U. S. Securities and Exchange Commission
                             Washington, D.C. 20549
                                    Form 10-K

          [X] Annual Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended December 31, 2002

          [ ]  Transition  Report  under  Section 13 or 15(d) of the  Securities
Exchange Act of 1934 for the transition period from ______ to ______.

                          Commission file number 0-439

                       American Locker Group Incorporated
--------------------------------------------------------------------------------
             (Exact Name of registrant as specified in its charter)

            Delaware                                        16-0338330
--------------------------------------------------------------------------------
   (State or other jurisdiction of                       (I.R.S. Employer
   incorporation or organization)                        Identification No.)

 608 Allen Street, Jamestown, New York                       14701-3966
--------------------------------------------------------------------------------
 (Address of principal executive offices)                    (Zip Code)

(Registrant's telephone number,  including area code) 1-716-664-9600  Securities
registered under Section 12(b) of the Exchange Act:

Title of each class                    Name of each exchange on which registered

    None
-------------------------------        -----------------------------------------

Securities registered under Section 12(g) of the Exchange Act:

                     Common Stock Par Value $1.00 Per Share
--------------------------------------------------------------------------------
                                (Title of class)

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

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

<PAGE>


          At March 12, 2003, the Registrant had outstanding  1,517,146 shares of
its Common Stock. The aggregate  market value of the  Registrant's  voting stock
held  by  non-affiliates  on the  last  business  day of the  registrant's  most
recently completed second fiscal quarter was approximately $19,051,000, based on
the closing  price per share of Common  Stock on this date of $14.00 as reported
on the NASDAQ. Shares of Common Stock known by the Registrant to be beneficially
owned by directors of the  Registrant  and officers of the  Registrant and other
persons reporting beneficial ownership of 5% or more of Common Stock pursuant to
the reporting requirements of Section 16 of the Securities Exchange Act of 1934,
as amended  (the  "Exchange  Act"),  are not  included in the  computation.  The
Registrant,   however,   has  made  no  determination   that  such  persons  are
"affiliates" within the meaning of Rule 12b-2 under the Exchange Act.



                       DOCUMENTS INCORPORATED BY REFERENCE

          Portions   of  the   definitive   Proxy   Statement   for  the  Annual
Stockholders'  Meeting to be held May 13, 2003,  are  incorporated  by reference
into Part III.



                                     - 2 -
<PAGE>






PART I

ITEM 1.  DESCRIPTION OF BUSINESS
         -----------------------

American Locker Group  Incorporated  (the "Company") is engaged primarily in the
sale and rental of lockers.  This includes coin,  key-only,  and  electronically
controlled   checking  lockers  and  related  locks  and  plastic  and  aluminum
centralized mail and parcel  distribution  lockers.  The key controlled checking
lockers are sold to the recreational and transportation industries,  bookstores,
military  posts,  law  enforcement  agencies,  libraries  and  for  export.  The
electronically  controlled  lockers  are sold for use as secure  storage  in the
business  environment and the electronically  controlled,  coin operated lockers
are sold for use in  transportation  industry  and other  uses.  The plastic and
aluminum centralized mail and parcel distribution lockers are sold to the United
States  Postal  Service  ("USPS") and to  distributors  and resellers for use in
centralized mail and parcel delivery in new housing and industrial developments,
inside postal lobbies and apartment buildings and for replacement of older style
lockers in existing locations.

The  Company  is  an  engineering,   assembling,   manufacturing  and  marketing
enterprise.

The Company was incorporated on December 15, 1958, as a subsidiary of its former
publicly owned parent.  In April 1964, the Company's  shares were distributed to
the  stockholders  of  its  former  parent,   and  it  became  a  publicly  held
corporation. From 1965 to 1989, the Company acquired and disposed of a number of
businesses including the disposition of its original voting machine business.

On July 6, 2001, the Company acquired Security Manufacturing  Corporation (SMC).
SMC  manufactures  aluminum  cluster  box units,  which are sold to the USPS and
private markets,  as well as other mail delivery  receptacles.  The Company made
this  acquisition  to increase  its  product  offerings  to existing  customers,
provide  additional  products to attract new customers and to increase its share
in the postal market.

One of the Company's subsidiaries is a party to a Manufacturing  Agreement dated
October 1, 2000 with Signore,  Inc.,  formerly a wholly owned  subsidiary of the
Company, to furnish fabricating,  assembly and shipping services. The Agreement,
which  replaced a similar  agreement  dated  January 1, 1990,  became  effective
October  1, 2000 and is for a term of three  years,  with  options to extend the
agreement  to August  31,  2007.  The  Agreement  provides  that the cost to the
Company for these services be equal to Signore's standard cost divided by 80%.

Business Segment Information
----------------------------

The Company,  including its foreign subsidiary, is engaged in one business: sale
and rental of lockers,  including coin,  key-only and electronically  controlled
checking lockers and locks and the sale of plastic and aluminum centralized mail
and parcel distribution lockers.

The  Company has  developed  a range of  products  to support the United  States
Postal  Service  (USPS)  Centralized  Delivery  program.  Outdoor Parcel Lockers
(OPLs) are used by the USPS for  delivery  of parcels.  Since  March  1989,  the
Company has shipped  over 169,000  plastic  OPLs to


                                     - 3 -
<PAGE>


the USPS.  Cluster Box Units (CBUs) are used by the USPS for delivery of letters
and parcels and for the  collection  of outgoing  mail.  In November  1994,  the
Company negotiated a contract to sell Type Three plastic CBUs in quantity to the
United States Postal  Service.  The Company,  including SMC, is approved to ship
Type  One,  Two,  Three and Four  plastic  CBUs,  and Type  Two,  Three and Four
aluminum  CBUs. As of March 13, 2003,  plastic  Cluster Box Units with aggregate
invoice  prices in excess of $165 million have been shipped to the United States
Postal  Service  pursuant  to  the  1994  contract  and  subsequent   contracts.
Components  of these  units  are  made by  outside  vendors  and the  units  are
assembled by the Company's  wholly-owned  subsidiary,  American  Locker Security
Systems,  Inc.  (ALSSI).  The  units  are sold  directly  by ALSSI to the  USPS.
Aluminum CBUs are  manufactured by SMC and sold directly to the USPS are private
markets.

The checking  lockers are  fabricated  by Signore,  Inc. and are marketed in the
United  States by ALSSI.  Lockers for the Canadian  market are  manufactured  by
Signore,  Inc. with locks supplied from ALSSI. Lockers are marketed in Canada by
the  Canadian  Locker  Company,   Ltd.  ("Canadian   Locker"),   a  wholly-owned
subsidiary.  These  sales are made  outright,  through  salaried  employees  and
distributors,   to  customers  who  need  storage  facilities  requiring  a  key
controlled lock system in the recreational,  governmental and institutional type
industries. Canadian Locker also owns and operates coin operated lockers in air,
bus and rail terminals and retail  locations in Canada.  ALSSI  manufactures the
lock system,  which is coin or key controlled  and operated,  for use in lockers
sold by ALSSI and Canadian Locker.  ALSSI also provides  nationwide and Canadian
maintenance and repair services with respect to coin operated lockers previously
sold by ALSSI.  The Company has  developed an electronic  coin operated  baggage
cart system and is operating  the system at one major U.S.  airport and has sold
the system to third-party  operators for use in two U.S.  airports.  The Company
also sells this  vending  system to shopping  centers for the rental of shopping
carts.

Additional   information  with  respect  to  business  segment  data,  including
significant  customers,  is  disclosed  in Note 13 of the  financial  statements
included in Item 8 of this Form 10-K.

Competition
-----------

While the Company is not aware of any  reliable  trade  statistics,  it believes
that its subsidiaries,  ALSSI and Canadian Locker are the dominant  suppliers of
key controlled  checking lockers in the United States and Canada.  However,  the
Company faces more active competition from several other manufacturers of locker
products sold to the United States Postal Service and other purchasers.

Raw Materials
-------------

Present  sources of supplies and raw materials  incorporated  into the Company's
metal,  aluminum and plastic  lockers and locks are  generally  considered to be
adequate and are currently available in the market place. The Company's supplier
of  polycarbonate  plastic which is used in the parcel  lockers and CBUs entered
this market in March 1992 and is presently  supplying  this raw  material  which
meets strict specifications  imposed by the United States Postal Service. In the
event the present  supplier  declines to continue to supply this  material,  the
Company would be required to seek an alternate source of supply.



                                     - 4 -
<PAGE>

The Company's  metal coin operated and electronic  lockers are  manufactured  by
Signore,  Inc.  pursuant to the Manufacturing  Agreement,  except for the locks,
which are manufactured by ALSSI.  The Company's  aluminum CBUs and mailboxes are
manufactured  and  sold  by the  Company's  subsidiary,  Security  Manufacturing
Corporation.

Patents
-------

The Company owns a number of patents, none of which it considers material to the
conduct of its business.

Employees
---------

The  Company  and  its  subsidiaries  actively  employed  161  individuals  on a
full-time  basis as of December 31, 2002, in its  businesses,  11 of whom are in
Canada.   The  Company   considers  its  relations  with  its  employees  to  be
satisfactory. None of the Company's employees are represented by a union.

Dependence on Material Customer
-------------------------------

During 2002,  2001 and 2000,  one customer,  the United  States Postal  Service,
accounted for 56.4%,  63.1%, and 70.9% of net sales,  respectively.  The loss of
this  customer,  or a  reduction  in its  orders,  could  adversely  affect  the
Company's operations and financial results.

Research and Development
------------------------

The Company engages in research and development  activities  relating to new and
improved products. It expended $174,000,  $91,000, and $93,000 in 2002, 2001 and
2000, respectively, for such activity in its continuing businesses.

Compliance with Environmental Laws and Regulations
--------------------------------------------------

Based on the  information  available to it, the Company  believes  that it is in
compliance  with  present  federal,  state  and  local  environmental  laws  and
regulations.

In December  1998,  the Company  was named as a  defendant  in a lawsuit  titled
"Roberta Raiport, et al. v. Gowanda Electronics Corp. And American Locker Group,
Inc." pending in the State of New York Supreme Court, County of Cattaragus.  The
suit  involves  property  located in  Gowanda,  New York,  which was sold by the
Company to Gowanda  Electronics Corp. prior to 1980. The plaintiffs,  current or
former  property  owners in  Gowanda,  New York,  assert  that  defendants  each
operated machine shops at the site during their respective  periods of ownership
and that as a result  of such  operation,  soil  and  groundwater  contamination
occurred  which  has  adversely   affected  the  plaintiffs  and  the  value  of
plaintiffs'  properties.  The plaintiffs assert a number of causes of action and
seek  compensatory  damages  of  $5,000,000  related to  alleged  diminution  of
property  values,  $3,000,000 for economic losses and "disruption to plaintiffs'
lives," $10,000,000 for "nuisance,  inconveniences and disruption to plaintiffs'
lives,"  $25,000,000 in


                                     - 5 -
<PAGE>


punitive damages,  and $15,000,000 to establish a "trust account" for monitoring
indoor air quality and other  remedies." The Company believes that its potential
liability with respect to this site, if any, is not material.  Therefore,  based
on the information currently available,  management does not believe the outcome
of this suit will have a material adverse impact on the Company's  operations or
financial  condition.  Defense of this case has been  assumed  by the  Company's
insurance carrier, subject to a reservation of rights.

On July  30,  2001,  the  Company  received  a letter  from  the New York  State
Department of Environmental  Conservation  (the "DEC") advising the Company that
it  is  a   potentially   responsible   party  with  respect  to   environmental
contamination  at the site mentioned above located in Gowanda,  New York,  which
was sold by the Company to Gowanda  Electronics  Corp. prior to 1980. The letter
from the DEC states that a Remedial Investigation and Feasibility Study has been
conducted at the site and a  remediation  plan  selected.  Based on  information
currently  available,  the Company  believes that its potential  liability  with
respect  to current  action by the DEC with  regard to this site will not have a
material  adverse  impact on the Company's  operations  or financial  condition.
Defense of this  matter has been  assumed by the  Company's  insurance  carrier,
subject to a reservation of rights.

General
-------

Backlog of orders is not  significant  in the  Company's  business as  shipments
usually are made shortly after orders are received.  The Company's  sales do not
have marked seasonal variations.


Executive Officers of the Company
---------------------------------
                                                                      Year First
                                                                       Assumed
      Name                   Age       Office Held with Company        Position
--------------------------------------------------------------------------------

Edward F. Ruttenberg         56        Chairman of the Board and         1998
                                       Chief Executive Officer

Roy J. Glosser               42        President, Chief Operating        1996
                                       Officer and Treasurer

Mr. E.F.  Ruttenberg has been employed in his positions since  September,  1998.
Prior to that  date he served  as Vice  Chairman  of the  Company.  Mr.  Glosser
assumed his position as President  and Chief  Operating  Officer in May 1996 and
became  Treasurer in September  1998.  Prior to that date, Mr. Glosser served as
Vice  President - Operations  of the Company since 1995 and has been employed by
the Company since 1992 in operations and product development.

There  are no  arrangements  or  understandings  pursuant  to  which  any of the
officers were elected as officers, except for an employment contract between the
Company and Roy J. Glosser and an  employment  contract  between the Company and
Edward F.  Ruttenberg.  Except as provided  in such  employment  contracts,  all
officers  hold  office for one year and until their  successors  are


                                     - 6 -
<PAGE>


elected and qualified; provided, however, that any officer is subject to removal
with or without  cause,  at any time,  by a vote of the majority of the Board of
Directors.

There have been no events under any bankruptcy act, no criminal  proceedings and
no  judgments  or  injunctions  material  to the  evaluation  of the ability and
integrity of any executive officer during the past five years.

