TABLE OF CONTENTS




|                                                  |                                                                                                |  |  |  |  |  |  | 
|------------------------------------------------- | ---------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|Forward-Looking Statements                       
|PART I.                                          
|                                                  | ITEM 1. BUSINESS.                                                                             
|                                                  | ITEM 2. PROPERTIES.                                                                           
|                                                  | ITEM 3. LEGAL PROCEEDINGS.                                                                    
|                                                  | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.                                  
|PART II.                                         
|                                                  | ITEM 5. MARKET FOR REGISTRANTS COMMON STOCK AND RELATED MATTERS.                             
|                                                  | ITEM 6. SELECTED FINANCIAL DATA.                                                              
|                                                  | ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|                                                  | ITEM 7(a). MARKET RISK EXPOSURES                                                              
|                                                  | ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.                                          
|                                                  | ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. 
|PART III.                                        
|                                                  | ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.                                  
|                                                  | ITEM 11. EXECUTIVE COMPENSATION.                                                              
|                                                  | ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERSAND MANAGEMENT.                       
|                                                  | ITEM 13. CERTAIN RELATIONSHIPS AND CERTAIN TRANSACTIONS.                                      
|PART IV.                                         
|                                                  | ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS ONFORM 8-K.                     
|SIGNATURES                                       
|SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS  
|EXHIBIT INDEX                                    
|EX-10.1.4  5th Amend. to Financing/Security Agrmt



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

FORM 10-K

(Mark one)

|                                                                                          
|------------------------------------------------------------------------------------------
|[X]   Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934

For the fiscal year ended June 30, 2001

or

|                                                                                                
|------------------------------------------------------------------------------------------------
|[   ]   Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

|                                                                     
|---------------------------------------------------------------------
|GLASSTECH, INC.(Exact name of registrant as specified in its charter)

|                                                                        |  |                                      |  |                                             
|----------------------------------------------------------------------- |  | ------------------------------------ |  | --------------------------------------------
|Delaware
(State or other jurisdiction of
incorporation or organization) |  | 33-32185-01
(Commission
file number) |  | 13-3440225
(IRS Employer
Identification No.)

|                                                                                                      |  |                 
|----------------------------------------------------------------------------------------------------- |  | ----------------
|Ampoint Industrial Park, 995 Fourth Street, Perrysburg, Ohio
(Address of principal executive offices) |  | 43551
(Zip Code)

Registrants telephone number, including area code: (419) 661-9500

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

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.



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



The aggregate market value of the common stock of Glasstech, Inc. held by
non-affiliates of Glasstech, Inc. is not applicable as the common stock of
Glasstech, Inc. is privately held.

The number of shares of common stock, $.01 par value, outstanding as of
September 21, 2001 was 1,000.

DOCUMENTS INCORPORATED BY REFERENCE

NONE



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Forward-Looking Statements

Certain statements in this Annual Report on Form 10-K (this Form 10-K)
including those contained in the Managements Discussion and Analysis of
Financial Condition and Results of Operations (MD&A) section and the attached
financial statements, in the Companys press releases and in oral statements
made by or with the approval of an authorized executive officer of the Company
constitute forward-looking statements as that term is defined under the
Private Securities Litigation Reform Act of 1995. These may include statements
projecting, forecasting or estimating Company performance and industry trends.
The achievement of the projections, forecasts or estimates is subject to
certain risks and uncertainties. Actual results and events may differ
materially from those projected, forecasted or estimated. The applicable risks
and uncertainties include general economic and industry conditions that affect
all international businesses, as well as matters that are specific to the
Company and the markets it serves.

General risks that may impact the achievement of such forecasts include
compliance with new laws and regulations; significant raw material price
fluctuations; currency exchange rate fluctuations; business cycles; and
political uncertainties. Specific risks to the Company include risk of
recession in the markets and industries in which its products are sold; the
concentration of a significant portion of the Companys revenues from customers
whose equipment needs are located in the Asia-Pacific region; the concentration
of a substantial percentage of the Companys sales with a few major customers,
several of whom have significant manufacturing presence in the Asia-Pacific
region; timing of new system orders and the timing of payments due on such
orders; changes in installation schedules, which could lead to deferral of
progress payments or unanticipated production costs; new or emerging
technologies from current competitors, customers in-house engineering
departments and others; competition from current competitors; and the emergence
of a substitute for glass. In light of these and other uncertainties, the
inclusion of a forward-looking statement herein should not be regarded as a
representation by the Company that the Companys plans and objectives will be
achieved.




PART I.




ITEM 1. BUSINESS.

Overview

The Company designs and assembles glass bending and tempering (i.e.,
strengthening) systems used by glass manufacturers and processors in the
conversion of flat glass into safety glass. The Company sells its systems
worldwide, primarily to automotive glass manufacturers and processors (the
Automotive Market) and also to architectural glass manufacturers and
processors (the Architectural Market). The Companys systems are designed to
meet customers safety glass production requirements for complexity, accuracy
and optical quality while simultaneously enhancing system productivity,
flexibility and cost efficiency. For the Automotive Market, the Company has
developed bending and tempering systems that meet automobile manufacturers
safety glass specifications for current and future production models. For the
Architectural Market, the Companys energy-efficient processing systems are
capable of producing high-quality bent or flat glass at output rates tailored
to meet customer-specific production requirements. As a result of the long
useful life and growing worldwide installed base of its systems, the Company is
able to complement its sale of complete systems (Original Equipment) with the
sale of aftermarket products and services consisting of retrofits, tooling
(i.e., molds used to shape automotive glass) and replacement parts (the
Aftermarket). The Companys products feature proprietary technologies that
have been developed over the last 25 years and are protected by approximately
700 patents and patent application filings worldwide.

A Glasstech system performs a series of processes that bend and strengthen
flat glass in the production of safety glass products such as car windows. In
each system, flat glass supplied by glass manufacturers is conveyed
horizontally on ceramic rollers through a high temperature furnace, a bending
module and a quench module (which completes the tempering process by rapidly
cooling the heated glass). Microprocessor-based

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controls regulate temperature, speed and glass location throughout the entire process. In addition, the
Company develops its own proprietary software to control the integrated system.
The modular design of a Glasstech system readily enables the Company to offer
customized systems that meet specific technical requirements of its customers.
Such a design also creates equipment retrofit and upgrade opportunities for the
Company. The Company works closely with its customers as they identify
capacity and functionality requirements for a new system and then throughout
the usual 10 to 12 month order, installation and acceptance cycle to ensure
satisfaction with their completed system. Systems designed for the Automotive
Market are used to form and temper glass for automotive back, side and roof
windows, as well as to form and anneal glass used for windshields. Systems
designed for the Architectural Market process curved and flat tempered glass
which are used for skylights, insulating glass, patio doors, furniture and
appliances. The Company has an installed base of approximately 400 systems
located in over 45 countries on six continents.

For fiscal year ended June 30, 2001, the Company generated net revenue and
EBITDA (as defined in Footnote (b) under the heading Selected Financial Data)
of $50.0 million and $4.3 million, respectively. Original Equipment revenue
totaled $32.2 million, or 64.4%, of the Companys total revenue for the same
period. The balance of the Companys revenue was generated through Aftermarket
sales including retrofits, tooling and replacement part sales intended to
maintain or enhance the Companys installed base of systems.

Background

The Company was founded in 1971 to manufacture flat glass tempering
systems for the Architectural Market. Building on its success in that market,
in 1977, the Company delivered its first bending and tempering system used to
produce simple glass shapes for the Automotive Market. Through continued
product development programs and technological enhancements, the Company
manufactured its first bending and tempering system for complex glass shapes
for the Automotive Market in 1985. This system enables the Companys customers
to bend and form glass while it is still inside the furnace, which results in
enhanced quality, higher yields (i.e., reduced breakage and fewer defects) and
more precision in the final shape of the safety glass product.

In 1988, and again in 1989, the Company was purchased in separate
leveraged buyout transactions. In December 1992, the Company reorganized its
senior management. In May 1993, the Company filed for protection under Chapter
11 of the Federal Bankruptcy Code due to an inability to service indebtedness
incurred in the 1989 leveraged buyout transaction. While under the protection
of Chapter 11, the new management team refocused its business strategy by,
among other things, focusing on the sale of a more profitable product mix and
on the containment of costs. As a result of these efforts, a reorganization of
its senior management and a reorganization of the Companys debt under a
bankruptcy plan of reorganization, the Company emerged from Chapter 11 in
January 1995. Upon consummation of the Reorganization, the Companys debt
holders converted their debt obligations into 100% of the Companys equity,
$42.0 million of 10% Senior Notes and the right to receive certain cash
payments.

In 1997, Glasstech Holding Co (Holding) and Glasstech Sub Co. (Sub
Co.) were formed to effect the acquisition of the Company by Key Equity
Capital Corporation (KECC), certain of KECCs affiliates and certain members
of management of the Company (collectively, the Key Equity Group). The
acquisition was consummated on July 2, 1997 pursuant to an Agreement and Plan
of Merger, dated as of June 5, 1997, among Holding, Sub Co. and the Company, as
amended (the Merger Agreement). Under the terms of the Merger Agreement, Sub
Co. was merged into the Company, and the Company continued as the surviving
corporation (the Merger). The aggregate consideration for the Merger was
$77.9 million (the Purchase Price). To finance and complete the Merger
(including the payment of related fees and expenses): (i) the Key Equity Group
purchased, for $15.0 million, all of the outstanding shares of capital stock of
Holding; (ii) Holding purchased, for $15.0 million, all of the outstanding
shares of capital stock of Sub Co. (the Equity Contribution); (iii) Sub Co.
sold 123/4% Senior Notes Due 2004 (the Old Notes) in an aggregate principal

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amount of $70.0 million and the Company issued 70,000 Warrants (received from
Holding) to purchase an aggregate of 877.21 shares of Class A Common Stock of
Holding (Initial Offering); and (iv) upon completion of the Merger, the
Company, as the surviving entity, became the obligor on the Old Notes. The
Company also entered into a revolving credit facility (the Credit Facility),
which is secured by substantially all of the assets of the Company and, subject
to certain borrowing base limitations, provides for borrowings up to $10.0
million (See Item 7 Managements Discussion and Analysis of Financial
Condition and Results of Operations  Liquidity and Capital Resources for
current discussion of the Credit Facility). The foregoing transactions are
collectively referred to herein as the Transaction. Holding has no
significant activities other than its investment in the Company. In December
1997, the Company completed an exchange offer under which holders of the Old
Notes were offered the opportunity to exchange their Old Notes for the
Companys Series B 12 3/4% Senior Notes Due 2004 (the Senior Notes) that
were identical to the Old Notes, except that the Senior Notes were issued in a
transaction registered under the Securities Act of 1933, as amended, and are
not subject to certain restrictions on transfer contained in the Old Notes and
do not provide for any registration rights.

Prior to the consummation of the Merger, the Company redeemed its existing
indebtedness at a premium, paid certain Transaction-related expenses and
remitted any remaining unrestricted cash in excess of $2.0 million to its
stockholders. Also, prior to the consummation of the Merger all existing stock
options and common stock warrants of the Company were deemed exercised and
exchanged for their pro rata share of the Purchase Price.

As a result of the Transaction, the financial position and results of
operations of the Company subsequent to the Transaction (the Successor
Company) are not necessarily comparable to the financial position and results
of operations of the Company prior to the Transaction (the Predecessor
Company). Amounts reported for financial reporting purposes in fiscal 1998
represent the activity of the Successor Company beginning July 2, 1997.

The Market for Safety Glass Products

In the United States, automobile manufacturers purchase their safety glass
products from independent glass manufacturers and processors, except for
DaimlerChrysler Corporation, which produces a portion of its safety glass
requirements in-house. In Europe and Asia-Pacific, the majority of automobile
glass manufacturers purchase safety glass products from independent
manufacturers and processors. The Company believes that most of the major
glass manufacturers and processors are customers of the Company.

Automotive safety glass products are formed into either simple or complex
shapes. Simple glass, which is relatively flat and has little curvature, is
required to conform to exacting physical dimensions and fracture requirements.
Significant bending technology is not required to process this type of glass.
Unlike simple glass, complex glass has a high degree of curvature, or bulge.
The more curvature that a piece of glass has, the more likely it is to develop
optical distortions unless it is produced to precise specifications. For this
reason, it is important that the bending of complex glass be done in a manner
that produces consistent, repeatable results subject to minimal process
variation.

In the Automotive Market, the majority of side, back and roof windows
consist of a single piece of tempered glass. The majority of windshields are
of laminated construction, which requires the insertion of a plastic layer
between two pieces of annealed glass.

In the Architectural Market, the most common architectural glazing product
worldwide is flat tempered glass. Such glass is used for building windows,
patio doors, shower enclosures, display cases, furniture glass and appliance
glass.

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The Company believes that a future trend in the Automotive Market will be
that of increasing use of additional laminated glass for sidelites and
backlites. If this trend materializes, it will mean the use of more glass in
cars since laminated glass requires the use of two pieces of glass where one is
now used for each sidelite and backlite. If this trend develops, it may
increase the need for the Companys equipment.

The Safety Glass Production Process

The Companys systems process flat glass produced by glass manufacturers
into safety glass. The Company designs and assembles Original Equipment
systems that bend and temper flat glass for automotive, industrial and
architectural applications. The Company also designs and assembles systems
that anneal (rather than temper) glass for use in the production of laminated
glass for products such as automotive windshields. The basic fabrication
process involves placing a piece of glass horizontally on a conveyor of ceramic
rollers that transfers the glass through a furnace where it is heated to the
desired temperature. If the glass then requires bending, it generally will be
bent into either a simple or complex shape. The glass is then moved into the
quench where, depending upon the desired end product, it is either tempered or
annealed.

Heating Process.Traditionally, all Glasstech systems heated glass with
electric radiant heat (ERH). As an alternative, the Company introduced
gas-fired forced convection heat (FCH) which was developed in conjunction
with the Gas Research Institute (GRI). FCH is currently available for sale
in the Automotive and Architectural Markets and offers customers significant
advantages over ERH technology. For example, FCH can be more cost-effective
than ERH, because gas often is less expensive than electricity. In addition,
FCH can heat glass with special coatings faster and more uniformly than ERH,
resulting in lower production costs, faster outputs and higher quality glass.
In spite of FCHs significant advantages, not all product applications justify
the additional capital expense of an FCH furnace. Accordingly, the Company
expects to continue to offer systems with ERH.

Bending Process.Glasstech systems generally bend glass into simple and
complex shapes through one of three techniques. The gravity-sag technique
creates simple shapes by placing a piece of glass on a ring, heating it to its
softening point and allowing the shape to form via gravity. The deep bending
technique creates complex shapes by placing the glass on a ring mold, heating
it and pressing the heated glass against a full surface area mold. The
cylindrical bending technique creates simple shapes with a single curve by
placing the glass on rollers, heating it and using a set of flexible rollers to
curve the glass.

Tempering Process.Tempering is the process of strengthening heated glass
by cooling it rapidly. Tempered glass is up to five times stronger than
untempered glass and, if broken, fractures into small pieces, reducing the risk
of injury. Conversely, untempered glass will splinter and produce sharp edges.
The process the Company uses to temper safety glass is called quenching
which involves moving the heated glass into the quench where, through a
computer-controlled process, it is cooled with air directed on the surfaces of
the glass by an array of nozzles that diffuse air from a large blower or fan.
Glass tempered by a Glasstech system meets international fracture standards.

Annealing Process.The annealing process is a preparatory step in the
process of producing laminated glass, which is used to form most vehicle
windshields. The annealing process is similar to the tempering process, except
that instead of cooling the glass rapidly, it is cooled much more slowly.
Annealed glass breaks more easily upon impact and, unlike tempered glass,
splinters when broken. To complete the lamination process, glass processors
and fabricators layer two pieces of annealed glass, which can be produced by
one of the Companys Original Equipment systems, around a piece of plastic such
that the annealed glass adheres to the plastic when broken. A laminated glass
product breaks relatively easily into a spider web-like pattern without
permitting the object creating the impact to break through the glass, and any

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glass particles remain adhered to the plastic layer, thereby reducing the risk
of injury to the vehicles or buildings occupants.

Products

Original Equipment-Automotive.Systems designed and assembled for the
Automotive Market process flat glass by bending and tempering it to produce
automotive side, back and roof windows and by bending and annealing flat glass
in the production of laminated glass for windshields. The Company sells four
basic systems, which are primarily differentiated by their bending techniques,
to automotive glass manufacturers and processors.



| |  |  | Quick-Sag System.Introduced in the late 1970s, the Companys
quick-sag system (the Quick-Sag System) bends and tempers glass for
side, back and roof automotive windows. Using the gravity-sag
technique, the Quick-Sag System produces high optical-quality glass
in simple shapes. Although this is the Companys oldest system, the
Quick-Sag System continues to have applications in markets such as
China, South America and other developing markets. Such a system may
be retrofitted to provide higher output deep bending or cylindrical
bending capabilities if required by the Companys customers.                                                                                                                                                                                                                                                                                            
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Deep Bending System.The Companys deep bending system (the
Deep Bending System) was first introduced in 1985 in response to
customers demands for more complex safety glass shapes that could
not be produced by the gravity-sag technique used in the Quick-Sag
System. By using the deep-bending technique, such systems shape
glass with enhanced optical quality to precise tolerances with deep
and complex bends for automotive side and back windows. To form
different shapes of complex safety glass, the Deep Bending System
requires different sets of tooling, which the Company offers as part
of its aftermarket business.                                                                                                                                                                                                                                                                  
|
| |  |  | Cylindrical Bending System.Introduced in fiscal 1994 to
produce accurate, simple cylindrical bends using flexible rollers
(rather than tooling), the cylindrical bending system (the
Cylindrical Bending System) produces side and roof vehicle windows
that require a simple cylindrical bend. Prior to the introduction of
this system, it generally was not cost-effective for the Company to
offer a system that produced glass with a simple cylindrical bend
because the Company was unable to compete favorably against equipment
designed in-house by the Companys customers. With the introduction
of the Cylindrical Bending System, however, the Company now offers
customers the ability to make faster changeovers by eliminating the
tooling requirements typical of its other bending systems. This
feature reduces the customers production costs and maximizes their
system performance.
|
| |  |  | In-line System.Unlike the movement of glass in a Quick-Sag
System or a Deep Bending System, in which glass exits from the side
of the bending module, the glass in an in-line system (the In-line
System) travels in a straight line throughout the entire process.
An In-line System is capable of producing higher quality glass at
faster output rates and at lower costs per piece of glass than a
side-exit system. The first generation of the In-Line System was
introduced in 1985. A second generation In-Line System was placed
into operation in 1995 for the production of windshield glass. The
current generation In-Line System was placed into operation in 1999
and is capable of producing complex-shaped glass for both automotive
windshields and back windows.                                                                                                                        

Original Equipment-Architectural.Systems designed and assembled for the
Architectural Market process flat glass by tempering or by bending and
tempering it for applications including residential and commercial
construction, furniture, display cases, shower enclosures and appliances.



| |  |  | Flat Glass Tempering Systems.The Companys initial generation
of flat glass tempering for architectural applications was introduced
in 1971. Current systems can be equipped with either
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |   |  | ERH or FCH heating technology. A system with FCH is more expensive initially
than one with ERH, but offers significant energy cost savings and
output advantages, particularly for reflective or low-emissivity
glass.             
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Bending and Tempering Systems.Initially introduced in 1990 in
response to the demand for curved glass from the Architectural
Market, these systems are designed to shape glass of varying
thicknesses into custom-specified curves.

