have audited the consolidated balance sheets of Denison International
plc and subsidiaries as of December 31, 2002 and 2001, and the related
consolidated statements of income, changes in shareholders' equity and cash
flows for each of the three years in the period ended December 31, 2002. Our
audits also included the financial statement schedule listed in the index at
Item 14a. These financial statements and schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.

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

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

     As discussed in Note 3 to the consolidated financial statements, effective
January 1, 2002, the Company adopted the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 141, "Business Combinations", and the
provisions of SFAS No. 142, "Goodwill and Other Intangible Assets".


                                        /S/ ERNST & YOUNG LLP

Columbus, Ohio
February 14, 2003


                                      -26-

<PAGE>


                   DENISON INTERNATIONAL plc AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                 (U.S. dollars in thousands, except share data)

                                     ASSETS
                                                            December 31,
                                                            ------------
                                                        2002            2001
                                                        ----            ----
Current Assets:
Cash and cash equivalents                             $ 39,752        $ 43,245
Accounts receivable, less allowances of $2,242
   and $2,185 in 2002 and 2001, respectively            32,554          27,715
Inventories                                             45,324          41,757
Other current assets                                     5,590           4,680
                                                      --------        --------
   Total current assets                                123,220         117,397
Property, plant and equipment, net                      31,132          27,912
Other assets                                             2,263           2,522
Goodwill                                                12,924           8,984
                                                      --------        --------
        Total Assets                                  $169,539        $156,815
                                                      ========        ========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Notes payable to bank                              $    898        $ 10,545
   Accounts payable                                     14,553          11,921
   Accrued payroll and related expenses                  7,846           7,369
   Other accrued liabilities                             9,836           8,593
   Income tax payable                                    1,690           3,846
                                                      --------        --------
        Total current liabilities                       34,823          42,274
Noncurrent liabilities:
   Pension accrual                                      13,201          11,345
   Other noncurrent liabilities                          5,159           5,113
   Negative goodwill                                         0           1,858
                                                      --------        --------
                                                        18,360          18,316
Shareholders' equity:
   'A' ordinary shares (pound)8.00 par value;
     7,125 shares authorized; 7,015
     issued and outstanding in 2002
     and 2001                                               86              86
   Ordinary shares $0.01 par value;
    15,000,000 shares authorized; and
    10,017,700 and 10,563,950 shares
    issued and outstanding in 2002 and 2001,
    respectively                                           102             107
   Additional paid-in capital                            5,202           5,150
   Capital redemption reserve                            1,090           1,090
   Retained earnings                                   109,900         103,107
   Accumulated other comprehensive loss                   (24)        (13,315)
                                                      --------        --------
        Total shareholders' equity                     116,356          96,225
                                                      --------        --------
        Total liabilities and shareholders' equity    $169,539        $156,815
                                                      ========        ========

        The accompanying notes are an integral part of these statements.


                                      -27-

<PAGE>


<TABLE>
                       DENISON INTERNATIONAL plc AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF INCOME
                   (U.S. dollars in thousands, except per share data)
<CAPTION>
                                                         Year ended December 31,
                                                         -----------------------
                                                   2002           2001          2000
                                                   ----           ----          ----
<S>                                             <C>            <C>           <C>
Net sales                                       $ 158,011      $ 155,446     $ 153,095
Cost of sales                                     102,600        100,207        99,993
                                                ---------      ---------     ---------
Gross profit                                       55,411         55,239        53,102
Selling, general and administrative
    expenses                                       39,217         36,689        34,735
                                                ---------      ---------     ---------
Operating income                                   16,194         18,550        18,367
Other income/(expense)                               (486)           109           279
Interest income, net                                1,117          1,258         1,030
                                                ---------      ---------     ---------
Income before taxes                                16,825         19,917        19,676
Provision for income taxes                          3,705          6,195         5,917
                                                ---------      ---------     ---------
Net income before cumulative effect of a
   change in accounting principle                  13,120         13,722        13,759
Cumulative effect of a change in accounting
   principle, net of taxes                          1,858             --            --
                                                ---------      ---------     ---------

Net income                                      $  14,978      $  13,722     $  13,759
                                                =========      =========     =========


Basic earnings per share, before cumulative
   effect of a change in accounting principle   $    1.25      $    1.30     $    1.25

Cumulative effect of a change in accounting
   principle                                          .18             --            --
                                                ---------      ---------     ---------

Basic earnings per share                        $    1.43      $    1.30     $    1.25
                                                =========      =========     =========

Diluted earnings per share                      $    1.43      $    1.30     $    1.25
                                                =========      =========     =========


            The accompanying notes are an integral part of these statements.
</TABLE>


                                      -28-

<PAGE>


<TABLE>
                                             DENISON INTERNATIONAL plc AND SUBSIDIARIES
                                     CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                           (U.S. dollars in thousands, except share data)
<CAPTION>
                                 'A'                        'A'                       Addi-                          Accumulated
                                 Ordinary                   Ordinary      Ordinary    tional    Capital              Other
                                 shares of     Ordinary     shares of     shares of   paid in   redem-    Retained   Compre-
                                 (pound)8.00   shares of    (pound)8.00   $0.01       capital   tion      earnings   hensive
                                 each          $0.01 each   each          each        (i)       reserve   (ii)       Income (loss)
                                 -----------   ----------   -----------   ---------   -------   -------   --------   -------------
                                    (number of shares)
<S>                              <C>           <C>          <C>           <C>         <C>       <C>       <C>        <C>
Balance at January 1, 2000       7,015         11,113,950   $86           $111        $5,479    $1,090    $ 82,691     ($8,397)
Purchase and retirement of
   treasury shares                  --           (550,000)   --             (4)         (329)       --      (7,065)         --
Net income                          --                 --    --             --            --        --      13,759          --
Translation adjustment              --                 --    --             --            --        --          --      (2,463)

Comprehensive income                --                 --    --             --            --        --          --          --
                                 -----         ----------   ---           ----        ------    ------    --------   ---------

Balance at December 31, 2000     7,015         10,563,950   $86           $107        $5,150    $1,090    $ 89,385    ($10,860)

Net income                          --                 --    --             --            --        --      13,722          --
Translation adjustment              --                 --    --             --            --        --          --      (2,393)
Foreign currency forward
   contract                         --                 --    --             --            --        --          --         (62)

Comprehensive income                --                 --    --             --            --        --          --          --
                                 -----         ----------   ---           ----        ------    ------    --------   ---------

Balance at December 31, 2001     7,015         10,563,950   $86           $107        $5,150    $1,090    $103,107    ($13,315)

Purchase and retirement of
   treasury shares                  --           (550,000)   --             (5)           --        --      (8,185)         --
Net income                          --                 --    --             --            --        --      14,978          --
Exercise of stock options           --              3,750    --             --            52        --          --          --
Translation adjustment              --                 --    --             --            --        --          --      13,096
Foreign currency forward
   contract                         --                 --    --             --            --        --          --         195

Comprehensive income                --                 --    --             --            --        --          --          --
                                 -----         ----------   ---           ----        ------    ------    --------   ---------

Balance at December 31, 2002     7,015         10,017,700   $86           $102        $5,202    $1,090    $109,900    ($    24)
                                 =====         ==========   ===           ====        ======    ======    ========   =========


[SECOND PART OF TABLE CONTINUED BELOW]

<CAPTION>
                               Compre-
                               hensive
                               Income
                               (Loss)     Total
                               --------   --------

<S>                            <C>        <C>
Balance at January 1, 2000                $ 81,060
Purchase and retirement of
   treasury shares                   --     (7,398)
Net income                       13,759     13,759
Translation adjustment           (2,463)    (2,463)
                                 ------
Comprehensive income           $ 11,296         --
                               ========   --------

Balance at December 31, 2000               $ 84,958

Net income                       13,722     13,722
Translation adjustment           (2,393)    (2,393)
Foreign currency forward
   contract                         (62)       (62)
                                    ----
Comprehensive income           $ 11,267         --
                               ========   --------

Balance at December 31, 2001              $ 96,225

Purchase and retirement of
   treasury shares                   --     (8,190)
Net income                       14,978     14,978
Exercise of stock options            --         52
Translation adjustment           13,096     13,096
Foreign currency forward
   contract                         195        195
                                    ---
Comprehensive income           $ 28,269         --
                               ========   --------

Balance at December 31, 2002              $116,356
                               ========   ========


(i)  Additional paid in capital is not distributable.

(ii) Retained earnings available for distribution as dividends by the parent company at December 31, 2002 were $66,325,000.

