SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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


                                    FORM 10-Q


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

        For quarter ended June 30, 2001 Commission File Number 33-24317

                             JORDAN INDUSTRIES, INC.
               (Exact name of registrant as specified in charter)

            Illinois                               36-3598114
(State or other jurisdiction of                 (I.R.S. Employer
Incorporation or organization)                  Identification No.)

       ArborLake Centre, Suite 550                    60015
         1751 Lake Cook Road                        (Zip Code)
         Deerfield, Illinois
(address of Principal Executive Offices)

         Registrant's telephone number, including Area Code:

                                 (847) 945-5591

Former name, former address and former fiscal year, if changed since last
report: Not applicable.

       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 twelve (12) months (or for such shorter period that
the registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past ninety (90) days.

                    Yes     X                  No   --------
                          ------

       The aggregate market value of voting stock held by non-affiliates of the
Registrant is not determinable as such shares were privately placed and there is
currently no public market for such shares.

     The number of shares outstanding of Registrant's  Common Stock as of August
14, 2001: 98,501.0004.




<PAGE>


                             JORDAN INDUSTRIES, INC.

                                      INDEX


Part I.                                                               Page No.
-------                                                               --------

       Condensed Consolidated Balance Sheets
       at June 30, 2001 (Unaudited), and December 31, 2000                3

       Condensed Consolidated Statements of Operations for the
       Three Months Ended June 30, 2001 and 2000 (Unaudited), and
       the Six Months Ended June 30, 2001 and 2000 (Unaudited)            4

       Condensed Consolidated Statements of Cash Flows for
       the Six Months Ended June 30, 2001 and 2000 (Unaudited)            5

       Notes to Condensed Consolidated Financial Statements (Unaudited)   6

       Management's Discussion and Analysis of
       Financial Condition and Results of Operations                     15


Part II.

       Other Information                                                 23

       Signatures                                                        24





                                       2
<PAGE>



                             JORDAN INDUSTRIES, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        (ALL DOLLAR AMOUNTS IN THOUSANDS)


                                                 June 30,        December 31,
                                                   2001             2000
                                                ------------     ------------
                                                (unaudited)

ASSETS
Current Assets:
  Cash and cash equivalents                        $22,355        $21,713
  Accounts receivable, net                         118,903        128,265
  Inventories                                      129,294        139,046
  Deferred Income Taxes                             15,215          9,001
  Prepaid expenses and other current assets         41,149         32,155
                                                   -------        -------
    Total Current Assets                           326,916        330,180

Property, plant and equipment, net                 103,442        107,526
Investments in and advances to affiliates           43,209         42,902
Goodwill, net                                      364,588        371,487
Deferred income taxes                                1,060          2,851
Other assets                                        40,916         41,755
                                                  --------       --------
    Total Assets                                  $880,131       $896,701
                                                  ========       ========

LIABILITIES AND SHAREHOLDER'S EQUITY
 (NET CAPITAL DEFICIENCY)
Current Liabilities:
  Accounts payable                                 $56,405        $68,236
  Accrued liabilities                               59,746         65,108
  Advance deposits                                   2,344          1,937
  Current portion of long-term debt                 31,691         35,600
                                                   -------        -------
    Total Current Liabilities                      150,186        170,881

Long-term debt                                     803,730        787,694
Other non-current liabilities                       19,240         17,728
Minority interest                                      245            410
Preferred stock                                      2,080          1,998

Shareholder's Equity (net capital deficiency):
Common stock $.01 par value: 100,000 shares
 authorized and 98,501 shares
 outstanding                                             1              1
  Additional paid-in capital                         2,116          2,116
  Accumulated other comprehensive loss              (15,105)      (16,641)
  Accumulated deficit                               (82,362)      (67,486)
                                                    --------      --------
    Total Shareholder's Equity (net capital
     deficiency)                                    (95,350)      (82,010)
                                                    --------      --------
    Total Liabilities and Shareholder's
     Equity (net capital deficiency)               $880,131      $896,701
                                                   ========      =========



See accompanying notes to condensed consolidated financial statements.




                                       3
<PAGE>



                             JORDAN INDUSTRIES, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                        (ALL DOLLAR AMOUNTS IN THOUSANDS)


<TABLE>
<CAPTION>

                                                    THREE MONTHS ENDED              SIX MONTHS ENDED
                                                         June 30,                       June 30,
                                                    ------------------             ---------------------
                                                     2001        2000                 2001         2000
                                                    ------      ------             --------      -------
<S>                                                <C>          <C>                  <C>         <C>


Net sales                                          $184,973     $207,083            $367,579     $398,201
Cost of sales, excluding
 depreciation                                       117,751      129,809             234,795      252,188
Selling, general and
 administrative expenses,
 excluding depreciation                              42,347       42,549              85,648       84,342
Depreciation                                          6,074        5,718              11,875       11,292
Amortization of goodwill
 and other intangibles                                4,051        4,165               7,881        8,239
Management fees and other                             1,566          198               2,499          492
                                                     ------       ------               -----       -------

Operating income                                     13,184       24,644              24,881       41,648

Other (income) expenses:
  Interest expense                                   23,215       23,564              46,063       45,952
  Interest income                                    (1,590)      (1,085)             (2,148)      (1,360)
  Other                                                 105          608                 386          602
                                                     ------       -------             -------      --------
Total other expenses, net                            21,730       23,087              44,301       45,194
                                                     ------       -------             -------      --------
(Loss) income from continuing
 operations before income
 taxes and minority interest                         (8,546)       1,557              (19,420)      (3,546)
(Benefit) provision for income
 taxes                                               (1,752)         363               (4,461)      (1,488)
                                                     -------         ---              --------      --------
(Loss) income from continuing operations before
   minority interest
                                                     (6,794)       1,194              (14,959)      (2,058)
Minority interest                                       (89)         642                 (165)         667
                                                     -------       -----              --------      --------
(Loss) income from continuing operations
                                                      (6,705)        552              (14,794)      (2,725)
Discontinued operations, net of
  taxes                                                    -      (8,798)                  -      (198,821)
                                                     --------     -------            ---------     ---------
Net (loss) income                                    $(6,705)     $9,350             $(14,794)    $196,096
                                                     ========     =======           =========      =========

</TABLE>


See accompanying notes to condensed consolidated financial statements.




                                       4
<PAGE>



                             JORDAN INDUSTRIES, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                        (ALL DOLLAR AMOUNTS IN THOUSANDS)


                                                           SIX MONTHS ENDED
                                                               June 30,
                                                           -----------------
                                                            2001        2000
                                                            ----        -----

Cash flows from operating activities:
 Net (loss) income                                        $(14,794)   $196,096
  Adjustments to reconcile net (loss) income to net
   cash used in operating activities:
    Depreciation and amortization                           19,756      19,409
    Amortization of deferred financing fees                  2,528       2,533
    Minority interest                                         (165)        318
    Non-cash interest                                       10,618       9,452
    Gain on sale of discontinued operations                     -     (198,821)
    Changes in operating assets and liabilities
     net of effects from acquisitions:
      Increase in current assets                           (15,689)    (13,763)
      Decrease in current liabilities                       (2,560)     (8,772)
      Increase in non-current assets                        (3,001)    (15,757)
      Increase (decrease) in non-current liabilities         1,514        (899)
                                                           --------    ---------
        Net cash used in operating
         activities                                         (1,793)    (10,204)


Cash flows from investing activities:
  Proceeds from sale of discontinued operations                 -       69,150
  Proceeds from sale of subsidiary                          16,663           -
  Capital expenditures, net                                 (6,282)     (7,410)
  Acquisitions of subsidiaries                              (8,765)    (39,882)
  Additional purchase price payments                             -      (3,093)
  Net cash acquired in purchase of subsidiaries                 14       1,680
  Other                                                        (42)         27
                                                            -------     -------
        Net cash provided by investing activities            1,588      20,472

Cash flows from financing activities:
  Proceeds from (repayment of) revolving credit
   facilities, net                                           6,543      (6,043)
  Repayment of long-term debt                               (5,999)     (2,254)
  Other borrowing                                              396           -
                                                            ------      -------
        Net cash provided by (used in) financing
         activities                                            940      (8,297)

Foreign currency translation                                   (93)     (2,576)
                                                               ----     -------
Net increase (decrease) in cash and cash equivalents           642        (605)
Cash and cash equivalents at beginning of period            21,713      20,417
                                                           -------     --------
Cash and cash equivalents at end of period                 $22,355     $19,812
                                                           =======     ========


See accompanying notes to condensed consolidated financial statements.