Original Equipment-Other.In 1992, the Company formed Stir-Melter, Inc.
(Stir-Melter), a wholly owned subsidiary that designs and assembles a
glass-melting system that vitrifies (i.e., changes into a glass-like substance
by fusion due to heat) hazardous waste for safe disposal. Stir-Melters
systems are rapid glass melters that employ aggressive mechanical stirring
action in combination with direct electrical heating. Stir Melters activities
have not been significant to the Companys operations.

Aftermarket Business.Aftermarket products and services complement the
Companys Original Equipment business. Sales in this area consist of the
following items: (i) retrofits (extensions or improvements of current systems);
(ii) tooling (complete sets of bending and tempering equipment designed to
produce specific complex-shaped glass products); (iii) ceramic rollers (used to
convey glass through the furnace); (iv) replacement parts for all the
individual system components; and (v) technical services.



| |  |  | Retrofits.Retrofits are purchased by customers who want to
increase production capacity, extend bending capability, increase
system efficiency or take advantage of the latest computer and
control system developments. Typical retrofits and improvements
include: (i) extensions of heater length to increase capacity; (ii)
conversions from automotive simple bending systems to complex bending
systems, such as from a Quick-Sag System to a Deep Bending System;
(iii) quench upgrades; (iv) conversion of a single-function system to
a dual-function system, such as adding a Cylindrical Bending System
to a Quick-Sag System; and (v) computer or control upgrades.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Tooling.The Companys customers in the Automotive Market
operate complex bending and tempering systems that require
part-dedicated tooling equipment to produce individual vehicle window
parts that meet precise design and shape specifications. The
Companys tooling products generally include: (i) bending molds; (ii)
bending rings (to press the glass to the mold); (iii) lift jets (to
raise the glass from the conveyor to the mold); (iv) quench rings (to
transport the glass from the mold to the quench); and (v) quenching
heads (which incorporate nozzles and direct air against the glass
surface).                                                         
|
| |  |  | Ceramic Rollers.The Companys roller hearth technology was
introduced to eliminate the marks left on glass by older vertical
systems that tempered flat glass by hanging it from tongs. The
ceramic rollers are used to convey the glass horizontally into and
through the furnace and are manufactured to strict specifications in
order to reduce distortion or markings on the glass surface.                                                                                                                                                                                                                                                                               
|
| |  |  | Replacement Parts.Both proprietary and nonproprietary parts
are offered to replace components used in Glasstech systems.
Customers are encouraged to purchase an initial consignment of
replacement parts when purchasing a new system and to maintain
critical parts in inventory throughout the life of their system.                                                                                                                                                                                                                                                                                                                                                        
|
| |  |  | Technical Services.The Companys technical services
department provides it with an important competitive advantage. The
customer service staff provides aftermarket technical support and
gathers feedback from customers regarding specific product
improvement recommendations for Glasstech systems.                                                                                                                                                                                                                                                                                                                                                                        

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Product Development

The Companys Research and Development (R&D) effort is a significant
factor in maintaining its market and technological leadership. The objective
of the Companys R&D effort is to develop new products and to improve existing
products to meet present and future market demands. The Company works closely
with its customers to identify their current and future needs, enabling it to
proactively design creative solutions to meet future industry requirements.
Development proposals are submitted to the Companys Executive Technical
Committee to be analyzed and assessed. Proposals are authorized only when the
committee is satisfied that the proposal meets customer or market needs and the
proposed program can be conducted cost-effectively with a reasonable
probability of achieving the desired level of profitability.

The Company has spent approximately $3.4 million, $3.6 million and $4.2
million (exclusive of capital expenditures relating to demonstration glass
tempering furnaces) in fiscal years 1999, 2000 and 2001, respectively, on the
development of new systems or on the improvement of existing systems.

Marketing and Sales

The Companys sales efforts are conducted by personnel operating in the
Americas, Europe (including Africa and the Middle East) and Asia-Pacific. The
Companys international sales efforts are supplemented by nonexclusive sales
agents retained on a commission basis. Commissions are paid only when sales
are confirmed and payments have been received from the customer. Glasstech
Ltd., a wholly owned subsidiary of the Company, supports the Companys sales
efforts in Europe.

The Company has installed approximately 400 systems in over 45 countries
on six continents. The Companys customers include virtually all major glass
manufacturers and processors, such as DaimlerChrysler Corporation, Guardian
Industries Corp., PPG Industries, Inc. and Visteon Corporation (formerly a
subsidiary of Ford Motor Company) in the United States; Compagnie de
Saint-Gobain, Pilkington plc and Rioglass S.A. in Europe; Asahi Glass Company,
Central Glass Company and Nippon Sheet Glass Company in Japan; Hankuk Glass
Industry Company and Kumgang Korea Chemical Co., Limited in Korea; Fuyao Glass
Group Limited in China and Shatterprufe (Pty) Limited in South Africa.

As part of its marketing process, the Company maintains ongoing customer
relationships that enable management to understand its customers needs for
existing and new product capabilities. Due to the size of a Glasstech system,
from both a physical and economic perspective, a significant commitment with
respect to planning is required on the part of the Companys customers before
they order new equipment and subsequently place it into operation. As part of
this planning process, the customer involves the Company in discussions that
can last up to one or two years before an order is actually placed. At any
point in time, the Company and its customers are involved in numerous
discussions that occur between their respective management teams, technical
staffs and sales/purchasing staffs.

The customer service staff provides aftermarket technical support and
gathers information from customers regarding specific product improvement
recommendations for Glasstech systems. Customer service representatives are
also available to the Companys customers as consultants on a per diem basis.
The Companys technical representatives train the customers workforce to
properly operate its Glasstech system and consult on specific technical issues
or production goals. The Companys customer service department has a program
that provides customers with 24-hour troubleshooting services via telephone.
In-house computers enable the Company to simulate system problems that a
customer might experience and provide the customer with prompt solutions.

Installation of a Glasstech system typically requires 12 months from the
time the customer executes a contract to final acceptance of the system.
Completion of aftermarket sales varies with each product and can take anywhere
from 24 hours to 10 months to complete.

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A substantial portion of the Companys revenue historically has been
comprised of sales to a limited number of customers. For example, in fiscal
years 1999, 2000 and 2001, Asahi Glass Company, Compagnie de Saint-Gobain,
Guardian Industries Corp., Rioglass S.A. and Visteon Corporation collectively
accounted for 47.6%, 39.1% and 63.8% of total fiscal year revenue,
respectively. In addition (i) in fiscal 1999, Asahi Glass Company and
Compagnie de Saint Gobain and Visteon Corporation each accounted for more than
10.0% of revenue, (ii) in fiscal 2000 Asahi Glass Company, Guardian Industries
Corp. and Rioglass S.A. each accounted for more than 10.0% of revenue and (iii)
in fiscal 2001 Asahi Glass Company and Guardian Industries Corp each accounted
for more than 10.0% of revenue.

International

The Companys revenue by geographic region for the fiscal years ended June
30 is as follows (dollars in thousands):

|                                |  |      |        |      |  |      |        |  |  |   |        | 
|------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ |  |  | - | ------ | 
|                                |  | 1999 |        | 2000 |  | 2001
|                                |  |      |        |      |  |     
|Asia-Pacific                    |  | $    | 14,189 |      |  | $    | 5,555  |  |  | $ | 21,418 | 
|                               
|                               
|                               
|                               
|Europe                          |  |      | 10,338 |      |  |      | 8,053  |  |  |   | 8,388  | 
|                               
|                               
|                               
|                               
|Latin America                   |  |      | 1,638  |      |  |      | 4,072  |  |  |   | 2,724  | 
|                               
|                               
|                               
|                               
|Other                           |  |      | 385    |      |  |      | 333    |  |  |   | 1,673  | 
|                                |  |      |        |      |  |      |        |  |  |   |        | 
|                               
|                               
|                               
|                               
|Total Non-United States Revenue |  |      | 26,550 |      |  |      | 18,013 |  |  |   | 34,203 | 
|                               
|                               
|                               
|                               
|United States                   |  |      | 23,995 |      |  |      | 29,009 |  |  |   | 15,792 | 
|                                |  |      |        |      |  |      |        |  |  |   |        | 
|                               
|                               
|                               
|                               
|Total Net Revenue               |  | $    | 50,545 |      |  | $    | 47,022 |  |  | $ | 49,995 | 
|                                |  |      |        |      |  |      |        |  |  |   |        | 

The Company generates a substantial portion of its revenue outside of the
United States and during fiscal 1999, 2000 and 2001, approximately 28.1%, 11.8%
and 42.8% of the Companys net revenue was derived from sales of products to
customers located in the Asia-Pacific region (Australia, China, Indonesia,
Japan, Malaysia, New Zealand, Pakistan, the Philippines, Singapore, South
Korea, Taiwan, and Thailand).

In fiscal 2001, the Company experienced an increase in quoting activity
and contract signings for the Asia-Pacific region and the Company believes that
given world demographics and long term economic trends, the Asia-Pacific region
will continue to represent a significant market for the Companys products.

Competition

The principal competitive factors in the Automotive Market are price and
system capabilities or specifications. The Companys primary competition in
the Automotive Market comes from the engineering departments of certain of its
customers, such as Pilkington plc and Compagnie de Saint-Gobain, which design
and build glass processing systems in-house. The Company primarily competes
against its customers by developing systems with greater capabilities than
those currently produced in-house. Management believes that the Company has a
significant share of the market for technologically advanced systems used to
bend and temper automotive glass into complex shapes and is the only
significant independent supplier.

In the Architectural Market, there is significant competition among
manufacturers of flat glass tempering systems, but less significant competition
for bending and tempering systems. The Companys principal competitor in the
Architectural Market is Tamglass Oy of Finland, which competes against the
Company mainly in the market for flat glass tempering systems.

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Patents and Proprietary Rights

The Company protects its technology by filing patents and patent
applications in the U.S. and in major markets worldwide. It is the Companys
policy to aggressively pursue patent coverage for significant product
developments. The Company owns or holds exclusive rights in 130 patents in the
U.S. and more than 350 patents outside the United States. In addition, the
Company has more than 200 patent application filings worldwide. Typically,
within each Glasstech system, several patents cover various controls, bending
processes or other aspects of the equipment. While management does not believe
that the loss of any one patent would have a material adverse effect on the
Companys business, it believes that the Companys patent position is material
in the aggregate. In the ordinary course of business, the Company is required
to defend its patented technology from possible or actual infringement that may
occur.

The Companys patents cover a range of products and product features,
including: (i) the Quick-Sag System; (ii) the Companys complex in-furnace
bending process (used in both Deep Bending and In-line Systems); (iii) the
Cylindrical Bending System; (iv) quenching systems; (v) process controls for
systems; and (vi) other aspects of its technologies and equipment. As patents
on some of the Companys older technologies, such as the Quick-Sag System,
begin to expire, the Company continually applies for, and is generally issued,
patents relating to its newer, leading edge technologies.

The Company received funding from GRI for the development of the FCH
technology. Under an agreement with GRI, GRI retained rights to the resulting
U.S. patents. Under the GRI agreement, the Company received two exclusive
patent licenses in the U.S. One license permits the Company to use FCH
technology in systems that produce flat tempered glass (the Flat License) and
the other license permits the Company to use FCH technology in systems that
produce bent glass (the Bent License). The exclusivity with respect to the
Flat License and Bent License will continue for the duration of the patents,
subject to minimum calendar year royalty obligations as follows: 2001-$150,000,
2002-$220,000, 2003-$300,000 and 2004-$400,000. Management expects to meet the
minimum calendar year royalty for 2001 and believes the minimum calendar year
royalties for the remainder of the years is obtainable. Under the terms of the
GRI agreement, the Company holds the exclusive rights to the FCH patents
outside of the U.S.

Substantially all Company employees execute technology agreements that
have a confidentiality provision and assign patent rights to the Company.
Members of senior management have entered into employment agreements that
contain noncompete provisions.

Materials and Supply Arrangements

In an effort to consolidate purchasing and reduce overall operating costs,
the Company is maintaining partnership agreements with several major
suppliers. However, the Company is not obligated to volume requirements with
any supplier and will continue to seek backup suppliers for use if any of its
primary suppliers is unable to fill Company orders. In fiscal 2001, the
Company did not purchase more than 10% of its materials and supplies from any
one supplier.

Environmental Matters

The Companys operations and properties are subject to a wide variety of
increasingly complex and stringent federal, state and local laws and
regulations, including those governing the use, storage, handling, generation,
treatment, emission, release, discharge and disposal of certain materials,
substances, and wastes, the remediation of contaminated soil and groundwater,
and the health and safety of employees (collectively, the Environmental
Laws). As such, the nature of the Companys operations exposes it to the risk
of claims with respect to such matters and there can be no assurance that
material costs or liabilities will not be incurred in connection with such
claims. Management believes its operations and properties are in compliance in
all

10



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##### Table of Contents



material respects with Environmental Laws. Based upon its experience to
date, management believes that the future cost of compliance with and liability
under existing Environmental Laws will not have a material adverse effect on
the Companys business, financial condition or operating results. However,
future events, such as the discovery of new information, changes in existing
Environmental Laws or their interpretations and more vigorous enforcement
policies of regulatory agencies, may give rise to additional expenditures or
liabilities that could be material.

Employees

As of June 30, 2001, the Company employed 184 people. The Company has no
union employees, and no attempt has ever been made to organize its workforce.
Management believes that its relations with its employees are good.

Backlog

The Company had a backlog (on a percentage of completion basis) of
approximately $13.5 million at June 30, 2001 as compared to approximately $17.4
million at June 30, 2000. The Company expects to complete a substantial
majority of this backlog within the next 12 months.




ITEM 2. PROPERTIES.

The Companys facilities are located in Perrysburg, Ohio. The Company
leases a 96,800 square foot facility that houses its offices and plant, as well
as an adjacent 43,200 square foot facility for production and storage. The
96,800 square foot facility is subject to a five-year lease that will expire on
December 31, 2004, after which the Company has an option to extend the lease
for one additional five-year period. The 43,200 square foot building is
subject to a three-year lease that will expire on January 31, 2003. The
Company also owns an adjacent 108,000 square foot building which houses R&D,
tooling design, tooling production and demonstration glass tempering furnaces.
The Company believes that its current facilities are adequate for its
foreseeable needs.




ITEM 3. LEGAL PROCEEDINGS.

The Company is subject to legal proceedings and claims that arise from
time to time in the ordinary course of its business. Management believes that
the amount of any ultimate liability with respect to these actions will not
have a material adverse effect on the financial condition or results of
operations of the Company.




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



| |                
| | ---------------
| | Not applicable.

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##### Table of Contents






PART II




ITEM 5. MARKET FOR REGISTRANTS COMMON STOCK AND RELATED MATTERS.

There is no established public trading market for the common stock of the
Company. The sole shareholder of the Company is Holding, a holding company
formed for the purpose of acquiring all of the outstanding stock of the
Company. Holding has no significant activities other than its investment in
the Company.

The Company has not declared or paid cash dividends to Holding. The
Company anticipates that all of its earnings in the near future will be
retained for the repayment of interest and debt and, therefore, does not
anticipate paying dividends on its common stock in the foreseeable future.
Declaration of dividends on the common stock will depend upon levels of
indebtedness, future earnings, the operating and financial condition of the
Company, its capital requirements and general business conditions, among other
things. In addition, the agreements governing the Companys indebtedness
contain provisions that restrict the ability of the Company to pay dividends on
its common stock.

12



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##### Table of Contents






ITEM 6. SELECTED FINANCIAL DATA.

The following table sets forth selected historical consolidated financial
and other data of the Company, which have been derived primarily from the
Companys audited consolidated financial statements. Amounts reported for
financial reporting purposes in fiscal 1998 represent the period from July 2,
1997 to June 30, 1998. The information presented below should be read in
conjunction with Item 7- Managements Discussion and Analysis of Financial
Condition and Results of Operations and the Companys consolidated financial
statements and notes thereto included elsewhere in this Form 10-K. All dollar
amounts in this section are in thousands.

