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, 2002                 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, 2002:  98,501.0004.




<PAGE>
                                       2

                          JORDAN INDUSTRIES, INC.

                                   INDEX


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

   Condensed Consolidated Balance Sheets
   at June 30, 2002 (Unaudited), and December 31, 2001                 3

   Condensed Consolidated Statements of Operations for the
   Three Months Ended June 30, 2002 and 2001 (Unaudited),
   4 and the Six Months Ended June 30, 2002 and 2001
   (Unaudited)                                                         4

   Condensed Consolidated Statements of Cash Flows for
   the Six Months Ended June 30, 2002 and 2001 (Unaudited)             5

   Notes to Condensed Consolidated Financial Statements
   (Unaudited)                                                         6

   Management's Discussion and Analysis of
   Financial Condition and Results of Operations                      16


Part II.

   Other Information                                                  22

   Signatures                                                         23




<PAGE>
                                    3

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


                                                       June 30,     December 31,
                                                         2002           2001
                                                      --------      -----------
                                                     (unaudited)

ASSETS
Current Assets:
  Cash and cash equivalents                             $24,141        $26,050
  Accounts receivable, net                              125,583        109,384
  Inventories                                           131,788        122,528
  Income tax receivable                                  12,980         12,245
  Deferred income taxes                                  22,600          8,100
  Prepaid expenses and other current assets              20,427         19,030
                                                         ------         ------
    Total Current Assets                                337,519        297,337

Property, plant and equipment, net                      107,540         99,602
Investments in and advances to affiliates                40,177         36,443
Goodwill, net                                           240,317        358,970
Other assets                                             33,930         37,044
                                                       --------       --------
    Total Assets                                       $759,483       $829,396
                                                       ========       ========

LIABILITIES AND SHAREHOLDER'S EQUITY (NET
CAPITAL DEFICIENCY)
Current Liabilities:
  Accounts payable                                     $60,465         $47,848
  Accrued liabilities                                   92,188          71,372
  Advance deposits                                       2,919           1,853
  Current portion of long-term debt                     27,730          17,137
                                                        ------  -       ------
    Total Current Liabilities                          183,302         138,210

Long-term debt, less current portion                   746,334         819,406
Other non-current liabilities                           11,281           8,668
Minority interest                                          110               4
Preferred stock                                          2,251           2,164

Shareholder's Equity (net capital deficiency):
Common stock $.01 par value: 100,000 shares
 authorized and 98,501 shares issued and
 outstanding                                                 1               1
  Additional paid-in capital                             2,116           2,116
  Accumulated other comprehensive loss                  (14,534)       (15,249)
  Accumulated deficit                                  (171,378)      (125,924)
                                                       ---------      ---------
    Total Shareholder's Equity (net capital
     deficiency)                                       (183,795)      (139,056)
                                                       ---------      ---------
    Total Liabilities and Shareholder's
     Equity (net capital deficiency)                   $759,483        $829,396
                                                       ========        ========



See accompanying notes to condensed consolidated financial statements.



<PAGE>
                                       4

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


                                  THREE MONTHS ENDED      SIX MONTHS ENDED
                                       June 30,                 June 30,
                                  ------------------     ------------------
                                  2002        2001        2002         2001
                                 ------      ------       -----        ----

Net sales                       $191,640     $184,973     $357,132   $367,579
Cost of sales, excluding
                                 121,558      117,751      226,687    234,795
depreciation
Selling, general and
 administrative expenses,
 excluding depreciation           43,251       42,347       84,675     85,648
Depreciation                       5,482        6,074       10,827     11,875
Amortization of goodwill
 and other intangibles               489        4,051          784      7,881
Management fees and other          7,823          247        8,436        876
                                 --------      -------      -------    ------

Operating income                  13,037       14,503       25,723     26,504

Other (income) expenses:
  Interest expense                22,981       23,215       46,164     46,063
  Interest income                    (80)        (271)        (166)      (525)
  Other                           (6,240)         105       (6,171)       386
                                 --------      -------      -------       ---
                                  16,661       23,049       39,827      45,924
                                 --------      -------      -------     ------
Loss before income taxes,
 minority interest,
 extraordinary gain and
 cumulative effect of
 change in accounting             (3,624)      (8,546)     (14,104)    (19,420)
 principle Benefit from income    (3,440)      (1,752)      (4,825)     (4,461)
 taxes                            -------      -------      -------    --------
Loss before minority interest,
 extraordinary gain and
 cumulative effect of change
 in accounting principle
                                    (184)      (6,794)      (9,279)    (14,959)
Minority interest                     61          (89)         106        (165)
                                   -------     -------      -------    --------
Loss before extraordinary
 gain and cumulative effect
 of change in accounting
 principle                          (245)      (6,705)      (9,385)    (14,794)
Extraordinary gain,
 net of tax                      (52,684)           -      (52,684)          -
Cumulative effect of change
 in accounting principle,
 net of tax                            -            -       89,139           -
                                 -------      -------      -------     --------
Net income (loss)                $52,439      $(6,705)    $(45,840)   $(14,794)
                                 =======      ========    =========   =========


See accompanying notes to condensed consolidated financial statements.