                                  5
<PAGE>



                             JORDAN INDUSTRIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                        (ALL DOLLAR AMOUNTS IN THOUSANDS)

A.  Organization

The unaudited condensed consolidated financial statements, which reflect all
adjustments that management believes necessary to present fairly the results of
interim operations and are of a normal recurring nature, should be read in
conjunction with the Notes to the Consolidated Financial Statements (including
the Summary of Significant Accounting Policies) included in the Company's
audited consolidated financial statements for the year ended December 31, 2000,
which are included in the Company's Annual Report filed on Form 10-K for such
year (the "2000 10-K"). Results of operations for the interim periods are not
necessarily indicative of annual results of operations.

B.  Accounting Policies - New Pronouncements

In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets, effective for fiscal years beginning after
December 15, 2001. Under the new rules, goodwill and intangible assets deemed to
have indefinite lives will no longer be amortized but will be subject to annual
impairment tests in accordance with the Statements. Other intangible assets will
continue to be amortized over their useful lives.

The Company will apply the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002. Application of the
nonamortization provisions of the Statement is expected to result in an increase
in pretax income of approximately $16.0 million per year. During 2002, the
Company will perform the first of the required impairment tests of goodwill and
indefinite lived intangible assets as of January 1, 2002 and has not yet
determined what the effect of these tests will be on the earnings and financial
position of the Company.

C.  Inventories

Inventories are summarized as follows:
                                            June 30,          December 31,
                                              2001                2000
                                           ------------       ------------

       Raw materials                         $ 52,250          $ 51,814
       Work-in-process                         18,994            16,760
       Finished goods                          58,050            70,472
                                              -------          --------
                                             $129,294          $139,046
                                             ========          ========

D.  Comprehensive Income


Total comprehensive (loss) income for the quarters and six months ended June 30,
2001 and 2000 is as follows:


                                  Three Months ended      Six Months ended
                                          June 30,               June 30,
                                 -------------------      ------------------
                                 2001        2000         2001        2000
                                 --------   --------      --------   -------

Net (loss) income                $(6,705)    $9,350      $(14,794)   $196,096
Foreign currency translation      (2,479)    (4,034)        1,536      (7,228)
                                 --------    -------     --------    ---------
Comprehensive (loss) income      $(9,184)    $5,316      $(13,258)   $188,868
                                 ========    =======     =========   =========

                                   6
<PAGE>


                             JORDAN INDUSTRIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                        (ALL DOLLAR AMOUNTS IN THOUSANDS)

E.  Sale of Subsidiaries

On February 2, 2001, the Company sold the assets of Riverside to a third-party
for cash proceeds of $16,663. Riverside is a publisher of Bibles and a
distributor of Bibles, religious books and music recordings. The cash proceeds
were used to pay off the Company's Revolving Credit Facility. The Company
recognized a loss on the sale of $2,798, which was recorded in the fourth
quarter of 2000.

F.  Acquisition and Formation of Subsidiaries

On June 30, 2001, the Company purchased Atco Products, ("ATCO"). Atco is a
manufacturer of air-conditioning components for the automotive aftermarket,
heavy duty truck OEs and international markets. The Company paid $7,200 in cash
for the assets of ATCO. The purchase price has been preliminarily allocated to
working capital of $4,908 and property, plant and equipment of $2,292.

On March 7, 2001, the Company purchased the assets of J.A. Larson Company ("JA
Larson"). JA Larson is a flexographic printer of pressure sensitive labels, tags
and seals, which are manufactured in a wide variety of shapes and sizes. JA
Larson is fully integrated into Pamco. The Company paid $375 in cash for the
assets. The purchase price was allocated to inventory of $100, property and
equipment of $20 and resulted in an excess purchase price over identifiable
assets of $255.

In December 2000, the Company formed GramTel Communications, Inc. ("GramTel").
GramTel is an information technology infrastructure outsourcing company that
allows its customers to transfer, protect and store their mission critical data
at regionally located Secure Network Access Centers. The Company has invested
$3,532 in GramTel through June 30, 2001 for property, equipment and other
start-up related expenses.

On October 23, 2000, the Company purchased the stock of Flavorsource, Inc.
("Flavorsource") for $9,728 including costs directly related to the transaction.
Flavorsource is a developer and compounder of flavors for use in beverages of
all kinds, including coffee, tea, juices, bar mixes, sodas, and cordials, as
well as in nutritional foods, bakery products and ice cream and dairy products.
The acquisition was financed with $8,478 in cash and a $1,250 subordinated
seller note. The purchase price has been allocated to working capital of $270
and property, plant and equipment of $66, and resulted in an excess purchase
price over net identifiable assets of $9,392.

On October 10, 2000, the Company purchased the assets of Internet Services of
Michigan, Inc. ("ISMI") for $1,181. ISMI is an Internet service provider with
approximately 9,500 customers located in Michigan. ISMI offers standard dial up
resources as well as high-speed Internet connections such as DSL, Satellite and
ISDN. ISMI also provides website development and creation services and web
hosting features. The acquisition was financed with cash and the purchase price
has been allocated to net operating liabilities of $(659), and property, plant
and equipment of $350, and resulted in an excess purchase price over net
identifiable assets of $1,490.

On June 2, 2000, the Company purchased Instachange Displays Limited and Pique
Display Systems, Inc. (collectively "IDL") for approximately $12,805 including
costs directly related to the transaction. IDL is Canada's leading manufacturer
and distributor of point-of-purchase display and retail merchandising products.



                                       7
<PAGE>

                             JORDAN INDUSTRIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                        (ALL DOLLAR AMOUNTS IN THOUSANDS)

The acquisition was financed with $10,316 of cash and a $2,489 subordinated
seller note. The purchase price has been allocated to working capital of $1,629,
and property, plant and equipment of $1,389, and resulted in an excess purchase
price over net identifiable assets of $9,787. IDL is a division of Deflecto.

On March 14, 2000, the Company purchased Online Environs, Inc. ("Online
Environs"), an international Internet business solutions developer and
consultant, for $5,093 including costs directly associated with the transaction.
The acquisition was financed with $3,593 in cash and a $1,500 subordinated
seller note. Online Environs' digital communications solutions are designed to
help clients increase sales, improve communications, and create and enhance
business identities over the Internet, commonly known as eBusiness. The purchase
price has been allocated to working capital of $258, property, plant and
equipment of $194, non current assets of $2, and long-term liabilities of $(43)
and resulted in an excess purchase price over net identifiable assets of $4,682.