|                                             |                   |                                   |        |                      |        |                   |         |        |        |      |        |        |        |   |        |        |        |   |         |         |         |  
|-------------------------------------------- | ----------------- | --------------------------------- | ------ | -------------------- | ------ | ----------------- | ------- | ------ | ------ | ---- | ------ | ------ | ------ | - | ------ | ------ | ------ | - | ------- | ------- | ------- | -
|                                             |                   |                                   |        | Predecessor          |        |                   |         |        |        |      |        |        |        |   |        |        |        |   |         |        
|                                             |                   |                                   |        | Company              |        | Successor Company
|                                             |                   |                                   |        |                      |        |                  
|                                             |                   |                                   |        | Years Ended June 30,
|                                             |                   |                                   |        |                     
|                                             |                   |                                   |        | 1997                 |        | 1998              |         | 1999   |        | 2000 |        | 2001  
|                                             |                   |                                   |        |                      |        |                   |         |        |        |      |        |       
|Statement of Operations Data:                |                   |                                   |        |                      |        |                   |         |        |        |      |        |        |        |   |        |        |        |   |         |        
|                                            
|                                            
|                                            
|                                            
|Net revenue                                  |                   | $                                 | 76,433 |                      |        | $                 | 69,588  |        |        | $    | 50,545 |        |        | $ | 47,022 |        |        | $ | 49,995  |        
|                                            
|                                            
|                                            
|                                            
|Cost of goods sold                           |                   |                                   | 45,603 |                      |        |                   | 37,760  |        |        |      | 31,768 |        |        |   | 29,411 |        |        |   | 34,654  |        
|                                             |                   |                                   |        |                      |        |                   |         |        |        |      |        |        |        |   |        |        |        |   |         |        
|                                            
|                                            
|                                            
|                                            
|                                             | Gross profit      |                                   |        | 30,830               |        |                   |         | 31,828 |        |      |        | 18,777 |        |   |        | 17,611 |        |   |         | 15,341  |        
|                                            
|                                            
|                                            
|                                            
|Selling, general and administrative          |                   |                                   | 12,866 |                      |        |                   | 11,035  |        |        |      | 8,632  |        |        |   | 7,626  |        |        |   | 7,962   |        
|                                            
|                                            
|                                            
|                                            
|Research and development                     |                   |                                   | 4,594  |                      |        |                   | 4,247   |        |        |      | 3,368  |        |        |   | 3,633  |        |        |   | 4,194   |        
|                                            
|                                            
|                                            
|                                            
|Amortization expense                         |                   |                                   | 2,306  |                      |        |                   | 4,356   |        |        |      | 4,243  |        |        |   | 4,243  |        |        |   | 4,243   |        
|                                             |                   |                                   |        |                      |        |                   |         |        |        |      |        |        |        |   |        |        |        |   |         |        
|                                            
|                                            
|                                            
|                                            
|                                             |                   | Operating profit (loss)           |        |                      | 11,064 |                   |         |        | 12,190 |      |        |        | 2,534  |   |        |        | 2,109  |   |         |         | (1,058  | )
|                                            
|                                            
|                                            
|                                            
|Interest expense                             |                   |                                   | (4,200 | )                    |        |                   | (9,643  | )      |        |      | (9,668 | )      |        |   | (9,668 | )      |        |   | (9,668  | )      
|                                            
|                                            
|                                            
|                                            
|Other income  net                           |                   |                                   | 2,263  |                      |        |                   | 525     |        |        |      | 352    |        |        |   | 261    |        |        |   | 148     |        
|                                             |                   |                                   |        |                      |        |                   |         |        |        |      |        |        |        |   |        |        |        |   |         |        
|                                            
|                                            
|                                            
|                                            
|                                             |                   | Income (loss) before income taxes |        |                      | 9,127  |                   |         |        | 3,072  |      |        |        | (6,782 | ) |        |        | (7,298 | ) |         |         | (10,578 | )
|                                            
|                                            
|                                            
|                                            
|Income taxes not payable in cash (a)         |                   |                                   | (2,551 | )                    |        |                   | (2,249  | )      |        |      |       |        |        |   |       |        |        |   |        |        
|                                            
|                                            
|                                            
|                                            
|Federal income taxes, current                |                   |                                   | (78    | )                    |        |                   |        |        |        |      |       |        |        |   |       |        |        |   |        |        
|                                             |                   |                                   |        |                      |        |                   |         |        |        |      |        |        |        |   |        |        |        |   |         |        
|                                            
|                                            
|                                            
|                                            
|                                             | Net income (loss) |                                   | $      | 6,498                |        |                   | $       | 823    |        |      | $      | (6,782 | )      |   | $      | (7,298 | )      |   | $       | (10,578 | )      
|                                             |                   |                                   |        |                      |        |                   |         |        |        |      |        |        |        |   |        |        |        |   |         |        
|                                            
|                                            
|                                            
|                                            
|Other Data:                                  |                   |                                   |        |                      |        |                   |         |        |        |      |        |        |        |   |        |        |        |   |         |        
|                                            
|                                            
|                                            
|                                            
|EBITDA (b)                                   |                   | $                                 | 14,829 |                      |        | $                 | 18,002  |        |        | $    | 8,242  |        |        | $ | 7,705  |        |        | $ | 4,280   |        
|                                            
|                                            
|                                            
|                                            
|Depreciation and amortization (c)            |                   |                                   | 3,765  |                      |        |                   | 5,812   |        |        |      | 5,708  |        |        |   | 5,596  |        |        |   | 5,338   |        
|                                            
|                                            
|                                            
|                                            
|Capital Expenditures                         |                   |                                   | 990    |                      |        |                   | 349     |        |        |      | 47     |        |        |   | 223    |        |        |   | 107     |        
|Backlog                                      |                   |                                   | 30,307 |                      |        |                   | 34,848  |        |        |      | 12,141 |        |        |   | 17,394 |        |        |   | 13,455  |        
|                                            
|                                            
|                                            
|                                            
|Cash Flow Provided by (Used in):             |                   |                                   |        |                      |        |                   |         |        |        |      |        |        |        |   |        |        |        |   |         |        
|                                            
|                                            
|                                            
|                                            
|Operating activities                         |                   | $                                 | 8,973  |                      |        | $                 | 7,921   |        |        | $    | (4,403 | )      |        | $ | (2,790 | )      |        | $ | (2,367  | )      
|                                            
|                                            
|                                            
|                                            
|Investing activities                         |                   |                                   | (978   | )                    |        |                   | (75,521 | )      |        |      | (57    | )      |        |   | (203   | )      |        |   | (104    | )      
|                                            
|                                            
|                                            
|                                            
|Financing activities                         |                   |                                   | (5     | )                    |        |                   | 80,721  |        |        |      |       |        |        |   |       |        |        |   | 3,000   |        
|                                            
|                                            
|                                            
|                                            
|Balance Sheet Data (at end of period):       |                   |                                   |        |                      |        |                   |         |        |        |      |        |        |        |   |        |        |        |   |         |        
|                                            
|                                            
|                                            
|                                            
|Working capital                              |                   | $                                 | 39,519 |                      |        | $                 | 6,538   |        |        | $    | 4,896  |        |        | $ | 3,768  |        |        | $ | (796    | )      
|                                            
|                                            
|                                            
|                                            
|Total assets                                 |                   |                                   | 99,364 |                      |        |                   | 102,919 |        |        |      | 88,662 |        |        |   | 81,111 |        |        |   | 77,689  |        
|                                            
|                                            
|                                            
|                                            
|Total long term debt                         |                   |                                   | 42,000 |                      |        |                   | 69,357  |        |        |      | 69,464 |        |        |   | 69,572 |        |        |   | 69,679  |        
|                                            
|                                            
|                                            
|                                            
|Shareholders equity (capital deficiency)(d) |                   |                                   | 29,232 |                      |        |                   | 12,545  |        |        |      | 5,763  |        |        |   | (1,535 | )      |        |   | (12,113 | )      

13



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---

|(a) |  | Income taxes not payable in cash represent the tax effect of certain
acquired temporary differences existing prior to the Transactions and are
recorded as a reduction to goodwill. Such amounts existing prior to the
Reorganization were recorded as a reduction to reorganization value in
excess of amounts allocable to identifiable assets as required by SOP
90-7.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|   
|(b) |  | EBITDA for any period means operating profit plus depreciation and
amortization. Management understands that EBITDA is an indicator
customarily used by investors to gauge a companys ability to service its
interest and principal obligations. EBITDA should not be considered in
isolation from, as a substitute for, or as being more meaningful than net
income, cash flows from operating, investing and financing activities, or
other income or cash flow statement data prepared in accordance with
generally accepted accounting principles, and should not be construed as
an indication of the Companys operating performance or as a measure of
liquidity. EBITDA, as presented herein, may be calculated differently by
other companies and, as such, EBITDA amounts presented herein may not be
comparable to other similarly titled measures of other companies.
|   
|   
|   
|   
|   
|(c) |  | Depreciation and amortization does not include the amortization of
deferred financing costs, which is recorded with interest expense.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|   
|   
|   
|   
|(d) |  | The Company has not declared or paid any dividends to its shareholders
since the Transaction.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

14



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

General Overview

The Company designs and assembles glass bending and tempering (i.e.,
strengthening) systems which are used by glass manufacturers and processors in
the conversion of flat glass into safety glass. Systems are sold worldwide,
primarily to automotive glass manufacturers and processors and, to a lesser
extent, to architectural glass manufacturers and processors. Revenues
generated by the sale of new systems are referred to below as Original
Equipment.

The Company has an installed base of approximately 400 systems in over 45
countries on six continents. As a result of its installed base and the
relatively long useful life of a system, the Company also engages in sales of
aftermarket products and services (retrofit of systems with upgrades, tooling
used to shape glass parts, replacement parts and technical services). Revenues
generated by these types of products are referred to below as Aftermarket.

In this MD&A section all dollar amounts are in thousands, unless otherwise
indicated.

Revenues

For financial reporting purposes, the Company includes in income the
ratable portion of profits on uncompleted contracts determined in accordance
with the stage of completion measured by the percentage of costs incurred to
estimated total costs of each contract (generally, Original Equipment, system
retrofits and tooling). Unbilled amounts included in uncompleted contract
receivables represent revenues recognized in excess of amounts billed.
Billings in excess of costs and estimated earnings on uncompleted contracts
represent amounts billed in excess of revenues recognized. Revenue from sales
other than contracts (spare parts and engineering services) is recognized when
the products are shipped.

Selling Expense

The Company maintains an in-house sales staff and uses the services of
non-exclusive, commissioned agents around the world for the sale of Original
Equipment and aftermarket products and services. In addition, the Company
maintains a sales and engineering support office in the United Kingdom. The
substantial majority of the Companys Original Equipment is sold directly to
the largest glass manufacturers and processors in the world or their
affiliates.

Research and Development

The Company believes it is the technological leader in the design and
assembly of glass bending systems. The Company works with customers to identify
product needs and market requirements. Periodically, the Company enters into
joint development agreements with customers. From time to time, the Company
allocates a portion of its R&D resources to complete the transition from new
product development to new product introduction. When the Company does this,
these expenses are charged directly to the contracts relating to the
introduction of new products. The Company considers R&D expenses and new
product introductions a very integral part of its future success.

15



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##### Table of Contents



Results of Operations

The following table presents the amounts and the percentage of total net
revenue for certain revenue and expense items for the periods indicated:

|                        |                    |                   |        |                     |        |      |      |      |       |   |        |        |        |  |      |      |       |   |        |        |        |   |      |      |       |  
|----------------------- | ------------------ | ----------------- | ------ | ------------------- | ------ | ---- | ---- | ---- | ----- | - | ------ | ------ | ------ |  | ---- | ---- | ----- | - | ------ | ------ | ------ | - | ---- | ---- | ----- | -
|                        |                    |                   |        | Years Ended June 30
|                        |                    |                   |        |                    
|                        |                    |                   |        | 1999                |        | 2000 |      | 2001
|                        |                    |                   |        |                     |        |      |      |     
|Net revenue(a)          |                    |                   |        |                     |        |      |      |      |       |   |        |        |        |  |      |      |       |   |        |        |        |   |      |     
|                       
|                       
|                       
|                       
|                        | Original Equipment |                   | $      | 28,885              |        |      |      | 57.1 | %     |   | $      | 27,199 |        |  |      | 57.8 | %     |   | $      | 32,180 |        |   |      | 64.4 | %    
|                       
|                       
|                       
|                       
|                        | Aftermarket        |                   |        | 21,660              |        |      |      | 42.9 |       |   |        | 19,823 |        |  |      | 42.2 |       |   |        | 17,815 |        |   |      | 35.6 |      
|                        |                    |                   |        |                     |        |      |      |      |       |   |        |        |        |  |      |      |       |   |        |        |        |   |      |     
|                       
|                       
|                       
|                       
|                        |                    | Total net revenue |        |                     | 50,545 |      |      |      | 100.0 |   |        |        | 47,022 |  |      |      | 100.0 |   |        |        | 49,995 |   |      |      | 100.0 |  
|                       
|                       
|                       
|                       
|Cost of goods sold(a)   |                    |                   | 31,768 |                     |        |      | 62.9 |      |       |   | 29,411 |        |        |  | 62.6 |      |       |   | 34,654 |        |        |   | 69.3 |     
|                        |                    |                   |        |                     |        |      |      |      |       |   |        |        |        |  |      |      |       |   |        |        |        |   |      |     
|                       
|                       
|                       
|                       
|Gross profit            |                    |                   | 18,777 |                     |        |      | 37.1 |      |       |   | 17,611 |        |        |  | 37.4 |      |       |   | 15,341 |        |        |   | 30.7 |     
|                       
|                       
|                       
|                       
|SG&A expense            |                    |                   | 8,632  |                     |        |      | 17.1 |      |       |   | 7,626  |        |        |  | 16.2 |      |       |   | 7,962  |        |        |   | 15.9 |     
|                       
|                       
|                       
|                       
|R&D expense             |                    |                   | 3,368  |                     |        |      | 6.6  |      |       |   | 3,633  |        |        |  | 7.7  |      |       |   | 4,194  |        |        |   | 8.4  |     
|                       
|                       
|                       
|                       
|Amortization expense(b) |                    |                   | 4,243  |                     |        |      | 8.4  |      |       |   | 4,243  |        |        |  | 9.0  |      |       |   | 4,243  |        |        |   | 8.5  |     
|                        |                    |                   |        |                     |        |      |      |      |       |   |        |        |        |  |      |      |       |   |        |        |        |   |      |     
|                       
|                       
|                       
|                       
|                        |                    | Operating profit  |        |                     | 2,534  |      |      |      | 5.0   |   |        |        | 2,109  |  |      |      | 4.5   |   |        |        | (1,058 | ) |      |      | (2.1  | )
|                       
|                       
|                       
|                       
|Amortization expense(b) |                    |                   | 4,243  |                     |        |      | 8.4  |      |       |   | 4,243  |        |        |  | 9.0  |      |       |   | 4,243  |        |        |   | 8.5  |     
|                       
|                       
|                       
|                       
|Depreciation expense    |                    |                   | 1,465  |                     |        |      | 2.9  |      |       |   | 1,353  |        |        |  | 2.9  |      |       |   | 1,095  |        |        |   | 2.2  |     
|                        |                    |                   |        |                     |        |      |      |      |       |   |        |        |        |  |      |      |       |   |        |        |        |   |      |     
|                       
|                       
|                       
|                       
|                        |                    | EBITDA            |        | $                   | 8,242  |      |      |      | 16.3  | % |        | $      | 7,705  |  |      |      | 16.4  | % |        | $      | 4,280  |   |      |      | 8.6   | %
|                        |                    |                   |        |                     |        |      |      |      |       |   |        |        |        |  |      |      |       |   |        |        |        |   |      |     



---

|(a) |  | Contract revenue and cost of goods sold are recognized on a percentage
completion basis measured by the percentage of costs incurred to the
estimated total costs of each contract.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(b) |  | Amortization expense excludes the amortization of deferred financing costs
that is included with interest expense.                                                                 

Fiscal Year 2001 Compared with
Fiscal Year 2000

Net revenue for fiscal 2001 increased $2,973, or 6.3%, to $49,995 from
$47,022 for fiscal 2000. Original Equipment revenue increased $4,981, or 18.3%,
to $32,180 for fiscal 2001 compared to $27,199 for fiscal 2000. This increase
in Original Equipment revenue was due to an increase in new contract signings
in fiscal 2001 and the backlog that existed at the beginning of fiscal 2001.
Aftermarket revenue decreased $2,008, or 10.1%, to $17,815 for fiscal 2001 from
$19,823 for fiscal 2000. The decrease in aftermarket revenue was primarily the
result of declines in tooling and replacement parts revenue.

A significant portion of the Companys revenue is generated from customers
outside of the United States. For fiscal 2001, Original Equipment revenue from
foreign customers was $23,215 (72.1% of total Original Equipment revenue) as
compared to $8,683 (31.9% of total Original Equipment revenue) for fiscal 2000.
The percentage of aftermarket revenue from foreign customers increased to
61.8% of total aftermarket revenue for fiscal 2001 compared to 47.1% for fiscal
2000.

Gross profit decreased $2,270 to $15,341, at a gross margin percentage of
30.7% for fiscal 2001 compared to $17,611, at a gross margin of 37.4% for
fiscal 2000. The decline in the gross profit and gross margin is the result of
the current mix of contracts and cost overruns on certain new product line
contracts that the Company does not expect to incur in the future.

Selling, general and administrative expenses increased $336, or 4.4%, to
$7,962 for fiscal 2001 from $7,626 for fiscal 2000. The increase largely
resulted from an increase in marketing expense, primarily related to a
bi-annual trade show, and an increase in professional fees.

16



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##### Table of Contents



Research and development expenses increased $561, or 15.4%, to $4,194 for
fiscal 2001 from $3,633 for fiscal 2000, due to an increase in project costs
partially offset by decreases in utilities, depreciation and other costs.

Operating profit decreased $3,167, to ($1,058) for fiscal 2001 from $2,109
for fiscal 2000. Operating profit (loss) as a percentage of revenue was (2.1%)
for fiscal 2001 as compared to 4.5% for fiscal 2000. The decrease in operating
profit was the result of the decline in gross profit and increases in selling,
general and administrative expenses and research and development expenses.

No income tax expense or benefit has been provided for fiscal 2001 and
2000 due to the recorded losses and the uncertainty related to the future
realization of such amounts.

Net loss was $10,578 for fiscal 2001 compared to $7,298 for fiscal 2000.
The net losses were the result of the decline in operating profits.

EBITDA, which is defined as operating profit plus depreciation and
amortization, decreased $3,425, or 44.5%, to $4,280 for fiscal 2001 from $7,705
for fiscal 2000.

Fiscal Year 2000 Compared with
Fiscal Year 1999

Net revenue for fiscal 2000 decreased $3,523, or 7.0%, to $47,022 from
$50,545 for fiscal 1999. Original Equipment revenue decreased $1,686, or 5.8%,
to $27,199 for fiscal 2000 compared to $28,885 for fiscal 1999. This decrease
in Original Equipment revenue was due in part to lower new contract signings in
fiscal 1999, which resulted in a low beginning backlog for fiscal 2000. In
addition, the timing and/or deferral of contract signings in the Asia-Pacific
and other foreign regions negatively impacted the Companys ability to generate
revenue in fiscal 2000. Aftermarket revenue decreased $1,837, or 8.5%, to
$19,823 for fiscal 2000 from $21,660 for fiscal 1999. The decrease in
aftermarket revenue was primarily the result of a decline in retrofit revenue.
Retrofit revenues fluctuate based on customer demands and are influenced by a
variety of factors, including economic conditions and the customers retrofit
schedules.

For fiscal 2000, Original Equipment revenue from foreign customers was
$8,683 (31.9% of total Original Equipment revenue) as compared to $13,698
(47.4% of total Original Equipment revenue) for fiscal 1999. The percentage of
aftermarket revenue from foreign customers decreased to 47.1% of total
aftermarket revenue for fiscal 2000 compared to 59.3% for fiscal 1999.

Gross profit decreased $1,166 to $17,611, at a gross margin percentage of
37.4% for fiscal 2000 compared to $18,777, at a gross margin of 37.1% for
fiscal 1999. The decline in the gross profit is the result of the decrease in
revenues. The Companys continued efforts to reduce and minimize its
production costs, including factory overhead, has mitigated the effects on the
gross margin.

Selling, general and administrative expenses decreased $1,006, or 11.7%,
to $7,626 for fiscal 2000 from $8,632 for fiscal 1999. This decrease was
primarily the result of no incentive compensation costs in fiscal 2000 due to
decreased earnings and other cost containment measures implemented.

Research and development expenses increased $265, or 7.9%, to $3,633 for
fiscal 2000 from $3,368 for fiscal 1999. In fiscal 1999, an increased level of
development resources was dedicated to the completion of certain original
equipment contracts.

Operating profit decreased $425, or 16.8%, to $2,109 for fiscal 2000 from
$2,534 for fiscal 1999. Operating profit, as a percentage of revenue, was 4.5%
for fiscal 2000 as compared to 4.5% for fiscal 1999. The decrease in operating
profit was the result of the decline in gross profit partially offset by the
decrease in selling, general and administrative expenses.