Available Information
---------------------

The Company files with the U.S. Securities and Exchange Commission quarterly and
annual  reports on Forms 10-Q and 10-K,  respectively,  current  reports on Form
8-K, and proxy  statements  pursuant to the Securities  Exchange Act of 1934, in
addition  to other  information  as  required.  The public may read and copy any
materials that the Company files with the SEC at the SEC's Public Reference Room
at 450 Fifth  Street,  N.W.,  Washington,  D.C.  20549.  The  public  may obtain
information on the operation of the Public  Reference Room by calling the SEC at
1  (800)   SEC-0330.   The  Company   files  this   information   with  the  SEC
electronically,  and the SEC maintains an Internet  site that contains  reports,
proxy and information  statements,  and other information regarding issuers that
file  electronically  with  the  SEC at  http://www.sec.gov.  The  Company  also
maintains a web site at http://www.americanlocker.com.


                                     - 7 -
<PAGE>



ITEM 2.  DESCRIPTION OF PROPERTY

The location and  approximate  floor space of the  Company's  principal  plants,
warehouses and office facilities are as follows ( * indicates leased facility):

<TABLE>
<CAPTION>
<S>                       <C>                                        <C>                 <C>

                                                                     Approximate
                                                                     Floor Space
Location                   Subsidiary                                In Sq. Ft.            Use
--------                   ---------                                -----------           --------

Jamestown, NY              Principal Executive Office                37,000*              Office space/
                           American Locker Company, Inc.                                  Assembly and
                           and American Locker Security                                   Warehouse
                             Systems, Inc.

Jamestown, NY              American Locker Security                  30,200*              Assembly and
                             Systems, Inc.                                                Warehouse

Pittsburgh, PA             Executive Office                             200*              Office space

Ellicottville, NY          American Locker Security                  12,800               Lock manufactur-
                             Systems, Inc. - Lock Shop                                    ing service and
                                                                                          repair

Toronto,                   Canadian Locker Company, Ltd.              4,000*              Coin-
  Ontario                                                                                 operated
                                                                                          lockers and
                                                                                          locks

Toronto,
  Ontario                  Canadian Locker Company, Ltd.              3,000*              Warehouse

Grapevine, TX              Security Manufacturing Corporation        70,000               Manufacturing
                                                                                          and office

                                                   TOTAL            157,200
                                                                    =======
</TABLE>


The Company believes that its facilities, which are of varying ages and types of
construction and the machinery and equipment utilized in such facilities, are in
good  condition  and are  adequate for its  presently  contemplated  needs.  All
facilities  are leased  except for the  Ellicottville,  New York and  Grapevine,
Texas facility.  The leases on these properties  terminate at various times from
2003 through 2004, with options available to extend certain leases through 2007.



                                     - 8 -
<PAGE>




ITEM 3.  LEGAL PROCEEDINGS

In September 1998 and subsequent  months, the Company was named as an additional
defendant in  approximately  140 cases pending in state court in  Massachusetts.
The  plaintiffs in each case assert that a division of the Company  manufactured
and furnished to various  shipyards  components  containing  asbestos during the
period  from  1948 to 1972 and that  injuries  resulted  from  exposure  to such
products.  The assets of this division were sold by the Company in 1973.  During
the process of discovery  in certain of these  actions,  documents  from sources
outside the Company have been produced which  indicate that the Company  appears
to have been  included  in the  chain of title for  certain  wall  panels  which
contained  asbestos  and which were  delivered to the  Massachusetts  shipyards.
Defense of these  cases has been  assumed by the  Company's  insurance  carrier,
subject to a reservation of rights. As of March 10, 2003,  settlement agreements
have  been  entered  in 14 cases  with  funds  authorized  and  provided  by the
Company's  insurance carrier.  Further,  over 70 cases originally filed in 1995,
1996,  1997,  1998 and 1999 against  other  defendants  to which the Company was
joined as an additional defendant have been terminated as to the Company without
liability to the Company under Massachusetts  procedural rules.  Therefore,  the
balance  of  unresolved  cases  against  the  Company  as of March  10,  2003 is
approximately 55 cases originally filed against other defendants in 2000 through
2002.

In June 2002,  the Company was named as a defendant in a lawsuit  titled "Alfred
Todak and Stephanie Todak v. Allen-Bradley  Company, et al" filed in King County
Superior Court, King County, Washington. The plaintiffs assert that the Company,
together with multiple additional named and unnamed defendants, manufactured and
sold products  containing  asbestos  exposure to which has resulted in injury to
the plaintiffs. The plaintiffs are seeking unspecified economic damages. Defense
of the case has been assumed by the Company's  insurance  carrier,  subject to a
reservation of rights.

While the Company cannot predict what the ultimate  resolution of these asbestos
cases may be because the  discovery  proceedings  on the cases are not complete,
based upon the Company's  experience to date with similar cases,  as well as the
assumption that insurance  coverage will continue to be provided with respect to
these cases,  at the present time, the Company does not believe that the outcome
of  these  cases  will  have a  significant  adverse  impact  on  the  Company's
operations or financial condition.

See "Item 1.  Business - Compliance with Environmental Laws and Regulations."

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

There were no matters submitted to a vote of the security  holders,  by means of
solicitation of proxies or otherwise, during the fourth quarter of 2002.




                                     - 9 -
<PAGE>



PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's  shares of Common Stock (Par Value $1.00 per share) are not listed
on any exchange,  but are traded on the  over-the-counter  market and quotations
are reported by the National Association of Security Dealers, Inc. through their
Automated  Quotation System (NASDAQ) on the National Market System.  The trading
symbol is ALGI.  The  following  table  shows the range of the low and high sale
prices for each of the calendar quarters indicated.


                                Per Common Share
                                  Market Price


                                                                      Dividend
     2002             High                       Low                  Declared
--------------------------------------------------------------------------------
First Quarter        $  17.50                $  10.50               $     0.00
Second Quarter          14.00                   10.53                     0.00
Third Quarter           13.99                    9.52                     0.00
Fourth Quarter          14.00                   10.00                     0.00
                                                                         -----
Total                                                               $     0.00
                                                                      ==========


                                                                      Dividend
   2001               High                      Low                   Declared
--------------------------------------------------------------------------------
First Quarter        $    8.13                 $ 5.25               $     0.00
Second Quarter           12.00                   6.50                     0.00
Third Quarter            13.50                   7.00                     0.00
Fourth Quarter           18.00                   7.95                     0.00
                                                                         -----
Total                                                               $     0.00
                                                                      ==========

As of March 12, 2003, the Company had 1,153 security holders of record.

By agreement with its principal lender,  the Company's ability to declare future
dividends is restricted. See Note 4 to the financial statements included in Item
8 of this Form 10-K.



                                     - 10 -
<PAGE>



ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth selected historical financial data of the Company
as of, and for the years ended December 31, 2002,  2001,  2000,  1999, and 1998.
The  financial  data set  forth  below  should be read in  conjunction  with the
information under  "Management's  Discussion and Analysis of Financial Condition
and  Results  of  Operations"  included  in Item 7 of  this  Form  10-K  and the
Financial  Statements of the Company and the notes thereto included in Item 8 of
this Form 10-K. The below amounts include the results of Security  Manufacturing
Corporation since its acquisition by the Company on July 6, 2001.

<TABLE>
<CAPTION>
<S>                                             <C>            <C>           <C>          <C>           <C>

                                                  2002           2001          2000          1999         1998
                                                  ----           ----          ----          ----         ----

Sales                                            $40,670,721   $39,627,216   $37,662,140  $34,950,104   $45,011,327

Income before income taxes                         4,972,307     4,939,946     4,840,632    4,395,208     7,103,364

Income taxes                                       1,949,479     1,879,585     1,891,419    1,771,407     2,788,822

Net income                                         3,022,828     3,060,361     2,949,213    2,623,801     4,314,542

Earnings per share - basic                              1.57          1.49          1.33         1.11          1.78

Earnings per share - diluted                            1.54          1.47          1.32         1.09          1.70

Weighted average common shares
outstanding - basic                                1,921,612     2,053,838     2,214,406    2,363,338     2,420,078

Weighted average common shares
outstanding - diluted                              1,957,561     2,083,484     2,230,785    2,402,108     2,542,684

Dividends declared                                      0.00          0.00          0.00         0.00          0.00

Interest expense                                     670,144       441,773       140,920      153,861       231,875

Depreciation and amortization expense                974,165       956,430       796,140      630,047       646,379

Expenditures for property, plant and                 316,180       801,009       206,604    1,915,139       536,819
equipment


YEAR-END POSITION
Total assets                                      25,034,616    29,735,420    15,582,599   15,179,069    13,469,516

Long-term debt, including current portion          9,933,813    11,578,687       333,320    2,034,324       733,333

Stockholders' equity                              11,874,709    14,553,876    11,723,825   10,107,210     9,264,056

Stockholders' equity per share of common
stock (1)                                               7.83          7.12          5.68         4.44          3.82

Common shares outstanding at year-end              1,517,146     2,043,046     2,062,540    2,277,118     2,422,772

Number of employees                                      161           198           144          137           135

(1) Based on shares outstanding at year-end.

</TABLE>

                                     - 11 -
<PAGE>



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

Critical Accounting Policies And Estimates

The Company's  discussion and analysis of its financial condition and results of
operations are based upon the Company's consolidated financial statements, which
have been prepared in accordance with accounting  principles  generally accepted
in the United States. The preparation of these financial statements requires the
Company to make estimates and judgments that affect the amounts  reported in the
financial  statements and the  accompanying  notes.  On an on-going  basis,  the
Company evaluates its estimates, including those related to product returns, bad
debts,  inventories,   intangible  assets,  income  taxes,  pensions  and  other
post-retirement  benefits,  and contingencies and litigation.  The Company bases
its estimates on experience and on various other  assumptions  that are believed
to be reasonable  under the  circumstances,  the results of which form the basis
for making  judgments about the carrying  values of assets and liabilities  that
are not readily  apparent  from other  sources.  Actual  results may differ from
these estimates.

The Company believes the following critical  accounting policies affect its more
significant  judgments and estimates used in the preparation of its consolidated
financial statements.

Bad Debts

The Company  maintains  allowances  for doubtful  accounts for estimated  losses
resulting  from  the  inability  of its  customers  to make  required  payments.
Management  uses judgmental  factors such as customer's  payment history and the
general economic climate,  as well as considering the age of and past due status
of invoices in assessing  collectiblity and establishing allowances for doubtful
accounts.  If  the  financial  condition  of the  Company's  customers  were  to
deteriorate,  resulting  in an  impairment  of their  ability to make  payments,
additional allowances may be required.

Inventory

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

Legal Matters

The Company is subject to certain legal  proceedings  as discussed in Note 16 of
the consolidated  financial  statements.  Currently the Company does not believe
that these  matters  will have a  material  impact on its  financial  results or
financial  position.  This  conclusion  is  based  primarily  on  the  Company's
insurance  coverage  for these  matters.  It is possible,  however,  that future
results of  operations  for any  particular  quarter or annual  period  could be
materially affected by changes in assumptions or other  circumstances  involving
these legal matters.


                                     - 12 -
<PAGE>

Goodwill

As described in Note 2 to the consolidated  financial statements the Company has
recorded  goodwill in connection with its acquisition of SMC in 2001.  Beginning
in 2002,  the  Company,  in  accordance  with the  provisions  of  Statement  of
Financial  Accounting  Standards No. 142, Goodwill and Other Intangible  Assets,
performed  the required  goodwill  impairment  tests.  Based upon these tests no
impairment  was  determined to exist.  In assessing  impairment the Company must
make  assumptions  regarding  estimated  future cash flows and other  factors to
determine the fair value of the  respective  net assets.  If these  estimates or
their related  assumptions  change in the future, the Company may be required to
record an impairment charge for the recorded goodwill.

Results of Operations - 2002 Compared to 2001

Consolidated  sales in 2002  totaled  $40,671,000,  a 3% increase  from sales of
$39,627,000 in 2001.  Income before income taxes in 2002 increased by $32,000 or
1% to $4,972,000  compared to $4,940,000  in 2001.  Plastic  locker sales to the
United States Postal  Service  (USPS)  totaled  $23,580,000  in 2002 compared to
$25,166,000  in 2001.  Plastic  Cluster  Box Units  (CBUs) to the United  States
Postal  Service (USPS)  decreased 5% to $22,649,000 in 2002 from  $23,864,000 in
2001.  Sales of Plastic  Outdoor  Parcel  Lockers  (OPLs) were  $931,000 in 2002
compared to  $1,302,000  in 2001.  The  decrease in sales of Plastic CBUs is the
result of overall  declines in volume,  changes in product mix as a lower priced
Plastic CBU was introduced in mid 2001, and to a lesser extent price  reductions
of 3% to 5% that became  effective in April 2001 on existing Plastic CBU models.
The  decrease  in sales of OPLs is  primarily  the result of lower  volume.  The
declines in CBU and OPL volume are due to decreased  purchases  made by the USPS
as a result of USPS budget constraints. Revenues from the Company's other locker
products,  primarily  the sale and  rental  of  metal,  coin  and  key-only  and
electronically   controlled  lockers,  were  $16,512,000  in  2002  compared  to
$13,382,000  in 2001,  an increase of  $3,131,000.  This  increase of $3,131,000
consists  of   increased   sales  from  the   Company's   subsidiary,   Security
Manufacturing  Corporation  (SMC),  which was acquired July 6, 2001, offset by a
decrease from other  products and services.  SMC sales were  $7,708,000 in 2002,
compared to $3,137,000 in 2001, beginning from the date of acquisition,  July 6,
2001.  Decreases in sales in 2002 for other locker  products and services relate
to declines in locker sales to amusement parks and others as a result of current
economic  conditions.  Revenues  from the  luggage  cart  business  for  airport
terminals  were  $578,000  in 2002,  a decrease  of  $502,000  compared  to 2001
revenues  of  $1,080,000.  This  decrease  is  primarily  due to  decreased  air
passenger  volume  during 2002  compared to 2001.  Also in  November  2002,  the
Company's   agreement  to  provide   luggage   cart   services  at  the  Toronto
International  Airport expired.  Revenue from luggage cart and other services at
this  airport  were  approximately  $332,000 in 2002 and  $556,000 in 2001.  The
Company continues to provide luggage cart service at one terminal of the Detroit
International Airport.