The above acquisitions have been accounted for as purchases and their operating
results have been consolidated with the Company's results since the respective
dates of acquisition. Unaudited pro forma information with respect to the
Company as if the 2001 acquisitions and divestitures had occurred on January 1,
2001 and 2000 and as if the 2000 acquisitions and divestitures had occurred on
January 1, 2000, is as follows:

                                                   Six months ended
                                                       June 30,
                                                   -----------------
                                                   2001         2000
                                                   ----         ----
Net Sales                                         $373,715     $401,160
Net (loss) income                                 $(16,097)    $151,627

G.  Discontinued Operations

On July 25, 1997, the Company recapitalized its investment in Jordan
Telecommunication Products, Inc. ("JTP") and JTP acquired the Company's
telecommunications and data communications products business from the Company
for total consideration of approximately $294,027, consisting of $264,027 in
cash, $10,000 of assumed indebtedness and preferred stock, and the issuance to
the Company of $20,000 aggregate liquidation preference of JTP Junior Preferred
Stock. The Company's stockholders and affiliates and JTP management invested in
and acquired the JTP common stock. As a result of the recapitalization, certain
of the Company's affiliates and JTP management owned substantially all of the
JTP common stock. The Company's investment in JTP was represented solely by the
JTP Junior Preferred Stock. The JTP Preferred Stock controlled over 80% of JTP's
stockholder voting rights and accreted 95% of JTP's net income or loss. The
Company had obtained an independent opinion as to the fairness, from a financial
point of view, of the recapitalization to the Company and its public
bondholders.

On January 18, 2000, the Company's affiliates sold the common stock of JTP to an
unaffiliated third party and the Company sold its interest in the JTP Junior
Preferred Stock for $54,100. The Company also received $6,535 for reimbursement
of expenses, $12,000 for the buyout of the management services agreements, and
$3,900 for an advisory and indemnity fee. The Company recognized a gain on the
sale of its interests in JTP of $200,078 in 2000, net of taxes of approximately
$28,000.

                                       8
<PAGE>


                             JORDAN INDUSTRIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                        (ALL DOLLAR AMOUNTS IN THOUSANDS)

For the period from January 1, 2000 to January 18, 2000, JTP's net sales were
$20,724. The losses from discontinued operations related to JTP in the Company's
Statements of Operations for the period from January 1, 2000 to January 18,
2000, included income tax expense of $406.

On June 22, 2000, the shareholders of Capita Technologies, Inc. ("Capita")
(including the Company) exchanged their stock in Capita, which included its
subsidiaries Protech, Aurora, Garg, and Raba, for shares in The Interpublic
Group of Companies, Inc. ("IPG") in a reorganization of Capita. In the
reorganization, the Company received registered common shares in IPG having a
value of $10,000 in exchange for its Capita stock. The Company also received
registered common shares in IPG having a value of $60,750 for its intercompany
notes and $2,000 in cash for the buyout of its management services agreements.
The Company's common shares in IPG were sold for cash of $70,750 in August 2000.
In 2000, the Company recognized a gain, for financial reporting purposes,
on the sale of its stock in IPG of $13,442, net of taxes of $7,000.

For the period from January 1, 2000 to June 22, 2000, Capita's net sales were
$7,372. The losses from discontinued operations related to Capita in the
Company's Statements of Operations for the period from January 1, 2000 to June
22, 2000, included tax expenses of $0.

As a result of the transactions described above, the Jordan Telecommunication
Products segment and the Capita Technologies segment have been reported as
discontinued operations for financial reporting purposes in accordance with
Accounting Principals Board ("APB") Opinion No. 30.

The following table summarizes the Company's discontinued operations:

                                     Three months ended    Six Months ended
                                          June 30,             June 30,
                                      2001      2000       2001          2000
                                     -----      ----       ----          ----

Loss from discontinued operations
 before income taxes                 $   -     $2,224       $      -     $9,190
Provision for income taxes                          -              -        406
                                     -----     -------      --------     ------
Net loss from discontinued
 operations                              -      2,224              -      9,596
Gain on sale of discontinued
 operations                              -    (18,022)             -   (243,417)
Provision for income taxes               -      7,000              -     35,000
                                     -----     -------      --------   --------
Gain on sale, net of taxes               -    (11,022)             -   (208,419)
                                     -----    --------      --------   --------
Discontinued operations, net
 of taxes                            $   -    $(8,798)      $      -  $(198,821)
                                     =====    ========      ========  =========


H.  Investments in JAAI, JSP, and M&G Holdings

JAAI

During 1999, the Company completed the recapitalization of Jordan Auto
Aftermarket, Inc. ("JAAI"). As a result of the recapitalization, certain of the
Company's affiliates and JAAI management own substantially all of the JAAI
common stock and the Company's investment in JAAI is represented solely by the
Cumulative Preferred Stock of JAAI. The JAAI Cumulative Preferred Stock controls
over 80% of the combined voting power of JAAI capital stock outstanding and
accretes at plus or minus 97.5% of the cumulative JAAI net income or net loss,
as the case may be, through the earlier of an Early Redemption Event (as
defined) or the fifth anniversary  of issuance  (unless  redemption is
prohibited by a JAAI or Company debt covenant).

                                       9
<PAGE>


                             JORDAN INDUSTRIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                        (ALL DOLLAR AMOUNTS IN THOUSANDS)


The Company recapitalized JAAI in order to establish JAAI as a more independent,
stand-alone, industry-focused company. The Company continues to consolidate JAAI
and its subsidiaries, for financial reporting purposes, as subsidiaries of the
Company. The Company's consolidation of the results of JAAI will be discontinued
upon redemption of the JAAI Cumulative Preferred Stock, or at such time as the
JAAI Cumulative Preferred Stock ceases to represent at least a majority of the
voting power and a majority share in the earnings of JAAI and its subsidiaries.
The JAAI Cumulative Preferred Stock is mandatorily redeemable upon certain
events and is redeemable at the option of JAAI, in whole or in part, at any
time.

JSP

During 1998, the Company recapitalized Jordan Specialty Plastics, Inc. ("JSP").
As a result of the recapitalization, certain of the Company's affiliates and JSP
management own substantially all of the JSP common stock and the Company's
investment in JSP is represented solely by the Cumulative Preferred Stock of
JSP. The JSP Cumulative Preferred Stock controls over 80% of the combined voting
power of JSP capital stock outstanding and accretes at plus or minus 95% of the
cumulative JSP net income or net loss, as the case may be, through the earlier
of an Early Redemption Event (as defined) or the fifth anniversary of issuance
(unless redemption is prohibited by a JSP or Company debt covenant).

The Company continues to consolidate JSP and its subsidiaries, for financial
reporting purposes, as subsidiaries of the Company. The Company's consolidation
of the results of JSP will be discontinued upon redemption of the JSP Cumulative
Preferred Stock, or at such time as the JSP Cumulative Preferred Stock ceases to
represent at least a majority of the voting power and a majority share in the
earnings of JSP and its subsidiaries. The JSP Cumulative Preferred Stock is
mandatorily redeemable upon certain events and is redeemable at the option of
JSP, in whole or in part, at any time.

M&G Holdings

Motors and Gears Holdings, Inc., ("M&G Holdings" or "M&G") along with its
wholly-owned subsidiary, Kinetek, Inc. ("Kinetek") (formerly Motors and Gears,
Inc.), was formed to combine a group of companies engaged in the manufacturing
and sale of fractional and sub-fractional motors and gear motors primarily to
customers located throughout the United States and Europe.

At the end of 1996, M&G was comprised of Merkle-Korff and its wholly-owned
subsidiary, Barber-Colman, and Imperial and its wholly-owned subsidiaries, Scott
and Gear. All of the outstanding shares of Merkle-Korff were purchased by M&G in
September 1995 and the net assets of Barber-Colman were purchased by
Merkle-Korff in March 1996. Barber-Colman was legally merged into Merkle-Korff
as of January 1, 1997 and now operates as a division of Merkle-Korff. The net
assets of Imperial, Scott, and Gear were purchased by M&G, from the Company, at
an arms length basis on November 7, 1996, with the proceeds from a debt
offering. The purchase price was $75,656, which included the repayment of $6,008
in Imperial liabilities owed to the Company, and a contingent payment payable
pursuant to a contingent earnout agreement. Under the terms of the contingent
earnout agreement, 50% of Imperial, Scott, and Gear's cumulative earnings before
interest, taxes, depreciation and amortization, as defined, exceeding $50,000
during the five fiscal years ended December 31, 1996, through December 31, 2000,
will be paid to the Company. The Company was paid $174 for this agreement in the
first quarter of 2001.




