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, 2000

                  [ ]  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 16, 2001, the Registrant had outstanding  2,062,440  shares of
its Common Stock. The aggregate  market value of the  Registrant's  voting stock
held by non-affiliates at this date was approximately  $8,212,456,  based on the
closing  price per share of Common  Stock on this date of $6.625 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 15, 2001, 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  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 centralized mail and parcel
distribution  lockers are sold to the United States Postal Service  ("USPS") for
use in  centralized  mail and parcel  delivery  in new  housing  and  industrial
developments,  as well  as  replacement  of  older  style  lockers  in  existing
locations.

The Company is an engineering,  assembling and marketing  enterprise  which also
manufactures its own mechanical locks for use in its products.

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.

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  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 160,000 OPLs to 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 CBUs in quantity to the United  States Postal  Service.  Type One and Type
Two CBUs are  approved  and  included in the current  contract.  As of March 16,
2001,  Cluster Box Units with aggregate invoice prices in excess of $120,000,000
have been  shipped to the United  States  Postal  Service  pursuant  to the 1994
contract and subsequent contracts. Components of




                                       3
<PAGE>


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  United  States  Postal
Service.

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 a coin operated baggage cart system and
is operating the system at one major Canadian  airport,  one major United States
airport and has sold several cart systems for use in U.S. airports.

Additional   information  with  respect  to  business  segment  data,  including
significant  customers,  is  disclosed  in Note 12 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 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.

The Company's metal lockers are  manufactured by Signore,  Inc.  pursuant to the
Manufacturing Agreement, except for the locks which are manufactured by ALSSI.

PATENTS
-------

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



                                       4
<PAGE>

EMPLOYEES
---------

The  Company  and  its  subsidiaries  actively  employed  144  individuals  on a
full-time  basis as of December 31, 2000,  in its  businesses  of whom 52 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 2000,  1999 and 1998,  one customer,  the United  States Postal  Service,
accounted for 70.9%,  74.3%, and 76.9% 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  as an  incident of its normal  manufacturing  operations  in
conjunction with the continuing  operations.  It expended $92,848,  $26,403, and
$17,081,  in 2000,  1999  and  1998,  respectively,  for  such  activity  in its
continuing businesses, which does not include new product development costs.

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 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
diminimus.  Therefore, based on the information currently available,  management
does not believe the outcome of this suit will have a substantial  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 customary  reservation
of rights.



                                       5
<PAGE>


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     54        Chairman of the Board and             1998
                                    Chief Executive Officer

Roy J. Glosser           40        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 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.



                                       6
<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.           PRODUCTS
--------                   ---------                                         -----------          --------

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                                     500*              Office space

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


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

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

                                                                             -------
                                                   TOTAL                     87,500
                                                                             =======

</TABLE>


The Company  believes that its facilities which are of varying ages and types of
construction and the machinery and equipment utilized in such plants are in good
condition and are adequate for its presently  contemplated needs. All facilities
are leased except for the Ellicottville facility. The leases on these properties
terminate at various times from 2001 through 2005.



                                       7
<PAGE>



ITEM 3.  LEGAL PROCEEDINGS

In September 1998 and subsequent  months, the Company was named as an additional
defendant in 110 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 customary  reservation
of rights.  As of March 13, 2001,  settlement  agreements have been entered in 6
cases with funds  authorized  and provided by the Company's  insurance  carrier.
Further,  32  cases  originally  filed in 1995,  1996  and  1997  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 March 13, 2001 is 72 cases originally filed against other
defendants in 1998 through 2001.

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 2000.



                                       8
<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
     1999                HIGH                 LOW                  DECLARED
--------------------------------------------------------------------------------

First Quarter            $26.00               $13.25               $0.00
Second Quarter            14.25                 6.375               0.00
Third Quarter              9.62                 5.25                0.00
Fourth Quarter             8.75                 5.125               0.00
                                                                   -----
Total                                                              $0.00
                                                                   =====



                                                                   DIVIDEND
     2000                HIGH                 LOW                  DECLARED
--------------------------------------------------------------------------------

First Quarter            $8.438               $5.375               $0.00
Second Quarter            7.75                 5.50                 0.00
Third Quarter             6.50                 4.75                 0.00
Fourth Quarter            6.75                 4.25                 0.00
                                                                   -----
Total                                                              $0.00
                                                                   =====


As of March 16, 2001, the Company had 1,307 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.



                                       9
<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, 2000, 1999, 1998, 1997 and 1996. 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.

<TABLE>
<CAPTION>
<S>                                              <C>           <C>           <C>           <C>          <C>
                                                   2000          1999          1998          1997          1996
                                                   ----          ----          ----          ----          ----
Sales                                            $37,662,140   $34,950,104   $45,011,327   $29,295,533  $22,517,589

Income before income taxes                         4,840,632     4,395,208     7,103,364     3,454,508    1,819,184

Income taxes                                       1,891,419     1,771,407     2,788,822     1,342,033      674,352

Net income                                         2,949,213     2,623,801     4,314,542     2,112,475    1,144,832

Earnings per share - basic (2)                          1.33          1.11          1.78          0.72         0.35

Earnings per share - diluted (2)                        1.32          1.09          1.70          0.70         0.35

Weighted average common shares
    outstanding - basic (2)                        2,214,406     2,363,338     2,420,078     2,909,788    3,232,408

Weighted average common shares
    outstanding - diluted (2)                      2,230,785     2,402,108     2,542,684     3,000,128    3,307,876

Dividends declared                                      0.00          0.00          0.00          0.00         0.00

Interest expense                                     140,920       153,861       231,875       181,678      208,827

Depreciation expense                                 796,140       630,047       646,379       600,632      622,392

Expenditures for property, plant and                 206,604     1,915,139       536,819       520,358      234,621
equipment

YEAR-END POSITION
Total assets                                      15,582,599    15,179,069    13,469,516    11,263,725   10,020,078

Long-term debt, including current portion            333,320     2,034,324       733,333     3,094,000    1,300,000

Stockholders' equity                              11,723,825    10,107,210     9,264,056     4,919,145    5,358,147

Stockholders' equity per share of common                5.68          4.44          3.82          2.04         1.67
stock (1) (2)

Common shares outstanding at year-end (2)          2,062,540     2,277,118     2,422,772     2,405,780    3,200,096

Number of employees                                      144           137           135           120          134

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

(2)  All  years  presented  have  been  restated  to  reflect  the  impact  of a
four-for-one stock distribution during 1998.