                                     - 13 -
<PAGE>



The present  contract of the  Company's  subsidiary,  American  Locker  Security
Systems,  Inc.,  with the USPS was awarded on April 15, 2001 and covers all four
types of CBUs and the OPL. The contract is for indefinite quantities of CBUs and
OPLs.  The contract is for a two-year  term and the USPS has the option to renew
for four additional  two-year terms. The USPS also awarded  indefinite  quantity
contracts  to  SMC,  which  the  Company  acquired  on July  6,  2001;  and to a
competitor that produces aluminum CBUs.

The Company believes that the long-term outlook for CBU volume remains favorable
in light of the continued  USPS  commitment to the CBU program and its resulting
operating cost reduction benefits. The USPS decision to discontinue the purchase
of Neighborhood  Delivery and Collection Box Units (NDCBUs) in 1999 has also had
a positive impact on the CBU market.  The CBU is the  modernization of the NDCBU
and is an integral part of the USPS delivery cost reduction  program  identified
as Centralized Delivery. As previously disclosed, total CBU demand is influenced
by a number of factors over which the Company has no control,  including but not
limited to: USPS  budgets,  policies  and  financial  performance,  domestic new
housing  starts,  postal  rate  increases,  and the  weather as these  units are
installed  outdoors.  The Company's  share of the CBU market  remained stable in
2002. The Company believes its CBU product line,  including the acquired line of
aluminum CBUs made by the Company's new subsidiary,  SMC, continues to represent
the best  value  when  all  factors  including  price,  quality  of  design  and
construction, long-term durability and service are considered.

Consolidated  cost of sales as a percentage  of sales was 68.9% in 2002 compared
to 70.8% in 2001. The improvement in 2002 is due to higher margins obtained from
SMC and stable margins for other products.

Selling,  administrative  and general  expenses were $7,400,000  during 2002, an
increase of $711,000 or 11% over the 2001 amount of $6,689,000. This increase is
primarily  from SMC,  since its 2002  amounts  include a full year  whereas 2001
amounts  only  include  the  period  from the July 6, 2001  acquisition  date to
December 31, 2001. The increase at SMC was approximately $954,000, whereas there
was a one  time  reduction  of  $319,000  as the  result  of the  reversal  of a
liability which existed under the Supplemental  Executive Retirement Plan due to
the death in March of 2002, of the only current beneficiary under the Plan. This
one time reduction,  which was recorded in the first quarter of 2002,  increased
basic  and  diluted  earnings  per share by $.09 for  2002.  Remaining  selling,
administrative  and general expenses  increased modestly during 2002 compared to
2001. Selling,  administrative and general expenses were 18% and 17% of sales in
2002 and 2001, respectively.

Interest  income  decreased  by $68,000 in 2002  compared to 2001 as a result of
lower cash  deposits,  primarily due to the  repurchase of the Company's  common
stock during 2002.

Interest expense  increased in 2002 compared to 2001 due to the outstanding debt
in connection  with the  acquisition of SMC being  outstanding  for all of 2002,
whereas in 2001 the debt was  outstanding  only  subsequent  to the July 6, 2001
acquisition date.



                                     - 14 -
<PAGE>

Results of Operations - 2001 Compared to 2000

Consolidated  sales in 2001  totaled  $39,627,000,  a 5% increase  from sales of
$37,662,000 in 2000.  Income before income taxes in 2001 increased by $99,000 or
2% to $4,940,000  compared to $4,841,000  in 2000.  Plastic  locker sales to the
United States Postal  Service  (USPS)  totaled  $25,166,000  in 2001 compared to
$26,705,000  in 2000.  Plastic  Cluster  Box Units  (CBUs) to the United  States
Postal  Service (USPS)  decreased 5% to $23,864,000 in 2001 from  $25,226,000 in
2000.  Sales of Plastic  Outdoor Parcel  Lockers (OPLs) were  $1,302,000 in 2001
compared to $1,479,000  in 2000.  The decreases in CBU sales in 2001 compared to
2000 was the result of product mix, as a lower priced CBU was  introduced in mid
2001,  and price  reductions of 3% to 5% that became  effective in April 2001 on
existing CBU models.  CBUs shipped in 2001 were consistent with 2000 levels; OPL
volume  decreased  by  approximately  13% in  2001  versus  2000,  due to  lower
purchases  by the USPS.  Revenues  from the  Company's  other  locker  products,
primarily  the sale and rental of metal,  coin and key-only  and  electronically
controlled lockers,  were $13,382,000 in 2001 compared to $9,871,000 in 2000, an
increase of $3,511,000.  This increase of $3,511,000 consists of $3,136,000 from
the Company's new subsidiary,  Security  Manufacturing  Corporation (SMC), which
was purchased on July 6, 2001. The remaining  increase from 2000 to 2001 relates
to price  increases,  increased  penetration in the shopping center market and a
general  increase in demand across  certain  markets  served.  Revenues from the
luggage cart business for airport  terminals were $1,080,000 in 2001, a decrease
of $6,000  compared to 2000 revenues of  $1,086,000.  This decrease is primarily
due to the growth in the first eight  months of 2001 being offset by declines in
September and the fourth quarter due to lower airline passenger volume.

Consolidated  cost of sales as a percentage  of sales was 70.8% in 2001 compared
to 71.8% in 2000. The improvement in 2001 is due to higher margins obtained from
SMC and  other  non-Plastic  products,  and  stable  margins  for  the  Plastics
products.

Selling,  administrative  and general  expenses were $6,689,000  during 2001, an
increase of 11% from  $6,040,000 in 2000. This increase of $649,000 is primarily
due to additional  expenses  from SMC of  approximately  $750,000,  which offset
decreases in selling  expenses from the Company's  existing  products.  Selling,
administrative  and general expenses were 17% and 16% of sales in 2001 and 2000,
respectively.

Interest  income  decreased  by $27,000 in 2001  compared to 2000 as a result of
lower interest rates earned on cash deposits during 2001 versus 2000.

Interest  expense  increased  in  2001  as a  result  of the  Company  incurring
$11,927,000  of new debt in connection  with the  acquisition of SMC and related
real estate on July 6, 2001.



                                     - 15 -
<PAGE>





Liquidity and Sources of Capital

The Company's  liquidity is reflected in the ratio of current  assets to current
liabilities or current ratio and its working capital. The current ratio was 2.77
to 1 and 3.55 to 1 at December 31, 2002 and 2001, respectively. Working capital,
or the excess of current  assets over current  liabilities  was  $8,370,000  and
$12,309,000 at December 31, 2002 and 2001, respectively. The decrease in working
capital  resulted  primarily from the use of $5,679,000 to repurchase  shares of
the  Company's  common  stock.  In 2002,  cash  generated  from  operations  was
$4,940,000.

The Company's  policy is to maintain  modern  equipment  and adequate  capacity.
During  2002,  2001,  and 2000 the  Company  expended  $316,000,  $801,000,  and
$207,000, respectively, for capital additions. Capital expenditures in all three
years were financed principally from operations.

During  2001,  the  Company   acquired   B.L.L.   Corporation,   d/b/a  Security
Manufacturing  Corporation  (SMC) and  related  real  estate  for  approximately
$12,100,000, excluding cash received. This acquisition was funded with term loan
borrowings of approximately  $11,000,000,  a $960,000 note payable to the former
owners and $140,000 of cash.  These  borrowings  require  principal  payments of
approximately $1,630,000 during 2003.

The Company expects that cash generated from operations in 2003 will be adequate
to fund the needs for working capital,  capital  expenditures and debt payments.
However,   if   necessary,   the  Company  has  a  $3,000,000   revolving   bank
line-of-credit available to assist in satisfying future operating cash needs, of
which $25,000 was outstanding at December 31, 2002.

The Company  has  contractual  obligations  at December  31,  2002,  relating to
long-term debt and operating lease  arrangements.  The Company does not have any
significant  purchase  obligations  or  commitments  at December 31,  2002.  The
Company does not guarantee the debt of any third  parties.  All of the Company's
subsidiaries  are 100% owned by the Company and are included in its consolidated
financial  statements.  Total  payments  to be made  under  long-term  debt  and
operating leases are listed below:


                       Long-Term Debt    Operating Leases          Total
                       --------------    ----------------          -----
      2003             $1,630,000         $  301,000           $  1,931,000
      2004              1,643,000            107,000              1,750,000
      2005              1,331,000             15,000              1,346,000
      2006              3,504,000                  -              3,504,000
      2007              1,200,000                  -              1,200,000
      2008                625,000                  -                625,000


The increase in 2006 long-term debt repayment is the result of a balloon payment
due on the  Company's  mortgage  payable.  The Company  expects to refinance the
mortgage payable in 2006.


                                     - 16 -
<PAGE>

During 2002,  the Company  entered into  agreements  to become 5% members of two
limited liability  corporations (LLCs). The LLCs were formed by third parties in
order to provide  luggage cart  services at two U.S.  airports.  The Company has
sold,  or expects to sell  luggage  cart  products  to the LLCs.  The  governing
documents  of  the  LLCs  provide  that  the  Company  does  not  share  in  the
distribution of cash flow or profits and losses of the LLCs through 2007, nor is
the Company required to make any capital  contribution to the LLCs. Ownership by
the Company of a minority  interest  in the LLCs had no impact on the  Company's
2002 operating results or financial  position,  and are not expected to have any
material impact in the future.

Impact of Inflation and Changing Prices

Although  inflation  has been low in recent  years,  it is still a factor in the
economy and the Company  continues to seek ways to mitigate  its impact.  To the
extent  permitted by competition,  the Company passes  increased costs on to its
customers by increasing sales prices over time.  Specifically,  the Company does
have the ability to modify its contract with the USPS regarding  sales prices in
the event of a  significant  price  increase for  materials  subject  however to
competitive  situations.  In respect to its other products,  steel, aluminum and
plastic,  the Company  expects  that any raw  material  price  changes  would be
reflected in adjusted sales prices.

The  Company  intends  to seek  additional  ways to control  the  administrative
overhead necessary to successfully run the business. By controlling these costs,
the Company can  continue to  competitively  price its  products  with other top
quality locker manufacturers and distributors.

The Company has used the LIFO method of  accounting  for its  inventories  since
1974.  This method  matches  current  costs with current  revenues and during an
inflationary  period,  reduces  reported  income but improves cash flow due to a
reduction of taxes based on income.

Market Risks - Foreign Currency and Interest Rate Risks

The Company's  Canadian operation subjects the Company to foreign currency risk,
though it is not  considered a significant  risk since the Canadian  operation's
net assets  represent  less than 10% of the  Company's  aggregate  net assets at
December 31, 2002.  Presently,  management  does not hedge its foreign  currency
risk as it plans  to  indefinitely  reinvest  the  Canadian  net  assets  in the
Canadian operation.

The Company has fixed  interest  rates on $5,034,000  of its  long-term  debt at
December  31,  2002 and  variable  interest  rates based on three month LIBOR on
$4,950,000 of its long-term debt at December 31, 2002.  Based upon the Company's
outstanding  long-term  debt subject to variable  interest rates at December 31,
2002,  a 1%  increase  in the LIBOR rate would  result in an annual  increase to
interest expense of approximately $50,000.


                                     - 17 -
<PAGE>


Effect of New Accounting Pronouncement

The Company has adopted the  provision  of  Statement  of  Financial  Accounting
Standards  No. 142  Goodwill  and Other  Intangible  Assets  (SFAS  142),  which
prohibits the amortization of goodwill  associated with  acquisitions made after
June  30,  2001.  SFAS 142 also  requires  an  impairment  test on  goodwill  be
performed annually or more frequently if an event occurs or circumstances change
that would more likely than not reduce the fair value of a reporting  unit below
its carrying amount. The impairment test consists of comparing the fair value of
a  reporting  unit with its  carrying  amount  including  goodwill,  and, if the
carrying  amount of the  reporting  unit exceeds its fair value,  comparing  the
implied fair value of goodwill with its carrying  amount.  An impairment loss is
recognized  for the  carrying  amount of goodwill in excess of its implied  fair
value. The Company performed the required goodwill impairment tests during 2002,
no  impairment  of  goodwill  was  calculated.  The  Company is  considered  one
reporting unit for purposes of the goodwill  impairment  test. The fair value of
the Company was estimated based on earnings multiples and market analysis. Since
the Company did not have any goodwill recorded prior to the SMC acquisition,  on
July 6, 2001, the provision of SFAS 142 requiring  companies to stop  amortizing
goodwill  had no impact on the ongoing  operating  results of the Company or the
comparability of such results with prior periods.

In August 2001, the Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  No.  144,  Accounting  for the  Impairment  or
Disposal of  Long-Lived  Assets (SFAS 144).  SFAS 144  supercedes  SFAS No. 121,
Accounting for the Impairment of Long-Lived  Assets and for Long-Lived Assets to
be Disposed  Of, but retains its  fundamental  provisions  for  recognition  and
measurement of the impairment of long-lived assets to be held and used and those
to be disposed of by sale. The Company adopted SFAS 144 in 2002; SFAS 144 had no
effect on the Company at the time of adoption or during 2002.