                                       10
<PAGE>


                             JORDAN INDUSTRIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                        (ALL DOLLAR AMOUNTS IN THOUSANDS)

As a result of this sale to M&G, the Company recognized approximately $62,700 of
deferred gain at the time of sale for U.S. Federal income tax purposes. A
portion of this deferred gain is recognized as M&G reports depreciation and
amortization over approximately 15 years on the step-up in basis of those
purchased assets. As long as M&G remains in the Company's affiliated group, the
gain recognized and the depreciation on the step-up in basis should exactly
offset each other. Upon any future de-consolidation of M&G from the Company's
affiliated group for U.S. Federal income tax purposes, any unreported gain would
be fully reported and subject to tax.

On May 16, 1997, the Company participated in a recapitalization of M&G Holdings.
In connection with the recapitalization, M&G Holdings issued 16,250 shares of
M&G Holdings common stock (representing approximately 82.5% of the outstanding
shares of M&G Holdings common stock) to certain stockholders and affiliates of
the Company and M&G Holdings management for total consideration of $2,200 (of
which $1,110 was paid in cash and $1,090 was paid through delivery of 8.0% zero
coupon notes due 2007). As a result of the recapitalization, certain of the
Company's affiliates and M&G Holdings management own substantially all of the
M&G Holdings common stock and the Company's investment in M&G Holdings is
represented solely by the Cumulative Preferred Stock of M&G Holdings (the "M&G
Holdings Junior Preferred Stock"). The M&G Holdings Junior Preferred Stock
represents 82.5% of M&G Holdings' stockholder voting rights and 80% of M&G
Holdings' net income or loss is accretable to the M&G Holdings Junior Preferred
Stock. The Company has obtained an independent opinion as to the fairness, from
a financial point of view, of the recapitalization to the Company and its public
bondholders. The Company continues to consolidate M&G Holdings and its
subsidiaries, for financial reporting purposes, as subsidiaries of the Company.
The M&G Holdings Junior Preferred Stock discontinues its participation in M&G
Holdings' earnings on the fifth anniversary of issuance. The Company's
consolidation of the results of M&G Holdings will be discontinued upon
redemption of the M&G Holdings Junior Preferred Stock, or at such time as the
M&G Holdings Junior Preferred Stock ceases to represent at least a majority of
the voting power and a majority share in the earnings of M&G Holdings and its
subsidiaries. As long as the M&G Holdings Junior Preferred Stock is outstanding,
the Company expects the vote test to be satisfied. The M&G Holdings Junior
Preferred Stock is mandatorily redeemable upon certain events and is redeemable
at the option of M&G Holdings, in whole or in part, at any time.

The Company expects to continue to include M&G Holdings and its subsidiaries in
its consolidated group for U.S. Federal income tax purposes. This consolidation
would be discontinued, however, upon the redemption of the M&G Holdings Junior
Preferred Stock, which could result in recognition by the Company of substantial
income tax liabilities arising out of the recapitalization. If such
deconsolidation had occurred at June 30, 2001, the Company believes that the
amount of taxable income to the Company attributable to M&G Holdings would have
been approximately $53,000 (or approximately $21,200 of tax liabilities,
assuming a 40.0% combined Federal, state, and local tax rate). The Company
currently expects to offset these tax liabilities arising from deconsolidation
with redemption proceeds from the M&G Holdings Junior Preferred Stock.
Deconsolidation would also occur with respect to M&G Holdings if the M&G
Holdings Junior Preferred Stock ceased to represent at least 80.0% of the voting
power and 80.0% of the combined stock value of the outstanding M&G Holdings
Junior Preferred Stock and common stock of M&G Holdings. As long as the M&G
Holdings Junior Preferred Stock is outstanding, the Company expects the vote
test to be satisfied. The value test depends on the relative values of the M&G
Holdings Junior Preferred Stock and common stock of M&G Holdings. The Company
believes the value test is satisfied at June 30, 2001. It is possible that on or
before the fifth anniversary of its issuance, the M&G Holdings Junior Preferred
Stock would cease to represent 80.0% of the relevant total combined stock value.
In the event that deconsolidation for U.S. Federal income tax purposes occurs
without redemption of the M&G Holdings Junior Preferred Stock, the tax
liabilities discussed above would be incurred without the Company receiving the
proceeds of the redemption.



                                       11
<PAGE>



                             JORDAN INDUSTRIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                        (ALL DOLLAR AMOUNTS IN THOUSANDS)


I.  Additional Purchase Price Agreements

The Company has a deferred purchase price agreement relating to its acquisition
of Yearntree in December 1999. The agreement is based on Yearntree achieving
certain agreed upon cumulative net income before interest and taxes for the 24
months beginning January 1, 2000 and ending December 31, 2001. The agreement is
payable 30 days after the receipt of the December 31, 2001 audited financial
statements.

The Company also has a deferred purchase price agreement relating to its
acquisition of Teleflow in July 1999. The agreement is based upon Teleflow
achieving certain agreed upon earnings before interest, taxes, depreciation, and
amortization for each year through the year ended December 31, 2002. The Company
paid $260 and $500 related to this agreement in April 2001 and 2000,
respectively.

The Company has a contingent purchase price agreement relating to its
acquisition of Deflecto in 1998. The plan is based on Deflecto achieving certain
earnings before interest and taxes and is payable on April 30, 2008. If Deflecto
is sold prior to April 30, 2008, the plan is payable 120 days after the
transaction.

The terms of Kinetek's Advanced DC purchase price agreement provides for
additional consideration to be paid if the acquired entity's results of
operations exceed certain targeted levels. Targeted levels were set
substantially above the historical experience of the acquired entity at the time
of acquisition. The contingent payments applied to operations of fiscal years
1998 and 1999. Kinetek made payments to the previous shareholders of Advanced DC
of $3,200 in March 1999 and $3,100 in March 2000 related to this agreement.

Kinetek has a contingent purchase price agreement relating to its acquisition of
Motion Control on December 18, 1997. The terms of the Company's Motion Control
acquisition agreement provide for additional consideration to be paid if the
acquired entity's results of operations exceed certain targeted levels. Targeted
levels are set substantially above the historical experience of the acquired
entity at the time of acquisition. The agreement becomes exercisable in 2003 and
payments, if any, under the contingent agreement will be placed in a trust and
paid out in cash in equal annual installments over a four year period.

J.  Related Party Transactions

An individual who is shareholder, Director, General Counsel, and Secretary for
the Company is also a partner in a law firm used by the Company. The firm was
paid $391 and $335 in fees and expenses in the first six months of 2001 and
2000, respectively. The rates charged to the Company were at arms-length.

Certain shareholders of TJC Management Corporation ("TJC") are also shareholders
of the Company. On July 25, 1997, a previous agreement with TJC was amended and
restated. This agreement was amended again in December 1999. Effective January
1, 2000, the Company pays TJC a $250 quarterly fee for management services. The
Company accrued fees to TJC of $500 in the first six months of 2001 and 2000,
respectively, related to this agreement. These expenses are classified in
"management fees and other" in the Company's statements of operations.