17



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##### Table of Contents



No income tax expense or benefit has been provided for fiscal 2000 and
1999 due to the recorded losses and the uncertainty related to the future
realization of such amounts.

Net loss was $7,298 for fiscal 2000 compared to $6,782 for fiscal 1999.
The net losses were the result of the decline in operating profit.

EBITDA, which is defined as operating profit plus depreciation and
amortization, decreased $537, or 6.5%, to $7,705 for fiscal 2000 from $8,242
for fiscal 1999.

Liquidity and Capital Resources

The Companys liquidity and capital resources were significantly impacted
by the Transaction and recent operating results. The Companys primary sources
of liquidity are funds provided by operations and amounts available under the
Credit Facility as amended. The Senior Notes do not require any principal
payments prior to maturity. The Credit Facility is available to fund working
capital requirements as needed, and to secure standby letters of credit. The
Credit Facility provides for borrowings up to $13,000 (including standby
letters of credit), subject to a borrowing base of certain qualifying assets up
to a maximum of $7,000. Any borrowings or standby letters of credit above
$7,000 must be cash collateralized. At June 30, 2001, the borrowing base
approximated $6,041 and the Company had outstanding borrowings of $3,000 and
standby letters of credit of $1,881. The Credit Facility is secured by
substantially all of the assets of the Company. The Company believes it is in
material compliance with all covenants, as amended.

The Companys ability to generate cash has been affected by the increased
interest costs resulting from the Transaction and the lower level of contract
signings in fiscal 2001 and 2000. The Company has incurred significant losses
and at June 30, 2001 had a net capital deficiency of approximately $12,113 and
a working capital deficiency of approximately $796. Management has been
actively addressing these matters including cost reduction and revenue growth
initiatives and other strategic alternatives associated with the business plan.
In September 2001, in order to remain in compliance, the Companys Credit
Facility was amended to modify the fixed charge coverage ratio covenant for the
fourth fiscal quarter ended June 30, 2001. Furthermore, the amendment permits
the Company to borrow under the Credit Facility until November 14, 2001 without
regard to whether or not it is in compliance with the fixed charge coverage
ratio for the first fiscal quarter ending September 30, 2001. On November 14,
2001, the Company will need to demonstrate its compliance with the covenant,
obtain a waiver of the covenant or refinance or replace the Credit Facility.
Management is currently negotiating to expand amounts available under its
Credit Facility as well as seeking other sources of financing. The Companys
ability to continue as a going concern is dependent on the success of these
initiatives and execution of its strategic business plan. There can be no
assurance that the Company will be able to successfully implement any of these
plans.

Net cash provided by (or net cash used in) operating activities can vary
significantly from quarter to quarter or year to year due to the number of new
system signings and the amount and timing of new system payments. In most
instances, progress payments on new system orders are invoiced or received in
advance of revenue recognition. When progress payments are invoiced or
received in advance of such revenue recognition, the Company increases current
liabilities represented by its billings in excess of costs and estimated
earnings on uncompleted contracts. When the revenue is earned, the Company
recognizes the revenue and reduces the billings in excess of costs and
estimated earnings on uncompleted contract balances. Net cash used by operating
activities for fiscal 2001 was $2,367, compared to $2,790 for fiscal 2000.
This improvement in net cash used by operating activities for fiscal 2001 was
due in part to an increase in new original equipment signings and the timing of
new system payments.

18



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##### Table of Contents



The Company has a backlog (on a percentage of completion basis) at June
30, 2001, of approximately $13,455 as compared to $17,394 at June 30, 2000.
The Company expects to complete a substantial majority of this backlog within
the next 12 months. Original equipment and aftermarket signings for the fiscal
2001 were $46,171 compared to $52,125 for fiscal 2000. The mix of signings by
type and breakdown by geographic region for fiscal 2001 compared to fiscal 2000
is as follows:



| |  |  | Automotive signings as a percentage of total signings,
increased to 84% for fiscal 2001 compared to 80% for fiscal 2000.
Architectural signings, as a percentage of total signings,
decreased to 16% for fiscal 2001 compared to 20% for fiscal 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The mix of signings by geographic region, as a percentage
of total signings, changed significantly between the periods.
Signings in the Americas (North, Central and South America)
decreased to 35% for fiscal 2001 compared to 62% for fiscal 2000.
Signings in Europe decreased to 14% for fiscal 2001 compared to 28%
for fiscal 2000. Signings in the Asia-Pacific region increased to
51% for fiscal 2001 compared to 10% for fiscal 2000. The Company
has experienced a recent increase in quoting activity and contract
signings for the Asia-Pacific region and the Company believes that
given world demographics and long term economic trends, the
Asia-Pacific region will continue to represent a significant market
for the Companys products.

Capital expenditures, including demonstration furnaces classified as fixed
assets, were $107 for fiscal 2001 compared to $223 for fiscal 2000. Future
capital expenditures, excluding demonstration furnaces, used to replace or
improve operating equipment and facilities are estimated to be less than $1,000
per year. In addition, the Company intends to make periodic replacements and
improvements on demonstration furnaces, which are used for customer
demonstrations and research and development purposes. Demonstration furnaces,
which outlive their usefulness for customer demonstrations or research and
development purposes, or both, may be refurbished and sold or put to other
applicable uses.

At June 30, 2001, the Company has net operating loss (NOL) carryforwards
for regular and alternative minimum tax purposes of approximately $61,657 and
$58,070, respectively, which expire in the years 2009 through 2016.

The Companys business is subject to rapid fluctuations due to changes in
the world markets for the end products produced by its equipment (largely in
the cyclical markets of automobiles and construction), currency fluctuations,
the local economies of those countries where users and potential users of the
Companys equipment are located, geopolitical events and other macroeconomic
forces largely beyond the ability of the Company to predict or control. Except
as discussed above, management is not currently aware of any trends, demands,
commitments or uncertainties, which will or which are reasonably likely to
result in a material change in the Companys liquidity.

Inflation

Management believes that the Companys operations have not been adversely
affected by inflation.




ITEM 7(a). Market Risk Exposures

Based on the Companys current operations and business practices, the
Company does not believe that it has any significant exposure to interest rate,
foreign currency, commodity price, or equity price market risks.

19



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##### Table of Contents






ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|                                                                                                                      |  |      |    | 
|--------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                                      |  | Page
|                                                                                                                      |  |     
|Consolidated Financial Statements:                                                                                    |  |      |    | 
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|Report of Independent Auditors                                                                                        |  |      | 21 | 
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|Consolidated Balance Sheets as of June 30, 2001 and 2000                                                              |  |      | 22 | 
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|Consolidated Statements of Operations for the Years Ended June 30, 2001, 2000 and 1999                                |  |      | 23 | 
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|Consolidated Statements of Shareholders Equity (Capital Deficiency) for the Years Ended
June 30, 2001, 2000 and 1999 |  |      | 24 | 
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|Consolidated Statements of Cash Flows for the Years Ended June 30, 2001, 2000 and 1999                                |  |      | 25 | 
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|                                                                                                                     
|Notes to Consolidated Financial Statements                                                                            |  |      | 26 | 

20



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##### Table of Contents



Report of Independent Auditors

The Board of Directors and Shareholder
Glasstech, Inc.

We have audited the accompanying consolidated balance sheets of Glasstech, Inc.
as of June 30, 2001 and 2000, and the related consolidated statements of
operations, shareholders equity (capital deficiency), and cash flows for each
of the three years in the period ended June 30, 2001. 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 Companys
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Glasstech, Inc. at June 30, 2001 and 2000, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
June 30, 2001, in conformity with accounting principles generally accepted in
the United States. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken
as a whole, presents fairly in all material respects the information set forth
therein.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As more fully described in Note 1,
the Company has incurred recurring operating losses and has a net capital
deficiency and net working capital deficiency. These conditions raise
substantial doubt about the Companys ability to continue as a going concern.
Managements plans in regard to these matters are also described in Note 1. The
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the
amounts and classification of liabilities that may result from the outcome of
this uncertainty.

| |  |                  
| |  | -----------------
|
|
| |  | ERNST & YOUNG LLP
|

Toledo, Ohio
August 24, 2001

21



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##### Table of Contents



GLASSTECH, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

|                                             |                                                                              |                                                    |                                                              |         |         |       |        |         |       |       | 
|-------------------------------------------- | ---------------------------------------------------------------------------- | -------------------------------------------------- | ------------------------------------------------------------ | ------- | ------- | ----- | ------ | ------- | ----- | ----- | 
|                                             |                                                                              |                                                    |                                                              |         | June 30
|                                             |                                                                              |                                                    |                                                              |         | 2001    |       | 2000  
|                                             |                                                                              |                                                    |                                                              |         |         |       |       
|Assets                                       |                                                                              |                                                    |                                                              |         |         |       |        |        
|                                            
|                                            
|                                            
|                                            
|Current assets:                              |                                                                              |                                                    |                                                              |         |         |       |        |        
|                                            
|                                            
|                                            
|                                            
|                                             | Cash and cash equivalents                                                    |                                                    | $                                                            | 6,197   |         |       | $      | 5,668   |      
|                                            
|                                            
|                                            
|                                            
|                                             | Accounts receivable:                                                         |                                                    |                                                              |         |         |       |        |         |      
|                                            
|                                            
|                                            
|                                            
|                                             |                                                                              | Contracts:                                         |                                                              |         |         |       |        |         |       |      
|                                            
|                                            
|                                            
|                                            
|                                             |                                                                              |                                                    | Uncompleted, including unbilled amounts of $1,563 and $2,211 |         |         | 6,637 |        |         |       | 4,820 | 
|                                            
|                                            
|                                            
|                                            
|                                             |                                                                              |                                                    | Completed                                                    |         |         | 1,371 |        |         |       | 1,626 | 
|                                            
|                                            
|                                            
|                                            
|                                             |                                                                              | Trade, less allowance of $40 for doubtful accounts |                                                              |         | 1,810   |       |        |         | 1,631 |      
|                                             |                                                                              |                                                    |                                                              |         |         |       |        |        
|                                             |                                                                              |                                                    | 9,818                                                        |         |         |       | 8,077  |        
|                                             | Inventory:                                                                   |                                                    |                                                              |         |         |       |        |         |      
|                                            
|                                            
|                                            
|                                            
|                                             |                                                                              | Replacement and service parts                      |                                                              |         | 1,798   |       |        |         | 1,675 |      
|                                            
|                                            
|                                            
|                                            
|                                             |                                                                              | Furnace and other                                  |                                                              |         | 680     |       |        |         | 687   |      
|                                             |                                                                              |                                                    |                                                              |         |         |       |        |        
|                                             |                                                                              |                                                    | 2,478                                                        |         |         |       | 2,362  |        
|                                             | Prepaid expenses                                                             |                                                    |                                                              | 341     |         |       |        | 279     |      
|                                             |                                                                              |                                                    |                                                              |         |         |       |        |        
|                                            
|                                            
|                                            
|                                            
|Total current assets                         |                                                                              |                                                    | 18,834                                                       |         |         |       | 16,386 |        
|                                            
|                                            
|                                            
|                                            
|Net property, plant and equipment            |                                                                              |                                                    | 4,656                                                        |         |         |       | 5,650  |        
|                                            
|                                            
|                                            
|                                            
|Other assets:                                |                                                                              |                                                    |                                                              |         |         |       |        |        
|                                            
|                                            
|                                            
|                                            
|                                             | Patents, less accumulated amortization of $6,908 and $5,181                  |                                                    |                                                              | 11,375  |         |       |        | 13,102  |      
|                                            
|                                            
|                                            
|                                            
|                                             | Goodwill, less accumulated amortization of $10,176 and $7,660                |                                                    |                                                              | 40,249  |         |       |        | 42,765  |      
|                                            
|                                            
|                                            
|                                            
|                                             | Deferred financing costs and other                                           |                                                    |                                                              | 2,575   |         |       |        | 3,208   |      
|                                             |                                                                              |                                                    |                                                              |         |         |       |        |        
|Total other assets                           |                                                                              |                                                    | 54,199                                                       |         |         |       | 59,075 |        
|                                             |                                                                              |                                                    |                                                              |         |         |       |        |        
|                                             |                                                                              | $                                                  | 77,689                                                       |         |         | $     | 81,111 |        
|                                             |                                                                              |                                                    |                                                              |         |         |       |        |        
|                                            
|                                            
|                                            
|                                            
|Liabilities and capital deficiency           |                                                                              |                                                    |                                                              |         |         |       |        |        
|                                            
|                                            
|                                            
|                                            
|Current liabilities:                         |                                                                              |                                                    |                                                              |         |         |       |        |        
|                                            
|                                            
|                                            
|                                            
|                                             | Revolving credit facility                                                    |                                                    | $                                                            | 3,000   |         |       | $      |        |      
|                                            
|                                            
|                                            
|                                            
|                                             | Accounts payable                                                             |                                                    |                                                              | 3,772   |         |       |        | 2,786   |      
|                                            
|                                            
|                                            
|                                            
|                                             | Billings in excess of costs and estimated earnings on uncompleted contracts  |                                                    |                                                              | 4,344   |         |       |        | 2,289   |      
|                                            
|                                            
|                                            
|                                            
|                                             | Accrued liabilities:                                                         |                                                    |                                                              |         |         |       |        |         |      
|                                            
|                                            
|                                            
|                                            
|                                             |                                                                              | Interest                                           |                                                              |         | 4,462   |       |        |         | 4,462 |      
|                                            
|                                            
|                                            
|                                            
|                                             |                                                                              | Contract costs                                     |                                                              |         | 1,844   |       |        |         | 876   |      
|                                            
|                                            
|                                            
|                                            
|                                             |                                                                              | Salaries and wages                                 |                                                              |         | 1,315   |       |        |         | 1,232 |      
|                                            
|                                            
|                                            
|                                            
|                                             |                                                                              | Other                                              |                                                              |         | 893     |       |        |         | 973   |      
|                                             |                                                                              |                                                    |                                                              |         |         |       |        |        
|                                             |                                                                              |                                                    | 8,514                                                        |         |         |       | 7,543  |        
|                                             |                                                                              |                                                    |                                                              |         |         |       |        |        
|                                            
|                                            
|                                            
|                                            
|Total current liabilities                    |                                                                              |                                                    | 19,630                                                       |         |         |       | 12,618 |        
|                                            
|                                            
|                                            
|                                            
|Long-term debt                               |                                                                              |                                                    | 69,679                                                       |         |         |       | 69,572 |        
|                                            
|                                            
|                                            
|                                            
|Nonpension postretirement benefit obligation |                                                                              |                                                    | 493                                                          |         |         |       | 456    |        
|                                            
|                                            
|                                            
|                                            
|Capital deficiency:                          |                                                                              |                                                    |                                                              |         |         |       |        |        
|                                            
|                                            
|                                            
|                                            
|                                             | Common stock $.01 par value; 1,000 shares authorized, issued and outstanding |                                                    |                                                              |        |         |       |        |        |      
|                                            
|                                            
|                                            
|                                            
|                                             | Additional capital                                                           |                                                    |                                                              | 15,750  |         |       |        | 15,750  |      
|                                            
|                                            
|                                            
|                                            
|                                             | Shareholders basis reduction                                                |                                                    |                                                              | (4,028  | )       |       |        | (4,028  | )    
|                                            
|                                            
|                                            
|                                            
|                                             | Retained deficit                                                             |                                                    |                                                              | (23,835 | )       |       |        | (13,257 | )    
|                                             |                                                                              |                                                    |                                                              |         |         |       |        |        
|                                            
|                                            
|                                            
|                                            
|Total capital deficiency                     |                                                                              |                                                    | (12,113                                                      | )       |         |       | (1,535 | )      
|                                             |                                                                              |                                                    |                                                              |         |         |       |        |        
|                                             |                                                                              | $                                                  | 77,689                                                       |         |         | $     | 81,111 |        
|                                             |                                                                              |                                                    |                                                              |         |         |       |        |        

See accompanying notes.

22



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GLASSTECH, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)

|                                             |  |      |         |      |  |                     |        |   |  |   |        |  
|-------------------------------------------- |  | ---- | ------- | ---- |  | ------------------- | ------ | - |  | - | ------ | -
|                                             |  |      |         |      |  | Years ended June 30 |        |   |  |  
|                                             |  | 2001 |         | 2000 |  | 1999               
|                                             |  |      |         |      |  |                    
|Net revenue                                  |  | $    | 49,995  |      |  | $                   | 47,022 |   |  | $ | 50,545 |  
|                                            
|                                            
|                                            
|                                            
|Cost of goods sold                           |  |      | 34,654  |      |  |                     | 29,411 |   |  |   | 31,768 |  
|                                             |  |      |         |      |  |                     |        |   |  |   |        |  
|                                            
|                                            
|                                            
|                                            
|Gross profit                                 |  |      | 15,341  |      |  |                     | 17,611 |   |  |   | 18,777 |  
|                                            
|                                            
|                                            
|                                            
|Selling, general and administrative expenses |  |      | 7,962   |      |  |                     | 7,626  |   |  |   | 8,632  |  
|                                            
|                                            
|                                            
|                                            
|Research and development expenses            |  |      | 4,194   |      |  |                     | 3,633  |   |  |   | 3,368  |  
|                                            
|                                            
|                                            
|                                            
|Amortization expense                         |  |      | 4,243   |      |  |                     | 4,243  |   |  |   | 4,243  |  
|                                             |  |      |         |      |  |                     |        |   |  |   |        |  
|                                            
|                                            
|                                            
|                                            
|Operating profit (loss)                      |  |      | (1,058  | )    |  |                     | 2,109  |   |  |   | 2,534  |  
|                                            
|                                            
|                                            
|                                            
|Interest expense                             |  |      | (9,668  | )    |  |                     | (9,668 | ) |  |   | (9,668 | )
|                                            
|                                            
|                                            
|                                            
|Other income  net                           |  |      | 148     |      |  |                     | 261    |   |  |   | 352    |  
|                                             |  |      |         |      |  |                     |        |   |  |   |        |  
|Net loss                                     |  | $    | (10,578 | )    |  | $                   | (7,298 | ) |  | $ | (6,782 | )
|                                             |  |      |         |      |  |                     |        |   |  |   |        |  

See accompanying notes.