<PAGE>
                                     5

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


                                                          SIX MONTHS ENDED
                                                               June 30,
                                                         ------------------
                                                          2002          2001
                                                         ------        ------

Cash flows from operating activities:
 Net loss                                              $(45,840)       $(14,794)
  Adjustments to reconcile net loss to net
   cash used in operating activities:
    Cumulative effect of accounting change               89,139               -
    Extraordinary gain on early retirement of debt      (52,684)              -
    Depreciation and amortization                        11,611          19,756
    Amortization of deferred financing fees               3,187           2,528
    Minority interest                                       106            (165)
    Non-cash interest                                     6,162          10,618
    Other                                                (4,640)              -
    Changes in operating assets and liabilities,
     net of effects from acquisitions:
      Increase in current assets                        (14,003)        (15,689)
      Increase (decrease) in current liabilities          2,596          (2,560)
      Increase in non-current assets                     (2,007)         (3,001)
      Increase in non-current liabilities                 1,253           1,514
                                                         -------       ---------
        Net cash used in operating activities            (5,120)         (1,793)


Cash flows from investing activities:
  Proceeds from sale of subsidiary                            -          16,663
  Proceeds from sale of fixed assets                      1,790               -
  Capital expenditures                                   (6,633)         (6,282)
  Acquisitions of subsidiaries                           (9,503)         (8,765)
  Additional purchase price payments                     (1,002)              -
  Net cash acquired in purchase of subsidiaries             788              14
  Other                                                      57             (42)
                                                         --------        -------
         Net cash (used in) provided by investing
           activities                                   (14,503)          1,588

Cash flows from financing activities:
  Proceeds from revolving credit facilities, net         31,851           6,543
  Proceeds from issuance of long-term debt - Kinetek     20,456               -
  Repayment of long-term debt                            (4,515)         (5,999)
  Repurchase of Series A Debentures                     (31,193)              -
  Other borrowing                                            -              396
                                                        --------         ------
        Net cash provided by financing
          activities                                     16,599             940

Effect of exchange rate changes on cash                   1,115             (93)
                                                         -------         ------
Net (decrease) increase in cash and cash equivalents     (1,909)            642
Cash and cash equivalents at beginning of period         26,050          21,713
                                                         ------         -------
Cash and cash equivalents at end of period              $24,141         $22,355
                                                        =======         =======


See accompanying notes to condensed consolidated financial statements.


<PAGE>
                                     6

                          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, 2001, which are included in the Company's Annual
Report filed on Form 10-K for such year (the "2001 10-K"). Results of
operations for the interim periods are not necessarily indicative of annual
results of operations.

B.  Accounting Policies - New Pronouncements

The Company adopted the non-amortization provisions of Statement of
Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other
Intangible Assets, on January 1, 2002, which resulted in a decrease of
approximately $2,800 to the second quarter's net loss and a decrease of
approximately $5,400 to the six month's net loss. This provision is
expected to decrease the full-year net loss by approximately $10,500.

The Company completed the transitional impairment review of its reporting
units during the second quarter and recorded a non-cash pretax charge of
$112,239 ($89,139 after-tax). This charge has been recorded as a cumulative
effect of a change in accounting principle retroactive to January 1, 2002
and therefore increased the previously reported first quarter 2002 net loss
of $9,140 to a net loss of $98,279.

The impaired goodwill relates to the acquisitions of JII Promotions,
Valmark, and Pamco in the Specialty Printing and Labeling group, Sate-Lite
and Beemak in the Jordan Specialty Plastics group, Alma in the Jordan Auto
Aftermarket group, FIR and the L'Europa product line in the Kinetek group
and Online Environs in the Consumer and Industrial Products group. The
Company determined the fair value of each reporting unit using a discounted
cash flow approach taking into consideration projections based on the
individual characteristics of the reporting units, historical trends and
market multiples for comparable businesses. The resulting impairment is
primarily attributable to a change in the evaluation criteria for goodwill
utilized under previous accounting guidance, to the fair value approach
stipulated in SFAS No. 142.

The following table provides comparative results had the non-amortization
provisions of SFAS No. 142 been adopted for all periods presented:

                                Three Months Ended        Six Months Ended
                                     June 30,                  June 30,
                                2002          2001        2002         2001
                                ----          ----        ----         ----

Net income (loss)            $52,439       $(6,705)    $(45,840)      $(14,794)
Goodwill amortization              -         2,788            -          5,376
                             -------       ---------   ---------       -- -----
Adjusted net income (loss)   $52,439       $(3,917)    $(45,840)       $(9,418)
                             =======       ========    =========       ========


<PAGE>
                                   7

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

The changes in the carrying amount of goodwill for the six months ended
June 30, 2002 were as follows:
<table>
<caption>
                                   Specialty          Jordan                                          Consumer &
                                    Printing        Specialty        Jordan Auto                      Industrial
                                   & Labeling        Plastics        Aftermarket       Kinetek         Products        Consolidated
                                   ----------        --------        -----------       -------         --------        ------------

                                 <c>             <c>                <c>            <c>              <c>                <c>
 Balance as of
 January 1, 2002                    $43,389         $41,253             $64,737       $194,622         $14,969            $358,970

 Acquisition of
 Subsidiary                               -               -                   -          2,552               -               2,552

 Additional Purchase Price
 Payments                                 -             902                   -              -               -                 902

 Foreign exchange                         -             (33)                  -            (97)             -                 (130)

 Sale of a subsidiary                     -               -                   -             -           (9,498)             (9,498)

 Impairment loss                    (31,653)         (6,694)            (47,800)       (21,300)         (4,792)           (112,239)
 Other                                    8               -                   -              -             (248)              (240)
                                    ---------       --------           ---------      ----------        ----- --          ----------

 Balance at
 June 30, 2002                      $11,744         $35,428             $16,937       $175,777            $431             $240,317
                                    =========       =========          =========      ==========        ========           =========
</table>


As of June 30, 2002, the Company had no indefinite-lived intangible assets.
The Company had $1,071 of other intangible assets, net of accumulated
amortization of $26,570, which will continue to be amortized over their
remaining useful lives ranging from 1 to 10 years. These other intangible
asset amounts are included in other assets in the Company's balance sheets.