On July 25, 1997, a previous agreement with TJC was amended and restated. Under
the new agreement, the Company pays TJC an investment banking fee of up to 1%,
based on the aggregate consideration paid, for its assistance in acquisitions
undertaken by the Company or its subsidiaries, and a financial consulting fee
not to exceed 0.5% of the aggregate debt and equity financing that is arranged
by the Jordan Company, plus the reimbursement of out-of-pocket and other
expenses. The Company made no payments in either the first six months of 2001 or
2000 to TJC for their assistance in relation to acquisition and refinancing
activities. The expenses related to these services are classified in "management
fees and other" in the Company's statements of operations.


                                       12
<PAGE>


                             JORDAN INDUSTRIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                        (ALL DOLLAR AMOUNTS IN THOUSANDS)

The Company has agreements to provide management and consulting services to
various entities whose shareholders are also shareholders of the Company. The
Company also has agreements to provide investment banking and financial
consulting services to these entities. Fees for management and consulting
services are typically a percentage of the entity's net sales or earnings before
interest, taxes, depreciation and amortization. Fees for investment banking and
financial consulting services are based on the aggregate consideration paid for
acquisitions or the aggregate debt and equity financing that is arranged by the
Company, plus the reimbursement of out-of pocket and other expenses. Amounts due
from affiliated entities as a result of providing the services described above
were $4,875 and $2,469 as of June 30, 2001 and December 31, 2000, respectively,
and are classified in "prepaid expenses and other current assets" in the
Company's balance sheets. The Company also made unsecured advances to these
entities for the purpose of funding operating expenses and working capital
needs. These advances totaled $12,243 and $9,081 as of June 30, 2001 and
December 31, 2000, respectively, and are classified in "prepaid expenses
and other current assets" in the Company's balance sheets.

K.  Investments in and advances to affiliates

The Company holds 75.6133 shares of Class A PIK Preferred Stock and 151.28
shares of common stock of Fannie May Holdings, Inc. ("Fannie May"), representing
a total investment of $1,721 and approximately 15.1% of the outstanding common
stock of Fannie May on a fully diluted basis. The Company is accounting for this
investment under the cost method. Fannie May's Chief Executive Officer is Mr.
Quinn, and its stockholders include Mr. Jordan, Mr. Quinn, Mr. Zalaznick, and
Mr. Boucher, who are directors and stockholders of the Company, as well as other
partners, principals, and associates of the Jordan Company, who are also
stockholders of the Company. Fannie May, which is also known as "Fannie May
Candies", is a manufacturer and marketer of kitchen-fresh, high-end boxed
chocolates and other confectionary items, through its company-owned retail
stores and through specialty sales channels. Its products are marketed under the
"Fannie May Candy", "Fanny Farmer Candy", "Sweet Factory", and "Laura Secord"
brand names.

As of June 30, 2001 and December 31, 2000, the Company had made approximately
$14,316 and $14,446 of unsecured advances to JIR Broadcast, Inc. and JIR Paging,
Inc. Each of these companies' Chief Executive Officer is Mr. Quinn and its
stockholders include Messrs. Jordan, Quinn, Zalaznick, and Boucher, who are the
Company's directors and stockholders, as well as other partners, principals and
associates of The Jordan Company who are also the Company's stockholders. These
companies are engaged in the development of businesses in Russia, including the
broadcast and paging sectors. The Company receives notes in exchange for these
advances, which bear interest at rates ranging from 10 3/4% to 12%.

In November 1998, the Company, through Motors and Gears, invested $5,585 in
Class A Preferred Stock and $1,700 in Class B Preferred Stock of JZ
International, Ltd. In April 2000, the Company, through Motors and Gears,
invested an additional $5,059 in Class A Preferred Stock of JZ International,
Ltd. At June 30, 2001 and December 31, 2000, the Company's investment in JZ
International was $12,344. JZ International's Chief Executive Officer is David
W. Zalaznick, and its stockholders include Messrs. Jordan, Quinn, Zalaznick and
Boucher, who are the Company's directors and stockholders, as well as other
partners, principals and associates. JZ International is a merchant bank located
in London, England that is focused on making European and other international
investments. The Company is accounting for this investment under the cost
method. At June 30, 2001, the cost of the investment approximates market value.



                                       13
<PAGE>


                             JORDAN INDUSTRIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                        (ALL DOLLAR AMOUNTS IN THOUSANDS)


Internet Services Management Group ("ISMG") is an Internet service provider with
over 130,000 customers. ISMG's stockholders include Mr. Jordan, Mr. Quinn, Mr.
Zalaznick, and Mr. Boucher, who are directors and stockholders of the Company,
as well as other partners, principals, and associates of the Jordan Company, who
are also stockholders of the Company. The Company has a 5% ownership interest in
ISMG's common stock and $1,000 of ISMG's 5% mandatorily redeemable cumulative
preferred stock. The Company is accounting for these investments under the cost
method. The Company has also made unsecured advances to ISMG totaling $10,938
and $10,701 as of June 30, 2001 and December 31, 2000, respectively, for the
purpose of funding ISMG acquisitions and its working capital needs.

The Company has a 20% limited partnership interest in a partnership that was
formed during 2000 for the purpose of making equity investments primarily in
datacom/telecom infrastructure and software, e-commerce products and services,
and other Internet-related companies. The Company has a $10,000 capital
commitment, of which $1,340 and $1,390 had been contributed through June 30,
2001 and December 31, 2000, respectively. The Company is accounting for this
investment using the equity method of accounting. Certain stockholders of the
Company are also stockholders in the general partner of the partnership. The
Company has an agreement with the partnership's general partner to provide
management services to the partnership for annual fees of $1,250.

L.  Business Segment Information

See "Management's Discussion and Analysis of Financial Condition and Results of
Operations" for the Company's business segment disclosures. There have been no
changes from the Company's December 31, 2000 consolidated financial statements
with respect to segmentation or the measurement of segment profit or loss.

M.  Income taxes

The provision (benefit) for income taxes from continuing operations differs from
the amount of income tax provision (benefit) computed by applying the United
States federal income tax rate to income (loss) from continuing operations
before income taxes, minority interest, and extraordinary items. A
reconciliation of the differences is as follows:

                                               Six Months ended
                                                 June 30, 2001
                                               -----------------

Computed statutory tax benefit                      $(6,797)
Increase (decrease) resulting from:
    Amortization of goodwill                           1,482
    Disallowed meals and entertainment                   215
    State and local tax and other                        639
                                                    --------
Benefit from income taxes                            $(4,461)
                                                    =========

N. Subsequent Events

On July 3, 2001, the Company purchased the assets of Pioneer Paper Corp. for
$2,733 in cash. Pioneer is a manufacturer of printed folding paperboard boxes,
insert packaging, and blister pack cards. The purchase price has not been
allocated at this time. Pioneer is a subsidiary of Seaboard Folding Box.

On July 23, 2001, the Company purchased the customer lists of The George
Kreisler Coporation ("Kreisler") for $200 cash. Kreisler will be fully
integrated into Pamco. The purchase price has been allocated to intangible
assets.


                                       14
<PAGE>



                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (UNAUDITED)


The following discussion should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations
contained in the 2000 10-K and the financial statements and the related notes
thereto.

Results of Operations

Summarized below are the net sales, operating income and operating margins (as
defined) for each of the Company's business segments for the quarters and six
month periods ended June 30, 2001 and 2000. This discussion reviews the
following segment data and certain of the consolidated financial data for the
Company.