23



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##### Table of Contents



GLASSTECH, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (CAPITAL DEFICIENCY)
(Dollars in thousands)

|                       |          |  |              |  |            |   |         |  |               |   |           |  |       |   |        |   |  |   |         |         |   |   |         |         |  
|---------------------- | -------- |  | ------------ |  | ---------- | - | ------- |  | ------------- | - | --------- |  | ----- | - | ------ | - |  | - | ------- | ------- | - | - | ------- | ------- | -
|                       |          |  | Common Stock |  |            |   |         |  | Shareholder's |   | Retained  |  |       |   |       
|                       |          |  |              |  | Additional |   | Basis   |  | Earnings      |   |           |  |      
|                       |          |  | Shares       |  | Amount     |   | Capital |  | Reduction     |   | (Deficit) |  | Total
|                       |          |  |              |  |            |   |         |  |               |   |           |  |      
|Balance July 1, 1998   |          |  | 1,000        |  |            | $ |        |  |               | $ | 15,750    |  |       | $ | (4,028 | ) |  | $ | 823     |         |   | $ | 12,545  |        
|                       | Net loss |  |              |  |            |   |         |  |               |   |           |  |       |   |        |   |  |   |         | (6,782  | ) |   |         | (6,782  | )
|                       |          |  |              |  |            |   |         |  |               |   |           |  |       |   |        |   |  |   |         |         |   |   |         |        
|                      
|                      
|                      
|                      
|Balance, June 30, 1999 |          |  | 1,000        |  |            |   |        |  |               |   | 15,750    |  |       |   | (4,028 | ) |  |   | (5,959  | )       |   |   | 5,763   |        
|                       | Net loss |  |              |  |            |   |         |  |               |   |           |  |       |   |        |   |  |   |         | (7,298  | ) |   |         | (7,298  | )
|                       |          |  |              |  |            |   |         |  |               |   |           |  |       |   |        |   |  |   |         |         |   |   |         |        
|                      
|                      
|                      
|                      
|Balance, June 30, 2000 |          |  | 1,000        |  |            |   |        |  |               |   | 15,750    |  |       |   | (4,028 | ) |  |   | (13,257 | )       |   |   | (1,535  | )      
|                       | Net loss |  |              |  |            |   |         |  |               |   |           |  |       |   |        |   |  |   |         | (10,578 | ) |   |         | (10,578 | )
|                       |          |  |              |  |            |   |         |  |               |   |           |  |       |   |        |   |  |   |         |         |   |   |         |        
|                      
|                      
|                      
|                      
|Balance, June 30, 2001 |          |  | 1,000        |  |            | $ |        |  |               | $ | 15,750    |  |       | $ | (4,028 | ) |  | $ | (23,835 | )       |   | $ | (12,113 | )      
|                       |          |  |              |  |            |   |         |  |               |   |           |  |       |   |        |   |  |   |         |         |   |   |         |        

See accompanying notes.

24



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##### Table of Contents



GLASSTECH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)

|                                                                            |                                                         |                                                                            |              |                                                                             |       |                     |        |      |       |       |        |   |       |       |        |  
|--------------------------------------------------------------------------- | ------------------------------------------------------- | -------------------------------------------------------------------------- | ------------ | --------------------------------------------------------------------------- | ----- | ------------------- | ------ | ---- | ----- | ----- | ------ | - | ----- | ----- | ------ | -
|                                                                            |                                                         |                                                                            |              |                                                                             |       | Years ended June 30
|                                                                            |                                                         |                                                                            |              |                                                                             |       |                    
|                                                                            |                                                         |                                                                            |              |                                                                             |       | 2001                |        | 2000 |       | 1999 
|                                                                            |                                                         |                                                                            |              |                                                                             |       |                     |        |      |       |      
|Operating activities                                                        |                                                         |                                                                            |              |                                                                             |       |                     |        |      |       |       |        |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Net loss                                                                    |                                                         | $                                                                          | (10,578      | )                                                                           |       | $                   | (7,298 | )    |       | $     | (6,782 | )
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Adjustments to reconcile net loss to net cash used in
operating activities: |                                                         |                                                                            |              |                                                                             |       |                     |        |      |       |       |        |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |                                                         | Depreciation and amortization                                              |              |                                                                             | 5,974 |                     |        |      | 6,232 |       |        |   | 6,343 |      
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |                                                         | Accretion of debt discount                                                 |              |                                                                             | 107   |                     |        |      | 107   |       |        |   | 107   |      
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |                                                         | Nonpension postretirement benefit obligation expense
in excess of payments |              |                                                                             | 37    |                     |        |      | 34    |       |        |   | 17    |      
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |                                                         | Changes in assets and liabilities affecting operations:                    |              |                                                                             |       |                     |        |      |       |       |        |   |       |      
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |                                                         |                                                                            |              | Accounts receivable                                                         |       |                     | (1,741 | )    |       |       | (2,547 | ) |       |       | 4,475  |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |                                                         |                                                                            |              | Inventory                                                                   |       |                     | (116   | )    |       |       | 1,005  |   |       |       | (965   | )
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |                                                         |                                                                            |              | Prepaid expenses                                                            |       |                     | (62    | )    |       |       | 71     |   |       |       |       |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |                                                         |                                                                            |              | Accounts payable                                                            |       |                     | 986    |      |       |       | 1,076  |   |       |       | (2,457 | )
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |                                                         |                                                                            |              | Billings in excess of costs and estimated
earnings on uncompleted contracts |       |                     | 2,055  |      |       |       | (961   | ) |       |       | (1,058 | )
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |                                                         |                                                                            |              | Accrued liabilities                                                         |       |                     | 971    |      |       |       | (509   | ) |       |       | (4,083 | )
|                                                                            |                                                         |                                                                            |              |                                                                             |       |                     |        |      |       |       |        |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Net cash used in operating activities                                       |                                                         |                                                                            | (2,367       | )                                                                           |       |                     | (2,790 | )    |       |       | (4,403 | )
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Investing activities                                                        |                                                         |                                                                            |              |                                                                             |       |                     |        |      |       |       |        |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Additions to property, plant and equipment                                  |                                                         |                                                                            | (107         | )                                                                           |       |                     | (223   | )    |       |       | (47    | )
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Other                                                                       |                                                         |                                                                            | 3            |                                                                             |       |                     | 20     |      |       |       | (10    | )
|                                                                            |                                                         |                                                                            |              |                                                                             |       |                     |        |      |       |       |        |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Net cash used in investing activities                                       |                                                         |                                                                            | (104         | )                                                                           |       |                     | (203   | )    |       |       | (57    | )
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Financing activities                                                        |                                                         |                                                                            |              |                                                                             |       |                     |        |      |       |       |        |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Revolving credit facility                                                   |                                                         |                                                                            | 3,000        |                                                                             |       |                     |       |      |       |       |       |  
|                                                                            |                                                         |                                                                            |              |                                                                             |       |                     |        |      |       |       |        |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Net cash provided by financing activities                                   |                                                         |                                                                            | 3,000        |                                                                             |       |                     |       |      |       |       |       |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Increase (decrease) in cash and cash equivalents                            |                                                         |                                                                            | 529          |                                                                             |       |                     | (2,993 | )    |       |       | (4,460 | )
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Cash and cash equivalents at beginning of year                              |                                                         |                                                                            | 5,668        |                                                                             |       |                     | 8,661  |      |       |       | 13,121 |  
|                                                                            |                                                         |                                                                            |              |                                                                             |       |                     |        |      |       |       |        |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Cash and cash equivalents at end of year                                    |                                                         | $                                                                          | 6,197        |                                                                             |       | $                   | 5,668  |      |       | $     | 8,661  |  
|                                                                            |                                                         |                                                                            |              |                                                                             |       |                     |        |      |       |       |        |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Supplemental disclosure of cash flow information:                           |                                                         |                                                                            |              |                                                                             |       |                     |        |      |       |       |        |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Cash paid (received) during the year for the following: |                                                                            |              |                                                                             |       |                     |        |      |       |       |        |   |      
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |                                                         |                                                                            | Interest     |                                                                             | $     | 8,925               |        |      | $     | 8,925 |        |   | $     | 8,925 |       
|                                                                            |                                                         |                                                                            |              |                                                                             |       |                     |        |      |       |       |        |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |                                                         |                                                                            | Income taxes |                                                                             | $     |                    |        |      | $     | (21   | )      |   | $     | 21    |       
|                                                                            |                                                         |                                                                            |              |                                                                             |       |                     |        |      |       |       |        |  

See accompanying notes.

25



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##### Table of Contents



GLASSTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)

1. Basis of Presentation

Effective July 2, 1997, Glasstech, Inc. (the Company) was acquired by
Glasstech Holding Co. (Holding) (the Transaction). In connection with the
Transaction, Holding, a holding company formed for the purpose of completing
the Transaction, formed a wholly owned subsidiary, Glasstech Sub Co. (Sub
Co.) which acquired all of the outstanding stock of the Company. Subsequently,
Sub Co. was merged into the Company. Holding has no significant activities
other than its investment in the Company. The acquisition was accounted for
under the purchase method of accounting for financial reporting purposes and
the purchase price of approximately $77,900 was allocated to the underlying net
assets acquired.

In connection with accounting for the Transaction, the Company applied the
provisions of Emerging Issues Task Force Issue 88-16 (EITF 88-16), whereby the
carryover equity interests of certain shareholders from the predecessor company
were recorded at their predecessor basis. As a result, shareholders equity of
the Company was reduced by $4,028 with a corresponding reduction to the value
of goodwill acquired.

The Company has two wholly owned subsidiaries, Glasstech Ltd., a corporation in
the United Kingdom, and Stir-Melter, Inc., a domestic subsidiary, which are
consolidated for financial reporting purposes. All significant intercompany
amounts and transactions have been eliminated.

The Company designs and manufactures glass bending and tempering equipment and
markets and sells such equipment worldwide to both automotive glass fabricators
and architectural glass producers. Glasstech Ltd. provides engineering, sales,
and service support in Europe, the Middle East, and Africa. Stir-Melter, Inc.
designs and markets glass-melting equipment for the treatment of certain waste
products.

The Company has incurred significant losses and at June 30, 2001 had a net
capital deficiency of approximately $12,113 and a working capital deficiency of
approximately $796. These conditions raise substantial doubt about the
Companys ability to continue as a going concern. Company management has been
actively addressing these matters including cost reduction and revenue growth
initiatives and other strategic alternatives associated with their business
plan. In addition, the Company is currently negotiating to expand amounts
available under its Credit Facility as well as seeking other sources of
financing. The Companys ability to continue as a going concern is dependent on
the success of these initiatives and execution of its strategic business plan.
The financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the
amounts and classification of liabilities that may result from the outcome of
this uncertainty.

2. Significant Accounting Policies

Revenue Recognition

For financial reporting purposes, the Company includes in income the ratable
portion of profits on uncompleted contracts determined in accordance with the
stage of completion measured by the percentage of costs incurred to estimated
total costs of each contract. Unbilled amounts included in uncompleted contract
accounts receivable represent revenues recognized in excess of amounts billed.
Billings in excess of costs and estimated earnings on uncompleted contracts
represent amounts billed in excess of revenues recognized.

Revenue from sales other than contracts is recognized when the products are
shipped.

26



---



##### Table of Contents



2. Significant Accounting Policies (continued)

Credit Practices

Credit terms are granted to customers and periodically revised based on
evaluations of the customers financial condition with collateral generally not
being required. In certain instances, letters of credit may be obtained to
secure payment.

Cash and Cash Equivalents

The Company considers all unrestricted highly liquid investments with a
maturity of three months or less when purchased to be cash equivalents.

Inventory

Inventory is stated at the lower of cost or market determined by the first-in,
first-out (FIFO) method.

Depreciation and Amortization

Depreciation is based on the estimated useful lives of the assets and is
generally computed using accelerated methods. Amortization of leasehold
improvements is provided on the straight-line basis over the estimated useful
lives of the assets or the terms of the leases, whichever is shorter. The
useful lives range from 10 to 40 years for building and leasehold improvements;
3 to 12 years for machinery and equipment; 7 to 12 years for demonstration
glass tempering furnaces; and 3 to 12 years for office equipment and other.

Patents are being amortized on the straight-line basis over their estimated
useful lives of 10 to 15 years.

Goodwill is being amortized on the straight-line basis over 20 years. The
Company periodically reviews goodwill to assess recoverability, generally based
upon expectations of nondiscounted cash flows, excluding interest and taxes.

Deferred financing costs are being amortized over 7 years, the length of the
underlying note agreement.

Management Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

New Accounting Standards

In June 2001 the FASB issued Statements of Financial Accounting Standards
(SFAS) No. 141, Business Combinations and No. 142, Goodwill and Other
Intangible Assets. Under the new rules, goodwill and indefinite lived
intangible assets are no longer amortized but are reviewed annually for
impairment. Separable intangible assets that are not deemed to have an
indefinite life will continue to be amortized over their useful lives. The
Company will apply the new accounting rules for goodwill beginning July 1, 2002
but has not yet determined the effects of these statements on the earnings and
financial position of the Company.

27



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##### Table of Contents



3. Property, Plant and Equipment

Property, plant and equipment consists of the following:

|                                               |                                        |   |               |       |      |   |        |       | 
|---------------------------------------------- | -------------------------------------- | - | ------------- | ----- | ---- | - | ------ | ----- | 
|                                               |                                        |   | As of June 30
|                                               |                                        |   |              
|                                               |                                        |   | 2001          |       | 2000
|                                               |                                        |   |               |       |     
|Cost:                                          |                                        |   |               |       |      |   |        |      
|                                              
|                                              
|                                              
|                                              
|                                               | Land                                   |   | $             | 110   |      |   | $      | 110   | 
|                                              
|                                              
|                                              
|                                              
|                                               | Building and leasehold improvements    |   |               | 2,368 |      |   |        | 2,372 | 
|                                              
|                                              
|                                              
|                                              
|                                               | Machinery and equipment                |   |               | 1,097 |      |   |        | 1,095 | 
|                                              
|                                              
|                                              
|                                              
|                                               | Demonstration glass tempering furnaces |   |               | 4,389 |      |   |        | 4,365 | 
|                                              
|                                              
|                                              
|                                              
|                                               | Office equipment                       |   |               | 1,989 |      |   |        | 1,918 | 
|                                              
|                                              
|                                              
|                                              
|                                               | Other                                  |   |               | 12    |      |   |        | 9     | 
|                                               |                                        |   |               |       |      |   |        |      
|                                              
|                                              
|                                              
|                                              
|                                               |                                        |   | 9,965         |       |      |   | 9,869  |      
|                                              
|                                              
|                                              
|                                              
|Less accumulated depreciation and amortization |                                        |   | (5,309        | )     |      |   | (4,219 | )    
|                                              
|                                              
|                                              
|                                              
|Net property, plant and equipment              |                                        | $ | 4,656         |       |      | $ | 5,650  |      
|                                               |                                        |   |               |       |      |   |        |      

4. Notes Payable and Long-Term Debt

In connection with the Transaction, the Company issued $70,000 of 12-3/4%
Senior Notes due 2004. Interest on the Senior Notes is payable semi-annually on
each January 1 and July 1. The terms of the Senior Notes do not require any
scheduled principal payments prior to maturity.

The Company also entered into a revolving credit facility (Credit Facility)
in connection with the Transaction. The Credit Facility is available to fund
working capital requirements as needed, and to secure standby letters of
credit. The Credit Facility provides for borrowings up to $13,000 (including
standby letters of credit), subject to a borrowing base of certain qualifying
assets up to a maximum of $7,000. Any borrowings or standby letters of credit
above $7,000 must be cash collateralized. The Credit Facility provides for
interest on outstanding borrowings at the LIBOR rate plus 2.5% (6.75% at June
30, 2001), payable semi-annually. The Credit Facility is secured by
substantially all of the assets of the Company. At June 30, 2001, the borrowing
base approximated $6,041, which included outstanding borrowings of $3,000 and
standby letters of credit of $1,881.

The Senior Notes and Credit Facility contain numerous financial and other
covenants which include the maintenance of certain levels of earnings as
defined, restrictions on the payment of dividends and the incurrence of
additional indebtedness as well as certain types of business activities and
investments. In September 2001, in order to remain in compliance, the Companys
Credit Facility was amended to modify the fixed charge coverage ratio covenant
for the fourth fiscal quarter ended June 30, 2001. Furthermore, the amendment
permits the Company to borrow under the Credit Facility until November 14, 2001
without regard to whether or not it is in compliance with the fixed charge
coverage ratio for the first fiscal quarter ending September 30, 2001. On
November 14, 2001, the Company will need to demonstrate its compliance with the
covenant, obtain a waiver of the covenant or refinance or replace the Credit
Facility. The Company believes it is in material compliance with all
covenants, as amended.

At June 30, 2001 and 2000, the Company believes the carrying value of the
Senior Notes exceeds their fair value. Although the Senior Notes are publicly
traded, the trading volume is so low that the Company is unable to determine
their fair value.

28



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##### Table of Contents



5. Employee Benefit Plans

The Company has defined contribution retirement plans that cover substantially
all employees. Contributions for the Employees Pension Plan, which are based
on participants compensation, are funded annually, in arrears. Annual expense
for this plan approximated $517, $534 and $616, for the years ended June 30,
2001, 2000 and 1999, respectively. The Company does not match contributions
made by employees under the Employees Savings Plan, a 401(k) plan.

The Company provides certain retiree healthcare insurance benefits to eligible
retired employees. Employees are generally eligible for benefits upon
retirement and completion of a specified number of years of creditable service.
These benefits are provided at the discretion of the Company and are subject to
revision or termination at any time. The Company funds such costs as they are
incurred.

The components of the net periodic postretirement benefit cost for the years
ended June 30 are as follows:

|                                                               |  |      |    |      |  |      |    |  |  |   |    | 
|-------------------------------------------------------------- |  | ---- | -- | ---- |  | ---- | -- |  |  | - | -- | 
|                                                               |  | 2001 |    | 2000 |  | 1999
|                                                               |  |      |    |      |  |     
|Service cost (benefits earned during the period)               |  | $    | 17 |      |  | $    | 17 |  |  | $ | 16 | 
|                                                              
|                                                              
|                                                              
|                                                              
|Interest cost on accumulated postretirement
benefit obligation |  |      | 37 |      |  |      | 36 |  |  |   | 32 | 
|                                                              
|                                                              
|                                                              
|                                                              
|Recognized net actuarial loss                                  |  |      | 2  |      |  |      | 3  |  |  |   |   | 
|                                                               |  |      |    |      |  |      |    |  |  |   |    | 
|                                                              
|                                                              
|                                                              
|                                                              
|Net periodic postretirement benefit cost                       |  | $    | 56 |      |  | $    | 56 |  |  | $ | 48 | 
|                                                               |  |      |    |      |  |      |    |  |  |   |    | 

The changes in the accumulated postretirement benefit obligation and amounts
accrued were as follows:

|                                                         |                                       |   |      |     |      |   |     |     |  
|-------------------------------------------------------- | ------------------------------------- | - | ---- | --- | ---- | - | --- | --- | -
|                                                         |                                       |   | 2001 |     | 2000
|                                                         |                                       |   |      |     |     
|Change in accumulated postretirement benefit obligation: |                                       |   |      |     |      |   |     |    
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Benefit obligation, beginning of year |   | $    | 546 |      |   | $   | 527 |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Service cost                          |   |      | 17  |      |   |     | 17  |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Interest cost                         |   |      | 37  |      |   |     | 36  |  
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Actuarial gain                        |   |      | (25 | )    |   |     | (12 | )
|                                                        
|                                                        
|                                                        
|                                                        
|                                                         | Benefits paid                         |   |      | (19 | )    |   |     | (22 | )
|                                                         |                                       |   |      |     |      |   |     |    
|                                                        
|                                                        
|                                                        
|                                                        
|Benefit obligation, end of year                          |                                       | $ | 556  |     |      | $ | 546 |    
|                                                         |                                       |   |      |     |      |   |     |    
|                                                        
|                                                        
|                                                        
|                                                        
|Funded status of plan                                    |                                       | $ | 556  |     |      | $ | 546 |    
|                                                        
|                                                        
|                                                        
|                                                        
|Unrecognized net loss                                    |                                       |   | (63  | )   |      |   | (90 | )  
|                                                         |                                       |   |      |     |      |   |     |    
|                                                        
|                                                        
|                                                        
|                                                        
|Accrued benefit obligation                               |                                       | $ | 493  |     |      | $ | 456 |    
|                                                         |                                       |   |      |     |      |   |     |    

The assumed discount rate used in determining the accumulated postretirement
benefit obligation was 7.0% at June 30, 2001 and 2000. The assumed healthcare
cost trend rates used to measure the expected cost of benefits covered by this
plan ranges principally from 4.25% to 5.75%, and decrease ratably to 4.25% by
fiscal year 2010.