On January 1, 2002, the Company adopted SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. There was no impact to the
Company's operating results or financial position related to the adoption of
this standard.

C.  Inventories

Inventories are summarized as follows:

                                            June 30,               December 31,
                                              2002                     2001
                                          ------------             ------------

       Raw materials                        $ 48,462                $ 52,493
       Work-in-process                        21,061                  17,329
       Finished goods                         62,265                  52,706
                                            --------                --------
                                            $131,788                $122,528
                                            ========                ========

<PAGE>
                                 8

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


D.  Comprehensive Income (Loss)

Total comprehensive income (loss) for the quarters and six months ended
June 30, 2002 and 2001 is as follows:

                                  Three Months ended          Six Months ended
                                       June 30,                    June 30,
                                 ---------------------     -------------------
                                  2002         2001          2002        2001
                                 -------      --------     ---------   --------

Net income (loss)               $52,439       $(6,705)    $(45,840)   $(14,794)
Foreign currency translation      3,166        (2,479)         715       1,536
                                -------       --------    ---------   --------
Comprehensive income (loss)     $55,605       $(9,184)    $(45,125)   $(13,258)
                                =======       ========    =========   =========

E.  Sale of Subsidiaries

Effective on January 1, 2002, the Company sold its subsidiary,
Flavorsource, Inc, ("Flavorsource") to Flavor & Fragrance Group Holdings,
Inc. ("FFG") for a $10,100 note. FFG'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. As the transaction was among entities
under common control, the difference between the note received and the net
assets of Flavorsource of $473 has been reflected as a credit to retained
earnings. Flavorsource is a developer and compounder of flavors for use in
beverages of all kinds, including coffee, tea, juices, and cordials, as
well as bakery products and ice cream and dairy products. Flavorsource was
a part of the Consumer & Industrial Products segment prior to its disposal.

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 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 April 11, 2002,  Kinetek,  Inc. formed a cooperative  joint venture with
Shunde De Sheng Electric Motor Group Co., Ltd. ("De  Sheng  Group"),  which is
named  Kinetek De Sheng  (Shunde)  Motor  Co.,  Ltd (the  "JV").  Kinetek  Inc.
initially contributed  approximately $9,503,  including costs associated with
the transaction,  for 80% ownership of the JV, with an option to purchase the
remaining  20% in the future.  The JV acquired  all of the net assets of
Shunde De Sheng  Electric Motor Co., Ltd. ("De Sheng"),  a subsidiary of De
Sheng Group.  The JV also assumed  approximately  $7,198 of  outstanding
debt.

On July 23, 2001, the Company purchased the customer lists of The George
Kreisler Corporation ("Kreisler") for $204 in cash. Kreisler has been fully
integrated into Pamco.

On July 3, 2001, the Company purchased the assets of Pioneer Paper Corp.
("Pioneer"). Pioneer is a manufacturer of printed folding paperboard boxes,
insert packaging, and blister pack cards. The Company paid $3,134 in cash
for the assets. The purchase price was allocated to accounts receivable of
$1,343, inventory of $298, property plant and equipment of $1,000, net

<PAGE>
                                      9

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


operating liabilities of $(303), and resulted in an excess purchase price
over identifiable assets of $796. Pioneer has been fully integrated into
Seaboard.

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 $7,344 in
cash for the assets of Atco. The purchase price was allocated to working
capital of $4,264 and property, plant and equipment of $3,080.

On April 6, 2001, Kinetek, through its wholly-owned subsidiary
Merkle-Korff, acquired substantially all of the assets, properties, and
business of Koford Engineering, Inc. for $690. The purchase price has been
allocated to working capital of $121, property, plant and equipment of
$130, and resulted in an excess purchase price over identifiable assets of
$439.

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.
The Company paid $433 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 $313. JA Larson has been
fully integrated into Pamco.

The above acquisitions have been accounted for as purchases and their
operating results have been consolidated with the Company's results since
the respective dates of acquisition. Pro forma information with respect to
the Company as if the above acquisitions and divestitures had occurred at
the beginning of the respective period is not materially different than
reported results.

G.  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 97.5% 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).

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.


<PAGE>
                                     10

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

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
97.5% of the combined voting power of JSP capital stock outstanding and
accretes at plus or minus 97.5% of the cumulative JSP net income or net
loss, as the case may be, through the earlier of an Early Redemption Event
(as defined) or the fifth anniversary of issuance (unless redemption is
prohibited by a JSP or Company debt covenant).

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 from December 31, 1996, through December 31, 2000, was
paid to the Company. The Company was paid $174 for this agreement in the
second quarter of 2001.