<TABLE>
<CAPTION>
                                              Three Months Ended        Six Months Ended
                                                    June 30,                 June 30,
                                             --------------------       -----------------
                                              2001          2000         2001         2000
                                             ------        ------       ------       ------
<S>                                         <C>            <C>            <C>          <C>
Net Sales (000's):
Specialty Printing and Labeling             $29,222        $31,849        $51,982     $55,916
Jordan Specialty Plastics                    24,780         24,149         50,296      47,466
Jordan Auto Aftermarket                      40,309         38,721         77,757      76,168
Motors and Gears                             74,244         82,586        152,541     162,247
Consumer and Industrial Products             16,418         29,778         35,003      56,404
                                           --------       --------       --------    --------
   Total                                   $184,973       $207,083       $367,579    $398,201
                                           ========       ========       ========    ========
Operating Income (Loss)(000's):
Specialty Printing and Labeling              $1,306         $3,956           $ 27      $4,021
Jordan Specialty Plastics                       874          1,580          1,846       2,803
Jordan Auto Aftermarket                       5,816          5,233         11,079      10,402
Motors and Gears                              9,440         14,012         21,190      27,050
Consumer and Industrial Products              (992)          1,071         (4,554)         75
                                            -------        -------        --------    -------
   Total(a)                                 $16,444        $25,852        $29,588     $44,351
                                            =======        =======        ========    =======
Operating Margin(b)
Specialty Printing and Labeling                4.5%          12.4%           0.1%        7.2%
Jordan Specialty Plastics                      3.5%           6.5%           3.7%        5.9%
Jordan Auto Aftermarket                       14.4%          13.5%          14.2%       13.7%
Motors and Gears                              12.7%          17.0%          13.9%       16.7%
Consumer and Industrial Products              (6.0%)          3.6%         (13.0%)       0.1%
   Total(a)                                    8.9%          12.5%           8.0%       11.1%
</TABLE>

----------------------
(a) The total does not include corporate overhead of $3,260 and $1,208 for the
three months ended June 30, 2001 and 2000, respectively, and $4,707 and $2,703
for the six months ended June 30, 2001 and 2000, respectively.

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


                                       15
<PAGE>





                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (UNAUDITED)

       Specialty Printing and Labeling. As of June 30, 2001, the Specialty
Printing and Labeling group ("SPL") consisted of JII Promotions, Valmark, Pamco,
and Seaboard.

Net sales for the second quarter of 2001 decreased $2.6 million, or 8.2% from
the same period in 2000. This decrease was due to lower sales at Valmark, $1.0
million, Seaboard, $1.0 million, JII Promotions, $0.5 million and Pamco, $0.1
million. Lower sales at Valmark were due to decreased sales of screen-printed
products, $0.4 million, rollstock, $0.5 million, and membrane switches, $0.1
million. Sales at JII Promotions decreased due to lower sales of ad specialties
and school annuals, $0.3 million and $1.6 million, offset by increased calendar
sales, $1.4 million. Seaboard's sales decreased $1.0 million, due to lower sales
of folding boxes. Pamco's sales decreased $0.1 million due to a decrease in
label sales. Net sales for the first six months of 2001 decreased $3.9 million,
or 7.0% over the same period in 2000. Decreased sales were due to lower sales at
Seaboard, $1.5 million, JII Promotions, $1.4 million, Valmark, $0.9 million and
Pamco, $0.1 million. Sales at Seaboard decreased due to lower sales of folding
boxes. Decreased sales at JII Promotions were due to lower sales of school
annuals and ad specialties, $0.3 million and $3.5 million respectively,
partially offset by increased calendar sales of $2.4 million. Valmark's sales
decreased due to lower sales of screen printed products and rollstock, $0.7
million and $0.5 million, respectively, partially offset by increased sales of
membrane switches, $0.3 million. Net sales decreased at Pamco due to a decrease
in label sales.

Operating income for the second quarter of 2001 decreased $2.6 million, or 67.0%
from the same period in 2000. Operating income at Pamco decreased $0.9 million
due to higher operating expenses associated with Pamco's new East Coast facility
and decreased net sales, as mentioned above. Valmark's operating income
decreased $0.8 million as a result of increased labor costs related to new
product development for a new customer. Operating income at JII Promotions
and Seaboard decreased $0.5 million and $0.3 million respectively, due to
lower sales.  Operating income for the first six months of 2001 decreased
$4.0 million, or 99.3% compared with the same period in 2000.  Operating
income at Pamco decreased $1.6 million due to expenses related to its
new East Coast facility coupled with lower sales. Valmark's operating income
decreased $0.9 million, due to increased labor costs attributed to new product
development for a new customer. Seaboard's operating income decreased $0.7
million and operating income at JII Promotions decreased $0.8 million, due to
lower sales as well as the reasons mentioned above.

     Jordan  Specialty  Plastics.  As of June 30,  2001,  the  Jordan  Specialty
Plastics group ("JSP") consisted of Beemak, Sate-Lite, and Deflecto.

Net sales for the second quarter of 2001 increased $0.6 million, or 2.6% over
the same period in 2000. The increase in sales is primarily due to Deflecto's
acquisition of IDL in June 2000, $1.4 million, and increased hardware sales at
Deflecto, $1.9 million. Partially offsetting these increases in sales were lower
sales of office products at Deflecto, $1.9 million lower sales at Beemak, $0.3
million and lower sales of colorants and custom molded products at Sate-Lite,
$0.5 million. Net sales for the first six months of 2001 increased $2.8 million,
or 6.0% when compared to the same period in 2000. Sales at Deflecto increased
due to the acquisition of IDL, $3.8 million, and increased sales of hardware
products, $2.6 million. Partially offsetting these increases are lower sales of



                                       16
<PAGE>





                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (UNAUDITED)

office products at Deflecto, $2.2 million and decreased sales of colorants
and custom molded products at Sate-Lite, $0.5 million. Lower sales at Beemak
of $0.9 million, include decreased sales of molding and fabricated products,
$0.1 million, and the transition of the Arnon Caine product line from Beemak
to Sate-Lite, $0.8 million.

Operating income for the second quarter of 2001 decreased $0.7 million, or 44.7%
when compared to the same period in 2000. This decrease was due to lower
operating income at Deflecto, $0.4 million and Beemak, $0.3 million. Operating
income at Deflecto decreased due to increased materials costs resulting from a
shift in product mix. Operating income at Beemak and Sate-Lite decreased due to
lower sales, as mentioned above. Operating income for the first six months of
2001 decreased $0.9 million, or 34.1% over the same period in 2000. The primary
reason for this decrease is lower operating income at Beemak and Deflecto, $0.5
million and $0.4 million, respectively. Operating income at Beemak has decreased
due to lower sales and Deflecto's operating income decreased as a result of
increased materials costs, as mentioned above. Sate-Lite's operating income
remained consistent with the same period in 2000.

     Jordan Auto  Aftermarket.  As of June 30, 2001, the Jordan Auto Aftermarket
group ("JAAI") consisted of Dacco, Alma and ATCO. (ATCO was purchased on
June 30, 2001.)

Net sales for the second quarter of 2001 increased $1.6 million, or 4.1% when
compared with same period in 2000. The primary reason for the increase in sales
was due to increased sales at Alma, $1.5 million. This sales increase was a
result of higher sales of converters, $1.1 million and air compressors, $0.8
million. At Dacco sales of soft parts and miscellaneous hard parts increased
$0.3 million and $0.4 million, respectively. Partially offsetting these
increases were lower sales of clutches and discs at Alma, $0.4 million and
decreased sales of rebuilt converters at Dacco, $0.6 million. Net sales for the
first six months of 2001 increased $1.6 million over the same period in 2000.
Sales of air compressors and converters at Alma increased $1.6 million and $0.7
million, respectively. Dacco's sales increased due to increased sales of soft
parts, $1.0 million and miscellaneous hard parts, $0.7 million. These increases
were offset by a decrease in sales of clutches and discs at Alma, $1.2 million,
and lower sales of rebuilt converters at Dacco, $1.2 million.