</TABLE>

                                       10
<PAGE>



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

RESULTS OF OPERATIONS - 2000 COMPARED TO 1999

Consolidated  sales in 2000 totaled  $37,662,000,  an 8% increase  from sales of
$34,950,000 in 1999. Income before income taxes in 2000 increased by $446,000 or
10% to $4,841,000 compared to $4,395,000 in 1999. Sales of the Company's plastic
Cluster Box Units (CBUs) to the United States Postal Service (USPS) increased 3%
to  $26,705,000 in 2000 from  $25,969,000  in 1999.  Revenues from the Company's
other locker products, primarily the sale and rental of metal, coin and key-only
and electronically controlled lockers,  increased 17% to $9,871,000 in 2000 from
$8,442,000  in 1999.  Revenues  from  the  luggage  cart  business  for  airport
terminals  were  $1,086,000 in 2000, an increase of $547,000 or 102% compared to
1999  revenues  of  $539,000.  This  increase  is the  result  of a full year of
operations  at the Detroit  Metropolitan  Airport in 2000 versus three months in
1999.

The increase in sales of plastic postal lockers resulted from an increase in the
total number of CBUs sold to the USPS in 2000 as compared to 1999. The Company's
present  contract  with the USPS  covers all three types of CBUs and the Outdoor
Parcel Locker (OPL). The contract was originally  awarded March 27, 1996 and the
USPS has  exercised  four  one-year  options,  which  extended  the  contract to
mid-April   2001.  The  Company  has  submitted  a  proposal  and  is  currently
negotiating with the USPS for a two year contract with four, two-year options to
renew.

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 increased slightly in
2000. The Company  believes its CBU product line continues to represent the best
value when all  factors  including  price,  quality of design and  construction,
long-term durability and service are considered.

The increase in the revenue from the Company's other locker products is, in part
due to the new plastic  coin-operated  locker,  which the Company  introduced in
April 2000, as well as increases in various other locker product lines.

Consolidated cost of sales as a percentage of sales remained consistent in 2000,
at 71.8% the same  percentage  as 1999.  Operating  efficiencies  obtained  from
higher volume were offset by price concessions on the CBUs.

Selling, administrative and general expenses of $6,040,000 during 2000 increased
7% from  $5,652,000  in 1999.  This is  primarily  the result of higher  selling
expenses  in 2000 which



                                       11
<PAGE>


corresponds   to  the  8%  increase  in  sales  from  1999  to  2000.   Selling,
administrative and general expenses were 16% of sales in both 2000 and 1999.

Interest  income  increased by $103,000 in 2000  compared to 1999 as a result of
higher cash balances during 2000 versus 1999.

Interest  expense  decreased  in 2000 as a  result  of the  Company  paying  its
$1,500,000 term loan during the third quarter of 2000.

RESULTS OF OPERATIONS - 1999 COMPARED TO 1998

Consolidated  sales in 1999 totaled  $34,950,000,  a 22% decrease  from sales of
$45,011,000  in  1998.  Income  before  income  taxes  in 1999  declined  38% to
$4,395,000  compared  to  $7,103,000  in 1998.  Sales of the  Company's  plastic
Cluster Box Units (CBUs) to the United States Postal  Service  (USPS)  decreased
23% to $25,969,000 in 1999 from $33,611,000 in 1998. Revenues from the Company's
other locker  products,  primarily  the sale and rental of metal,  coin and key-
only and electronically controlled lockers,  decreased 23% to $8,442,000 in 1999
from  $11,038,000 in 1998.  During 1999,  the Company  expanded its luggage cart
business for airport terminals by commencing service at the Detroit Metropolitan
Airport.  The luggage cart business generated revenue of approximately  $539,000
in 1999 compared to $362,000 in 1998.

The  decline in sales of plastic  lockers  resulted  from a decline in the total
number  of CBUs sold to the USPS in 1999 as  compared  to 1998 and also to lower
selling prices per unit. As a result of the USPS accumulation of CBU inventories
in 1998 and the USPS operating  losses  associated  with deferring a postal rate
increase, the USPS purchased fewer CBUs in 1999.

Sales of the Company's other locker products decreased due to a general decrease
in  demand  across  all  markets  served  by the  Company  as well as  increased
competition.

Consolidated  cost of sales as a percentage of sales  increased to 71.8% in 1999
compared to 70.0% in 1998.  The  increase was the result of the lower unit sales
of the Company's products, primarily the CBUs, as well as CBU price concessions.

Selling, administrative and general expenses of $5,652,000 during 1999 decreased
14% from $6,608,000 in 1998. The decrease is primarily the result of two unusual
1998 expenses.  In 1998, Roy J. Glosser,  President and Chief Operating  Officer
was granted and exercised stock  appreciation  rights which resulted in $327,000
of  additional  compensation  expense.  The Company  also  expensed  $400,000 to
provide for the entire  obligation under the supplemental  executive  retirement
program  (SERP)  as a result  of the  death of the  former  chairman  and  chief
executive  officer of the Company.  The  remaining  decrease in 1999 compared to
1998 is due to lower  selling  expenses  as a result  of the  decrease  in sales
volume.