Safe Harbor Statement under the Private Securities Litigation Reform Act Of 1995

Forward-looking   statements  in  this  report,  including  without  limitation,
statements   relating   to  the   Company's   plans,   strategies,   objectives,
expectations,  intentions  and adequacy of  resources,  are made pursuant to the
Safe Harbor Provisions of the Private Securities  Litigation Reform Act of 1995.
Investors are cautioned that such  forward-looking  statements involve risks and
uncertainties  including  without  limitation the  following:  (i) the Company's
plans,  strategies,  objectives,  expectations,  and  intentions  are subject to
change at any time at the  discretion of the Company,  (ii) the Company's  plans
and results of operations  will be affected by the  Company's  ability to manage
its growth and  inventory,  (iii) the risk that the Company's  contract with the
USPS will not be renewed, and (iv) other risks and uncertainties  indicated from
time  to  time  in the  Company's  filings  with  the  Securities  and  Exchange
Commission.

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk

The  information  required is reported  under  "Impact of Inflation and Changing
Prices" and "Market Risks - Foreign  Currency and Interest Rate Risk" in Item 7.
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations.


                                     - 18 -
<PAGE>


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Auditors


Board of Directors and Stockholders
American Locker Group Incorporated and Subsidiaries


We have audited the accompanying  consolidated balance sheets of American Locker
Group  Incorporated  and  Subsidiaries as of December 31, 2002 and 2001, and the
related consolidated statements of income,  stockholders' equity, and cash flows
for each of the three years in the period ended  December  31, 2002.  Our audits
also  included  the  financial  statement  schedule  listed in the index at Item
15(a).  These financial  statements and schedule are the  responsibility  of the
management of the Company.  Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.

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

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




/s/Ernst & Young LLP

Buffalo, New York
February 21, 2003



                                     - 19 -
<PAGE>




<TABLE>

                                   American Locker Group Incorporated and Subsidiaries

                                               Consolidated Balance Sheets

<CAPTION>

                                                                                 December 31
                                                                          2002                 2001
                                                                   -----------------------------------------
<S>                                                                       <C>                   <C>

Assets
Current assets:
     Cash and cash equivalents                                           $ 2,002,225            $ 4,579,034
     Accounts and notes receivable, less allowance
        for doubtful accounts of $333,000 in 2002
        and $249,000 in 2001                                               4,166,972              5,042,685
     Inventories                                                           6,020,966              6,813,511
     Prepaid expenses                                                        104,115                125,805
     Prepaid income taxes                                                    234,008                      -
     Deferred income taxes                                                   579,137                570,731
                                                                   -----------------------------------------
Total current assets                                                      13,107,423             17,131,766


Property, plant and equipment:
     Land                                                                    500,500                500,500
     Buildings                                                             3,444,688              3,441,616
     Machinery and equipment                                              11,611,883             11,771,099
                                                                   -----------------------------------------
                                                                          15,557,071             15,713,215
     Less allowance for depreciation                                    (10,296,881)            (9,879,825)
                                                                   -----------------------------------------
                                                                           5,260,190              5,833,390

Deferred income taxes                                                         18,152                 73,393
Goodwill                                                                   6,155,204              6,405,204
Other assets                                                                 192,447                291,667
Notes receivable, long-term portion                                          301,200                      -


                                                                   -----------------------------------------
Total assets                                                            $ 25,034,616           $ 29,735,420
                                                                   =========================================


</TABLE>



                                     - 20 -
<PAGE>

<TABLE>

<CAPTION>

                                                                                        December 31
                                                                                  2002               2001
                                                                           ---------------------------------------
<S>                                                                                <C>                <C>

Liabilities and stockholders' equity
Current liabilities:
     Line of credit                                                               $    25,000         $     -
     Accounts payable                                                               1,740,763           1,348,396
     Commissions, salaries, wages and taxes thereon                                   602,792             555,326
     Other accrued expenses and current liabilities                                   739,309             895,274
     Income taxes payable                                                                   -             393,781
     Current portion of long-term debt                                              1,630,000           1,630,000
                                                                           ---------------------------------------
Total current liabilities                                                           4,737,864           4,822,777

Long-term liabilities:
     Long-term debt                                                                 8,303,813           9,948,687
     Pension and other benefits                                                       118,230             410,080
                                                                           ---------------------------------------
                                                                                    8,422,043          10,358,767

Stockholders' equity:
     Common stock, $1 par value:
       Authorized shares - 4,000,000
         Issued shares - 1,709,146 in 2002, 2,504,526 in 2001
         Outstanding shares
         - 1,517,146 in 2002,
          2,043,046 in 2001                                                         1,709,146           2,504,526
     Other capital                                                                          -             496,708
     Retained earnings                                                             12,670,948          15,610,362
     Treasury stock at cost ( 192,000 shares in 2002
        461,480 shares in 2001)                                                   (2,112,000)         (3,816,533)
     Accumulated other comprehensive income (loss)                                  (393,385)           (241,187)
                                                                           ---------------------------------------
Total stockholders' equity                                                         11,874,709          14,553,876
                                                                           ---------------------------------------

Total liabilities and stockholders' equity                                       $ 25,034,616        $ 29,735,420
                                                                           =======================================


See accompanying notes.

</TABLE>


                                     - 21 -
<PAGE>

<TABLE>


                                 American Locker Group Incorporated and Subsidiaries

                                          Consolidated Statements of Income

<CAPTION>

                                                                          Year ended December 31
                                                              2002                 2001                 2000
                                                       --------------------------------------------------------------

<S>                                                          <C>                   <C>                  <C>
Net sales                                                     $ 40,670,721          $39,627,216         $ 37,662,140
Cost of products sold                                           28,030,169           28,061,281           27,025,940
                                                       --------------------------------------------------------------
                                                                12,640,552                                10,636,200
                                                                                     11,565,935
Selling, administrative and general expenses                     7,399,754            6,688,676            6,039,584
                                                       --------------------------------------------------------------
                                                                 5,240,798            4,877,259            4,596,616

Interest income                                                     94,826              163,497
                                                                                                             190,486
Other income - net                                                 306,827              340,963              194,450
Interest expense                                                 (670,144)            (441,773)            (140,920)
                                                       --------------------------------------------------------------
Income before income taxes                                       4,972,307            4,939,946            4,840,632
Income taxes                                                     1,949,479            1,879,585            1,891,419
                                                       --------------------------------------------------------------
Net income                                                    $ 3,022,828          $  3,060,361         $  2,949,213
                                                       ==============================================================





Earnings per share of common stock:
     Basic                                                           $1.57                $1.49                $1.33
                                                       ==============================================================
     Diluted                                                         $1.54                $1.47                $1.32
                                                       ==============================================================

Dividends per share of common stock:                                 $0.00                $0.00                $0.00
                                                       ==============================================================


See accompanying notes.



</TABLE>


                                     - 22 -
<PAGE>

<TABLE>


                                          American Locker Group Incorporated and Subsidiaries
                                            Consolidated Statements of Stockholders' Equity
<CAPTION>

                                                                                                        Accumulated
                                                                                                           Other
                                                                                                         Compre-           Total
                                            Common         Other         Retained        Treasury        hensive       Stockholders'
                                             Stock        Capital        Earnings         Stock        Income (Loss)      Equity
                                         -------------------------------------------------------------------------------------------
<S>                <C>                   <C>           <C>             <C>             <C>             <C>              <C>
Balance at January 1, 2000               $  2,498,768  $    538,455    $  9,600,788    $ (2,367,966)   $  (162,835)     $10,107,210

Comprehensive income:
     Net income                                   -             -         2,949,213             -              -          2,949,213
     Other comprehensive income:
       Foreign currency translation               -             -               -               -          (22,619)         (22,619)
                                                                                                                        ------------
Total comprehensive income                                                                                                2,926,594
Common stock issued (13,400 shares)            13,400         3,012             -               -              -             16,412
Tax benefit of exercised stock options            -          27,000             -               -              -             27,000
Common stock purchased for treasury
  (227,360 shares)                                -             -               -        (1,349,637)           -         (1,349,637)
Common stock purchased and retired               (618)       (3,136)            -               -              -             (3,754)
  (618 shares)                           -------------------------------------------------------------------------------------------
Balance at December 31, 2000                2,511,550       565,331      12,550,001      (3,717,603)      (185,454)      11,723,825

Comprehensive income:
     Net income                                   -             -         3,060,361             -              -          3,060,361
     Other comprehensive income
       Foreign currency transaction               -             -               -               -          (55,733)         (55,733)
                                                                                                                        ------------
Total comprehensive income                                                                                                3,004,628
Common stock purchased for treasury
  (12,470 shares)                                 -             -               -           (98,930)           -            (98,930)
Common stock purchased and retired
  (7,024 shares)                               (7,024)      (68,623)            -               -              -            (75,647)
                                         -------------------------------------------------------------------------------------------
Balance at December 31, 2001                2,504,526       496,708      15,610,362      (3,816,533)      (241,187)      14,553,876

Comprehensive income:
     Net income                                   -             -         3,022,828             -              -          3,022,828
     Other comprehensive income:
       Foreign currency translation               -             -               -               -            7,081            7,081
       Minimum pension liability
       adjustment, net of tax                     -             -               -               -         (159,279)        (159,279)
       benefit of $106,186                                                                                              ------------
Total comprehensive income                                                                                                2,870,630
Common stock issued (18,000 shares)            18,000        43,688             -               -              -             61,688
Tax benefit of exercised stock options            -          67,300             -               -              -             67,300
Common stock purchased for treasury
  (163,000 shares)                                -             -               -        (1,793,000)           -         (1,793,000)
Common stock purchased and retired
  (380,900 shares)                           (380,900)     (607,696)     (2,897,189)            -              -         (3,885,785)
Retirement of treasury stock
  (432,480 shares)                           (432,480)          -        (3,065,053)      3,497,533            -               -
                                         -------------------------------------------------------------------------------------------
Balance at December 31, 2002             $  1,709,146      $    -      $ 12,670,948    $ (2,112,000)   $  (393,385)     $11,874,709
                                         ===========================================================================================

See accompanying notes.

</TABLE>


                                     - 23 -
<PAGE>

<TABLE>


                                  American Locker Group Incorporated and Subsidiaries
                                         Consolidated Statements of Cash Flows

<CAPTION>
                                                                                   Year ended December 31
                                                                          2002              2001              2000
                                                                  -----------------------------------------------------
<S>                                                                      <C>             <C>               <C>
Operating activities
Net income                                                               $3,022,828      $ 3,060,361       $ 2,949,213
Adjustments to reconcile net income to net cash
     provided by operating activities:
       Depreciation and amortization                                        974,165                            796,140
                                                                                             956,430
       Provision for uncollectible accounts                                 111,000          248,895           138,000
       Deferred income taxes (credits)                                      153,021                                469
                                                                                            (93,678)
       Changes in assets and liabilities:
         Accounts and notes receivable                                      465,338           32,567         (964,958)
         Inventories                                                        792,736                            154,780
                                                                                           (601,363)
         Prepaid expenses                                                    21,771                             80,251
                                                                                            (52,698)
         Accounts payable and accrued expenses                              429,795        (423,235)           173,656
         Income taxes                                                     (560,984)                            436,393
                                                                                           (236,924)
         Pension and other benefits                                       (469,336)                          (192,511)
                                                                                            (60,295)
                                                                  -----------------------------------------------------
Net cash provided by operating activities                                 4,940,334        2,830,060         3,571,433

Investing activities
Purchase of business and related real estate,                                     -     (12,084,711)                 -
net of cash acquired
Purchase of property, plant and equipment                                 (316,180)        (801,009)         (206,604)
Payment for other assets                                                          -        (100,000)                 -
Proceeds from sale of property, plant and equipment                          31,915                -            87,378
                                                                  -----------------------------------------------------
Net cash used in investing activities                                     (284,265)     (12,985,720)         (119,226)

Financing activities
Long-term debt borrowings                                                         -       11,926,682                 -
Long-term debt payments                                                 (1,644,874)        (681,315)
                                                                                                           (1,700,004)
Borrowings on line of credit                                                 25,000                -                 -
Common stock issued                                                          61,688                -
                                                                                                                16,412
Common stock purchased for treasury                                     (1,793,000)         (98,930)       (1,349,637)
Common stock purchased and retired                                      (3,885,785)         (75,647)
                                                                                                               (3,754)
                                                                  -----------------------------------------------------
Net cash (used in) provided by financing activities                     (7,236,971)       11,070,790       (3,036,983)
Effect of exchange rate changes on cash                                       4,093         (32,455)
                                                                                                               (4,848)
                                                                  -----------------------------------------------------
Net (decrease) increase in cash                                         (2,576,809)          882,675           410,376
Cash and cash equivalents at beginning of year                            4,579,034        3,696,359         3,285,983
                                                                  -----------------------------------------------------
Cash and cash equivalents at end of year                                 $2,002,225      $ 4,579,034       $ 3,696,359
                                                                  =====================================================

Supplemental cash flow information:
     Cash paid during the year for:
        Interest                                                          $ 731,198       $  325,351        $  151,749
                                                                  =====================================================
        Income taxes                                                     $2,347,283      $ 2,215,000       $ 1,455,026
                                                                  =====================================================
See accompanying notes.

</TABLE>



                                     - 24 -
<PAGE>


Notes to Consolidated Financial Statements
American Locker Group Incorporated and Subsidiaries
December 31, 2002

1. Basis of Presentation

Consolidation and Business Description

The consolidated  financial  statements  include the accounts of American Locker
Group  Incorporated  and  its  subsidiaries  (the  Company),  all of  which  are
wholly-owned.  Intercompany  accounts and  transactions  have been eliminated in
consolidation.  The consolidated  financial  statements include the accounts and
results of  Security  Manufacturing  Corporation  since its  acquisition  by the
Company on July 6, 2001. The Company is primarily engaged in one business,  sale
and  rental  of  lockers.   This  includes  coin,  key-only  and  electronically
controlled  checking  lockers  and  locks  and  sale  of  plastic  and  aluminum
centralized mail and parcel distribution lockers. The Company sells to customers
throughout North America as well as internationally.