Operating income for the second quarter of 2001 increased $0.6 million, or 11.1%
over the same period in 2000. The reason for this increase was increased
operating income at Alma, $0.1 million and Dacco, $0.5 million. The increases
are attributed to the increase in sales mentioned above and improved labor
efficiency and cost cutting efforts. Operating income for the first six months
of 2001 increased $0.9 million compared with the same period in 2000. The
primary reason for this increase was higher operating income at Dacco $0.7
million, based on increased sales and reduced costs as mentioned above. This
increase was partially offset by increased corporate expenses of $0.2 million.
Operating income at Alma remained consistent with the same period in 2000.

     Kinetek.  As of June 30,  2001,  the Kinetek  group  consisted of Imperial,
Gear, Merkle-Korff, FIR, ED&C, Motion Control and Advanced DC.

Net sales for the second quarter of 2001 decreased $8.3 million, or 10.1% when
compared with the same period in 2000. The decrease in sales resulted from a
general decline in all of the companies' principal markets. The motors segment
decreased due to lower sales of sub-fractional motors related to lower sales of


                                       17
<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (UNAUDITED)


refrigeration appliance motors and lower sales in the bottle and can vending
market. In addition, sales of fractional/integral motors decreased due to
reduced demand for AC and DC products used in the floor care market and lower
sales of DC products used in material handling applications. Net sales in the
controls segment decreased due to weakness in the elevator modernization market.
Partially offsetting these decreases were increased European sales of golf car
motors due to the acquisition of the L'European hoist product line. Net sales
for the first six months of 2001 decreased $9.7 million, or 6.0% when compared
with the same period in 2000. This decrease was due to lower sales in the motors
segment as a result of decreased demand in the refrigeration motors market and
bottle and can vending market. Sales decreased in the control segment due to a
general decline in the elevator modernization market, as mentioned above.

Operating income for the second quarter of 2001 decreased $4.6 million, or 32.6%
over the same period in 2000. This decrease was due to decreased sales, as
mentioned above, and lower operating margins resulting from unfavorable
manufacturing leveraging and increased research and development costs related to
future products. Operating income for the first six months of 2001 decreased
$5.9 million, or 21.7% when compared to the same period in 2000. This decrease
is a result of lower sales and decreased operating margins, as discussed above.
In addition, corporate overhead increased 3% for both the three month period and
six month period ended June 30, 2001 over the same periods in 2000.

       Consumer and Industrial Products. As of June 30, 2001, the Consumer and
Industrial Products group consisted of Cape, Welcome Home, Cho-Pat, Online
Environs, Flavorsource and GramTel. Riverside was sold on February 2, 2001. See
Note E to the Condensed Consolidated Financial Statements.

Net sales for the second quarter 2001 decreased $13.4 million, or 44.9% when
compared with the same period in 2000. This decrease was primarily due to the
sale of Riverside in February 2001, $12.4 million. In addition, sales decreased
at Welcome Home, $0.9 million, Online Environs, $1.5 million, and Cho-Pat, $0.1
million. Cape Craftsmen third party sales decreased $1.0 million. Partially
offsetting these decreases were increased sales due to the following
acquisitions made during the second half of 2000: Flavorsource, $1.8 million,
ISMI, $0.6 million and GramTel, $0.1 million. Net sales for the first six months
of 2001 decreased $21.4 million, or 37.9% over the same period in 2000.
Decreased sales resulted from the sale of Riverside in February 2001, $22.1
million, lower sales at Welcome Home, $1.1 million, Online Environs, $1.2
million and Cho-Pat, $0.2 million. In addition, third party sales at Cape
Craftsmen decreased $1.2 million. Offsetting these decreases were the
acquisitions of Flavorsource, $3.1 million, ISMI, $1.2 million and GramTel, $0.1
million.

Operating income for the second quarter of 2001 decreased $2.1 million, or
192.6% from the same period in 2000. This decrease is due to lower operating
income at Cape Craftsmen, $0.7 million, Welcome Home, $0.5 million, Online
Environs, $0.8 million and Cho-Pat, $0.1 million. Lower operating income at
these companies is primarily due to lower sales, as mentioned above. Operating
income decreased at GramTel, $0.1 million due to start up expenses and ISMI,
$0.1 million, due to increased consulting and administrative fees. Partially
offsetting these decreases was increased operating income at Flavorsource, $0.2
million. Flavorsource, ISMI, and GramTel were new acquisitions during the second
half of 2000. Operating income for the first six months of 2001 decreased $4.6
million when compared to the same period in 2000. Lower operating income is
attributed to Welcome Home, $1.3 million, Online Environs, $1.3 million,

                                       18
<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (UNAUDITED)


Cape Craftsmen, $0.6 million, and Cho-Pat, $0.2 million. The primary reason for
decreased operating income is lower sales. Operating income decreased at
GramTel, $0.6 million, due to operating expenses relating to the start up of the
company and ISMI, $0.2 million, due to increased consulting and administrative
expenses. In addition, the sale of Riverside in February 2001 resulted in lower
operating income of $0.7 million. Offsetting these decreases was increased
operating income due to the acquisition of Flavorsource during the second half
of 2000, $0.3 million.

Consolidated Results:  (See Condensed Consolidated Statement of Operations).

Net sales for the second quarter of 2001 decreased $22.1 million, or 10.7% from
the same period in 2000. Sales decreased in the Specialty Printing and Labeling
Group due to lower sales of screen-printed products and rollstock at Valmark, ad
specialties and school annuals at JII Promotions, labels at Pamco and folding
boxes at Seaboard. Sales of office products at Deflecto and custom molded
products and colorants at Sate-Lite partially offset the net increase in sales
in the Specialty Plastics Group. Decreased sales in the Consumer and Industrial
Products Group resulted from lower sales at Welcome Home, Online Environs,
Cho-Pat and third party sales at Cape Craftsmen. In addition, sales in this
group decreased due to the sale of Riverside in February 2001. Sales at Kinetek
decreased in both the motors segment and the controls segment. Partially
offsetting these decreases were increased sales of soft parts and miscellaneous
hard parts at Dacco and converters and air compressors at Alma in the Jordan
Auto Aftermarket Group. The acquisition of IDL in the Jordan Specialty Plastics
Group, and Flavorsource, GramTel and ISMI in the Consumer and Industrial
Products Group, during the second half of 2000, increased sales for the second
quarter of 2001 compared to the second quarter of 2000.

Net sales of the first six months of 2001 decreased $30.6 million, or 7.7% when
compared to the same period in 2000. Lower sales were due to decreased sales of
screen printed products and rollstock at Valmark, folding boxes at Seaboard,
labels at Pamco and ad specialties and school annuals at JII Promotions in the
Specialty Printing and Labeling Group. Decreased sales of colorants and custom
molded products at Sate-Lite and office products at Deflecto contributed to
lower net sales in the Jordan Specialty Plastics Group. Sales in the Consumer
and industrial Products group decreased primarily due to the sale of Riverside
in February 2001, as well as decreased sales at Welcome Home, Cho-Pat, Online
Environs, GramTel, ISMI and Cape Craftsmen. Lower sales at Kinetek were due to
decreased sales across the motors segment and controls segment. Partially
offsetting these decreases, were increased sales of soft parts and miscellaneous
hard parts at Dacco and converters and air compressors at Alma in the Jordan
Auto Aftermarket Group. The acquisition of IDL in the Jordan Specialty Plastics
Group and Flavorsource, GramTel, and ISMI in the Consumer and Industrial
Products Group, during the second half of 2000, increased sales for the second
quarter of 2001 compared to the second quarter of 2000.