                                  The accompanying notes are an integral part of these statements.
</TABLE>


                                      -29-

<PAGE>


<TABLE>
                            DENISON INTERNATIONAL plc AND SUBSIDIARIES
                              CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (U.S. dollars in thousands)
<CAPTION>
                                                                   Year ended December 31,
                                                                   -----------------------
                                                               2002          2001          2000
                                                               ----          ----          ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                         <C>           <C>           <C>
Net income                                                  $ 14,978      $ 13,722      $ 13,759
Adjustments to reconcile net income to net cash
provided by operating activities:
   Amortization of goodwill                                   (1,858)         (902)       (1,043)
   Depreciation                                                5,661         5,239         5,050
   Deferred income taxes                                        (400)         (192)          831
   Changes in operating assets and liabilities:
      Accounts receivable                                     (1,650)        4,080        (3,039)
      Inventories                                             (2,562)       (4,805)       (4,653)
      Other current assets                                       647            (2)          (52)
      Other assets                                             3,704         3,096        (1,482)
      Accounts payable                                           932        (2,399)        4,545
      Accrued payroll and related expenses                      (442)          466         2,912
      Income tax payable                                      (1,804)           41           914
      Other accrued liabilities                                  341         2,355        (1,268)
      Pension accrual                                             61            88           164
      Other noncurrent liabilities                              (636)          451           (62)
                                                            --------      --------      --------
Net cash provided by operating activities                     16,972        21,238        16,576

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired                            (2,749)       (2,491)       (4,015)
Purchase of property, plant and equipment                     (6,196)       (9,851)       (3,698)
Proceeds from disposal of property, plant and equipment         (210)          (94)          238
                                                            --------      --------      --------
Net cash used in investing activities                         (9,155)      (12,436)       (7,475)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowing (repayment) on lines of credit                  (9,743)        4,130           660
Purchase and retirement of treasury shares                    (8,190)           --        (7,398)
Repayment of capital lease obligations                            --            --          (111)
Proceeds from exercise of stock options                           52            --            --
                                                            --------      --------      --------
Net cash provided by (used in) financing activities          (17,881)        4,130        (6,849)
                                                            --------      --------      --------

Effect of exchange rate changes on cash                        6,571        (1,784)       (1,329)
Net increase/(decrease) in cash and cash equivalents          (3,493)       11,148           923

Cash and cash equivalents at beginning of year                43,245        32,097        31,174
                                                            --------      --------      --------
Cash and cash equivalents at end of year                    $ 39,752      $ 43,245      $ 32,097
                                                            ========      ========      ========

Supplemental disclosure of cash flow information:
Interest paid                                               $    320      $    521      $    436
Income taxes paid                                           $  2,098      $  2,958      $  2,729

                 The accompanying notes are an integral part of these statements.
</TABLE>


                                      -30-

<PAGE>


                            DENISON INTERNATIONAL plc

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. The Company

     Denison International plc (the "Company"), a Company incorporated in
England and Wales, and its subsidiaries manufacture and distribute hydraulic
pumps and valves. The manufacturing plants are located in the United States,
China, Germany, France, Italy and Finland and there are sales and distribution
operations in the United Kingdom, Canada, Sweden, Denmark, The Netherlands,
Spain, Italy, Japan, Australia, China and Singapore.

     The Company was incorporated on March 10, 1993 as Alnery No. 1278 Limited
and on May 14, 1993 changed its name to Denison International Limited ("DIL")
and re-registered as a public limited company on July 28, 1997.

2.  Basis of Financial Statements

  Companies Act 1985

     These consolidated financial statements do not comprise the Company's
statutory accounts within the meaning of section 240 of the Companies Act 1985,
as amended, of Great Britain (the "Companies Act"). The Company's statutory
accounts, which are its primary consolidated financial statements, are prepared
in accordance with accounting principles generally accepted in the United
Kingdom ("U.K. GAAP") in compliance with the Companies Act and are presented in
pounds sterling. Statutory accounts for the years ended December 31, 2000 and
2001 have been, and for the year ended December 31, 2002 will be filed with the
Registrar of Companies for England and Wales. The auditors' reports on those
accounts previously filed were unqualified.

  Principles of Consolidation

     The consolidated financial statements include the accounts of the Company
and its subsidiaries, all of which are wholly owned. Significant intercompany
accounts and transactions have been eliminated on consolidation.

  Use of Estimates

     The preparation of the consolidated financial statements in conformity with
accounting principles generally accepted in the United States ("U.S. GAAP")
requires management to make estimates and assumptions that affect the amounts
reported in the consolidated financial statements and accompanying notes. Actual
results could differ from these estimates.

3.  Significant Accounting Policies

     These financial statements have been prepared in accordance with accounting
principles generally accepted in the United States. The significant accounting
policies applied in their preparation are as follows:


                                      -31-

<PAGE>


  Cash and Cash Equivalents

     The Company considers all highly liquid investments having an original
maturity of three months or less to be cash equivalents.

  Inventories

     Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out (FIFO) method. Work-in-progress and finished goods
include the cost of direct materials and labor plus a reasonable proportion of
manufacturing overheads based on normal levels of activity.

  Property, Plant and Equipment

     Property, plant and equipment are recorded at cost and depreciated using
the straight-line method over their estimated useful lives as follows:

          Buildings owned by the Company           33 to 38 years
          Leaseholds                                Life of lease
          Plant and equipment                       4 to 10 years

  Goodwill

     Goodwill represents the excess of the purchase price over the estimated
fair value of net assets acquired. Negative goodwill represents the excess of
the estimated fair value of net assets acquired (after the elimination of the
carrying value of all noncurrent assets) over the purchase price.

     Through December 31, 2001, the Company's policy was to periodically review
its goodwill and other long-lived assets based upon the evaluation of such
factors as the occurrence of a significant adverse event or change in the
environment in which the business operates or if the expected future net cash
flows (undiscounted and without interest) would become less than the carrying
amount of the asset. An impairment loss would be recorded in the period such
determination is made based on the fair value of the related businesses.
Effective January 1, 2002, the Company adopted the impairment provisions of
Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets".
During 2002, the Company performed both the transitional impairment test in June
2002 and the annual impairment test in the fourth quarter of 2002. Both of these
tests determined that no impairment existed. See New Accounting Pronouncements
below.

Environmental Remediation

     Environmental liabilities are recorded based on the most probable cost if
known or on the estimated minimum cost, determined on a site by site basis. The
Company's environmental liabilities are not discounted and do not take into
consideration any possible future insurance proceeds or any significant amounts
of claims against other third parties.

  Revenue Recognition

     The Company recognizes revenues from the sale of its products at the time
of shipment to the customer which coincides with title transfer. Provision is
made currently for estimated product returns, which may occur.


                                      -32-

<PAGE>


  Shipping and Handling Costs

     Shipping and handling costs are classified in cost of sales.

  Warranty

     The Company generally warrants its products for one year. An estimate of
the amount required to cover warranty expense on products sold is charged
against income at the time of sale. Other liabilities include accrued warranty
costs of $3.4 million and $3.3 million at December 31, 2002 and 2001,
respectively, of which $2.9 million and $2.7 million are classified as
short-term.

  Advertising Expense

     The Company expenses the costs of advertising as incurred. Advertising
expenses include the promotion of specific products and kinds of advertising
include Company and product catalogues, business and industrial publications.
Advertising expense was $0.6 million, $0.8 million and $0.8 million for the
years ended December 31, 2002, 2001 and 2000, respectively.

Research and Development

     Expenditures for research and development are expensed as incurred.
Research and development expense was $4.8 million, $5.2 million and $5.0 million
for the years ended December 31, 2002, 2001 and 2000, respectively.

  Income Taxes

     Full provision is made for income taxes using the liability method on all
temporary differences between financial reporting and tax bases of assets and
liabilities, using enacted tax rates and laws.

Foreign Currency

     The functional currencies of the Company and its subsidiaries are their
local currencies.

     For U.S. reporting purposes, these consolidated financial statements are
translated from local currency into U.S. dollars using year-end rates for the
balance sheets and average rates for statements of operations and cash flows in
accordance with Financial Accounting Standards Board Statement No. 52, "Foreign
Currency Translation." Translation gains and losses are accumulated in the
accumulated other comprehensive income or loss component of shareholders'
equity.

     Foreign currency transactions are converted into functional currencies at
the rates of exchange at the transaction date or average rate for the period of
the transaction. Exchange gains and losses arising from transactions in foreign
currencies are recorded in the consolidated statements of operation and are
insignificant for all years presented.

  Stock Based Compensation

     As permitted by Financial Accounting Standards Board Statement No. 123,
"Accounting and Disclosure of Stock-Based Compensation" ("SFAS No. 123"), and
Financial Accounting Standards Board Statement No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosures" ("SFAS No. 148"), the
Company accounts for employee share option grants using the intrinsic value
method in accordance with Accounting Principle Board Opinion No. 25, "Accounting
for Stock Issued to Employees"


                                      -33-

<PAGE>


("APB 25"). Under APB 25, because the exercise price equals the estimated market
price on the date of grant, no compensation expense has been recognized for
stock option awards.