2. Summary of Significant Accounting Policies

Cash and Cash Equivalents

Cash includes currency on hand and demand deposits with financial  institutions.
The Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents.

Accounts and Notes Receivable

The  Company  grants  credit to its  customers  and  generally  does not require
collateral.  Accounts receivable are reported at net realizable value and do not
accrue interest. The Company has secured, interest-bearing notes receivable from
certain customers under time payment arrangements totaling $694,000 and $366,000
at December  31, 2002 and 2001,  respectively.  The amounts not  scheduled to be
repaid  within one year have been  recorded  as  long-term  on the  accompanying
balance sheet.

Management  uses judgmental  factors such as customer's  payment history and the
general economic climate,  as well as considering the age of and past due status
of invoices in assessing collectibility and establishing allowances for doubtful
accounts.

Inventories

Inventories  are  valued  principally  at the  lower  of  cost or  market,  cost
determined by the last-in,  first-out method (LIFO) for approximately 76% of the
Company's  inventories at December 31, 2002 (80% at December 31, 2001).  For the
remaining  inventories,  cost is determined  by the  first-in,  first out method
(FIFO).


                                     - 25 -
<PAGE>


2. Summary of Significant Accounting Policies (continued)

Properties and Depreciation

Property,  plant and equipment are stated at cost.  Depreciation  is computed by
the straight-line and declining-balance methods for financial reporting purposes
and by accelerated  methods for income tax purposes.  Estimated useful lives for
financial  reporting  purposes are 30 years for  buildings and 3 to 12 years for
machinery and equipment.

Long-lived  assets,  including  intangible  assets,  are reviewed for impairment
whenever events or changes in  circumstances  indicate that the carrying amounts
of those assets may not be recoverable. The Company uses undiscounted cash flows
to determine  whether  impairment  exists and measures any impairment loss using
discounted cash flows.

Acquisition

On July 6, 2001, the Company purchased 100% of the outstanding  capital stock of
B.L.L. Corporation,  d/b/a Security Manufacturing Corporation (SMC), a privately
held Texas  corporation,  for $9,100,000.  SMC is engaged in the manufacture and
sale of postal unit lockers. The Company also purchased related real estate from
the owners of SMC for cash  consideration  of $3,500,000.  The purchase price of
the stock and the related real estate was funded with cash on hand, a three-year
note payable to the sellers of $960,000 and the proceeds of additional term loan
borrowings of approximately  $11,000,000.  Goodwill of approximately  $6,155,000
has been recorded in connection with the acquisition.  The operating  results of
SMC have been  included in the  accompanying  consolidated  statements of income
from the July 6, 2001 acquisition date.

Goodwill and Other Intangible Assets

The Company has adopted the  provision  of  Statement  of  Financial  Accounting
Standards  No. 142  Goodwill  and Other  Intangible  Assets  (SFAS  142),  which
prohibits the amortization of goodwill  associated with  acquisitions made after
June 30,  2001.  SFAS 142 also  requires  an  impairment  test for  goodwill  be
performed annually or more frequently if an event occurs or circumstances change
that would more likely than not reduce the fair value of a reporting  unit below
its carrying amount. The impairment test consists of comparing the fair value of
a  reporting  unit with its  carrying  amount  including  goodwill,  and, if the
carrying  amount of the  reporting  unit  exceed its fair value,  comparing  the
implied fair value of goodwill with its carrying  amount.  An impairment loss is
recognized  for the  carrying  amount of goodwill in excess of its implied  fair
value.  The Company  performed  the required  goodwill  tests  during  2002,  no
impairment of goodwill was  calculated.  The Company has one reporting  unit for
purposes  of the  goodwill  impairment  test.  The fair value of the Company was
estimated based on earnings multiples and market analysis. Since the Company did
not have any goodwill  recorded prior to the SMC  acquisition,  on July 6, 2001,
the provision of SFAS 142 requiring companies to stop amortizing goodwill had no
impact on the ongoing  operating  results of the Company or the comparability of
such results with prior periods.


                                     - 26 -
<PAGE>

2. Summary of Significant Accounting Policies (continued)

Other intangible assets consist of a covenant  not-to-compete in connection with
the SMC  acquisition and an intangible  pension asset.  The asset related to the
covenant  not-to-compete  is being  amortized  over the  three-year  term of the
agreement.  The  agreement  is recorded  at $175,000 at December  31, 2002 which
consists of its original  value of $350,000  less  accumulated  amortization  of
$175,000.  Amortization  expense was $116,667 and $58,333  during 2002 and 2001,
respectively and is estimated to be $116,667 in 2003 and $58,333 in 2004.

Revenue Recognition

Revenue is recognized at the point of passage of title,  which is at the time of
shipment to the customer.  Less than five percent of the Company's revenues were
derived from sales to  distributors  during 2002,  2001 and 2000. No distributor
stocks  a  material  amount  of  inventory  of  the  Company's  products  and no
distributor has the right to return.

Shipping and Handling Costs

Shipping  and  handling  costs are  expensed  as  incurred  and are  included in
selling,  administrative  and general expenses in the accompanying  consolidated
statements of income.  These costs were approximately  $370,000,  $276,000,  and
$185,000 during 2002, 2001, and 2000, respectively.

Advertising Expense

The cost of advertising is expensed as incurred.  The Company incurred $333,000,
$215,000,  and  $274,000 in  advertising  costs  during  2002,  2001,  and 2000,
respectively.

Income Taxes

The Company  accounts for income taxes using the liability  method in accordance
with Statement of Financial  Accounting Standards No. 109, Accounting for Income
Taxes (SFAS 109).

Research and Development

The Company engages in research and development  activities  relating to new and
improved products.  It expended $174,00,  $91,000, and $93,000 in 2002, 2001 and
2000, respectively, for such activity in its continuing businesses.

Earnings Per Share

The Company reports earnings per share in accordance with Statement of Financial
Accounting  Standards  No. 128,  Earnings  per Share (SFAS 128).  Under SFAS 128
basic earnings per share excludes any dilutive effects of stock options, whereas
diluted  earnings per share assumes  exercise of stock  options,  when dilutive,
resulting in an increase in outstanding shares.


                                     - 27 -
<PAGE>


2. Summary of Significant Accounting Policies (continued)

Foreign Currency

The assets and liabilities of the Company's  Canadian  subsidiary are translated
to U.S.  dollars  at  current  exchange  rates.  Income  statement  amounts  are
translated  using the average  exchange rate for the year.  The gains and losses
resulting  from the  changes  in  exchange  rates  from  year to year  have been
reported in other  comprehensive  income. The effect on the statements of income
of transaction gains and losses is insignificant for all years presented.

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable, accounts
payable,  and accrued  liabilities  approximate fair value due to the short-term
maturities  of these  assets  and  liabilities.  The  carrying  amount  of notes
receivable  approximates  fair value since these are interest bearing notes. The
fair value of the Company's  long-term debt has been  estimated  using cash flow
methods and applying  current  interest  rates for similar term  instruments  in
place of the actual fixed interest rates.  Based on these  calculations the fair
value of long-term debt is  approximately  $10,060,000 and the carrying value is
$9,933,813 at December 31, 2002.

Stock-Based Compensation

In  accordance  with the  provisions  of SFAS No. 123 the Company has elected to
continue  applying the provisions of Accounting  Principles Board Opinion No. 25
and related  interpretations  in  accounting  for its  stock-based  compensation
plans.  Accordingly,  the Company does not  recognize  compensation  expense for
stock  options  when the stock  option  price at the  grant  date is equal to or
greater  than the fair  market  value of the stock at that date.  The  following
illustrates  the pro forma  effect on net income and  earnings  per share if the
Company had applied the fair value recognition provisions of SFAS No. 123:

<TABLE>
<CAPTION>

                                                                  Pro Forma
                                             ------------------------------------------------
                                                   2002            2001            2000
                                             ------------------------------------------------

<S>                                           <C>              <C>              <C>
     Net income as reported                   $ 3,022,828     $ 3,060,361      $ 2,949,213
     Deduct: Total stock-based employee
       compensation expense determined
       under fair value method for all
       awards, net of related tax effects               -               -          (28,210)
                                             ------------------------------------------------
     Pro forma net income                     $ 3,022,828     $ 3,060,361      $ 2,921,003
                                             ================================================
     Earnings per share:
       Basic - as reported                    $      1.57     $      1.49      $      1.33
                                             ================================================
        Basic - pro forma                     $      1.57     $      1.49      $      1.32
                                             ================================================
        Diluted - as reported                 $      1.54     $      1.47      $      1.32
                                             ================================================
        Diluted - pro forma                   $      1.54     $      1.47      $      1.31
                                             ================================================

</TABLE>

                                     - 28 -
<PAGE>

2. Summary of Significant Accounting Policies (continued)

Pro forma information regarding net income and earnings per share is required by
SFAS No. 123, and has been  determined  as if the Company had  accounted for its
stock options under the fair value method of SFAS No. 123. No stock options were
granted in 2002 or 2001.  All  options  granted  in 2000 or in prior  years were
fully vested as of December  31, 2000,  as such there was no pro forma impact in
2002 or 2001 for stock options.  The fair value for the options  granted in 2000
was estimated at the date of grant using a  Black-Scholes  option  pricing model
with the following  weighted-average  assumptions:  risk-free  interest rates of
6.5%, dividend yield of 0.0%, volatility factors of the expected market price of
the Company's common stock of .69, and a  weighted-average  expected life of the
options of 5 years. The per share fair value of the options granted was $4.55.

Comprehensive Income

Comprehensive  income consists of net income,  foreign currency  translation and
minimum  pension  liability  adjustments  and is  reported  in the  consolidated
statements of stockholders' equity.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts  reported in the financial  statements  and the  accompanying
notes. Actual results could differ from those estimates.

New Accounting Pronouncement

In August 2001,  the FASB issued SFAS No. 144,  Accounting for the Impairment or
Disposal of Long-Lived  Assets which  supersedes SFAS No. 121 Accounting for the
Impairment of  Long-Lived  Assets and for  Long-Lived  Assets to be Disposed of.
Although  retaining  many of the  provisions  of SFAS  No.  121,  SFAS  No.  144
establishes a uniform accounting model for long-lived assets to be disposed. The
Company's  adoption of this  statement in the first quarter of 2002 did not have
an impact on the Company's financial results.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities,  which requires the recognition of expense when the
liability is incurred and not as a result of an entity's  commitment  to an exit
plan. The statement is effective for exit or disposal activities initiated after
December 31, 2002.  The adoption of SFAS No. 146 in the first quarter of 2003 is
not expected to have a significant impact on the Company's financial results.


                                     - 29 -
<PAGE>

2. Summary of Significant Accounting Policies (continued)

In December  2002,  the FASB issued SFAS No.  148,  Accounting  for  Stock-Based
Compensation  -  Transition  and  Disclosure,  an  amendment  of SFAS  No.  123,
Accounting for  Stock-Based  Compensation.  SFAS No. 148, which is effective for
years  ending  after  December  15,  2002,  provides  alternative  methods for a
voluntary  change to the fair value based method of accounting  for  stock-based
employee  compensation  and requires  prominent  disclosure  about the method of
accounting for stock-based  employee  compensation  and the effect of the method
used on  reported  results.  The  Company's  adoption  of SFAS  No.  148 in 2002
enhanced stock-based employee compensation  disclosures and had no effect on the
method of accounting followed by the Company.

3. Inventories

Inventories consist of the following:

                                                            December 31
                                                        2002          2001
                                                  -----------------------------

     Finished products                              $ 1,572,946   $ 1,962,881
     Work-in-process                                  1,901,263     2,373,549
     Raw materials                                    2,965,023     2,898,908
                                                  -----------------------------
                                                      6,439,232     7,235,338
     Less allowance to reduce to LIFO basis            (418,266)     (421,827)
                                                  -----------------------------
     Net inventories                                $ 6,020,966   $ 6,813,511
                                                  =============================











                                     - 30 -
<PAGE>


4. Debt

Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                                           December 31
                                                                     2002               2001
                                                            --------------------------------------
<S>                                                           <C>               <C>

Bank note payable through July 6, 2008 at $225,000
  quarterly plus interest at the 3-month LIBOR rate
  plus 2% (3.77% at December 31, 2002)                        $     4,950,000   $     5,850,000

Bank note payable through July 6, 2008 at $25,000
  monthly plus interest at 8.07%                                    1,675,000         2,000,000

Mortgage payable to bank through July 2006 at $26,823
  monthly including interest at 8.04% with payment for
  remaining balance due August 1, 2006                              2,668,813         2,768,687

Note payable in annual installments of $320,000 through
  July 6, 2004 plus interest at 6.50%                                 640,000           960,000
                                                            --------------------------------------
Total long-term debt                                                9,933,813        11,578,687
Less current portion                                                1,630,000         1,630,000
                                                            --------------------------------------
Long-term portion                                             $     8,303,813   $     9,948,687
                                                            ======================================
</TABLE>

The bank notes are secured by all equipment,  accounts  receivable,  inventories
and general intangibles.  The credit agreement underlying the bank notes payable
requires  compliance with certain  covenants and has restrictions on the payment
of dividends.  The Company was in compliance  with the terms of the agreement in
connection with the notes payable at December 31, 2002.

Based upon the outstanding balances at December 31, 2002, the required principal
payments on long-term obligations for the next five years are as follows:

     2003                                             $     1,630,000
     2004                                                   1,643,290
     2005                                                   1,331,438
     2006                                                   3,504,085
     2007                                                   1,200,000
     Thereafter                                               625,000

The Company has a $3,000,000 unsecured line of credit agreement with a bank with
interest  at the prime rate  (4.25% at  December  31,  2002).  There was $25,000
outstanding under the line of credit at December 31, 2002.