Operating income for the second quarter 2001 decreased $9.4 million, or 36.4%
from the same period in 2000. This decrease was due to lower operating income at
Valmark due to increased labor costs associated with new product development for
a new customer, and increased operating expenses at Pamco related to the start
up of their new East Coast facility. Operating income decreased at Deflecto due
to increased materials costs and a shift in product mix and at Beemak and
Sate-Lite due to lower sales. In the Consumer and Industrial Products Group,


                                       19
<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (UNAUDITED)


operating income decreased at Welcome Home, Cape Craftsmen, Cho-Pat, and Online
Environs due to decreased sales. Operating income decreased at ISMI and GramTel
due to increased consulting and administrative expenses, and increased start up
expenses, respectively. In addition, operating income in the group decreased as
a result of the sale of Riverside in February 2001. Operating income decreased
at Kinetek due to unfavorable manufacturing leveraging, external pricing
pressures and increased research and development costs related to new future
products. Partially offsetting these decreases was increased operating income in
the Jordan Auto Aftermarket Group relating to increased sales and improved cost
cutting efforts and labor efficiencies.

Operating income for the first six months of 2001 decreased $14.8 million, or
33.3% from the same period in 2000. This decrease was due to decreased sales at
JII Promotions and Seaboard, increased labor costs due to the new product
development for a new customer at Valmark, and increased operating expenses at
Pamco related to the start up of the new East Coast facility. Operating income
was lower in the Jordan Specialty Plastics group due to increased materials
costs and a shift in product mix at Deflecto and decreased sales at Beemak. In
the Consumer and Industrial Products Group, operating income decreased at
Welcome Home, Cape Craftsmen, Cho-Pat and Online Environs due to decreased
sales. Operating income also decreased at ISMI and GramTel due to increased
operating costs as mentioned above. In addition, operating income in the group
decreased as a result of the sale of Riverside in February 2001. Operating
income decreased at Kinetek due to unfavorable manufacturing leveraging,
external pricing pressures, increased research and development costs related to
new future products and increased corporate overhead. Partially offsetting these
decreases was increased operating income in the Jordan Auto Aftermarket Group
due to increased sales and improved cost cutting efforts and labor efficiencies
at both Alma and Dacco.

       Liquidity and Capital Resources.

In general, the Company requires liquidity for working capital, capital
expenditures, interest, taxes, debt repayment and its acquisition strategy. Of
primary importance are the Company's working capital requirements, which
increase whenever the Company experiences strong incremental demand or
geographical expansion. The Company expects to satisfy its liquidity
requirements through a combination of funds generated from operating activities
and the funds available under its revolving credit facilities.

The Company had approximately $176.7 million of working capital at June 30, 2001
compared to approximately $159.3 million at the end of 2000. The increase in
working capital during the first six months of 2001 was primarily due to higher
prepaids and other current assets of $10.6 million, and lower accounts payable,
accrued liabilities and current portion of long-term debt of $11.8 million, $5.4
million and $3.9 million, respectively. These increases in working capital are
partially offset by lower accounts receivable and inventories of $9.4 million
and $9.8 million, respectively.

Operating activities. Net cash used in operating activities for the six months
ended June 30, 2001 was $1.8 million compared to net cash used in operating
activities of $10.2 million during the same period in 2000. The decrease in cash
used is primarily due to lower income from continuing operations and
fluctuations in working capital levels as compared to the same period in the
prior year.


                                       20
<PAGE>


                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (UNAUDITED)


Investing activities. Net cash provided by investing activities for the six
months ended June 30, 2001 was $1.6 million compared to net cash provided by
investing activities of $20.5 million during the same period in 2000. The
decrease was primarily due to the proceeds from the sale of discontinued
operations in the prior year partially offset by less cash spent on acquisitions
in 2001 versus the same period in 2000.

Financing activities. Net cash provided by financing activities for the six
months ended June 30, 2001 was $0.9 million compared to net cash used in
financing activities of $8.3 million during the same period in 2000. This change
is primarily due to net revolver borrowings of $6.5 million in the current year
as compared to net revolver repayments of $6.0 million in the prior year.

The Company expects its principal sources of liquidity to be from its operating
activities and funding from its revolving lines of credit. The Company further
expects that these sources will enable it to meet its long-term cash
requirements for working capital, capital expenditures, interest, taxes, and
debt repayment for at least the next twelve months.

The Company is party to various credit agreements under which the Company is
able to borrow up to $160.0 million to fund acquisitions, provide working
capital and for other general corporate purposes. The credit agreements mature
at various dates in 2001 and 2002. The agreements are secured by a first
priority security interest in substantially all of the Company's assets. As of
August 14, 2001, the Company had approximately $114.0 million of available funds
under these arrangements.

In addition, Welcome Home, a subsidiary of the Company, has a Security Agreement
with Fleet, which provides for maximum borrowings of $15.0 million. The
agreement is secured by essentially all the assets of Welcome Home and expires
October 29, 2003. As of August 14, 2001, Welcome Home had approximately $1.0
million of available funds under this agreement.

The Company may, from time to time, use cash, including cash generated from
borrowings under its credit agreements, to purchase either its 11 3/4% Senior
Subordinated Discount Debentures due 2009 or its 10 3/8% Senior Notes due 2007,
or any combination thereof, through open market purchases, privately negotiated
purchases or exchanges, tender offers, redemptions or otherwise, and may, from
time to time, pursue various refinancing or financial restructurings, including
pursuant to current solicitations and waivers involving those securities, in
each case, without public announcement or prior notice to the holders thereof,
and if initiated or commenced, such purchases or offers to purchase may be
discontinued at any time.

If the Company's EBITDA and cash flow continues through 2002 at the levels
experienced in the second quarter and the first half of 2001, the Company
would barely generate sufficient cash to cover its interest payment
obligations in respect of its bank debt, senior notes and senior subordinated
discount notes (which cease to accrue, and become cash-pay obligations in the
fourth quarter of 2002).  This assumes no further general, economic or
industry declines, which may necessitate the Company to further reduce
capital expenditures and acquisitions, and no assurances can be given that,
at the end of 2002, the Company will have sufficient financial resources
to pay its cash interest obligations.

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


                                       21
<PAGE>






                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (UNAUDITED)


Quantitative And Qualitative Disclosures About Market Risks

The Company's debt obligations are primarily fixed-rate in nature and, as such,
are not sensitive to changes in interest rates. At June 30, 2001, the Company
had $38.2 million of variable rate debt outstanding. A one percentage point
increase in interest rates would increase the annual amount of interest paid by
approximately $0.4 million. The Company does not believe that its market risk
financial instruments on June 30, 2001 would have a material effect on future
operations or cash flows.

The Company is exposed to market risk from changes in foreign currency exchange
rates, including fluctuations in the functional currency of foreign operations.
The functional currency of operations outside the United States is the
respective local currency. Foreign currency translation effects are included in
accumulated other comprehensive income in shareholder's equity.



                                       22
<PAGE>




                                OTHER INFORMATION



Item 1.             Legal Proceedings
                    -----------------
                    None

Item 2.             Changes in Securities
                    ---------------------
                    None

Item 3.             Defaults upon Senior Securities
                    -------------------------------
                    None

Item 4.             Submission of Matters to a Vote of Security
                    -------------------------------------------
                    Holders
                    -------
                    None

Item 5.             Other Information
                    -----------------
                    None

Item 6.             Exhibits and Reports on Form 8-K
                    --------------------------------
                    None





                                       23
<PAGE>



                                   SIGNATURES
                                   ----------




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


                                         JORDAN INDUSTRIES, INC.



August 14, 2001                  By:    /s/ Thomas C. Spielberger
                                       ---------------------------
                                         Thomas C. Spielberger
                                           Senior Vice President,
                                           Finance and Accounting





                                       24