29



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##### Table of Contents



6. Federal Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Companys deferred income tax liabilities and assets at June 30 are as
follows:

|                                      |                                              |   |        |        |      |   |        |        |  
|------------------------------------- | -------------------------------------------- | - | ------ | ------ | ---- | - | ------ | ------ | -
|                                      |                                              |   | 2001   |        | 2000
|                                      |                                              |   |        |        |     
|Deferred income tax liabilities:      |                                              |   |        |        |      |   |        |       
|                                     
|                                     
|                                     
|                                     
|                                      | Contract revenues                            |   | $      | (5,756 | )    |   | $      | (3,261 | )
|                                     
|                                     
|                                     
|                                     
|                                      | Tax basis differences on purchased assets    |   |        | (2,547 | )    |   |        | (1,530 | )
|                                     
|                                     
|                                     
|                                     
|                                      | Property, plant and equipment                |   |        | (483   | )    |   |        | (613   | )
|                                      |                                              |   |        |        |      |   |        |       
|                                     
|                                     
|                                     
|                                     
|Total deferred income tax liabilities |                                              |   | (8,786 | )      |      |   | (5,404 | )     
|                                     
|                                     
|                                     
|                                     
|Deferred income tax assets:           |                                              |   |        |        |      |   |        |       
|                                     
|                                     
|                                     
|                                     
|                                      | Federal income tax operating loss carryovers |   |        | 23,430 |      |   |        | 17,692 |  
|                                     
|                                     
|                                     
|                                     
|                                      | Accrued liabilities and reserves             |   |        | 956    |      |   |        | 565    |  
|                                     
|                                     
|                                     
|                                     
|                                      | Other                                        |   |        | 708    |      |   |        | 421    |  
|                                      |                                              |   |        |        |      |   |        |       
|                                     
|                                     
|                                     
|                                     
|Total deferred income tax assets      |                                              |   | 25,094 |        |      |   | 18,678 |       
|                                     
|                                     
|                                     
|                                     
|Less valuation allowance              |                                              |   | 16,308 |        |      |   | 13,274 |       
|                                      |                                              |   |        |        |      |   |        |       
|                                     
|                                     
|                                     
|                                     
|Net deferred income tax assets        |                                              |   | 8,786  |        |      |   | 5,404  |       
|                                      |                                              |   |        |        |      |   |        |       
|                                     
|                                     
|                                     
|                                     
|Total deferred income taxesnet       |                                              | $ |       |        |      | $ |       |       
|                                      |                                              |   |        |        |      |   |        |       

A valuation allowance has been recorded against the Companys deferred income
tax assets due to the uncertainties surrounding the realization of any future
tax benefit.

The consolidated effective income tax rate differs from the statutory U. S.
federal tax rate for the following reasons and by the following percentages:

|                                                 |                                                                               |  |       |      |      |  |       |      |  |  |       |      | 
|------------------------------------------------ | ----------------------------------------------------------------------------- |  | ----- | ---- | ---- |  | ----- | ---- |  |  | ----- | ---- | 
|                                                 |                                                                               |  | 2001  |      | 2000 |  | 1999 
|                                                 |                                                                               |  |       |      |      |  |      
|Statutory U. S. Federal tax rate                 |                                                                               |  | (34.0 | )%   |      |  | (34.0 | )%   |  |  | (34.0 | )%  
|                                                
|                                                
|                                                
|                                                
|Increase (reduction) in tax rate
resulting from: |                                                                               |  |       |      |      |  |       |      |  |  |       |     
|                                                
|                                                
|                                                
|                                                
|                                                 | Effect of increase (reduction) in
valuation reserve for deferred
income taxes |  |       | 25.8 |      |  |       | 22.1 |  |  |       | 20.9 | 
|                                                
|                                                
|                                                
|                                                
|                                                 | Amortization of goodwill                                                      |  |       | 8.1  |      |  |       | 11.8 |  |  |       | 12.7 | 
|                                                
|                                                
|                                                
|                                                
|                                                 | Other                                                                         |  |       | 0.1  |      |  |       | 0.1  |  |  |       | 0.4  | 
|                                                 |                                                                               |  |       |      |      |  |       |      |  |  |       |     
|                                                
|                                                
|                                                
|                                                
|Effective tax rate                               |                                                                               |  |      | %    |      |  |      | %    |  |  |      | %   
|                                                 |                                                                               |  |       |      |      |  |       |      |  |  |       |     

At June 30, 2001, the Company has net operating loss carryforwards for regular
and alternative minimum tax purposes of approximately $61,657 and $58,070,
respectively, which expire in the years 2009 through 2016. Such loss
carryforwards have annual usage limitations which, if not utilized in a given
year, may be utilized in subsequent years.

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7. Leases

The Company leases a manufacturing/office building, a warehouse and certain
office equipment under long-term agreements. The Company has the option to
renew the manufacturing/office building lease for one additional five-year
period at slightly higher rates. Total rental expense amounted to $502, $475
and $461, respectively for each of the three years in the period ended June 30,
2001. Total minimum rental commitments under the operating leases for fiscal
years subsequent to June 30, 2001 total approximately $1,804 payable as
follows: 2002$566, 2003$492, 2004$416, 2005$251, 2006$79.

8. Geographic and Customer Information

The Company operates in one industry segment, the design and manufacture of
glass bending and tempering equipment. The Companys net revenues from external
customers are derived from glass bending and tempering equipment and related
replacement parts and service. The Companys net revenues from external
customers by geographic areas and customers who represent 10% or more of total
sales for 2001, 2000 and 1999 are presented below. Long-lived assets,
consisting of property, plant and equipment, patents and goodwill, located
outside the United States are not significant.

|                                    |               |   |        |        |      |   |        |        |  |   |        |        | 
|----------------------------------- | ------------- | - | ------ | ------ | ---- | - | ------ | ------ |  | - | ------ | ------ | 
|                                    |               |   | 2001   |        | 2000 |   | 1999  
|                                    |               |   |        |        |      |   |       
|Net Revenue by Geographic Location: |               |   |        |        |      |   |        |        |  |   |        |       
|                                   
|                                   
|                                   
|                                   
|                                    | Asia-Pacific  |   | $      | 21,418 |      |   | $      | 5,555  |  |   | $      | 14,189 | 
|                                   
|                                   
|                                   
|                                   
|                                    | United States |   |        | 15,792 |      |   |        | 29,009 |  |   |        | 23,995 | 
|                                   
|                                   
|                                   
|                                   
|                                    | Europe        |   |        | 8,388  |      |   |        | 8,053  |  |   |        | 10,338 | 
|                                   
|                                   
|                                   
|                                   
|                                    | Latin America |   |        | 2,724  |      |   |        | 4,072  |  |   |        | 1,638  | 
|                                   
|                                   
|                                   
|                                   
|                                    | Other         |   |        | 1,673  |      |   |        | 333    |  |   |        | 385    | 
|                                    |               |   |        |        |      |   |        |        |  |   |        |       
|                                    |               | $ | 49,995 |        |      | $ | 47,022 |        |  | $ | 50,545 |       
|                                    |               |   |        |        |      |   |        |        |  |   |        |       

|                                           |            |  |      |      |      |  |      |      |   |  |  |      |  
|------------------------------------------ | ---------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                                           |            |  | 2001 |      | 2000 |  | 1999
|                                           |            |  |      |      |      |  |     
|Major customers percentage of net revenue: |            |  |      |      |      |  |      |      |   |  |  |     
|                                          
|                                          
|                                          
|                                          
|                                           | Customer A |  |      | 40.9 | %    |  |      | 11.7 | % |  |  | 17.7 | %
|                                          
|                                          
|                                          
|                                          
|                                           | Customer B |  |      | 11.9 |      |  |      | 16.5 |   |  |  | 2.4  |  
|                                          
|                                          
|                                          
|                                          
|                                           | Customer C |  |      | 7.4  |      |  |      | 10.3 |   |  |  |     |  
|                                          
|                                          
|                                          
|                                          
|                                           | Customer D |  |      | 2.3  |      |  |      | 6.4  |   |  |  | 10.2 |  
|                                          
|                                          
|                                          
|                                          
|                                           | Customer E |  |      | 1.3  |      |  |      | 6.0  |   |  |  | 17.3 |  

9. Transactions with Affiliate

Upon consummation of the Transaction, the Company entered into an advisory
agreement with Key Equity Capital Corporation (KECC), a major shareholder, at
an annual expense of $200 adjusted to $150 effective October 1, 1998. Effective
June 30, 2000, Blue Point Capital Partners (BPCP) succeeded KECCs interest
in the advisory agreement.

In connection with the Transaction, the Company advanced $656 to Holding. The
advances were made to Holding to permit Holding to satisfy certain obligations
it entered into in connection with the Transactions.

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

Not applicable.

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PART III.




ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The following table sets forth the names and ages of the Companys
executive officers (the Executive Management) and the directors of the
Company and Holding (the Directors). The officers and directors of the
Company and Holding are identical and management believes that they will
continue to be identical for the foreseeable future.

|                          |  |     |    |          |  |                                                      
|------------------------- |  | --- | -- | -------- |  | -----------------------------------------------------
|Name                      |  | Age |    | Position
|                          |  |     |    |         
|Mark D. Christman         |  |     | 49 |          |  | Director, President and Chief Executive Officer      
|                         
|                         
|                         
|                         
|John S. Baxter            |  |     | 61 |          |  | Senior Vice President, Marketing and Sales           
|                         
|                         
|                         
|                         
|Kenneth H. Wetmore        |  |     | 54 |          |  | Vice President, General Counsel and Secretary        
|                         
|                         
|                         
|                         
|Ronald A. McMaster, Ph.D. |  |     | 62 |          |  | Vice President, Corporate Development                
|                         
|                         
|                         
|                         
|Diane S. Tymiak           |  |     | 44 |          |  | Vice President, Treasurer and Chief Financial Officer
|                         
|                         
|                         
|                         
|Larry E. Elliott          |  |     | 52 |          |  | Vice President, Manufacturing                        
|                         
|                         
|                         
|                         
|James P. Schnabel         |  |     | 41 |          |  | Vice President, Development                          
|                         
|                         
|                         
|                         
|Kevin W. Alexander        |  |     | 42 |          |  | Vice President, Logistics                            
|                         
|                         
|                         
|                         
|Norman J. Klatt           |  |     | 70 |          |  | Vice President, Sales  Asia                         
|                         
|                         
|                         
|                         
|David P. Given            |  |     | 47 |          |  | Director                                             
|                         
|                         
|                         
|                         
|John A. LeMay             |  |     | 35 |          |  | Director                                             
|                         
|                         
|                         
|                         
|James M. Papada, III      |  |     | 53 |          |  | Director                                             
|                         
|                         
|                         
|                         
|Edmund S. Wright          |  |     | 58 |          |  | Director                                             

Mark D. Christmanhas been President and Chief Operating Officer of the
Company since December 31, 1992. Mr. Christman joined the Company in 1976, and
since that time has served in various capacities, including Vice President,
Treasurer, Chief Financial Officer and Executive Vice President. Upon the
consummation of the Transactions, Mr. Christman was elected Director, President
and Chief Executive Officer.

John S. Baxterhas been Senior Vice President, Marketing and Sales, since
1992. Mr. Baxter joined the Company in 1981 and was Managing Director of
Glasstech Ltd. from 1981 to 1992. Prior to joining the Company, Mr. Baxter was
employed by Triplex Safety Glass, a subsidiary of Pilkington plc, for five
years. From July 1997 to February 1998, Mr. Baxter was a Director.

Kenneth H. Wetmorejoined the Company in 1988 as General Counsel and was
elected Secretary in 1989 and Vice President in 1991. Mr. Wetmore is also
President of Stir-Melter, Inc. Prior to joining the Company, Mr. Wetmore was
employed by Owens Corning Fiberglas Corp. for 19 years.

Ronald A. McMaster, Ph.D.has been Vice President, Corporate Development
since 1988. Dr. McMaster joined the Company in 1977 and has served in various
capacities, including Vice President, Research and Development and Vice
President, Advanced Engineering. Mr. McMaster and Mr. Christman are first
cousins.

Diane S. Tymiakhas been Vice President, Treasurer and Chief Financial
Officer since 1993. Ms. Tymiak joined the Company in 1980 and has served in
various financial capacities since that time.

Larry E. Elliottjoined the Company in July 1996 as Vice President and
currently serves as Vice President, Manufacturing. Prior to joining the
Company, Mr. Elliott was employed by the glass division of Ford Motor Company
for 25 years, most recently as Supervisor, Fabrication Facilities Engineering.

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James P. Schnabelwas elected Vice President in 1997 and currently serves
as Vice President Development. Mr. Schnabel joined the Company in 1984 and has
served in various engineering capacities with the Company since that time.

Kevin W. Alexanderjoined the Company in January 2000 as Economist and
currently serves as Vice President, Logistics. Prior to joining the Company,
Mr. Alexander was employed by SKF USA, most recently as Vice President of
Supply Chain Management.

Norman J. Klattjoined the Company in December 1980 and currently serves
as Vice President, Sales  Asia. Mr. Klatt has served in various marketing and
sales capacities with the Company.

David P. Givenbecame a Managing Partner of Blue Point Capital Partners,
L.P. (BPCP), a venture capital firm, effective June 30, 2000. See Certain
Relationships and Certain Transactions. Prior to joining BPCP, Mr. Given had
been President of KECC since 1995 and joined KECC as a Vice President in 1990.
Mr. Given serves as a director of several privately held companies. Upon the
consummation of the Transactions, Mr. Given began to serve as Director.

John A. LeMaybecame a Principal with BPCP, effective June 30, 2000.
Prior to joining BPCP, Mr. LeMay joined KECC as a Vice President in 1998.
Prior to joining KECC, Mr. LeMay was employed by the Boston Consulting Group,
Inc. and Salomon Brothers, Inc. Mr. LeMay became a Director in May 1999.

James M. Papadais Chairman of the Board of Directors and CEO of
Technitrol, Inc. (NYSE: TNL), a diversified manufacturer of components for
electrical and electronic equipment. From 1978 to 1982 and from 1988 to 1999,
Mr. Papada was a partner with the law firm of Stradley, Ronon, Stevens & Young,
located in Philadelphia, Pennsylvania. From 1983 to 1988, Mr. Papada was Chief
Operating Officer of Hordis Brothers, Inc., the largest independent glass
processor/fabricator in the United States. Mr. Papada is also a director of
Parra-Chem Southern, Inc. and CTA, Incorporated. Mr. Papada became a Director
in February 1998.

Edmund S. Wrighthas been a business consultant since 1995. Prior to
that, Mr. Wright was President and CEO of North American Refractory Company
from 1981 to 1994, Vice Chairman of NARCO, Canada, Inc. from 1989 to 1994,
Chairman of ZIRCOA, Inc. from 1989 to 1994, President of Tri-Star Refractories,
Inc. from 1990 to 1994 and Chairman of Dakota Catalyst Products, Inc. from 1995
to 1997. Mr. Wright is also a director of Fairmount Minerals, Inc., Unifrax
Corporation, Stonebridge Industries, Inc. and STAM, Inc. Mr. Wright became a
Director in February 1998.

All Directors hold office until the next annual meeting of shareholders
and until their successors have been elected and qualified. Executive Officers
serve at the discretion of the Board. Compensation of Directors, not employed
by the Company or affiliated with KECC or BPCP, is $20,000 per year.

Under the Stockholders Agreement (as defined herein), Messrs. Given and
LeMay serve as directors as representatives of KECC, and Mr. Christman serves
as a director by virtue of his position as President and Chief Executive
Officer of the Company and Holding.

34



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##### Table of Contents






ITEM 11. EXECUTIVE COMPENSATION.

The following table sets forth the compensation received by the Companys
Chief Executive Officer and the four other highest paid executive officers
(together with the Chief Executive Officer, the Named Executive Officers) for
services to the Company in fiscal years 2001, 2000 and 1999.

Summary Compensation Table

|                            |                                               |             |      |        |  |          |              |         |              |   |           |         |  |   |        |        | 
|--------------------------- | --------------------------------------------- | ----------- | ---- | ------ |  | -------- | ------------ | ------- | ------------ | - | --------- | ------- |  | - | ------ | ------ | 
|                            |                                               |             |      |        |  |          | Annual       |         | All Other   
|                            |                                               |             |      |        |  |          | Compensation |         | Compensation
|                            |                                               |             |      |        |  |          |              |         |             
|Name and Principal Position |                                               | Fiscal Year |      | Salary |  | Bonus(a) |              | (b)    
|                            |                                               |             |      |        |  |          |              |        
|Mark D. Christman           |                                               |             | 2001 |        |  | $        | 306,295      |         |              | $ |          |         |  | $ | 14,680 |       
|                           
|                           
|                           
|                           
|                            | President and Chief Executive Officer         |             |      | 2000   |  |          |              | 296,140 |              |   |           | 228,000 |  |   |        | 14,264 | 
|                           
|                           
|                           
|                           
|                            |                                               |             | 1999 |        |  |          | 289,909      |         |              |   | 1,058,000 |         |  |   | 13,848 |       
|                           
|                           
|                           
|                           
|John S. Baxter              |                                               |             | 2001 |        |  |          | 239,169      |         |              |   |          |         |  |   | 15,292 |       
|                           
|                           
|                           
|                           
|                            | Senior Vice President, Marketing and Sales    |             |      | 2000   |  |          |              | 231,847 |              |   |           | 70,000  |  |   |        | 14,708 | 
|                           
|                           
|                           
|                           
|                            |                                               |             | 1999 |        |  |          | 226,935      |         |              |   | 322,000   |         |  |   | 14,400 |       
|                           
|                           
|                           
|                           
|Kenneth H. Wetmore          |                                               |             | 2001 |        |  |          | 206,052      |         |              |   |          |         |  |   | 14,776 |       
|                           
|                           
|                           
|                           
|                            | Vice President, General Counsel and Secretary |             |      | 2000   |  |          |              | 201,002 |              |   |           | 40,000  |  |   |        | 14,162 | 
|                           
|                           
|                           
|                           
|                            |                                               |             | 1999 |        |  |          | 196,932      |         |              |   | 170,000   |         |  |   | 14,076 |       
|                           
|                           
|                           
|                           
|Norman J. Klatt             |                                               |             | 2001 |        |  |          | 194,964      |         |              |   |          |         |  |   | 9,524  |       
|                           
|                           
|                           
|                           
|                            | Vice President Sales  Asia                   |             |      | 2000   |  |          |              | 190,031 |              |   |           | 6,000   |  |   |        | 10,022 | 
|                           
|                           
|                           
|                           
|                            |                                               |             | 1999 |        |  |          | 188,639      |         |              |   | 80,000    |         |  |   | 10,520 |       
|                           
|                           
|                           
|                           
|Ronald A. McMaster          |                                               |             | 2001 |        |  |          | 190,308      |         |              |   |          |         |  |   | 15,292 |       
|                           
|                           
|                           
|                           
|                            | Vice President, Corporate Development         |             |      | 2000   |  |          |              | 184,004 |              |   |           | 15,000  |  |   |        | 15,098 | 
|                           
|                           
|                           
|                           
|                            |                                               |             | 1999 |        |  |          | 180,160      |         |              |   | 72,000    |         |  |   | 14,400 |       



---

|(a) |  | Represent bonus amounts paid in the fiscal years listed but related to
prior year performance.                                                                                                                             
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(b) |  | Represents (i) a pension plan contribution equal to 5% of each Named
Executive Officers first $160,000 of compensation under the Companys pension
plan and (ii) imputed income on life insurance provided by the Company.