                                     - 31 -
<PAGE>


5. Operating Leases

The Company leases several operating facilities and vehicles under noncancelable
operating  leases.  Future  minimum lease  payments  consist of the following at
December 31, 2002:

     2003                                             $       301,000
     2004                                                     107,000
     2005                                                      15,000

Rent expense amounted to approximately $368,000, $340,000, and $313,000 in 2002,
2001, and 2000, respectively.

6. Income Taxes

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

                                          2002           2001           2000
                                    --------------------------------------------
United States                       $  4,925,308    $  4,845,146   $  4,846,963
Foreign income (loss)                     46,999          94,800         (6,331)
                                    --------------------------------------------
                                    $  4,972,307    $  4,939,946   $  4,840,632
                                    ============================================

Significant components of the provision for income taxes are as follows:

                                          2002           2001           2000
                                    --------------------------------------------
Current:
   Federal                          $  1,517,532    $  1,624,225   $  1,601,253
   State                                 255,669         304,028        286,924
   Foreign                                23,257          45,010          2,773
                                    --------------------------------------------
Total current                          1,796,458       1,973,263      1,890,950
Deferred:
   Federal                               130,068         (79,626)            70
   State                                  22,953         (14,052)           399
                                    --------------------------------------------
                                         153,021         (93,678)           469
                                    --------------------------------------------
                                    $  1,949,479    $  1,879,585   $  1,891,419
                                    ============================================

The differences between the federal statutory rate and the effective tax rate as
a percentage of income before taxes are as follows:

                                         2002        2001          2000
                                       ---------------------------------
Statutory income tax rate                 34%         34%           34%
State and foreign income taxes,
   net of federal benefit                  4           4             6
Other permanent differences                1           -            (1)
                                       ---------------------------------
                                          39%         38%           39%
                                       =================================


                                     - 32 -
<PAGE>

6. Income Taxes (continued)

Differences  between accounting rules and tax laws cause differences between the
bases of certain assets and liabilities for financial reporting purposes and tax
purposes.  The  tax  effects  of  these  differences,  to the  extent  they  are
temporary,  are  recorded as deferred  tax assets and  liabilities.  Significant
components of the Company's  deferred tax assets and  liabilities at December 31
are as follows:

                                                   2002            2001
                                             -----------------------------
 Deferred tax liabilities:
    Property, plant and equipment             $   41,807     $    125,703
    Prepaid expenses and other                   127,435          114,904
                                             -----------------------------
 Total deferred tax liabilities                  169,242          240,607

 Deferred tax assets:
    Postretirement benefits                       47,292           47,292
    Pension costs                                 63,158          164,967
    Allowance for doubtful accounts              111,038           99,558
    Other assets                                  12,667           18,669
    Accrued expenses                             119,810          137,709
    Other employee benefits                       37,148           36,024
    Inventory costs                              375,418          380,512
                                             -----------------------------
 Total deferred tax assets                       766,531          884,731
                                             -----------------------------
 Net deferred tax assets                      $  597,289     $    644,124
                                             =============================

 Current deferred tax asset                   $  579,137     $    570,731
 Long-term deferred tax asset                     18,152           73,393
                                             -----------------------------
                                              $  597,289     $    644,124
                                             =============================

The Company does not provide deferred taxes for taxes that could result from the
remittance of undistributed  earnings of the Company's foreign  subsidiary since
it is generally the Company's intention to reinvest these earnings indefinitely.
Undistributed  earnings  that  could be subject to  additional  income  taxes if
remitted were  approximately  $1,100,000 at December 31, 2002.  Determination of
the amount of unrecognized deferred U.S. income tax liability is not practicable
because  of the  complexities  associated  with  its  hypothetical  calculation;
however  unrecognized  foreign tax  credits  would be  available  to reduce some
portion of the U.S. tax liability.

7. Pension and Other Postretirement Benefits

The Company and its  subsidiaries  have a defined  benefit pension plan covering
substantially  all employees.  Benefits for the salaried  employees are based on
specified  percentages of the employees  annual  compensation.  The benefits for
hourly  employees  are based on stated  amounts  for each year of  service.  The
plan's assets are invested in fixed  interest rate group annuity  contracts with
an insurance company.


                                     - 33 -
<PAGE>

7. Pension and Other Postretirement Benefits (continued)

The  following  table sets forth the changes in benefit  obligation,  changes in
plan assets,  the funded  status,  the accrued  benefit cost  recognized  in the
consolidated  balance sheets at December 31, 2002 and 2001, and the net periodic
cost and assumptions.

<TABLE>
<CAPTION>
                                                                  Pension Benefits
                                                              2002               2001
                                                        --------------------------------
<S>                                                       <C>            <C>
 Change in benefit obligation
    Benefit obligation at beginning of year               $  2,482,076   $  2,430,400
    Service cost                                               220,751        182,135
    Interest cost                                              183,742        172,969
    Actuarial loss                                             294,643        132,382
    Plan amendments                                             17,530              -
    Benefits and expenses paid                                 (79,520)      (435,810)
                                                        --------------------------------
    Benefit obligation at end of year                        3,119,222      2,482,076
 Change in plan assets
    Fair value of plan assets as beginning of year           2,113,406      2,193,267
    Actual return on plan assets                               102,955        159,143
    Employer contribution                                      339,646        196,806
    Benefits and expenses paid                                 (79,520)      (435,810)
                                                        --------------------------------
 Fair value of plan assets at end of year                    2,476,487      2,113,406
                                                        --------------------------------

 Funded status                                                (642,735)      (368,670)
 Unrecognized net transition asset                                   -       (104,892)
 Unrecognized net actuarial loss                               733,012        392,383
 Unrecognized prior service cost                                17,447          1,418
                                                        --------------------------------
 Prepaid (accrued) benefit cost                           $    107,724   $    (79,761)
                                                        ================================
</TABLE>

Amounts are recognized in the consolidated balance sheet as follows:
<TABLE>
<CAPTION>

                                                                    December 31
                                                              2002               2001
                                                        --------------------------------

<S>                                                       <C>            <C>
Intangible asset                                          $   17,447     $           -
Other accrued expenses - current                            (175,188)          (79,761)
Accumulated other comprehensive income (loss)                265,465                 -
                                                        --------------------------------
                                                          $  107,724     $     (79,761)
                                                        ================================

</TABLE>


                                     - 34 -
<PAGE>






7. Pension and Other Postretirement Benefits (continued)

<TABLE>
<CAPTION>
                                                                  Pension Benefits
                                                              2002             2001
                                                       -------------------------------------
<S>                                                     <C>           <C>
   Components of net periodic benefit cost
   Service cost                                         $    220,751   $    182,135
   Interest cost                                             183,742        172,969
   Expected return on plan assets                           (159,462)      (149,779)
   Amortization of unrecognized net transition asset        (104,892)      (106,041)
   Net actuarial loss                                         10,516          1,869
   Amortization of prior service cost                          1,506            425
                                                      --------------------------------------
   Net periodic benefit cost                            $    152,161   $    101,578
                                                      ======================================

                                                                Pension Benefits
                                                             2002              2001
                                                      --------------------------------------
   Weighted average assumptions as of December 31
   Discount rate                                            6.75%             7.25%
   Expected return on plan assets                           7.0%               7.0%
   Rate of compensation increase                            5.5%               5.5%

</TABLE>
The  benefit  obligation  represents  the  actuarial  present  value of benefits
attributed to employee service rendered, assuming future compensation levels are
used to measure the obligation.  FASB Statement No. 87 Employers' Accounting for
Pensions, requires the Company to recognize a minimum pension liability equal to
the actuarial present value of the accumulated  benefit  obligation in excess of
plan assets. An intangible asset is required and has been recorded to the extent
that the  excess of the  accumulated  benefit  obligation  over the plan  assets
relates to prior service costs.

The Company also provides a life insurance  benefit for retired former employees
of the Company.  Effective in 2000,  the Company  discontinued  this benefit for
active  employees.  The life insurance benefit is not a funded plan. The Company
pays the benefit upon the death of the retiree.  The Company has fully  recorded
its liability in  connection  with this plan.  The  liability was  approximately
$118,000 at December 31, 2002 and 2001, and is recorded as long-term pension and
other  benefits in the  accompanying  balance  sheets.  The expense  recorded in
connection  with  these  benefits  was  approximately  $3,000 for the year ended
December 31, 2000 (none in 2002 and 2001).

Effective  January 1, 1998,  the Company  implemented a  Supplemental  Executive
Retirement Plan. The Plan provides for retirement benefits for select executives
and  spouses.  During  2002,  as a  result  of the  death  of the  only  current
beneficiary  under the Plan,  the Company  removed  the  recorded  liability  of
$319,000. This was recorded as a reduction to administrative expenses. There are
no  participants  accruing or receiving  benefits under the Plan at December 31,
2002.



                                     - 35 -
<PAGE>



7. Pension and Other Postretirement Benefits (continued)

During  1999,  the  Company  established  a 401(k)  plan for the  benefit of its
full-time employees. Under the plan, employees may contribute a portion of their
salary  up to IRS  limits.  The  Company  matches a  portion  of the  employees'
contribution. The Company recorded expense of approximately $15,000 each year in
connection  with its  contribution  to the plan  during  2002,  2001,  and 2000,
respectively.

8. Capital Stock

The Certificate of  Incorporation,  as amended,  authorizes  4,000,000 shares of
common stock and 1,000,000  shares of preferred  stock,  200,000 shares of which
have been designated as Series A Junior Participating Preferred Stock.

9. Stock Options

In 1999,  the Company  adopted the  American  Locker  Group  Incorporated  Stock
Incentive Plan, permitting the Company to provide incentive  compensation of the
types  commonly  known as  incentive  stock  options,  stock  options  and stock
appreciation  rights. The price of option shares or appreciation  rights granted
under the plan shall not be less than the fair market  value of common  stock on
the date of grant, and the term of the stock option or appreciation  right shall
not exceed ten years from date of grant.  Upon exercise of a stock  appreciation
right granted in connection  with a stock option,  the optionee shall  surrender
the option  and  receive  payment  from the  Company  of an amount  equal to the
difference  between  the option  price and the fair  market  value of the shares
applicable to the options surrendered on the date of surrender. Such payment may
be  in  shares,   cash  or  both  at  the  discretion  of  the  Company's  Stock
Option-Executive Compensation Committee. Prior to 1999, the Company issued stock
options and stock  appreciation  rights under a 1988 plan. The 1988 plan expired
in 1999, as such no further options can be granted under the 1988 plan.  Options
with respect to 29,000 shares remain outstanding under the 1988 plan.








                                     - 36 -
<PAGE>

9. Stock Options (continued)

At  December  31,  2002  and  2001,  there  were no  stock  appreciation  rights
outstanding.

The  following  table sets forth the  activity  related to the  Company's  stock
options for the years ended December 31:

<TABLE>
<CAPTION>

                                          2002                       2001                         2000
                                          ----                       ----                         ----
                                              Weighted                    Weighted                      Weighted
                                              Average                      Average                      Average
                                              Exercise                    Exercise                   Exercise Price
                                  Options      Price        Options         Price        Options
                                ------------------------------------------------------------------------------------
<S>                              <C>        <C>               <C>       <C>             <C>           <C>

Outstanding -
  beginning of year              120,600    $     5.41        120,600   $      5.41     124,000       $     5.11
Exercised and
  surrendered                    (18,000)         3.43              -             -     (13,400)            1.23
Granted                                -             -              -             -      10,000             7.25
Expired or forfeited              (5,000)         6.50              -             -           -                -
                                ====================================================================================
Outstanding - end of
  year                            97,600    $     5.72        120,600   $      5.41     120,600       $     5.41
                                ====================================================================================
Exercisable - end of
  year                            97,600                      120,600                   120,600
                                ===========               =============                =============

</TABLE>

The  exercise  prices for options  outstanding  as of December  31, 2002 were as
follows: $2.81 - 29,000 shares, $6.50 - 48,600 shares, $ 7.25- 10,000 shares and
$8.88 - 10,000 shares. The weighted-average  remaining contractual life of those
options is 5.6 years.

At December 31, 2002,  73,000 options remain available for future issuance under
the 1999 plan.

10. Shareholder Rights Plan

In November  1999,  the  Company  adopted a  Shareholder  Rights  Agreement  and
declared  a dividend  distribution  of one Right for each  outstanding  share of
common stock. Under certain conditions,  each right may be exercised to purchase
one one-hundredth of a share of Series A Junior Participating Preferred Stock at
a price of $40  (Purchase  Price),  subject  to  adjustment.  The Right  will be
exercisable  only if a person  or  group  (an  Acquiring  Person)  has  acquired
beneficial  ownership  of 20%  or  more  of the  outstanding  common  stock,  or
following the commencement of a tender or exchange offer for 20% or more of such
outstanding  common stock. The Rights Plan includes certain  exceptions from the
definitions of Acquiring  Person and  beneficial  ownership to take into account
the existing  ownership of common shares by members of one family. If any person
becomes an Acquiring Person, each Right will entitle its holder to receive, upon
exercise  of  the  Right,  such  number  of  common  shares  determined  by  (A)
multiplying the current purchase price by the number of one  one-hundredths of a
preferred  share for which a right is now  exercisable and dividing that product
by (B) 50% of the current market price of the common shares.


                                     - 37 -
<PAGE>

10. Shareholder Rights Plan (continued)

In  addition,  if  the  Company  is  acquired  in a  merger  or  other  business
combination  transaction,  each Right will  entitle its holder to receive,  upon
exercise,  that number of the acquiring  Company's common shares having a market
value of twice the exercise price of the Right.  The Company will be entitled to
redeem  the  Rights at $.01 per Right at any time  prior to the  earlier  of the
expiration of the Rights in November  2009 or the time that a person  becomes an
Acquiring  Person.  The Rights do not have voting or dividend rights,  and until
they become exercisable, have no dilutive effect on the Company's earnings.

11. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per
share for the years ended December 31:
<TABLE>
<CAPTION>

                                                                 2002               2001            2000
                                                          --------------------------------------------------
<S>                                                       <C>                 <C>               <C>
Numerator:
   Net income                                               $   3,022,828     $    3,060,361    $  2,949,213
Denominator:
   Denominator for basic earnings
     per share - weighted
     average shares outstanding                                 1,921,612          2,053,838       2,214,406

   Effect of dilutive securities:
     Employee stock options                                        35,949             29,646          16,379
                                                          ---------------------------------------------------

   Denominator for diluted earnings per share -
     weighted average shares out- standing and
     assumed conversions                                        1,957,561          2,083,484       2,230,785
                                                          ===================================================
Basic earnings per share                                    $        1.57     $         1.49    $       1.33
                                                          ===================================================
Diluted earnings per share                                  $        1.54     $         1.47    $       1.32
                                                          ===================================================

</TABLE>

At  December  31,  2002  common  shares  outstanding  were  1,517,146,  which is
significantly  below the 2002 weighted  average  shares  outstanding  due to the
repurchase of 543,900  common shares by the Company  during 2002,  including the
repurchase of 370,000 common shares on November 20, 2002.

12. Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss) are as follows:

                                                        December 31
                                                     2002          2001
                                                ---------------------------

  Foreign currency translation adjustment         $  (234,106)   $ (241,187)
  Minimum pension liability adjustment,
    net of tax                                       (159,279)            -
                                                ---------------------------
                                                  $  (393,385)   $ (241,187)
                                                ===========================




                                     - 38 -
<PAGE>


13. Geographic and Customer Concentration Data

The Company is primarily  engaged in one  business,  sale and rental of lockers.
This includes coin, key-only and electronically  controlled checking lockers and
related  locks and sale of  plastic  centralized  mail and  parcel  distribution
lockers.  The Company sells to customers in the United States,  Canada and other
foreign locations. Net sales to external customers are as follows:

                                 2002             2001               2000
                           ---------------------------------------------------

United States customers     $  38,242,845    $  36,742,001      $  35,215,373
Foreign customers               2,427,876        2,885,215          2,446,767
                           ---------------------------------------------------
                            $  40,670,721    $  39,627,216      $  37,662,140
                           ===================================================

Sales to the U.S. Postal Service represented 56.4%, 63.1% and 70.9% of net sales
in 2002, 2001, and 2000, respectively.

At December 31, 2002 and 2001, the Company had unsecured trade  receivables from
governmental  agencies of $1,867,000 and $1,830,000,  respectively.  At December
31, 2002 and 2001, the Company had secured notes  receivable  totaling  $694,000
and $366,000, respectively and trade receivables from customers considered to be
distributors of $1,125,000 and $1,507,000, respectively.

Other  concentrations  of credit risk with respect to trade accounts  receivable
are  limited  due to the  large  number of  entities  comprising  the  Company's
customer base and their dispersion across many industries.







                                     - 39 -
<PAGE>


14. Quarterly Results of Operations (Unaudited)

The following is a tabulation of the unaudited quarterly results of operations
for the years ended December 31, 2002 and 2001:

<TABLE>
<CAPTION>

                                                                   2002
                                  -----------------------------------------------------------------------
                                                            Three Months Ended
                                      March 31          June 30        September 30       December 31
                                  -----------------------------------------------------------------------
<S>                                 <C>               <C>              <C>               <C>
Net sales                           $   9,254,050     $  11,008,835    $   9,975,928     $  10,431,908
                                  =======================================================================
Gross profit                        $   2,858,113     $   3,432,768    $   3,138,508     $   3,211,163
                                  =======================================================================
Net income                          $     776,797     $     847,201    $     766,987     $     631,843
                                  =======================================================================
Earnings per share - Basic          $        0.38     $        0.42    $        0.40     $         .37
                                  =======================================================================
Earnings per share - Diluted        $        0.37     $        0.42    $        0.39     $         .36
                                  =======================================================================

                                                                   2001
                                  -----------------------------------------------------------------------
                                                            Three Months Ended
                                      March 31          June 30        September 30       December 31
                                  -----------------------------------------------------------------------
Net sales                           $   8,116,568     $   9,825,943    $  11,375,429     $  10,309,276
                                  =======================================================================
Gross profit                            2,412,343         2,791,217        3,098,955         3,263,420
                                  =======================================================================
Net income                                656,837           883,905          652,492           867,127
                                  =======================================================================
Earnings per share - Basic                    .32               .43              .32               .42
                                  =======================================================================
Earnings per share - Diluted                  .32               .42              .31               .42
                                  =======================================================================

</TABLE>

The  Company's  accounting  practice for interim  periods  provides for possible
accounting  adjustments  in the fourth  quarter or at  year-end.  In 2002,  such
adjustments  resulted in increasing  fourth quarter pretax income by $57,000 for
inventory  costs and decreasing  fourth quarter pretax income by $87,000 for bad
debt expense.  In 2001, such adjustments  resulted in increasing  fourth quarter
pretax income by $330,000 for inventory costs.

15. Related Parties

The Chairman and Chief  Executive  Officer of the Company is a  stockholder  and
director  of Rollform of  Jamestown  Inc.,  a  rollforming  company.  One of the
Company's subsidiaries purchased $183,000,  $215,000, and $152,000 of fabricated
parts from Rollform of Jamestown, Inc. in 2002, 2001, and 2000, respectively, at
prices that the Company believes are at arms length.

During  2002 the  Company  purchased  425,000  shares  of its  common  stock for
$4,342,000 from the estate of its former chief executive officer and his spouse.
The purchases were made at prices the Company  believes  represent fair value of
the common stock.



                                     - 40 -
<PAGE>


16. Contingencies

In December  1998,  the Company  was named as a  defendant  in a lawsuit  titled
"Roberta Raiport, et al. v. Gowanda Electronics Corp. And American Locker Group,
Inc." pending in the State of New York Supreme Court, County of Cattaragus.  The
suit  involves  property  located in  Gowanda,  New York,  which was sold by the
Company to Gowanda  Electronics Corp. prior to 1980. The plaintiffs,  current or
former  property  owners in  Gowanda,  New York,  assert  that  defendants  each
operated machine shops at the site during their respective  periods of ownership
and that as a result  of such  operation,  soil  and  groundwater  contamination
occurred  which  has  adversely   affected  the  plaintiffs  and  the  value  of
plaintiffs'  properties.  The plaintiffs assert a number of causes of action and
seek  compensatory  damages  of  $5,000,000  related to  alleged  diminution  of
property  values,  $3,000,000 for economic losses and "disruption to plaintiffs'
lives," $10,000,000 for "nuisance,  inconveniences and disruption to plaintiffs'
lives,"  $25,000,000 in punitive damages,  and $15,000,000 to establish a "trust
account"  for  monitoring  indoor air quality and other  remedies."  The Company
believes that its potential  liability with respect to this site, if any, is not
material.  Therefore,  based on the information currently available,  management
does not believe the outcome of this suit will have a material adverse impact on
the Company's operations or financial  condition.  Defense of this case has been
assumed by the Company's insurance carrier, subject to a reservation of rights.

On July  30,  2001,  the  Company  received  a letter  from  the New York  State
Department of Environmental  Conservation (the DEC) advising the Company that it
is a potentially  responsible party with respect to environmental  contamination
at the site mentioned above located in Gowanda,  New York, which was sold by the
Company to Gowanda  Electronics  Corp.  prior to 1980.  The letter  from the DEC
states that a Remedial Investigation and Feasibility Study has been conducted at
the  site and a  remediation  plan  selected.  Based  on  information  currently
available,  the Company  believes that its potential  liability  with respect to
current  action by the DEC with  regard  to this  site will not have a  material
adverse impact on the Company's  operations or financial  condition.  Defense of
this matter has been assumed by the Company's  insurance  carrier,  subject to a
reservation of rights.









                                     - 41 -
<PAGE>


16. Contingencies (continued)

In September 1998 and subsequent  months, the Company was named as an additional
defendant in  approximately  140 cases pending in state court in  Massachusetts.
The  plaintiffs in each case assert that a division of the Company  manufactured
and furnished to various  shipyards  components  containing  asbestos during the
period  from  1948 to 1972 and that  injuries  resulted  from  exposure  to such
products.  The assets of this division were sold by the Company in 1973.  During
the process of discovery  in certain of these  actions,  documents  from sources
outside the Company have been produced which  indicate that the Company  appears
to have been  included  in the  chain of title for  certain  wall  panels  which
contained  asbestos  and which were  delivered to the  Massachusetts  shipyards.
Defense of these  cases has been  assumed by the  Company's  insurance  carrier,
subject  to a  reservation  of  rights.  As of  February  21,  2003,  settlement
agreements  have been entered in 14 cases with funds  authorized and provided by
the Company's  insurance  carrier.  Further,  over 70 cases  originally filed in
1995,  1996,  1997, 1998 and 1999 against other  defendants to which the Company
was joined as an  additional  defendant  have been  terminated as to the Company
without  liability  to  the  Company  under   Massachusetts   procedural  rules.
Therefore,  the balance of  unresolved  cases against the Company as of February
21, 2003 is  approximately 55 cases originally filed against other defendants in
2000 through 2002.

In June 2002,  the Company was named as a defendant in a lawsuit  titled "Alfred
Todak and Stephanie Todak v. Allen Bradley Company,  et al" filed in King County
Superior Court, King County, Washington. The plaintiffs assert that the Company,
together with multiple additional named and unnamed defendants, manufactured and
sold products  containing  asbestos  exposure to which has resulted in injury to
the plaintiffs. The plaintiffs are seeking unspecified economic damages. Defense
of the case has been assumed by the Company's  insurance  carrier,  subject to a
reservation of rights.

While the Company cannot predict what the ultimate  resolution of these asbestos
cases may be because the  discovery  proceedings  on the cases are not complete,
based upon the Company's  experience to date with similar cases,  as well as the
assumption that insurance  coverage will continue to be provided with respect to
these case, at the present  time,  the Company does not believe that the outcome
of  these  cases  will  have a  significant  adverse  impact  on  the  Company's
operations or financial condition.

The Company is involved in other claims and litigation  from time to time in the
normal course of business.  The Company does not believe these matters will have
a significant adverse impact on the Company's operations or financial condition.






                                     - 42 -
<PAGE>


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

There have been no changes in or  disagreements  with  accountants on accounting
and financial disclosures during 2001 or 2000.


PART III

Item 10, 11, 12 and 13 will be contained in American Locker Group Incorporated's
Annual Proxy Statement,  incorporated  herein by reference,  which will be filed
within 120 days after year-end.

ITEM 14.  CONTROLS AND PROCEDURES

As of a date  within  90 days of the  filing  date of this  report,  based on an
evaluation of the Company's  disclosure  controls and  procedures (as defined in
Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934) each of
the chief executive officer and the principal  accounting officer of the Company
has  concluded  that  the  Company's  disclosure  controls  and  procedures  are
effective to ensure that information  required to be disclosed by the Company in
its Exchange Act reports is recorded, processed,  summarized and reported within
the applicable time periods specified by the SEC's rules and forms.

There were no significant changes in the Company's internal controls or in any
other factors that could significantly affect those controls subsequent to the
date of the most recent evaluation of the Company's internal controls by the
Company, including any corrective actions with regard to any significant
deficiencies or material weaknesses.

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

     (a)   The documents filed as part of this report are as follows:

           1.  Financial Statements

           2.  Financial Statement Schedules

          See Index to Financial  Statements and Financial  Statement  Schedules
          All other  consolidated  financial  schedules are omitted because they
          are  inapplicable,   not  required  or  the  information  is  included
          elsewhere  in the  consolidated  financial  statements  or  the  notes
          thereto.

           3.  Exhibits

               (a)  Exhibits   required  by  Item  601  of  Regulation  S-K  are
                    submitted as a separate section herein immediately following
                    the "Exhibit Index".

               (b)  Reports on Form 8-K filed in the fourth quarter of 2002.

                    (i)  Report on Form 8-K filed November 21, 2002




                                     - 43 -
<PAGE>


                       American Locker Group Incorporated

         Index to Financial Statements and Financial Statement Schedules


The  financial  statements  together  with the report of Ernst & Young LLP dated
February 21, 2003, is included in Item 8 Financial  Statements and Supplementary
Data in the Annual Report on Form 10-K.

Financial Schedules for the years 2002, 2001 and 2000:

         Valuation and Qualifying Accounts












                                     - 44 -
<PAGE>


Schedule II
<TABLE>
                                   American Locker Group Incorporated

                                   Valuation and Qualifying Accounts

<CAPTION>

                                                                      Additions
                                                   Balance at the    Charged to
                                                   Beginning of      Costs and                    Balance at
Year              Description                          Year           Expense      Deductions    End of Year
--------------------------------------------------------------------------------------------------------------
<S>                                                    <C>         <C>              <C>           <C>
Year ended 2002
         Allowance for Doubtful Accounts               $249,000    $   111,000      $(27,000)     $  333,000
         Reserve for Inventory Valuation                406,000        (49,000)            -          35,700

Year ended 2001
         Allowance for Doubtful Accounts               $324,000    $    15,000      $(90,000)     $  249,000
         Reserve for Inventory Valuation                252,000        154,000             -         406,000

Year ended 2000
         Allowance for Doubtful Accounts               $222,000    $   138,000      $(36,000)     $  324,000
         Reserve for Inventory Valuation                194,000         58,000             -         252,000














</TABLE>



                                     - 45 -
<PAGE>


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


                       AMERICAN LOCKER GROUP INCORPORATED


                             /s/Edward F. Ruttenberg
                    ----------------------------------------
                              Edward F. Ruttenberg
                          Chairman and Chief Executive
                                     Officer

                               /s/Wayne L. Nelson
                    ----------------------------------------
                                 Wayne L. Nelson
              Principal Accounting Officer and Assistant Secretary

                                 March 18, 2003

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

Signature                      Title                           Date
---------                      -----                           -----

/s/Edward F. Ruttenberg        Chairman, Chief Executive       March 18, 2003
--------------------------     Officer and Director
Edward F. Ruttenberg

/s/Roy J. Glosser              President, Chief Operating      March 18, 2003
--------------------------     Officer, Treasurer and
Roy J. Glosser                 Director

/s/Alan H. Finegold            Director                        March 18, 2003
--------------------------
Alan H. Finegold

/s/Thomas Lynch, IV            Director                        March 18, 2003
--------------------------
Thomas Lynch, IV

/s/Lawrence J. Goldstein       Director                        March 18, 2003
--------------------------
Lawrence J. Goldstein

/s/Jeffrey C. Swoveland        Director                        March 18, 2003
--------------------------
Jeffrey C. Swoveland

/s/Donald I. Dussing, Jr.      Director                        March 18, 2003
--------------------------
Donald I. Dussing, Jr.