As a result of this sale to M&G, the Company recognized approximately
$67,400 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.


<PAGE>
                                    11

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

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 May 16, 2003. 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, 2002, the Company believes that the amount of taxable income to the
Company attributable to M&G Holdings would have been approximately $52,000
(or approximately $20,800 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, 2002. It is
possible that on or before May 16, 2003, 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.

<PAGE>
                                     12

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

H.  Additional Purchase Price Agreements

The Company had a deferred purchase price agreement relating to its
acquisition of Yearntree in December 1999. The agreement was 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. On March 8, 2002, the Company paid $574 related to the
above agreement.

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 $328 and $260 related to this agreement
in April 2002 and 2001, 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.

Kinetek has a contingent purchase price agreement relating to its
acquisition of Motion Control on December 18, 1997. The terms of this
agreement provide for additional consideration to be paid 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.

I.  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 $787 and $391 in fees and expenses in the first six months of
2002 and 2001, 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. Effective January 1, 2000, the Company owes
TJC a $250 quarterly fee for management services. The Company accrued fees
to TJC of $500 in the first six months of 2002 and 2001, 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 TJC, plus the reimbursement of out-of-pocket
and other expenses. The Company made no payments in either the first six
months of 2002 or 2001 to TJC for their assistance in relation to
acquisition and refinancing activities. At June 30, 2002, $8,429 was
accrued related to this agreement and is included in "accrued liabilities"
on the Company's balance sheet.

<PAGE>
                                     13

                          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 $4,785 and $3,810 as
of June 30, 2002 and December 31, 2001, 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 $14,251 and $13,318 as of June 30, 2002 and December 31,
2001, respectively, and are classified in "prepaid expenses and other
current assets" in the Company's balance sheets. The Company had reserves
of $10,400 at June 30, 2002 and December 31, 2001, related to these
management and consulting services and advances.

J.  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.

The Company has unsecured advances totaling $15,478 and $15,382 as of June
30, 2002 and December 31, 2001, due from 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 a range from 10.75% to 12.0%.

In November 1998, the Company, through Kinetek, invested $5,585 in Class A
Preferred Units and $1,700 in Class B Preferred Units of JZ International,
LLC. In April 2000, the Company, through Kinetek, invested an additional
$5,059 in Class A Preferred Units of JZ International, LLC. This increased
the Company's investment in JZ International to $12,344 at June 30, 2002
and December 31, 2001. JZ International's Chief Executive Officer is David
W. Zalaznick, and its members include Messrs. Jordan, Quinn, Zalaznick and
Boucher, who are the Company's directors and stockholders, as well as other
members. JZ International and its subsidiaries are focused on making
European and other international investments. The Company is accounting for
this investment under the cost method.


<PAGE>
                                      14

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

The Company has made unsecured advances totaling $11,201 and $11,331 as of
June 30, 2002 and December 31, 2001, respectively to Internet Services
Management Group ("ISMG") an Internet service provider with over 100,000
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
receives notes in exchange for these advances, which bear interest at
10.75%. The Company also holds 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 made aggregate investments of $200 and $1,550 in the capital
stock of three different businesses in technology-related industries in
2001 and 2000, respectively. The Company's ownership in these businesses
ranges from 1-15% on a fully diluted basis. The Company is accounting for
these investments under the cost method.

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 $2,390 had been contributed
through June 30, 2002 and December 31, 2001. 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.

Effective on January 1, 2002, the Company sold the stock of Flavorsource  to
FFG for a $10,100 note.  The note accrues interest at 8% annually and has no
stated maturity date. FFG'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 had reserves of $15,800 and $8,800 at June 30, 2002 and
December 31, 2001, respectively, related to the above investments in
affiliates. The increase of $7,000 in the second quarter of 2002 is
reflected in "management fees and other" in the Company's statements of
operations.

K.  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, 2001
consolidated financial statements with respect to segmentation or the
measurement of segment profit or loss.

L.  Income taxes

The benefit from income taxes differs from the amount of income tax benefit
computed by applying the United States federal income tax rate to loss
before income taxes, minority interest, extraordinary gain and cumulative
effect of change in accounting principle. A reconciliation of the
differences is as follows:

<PAGE>
                                        15

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


                                           Six Months ended     Six Months ended
                                             June 30, 2002        June 30, 2001
                                             -------------        -------------
       Computed statutory tax benefit          $(4,936)              $(6,797)
       Increase (decrease) resulting from:
           Amortization of goodwill                  -                 1,482
           Disallowed meals and entertainment      442                   215
           State and local tax and other          (331)                  639
                                               --------              --------
       Benefit from income taxes               $(4,825)              $(4,461)
                                               ========              ========

M.  Kinetek Credit Agreement

On December 18, 2001, Kinetek, Inc. entered into a new Loan and Security
Agreement with Fleet Bank (the "Kinetek Agreement"). On April 12, 2002, the
Kinetek Agreement was amended and restated. The Kinetek Agreement now
provides for borrowings of up to $35,000 based on the value of certain
assets, including inventory, accounts receivable, machinery and equipment,
and real estate. Kinetek had $5,326 of outstanding borrowings, $7,554 of
outstanding letters of credit, and $21,493 of excess availability under
this agreement at June 30, 2002.