Employment Agreements and Arrangements

Mr. Christman has entered into a five-year employment agreement with
Holding and the Company pursuant to which Mr. Christman serves as the President
and Chief Executive Officer of Holding and the Company (the President). Mr.
Christman is paid a base salary subject to certain cost-of-living adjustments,
and receives customary executive benefits. Additionally, pursuant to his
agreement and the Stockholders Agreement (as defined herein), he is entitled to
receive no less than 40% of all distributions from the Performance Bonus Pool
(as defined herein), participate in the Restricted Stock Program (as defined
herein), and participate in the Performance Share Program (as defined herein).
See Management Incentive Plans. The employment agreement also contains a
noncompetition provision that prohibits Mr. Christman from competing or holding
certain ownership interests in other businesses that compete against the
Company for the later of five years after the initial date of the agreement or
two years following the termination of Mr. Christmans employment (unless Mr.
Christman is terminated without cause, in which case no restriction shall
apply). The employment agreement is renewable by the Company for one-year
successive terms upon completion of the initial five-year term.

Each of the other members of Executive Management, except Mr. Alexander
and Mr. Klatt, also entered into an employment agreement (each, an Employment
Agreement and, collectively with the

35



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##### Table of Contents



Presidents employment agreement, the
Employment Agreements) that is substantially similar to Mr. Christmans
agreement, but is paid a base salary per year, subject to certain
cost-of-living adjustments.

Management Incentive Plans

In connection with the Transactions, the Company and Holding have
established (i) a performance bonus pool (the Performance Bonus Pool); (ii) a
restricted stock plan (the Restricted Stock Program); and (iii) a performance
share program (the Performance Share Program), all of which were designed to
retain and reward members of Executive Management. No table describing options
granted in the last fiscal year has been included, because neither the Company
nor Holding has granted any options to Executive Management in the past fiscal
year and no options to Executive Management are currently outstanding.

Performance Bonus Pool.Each member of Executive Management is eligible
to receive a distribution from the Performance Bonus Pool (based upon a
calculated EBITDA as defined in the Employment Agreements). Amounts made
available by the Company pursuant to the Performance Bonus Pool at the end of
each fiscal year are based on the calculated EBITDA of the Company for such
fiscal year or the average calculated EBITDA for all fiscal years, whichever is
greater (as defined in the Employment Agreements). If calculated EBITDA (which
for such purpose will be computed before deducting any fees payable to KECC or
BPCP subsequent to June 30, 2000) is between $14.0 million and $15.0 million as
of such fiscal year, then amounts available for distribution pursuant to the
Performance Bonus Pool will generally be 5.0% of calculated EBITDA. If
calculated EBITDA is more than $15.0 million but not over $16.0 million, then
amounts available for distribution pursuant to the Performance Bonus Pool will
generally be 7.5% of calculated EBITDA. If calculated EBITDA is more than
$16.0 million, then amounts available for distribution pursuant to the
Performance Bonus Pool will generally be 10.0% of calculated EBITDA. The
Directors, at their discretion, but after consultation with the President, will
distribute the Performance Bonus Pool among the members of Executive Management
using its discretion; but Mr. Christman, under the terms of his employment
agreement, is entitled to receive at least 40% of the Performance Bonus Pool.
The Directors are required to distribute the entire amount of the Performance
Bonus Pool among some or all members of Executive Management.

Restricted Stock Program.Simultaneous with the consummation of the
Transactions, Holding and the members of the Key Equity Group entered into a
stockholders agreement (the Stockholders Agreement), pursuant to which
Holding established the Restricted Stock Program. Under the terms of the
Restricted Stock Program, members of Executive Management were granted, under
their employment agreements, in the aggregate, 1,667 shares of restricted Class
C Common Stock (as defined herein) of Holding. The restricted Class C Common
Stock may not be sold or otherwise transferred while the restrictions are in
effect and may be forfeited to the Company if the recipient leaves the Company
before the restrictions lapse. The shares of Class C Common Stock are
non-voting and the restrictions will generally lapse in equal amounts over a
four-year period. However, all such restrictions will lapse upon a Change of
Control (as defined in the Employment Agreements).

Performance Share Program.The Performance Share Program was established
under the Stockholders Agreement. Under the terms of the Performance Share
Program, members of Executive Management purchased shares of Class D Common
Stock of Holding (the Class D Holders) by paying $0.01 in cash and paying for
the balance by issuing to Holding promissory notes in consideration therefor
and pledging such shares to Holding to secure such debt. Upon the occurrence
of a Liquidity Event (as defined herein), a final determination of the number
of shares of Class D Common Stock that will be retained by members of Executive
Management will be made based upon the achievement by the Key Equity Group of
certain goals relating to its return on the Equity Contribution, as adjusted to
account for the value attributable to the Warrants. Liquidity Event is
defined in the Stockholders Agreement as the first to occur of (i) the sale of
Holding and (ii) a public offering of any of Holdings securities (each, a
Liquidity Event). The Company will have the right to repurchase shares of
Class D Common Stock under certain circumstances

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##### Table of Contents



upon a termination of employment.

Employees Pension Plan and Employees Savings Plan

The Companys Employees Pension Plan and Employees Savings Plan cover
substantially all of its employees. Under the Employees Pension Plan, the
Company may make annual contributions to the participants equal to 5% of each
participants compensation up to $160,000. For the fiscal years ended June 30,
1999, 2000 and 2001, the Companys expense under the Employees Pension Plan
approximated $616,000 $534,000 and $517,000, respectively. The Company does
not match contributions made by employees under the Employees Savings Plan, a
401(k) plan.

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##### Table of Contents






ITEM 12. SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

Holding owns 100% of the issued and outstanding common stock of the
Company. As of September 21, 2001, the following entities or persons owned the
outstanding Common Stock of Holding as set forth below.

|                                                                                           |                           |  |                      |     |                      |  |                      |     |                      |  |           |   |            |  |           |   |            |  |       |     |  |  |       |     |   |  |        |       |  |  |       |      |  
|------------------------------------------------------------------------------------------ | ------------------------- |  | -------------------- | --- | -------------------- |  | -------------------- | --- | -------------------- |  | --------- | - | ---------- |  | --------- | - | ---------- |  | ----- | --- |  |  | ----- | --- | - |  | ------ | ----- |  |  | ----- | ---- | -
|                                                                                           |                           |  | Class A Common Stock |     | Class B Common Stock |  | Class C Common Stock |     | Class D Common Stock
|                                                                                           |                           |  |                      |     |                      |  |                      |     |                     
|                                                                                           |                           |  | Number of            |     | Percent of           |  | Number of            |     | Percent of           |  | Number of |   | Percent of |  | Number of |   | Percent of
|                                                                                           |                           |  | Shares(a)            |     | Ownership(b)         |  | Shares(c)            |     | Ownership            |  | Shares    |   | Ownership  |  | Shares    |   | Ownership 
|                                                                                           |                           |  |                      |     |                      |  |                      |     |                      |  |           |   |            |  |           |   |           
|Key
Equity Capital Corporation
127 Public Square,
28th Floor
Cleveland, Ohio 44114-1306(d) |                           |  | 1,550                |     |                      |  | 37.5                 | %   |                      |  | 8,405     |   |            |  | 100.0     | % |            |  |      |     |  |  |      |     |   |  |       |       |  |  |      |     
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|Key
Equity Partners 97
127 Public Square,28th FloorCleveland, Ohio 44114-1306(e)           |                           |  |                     |     |                      |  |                     |     |                      |  |          |   |            |  |          |   |            |  | 3,335 |     |  |  | 66.7  | %   |   |  |       |       |  |  |      |     
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|David
Given(e)
127 Public Square,28th Floor
Cleveland, Ohio 44114-1306                     |                           |  |                     |     |                      |  |                     |     |                      |  |          |   |            |  |          |   |            |  | 3,335 |     |  |  | 66.7  | %   |   |  |       |       |  |  |      |     
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|Executive Management(f)
Mark D. Christman                                                  |                           |  | 1,010                |     |                      |  | 24.4                 | %   |                      |  |          |   |            |  |          |   |            |  | 834   |     |  |  | 16.7  | %   |   |  | 4,000  |       |  |  | 40.0  | %   
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                           | John S. Baxter            |  |                      | 175 |                      |  |                      | 4.2 | %                    |  |           |  |            |  |           |  |            |  |       | 267 |  |  |       | 5.3 | % |  |        | 1,800 |  |  |       | 18.0 | %
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                           | Kenneth H. Wetmore        |  |                      | 125 |                      |  |                      | 3.0 | %                    |  |           |  |            |  |           |  |            |  |       | 133 |  |  |       | 2.7 | % |  |        | 1,000 |  |  |       | 10.0 | %
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                           | Ronald A. McMaster, Ph.D. |  |                      | 150 |                      |  |                      | 3.6 | %                    |  |           |  |            |  |           |  |            |  |       | 67  |  |  |       | 1.3 | % |  |        | 500   |  |  |       | 5.0  | %
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                           | Diane S. Tymiak           |  |                      | 90  |                      |  |                      | 2.2 | %                    |  |           |  |            |  |           |  |            |  |       | 100 |  |  |       | 1.9 | % |  |        | 700   |  |  |       | 7.0  | %
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                           | Larry E. Elliot           |  |                      | 35  |                      |  |                      | 0.9 | %                    |  |           |  |            |  |           |  |            |  |       | 133 |  |  |       | 2.7 | % |  |        | 1,000 |  |  |       | 10.0 | %
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                           | James P. Schnabel         |  |                      | 75  |                      |  |                      | 1.8 | %                    |  |           |  |            |  |           |  |            |  |       | 133 |  |  |       | 2.7 | % |  |        | 1,000 |  |  |       | 10.0 | %
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|Key Equity Group(g)                                                                        |                           |  | 3,210                |     |                      |  | 77.6                 | %   |                      |  | 8,405     |   |            |  | 100.0     | % |            |  | 5,002 |     |  |  | 100.0 | %   |   |  | 10,000 |       |  |  | 100.0 | %   
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|James M. Papada, III                                                                       |                           |  | 25                   |     |                      |  | 0.6                  | %   |                      |  |          |   |            |  |          |   |            |  |      |     |  |  |      |     |   |  |       |       |  |  |      |     
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|Edmund S. Wright                                                                           |                           |  | 25                   |     |                      |  | 0.6                  | %   |                      |  |          |   |            |  |          |   |            |  |      |     |  |  |      |     |   |  |       |       |  |  |      |     
|                                                                                          
|                                                                                          
|                                                                                          
|                                                                                          
|All officers and directors as a group                                                      |                           |  | 3,260                |     |                      |  | 78.8                 | %   |                      |  | 8,405     |   |            |  | 100.0     | % |            |  | 5,002 |     |  |  | 100.0 | %   |   |  | 10,000 |       |  |  | 100.0 | %   



---

|(a) |  | Does not include shares of Class A Common Stock issuable upon conversion
of Class B Common Stock, or following the occurrence of a Conversion
Event, Class C Common Stock.                                                                                                                                                                                                                                                                                        
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|   
|(b) |  | Assumes 877.21 shares of Class A Common Stock issuable pursuant to the
Warrants are outstanding.                                                                                                                                                                                                                                                                                                                                                                  
|   
|   
|   
|   
|   
|(c) |  | Does not include shares of Class B Common Stock issuable upon conversion
of Class A Common Stock.                                                                                                                                                                                                                                                                                                                                                                 
|   
|   
|   
|   
|   
|(d) |  | KECC is a wholly owned subsidiary of Key Bank, N.A., which is a wholly
owned subsidiary of KeyCorp, a bank holding corporation.                                                                                                                                                                                                                                                                                                                                   
|   
|   
|   
|   
|   
|(e) |  | Mr. Given is a partner of KEP 97. Accordingly, Mr. Given may be deemed
to beneficially own the shares owned by KEP 97.                                                                                                                                                                                                                                                                                                                                            
|   
|   
|   
|   
|   
|(f) |  | Simultaneously with the consummation of Transaction, Executive Management
purchased 1,660 shares of Class A Common Stock on the same terms and
conditions as those shares of Class A Common Stock that are purchased by
KECC. In addition, Executive Management received 1,667 shares of Class C
Common Stock in connection with the Restricted Stock Plan and up to 10,000
shares of Class D Common Stock that may be earned under the Performance
Share Program.
|   
|   
|   
|   
|   
|(g) |  | The Key Equity Group is comprised of Executive Management, KECC and KEP 97.                                                                                                                                                                                                                                                                                                                                                                                       

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Stockholders Agreement

Simultaneously with the consummation of the Transactions, members of the
Key Equity Group and Holding entered into a Stockholders Agreement (the
Stockholders Agreement) which, together with the Amended and Restated
Certificate of Incorporation of Holding (the Certificate of Incorporation),
governs the terms of the capital stock of Holding.

Classes of Common Stock.The authorized shares of capital stock of
Holding (the Common Stock) consists of: (i) 18,072 authorized shares of Class
A Voting Common Stock, $0.01 par value (the Class A Common Stock); (ii)
13,070 authorized shares of Class B Non-Voting Common Stock, $0.01 par value
(the Class B Common Stock); (iii) 5,002 shares of Class C Stock Non-Voting
Common Stock, $0.01 par value (the Class C Common Stock); and (iv) 10,000
shares of Class D Non-Voting Common Stock, $0.01 par value (the Class D Common
Stock). The holders of Class A Common Stock have the right to vote on all
matters to be voted on by the stockholders of Holding. At every meeting of
stockholders of Holding, each holder of Class A Common Stock is entitled to one
vote per share. Except as otherwise required by law, a holder of Class B
Common Stock, Class C Common Stock or Class D Common Stock has no voting rights
with respect to such Common Stock.

Control.The Certificate of Incorporation requires Holding to obtain the
approval by vote or written consent of 55% of the then outstanding shares of
Class A Common Stock, in addition to any other vote required by law, in order
to do any of the following: (i) redeem, purchase or otherwise acquire for value
any shares of Common Stock or any other shares of its capital stock, except as
specifically permitted in the Stockholders Agreement; (ii) authorize or issue,
or obligate itself to authorize or issue, additional shares of Common Stock or
any other shares of its capital stock except as contemplated in the Certificate
of Incorporation or in the Stockholders Agreement; (iii) amend, alter or repeal
the Certificate of Incorporation or the By-Laws of Holding (the By-Laws);
(iv) declare or pay any dividends or make any distributions with respect to any
of its capital stock; or (v) except as specifically permitted by the
Stockholders Agreement, effect, or obligate itself to effect, any sale, lease,
assignment, transfer or other conveyance of all or substantially all of the
assets of Holding or any subsidiary thereof, or any consolidation or merger
involving Holding or any subsidiary thereof, or any reclassification or other
change of capital stock, or any recapitalization or reorganization or any
dissolution, liquidation or winding up of Holding or any subsidiary thereof,
except for the merger into Holding of, or the transfer of assets to Holding
from, any wholly owned subsidiary.

In addition, the Stockholders Agreement provides that Holding will not,
and will not permit any of its subsidiaries (including the Company), to take
any of the following actions without the written consent of KECC or Key Equity
Partners, a general partnership comprised of certain affiliates of KECC (KEP
97): (i) acquire any assets (other than in the ordinary course of business),
capital stock, or any other interest in another business or entity; (ii) sell,
lease, transfer, mortgage, pledge, or encumber all or substantially all of its
assets; (iii) dispose of any business entity or product line or any division or
subsidiary; (iv) enter into any merger, consolidation, reorganization or
recapitalization, or any agreement to do any of the foregoing or reclassify any
of its equity securities; (v) issue any equity security, or issue any options,
warrants, convertible securities, or other rights (contingent or otherwise) to
acquire any equity securities, except for shares of Class A Common Stock issued
pursuant to the Warrants and the issuance of stock to an employee of Holding or
any of its subsidiaries in accordance with a stock purchase or award program
plan or the conversion of stock as described in the Certificate of
Incorporation; (vi) form or acquire any subsidiary except those now existing;
(vii) except as otherwise contemplated by the Stockholders Agreement, declare
or pay any dividends or distributions on the Common Stock or other equity
securities or redeem or repurchase any Common Stock; (viii) grant its consent
to a transfer of stock otherwise prohibited by the Stockholders Agreement; (ix)
incur, assume or guaranty any indebtedness for borrowed money in excess of
certain amounts in any fiscal year; (x) make any loans or advances to any
stockholders or any employees of Holding or any of its subsidiaries other

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than advances to employees in the ordinary course of business which do not exceed
certain amounts per year; (xi) make capital expenditures in excess of certain
amounts in any fiscal year; (xii) except as otherwise contemplated by the
Stockholders Agreement, enter into any transaction with any stockholder or any
affiliate of Holding or its subsidiaries or any stockholder that is on terms
less favorable to Holding and its subsidiaries than could be obtained from
unaffiliated third parties on an arms-length basis; (xiii) amend its
Certificate of Incorporation or By-Laws; or (xiv) enter into any agreement to
do any of the foregoing.