Interest  expense  decreased  to  $154,000 in 1999 from  $232,000  in 1998.  The
decrease  in  1999 is due to  lower  average  outstanding  debt  during  1999 as
compared to 1998.  The increase in long-term  debt at December 31, 1999 compared
to December 31, 1998 is due to the Company entering into a term loan during June
1999, which increased long-term debt by $1,500,000.



                                       12
<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 4.39
to 1 and 4.68 to 1 at December 31, 2000 and 1999, respectively. Working capital,
or the excess of current assets over current  liabilities  was  $10,706,000  and
$9,973,000 at December 31, 2000 and 1999, respectively.  The increase in working
capital resulted  primarily from operations.  In 2000, the Company's  operations
generated $3,571,000 of cash.

The Company's  policy is to maintain  modern  equipment  and adequate  capacity.
During 2000,  1999, and 1998, the Company  expended  $207,000,  $1,915,000,  and
$537,000, respectively, for capital additions. Capital expenditures in all three
years were financed principally from operations.

The Company expects that cash generated from operations in 2001 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.

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,  both  steel and
plastic,  the Company  expects  that any raw  material  price  changes  would be
reflected in adjusted sales prices.

The  Company  intends  to  seek  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 asset position
at December 31, 2000. Presently,  management does not hedge its foreign currency
risk as it plans  to  indefinitely  reinvest  the  Canadian  net  assets  in the
Canadian operation.



                                       13
<PAGE>



The  interest  rate on the  Company's  long-term  debt is based  upon the  prime
interest rate;  accordingly the Company is exposed to interest rate risk, though
the low outstanding debt balance of $333,000 mitigates this risk at December 31,
2000. Based upon the Company's  outstanding long-term debt at December 31, 2000,
a 1% increase in interest rates would result in an increase to interest expenses
of approximately $3,000.

EFFECT OF NEW ACCOUNTING PRONOUNCEMENT

In June 1998, the Financial  Accounting  Standards  Board (FASB) issued SFAS No.
133,  "Accounting  for Derivative  Instruments  and Hedging  Activities"  ("SFAS
133").  SFAS 133 establishes  accounting and reporting  standards for derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts, and for hedging activities.  It requires that an entity recognize all
derivatives  as either  assets or  liabilities  in the  statement  of  financial
position and measure those  instruments  at fair value.  The intended use of the
derivative and its  designation as either (1) a hedge of the exposure to changes
in the fair value of a recognized  asset or liability  or a firm  commitment  (a
fair value  hedge),  (2) a hedge of the  exposure  to  variable  cash flows of a
forecasted  transaction  (a cash  flow  hedge),  or (3) a hedge  of the  foreign
currency exposure of a net investment in a foreign operation (a foreign currency
hedge),  will  determine when the gains or losses on the  derivatives  are to be
reported  in earnings  and when they are to be reported as a component  of other
comprehensive  income. This new standard must be adopted for year 2001 financial
reporting. At this time, management does not believe that the pronouncement will
impact the Company's financial statements.

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, and (iii) 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.



                                       14
<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, 2000 and 1999, and the
related consolidated statements of income,  stockholders' equity, and cash flows
for each of the three years in the period ended  December  31, 2000.  Our audits
also  included  the  financial  statement  schedule  listed in the index at Item
14(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, 2000 and 1999,  and the
consolidated  results of their  operations  and their cash flows for each of the
three years in the period ended December 31, 2000, 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, 2001



                                       15
<PAGE>




               American Locker Group Incorporated and Subsidiaries

                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
<S>                                                                <C>                         <C>
                                                                                 DECEMBER 31

                                                                          2000                 1999
                                                                   -----------------------------------------

ASSETS
Current assets:
     Cash and cash equivalents                                             $ 3,696,359          $ 3,285,983
     Accounts and notes receivable, less allowance
        for doubtful accounts of $324,000 in 2000
        and $222,000 in 1999                                                 4,633,422            3,814,185
     Inventories                                                             4,818,348            4,973,269
     Prepaid expenses                                                           45,209              125,581
     Deferred income taxes                                                     668,769              481,163
                                                                   -----------------------------------------
Total current assets                                                        13,862,107           12,680,181


Property, plant and equipment:
     Land                                                                          500                  500
     Buildings                                                                 389,959              390,953
     Machinery and equipment                                                10,378,983           10,309,324
                                                                   -----------------------------------------
                                                                            10,769,442           10,700,777
     Less allowance for depreciation                                        (9,048,950)          (8,290,534)
                                                                   -----------------------------------------
                                                                             1,720,492            2,410,243

Deferred income taxes                                                                -               88,645




                                                                   -----------------------------------------
                                                                   -----------------------------------------
Total assets                                                               $15,582,599         $ 15,179,069
                                                                   =========================================

</TABLE>




                                       16
<PAGE>






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


                                                                                        DECEMBER 31

                                                                                  2000                 1999
                                                                           ---------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable                                                           $ 1,513,203          $  1,410,948
     Commissions, salaries, wages and taxes thereon                                 323,769               311,172
     Other accrued expenses                                                         659,852               610,947
     Federal, state and foreign income taxes payable                                458,825                49,432
     Current portion of long-term debt                                              200,000               325,000

                                                                           ---------------------------------------
Total current liabilities                                                         3,155,649             2,707,499

Long-term liabilities:
     Long-term debt                                                                 133,320             1,708,324
     Pension and other benefits                                                     470,375               656,036
     Deferred income taxes                                                           99,430                     -
                                                                           ---------------------------------------
                                                                                    703,125             2,364,360

Stockholders' equity:
     Common stock, $1 par value:
       Authorized shares - 4,000,000
         Issued shares - 2,511,550 in 2000, 2,498,768 in 1999
         Outstanding shares - 2,062,540 in 2000,
         2,277,118 in 1999                                                        2,511,550             2,498,768
     Other capital                                                                  565,331               538,455
     Retained earnings                                                           12,550,001             9,600,788
     Treasury stock at cost (449,010 shares in 2000
        221,650 in 1999)                                                         (3,717,603)           (2,367,966)
     Accumulated other comprehensive income                                        (185,454)             (162,835)
                                                                           ---------------------------------------
Total stockholders' equity                                                       11,723,825            10,107,210
                                                                           ---------------------------------------

Total liabilities and stockholders' equity                                      $15,582,599          $ 15,179,069
                                                                           =======================================


See accompanying notes.