N.  Jordan Industries Credit Agreement

On August 16, 2001, the Company entered into a new Loan and Security
Agreement with Congress Financial Corporation and First Union National
Bank. The new facility provides for borrowings up to $110,000 based on the
value of certain assets including inventory, accounts receivable and fixed
assets. As of June 30, 2002 the Company had borrowings of $56,923, $2,807
of outstanding letters of credit, and $19,825 of excess availability under
this facility.

O.  Kinetek Senior Secured Notes

On April 12, 2002, Kinetek Industries, Inc., a wholly-owned subsidiary of
Kinetek, Inc., issued $15,000 principal amount of 5% Senior Secured Notes
and $11,000 principal amount of 10% Senior Secured Notes for net proceeds
of $20,456. The notes are due in 2007 and are guaranteed by Kinetek, Inc.
and substantially all of its domestic subsidiaries. The notes are also
secured by a second priority lien on substantially all of the assets of the
issuer and the guarantors, which lien is subordinate to the existing lien
securing Kinetek, Inc.'s credit facility. Interest on the notes is payable
semi-annually on May 1 and November 1 of each year.

P.  Retirement of Debt

Between May 29, 2002 and June 5, 2002, the Company repurchased $119,000
principal amount of its $214,036 11.75% Series A Senior Subordinated
Discount Debentures due 2009 (the "Series A Debentures"), for total
consideration of $31,193, including expenses. The Series A Debentures were
purchased from an institutional investor. After the purchase, $95,036
principal amount of Series A Debentures were outstanding. The Company has
reported an extraordinary gain, net of taxes, of $52,684 in the statement
of operations related to this purchase.



<PAGE>
                                    16

                    MANAGEMENT'S DISCUSSION AND ANALYSIS
              OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                (UNAUDITED)
                     (ALL DOLLAR AMOUNTS IN THOUSANDS)

The following discussion should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations
contained in the 2001 10-K and the financial statements and the related
notes thereto.

Results of Operations

Summarized below are the net sales, operating income (loss) and operating
margins (as defined) for each of the Company's business segments for the
quarters and six month periods ended June 30, 2002 and 2001. 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,
                                              ----------------------        ----------------------
                                               2002            2001            2002          2001
                                              -----           ------          ------        -----

                                           <c>             <c>            <c>           <c>
Net Sales:
Specialty Printing and Labeling               $28,241          $29,222       $48,015        $51,982
Jordan Specialty Plastics                      27,437           24,780        52,610         50,296
Jordan Auto Aftermarket                        45,722           40,309        83,902         77,757
Kinetek                                        74,243           74,244       142,441        152,541
Consumer and Industrial Products               15,997           16,418        30,164         35,003
                                             --------         --------       -------       --------
   Total                                     $191,640         $184,973       357,132       $367,579
                                             ========         ========       =======       ========

Operating Income (Loss):
Specialty Printing and Labeling                $2,971            1,306        $1,997           $ 27
Jordan Specialty Plastics                       2,440              874         4,310          1,846
Jordan Auto Aftermarket                         6,381            5,816        11,637         11,079
Kinetek                                        11,864            9,440        21,579         21,190
Consumer and Industrial Products                 (753)            (992)       (1,887)        (4,554)
                                              --------         --------       -------       -------
   Total(a)                                   $22,903          $16,444       $37,636        $29,588
                                              =======          ========      ========       =======

Operating Margin(b)
Specialty Printing and Labeling                  10.5%             4.5%         4.2%           0.1%
Jordan Specialty Plastics                         8.9%             3.5%         8.2%           3.7%
Jordan Auto Aftermarket                          14.0%            14.4%        13.9%          14.2%
Kinetek                                          16.0%            12.7%        15.2%          13.9%
Consumer and Industrial Products                 (4.7)%           (6.0)%       (6.3)%         (13.0)%
   Total(b)                                      12.0%             8.9%        10.5%            8.0%

</table>

(a) Before corporate overhead of $9,866 and $1,941 for the three months
ended June 30, 2002 and 2001, respectively, and $11,913 and $3,084 for the
six months ended June 30, 2002 and 2001, respectively.

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

<PAGE>

                                        17

                    MANAGEMENT'S DISCUSSION AND ANALYSIS
              OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                (UNAUDITED)
                     (ALL DOLLAR AMOUNTS IN THOUSANDS)

       Specialty Printing and Labeling. As of June 30, 2002, the Specialty
Printing and Labeling group ("SPL") consisted of JII Promotions, Valmark,
Pamco, and Seaboard.

Net sales for the second quarter of 2002 decreased $1.0 million, or 3.4%,
from the same period in 2001. This decrease is primarily due to lower sales
of calendars and outside specialties at JII Promotions, $0.8 million and
$0.5 million, respectively, and decreased sales of screen printed products
and membrane switches at Valmark, $0.7 million and $0.2 million,
respectively. Partially offsetting these decreases is higher sales of
school annuals at JII Promotions, $0.5 million, and increased sales of
folding boxes at Seaboard, $0.7 million. Net sales for the first six months
of 2002 decreased $4.0 million, or 7.6%, from the same period in 2001. This
decrease is primarily due to lower sales of calendars and outside
specialties at JII Promotions, $1.2 million and $1.0 million, respectively,
decreased sales of screen printed products, membrane switches, rollstock
and shrouds at Valmark, $1.7 million, $0.7 million, $0.4 million, and $0.1
million respectively, and lower sales of labels at Pamco, $0.3 million.
Partially offsetting these decreases is higher sales of school annuals at
JII Promotions, $0.4 million, and increased sales of folding boxes at
Seaboard, $1.0 million.