Conversion.Each holder of Class B Common Stock is entitled at any time
and from time to time to convert any or all of the shares of that holders
Class B Common Stock into the same number of shares of Class A Common Stock as
provided in the Certificate of Incorporation; each holder of Class A Common
Stock is entitled at any time and from time to time to convert any or all of
the shares of that holders Class A Common Stock into the same number of shares
of Class B Common Stock as provided in the Certificate of Incorporation;
providedthat in the case of a conversion from Class B Common Stock, which is
non-voting, into Class A Common Stock, which is voting, the holder of shares to
be converted would be permitted under applicable law to hold the total number
of shares of Class A Common Stock which would be held after giving effect to
the conversion. The conversion of the Class B Common Stock held by BPCP could
result in a change of control of Holding and the Company, since Holding is the
sole stockholder of the Company.

Each holder of Class C Common Stock is entitled to convert any or all of
the shares of that holders Class C Common Stock into the same number of shares
of Class A Common Stock only upon the occurrence of any public offering or
public sale of securities of the Corporation (including a public offering
registered under the Securities Act and a sale pursuant to Rule 144 of the
Securities Act or any similar rule then in effect) (any such offering, a
Conversion Event). In addition, each holder of Class C Common Stock is
entitled to convert shares of Class C Common Stock if such holder reasonably
believes that a Conversion Event will be consummated. The Company is
obligated, upon written request of the holder of Class C Common Stock, to
effect such conversion in a timely manner so as to enable each such holder to
participate in such Conversion Event. If any shares of Class C Common Stock
are converted into shares of Class A Common Stock in connection with a
Conversion Event and such shares of Class A Common Stock are not actually
distributed, disposed of or sold pursuant to such Conversion Event, such shares
of Class A Common Stock will promptly be converted back into the same number of
shares of Class C Common Stock that had been the subject of the request for
conversion.

Restrictions on Transfer.Generally, the shares of Common Stock are
subject to certain restrictions on transfer contained in the Stockholders
Agreement. The shares of Common Stock may be transferred among affiliates and
immediate family members without restrictions as long as the recipient complies
with the provisions of the Stockholders Agreement and the applicable rules and
regulations of the Commission. In addition, Holding may repurchase shares of
Common Stock from departing members of Executive Management.

Preemptive Rights.The holders of Common Stock have a pro rataright to
participate in all future offerings of shares of equity securities of Holding
or any securities convertible into or exchangeable for or carrying rights or
options to purchase any shares or any other equity securities of the Company.

Certain Rights of KECC and KEP 97. KECC and KEP 97 have the right, in the
future to exercise a right to require Holding to repurchase their shares of
Common Stock any time after June 2004. In addition, KECC and KEP 97 also have
certain demand registration rights pursuant to which members of Executive
Management may also be able to participate.

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##### Table of Contents






ITEM 13. CERTAIN RELATIONSHIPS AND CERTAIN TRANSACTIONS.

Upon consummation of the Transaction, the Company entered into an advisory
agreement with KECC, pursuant to which KECC consults with the Directors and
members of Executive Management on such general business and financial matters
as may be requested by the Board of Directors, including: (i) corporate
strategy; (ii) budgeting of future corporate investment; and (iii) acquisition
and divestiture strategies. In exchange for such services, KECC received an
annual fee of $200,000, payable quarterly in arrears. Effective October 1,
1998, this fee was adjusted to $150,000.

Effective June 30, 2000, Messrs. Given and LeMay resigned their positions
with KECC and their affiliates and became a Managing Partner and Principal of
BPCP, respectively. In addition, effective June 30, 2000, an affiliate of BPCP
and KECC entered into an Investment Management Agreement, pursuant to which the
affiliate of BPCP agreed to manage KECCs existing investments, which includes
its investment in Holding. As a result of entering into the Investment
Management Agreement, the affiliate of BPCP effectively succeeded to KECCs
interest in the fees payable under the advisor agreement.

The Company has advanced to Holding the sum of $656,399. The advances
have been made to Holding to permit Holding to satisfy certain obligations it
entered into in connection with the Transactions, including, without
limitation, obligations to loan funds to members of Executive Management to
allow them to satisfy certain tax liabilities. The tax liabilities resulted
from the members of Executive Management making certain elections under Section
83(b) of the Code with respect to the shares of Class C Common Stock.

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##### Table of Contents






PART IV.




ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS ON FORM 8-K.

|          |  |                                                                                                                                                                                                                                                             
|--------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a)       |  | (1) Financial Statements:                                                                                                                                                                                                                                   
|         
|         
|         
|         
|          |  | See Index to Consolidated Financial Statements on page 23 included
herein.                                                                                                                                                                                  
|         
|         
|         
|         
|          |  |                                                                                                                                                                                                                                                             
|         
|         
|         
|         
|(a)       |  | (2) Financial Statement Schedule:                                                                                                                                                                                                                           
|         
|         
|         
|         
|          |  | Schedule IIValuation and Qualifying Accounts on page S-1.                                                                                                                                                                                                  
|         
|         
|         
|         
|          |  | All other schedules are omitted as the required information is not
applicable or not present in amounts sufficient to require submission
of the schedule, or because the information is presented in the
consolidated financial statements or related notes.
|         
|         
|         
|         
|          |  |                                                                                                                                                                                                                                                             
|         
|         
|         
|         
|(a)       |  | (3) Exhibits:                                                                                                                                                                                                                                               
|2.1(a)    |  | Agreement and Plan of Merger                                                                                                                                                                                                                                
|         
|         
|         
|         
|2.2(a)    |  | Amendment to Agreement and Plan of Merger                                                                                                                                                                                                                   
|         
|         
|         
|         
|3.1(a)    |  | Restated Certificate of Incorporation of the Registrant                                                                                                                                                                                                     
|         
|         
|         
|         
|3.2(a)    |  | By-laws of the Registrant                                                                                                                                                                                                                                   
|         
|         
|         
|         
|4.1(a)    |  | Indenture (including form of Note)                                                                                                                                                                                                                          
|         
|         
|         
|         
|4.2(a)    |  | First Supplemental Indenture                                                                                                                                                                                                                                
|         
|         
|         
|         
|10.1(a)   |  | Financing and Security Agreement between Bank of America, N.A.,
(f/k/a NationsBank, N.A.) and the Registrant                                                                                                                                                
|         
|         
|         
|         
|10.1.1(b) |  | Second Amendment to Financing and Security Agreement between
Bank of America, N.A., (f/k/a NationsBank, N.A.) and the Registrant                                                                                                                            
|         
|         
|         
|         
|10.1.2(c) |  | Third Amendment to Financing and Security Agreement between
Bank of America, N.A., (f/k/a NationsBank, N.A.) and the
Registrant                                                                                                                             
|         
|         
|         
|         
|10.1.3(d) |  | Fourth Amendment to Financing and Security Agreement between
Bank of America, N.A., (f/k/a NationsBank, N.A.) and the
Registrant                                                                                                                            
|         
|         
|         
|         
|10.1.4(e) |  | Fifth Amendment to Financing and Security Agreement between
UPS Capital Corporation (successor-in-interest to Bank of America,
N.A., f/k/a NationsBank, N.A.) and the Registrant                                                                            
|         
|         
|         
|         
|10.2(a)   |  | Plant and Office Lease                                                                                                                                                                                                                                      
|         
|         
|         
|         
|10.3(a)   |  | Warehouse Lease                                                                                                                                                                                                                                             
|         
|         
|         
|         
|10.4(a)   |  | Advisory Agreement between the Registrant and Key Equity Capital Corporation                                                                                                                                                                                
|         
|         
|         
|         
|10.5(a)   |  | Form of Exchange Agent Agreement between United States Trust
Company of New York and the Registrant                                                                                                                                                         
|         
|         
|         
|         
|10.6(a)   |  | Employment Agreement among Glasstech Holding Co., the Registrant and John S. Baxter                                                                                                                                                                         
|         
|         
|         
|         
|10.7(a)   |  | Employment Agreement among Glasstech Holding Co., the Registrant and Mark D. Christman                                                                                                                                                                      
|         
|         
|         
|         
|10.8(a)   |  | Employment Agreement among Glasstech Holding Co., the Registrant and Larry E. Elliott                                                                                                                                                                       
|         
|         
|         
|         
|10.9(a)   |  | Employment Agreement among Glasstech Holding Co., the Registrant and Ronald A. McMaster                                                                                                                                                                     
|         
|         
|         
|         
|10.10(a)  |  | Employment Agreement among Glasstech Holding Co., the Registrant and James P. Schnabel, Jr.                                                                                                                                                                 
|         
|         
|         
|         
|10.11(a)  |  | Employment Agreement among Glasstech Holding Co., the Registrant and Diane S. Tymiak                                                                                                                                                                        
|         
|         
|         
|         
|10.12(a)  |  | Employment Agreement among Glasstech Holding Co., the Registrant and Kenneth H. Wetmore                                                                                                                                                                     
|         
|         
|         
|         
|10.13(a)  |  | Securities Purchase Agreement between the Registrant, as
successor to Glasstech Sub Co., and CIBC Wood Gundy Securities
Corp.                                                                                                                               
|         
|         
|         
|         
|10.14(a)  |  | Registration Rights Agreement between the Registrant, as
successor to Glasstech Sub Co., and CIBC Wood Gundy Securities
Corp.                                                                                                                               
|         
|         
|         
|         
|21.1(a)   |  | List of Subsidiaries.                                                                                                                                                                                                                                       
|         
|         
|         
|         
|(a)       |  | Incorporated by reference from the Companys Registration
Statement on Form S-4 (Registration No. 333-34391) (the Form
S-4) filed on August 26, 1997. Each of the above exhibits has
the same exhibit number in the Form S-4.                             
|         
|         
|         
|         
|(b)       |  | Incorporated by reference from the Companys Quarterly Report on
Form 10-Q filed on February 11, 1999.                                                                                                                                                      
|         
|         
|         
|         
|(c)       |  | Incorporated by reference from the Companys Annual Report on Form
10-K filed on September 23, 1999.                                                                                                                                                        
|         
|         
|         
|         
|(d)       |  | Incorporated by reference from the Companys Quarterly Report on
Form 10-Q filed on November 13, 2000.                                                                                                                                                      
|         
|         
|         
|         
|(e)       |  | Filed herewith.                                                                                                                                                                                                                                             

|    |  |                                                                                                           
|--- |  | ----------------------------------------------------------------------------------------------------------
|(b) |  | Reports on Form 8-K:                                                                                      
|   
|   
|   
|   
|    |  | No reports have been filed during the last quarter of the fiscal year
covered by this report on Form 10-K.

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##### Table of Contents






SIGNATURES

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

| |               
| | --------------
|
| | GLASSTECH, INC
|

|                         |  |                                                        
|------------------------ |  | -------------------------------------------------------
|Date: September 27, 2001 |  | /s/ Mark D. Christman                                  
|                         |  |                                                        
|                         |  | Mark D. Christman
President and Chief Executive Officer

Pursuant to the requirements of 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 date indicated.

|                         |  |                                                                                                                   
|------------------------ |  | ------------------------------------------------------------------------------------------------------------------
|Date: September 27, 2001 |  | /s/ Mark D. Christman                                                                                             
|                         |  |                                                                                                                   
|                         |  | Mark D. Christman
Director, President and Chief Executive Officer
(Principal Executive Officer)                   
|                        
|Date: September 27, 2001 |  | /s/ Diane S. Tymiak                                                                                               
|                         |  |                                                                                                                   
|                         |  | Diane S. Tymiak
Vice President, Treasurer and Chief Financial Officer
(Principal Financial and Accounting Officer)
|                        
|Date: September 27, 2001 |  | /s/ David P. Given                                                                                                
|                         |  |                                                                                                                   
|                         |  | David P. Given
Director                                                                                           
|                        
|Date: September 27, 2001 |  | /s/ James M. Papada, III                                                                                          
|                         |  |                                                                                                                   
|                         |  | James M. Papada, III
Director                                                                                     
|                        
|Date: September 27, 2001 |  | /s/ Edmund S. Wright                                                                                              
|                         |  |                                                                                                                   
|                         |  | Edmund S. Wright
Director                                                                                         
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##### Table of Contents



GLASSTECH, INC.




SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS

|                                |                                 |           |            |          |           |     |                |        |        |   |   |       |         |   |    |       | 
|------------------------------- | ------------------------------- | --------- | ---------- | -------- | --------- | --- | -------------- | ------ | ------ | - | - | ----- | ------- | - | -- | ----- | 
|                                |                                 |           |            |          |           |     | Additions      |        |        |   |   |       |         |   |   
|                                |                                 |           |            |          |           |     | Charged        |        |        |   |   |       | Balance
|                                |                                 |           | Balance at |          | to        |     | Amount         |        | at    
|                                |                                 |           | Beginning  |          | Costs and |     | Charged        |        | End of
|Description                     |                                 | of Period |            | Expenses |           | Off |                | Period
|                                |                                 |           |            |          |           |     |                |       
|                                |                                 |           |            |          |           |     | (In thousands) |        |        |   |  
|Year ended June 30, 2001:       |                                 |           |            |          |           |     |                |        |        |   |   |       |         |   |    |      
|                               
|                               
|                               
|                               
|                                | Allowance for doubtful accounts |           | $          | 40       |           |     | $              |       |        |   | $ |      |         |   | $  | 40    | 
|                                |                                 |           |            |          |           |     |                |        |        |   |   |       |         |   |    |      
|                               
|                               
|                               
|                               
|                                | Accrued contract costs          |           | $          | 874      |           |     | $              | 4,435  |        |   | $ | 3,465 |         |   | $  | 1,844 | 
|                                |                                 |           |            |          |           |     |                |        |        |   |   |       |         |   |    |      
|                               
|                               
|                               
|                               
|Year ended June 30, 2000:       |                                 |           |            |          |           |     |                |        |        |   |   |       |         |   |    |      
|                               
|                               
|                               
|                               
|                                | Allowance for doubtful accounts |           | $          | 40       |           |     | $              |       |        |   | $ |      |         |   | $  | 40    | 
|                                |                                 |           |            |          |           |     |                |        |        |   |   |       |         |   |    |      
|                               
|                               
|                               
|                               
|                                | Accrued contract costs          |           | $          | 795      |           |     | $              | 1,963  |        |   | $ | 1,884 |         |   | $  | 874   | 
|                                |                                 |           |            |          |           |     |                |        |        |   |   |       |         |   |    |      
|                               
|                               
|                               
|                               
|Year ended June 30, 1999:       |                                 |           |            |          |           |     |                |        |        |   |   |       |         |   |    |      
|                               
|                               
|                               
|                               
|Allowance for doubtful accounts |                                 | $         | 40         |          |           | $   |               |        |        | $ |  |       |         | $ | 40 |      
|                                |                                 |           |            |          |           |     |                |        |        |   |   |       |         |   |    |      
|                               
|                               
|                               
|                               
|                                | Accrued contract costs          |           | $          | 2,382    |           |     | $              | 1,694  |        |   | $ | 3,281 |         |   | $  | 795   | 
|                                |                                 |           |            |          |           |     |                |        |        |   |   |       |         |   |    |      

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##### Table of Contents






EXHIBIT INDEX

|          |  |                                                                                                                                                                                                                                
|--------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1(a)    |  | Agreement and Plan of Merger                                                                                                                                                                                                   
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|2.2(a)    |  | Amendment to Agreement and Plan of Merger                                                                                                                                                                                      
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|3.1(a)    |  | Restated Certificate of Incorporation of the Registrant                                                                                                                                                                        
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|3.2(a)    |  | By-laws of the Registrant                                                                                                                                                                                                      
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|4.1(a)    |  | Indenture (including form of Note)                                                                                                                                                                                             
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|4.2(a)    |  | First Supplemental Indenture                                                                                                                                                                                                   
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|10.1(a)   |  | Financing and Security Agreement between Bank of America, N.A.,
(f/k/a NationsBank, N.A.) and the Registrant                                                                                                                   
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|10.1.1(b) |  | Second Amendment to Financing and Security Agreement between
Bank of America, N.A., (f/k/a NationsBank, N.A.) and the
Registrant                                                                                               
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|10.1.2(c) |  | Third Amendment to Financing and Security Agreement between
Bank of America, N.A., (f/k/a NationsBank, N.A.) and the
Registrant                                                                                                
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|10.1.3(d) |  | Fourth Amendment to Financing and Security Agreement between
Bank of America, N.A., (f/k/a NationsBank, N.A.) and the
Registrant                                                                                               
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|10.1.4(e) |  | Fifth Amendment to Financing and Security Agreement between
UPS Capital Corporation (successor-in-interest to Bank of America,
N.A., f/k/a NationsBank, N.A.) and the Registrant                                               
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|10.2(a)   |  | Plant and Office Lease                                                                                                                                                                                                         
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|10.3(a)   |  | Warehouse Lease                                                                                                                                                                                                                
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|10.4(a)   |  | Advisory Agreement between the Registrant and Key Equity Capital Corporation                                                                                                                                                   
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|10.5(a)   |  | Form of Exchange Agent Agreement between United States Trust
Company of New York and the Registrant                                                                                                                            
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|10.6(a)   |  | Employment Agreement among Glasstech Holding Co., the Registrant and John S. Baxter                                                                                                                                            
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|10.7(a)   |  | Employment Agreement among Glasstech Holding Co., the Registrant and Mark D. Christman                                                                                                                                         
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|10.8(a)   |  | Employment Agreement among Glasstech Holding Co., the Registrant and Larry E. Elliott                                                                                                                                          
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|10.9(a)   |  | Employment Agreement among Glasstech Holding Co., the Registrant and Ronald A. McMaster                                                                                                                                        
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|10.10(a)  |  | Employment Agreement among Glasstech Holding Co., the Registrant and James P. Schnabel, Jr.                                                                                                                                    
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|10.11(a)  |  | Employment Agreement among Glasstech Holding Co., the Registrant and Diane S. Tymiak                                                                                                                                           
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|10.12(a)  |  | Employment Agreement among Glasstech Holding Co., the Registrant and Kenneth H. Wetmore                                                                                                                                        
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|10.13(a)  |  | Securities Purchase Agreement between the Registrant, as
successor to Glasstech Sub Co., and CIBC Wood Gundy Securities
Corp.                                                                                                  
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|10.14(a)  |  | Registration Rights Agreement between the Registrant, as
successor to Glasstech Sub Co., and CIBC Wood Gundy Securities
Corp.                                                                                                  
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|21.1(a)   |  | List of Subsidiaries.                                                                                                                                                                                                          
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|(a)       |  | Incorporated by reference from the Companys Registration
Statement on Form S-4 (Registration No. 333-34391) (the Form
S-4) filed on August 26, 1997. Each of the above exhibits has
the same exhibit number in the Form S-4.
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|(b)       |  | Incorporated by reference from the Companys Quarterly Report on
Form 10-Q filed on February 11, 1999.                                                                                                                         
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|(c)       |  | Incorporated by reference from the Companys Annual Report on Form
10-K filed on September 23, 1999.                                                                                                                           
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|(d)       |  | Incorporated by reference from the Companys Quarterly Report on
Form 10-Q filed on November 13, 2000.                                                                                                                         
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|(e)       |  | Filed herewith.                                                                                                                                                                                                                

E-1