                                     - 46 -
<PAGE>

<TABLE>

<CAPTION>

                                    EXHIBIT INDEX
                                                                      Prior Filing or Sequential
Exhibit No.                                                           Page No. Herein
-----------                                                           ---------------------------

  <S>            <C>                                                  <C>
  3.1            Certificate of Incorporation of American Locker      Exhibits to Form 10-K for Year
                 Group Incorporated                                   ended December 31, 1980

  3.2            Amendment to Certificate of Incorporation changing   Form 10-C filed May 6, 1985
                 name of company

  3.3            Amendment to Certificate of Incorporation limiting   Exhibit to Form 10-K for year ended
                 liability of Directors and Officers                  December 31, 1987

  3.4            By-laws of American Locker Group Incorporated as     Exhibit to Form 10-K for year ended
                 amended and restated                                 December 31, 1985

  3.5            Certificate of Designations of Series                Exhibit to Form 10-K for year ended
                 A Junior Participating Preferred Stock               December 31, 1999

  3.6            Amendment to By-laws of American Locker Group        Exhibit to Form 10-K for year ended
                 Incorporated dated January 15, 1992                  December 31, 1991

  3.7            Amendment to Bylaws dated March 3, 1999              Exhibit to Form 10-K for year ended
                                                                      December 31, 1998

  3.8            Amendment to Bylaws dated November 19, 1999          Exhibit to Form 10-K for year ended
                                                                      December 31, 1999

10.1             American Locker Group Incorporated 1988 Stock        Exhibit to Form 10-K for year ended
                 Incentive Plan                                       December 31, 1988

10.2             First Amendment dated March 28, 1990 to American     Exhibit to Form 10-K for year ended
                 Locker Group Incorporated  1988 Stock Incentive      December 31, 1989
                 Plan

10.3             Form of Indemnification Agreement between American   Exhibit to Form 10-K for year ended
                 Locker Group Incorporated  and its directors and     December 31, 1987
                 officers


                                     - 47 -
<PAGE>

10.4             Corporate Term Loan Agreement between American       Exhibit to Form 10-K for year ended
                 Locker Group Incorporated and Manufacturers and      December 31, 1991
                 Traders Trust Company covering $2,400,000 loan

10.5             Approved Line of Credit from Manufacturers and       Exhibit to Form 10-K for year ended
                 Traders Trust Company to American Locker Group       December 31, 1990
                 Incorporated in the amount of $1,000,000

10.6             Amendment Agreement dated May 1, 1994 between        Exhibit to Form 10-KSB for year
                 Manufacturing and Traders Trust Company and          ended December 31, 1994
                 American Locker Group Incorporated [Increase in
                 Term Loan to $1,850,000]

10.7             Amendment Agreement dated March 12, 1996 between     Exhibit to Form 10-KSB for year
                 Manufacturing and Traders Trust Company and          ended December 31, 1995
                 American Locker Group Incorporated [Increase in
                 Term Loan to $1,800,000]

10.8             Employment Agreement between American Locker Group   Exhibit to Form 10-QSB for quarter
                 Incorporated and  Roy J. Glosser                     ended June 30, 1996

10.9             Amendment dated as of March 3, 1999 to Employment    Exhibit to Form 10-KSB for year
                 Agreement between American Locker Group              ended December 31, 1998
                 Incorporated and Roy J. Glosser

10.10            Second Amendment dated May 20, 2002 to Employment    Exhibit to Form 10Q for quarter
                 Agreement between American Locker Group              ended June 30, 2002
                 Incorporated and Roy J. Glosser

10.11            Manufacturing Agreement dated as of October 1,       Exhibit to Form 10-K for year ended
                 2000 between American Locker Security Systems Inc.   December 31, 2000
                 and Signore, Inc.

10.14            Contract dated March 27, 1996 between the U.S.       Exhibit to Form 10-QSB for the
                 Postal Service and American Locker Security          quarter ended March 31, 1996
                 Systems, Inc.

10.15            Modification #MO3 to USPS Contract                   Exhibits to Form 10-QSB for the
                 #072368-96-B-0741 dated April 16, 1997               quarter ended March 31, 1997


                                     - 48 -
<PAGE>

10.18            Amendment dated August 22, 1997 to Corporate Term    Exhibit to Form 10-QSB for the
                 Loan Agreement dated August 30, 1991 between         quarter ended September 30, 1997
                 American Locker Group Incorporated and
                 Manufacturers and Traders Trust Company

10.19            Modification M05 to USPS Contract                    Exhibit to Form 10-QSB for the
                 #072368-96-B-0741, dated October 9, 1997, which      quarter ended September 30, 1997
                 replaces steel pedestals with aluminum pedestals
                 for American Locker Outdoor Parcel Lockers

10.20            Modification M06 to USPS Contract                    Exhibit to Form 10-QSB for the
                 #072368-96-B-0741, dated October 23, 1997            quarter ended September 30, 1997
                 regarding prices and minimum quantities through
                 April 14, 1998

10.20            Modification M07 to USPS Contract                    Exhibit to Form 10-QSB for quarter
                 #072368-96-B-0741, dated April 14, 1998 regarding    ended March 31, 1998
                 prices and minimum quantities

10.21            Modification #M010 to USPS Contract                  Exhibit to Form 10-QSB for the
                 #072368-96-B-0741, dated May 6, 1999                 quarter ended March 31, 1999

10.23            American Locker Group Incorporated 1999 Stock        Exhibit to Form 10-QSB for the
                 Incentive Plan                                       quarter ended June 30, 1999

10.24            Amendment dated June 9, 1999 between American        Exhibit to Form 10-QSB for the
                 Locker Group Incorporated and Manufacturers and      quarter ended June 30, 1999
                 Traders Trust Company

10.25            Rights Agreement dated November 19, 1999 between     Exhibit to Form 8-K dated November
                 American Locker Group Incorporated and Chase         18, 1999
                 Mellon Shareholder Services LLC

10.26            Form of American Locker Group Incorporated           Exhibit to Form 10-QSB for year
                 Supplemental Executive Retirement Benefit Plan       ending December 31, 1998

10.27            Employment Agreement dated November 19, 1999         Exhibit to Form 10-K for year ended
                 between American Locker Group Incorporated and       December 31, 1999
                 Edward F. Ruttenberg


                                     - 49 -
<PAGE>

10.28            Amendment dated May 20, 2002 to Employment           Exhibit to Form 10Q for quarter
                 Agreement between American Locker Group              ending June 30, 2002
                 Incorporated and Edward F. Ruttenberg

10.29            Form of Option Agreement under 1999 Stock            Exhibit to Form 10-K for year ended
                 Incentive Plan                                       December 31, 1999

10.30            Promissory Note dated July 6, 2001 made by           Exhibit to Form 8-K filed July 12,
                 American Locker Group Incorporated in favor of       2001
                 Janie D'Addio

10.31            Amendment Agreement dated as of July 5, 2001         Exhibit to Form 8-K filed July 12,
                 between American Locker Group Incorporated and       2001
                 Manufacturers and Traders Trust Company
10.32            Deed of Trust Note dated as of July 5, 2001 made     Exhibit to Form 8-K filed July 12,
                 by ALTRECO, Incorporated in favor of M&T Real        2001
                 Estate, Inc.

22.1             List of Subsidiaries                                 Page ____

23.1             Consent of Ernst&Young LLP                           Page ____

99.1             Certification Pursuant to 18 V.S.C. Section 1350     Page ____
                 as adopted pursuant to Section 906 of the
                 Sarbanes-Oxley Act of 2002

</TABLE>




                                     - 50 -
<PAGE>


                                 Certifications

I, Edward F. Ruttenberg, Chief Executive Officer, certify that:

     1.   I have  reviewed  this annual  report on Form 10-K of American  Locker
          Group Incorporated (the "Registrant"):
     2.   Based on my knowledge,  this annual report does not contain any untrue
          statement  of a  material  fact  or  omit to  state  a  material  fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this annual report;
     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this  annual  report,  fairly  present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this annual report;
     4.   The registrant's  other certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and have:

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

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

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

     6.   The  registrant's  other  certifying  officers and I have indicated in
          this annual report whether there were significant  changes in internal
          controls or in other factors that could significantly  affect internal
          controls  subsequent  to the  date  of  our  most  recent  evaluation,
          including   any   corrective   actions  with  regard  to   significant
          deficiencies and material weaknesses.

Date  March 18, 2003


By:  /s/Edward F. Ruttenberg
     -------------------------
     Edward F. Ruttenberg
     Chief Executive Officer



                                     - 51 -
<PAGE>


                                 Certifications

I, Wayne L. Nelson, Principal Accounting Officer, certify that:

     1.   I have  reviewed  this annual  report on Form 10-K of American  Locker
          Group Incorporated (the "Registrant"):
     2.   Based on my knowledge,  this annual report does not contain any untrue
          statement  of a  material  fact  or  omit to  state  a  material  fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this annual report;
     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this  annual  report,  fairly  present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this annual report;
     4.   The registrant's  other certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and have:

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

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

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

     6.   The  registrant's  other  certifying  officers and I have indicated in
          this annual report whether there were significant  changes in internal
          controls or in other factors that could significantly  affect internal
          controls  subsequent  to the  date  of  our  most  recent  evaluation,
          including   any   corrective   actions  with  regard  to   significant
          deficiencies and material weaknesses.


Date:  March 18, 2003

By:  /s/Wayne L. Nelson
     ---------------------------
     Wayne L. Nelson
     Principal Accounting Officer



                                     - 52 -

<PAGE>

Exhibit 22.1      List of Subsidiaries


The following  companies are subsidiaries of the Company and are included in the
consolidated financial statements of the Company:

<TABLE>
<CAPTION>
                                                                                            Percentage of Voting
NAME                                                  Jurisdiction of Organization          Securities Owned
-----                                                 ----------------------------          --------------------

<S>                                                   <C>                                   <C>
American Locker Security Systems, Inc.                Delaware                              100%
American Locker Company, Inc.                         Delaware                              100%
American Locker Company of Canada, Ltd.               Dominion of Canada                    100% (1)
Canadian Locker Company, Ltd.                         Dominion of Canada                    100% (2)
American Locker Security Systems International        Virgin Islands                        100% (1)
Security Manufacturing Corporation                    Delaware                              100%(1)
B.L.L. Corporation                                    Texas                                 100%(1)
ALTRECO, Incorporated                                 Delaware                              100%(1)

(1) Owned by American Locker Security Systems, Inc.
(2) Owned by American Locker Company of Canada, Ltd.



</TABLE>











                                     - 53 -


<PAGE>

Exhibit 23.1


                         Consent of Independent Auditors


We consent to the incorporation by reference in the Registration Statement (Form
S-8, No.  333-86494)  pertaining to the American Locker Group  Incorporated 1999
Stock  Incentive Plan of our report dated February 21, 2003, with respect to the
consolidated   financial  statements  and  schedule  of  American  Locker  Group
Incorporated  included  in its  Annual  Report  (Form  10-K) for the year  ended
December 31, 2002, filed with the Securities and Exchange Commission.



                                              /s/Ernst & Young LLP



Buffalo, New York
March 18, 2003
















                                     - 54 -
<PAGE>


Exhibit 99.1  Certifications


Pursuant  to 18 U.S.C.  Section  1350 As Adopted  Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002

I, Edward F. Ruttenberg,  do hereby certify, pursuant to 18 U.S.C. Section 1350,
as adopted  pursuant to Section  906 of the  Sarbanes-Oxley  Act of 2002,  to my
knowledge, that:

The Annual  Report on Form 10-K for the fiscal year ended  December  31, 2002 of
American  Locker  Group  Incorporated  (the  Company)  fully  complies  with the
requirements  of section  13(a) or 15(d) of the  Securities  and Exchange Act of
1934 and the  information  contained  in the Form 10-K fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Company.

Dated:  March 18, 2003


/s/ Edward F. Ruttenberg
--------------------------
Edward F. Ruttenberg
Chief Executive Officer





I, Wayne L. Nelson,  do hereby certify,  pursuant to 18 U.S.C.  Section 1350, as
adopted  pursuant  to  Section  906 of the  Sarbanes-Oxley  Act of  2002,  to my
knowledge, that:

The Annual  Report on Form 10-K for the fiscal year ended  December  31, 2002 of
American  Locker  Group  Incorporated  (the  Company)  fully  complies  with the
requirements  of section  13(a) or 15(d) of the  Securities  and Exchange Act of
1934 and the  information  contained  in the Form 10-K fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Company.

Dated:  March 18, 2003


/s/ Wayne L. Nelson
----------------------------
Wayne L. Nelson
Principal Accounting Officer






                                     - 55 -