     Pro forma information regarding net income and earnings per share is
required under SFAS No. 123, and has been determined as if the Company has
accounted for its employee stock options under the fair value method of that
statement. The Company uses the Black-Scholes method to estimate the fair value
of options at the date of grant with the following assumptions for 2001 and
2000: risk-free interest rates of 6%, volatility of 50% and 53% respectively, no
dividend yield and an expected life of 5 years. There were no stock options
granted in 2002.

     For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information for the years ended December 31 follows:

<TABLE>
<CAPTION>
                                                          2002             2001            2000
                                                          ----             ----            ----
                                                   (U.S. dollars in thousands, except per share data)
<S>                                                    <C>             <C>             <C>
Net income as reported                                 $   14,978      $   13,722      $   13,759
Less:  Total stock-based employee compensation
       expense determined under the fair value
       based method for all awards, net of related
       tax effects                                           (541)         (1,086)         (1,236)
                                                       ----------      ----------      ----------
Pro forma net income                                   $   14,437      $   12,636      $   12,523
                                                       ==========      ==========      ==========

Earnings per share:
     Basic - as reported                               $     1.43      $     1.30      $     1.25
     Basic - pro forma                                 $     1.38      $     1.20      $     1.13
     Diluted - as reported                             $     1.43      $     1.30      $     1.25
     Diluted - pro forma                               $     1.38      $     1.19      $     1.13
</TABLE>

  Earnings per Common Share

     Basic net income per common share is computed using the weighted average
number of common shares outstanding during the period. Diluted net income per
common share is computed using the weighted average number of common and diluted
equivalent shares outstanding during the period. Dilutive common equivalent
shares consist of stock options (see Note 10).

Concentrations of Business and Credit Risk

     Financial instruments which potentially subject the Company to credit risk
consist principally of trade receivables. The Company performs on-going credit
evaluations of its customers and generally does not require collateral. The
Company maintains adequate reserves for potential losses and such losses, which
have historically been minimal, have been within management's estimates.

     The Company sells the majority of its products to distributors and original
equipment manufacturers throughout North America, Europe and Asia-Pacific.


                                      -34-

<PAGE>


Comprehensive Income (Loss)

     Accumulated other comprehensive loss on the balance sheet consists of:

                                               December 31,
                                               ------------
                                            2002          2001
                                            ----          ----
                                       (U.S. dollars in thousands)

Foreign currency forward contracts       $    195      $    (62)
Cumulative translation adjustment            (219)      (13,253)
                                         --------      --------
Accumulated other comprehensive loss     $    (24)     $(13,315)
                                         ========      ========

Reclassification

     Certain prior year end amounts have been reclassified to conform to the
2002 presentation.

 New Accounting Pronouncements

     In July 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 141, Business
Combinations, and SFAS No. 142 , Goodwill and Other Intangible Assets. SFAS No.
141 requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001 and prohibits the use of the
pooling-of-interests method. SFAS No. 142 changes the accounting for goodwill
from an amortization method to an impairment-only approach. The amortization of
goodwill from past business combinations will cease upon adoption of this
Statement on January 1, 2002. Goodwill and intangible assets acquired in
business combinations completed after June 30, 2001 must comply with the
provisions of this Statement. Also under this Statement, companies were required
to perform a transitional impairment test of goodwill by evaluating all existing
goodwill for impairment within six months of adoption by comparing the fair
value of each reporting unit to its carrying value at the date of adoption.
During 2002, the Company performed both the transitional impairment test in June
of 2002 and the annual impairment test in the fourth quarter of 2002. Both of
these tests determined that no impairment existed.

     Additionally, SFAS No. 141 requires that in a business combination in which
the fair value of the net assets acquired exceeds cost, any residual negative
goodwill is recognized as an extraordinary gain in the period in which the
business combination is initially recognized. The transition provisions of SFAS
No. 141 require that upon adoption of SFAS No. 142, any existing negative
goodwill be adjusted as a cumulative effect of a change in accounting principle
in the statement of operations. In the first quarter of 2002, the Company
recorded a cumulative effect of a change in accounting principle for its
remaining unamortized negative goodwill of $1.9 million.


                                      -35-

<PAGE>


     The Company's net income and earnings per share for the years ended
December 31, 2002, 2001 and 2000 adjusted to exclude goodwill amortization were
as follows:

<TABLE>
<CAPTION>
                                                              2002            2001            2000
                                                              ----            ----            ----
                                                      (U.S. dollars in thousands, except per share data)
<S>                                                       <C>             <C>             <C>
Reported net income                                       $   14,978      $   13,722      $   13,759
Goodwill amortization, net of tax                                 --             300             275
Negative goodwill amortization, net of tax                        --          (1,200)         (1,200)
Cumulative change in accounting principle, net of tax         (1,858)             --              --
                                                          ----------      ----------      ----------
Adjusted net income                                       $   13,120      $   12,822      $   12,834
                                                          ==========      ==========      ==========

Basic earnings per share as reported                      $     1.43      $     1.30      $     1.25
Net goodwill amortization, net of tax                          --               (.09)           (.08)
Cumulative change in accounting principle, net of tax           (.18)          --                 --
                                                          ----------      ----------      ----------
Adjusted basic earnings per share                         $     1.25      $     1.21      $     1.17
                                                          ==========      ==========      ==========

Diluted earnings per share as reported                    $     1.43      $     1.30      $     1.25
Net goodwill amortization, net of tax                          --               (.09)           (.08)
Cumulative change in accounting principle, net of tax           (.18)          --                 --
                                                          ----------      ----------      ----------
Adjusted diluted earnings per share                       $     1.25      $     1.21      $     1.17
                                                          ==========      ==========      ==========
</TABLE>

     Goodwill of $12,924 and $8,984 at December 31, 2002 and 2001, respectively,
relates to the Company's operations in its European segment. The increase in
goodwill during 2002 includes increases of $2,200 related to the May 2002 Rander
acquisition and $2,140 in foreign currency translation adjustments offset by a
decrease of $400 related to the reversal of accruals recorded in a prior
acquisition.

     In October 2001, the FASB issued SFAS No. 144, "Accounting for Impairment
or Disposal of Long-Lived Assets," which addresses financial accounting and
reporting for the impairment or disposal of long-lived assets. SFAS No. 144
supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of," and the accounting and reporting
provisions of Accounting Principles Board Opinion No. 30, "Reporting the Results
of Operations -- Reporting the Transactions for the Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions." SFAS No. 144 requires that long-lived assets that are to be
disposed of by sale be measured at the lower of book value or fair value less
cost to sell. SFAS No. 144 also sets forth requirements for recognizing and
measuring impairment losses on certain long-lived assets to be held or used.
SFAS No. 144 is effective January 1, 2002. The adoption of SFAS 144 did not have
a material impact on the Company's financial position or results of operations.

     In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." SFAS No. 145 rescinds SFAS No. 4, which required that all gains
and losses from extinguishment of debt be reported as an extraordinary item. The
provisions of SFAS No. 145 related to the rescission of SFAS No. 4 must be
applied in fiscal years beginning after May 15, 2002. The Company has early
adopted this statement for the year ended December 31, 2002. However, its
adoption will have no effect on the Company's future results of operations,
financial position, or cash flows.


                                      -36-

<PAGE>


     In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities". SFAS No. 146 replaces EITF Issue
No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." Among other things, SFAS No. 146 requires that a liability for
a cost associated with an exit or disposal activity be recognized when the
liability is incurred instead of at the date of an entity's commitment to an
exit plan, as under EITF Issue No. 94-3. SFAS No. 146 is effective for exit or
disposal activities that are initiated after December 31, 2002, with early
application encouraged. The Company does not expect the adoption of this
statement to have a significant effect on the Company's results of operations,
financial position, or cash flows.

     In December 2002, the FASB issued SFAS No. 148 "Accounting for Stock-Based
Compensation - Transition and Disclosures", which amends FASB SFAS No. 123,
"Accounting for Stock-Based Compensation". SFAS No. 148 provides alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. Statement No. 148 amends the
disclosure requirements of SFAS No. 123 to require more prominent and more
frequent disclosure in the financial statements about the effects of stock-based
compensation. SFAS No. 148 is effective for fiscal years ended after December
15, 2002. Accordingly, the Company has adopted the annual disclosure provisions
of SFAS No. 148 in its financial statements for the year ended December 31,
2002. The Company will implement SFAS No. 148 effective January 1, 2003
regarding disclosure requirements for condensed financial statements for interim
periods. As provided by SFAS No. 123 and 148, the Company has chosen to continue
use of the accounting method under Accounting Principles Board Opinion No. 25
and the related interpretations to account for the Company's stock compensation
plans. As adoption of Statement No. 148 only involves disclosures by the
Company, the Company does not expect any impact on its results of operations,
financial position, or liquidity.