</TABLE>


                                       17
<PAGE>




               American Locker Group Incorporated and Subsidiaries

                        Consolidated Statements of Income


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


                                                                          YEAR ENDED DECEMBER 31
                                                              2000                 1999                 1998
                                                       --------------------------------------------------------------

Net sales                                                     $ 37,662,140         $ 34,950,104         $ 45,011,327
Cost of products sold                                           27,025,940           25,099,003           31,493,280
                                                       --------------------------------------------------------------
                                                                10,636,200            9,851,101           13,518,047
Selling, administrative and general expenses                     6,039,584            5,652,262            6,608,376
                                                       --------------------------------------------------------------
                                                                 4,596,616            4,198,839            6,909,671
Interest income                                                    190,486               96,057              102,826
Other income - net                                                 194,450              254,173              322,742
Interest expense                                                 (140,920)             (153,861)            (231,875)
                                                       --------------------------------------------------------------
Income before income taxes                                       4,840,632            4,395,208            7,103,364
Income taxes                                                     1,891,419            1,771,407            2,788,822
                                                       --------------------------------------------------------------
Net income                                                     $ 2,949,213         $  2,623,801          $ 4,314,542
                                                       ==============================================================


Earnings per share of common stock:

     Basic                                                           $1.33                $1.11                $1.78
                                                       ==============================================================
                                                       ==============================================================
     Diluted                                                         $1.32                $1.09                $1.70
                                                       ==============================================================

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


See accompanying notes.

</TABLE>


                                       18
<PAGE>



               American Locker Group Incorporated and Subsidiaries

                 Consolidated Statements of Stockholders' Equity

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

                                                                                                        Accumulated
                                                                                                           Other          Total
                                            Common           Other         Retained       Treasury     Comprehensive  Stockholders'
                                            Stock           Capital        Earnings        Stock           Income         Equity
                                         ------------------------------------------------------------------------------------------

Balance at January 1, 1998                  $ 2,405,780      $        -   $  2,662,445    $          -  $ (149,080)   $  4,919,145

   Comprehensive income:
      Net income                                      -               -      4,314,542               -           -       4,314,542
      Other comprehensive income:
        Foreign currency translation                  -               -              -               -     (61,490)        (61,490)
                                                                                                                   ----------------
   Total comprehensive income                                                                                            4,253,052
   Common stock issued (17,000 shares)           17,000           8,063              -               -           -          25,063
   Tax benefit of exercised stock options             -          66,894              -               -           -          66,894
   Common stock purchased and
      retired (8 shares)                             (8)            (90)             -               -           -             (98)
                                            ---------------------------------------------------------------------------------------
   Balance at December 31, 1998               2,422,772          74,867      6,976,987               -    (210,570)      9,264,056

   Comprehensive income:
      Net income                                      -               -      2,623,801               -           -       2,623,801
      Other comprehensive income:
        Foreign currency translation                  -               -              -               -      47,735          47,735
                                                                                                                   ----------------
   Total comprehensive income                                                                                            2,671,536
   Common stock issued (76,000 shares)           76,000         (21,375)             -               -           -          54,625
   Tax benefit of exercised stock options             -         485,000              -               -           -         485,000
   Common stock purchased for
      treasury (221,650 shares)                       -               -              -      (2,367,966)          -      (2,367,966)
   Common stock purchased and retired
      (4 shares)                                     (4)            (37)             -               -           -             (41)
                                            ----------------------------------------------------------------------------------------
   Balance at December 31, 1999               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 shares)                                 (618)         (3,136)             -               -           -          (3,754)
                                            ----------------------------------------------------------------------------------------
   Balance at December 31, 2000             $ 2,511,550      $  565,331   $ 12,550,001    $ (3,717,603)  $ (185,454)  $ 11,723,825
                                            ========================================================================================

See accompanying notes.



</TABLE>



                                       19
<PAGE>



               American Locker Group Incorporated and Subsidiaries
                      Consolidated Statements of Cash Flows


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

                                                                                YEAR ENDED DECEMBER 31
                                                                        2000              1999            1998
                                                                  ---------------------------------------------------

OPERATING ACTIVITIES

Net income                                                              $ 2,949,213      $ 2,623,801     $ 4,314,542
Adjustments to reconcile net income to net cash
     provided by operating activities:
       Depreciation                                                         796,140          630,047         646,379
       Loss on disposition of property, plant and equipment                       -                -           1,265
       Deferred income taxes (credits)                                          469           69,314        (57,139)
       Changes in assets and liabilities:
         Accounts and notes receivable                                    (826,958)          263,872         438,478
         Inventories                                                       154,780         1,338,862      (2,675,794)
         Prepaid expenses                                                    80,251           25,805        (62,058)
         Accounts payable and accrued expenses                              173,656        (493,590)         687,462
         Income taxes                                                       436,393          451,491         182,350
         Pension and other benefits                                       (192,511)           84,863         311,613
                                                                  ---------------------------------------------------
Net cash provided by operating activities                                 3,571,433        4,994,465       3,787,098

INVESTING ACTIVITIES

Purchase of property, plant and equipment                                 (206,604)      (1,915,139)       (536,819)
Proceeds from sale of property, plant and equipment                          87,378                -           9,426
                                                                  ---------------------------------------------------
Net cash used in investing activities                                     (119,226)      (1,915,139)       (527,393)