Operating income for the second quarter of 2002 increased $1.7 million, or
127.5%, over the same period in 2001. This increase is primarily due to
higher operating income at JII Promotions, $0.9 million, and Pamco, $0.9
million, partially offset by lower operating income at Valmark, $0.1
million. Operating income for the first six months of 2002 increased $2.0
million over the same period in 2001. This increase is primarily due to
higher operating income at JII Promotions, $1.0 million, Pamco, $1.7
million, and Seaboard, $0.3 million, partially offset by lower operating
income at Valmark, $1.0 million. The increase in operating income at Pamco
is due to the closing of Pamco's East Coast facility in October 2001.

       Jordan Specialty Plastics.  As of June 30, 2002, the Jordan Specialty
Plastics group ("JSP") consisted of Beemak, Sate-Lite, and Deflecto.

Net sales for the second quarter of 2002 increased $2.7 million, or 10.7%,
over the same period in 2001. This increase is primarily due to higher
sales of bike and truck reflectors at Sate-Lite, $0.4 million, increased
sales of fabricated products at Beemak, $0.1 million, and higher sales of
hardware products at Deflecto, $2.6 million. Partially offsetting these
increases are lower sales of Tilt Bins and thermoplastic colorants at
Sate-Lite, $0.1 million and $0.2 million, respectively, and decreased sales
of injection molded products at Beemak, $0.1 million. Net sales for the
first six months of 2002 increased $2.3 million, or 4.6%, over the same
period in 2001. This increase is primarily due to higher sales of bike and
truck reflectors at Sate-Lite, $0.6 million, increased sales of fabricated
products at Beemak, $0.2 million, and higher sales of hardware products at
Deflecto, $4.2 million. Partially offsetting these increases are lower
sales of Tilt Bins and thermoplastic colorants at Sate-Lite, $0.5 million
each, decreased sales of injection molded product at Beemak, $0.1 million,
and decreased sales of office products at Deflecto, $1.6 million.

Operating income for the second quarter of 2002 increased $1.6 million, or
179.2%, over the same period in 2001. This increase is primarily due to
higher operating income of $1.7 million at Deflecto, partially offset by
decreased operating income of $0.2 million at Sate-Lite. Operating income
for the first six months of 2002 increased $2.5 million, or 133.5% over the
same period in 2001. This increase is primarily due to higher operating
income at Beemak, $0.1 million, and Deflecto, $2.5 million. Partially
offsetting this increase is lower operating income of $0.1 million at
Sate-Lite. The increase in operating income at Deflecto is due to increased
sales, ongoing headcount reductions and continued focus on operational
efficiencies.

<PAGE>
                                    18

                    MANAGEMENT'S DISCUSSION AND ANALYSIS
              OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                (UNAUDITED)
                     (ALL DOLLAR AMOUNTS IN THOUSANDS)

       Jordan Auto Aftermarket.  As of June 30, 2002, the Jordan Auto
Aftermarket  group ("JAAI")  consisted of Dacco, Alma and Atco.

Net sales for the second quarter of 2002 increased $5.4 million, or 13.4%,
over the same period in 2001. Net sales for the first six months of 2002
increased $6.1 million, or 7.9%, over the same period in 2001. These
increases are primarily due to the acquisition of Atco in July 2001. Atco
contributed net sales of $5.1 million in the second quarter of 2002, and
$8.4 million in the first six months of 2002. In addition, sales of air
conditioning compressors increased at Alma. Partially offsetting these
increases are lower sales of remanufactured torque converters and drive
train components at Dacco and Alma.

Operating income for the second quarter and first six months of 2002
increased $0.6 million over the same periods in 2001. The second quarter
increase represents a 9.7% increase over the second quarter of 2001 and the
six month increase represents a 5.0% increase over the first six months of
2001. This higher operating income can primarily be attributed to the
acquisition of Atco, as discussed above, partially offset by increased
corporate expenses.

       Kinetek. As of June 30, 2002, the Kinetek group consisted of
Imperial, Gear, Merkle-Korff, FIR, ED&C, Motion Control, Advanced DC and
DeSheng.

Net sales for the second quarter of 2002 were equal to those of the same
period for 2001 at $74.2 million. Net sales for the first six months of
2002 decreased $10.1 million or 6.6% from 2001. The decline in sales
resulted from general softness in substantially all of Kinetek's principal
markets. The motors segment delivered a 0.7% decrease in second quarter
sales versus 2001, with year to date sales 7.9% below the same period in
2001. Net sales of subfractional motors increased 3.6% for the second
quarter and decreased 2.1% year to date, driven by protracted weakness in
the bottle and can vending market, which was offset in part by increased
demand for refrigeration appliance motors and by Kinetek's new product
introductions. Net sales of fractional/integral motors decreased 3.4% for
the second quarter and 11.4% for the year to date, compared with the same
periods in 2001. The reductions in sales were led by sharp declines in
sales of DC products used in material handling applications and moderately
reduced demand for AC and DC products used in the floor care end market,
and a weak market in Europe. The addition of the Kinetek DeSheng joint
venture resulted in $1.7 million in added sales during the second quarter
of 2002. Net sales in the controls segment rose 1.9% in the second quarter
but fell 3.2% for the year to date compared with 2001 performance, driven
by general softness and moderate pricing pressures in the elevator
modernization market.