     In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others, an Interpretation of FASB Statements No.
5, 57, and 107 and Rescission of FASB Interpretation No. 34" (FIN No. 45). The
interpretation requires that upon issuance of a guarantee, the entity must
recognize a liability for the fair value of the obligation it assumes under that
obligation. This interpretation is intended to improve the comparability of
financial reporting by requiring identical accounting for guarantees issued with
separately identified consideration and guarantees issued without separately
identified consideration. The disclosure provisions of FIN No. 45 are effective
for the Company as of December 31, 2002. The Company has now significant
guarantees and claims arising during the course of its business operations. The
Company accrues for losses under these arrangements when they become probable
and estimable. The initial recognition and measurement provisions of FIN No. 45
are applicable to guarantees issued or modified after December 31, 2002. The
Company is currently evaluating what impact, if any, adoption of FIN No. 45 will
have on its consolidated results of operations, financial position, or cash
flows.

4. Inventories

     Inventories consisted of the following:

                                            December 31,
                                            ------------
                                          2002        2001
                                          ----        ----
                                     (U.S. dollars in thousands)

     Finished goods                     $27,551     $23,611
     Work-in-progress                     3,675       3,510
     Raw materials and supplies          14,098      14,636
                                        -------     -------
                                        $45,324     $41,757
                                        =======     =======


                                      -37-

<PAGE>


5. Property, Plant and Equipment

     Property, plant and equipment, net, consisted of the following:

                                                 December 31,
                                                 ------------
                                               2002        2001
                                               ----        ----
                                          (U.S. dollars in thousands)

     Land and buildings                      $ 6,954     $ 5,384
     Machinery and equipment                  53,939      43,960
     Motor vehicles                              978         827
                                             -------     -------
                                             $61,871     $50,171
     Less:  accumulated depreciation         (30,739)    (22,259)
                                             -------     -------
     Property, plant and equipment, net      $31,132     $27,912
                                             =======     =======

6. Notes Payable to Bank

     In April 2002, the Company's Japanese subsidiary entered into a bank loan
with a bank that provided $2.4 million for working capital and acquisitions.
Borrowings under the agreement are guaranteed by the Company. At December 31,
2002, $.2 million was outstanding under the bank loan. Interest on the loan
accrues at a rate of 1.75%. Interest on the loan is payable quarterly. The bank
loan is due on April 20, 2003.

     Other short-term borrowings outside the United States under available
informal credit facilities are typically a result of overdrafts. At December 31,
2002, the Company had an additional $.7 million of other foreign debt
outstanding. The Company also has an additional $1.7 million of unused foreign
credit facilities. These facilities may be withdrawn at any time by the banks.

     The weighted average interest rates on short-term borrowings as of December
31, 2002 and 2001 were 3.9% and 3.6%, respectively.

7. Financial and Derivative Instruments

     Primarily as a result of the short term nature of the Company's financial
instruments and the variable rate of interest on the Company's debt, the
estimated fair values of financial instruments approximate their carrying values
at December 31, 2002 and 2001.

     Effective January 1, 2001, the Company adopted Statement of Financial
Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative
Instruments and Hedging Activities," as amended, which requires companies to
recognize all derivatives as either assets or liabilities in the balance sheet
and measure such instruments at fair value. Derivatives that are not hedges are
adjusted to fair value through income. If the derivative is a hedge, depending
on the nature of the hedge, changes in fair value of derivatives are either
offset against the change in the fair value of assets, liabilities, or firm
commitments through earnings or recognized in other comprehensive income until
the hedged item is recognized in earnings. The ineffective portion of the gain
or loss from the financial instrument is immediately recognized in net income.

     The Company's worldwide manufacturing facilities sell products to the
Company's sales and distribution subsidiaries under various currencies. In
addition, certain of the Company's subsidiaries


                                      -38-

<PAGE>


record billings of export sales in the customer's functional currency.
Accordingly, the US Dollar-equivalent cash flows may vary due to changes in
related foreign currency exchange rates. To reduce that risk, the Company enters
into foreign currency forward contracts with a maximum hedging period of 12
months. The Company has no other freestanding or embedded derivative
instruments. The notional amount of foreign forward currency contracts at
December 31, 2002 was $1.1 million.

     Gains and losses on the foreign currency forward contracts are recorded in
other comprehensive income (equity) to the extent that the hedges are effective
until the underlying sale or purchase transactions are recognized in earnings.
Gains and losses on sale and purchase transactions are classified as sales or
cost of sales, respectively.

     The adoption of SFAS 133 on January 1, 2001 resulted in the cumulative
effect of an accounting change of $178,000, being recognized as other
comprehensive income. The $195,000 gain recorded in accumulated other
comprehensive loss at December 31, 2002 is expected to be reclassified to
earnings over the twelve-month period ending December 31, 2003. The actual
amounts that will be reclassified to earnings over the next twelve months will
vary from this amount as a result of changes in market conditions. No amounts
were reclassified to earnings during the year ended December 31, 2002 in
connection with forecasted transactions that were no longer considered probable
of occurring.

8. Acquisitions

     On May 31, 2002 the Company completed its acquisition of 100% of the
outstanding shares of Rander & Company Hydraulick-Systeme und Anlagenbau GmbH
("Rander"), effective as of June 1, 2002. The Rander acquisition improved the
Company's strategic presence in the German hydraulic markets, the largest market
in Europe. The cash purchase price was $3.3 million ($2.7 million net of cash
acquired and debt assumed). Rander designs, manufactures and distributes
hydraulic systems for industrial and mobile hydraulic applications, and is
located in Bremen, Germany. The acquisition has been accounted for utilizing the
purchase method of accounting, and the operating results of Rander have been
included in the operating results of the Company from June 1, 2002. The purchase
price allocation was as follows: current assets - $1,500, property, plant and
equipment - $460, current liabilities - $860 and goodwill - $2,200. The Company
performed an evaluation of the operations of Rander and determined that there
were no identifiable intangible assets.

     In December 2001 the Company acquired certain assets of a California
distributor of the Company's U.S. subsidiary for $963,000. The Company began
operations, establishing West Coast Fluid Power, as a division of the Company's
U.S. subsidiary, on January 1, 2002 as a distributor serving the general
hydraulics market in California.

     The following unaudited pro forma summary presents the Company's combined
2002 and 2001 results as if the Rander and West Coast Fluid Power acquisitions
had occurred at January 1, 2001, after giving effect to certain adjustments.
These pro forma results are not necessarily indicative of those that would have
occurred had the acquisition(s) occurred at January 1, 2001:

                                             Year Ended
                                December 31, 2002   December 31, 2001
                                -----------------   -----------------
                         (U.S. dollars in thousands, except per share data)

Net sales                            $160,200           $162,400
Net income                           $ 15,378           $ 14,922
Basic earnings per share             $   1.47           $   1.41
Diluted earnings per share           $   1.47           $   1.41


                                      -39-

<PAGE>

     In November 2000, the Company entered into a contract with Shanghai
Hydraulics & Pneumatics Corporation to establish a Sino-Foreign Co-operation
Company, Shanghai Hydraulics Components Limited ("Denison Shanghai"), under the
laws of the People's Republic of China. The contract was subject to approval by
the government of the People's Republic of China (the "PRC"). In June 2001, the
Company received the necessary approvals from the PRC and the contract became
effective as of June 12, 2001. Denison Shanghai manufactures and distributes
vane pumps and motors for industrial hydraulics applications, and is located in
Shanghai, China. The Company owns 100% of the shares of Denison Shanghai. The
Company's initial contribution to Denison Shanghai was $360,000, and the Company
will make additional contributions of machinery and equipment totaling an
additional $90,000. The results of operations for Denison Shanghai have been
consolidated into the Company's results.

     On April 12, 2000, the Company completed its acquisition of 100% of the
outstanding shares of Riva Calzoni Oleodinamica S.p.A. ("Calzoni"), a wholly
subsidiary of Intek S.p.A., effective as of April 1, 2000. The cash purchase
price was $4,015,000 ($5,354,000 net of cash acquired and debt assumed). Calzoni
designs, manufactures and distributes radial piston oil-pressure motors for
industrial hydraulics applications and is located in Bologna, Italy. The
acquisition was accounted for utilizing the purchase method of accounting, and
the operating results of Calzoni have been included in the operating results of
the Company from April 1, 2000.