FINANCING ACTIVITIES
Net repayment under line of credit                                                -                -       (850,000)
Long-term debt borrowings                                                         -        1,500,000               -
Long-term debt payments                                                 (1,700,004)        (200,000)     (2,360,667)
Common stock issued                                                          16,412           54,625          25,063
Common stock purchased for treasury                                     (1,349,637)      (2,367,966)               -
Common stock purchased and retired                                          (3,754)             (41)            (98)
                                                                  ---------------------------------------------------
Net cash used in financing activities                                   (3,036,983)      (1,013,382)     (3,185,702)
Effect of exchange rate changes on cash                                     (4,848)           32,032        (40,041)
                                                                  ---------------------------------------------------
Net increase in cash                                                        410,376        2,097,976          33,962
Cash and cash equivalents at beginning of year                            3,285,983        1,188,007       1,154,045
                                                                  ---------------------------------------------------
Cash and cash equivalents at end of year                                $ 3,696,359      $ 3,285,983     $ 1,188,007
                                                                  ===================================================

Supplemental cash flow information: Cash paid during the year for:

        Interest                                                          $ 151,749       $  143,032      $  240,600
                                                                  ===================================================

        Income taxes                                                    $ 1,455,026      $ 1,250,602     $ 2,665,587
                                                                  ===================================================

See accompanying notes.

</TABLE>


                                       20
<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AMERICAN LOCKER GROUP INCORPORATED AND SUBSIDIARIES

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 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  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.

INVENTORIES

Inventories  are  valued  principally  at the  lower  of  cost or  market,  cost
determined by the last-in, first-out method.

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.

REVENUE RECOGNITION

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



                                       21
<PAGE>

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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  $185,000,  $190,000 and
$235,000 during 2000, 1999 and 1998, respectively.

ADVERTISING EXPENSE

The cost of advertising is expensed as incurred.  The Company incurred $274,000,
$332,000  and  $310,000  in  advertising  costs  during  2000,  1999  and  1998,
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").

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.

FOREIGN CURRENCY

The assets and liabilities of the Company's foreign 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  and  notes
receivable, accounts payable, and accrued liabilities approximate fair value due
to the  short-term  maturities  of these  assets and  liabilities.  The carrying
amounts of the Company's bank borrowings also  approximate  fair value since the
interest rates are adjusted based upon changes in the prime interest rate.

STOCK-BASED COMPENSATION

The  Company   accounts  for  stock  options   granted  under  its   stock-based
compensation  plan in  accordance  with the  intrinsic  value  based  method  of
accounting  as  prescribed  by  Accounting  Principles  Board  Opinion  No.  25,
"Accounting  for  Stock  Issued to  Employees"  ("APB  25"),  as  allowed  under
Financial   Accounting   Standards   No.  123,   "Accounting   for   Stock-Based
Compensation" ("SFAS 123"). Accordingly,  no compensation cost for stock options
is


                                       22
<PAGE>

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

recognized because the number of options granted is fixed and the exercise price
of the stock options equals the market price of the underlying stock on the date
of the grant.


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.

EFFECT OF NEW ACCOUNTING PRONOUNCEMENT

In June 1998, the Financial  Accounting  Standards  Board (FASB) issued SFAS 133
"Accounting  for Derivative  Instruments and Hedging  Activities"  ("SFAS 133").
SFAS  133  establishes   accounting  and  reporting   standards  for  derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts,  and for hedging activities.  It requires that an entity recognize as
either assets or liabilities in the balance sheets and measure those instruments
at fair value.  The intended use of the derivative and its designation as either
(1) a hedge of the exposure to change in the fair value of a recognized asset or
liability or a firm commitment (a fair value hedge), (2) a hedge of the exposure
to variable cash flows of a forecasted transaction (a cash flow hedge), or (3) a
hedge  of  the  foreign  currency  exposure  of a net  investment  in a  foreign
operation (a foreign currency hedge), will determine when the gains or losses on
the  derivatives are to be reported in earnings and when they are to be reported
as a component of other comprehensive income.

This new standard must be adopted for year 2001 financial reporting.  Management
has  determined  that it does not have current  transactions  that would require
reporting under SFAS 133.

3. INVENTORIES

Inventories consist of the following:
                                                       DECEMBER 31

                                                  2000               1999
                                         ---------------------------------------

Finished products                          $     986,369         $1,363,889
Work-in-process                                1,541,110          1,856,704
Raw materials                                  2,888,897          2,373,527
                                         ---------------------------------------
                                               5,416,376          5,594,120
Less allowance to reduce to LIFO basis          (598,028)          (620,851)
                                         ---------------------------------------
Net inventories                            $   4,818,348         $4,973,269
                                         =======================================



                                       23
<PAGE>



4. DEBT

Long-term debt consists of the following:
<TABLE>
<CAPTION>
<S>                                                             <C>                    <C>

                                                                           DECEMBER 31
                                                                      2000             1999
                                                                ---------------------------------------
Note payable to bank, unsecured, payable through August 31,
 2002 at $16,667 per month plus interest at prime plus 0.15%       $ 333,320       $  533,324

Note payable to bank, unsecured, with interest at prime                    -        1,500,000
                                                                ---------------------------------------
Total long-term debt                                                 333,320        2,033,324
Less current portion                                                 200,000          325,000
                                                                ---------------------------------------
Long-term portion                                                  $ 133,320       $1,708,324
                                                                =======================================

</TABLE>

The credit  agreement  underlying the notes payable to bank 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, 2000.

Based upon the outstanding balances at December 31, 2000, the required principal
payments on long-term  obligations  in each of the years through final  maturity
are as follows:

                      2001                       $   200,000
                      2002                           133,320

The Company has a $3,000,000 unsecured line of credit agreement with a bank with
interest at the prime rate (9.5% at December 31, 2000). There were no borrowings
outstanding under the line of credit at December 31, 2000.