Operating income for the second quarter increased $2.4 million or 25.7%
over the same period in 2001, while operating income for the first six
months of 2002 increased $0.4 million or 1.8% over the same period in 2001.
Operating income for the motors segment increased 24.5% for the quarter to
$11.8 million and increased 1.0% to $21.3 million for the first six months
of 2002. The operating income of the controls segment increased 0.5% to
$2.5 million for the quarter ending on June 30, 2002, and decreased 4.4% to
$5.1 million for the six-month period then ending. The improved operating
income reflects lower selling, general, and administrative expenses from
Kinetek's cost control efforts such as facility closings and reductions in
staff. In addition, gross margins have been positively impacted by
Kinetek's focus on cost reductions through improved productivity and
sourcing initiatives. These reductions in cost compared to the prior year
are offset by unfavorable manufacturing leverage resulting from the
decreased sales described above, and to increased research and development
costs related to future products.

<PAGE>
                                    19

                    MANAGEMENT'S DISCUSSION AND ANALYSIS
              OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                (UNAUDITED)
                     (ALL DOLLAR AMOUNTS IN THOUSANDS)

       Consumer and Industrial Products. As of June 30, 2002, the Consumer
and Industrial Products group consisted of Cape, Welcome Home, Cho-Pat,
Online Environs, ISMI and GramTel.

Net sales for the second quarter of 2002 decreased $0.4 million, or 2.6%
from the same period in 2001. This decrease is primarily due to the
divestiture of Flavorsource in January 2002, $1.8 million. In addition,
sales of web site development services at Online Environs decreased $0.1
million, sales of Internet connection services at ISMI decreased $0.2
million, and sales of orthopedic supports at Chopat decreased $0.1 million.
Partially offsetting these decreases are higher sales of home accessories
at Cape, $0.9 million, higher retail sales at Welcome Home, $0.7 million,
and increased sales of information technology outsourcing services at
GramTel, $0.2 million. Net sales for the first six months of 2002 decreased
$4.8 million, or 13.8%, from the same period in 2001. This decrease is also
primarily due to the divestiture of Flavorsource, $3.1 million, as well as
sales at Riverside in January 2001 before its divestiture in February 2001,
$4.1 million. In addition, sales decreased due to lower sales of web site
development services at Online Environs, $0.3 million, and decreased sales
of Internet connection services at ISMI, $0.4 million. Partially offsetting
these decreases are higher sales of home accessories at Cape, $1.3 million,
increased retail sales at Welcome Home, $1.4 million, and higher sales of
information technology outsourcing services at Gramtel, $0.4 million. Cape
and Welcome Home have been helped by the consumers' inclination to "nest"
and decorate their homes, and Welcome Home has been helped by lower gas
prices which accounts for higher traffic in outlet malls.

Operating loss for the second quarter of 2002 decreased $0.2 million, or
24.1%, from the same period in 2001. This decrease is primarily due to a
lower operating loss at Welcome Home, $0.5 million. In addition, operating
income increased $0.2 million at Cape. Partially offsetting these increases
is lower operating income at ISMI, $0.2 million, GramTel, $0.1 million, and
Flavorsource, $0.2 million, due to the divestiture of the company in
January 2002. Operating loss for the first six months of 2002 decreased
$2.7 million, or 58.6%, from the same period in 2001. This decrease is
partially due to the divestiture of Riverside, as mentioned above, as
Riverside had an operating loss of $0.4 million for the first six months of
2001. In addition, operating loss decreased at Welcome Home, $1.4 million,
and operating income increased at Cape, $0.8 million, Chopat, $0.1 million,
and Online Environs, $0.3 million. Partially offsetting these increases is
lower operating income at Flavorsource, $0.3 million, due to the
divestiture of the company. The increased operating income at Cape and
Welcome Home is due to higher gross margins in addition to the higher sales
mentioned above.

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

Net sales for the second quarter of 2002 increased $6.7 million, or 3.6%,
over the same period in 2001. This increase is primarily due to higher
sales of school annuals at JII Promotions, increased sales of folding boxes
at Seaboard, higher sales of bike and truck reflectors at Sate-Lite,
increased sales of hardware products at Deflecto, higher sales of air
conditioning compressors at Alma, higher sales of subfractional motors and
controls at Kinetek, higher sales of home accessories at Cape, and
increased retail sales at Welcome Home. In addition, sales increased due to
the acquisition of Atco in July 2001. Partially offsetting these increases
are lower sales of calendars and outside specialties at JII Promotions,
decreased sales of screen printed products at Valmark, lower sales of
remanufactured torque converters and drive train components at Dacco and
Alma, and decreased sales of fractional/integral motors at Kinetek. In
addition, sales decreased due to the divestiture of Flavorsource in January
2002.