     On December 23, 1998 the Company closed its acquisition of Lokomec Oy
effective as of October 1, 1998, for a cash purchase price of $16,038,000
($10,923,000 net of cash acquired). Lokomec is a manufacturer of hydraulic
manifolds located in Tampere, Finland. The acquisition was accounted for using
the purchase method of accounting, and the operating results of Lokomec have
been included in the consolidated results of the Company from October 1, 1998.
Goodwill of $8,599,000 is being amortized by the straight-line method over 30
years. The purchase price has increased since 1998 due to the achievement of
certain operating objectives, principally based upon earnings before interest
and taxes, over a three-year period ending on August 31, 2001. In 2001, 2000 and
1999, the Company paid $1,165,000, $572,000 and $788,000, respectively, of
additional purchase price related to this earn out provision.

9. Shareholders Equity

     At the Company's 2002 Annual General Meeting of Shareholders held on May
28, 2002, shareholders unanimously approved a plan under which the Company may
repurchase up to 1,056,770 of its ordinary shares under certain terms and
conditions. The approval will expire on November 7, 2003. During fiscal 2002,
550,000 shares were purchased and retired for an aggregate price of $8.2
million. As of December 31, 2002, the Company had remaining authorization for
future purchases under the plan of 506,770 shares or approximately $8.1 million
at market price as of December 31, 2002.

10. Stock Options

     The Company's Executive Stock Option Plan authorizes awards to employees in
the form of options to purchase the Company's Ordinary Shares. The aggregate
number of Ordinary Shares for which options may be granted under the plan is
850,000. Options granted under the plan are for periods not to exceed 10 years,
and must be issued at the higher of par value or the fair market value of the
shares on the date of grant. Options vest one year from the date of grant
subject to any additional restrictions that may be imposed by the board of
directors.


                                      -40-

<PAGE>


<TABLE>
     The following table summarizes share option activity for Ordinary Shares:

<CAPTION>
                                                  2002                       2001                         2000
                                         ----------------------     ------------------------    ------------------------
                                                      Weighted                   Weighted                    Weighted
                                                       Average                    Average                     Average
                                                      Exercise                   Exercise                    Exercise
                                          Options       Price        Options        Price        Options        Price
                                         ----------- ----------     ----------- ------------    ----------- ------------
<S>                                        <C>         <C>           <C>          <C>            <C>          <C>
Outstanding beginning of year              613,000     $ 16.63       623,000      $ 16.67        650,500      $ 16.81
Granted                                         --          --         5,000        13.63         20,000        11.56
Exercised                                  (3,750)          --            --           --             --           --
Forfeited                                  (1,250)       13.88       (15,000)       16.88        (47,500)       16.00
                                           -------     -------      --------      -------        -------      -------
Outstanding end of year                    608,000     $ 16.66       613,000      $ 16.63        623,000      $ 16.67
                                           =======     =======      ========       =======       =======      =======

Exercisable at end of year                 585,250                   496,875                     353,000

Weighted-average fair value of
options granted during the year              N/A                      $6.92                       $6.09
</TABLE>


<TABLE>
Share options outstanding at December 31, 2002 are summarized as follows:

<CAPTION>
                                               Outstanding                           Exercisable
                                 -------------------------------------------- --------------------------
                                                                Weighted-
                                               Weighted           Average                      Weighted
                                                Average         Remaining                       Average
                                               Exercise       Contractual                      Exercise
                                 Number           Price              Life        Number           Price
                                 -------------------------------------------- --------------------------
<S>                               <C>           <C>               <C>           <C>             <C>
Exercise prices between
   $11.56 and $13.88               66,000       $12.54            6.7            43,250         $12.62
   $16.00 and $19.53              542,000       $17.16            4.5           542,000         $17.16
</TABLE>


     Options to purchase 542,000, 542,000 and 557,000 shares of common stock at
a weighted average price of $17.16, $17.16 and $17.16 per share, respectively,
were outstanding during 2002, 2001 and 2000, respectively, but were not included
in the computation of diluted earnings per share because the options exercise
price was greater than the average market price for the common shares and,
therefore, the effect would be antidilutive.


                                      -41-

<PAGE>


11. Earnings per Share

<TABLE>
     The following table sets forth the computation of basic and diluted
earnings per share:

<CAPTION>
                                                                     2002             2001            2000
                                                                     ----             ----            ----
                                                             (U.S. dollars in thousands, except share and
                                                                           per share data)
<S>                                                             <C>             <C>              <C>
Numerator:
    Net income                                                    $ 14,978        $ 13,722         $ 13,759
                                                                  ========        ========         ========

Denominator:
    Denominator for basic earnings per share --
     weighted-average shares                                    10,453,042      10,563,950       11,046,976
    Effect of dilutive stock options                                33,706          16,710              852
                                                                -----------     ----------       ----------
    Denominator for diluted earnings per share  --
     adjusted weighted-average shares                           10,486,748      10,580,660       11,047,828
                                                                ==========      ==========       ==========

Basic earnings per share                                            $ 1.43          $ 1.30           $ 1.25
                                                                    ======          ======           ======

Diluted earnings per share                                          $ 1.43          $ 1.30           $ 1.25
                                                                    ======          ======           ======
</TABLE>


12.  Commitments

     The Company has purchase commitments with various vendors for approximately
$1.6 million as of December 31, 2002. These purchase commitments are payable
during 2003.

     Future minimum lease payments under non-cancelable operating leases with
initial terms of one year or more consisted of the following at December 31,
2002:

                                              Operating Leases
                                         (U.S. dollars in thousands)

     2003                                          $ 2,074
     2004                                              857
     2005                                              549
     2006                                              399
     2007                                              221
     Thereafter                                         --
                                                        --
     Total minimum lease payments                  $ 4,100
                                                   =======

     Annual rent expense charged to operations in each of the three years ended
December 31, 2002, was approximately $2.1 million.

13. Income Taxes

     The Company's income before income taxes relates to operations in the
United Kingdom and operations other than the United Kingdom (foreign). The
relationship between income before income taxes and the provision for income
taxes varies from period to period because each jurisdiction in which the
Company operates has its own system of taxation (not only with respect to the
statutory rate, but also with


                                      -42-

<PAGE>


respect to the availability of deductions, credits, and other benefits) and
because the amounts earned in and subject to tax by, each jurisdiction changes
from period to period.

     For financial reporting purposes, income before income taxes includes the
following components:

                                                  Year ended December 31,
                                                  -----------------------
                                           2002            2001           2000
                                           ----            ----           ----
                                              (U.S. dollars in thousands)
     Pretax income:
       United Kingdom                   $   (215)       $  2,733       $  2,471
       Foreign                            17,040          17,184         17,205
                                        --------        --------       --------
                                         $16,825         $19,917        $19,676
                                        ========        ========       ========


Significant components of the provision for income tax expense (benefit) were as
follows:

                                                  Year ended December 31,
                                                  -----------------------
                                           2002            2001           2000
                                           ----            ----           ----
                                              (U.S. dollars in thousands)
     Current:
       United Kingdom                   $    (86)       $    367       $    (27)
       Foreign                             4,191           6,020          5,113
                                        --------        --------       --------
         Total current                  $  4,105        $  6,387       $  5,086
                                        ========        ========       ========

     Deferred:
       United Kingdom                   $     --        $     --       $     --
       Foreign                              (400)           (192)           831
                                        --------        --------       --------
         Total provision (benefit)
         for income taxes               $  3,705        $  6,195       $  5,917
                                        ========        ========       ========


<TABLE>
         The effective tax rate on earnings before income taxes varies from the
current U.K. statutory income tax rate as follows:

<CAPTION>
                                                                        December 31,
                                                                        ------------
                                                             2002           2001           2000
                                                             ----           ----           ----
<S>                                                           <C>            <C>            <C>
Provision at statutory rate                                   30%            30%            30%
Foreign operations taxed at rates different from
   United Kingdom statutory rate                                3              6              6
Reduction in valuation allowance relating to utilization
   of NOL carry forwards and other deferred tax assets        (7)            (4)            (3)
Amortization of negative goodwill                              --            (1)            (1)
Other - net                                                   (4)             --            (2)
                                                              ---             --            ---
Effective tax rate                                            22%            31%            30%
                                                              ===            ===            ===
</TABLE>

     Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts for income tax purposes recorded at the applicable
statutory rates where the Company's operations are located.