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, 2000:

                      2001                       $   298,000
                      2002                           203,000
                                                 -----------
                                                 $   501,000
                                                 ===========

Rent expense amounted to approximately $313,000,  $322,000 and $252,000 in 2000,
1999 and 1998, respectively.



                                       24
<PAGE>



6. INCOME TAXES

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

                              2000                 1999                  1998
                         -------------------------------------------------------

United States            $ 4,846,963           $ 4,286,818          $ 7,055,116
Foreign income (loss)         (6,331)              108,390               48,248
                         -------------------------------------------------------
                         $ 4,840,632           $ 4,395,208          $ 7,103,364
                         =======================================================

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

                              2000                 1999                  1998
                         -------------------------------------------------------
Current:
   Federal               $ 1,601,253           $ 1,386,855          $ 2,431,459
   State                     286,924               266,557              390,548
   Foreign                     2,773                48,681               23,954
                         -------------------------------------------------------
Total current              1,890,950             1,702,093            2,845,961

Deferred:
   Federal                        70                58,917              (48,569)
   State                         399                10,397               (8,570)
                         -------------------------------------------------------
                                 469                69,314              (57,139)
                         -------------------------------------------------------
                         $ 1,891,419         $   1,771,407        $   2,788,822
                         =======================================================



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

                                           2000          1999           1998
                                        ----------------------------------------


Statutory income tax rate                   34%           34%            34%
State and foreign income taxes               6             5              4
Other permanent differences                 (1)            1              1
                                        ----------------------------------------
                                            39%           40%               39%
                                        ========================================

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:

                                                2000                 1999
                                            ------------------------------------
Deferred tax liabilities:
   Property, plant and equipment              $ 136,228           $ 220,796
   Prepaid expenses and other                   112,937              85,005
                                            ------------------------------------
Total deferred tax liabilities                  249,165             305,801




                                       25
<PAGE>

6. INCOME TAXES (CONTINUED)

Deferred tax assets:

   Postretirement benefits                       58,301              58,301
   Pension costs                                200,619             289,663
   Allowance for doubtful accounts               93,658              46,283
   Accrued expenses                             120,031             110,476
   Other employee benefits                       32,236              28,608
   Inventory costs                              313,659             342,278
                                            ------------------------------------
Total deferred tax assets                       818,504             875,609
                                            ------------------------------------
Net deferred tax assets                       $ 569,339           $ 569,808
                                            ====================================

Current deferred tax asset                   $ 668,769           $    481,163
Long-term deferred tax (liability) asset       (99,430)                88,645
                                             -----------------------------------
                                             $ 569,339           $    569,808
                                             ===================================

The Company does not provide  deferred  taxes for amounts 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 was  approximately  $1,000,000  at December 31, 2000.  If such
dividends were to be remitted,  foreign tax credits  available under present law
would reduce the amount of U.S. taxes payable.

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.

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, 2000 and 1999, and the net periodic
cost and assumptions.

                                                        PENSION BENEFITS
                                                     2000               1999
                                             -----------------------------------
     CHANGE IN BENEFIT OBLIGATION
       Benefit obligation at beginning
          of year                              $   2,197,716     $    2,123,786
       Service cost                                  175,072            177,064
       Interest cost                                 161,880            147,538
       Actuarial gain                                 (2,313)          (151,581)
       Benefits paid                                (101,955)           (99,091)
                                             -----------------------------------
     Benefit obligation at end of year             2,430,400          2,197,716
                                             -----------------------------------


                                       26
<PAGE>




7. PENSION AND OTHER POSTRETIREMENT BENEFITS (CONTINUED)

CHANGE IN PLAN ASSETS
       Fair value of plan assets at
         beginning of year                        1,853,052           1,825,209
       Actual return on plan assets                 144,421             126,914
       Employer contribution                        297,749                   -
       Benefits paid                               (101,955)            (99,091)
                                               ---------------------------------
     Fair value of plan assets at end of year     2,193,267           1,853,052
                                               ---------------------------------

     Funded status                                 (237,133)           (344,664)

     Unrecognized net transition asset             (210,933)           (316,974)
     Unrecognized net actuarial loss                271,234             288,202
     Unrecognized prior service cost                  1,843               2,268
                                               ---------------------------------
     Accrued benefit cost                      $   (174,989)    $      (371,168)
                                               =================================

                                                         PENSION BENEFITS
                                                      2000               1999
                                               ---------------------------------
COMPONENTS OF NET PERIODIC
   BENEFIT COST

Service cost                                   $    175,072     $       177,064
Interest cost                                       161,880             147,538
Expected return on plan assets                     (134,676)           (124,677)
Amortization of unrecognized net
   transition asset                                (106,041)           (106,041)
Net actuarial loss                                    4,890              15,645
Amortization of prior service cost                      425                 425
                                               ---------------------------------
Net periodic benefit cost                      $    101,550     $       109,954
                                               =================================

                                                         PENSION BENEFITS
                                                      2000               1999
                                               ---------------------------------
WEIGHTED AVERAGE ASSUMPTIONS
   AS OF DECEMBER 31
   Discount rate                                      7.5%               7.50%
     Expected return on plan assets                   7.0%               7.00%
     Rate of compensation increase                    5.5%               5.50%

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



                                       27
<PAGE>


retiree.  The Company has fully  recorded its liability in connection  with this
plan. The expense  recorded in connection with these benefits was  approximately
$3,000 in each of the years ended December 31, 2000 and 1999.

7. PENSION AND OTHER POSTRETIREMENT BENEFITS (CONTINUED)

Effective  January 1, 1998,  the Company  implemented a  Supplemental  Executive
Retirement  Plan.  During 1998, the Company recorded an expense of approximately
$400,000 in accordance with the plan provisions, as a result of the death of the
Company's chief executive officer. The Plan provides for monthly payments to the
former  executive's  widow for the remainder of her life.  Based upon  actuarial
calculations,  the projected liability under the plan is approximately  $352,000
at December 31, 2000 and is recorded as other  accrued  expenses and pension and
other benefits in the consolidated balance sheets.