<PAGE>
                                    20

                    MANAGEMENT'S DISCUSSION AND ANALYSIS
              OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                (UNAUDITED)
                     (ALL DOLLAR AMOUNTS IN THOUSANDS)

Net sales for the first six months of 2002 decreased $10.4 million, or
2.8%, from the same period in 2001. This decrease is primarily due to the
divestitures of Flavorsource in January 2002 and Riverside in February
2001. In addition, sales decreased due to lower sales of calendars and
outside specialties at JII Promotions, decreased sales of screen printed
products and membrane switches at Valmark, lower sales of office products
at Deflecto, decreased sales of torque converters and drive train
components at Dacco and Alma, lower sales of subfractional motors,
fractional/integral motors and controls at Kinetek, and lower sales of
Internet connection services at ISMI. Partially offsetting these decreases
are higher sales of school annuals at JII Promotions, folding boxes at
Seaboard, bike and truck reflectors at Sate-Lite, hardware products at
Deflecto, home accessories at Cape, retail sales at Welcome Home, and
information technology outsourcing services at GramTel. In addition, sales
increased due to the acquisition of Atco in July 2001.

Operating income for the second quarter decreased $1.5 million, or 10.1%,
from the same period in 2001. This decrease is primarily due to lower
operating income at Valmark, Sate-Lite, ISMI and GramTel. In addition,
operating income decreased due to the divestiture of Flavorsource, as
mentioned above. Partially offsetting these decreases is higher operating
income at JII Promotions, Pamco, Deflecto, the motors segment of Kinetek,
and Cape, as well as a decreased operating loss at Welcome Home. In
addition, operating income was helped by the acquisition of Atco in the
Jordan Auto Aftermarket segment.

Operating income for the first six months of 2002 decreased $0.8 million,
or 3.0%, from the same period in 2001. This decrease is due to the
divestiture of Flavorsource, as mentioned above, as well as lower operating
income at Valmark, Sate-Lite, and the controls segment of Kinetek.
Partially offsetting these decreases is higher operating income due to the
acquisition of Atco, as well as increased operating income at JII
Promotions, Pamco, Deflecto, the motors segment of Kinetek, Welcome Home,
and Cape. The increase in operating income at Pamco is due to the closing
of Pamco's East Coast facility in October 2001, the higher operating income
at Deflecto is primarily due to ongoing headcount reductions and continued
focus on operational efficiencies, the increased operating income at
Kinetek is due to improved gross margins and focus on improved productivity
and sourcing initiatives, and the improved operating income at Cape and
Welcome Home is due to higher sales and gross margins.

       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 had approximately $154.2 million of working capital at June 30,
2002 compared to approximately $159.1 million at the end of 2001.

Operating activities. Net cash used in operating activities for the six
months ended June 30, 2002 was $5.1 million compared to net cash used in
operating activities of $1.8 million during the same period in 2001. The
increase in cash used is primarily due to an increase in the net loss,
partially offset by changes in operating assets and liabilities.

Investing activities. Net cash used in investing activities for the six
months ended June 30, 2002 was $14.5 million compared to net cash provided
by investing activities of $1.6 million during the same period in 2001. The
decrease was primarily due to the proceeds from the sale of a subsidiary in
the prior year.


<PAGE>
                                    21

                    MANAGEMENT'S DISCUSSION AND ANALYSIS
              OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                (UNAUDITED)
                     (ALL DOLLAR AMOUNTS IN THOUSANDS)

Financing activities. Net cash provided by financing activities for the six
months ended June 30, 2002 was $16.6 million compared to net cash provided
by financing activities of $0.9 million during the same period in 2001.
This change is primarily due to net revolver borrowings of $31.9 million in
the current year as compared to $6.5 million in the prior year and the
issuance of long-term debt at one of the Company's subsidiaries, Kinetek,
of $20.5 million, partially offset by the retirement of debt in the current
year of $31.2 million.

The Company is party to two 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 in 2005 and 2006. The agreements are secured by a first priority
security interest in substantially all of the Company's assets. As of
August 14, 2002, the Company had approximately $29.7 million of available
funds under these arrangements.

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.

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.

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, 2002, the
Company had $62.2 million of variable rate debt outstanding. A one
percentage point increase in interest rates would increase the annual
amount of interest paid by approximately $0.6 million. The Company does not
believe that its market risk financial instruments on June 30, 2002 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.


<PAGE>
                                     22

                             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
                        Since the Company does not have
                        securities registered under Section
                        12 of the Securities Exchange Act
                        of 1934 and is not required to file
                        periodic reports pursuant to
                        Section 13 or 15(d) of the
                        Securities Exchange Act of 1934,
                        the Company is not an "issuer" as
                        defined in the Sarbanes-Oxley Act
                        of 2002, and therefore the Company
                        is not filing the written
                        certification statement pursuant to
                        Section 906 of such Act. The
                        Company files periodic reports with
                        the Securities and Exchange
                        Commission because it is required
                        to do so by the terms of the
                        indentures governing its notes.

Item 6.                 Exhibits and Reports on Form 8-K
                        --------------------------------
                        8-K filed on May 29, 2002 regarding
                        the purchase of $110,000,000
                        principal amount of the Company's
                        Series A Debentures.

                        8-K filed on June 5, 2002 regarding
                        the purchase of $9,000,000
                        principal amount of the Company's
                        Series A Debentures.



<PAGE>
                                      23

                                 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, 2002                          By:    /s/ Thomas C. Spielberger
                                              ---------------------------
                                                  Thomas C. Spielberger
                                                    Senior Vice President,
                                                    Finance and Accounting