                                      -43-

<PAGE>


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

                                                              December 31,
                                                              ------------
                                                         2002              2001
                                                         ----              ----
     Deferred tax assets:
          Employee benefits                             $ 917             $ 594
          Net operating loss carryforwards              2,378             2,162
          Other                                         3,525             3,159
     Valuation allowance                               (4,447)           (3,742)
                                                      -------           -------
     Deferred tax assets                                2,373             2,173
                                                      -------           -------

     Deferred tax liabilities                           1,979             1,552

     Net deferred tax assets                            $ 394             $ 621
                                                      =======           =======

     A valuation allowance has been provided against the net deferred tax assets
for financial reporting purposes in respect of temporary differences and net
operating loss carryforwards. These deferred tax assets primarily relate to
existing net operating losses and basis differences that arose as part of the
June 15, 1993 acquisition. Certain of these net operating losses and future tax
deductions are subject to limitations under foreign tax law which are described
further below. When the deferred tax assets from the acquisition are realized,
the Company records a reduction in the current year income tax expense equal to
the valuation reserve which has been realized. The valuation allowance has been
increased by $0.7 million at December 31, 2002 and was reduced by $1.5 million
at December 31, 2001.

     At December 31, 2002, the Company has net operating loss carryforwards
("NOLs") of approximately $7.2 million for foreign income tax purposes, of which
the entire balance will be allowable against national taxes. The NOL deductions
in the U.S. totaling $4.5 million are limited under Section 382 of the Internal
Revenue Code to $0.9 million per year expiring in 2007. The Company and its
subsidiaries file for group relief or consolidated tax returns in the
jurisdictions where available.

     The Company has not provided for taxes on undistributed foreign earnings
since the Company intends to reinvest these earnings in the future growth of the
business.

14. Pension and Other Postretirement Benefits

     The Company operates four defined benefit pension plans in the United
States, Germany and Japan. The plans are generally funded in advance by
contributions from members at levels set in the rules, and from the Company at
rates assessed by each plan's professionally qualified actuaries. Plan assets
consist principally of corporate and government bonds and common stocks.

     In addition to the Company's defined benefit pension plans, the Company's
U.S. subsidiary provides health care and life insurance benefits for certain
retired employees, and life insurance benefits for certain active employees. The
health care and life insurance plans are non-contributory and the health care
plan contains other cost-sharing features such as deductibles and coinsurance.

     The following table sets forth the reconciliation of the beginning and
ending balances of the benefit obligation and plan assets, the funded status and
the amounts recognized in the consolidated balance sheets for the defined
benefit and other postretirement plans as of December 31:


                                      -44-

<PAGE>

<TABLE>
<CAPTION>
                                                              Pension Benefits           Other Benefits
                                                              ----------------           --------------
                                                             2001         2002         2002         2001
                                                             ----         ----         ----         ----
                                                                     (U.S. dollars in thousands)
<S>                                                        <C>          <C>          <C>          <C>
Change in benefit obligation
Benefit obligation beginning of year                       $ 14,404     $ 14,249     $    794     $    754
Service cost                                                    275          265            7            5
Interest cost                                                   839          822           46           58
Actuarial (gain)/loss                                             7          422          (25)         122
Benefits paid                                                  (639)        (686)        (156)        (145)
Exchange rate changes                                         1,495         (668)          --           --
                                                           --------     --------     --------     --------
Benefit obligation at end of year                          $ 16,381     $ 14,404     $    666     $    794
                                                           --------     --------     --------     --------

Change in plan assets
Fair value of plan assets at beginning of year             $  5,595     $  5,655     $     --     $     --
Actual return on plan assets                                    183          218           --           --
Employer contributions                                          142          218          156          145
Benefits paid                                                  (366)        (422)        (156)        (145)
Exchange rate changes                                            55          (74)          --           --
                                                           --------     --------     --------     --------
Fair value of plan assets at end of year                   $  5,609     $  5,595     $      0     $      0
                                                           --------     --------     --------     --------


Reconciliation of funded status
Funded status                                              $(10,775)    $ (8,809)    $   (666)    $   (794)
Unrecognized actuarial (gain)/loss                               23         (246)         113          138
Unrecognized net asset                                          267          (34)          --           --
                                                           --------     --------     --------     --------
Accrued benefit cost                                       $(10,485)    $ (9,089)    $   (553)    $   (656)
                                                           --------     --------     --------     --------

Amounts recognized in the consolidated balance sheets
consists of:
Prepaid benefit cost                                       $     --     $    472     $     --     $     --
Accrued benefit liability                                   (11,055)      (9,561)        (553)        (656)
Intangible asset                                                 42           --           --           --
Accumulated other comprehensive income                          528           --           --           --
                                                           --------     --------     --------     --------
Net amount recognized                                      $(10,485)    $ (9,089)    $   (553)    $   (656)
                                                           ========     ========     ========     ========


Additional year-end information for plans with benefit
obligations in excess of plan assets
Projected benefit obligation                                 16,381       13,766
Accumulated benefit obligation                               15,535       12,987
Fair value of plan assets                                     5,609        4,948


Components of net periodic benefit cost
Service cost                                                  $ 276        $ 265     $      7     $      5
Interest cost                                                   839          822           46           58
Expected return on plan assets                                (353)         (367)          --           --
Amortization of transitional (asset) or obligation               33           33           --           --
Recognized actuarial (gain) or loss                              10          (25)          --            3
Exchange rate changes                                            63           --           --           --
                                                           --------     --------     --------     --------
Net periodic benefit cost                                  $    868     $    728     $     53     $     66
                                                           --------     --------     --------     --------


                                      -45-

<PAGE>


<CAPTION>
                                                              Pension Benefits           Other Benefits
                                                              ----------------           --------------
                                                             2001         2002         2002         2001
                                                             ----         ----         ----         ----
                                                                     (U.S. dollars in thousands)
<S>                                                        <C>          <C>          <C>          <C>
Weighted average assumptions as of December 31
Discount rate                                                  3.41%        5.84%        7.00%        7.25%
Rate of increase in compensation levels                        2.40%        2.40%          --           --
Expected long-term rate of return on assets                    6.63%        6.76%          --           --
</TABLE>

     The annual assumed health care cost trend rate is 6% for the year
subsequent to December 31, 2002 and is assumed to remain at 6% thereafter.

     Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plan. A one-percentage point change in
assumed health care trend rate would have the following effects:

(U.S. dollars in thousands)                        1% Increase       1% Decrease
                                                   -----------       -----------

Effect on total service and interest cost              $ 4               $ 3
Effect on postretirement benefit obligation            $ 47             $ 33

15. Contingencies

     The Company remains involved in environmental cleanup efforts at Company
owned sites. The Company's estimate of the total anticipated cost of the cleanup
efforts is $3.0 million of which $1.7 million has been spent as of December 31,
2002. Remaining accrued cleanup costs total $1.3 million of which $1.2 million
is classified in the consolidated financial statements as long-term accrued
liabilities. There were no charges to the accrual in 2002 and 2001.

     Because of the uncertainties relating to remediation activities, the future
expenditures to remediate the currently identified sites could be higher than
the accrued liability. Although it is difficult to assess the final outcome
related to environmental exposures, management believes that these liabilities
are fully accrued for in the accompanying consolidated financial statements.

16. Segment Information

     The Company operates exclusively in the hydraulics industry. Substantially
all revenues result from the sale of hydraulics products. The Company's
reportable segments are based on geographic area. The accounting policies of the
operating segments are the same as described in Note 3. Sales are determined
based on the country of origin. The Company evaluates the performance of its
operating segments based on operating profit after elimination of profits on
transfers between geographic area.


                                      -46-

<PAGE>


     A summary of the Company's operations by geographic area follows:

                                           2002           2001           2000
                                           ----           ----           ----
                                              (U.S. dollars in thousands)
Sales to unaffiliated companies:
     United Kingdom                    $   8,594      $   8,543      $   8,776
     France                               15,720         15,104         14,447
     Germany                              13,950         12,550         11,405
     Italy                                19,260         20,037         18,941
     Rest of Europe                       32,194         29,071         29,561
                                       ---------      ---------      ---------
          Total Europe                    89,718         85,305         83,130

     United States                        36,712         39,669         41,078
     Canada                                8,506          8,449          7,855
                                       ---------      ---------      ---------
          Total North America             45,218         48,118         48,933

     Asia-Pacific                         23,075         22,023         21,032
                                       ---------      ---------      ---------
          Total Consolidated           $ 158,011      $ 155,446      $ 153,095
                                       =========      =========      =========

Transfers between geographic area:
     United Kingdom                    $     114      $     138      $     274
     France                               24,498         24,340         23,822
     Germany                              12,635         14,027         14,518
     Italy                                 1,698          1,239             --
     Rest of Europe                          854            923            886
                                       ---------      ---------      ---------
          Total Europe                    39,799         40,667         39,500

     United States                        14,123         14,344         13,188
     Canada                                   --             --             --
                                       ---------      ---------      ---------
          Total North America             14,123         14,344         13,188

     Asia-Pacific                            282            643             94
                                       ---------      ---------      ---------

          Total Transfers                 54,204         55,654         52,782
          Eliminations                   (54,204)       (55,654)       (52,782)
                                       ---------      ---------      ---------
          Total Consolidated           $       0      $       0      $       0
                                       =========      =========      =========