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 and $12,000
in  connection  with  its  contribution  to  the  plan  during  2000  and  1999,
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 44,000 shares remain outstanding under the 1988 plan.

During 1998, the Company recorded  approximately  $327,000 of expense related to
stock appreciation rights that were granted and exercised. At December 31, 2000,
1999 and 1998, there were no stock appreciation rights outstanding.



                                       28
<PAGE>



9. STOCK OPTIONS (CONTINUED)

Pro forma information regarding net income and earnings per share is required by
Statement of Financial  Accounting Standards No. 123 "Accounting for Stock-Based
Compensation"  ("SFAS  123"),  and has been  determined  as if the  Company  had
accounted  for its employee  stock  options  under the fair value method of SFAS
123. The fair value for these options 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%  for  2000  and 7.0% for  1999;
dividend yields of 0.0 for both years; volatility factors of the expected market
price of the  Company's  common  stock of .69 for 2000 and .70 for  1999;  and a
weighted-average  expected life of the option of 5 years for both years. The per
share fair value of the options granted in 2000 and 1999 using these assumptions
was $4.55 and $4.35, respectively. The pro forma effect on earnings for the year
ended December 31, 2000 is as follows: net income $2,908,184; basic earnings per
share  $1.31,  and diluted  earnings  per share  $1.30.  The pro forma effect on
earnings  for the  year  ended  December  31,  1999 is as  follows:  net  income
$2,455,803;  basic  earnings  per share  $1.04,  and diluted  earnings per share
$1.02.  The 1998 net income and earnings per share would not have been impacted,
since no stock  options were granted in 1998,  and the options  granted in 1997,
vested immediately.

A summary of the  activity  in the  Company's  Employee  Option Plan and related
information for the years ended December 31 follows:


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

                                            2000                         1999                          1998
                                            ----                         ----                          ----
                                                  Weighted                    Weighted                      Weighted
                                                  Average                      Average                      Average
                                                  Exercise                    Exercise                   Exercise Price
                                    Options        Price        Options         Price        Options
                                 ----------------------------------------------------------------------------------------

Outstanding -
  beginning of year                  124,000    $     5.11     133,000           $1.45      162,000        $ 1.55

Exercised and

  surrendered                        (13,400)         1.23     (76,000)            .72      (29,000)         2.03

Granted                               10,000          7.25      67,000            6.98            -             -
                                 =========================================================================================
Outstanding -
  end of year                        120,600    $     5.41     124,000           $5.11      133,000         $1.45
                                 =========================================================================================

Exercisable -
   end of year                       120,600                   114,000                      133,000
                                 =========================================================================================

</TABLE>


                                       29
<PAGE>



9. STOCK OPTIONS (CONTINUED)

The  exercise  prices for options  outstanding  as of December  31, 2000 were as
follows: $2.813 - 44,000 shares, $6.50 - 56,600 shares $7.25 - 10,000 shares and
$8.875 - 10,000 shares. The weighted-average remaining contractual life of those
options is 6.6 years.

At December 31, 2000,  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.

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.



                                       30
<PAGE>



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>
<S>                                                       <C>                      <C>                   <C>

                                                                  2000                   1999                1998
                                                          ------------------------------------------------------------
Numerator:
   Net income                                               $  2,949,213           $   2,623,801        $   4,314,542
Denominator:
   Denominator for basic earnings per share -
    weighted average shares outstanding                        2,214,406               2,363,338            2,420,078

   Effect of dilutive securities:
     Employee stock options                                       16,379                  38,770              122,606
                                                          ------------------------------------------------------------

   Denominator for diluted earnings per share -
     weighted average shares out- standing and
     assumed conversions                                       2,230,785              2,402,108             2,542,684
                                                          ============================================================
Basic earnings per share                                  $       1.33            $      1.11           $      1.78
                                                          ============================================================
Diluted earnings per share                                $       1.32            $      1.09           $      1.70
                                                          ============================================================
</TABLE>

12. 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:

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

                                                                  2000                   1999                1998
                                                          -------------------------------------------------------------

United States customers                                   $   35,215,373          $  32,596,075         $  41,735,153
Foreign customers                                              2,446,767              2,354,029             3,276,174
                                                          -------------------------------------------------------------
                                                          $   37,662,140          $  34,950,104         $  45,011,327
                                                          =============================================================

</TABLE>

Sales to the U.S. Postal Service represented 70.9%, 74.3% and 76.9% of net sales
in 2000, 1999, and 1998, respectively.

At  December  31,  2000 and 1999,  the  Company  had  secured  receivables  from
customers  under  time  payment  arrangements  totaling  $131,635  and  $63,000,
respectively.  At December 31, 2000 and 1999,  the Company had  unsecured  trade
receivables   from   governmental   agencies  of  $2,551,000   and   $2,416,000,
respectively,  and from customers  considered to be distributors of $374,000 and
$192,000, 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 different industries. The Company
generally does not require collateral for trade accounts receivable.



                                       31
<PAGE>



13. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a tabulation of the unaudited  quarterly  results of operations
for the years ended December 31, 2000 and 1999:

<TABLE>
<CAPTION>
<S>                                           <C>                 <C>              <C>               <C>
                                                                               2000
                                              -----------------------------------------------------------------------
                                                                        THREE MONTHS ENDED

                                                  MARCH 31          JUNE 30        SEPTEMBER 30       DECEMBER 31
                                              -----------------------------------------------------------------------

Net sales                                       $   7,859,150     $  10,635,913    $   8,413,176     $  10,753,901
                                              =======================================================================

Gross profit                                    $   2,315,608     $   3,113,429    $   2,451,977     $   2,755,186
                                              =======================================================================



Net income                                      $     522,891     $     884,030    $     533,648     $   1,008,644
                                              =======================================================================

Earnings per share - Basic                      $         .23     $         .39    $         .24     $         .49
                                              =======================================================================
Earnings per share - Diluted                    $         .23     $         .39    $         .24     $         .48
                                              =======================================================================

                                                                               1999

                                              -----------------------------------------------------------------------
                                                                        THREE MONTHS ENDED

                                                  MARCH 31          JUNE 30        SEPTEMBER 30       DECEMBER 31
                                              -----------------------------------------------------------------------

Net sales                                       $   7,857,688     $  10,029,123    $   7,761,363     $   9,301,930
                                              =======================================================================

Gross profit                                        2,323,713         2,890,548        2,327,709         2,309,131
                                              =======================================================================

Net income                                            591,807           911,546          502,159           618,289
                                              =======================================================================

Earnings per share - Basic                                .24               .37              .22               .27
                                              =======================================================================
Earnings per share - Diluted                              .23               .37              .22               .27
                                              =======================================================================

</TABLE>


The  Company's  accounting  practice for interim  periods  provides for possible
accounting  adjustments  at year end.  In 2000,  such  adjustments  resulted  in
increasing  fourth  quarter  pretax  income by $23,000 for  inventory  costs and
$99,000 for pension costs, and decreasing  pretax income by $76,000 for accounts
receivable  allowances.  In 1999, such adjustments resulted in decreasing fourth
quarter pretax income by $216,000 for inventory  costs. In 1998 such adjustments
resulted in increasing  fourth  quarter  pretax income by $240,000 for inventory
costs,  decreasing  fourth  quarter  pretax  income  by  $150,000  for  accounts
receivable allowances and increasing fourth quarter pretax income by $74,000 for
liability reserves.

Also in the forth quarter of 2000, the Company  reclassified  certain costs that
in  the  previous   three  quarters  of  2000  had  been  reported  as  selling,
administrative  and  general  expenses to cost of sales.  The  reclassification,
which has no impact on net income, was approximately $360,000.

14. RELATED PARTIES

One  Director  of the  Company is a  stockholder  and  director  of  Rollform of
Jamestown  Inc.,  a  rollforming  company.  One  of the  Company's  subsidiaries
purchased $152,000, $218,000, and




                                       32
<PAGE>




$235,000 of fabricated parts from Rollform of Jamestown, Inc. in 2000, 1999, and
1998, respectively, at prices that the Company believes are at arms length.

15. 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
diminimus.  Therefore, based on the information currently available,  management
does not believe the outcome of this suit will have a substantial  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 customary  reservation
of rights.

In September 1998 and subsequent  months, the Company was named as an additional
defendant in 110 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 customary  reservation
of rights. As of February 21, 2001, settlement agreements have been entered in 6
cases with funds  authorized  and provided by the Company's  insurance  carrier.
Further,  32  cases  originally  filed in 1995,  1996  and  1997  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, 2001 is 72 cases originally filed against
other defendants in 1998 through 2001. While the Company cannot predict what the
ultimate  resolution of these 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, management does
not  believe  that the outcome of these  cases will have a  significant  adverse
impact on the Company's operations or financial condition.



                                       33
<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.  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  2000.
                                    (i)     None



                                       34
<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, 2001, is included in Item 8 Financial  Statements and Supplementary
Data in the Annual Report on Form 10-K.

Financial Schedules for the years 2000, 1999 and 1998:

         Valuation and Qualifying Accounts



                                       35
<PAGE>



SCHEDULE II

                       American Locker Group Incorporated

                        VALUATION AND QUALIFYING ACCOUNTS


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


                                           Balance at the   Charged to
                                            Beginning of    Costs and     Write-offs/    Balance at
Year              Description                  Period        Expense      Recoveries    End of Period
-----------------------------------------------------------------------------------------------------
2000     Allowance for Doubtful Accounts   $222,000         $138,000      $ (36,000)    $324,000
1999     Allowance for Doubtful Accounts    216,000           12,000         (6,000)     222,000
1998     Allowance for Doubtful Accounts    439,000           12,000       (235,000)     216,000

</TABLE>


                                       36
<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 23, 2001

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.

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

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

/s/Edward F. Ruttenberg            Chairman, Chief Executive Officer                 March 23, 2001
------------------------------     and Director
Edward F. Ruttenberg


/s/Roy J. Glosser                  President, Chief Operating                        March 23, 2001
------------------------------     Officer Treasurer and Director
Roy J. Glosser


/s/Alan H. Finegold                Director                                          March 23, 2001
------------------------------
Alan H. Finegold


/s/Thomas Lynch, IV                Director                                          March 23, 2001
------------------------------
Thomas Lynch, IV


/s/James E. Ruttenberg             Director                                          March 23, 2001
------------------------------
James E. Ruttenberg


/s/Jeffrey C. Swoveland            Director                                          March 23, 2001
------------------------------
Jeffrey C. Swoveland


/s/Donald I. Dussing, Jr.          Director                                          March 23, 2001
------------------------------
Donald I. Dussing, Jr.


</TABLE>

                                       37

<PAGE>




                                             EXHIBIT INDEX
<TABLE>
<CAPTION>

<S>                       <C>                                                   <C>

                                                                                PRIOR FILING OR SEQUENTIAL PAGE
EXHIBIT NO.                                                                     NO. HEREIN
-----------                                                                     -------------------------------

  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



                                       38
<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-GSB for quarter
                          Incorporated and  Roy J. Glosser                      ended June 30, 1996

10.8                      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

10.9                      Manufacturing Agreement dated as of October 1,        Page __
                          2000 between American Locker Security Systems Inc.
                          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

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



                                       39
<PAGE>



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
                          American Locker Group Incorporated and Chase          November 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

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

22.1                      List of Subsidiaries                                  Page ____




</TABLE>


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