Depreciation expense:
     United Kingdom                    $     227      $     209      $     163
     France                                1,524          1,253          1,282
     Germany                                 850            746            680
     Italy                                   710            677            589
     Rest of Europe                          544            667            498
                                       ---------      ---------      ---------
          Total Europe                     3,855          3,552          3,212

     United States                         1,530          1,445          1,470
     Canada                                   22            (31)            19
                                       ---------      ---------      ---------
          Total North America              1,552          1,414          1,489

     Asia-Pacific                            254            273            349
                                       ---------      ---------      ---------
          Total Consolidated           $   5,661      $   5,239      $   5,050
                                       =========      =========      =========


                                      -47-

<PAGE>


                                           2002           2001           2000
                                           ----           ----           ----
                                              (U.S. dollars in thousands)
Operating Income:
     United Kingdom                    $     670      $     929          $ 995
     France                                7,373          7,676          6,470
     Germany                               1,003          1,651          1,336
     Italy                                 1,057          1,469          1,518
     Rest of Europe                        2,889          3,061          3,516
                                       ---------      ---------      ---------
          Total Europe                    12,992         14,786         13,835

     United States                         1,526            638          1,915
     Canada                                1,007            933            783
                                       ---------      ---------      ---------
          Total North America              2,533          1,571          2,698

     Asia-Pacific                          1,212          1,998          1,123

     Corporate                              (543)           195            711
                                       ---------      ---------      ---------
          Total Consolidated           $  16,194      $  18,550      $  18,367
                                       =========      =========      =========


Identifiable assets:
     United Kingdom                    $   9,027      $  11,846      $  10,043
     France                               30,867         29,487         23,600
     Germany                              20,828         16,941         16,236
     Italy                                24,259         16,953         18,584
     Rest of Europe                       34,084         32,725         29,225
                                       ---------      ---------      ---------
          Total Europe                   119,065        107,952         97,688

     United States                        26,371         25,989         25,938
     Canada                                5,323          5,411          4,920
                                       ---------      ---------      ---------
          Total North America             31,694         31,400         30,858

     Asia-Pacific                         18,780         17,463         15,848
                                       ---------      ---------      ---------
          Total Consolidated           $ 169,539      $ 156,815      $ 144,394
                                       =========      =========      =========


17. Selected Quarterly Financial Data (Unaudited)
      (U.S. dollars in thousands)

                                                Quarter Ended
                                                -------------
                              March 31      June 30   September 30   December 31
                              --------      -------   ------------   -----------

2002
Net Sales                      $38,186      $39,620      $38,925       $41,280
Gross Profit                    13,596       14,002       14,197        13,616
Operating Income                 4,258        4,112        4,190         3,634
Net Income                       4,825        3,406        3,220         3,527
Basic Earnings per Share          0.46         0.32         0.31          0.35
Diluted Earnings per Share        0.46         0.32         0.31          0.35

2001
Net Sales                      $42,717      $41,071      $36,612       $35,046
Gross Profit  (a)               14,708       14,885       12,873        12,733
Operating Income                 5,789        5,541        4,220         3,000
Net Income                       4,015        4,309        3,219         2,179
Basic Earnings per Share          0.38         0.41         0.31          0.21
Diluted Earnings per Share        0.38         0.41         0.30          0.21

(a) Gross Profit for the quarter ended June 30, 2001 has been restated from
$13,839 reported in the Company's Form 10-Q to $14,885 to reflect a
reclassification between cost of sales and selling, general & administrative
expenses.


                                      -48-

<PAGE>


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

     None.


                                    PART III

ITEM 10. DIRECTORS AND OFFICERS OF THE REGISTRANT

     The information regarding Directors appearing under the caption "Election
of Directors" in the Company's Definitive Proxy Statement to be used in
connection with the Annual General Meeting of Stockholders to be held on May 22,
2003 (the "2003 Proxy Statement") is incorporated herein by reference, since
such Proxy Statement will be filed with the Securities and Exchange Commission
not later than 120 days after the end of the Company's fiscal year pursuant to
Regulation 14A. Information required by this item as to executive officers of
the Company is included in Part I (See "Executive Officers of the Company") of
this Annual Report on Form 10-K. Information required by Item 405 of Regulation
S-K is set forth in the 2003 Proxy Statement under the heading "Section 16(a)
Beneficial Ownership Reporting Compliance" which information is incorporated
herein by reference.


ITEM 11. EXECUTIVE COMPENSATION

     The information required by this item is incorporated herein by reference
to "Executive Compensation" in the 2003 Proxy Statement.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information required by this item is incorporated herein by reference
to "Stock Ownership of Beneficial Owners and Management" in the 2003 Proxy
Statement.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     None.


ITEM 14. CONTROLS AND PROCEDURES

     (a) Evaluation of disclosure controls and procedures.

     The Company's chief executive officer and chief financial officer, after
evaluating the effectiveness of the Company's "disclosure controls and
procedures" (as defined in Rules 13a-14(c) and 15d-14(c) of the Securities
Exchange Act of 1934) as of a date (the "Evaluation Date") within 90 days before
the filing date of this annual report, have concluded that, as of the Evaluation
Date, the Company's


                                      -49-

<PAGE>


disclosure controls and procedures were effective and designed to ensure that
material information relating to the Company and the Company's consolidated
subsidiaries would be accumulated and communicated to the Company's management,
as appropriate to allow timely decisions regarding required disclosure.

     (b) Changes in internal controls.

     There were no significant changes in the Company's internal controls or in
other factors that could significantly affect those controls subsequent to the
Evaluation Date.


                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)  Documents filed as part of this Form 10-K:

     1.   Financial Statements

          The 2002 Consolidated Financial Statements of Denison International
          plc are included in Part II, Item 8.

     2.   Financial Statement Schedule

Schedule II - Valuation and Qualifying Accounts is enclosed at page F-1 of this
Form 10-K.

          All other financial statement schedules for the Company and its
          subsidiaries have been included in the consolidated financial
          statements or the related footnotes, or they are either inapplicable
          or not required.

     3.   Exhibits

          See the Index to Exhibits at page E-1 of this Form 10-K.

(b)  Reports on Form 8-K

          Form 8-K filed on October 28, 2002, relating to the Company's press
          release reporting financial results for the third quarter of 2002.


                                      -50-

<PAGE>


                                INDEX OF EXHIBITS


Exhibit No.    Description
-----------    -----------


2.1            Agreement, dated December 23, 1998, by and among Denison
               International plc, Merifire Oy and other persons named therein,
               for the acquisition of 100% of the outstanding shares of Lokomec
               Oy. ***

2.2            Stock Purchase Agreement, dated March 14, 2000, by and among
               Denison Hydraulics Italy s.r.l. and Intek S.p.A., for the
               acquisition of 100% of the shares outstanding of Riva Calzoni
               Oleodinamica S.p.A. *

2.3            Contract dated November 8, 2000 by and between Denison Hydraulics
               Limited, Hong Kong and Shanghai Hydraulics & Pneumatics
               Corporation for the establishment of Shanghai Denison Hydraulics
               Components Limited. ++

2.4            Asset Purchase Agreement, dated December 27, 2001 by and between
               Denison Hydraulics, Inc. and STS Operating, Inc. for the
               acquisition of certain assets relating to STS Operating Inc.'s
               U.S. west coast operations. +++

2.5            Agreement, dated May 31, 2002, by and among Denison Hydraulicks
               GmbH and the shareholders of Rander & Co. Hydraulick-Systeme und
               Anlagenbau GmbH ("Rander"), for the acquisition of 100% of the
               outstanding shares of Rander. ++++

3.1            Memorandum and Articles of Association of the Company **

4.1            Form of Deposit Agreement, among the Company, Bankers Trust
               Company, as Depository, and holders from time to time of American
               Depository Shares issued thereunder (including as an exhibit the
               form of American Depository Receipt and the form of said
               Agreement) **

4.2            Form of Ordinary Share Certificate **

10.1           The Denison International Stock Option Plan **

10.2           Employment Agreement, dated as of June 1, 1998, by and among
               David L. Weir, Denison Hydraulics, Inc. and Denison International
               plc ***

10.3           Revolving Credit Agreement, dated as of May 18, 1999 by and
               between Denison Hydraulics, Inc. and Bank One, NA. +

10.4           Stock Purchase Agreement, dated May 8, 2000, by and between
               Denison International plc and ING Barings LLP for the purchase of
               up to 1,113,950 of the outstanding shares of the Company. *

10.5           Agreement dated May 31, 2000 by and between David L. Weir and
               Denison Hydraulics Inc. and Denison International plc to extend
               the employment agreement entered into June 1, 1998. ****

10.6           Form of Stock Purchase Agreement, by and between Denison
               International plc and ING Barings LLP for the purchase of up to
               1,056,395 of the outstanding shares of the Company. +++

21.1           Subsidiaries of Registrant ****

23.1           Consent of Ernst & Young LLP

99.1           Certification of Principal Executive Officer, David L. Weir,
               Pursuant to 18 U.S.C Section 1350, as adopted Pursuant to ss. 906
               of the Sarbanes-Oxley Act of 2002.


                                      -51-

<PAGE>


99.2           Certification of Principal Financial Officer, Bruce A. Smith,
               Pursuant to 18 U.S.C Section 1350, as adopted Pursuant to ss. 906
               of the Sarbanes-Oxley Act of 2002.


*              Filed as an exhibit to the Company's Quarterly Report on Form
               10-Q for the period ended March 31, 2000 and incorporated herein
               by reference.

**             Filed as an exhibit to the Company's Registration Statement on
               Form F-1 (Registration No. 333-7248) and incorporated herein by
               reference.

***            Filed as an exhibit to the Company's Annual Report on Form 20-F
               for the year ended December 31, 1998 and incorporated herein by
               reference.

****           Filed as an exhibit to the Company's Annual Report on Form 10-K
               for the year ended December 31, 2000 and incorporated herein by
               reference.

+              Filed as an exhibit to the Company's Annual Report on Form 10-K
               for the year ended December 31, 1999 and incorporated herein by
               reference.

++             Filed as an exhibit to the Company's Quarterly Report on Form
               10-Q for the period ended June 30, 2001 and incorporated herein
               by reference.

+++            Filed as an exhibit to the Company's Annual Report on Form 10-K
               for the year ended December 31, 2001 and incorporated herein by
               reference.

++++           Filed as an exhibit to the Company's Quarterly Report on Form
               10-Q for the period ended June 30, 2002 and incorporated herein
               by reference.


                                      -52-

<PAGE>


                                   SIGNATURES

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

                                        Denison International plc (registrant)

     March 28, 2003                     By: /s/ Bruce A. Smith
                                            ------------------------------
                                            Bruce A. Smith
                                            Chief Financial Officer

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


     /s/ J. Colin Keith                                           March 28, 2003
     ------------------------------

     J. Colin Keith, Chairman of the Board


     /s/ Anders C. H. Brag                                        March 28, 2003
     ------------------------------

     Anders C. H. Brag, Managing Director and Director


     /s/ David L. Weir                                            March 28, 2003
     ------------------------------

     David L. Weir, President, Chief Executive Officer and Director
     (Principal Executive Officer)


     /s/ Bruce A. Smith                                           March 28, 2003
     ------------------------------

     Bruce A. Smith, Chief Financial Officer and Director
     (Principal Financial Officer and Principal Accounting Officer)


                                      -53-

<PAGE>


                                 CERTIFICATIONS

I, David L. Weir, certify that:


     1.   I have reviewed this annual report on Form 10-K of Denison
          International plc;

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

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

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

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

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

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

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

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

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

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


Date:  March 28, 2003                   /s/ David L. Weir
       --------------                   ----------------------------------
                                        Chief Executive Officer
                                        and President


                                      -54-

<PAGE>


                                 CERTIFICATIONS

I, Bruce A. Smith, certify that:

     1.   I have reviewed this annual report on Form 10-K of Denison
          International plc;

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

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

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

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

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

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

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

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

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

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


Date:  March 28, 2003                   /s/ Bruce A. Smith
       --------------                   ----------------------------------
                                        Chief Financial Officer


                                      -55-

<PAGE>


                                   SCHEDULE II
                                   -----------

<TABLE>
                            DENISON INTERNATIONAL PLC

                        VALUATION AND QUALIFYING ACCOUNTS

<CAPTION>
                                                                     Additions
                                                                     ---------
                                              Balance at     Charged to     Charged to                    Balance at
                                             beginning of     costs and        other       Deductions        end of
                                                period        expenses       accounts     (write-offs)       period
                                             ------------    ----------     ----------    ------------    ----------
Description
<S>                                             <C>            <C>          <C>              <C>            <C>
Allowance for doubtful accounts receivable
     Year ended December 31, 2000               2,175          1,660         (41) (a)        (1,382)        2,412
     Year ended December 31, 2001               2,412            663        (656) (a)          (204)        2,185
     Year ended December 31, 2002               2,185            548        (448) (a)           (43)        2,242

(a)  Exchange adjustment
</TABLE>


                                      F-1

<PAGE>


                                INDEX OF EXHIBITS


Exhibit No.    Description
-----------    -----------


2.1            Agreement, dated December 23, 1998, by and among Denison
               International plc, Merifire Oy and other persons named therein,
               for the acquisition of 100% of the outstanding shares of Lokomec
               Oy. ***

2.2            Stock Purchase Agreement, dated March 14, 2000, by and among
               Denison Hydraulics Italy s.r.l. and Intek S.p.A., for the
               acquisition of 100% of the shares outstanding of Riva Calzoni
               Oleodinamica S.p.A. *

2.3            Contract dated November 8, 2000 by and between Denison Hydraulics
               Limited, Hong Kong and Shanghai Hydraulics & Pneumatics
               Corporation for the establishment of Shanghai Denison Hydraulics
               Components Limited. ++

2.4            Asset Purchase Agreement, dated December 27, 2001 by and between
               Denison Hydraulics, Inc. and STS Operating, Inc. for the
               acquisition of certain assets relating to STS Operating Inc.'s
               U.S. west coast operations. +++

2.5            Agreement, dated May 31, 2002, by and among Denison Hydraulicks
               GmbH and the shareholders of Rander & Co. Hydraulick-Systeme und
               Anlagenbau GmbH ("Rander"), for the acquisition of 100% of the
               outstanding shares of Rander. ++++

3.1            Memorandum and Articles of Association of the Company **

4.1            Form of Deposit Agreement, among the Company, Bankers Trust
               Company, as Depository, and holders from time to time of American
               Depository Shares issued thereunder (including as an exhibit the
               form of American Depository Receipt and the form of said
               Agreement) **

4.2            Form of Ordinary Share Certificate **

10.1           The Denison International Stock Option Plan **

10.2           Employment Agreement, dated as of June 1, 1998, by and among
               David L. Weir, Denison Hydraulics, Inc. and Denison International
               plc ***

10.3           Revolving Credit Agreement, dated as of May 18, 1999 by and
               between Denison Hydraulics, Inc. and Bank One, NA. +

10.4           Stock Purchase Agreement, dated May 8, 2000, by and between
               Denison International plc and ING Barings LLP for the purchase of
               up to 1,113,950 of the outstanding shares of the Company. *

10.5           Agreement dated May 31, 2000 by and between David L. Weir and
               Denison Hydraulics Inc. and Denison International plc to extend
               the employment agreement entered into June 1, 1998. ****

10.6           Form of Stock Purchase Agreement, by and between Denison
               International plc and ING Barings LLP for the purchase of up to
               1,056,395 of the outstanding shares of the Company. +++

21.1           Subsidiaries of Registrant ****

23.1           Consent of Ernst & Young LLP

99.1           Certification of Principal Executive Officer, David L. Weir,
               Pursuant to 18 U.S.C Section 1350, as adopted Pursuant to ss. 906
               of the Sarbanes-Oxley Act of 2002.


                                      E-1

<PAGE>


99.2           Certification of Principal Financial Officer, Bruce A. Smith,
               Pursuant to 18 U.S.C Section 1350, as adopted Pursuant to ss. 906
               of the Sarbanes-Oxley Act of 2002.


*              Filed as an exhibit to the Company's Quarterly Report on Form
               10-Q for the period ended March 31, 2000 and incorporated herein
               by reference.

**             Filed as an exhibit to the Company's Registration Statement on
               Form F-1 (Registration No. 333-7248) and incorporated herein by
               reference.

***            Filed as an exhibit to the Company's Annual Report on Form 20-F
               for the year ended December 31, 1998 and incorporated herein by
               reference.

****           Filed as an exhibit to the Company's Annual Report on Form 10-K
               for the year ended December 31, 2000 and incorporated herein by
               reference.

+              Filed as an exhibit to the Company's Annual Report on Form 10-K
               for the year ended December 31, 1999 and incorporated herein by
               reference.

++             Filed as an exhibit to the Company's Quarterly Report on Form
               10-Q for the period ended June 30, 2001 and incorporated herein
               by reference.

+++            Filed as an exhibit to the Company's Annual Report on Form 10-K
               for the year ended December 31, 2001 and incorporated herein by
               reference.

++++           Filed as an exhibit to the Company's Quarterly Report on Form
               10-Q for the period ended June 30, 2002 and incorporated herein
               by reference.


                                      E-2