UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One) ~~x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OFTHE SECURITIES EXCHANGE ACT OF 1934~~

~~For~~x ~~the~~QUARTERLY ~~quarterly~~REPORT ~~period~~PURSUANT ~~ended~~TO ~~February 28,~~SECTION ~~2003~~ 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 29, 2004

ooTRANSITION ~~TRANSITION~~ REPORT PURSUANT TO SECTION 13 OR 15(d) ~~OFTHE~~OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to _______.

Commission file number 333-49957-01

EaglePicher Holdings, Inc.

A Delaware Corporation
I.R.S. Employer Identification
No. 13-3989553

~~11201~~3402 ~~North~~East ~~Tatum~~University ~~Blvd. Suite 110~~Drive, Phoenix, Arizona ~~85028~~85034

Registrant’s telephone number, including area code: 602-~~923~~794-~~7200~~9600

Former Name

Eagle-Picher Holdings, Inc.

EAGLEPICHER HOLDINGS, INC. IS FILING THIS REPORT VOLUNTARILY IN ORDER TO COMPLY WITH THE REQUIREMENTS OF THE TERMS OF ITS 9 3/8% SENIOR SUBORDINATED NOTES AND 11 3/4% SERIES B CUMULATIVE EXCHANGEABLE PREFERRED STOCK AND IS NOT REQUIRED TO FILE THIS REPORT PURSUANT TO EITHER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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, and (2) has been subject to such filing requirements for the past 90 days.

Yes ox No ~~x (See explanatory note immediately above.)~~o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2)

Yes o No x

~~930~~1,~~500~~000,000 shares of common capital stock, $0.01 par value each, were ~~outstanding~~ outstanding at April 145, ~~2003~~2004

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements.
		CONDENSED CONSOLIDATED BALANCE SHEETS
		CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
		CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
		NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
	Item 3. Quantitative and Qualitative Disclosures About Market Risk
	Item 4. Controls and Procedures
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
CERTIFICATIONS
EXHIBIT INDEX
EX-10.66
EX-10.67
EX-12.1

TABLE OF ADDITIONAL REGISTRANTS

Jurisdiction

IRS Employer

STATE OR OTHER

Incorporation or

Commission

Identification

JURISDICTION OF

I.R.S. EMPLOYER

Names

Former Names

Organization

File Number

Number

INCORPORATION OR

IDENTIFICATION

EaglePicher Incorporated

Eagle-Picher Industries, Inc

Ohio

333-49957

31-0268670

NAME OF REGISTRANT

ORGANIZATION

NUMBER

Daisy Parts, Inc.

N/A

Michigan

333-49957-02

38-1406772

EaglePicher Incorporated

Ohio

31-0268670

EaglePicher Development Co., Inc.

Eagle-Picher Development Co.,Inc

Delaware

333-49957-03

31-1215706

Carpenter Enterprises, Inc.

Michigan

38-2752092

EaglePicher Far East, Inc.

Eagle-Picher Far East, Inc

Delaware

333-49957-04

31-1235685

Daisy Parts, Inc.

Michigan

38-1406772

EaglePicher Filtration and Minerals, Inc.

Eagle-Picher Minerals, Inc

Nevada

333-49957-06

31-1188662

Eagle-Picher Far East, Inc.

Delaware

31-1235685

EaglePicher Technologies, LLC

Eagle-Picher Technologies, LLC

Delaware

333-49957-09

31-1587660

EaglePicher Filtration & Minerals, Inc.

Nevada

31-1188662

Hillsdale Tool & Manufacturing Co.

N/A

Michigan

333-49957-07

38-0946293

EaglePicher Technologies, LLC

Delaware

31-1587660

EPMR Corporation (f/k/a Michigan Automotive Research Corp.)

N/A

Michigan

333-49957-08

38-2185909

EaglePicher Automotive, Inc.

Michigan

38-0946293

EaglePicher Pharmaceutical Services, LLC

Delaware

74-3071334

TABLE OF CONTENTS

				Page
				Number
		PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets				3
	Condensed Consolidated Statements of Income (Loss)				4
	Condensed Consolidated Statements of Cash Flows				5
	Notes to Condensed Consolidated Financial Statements				6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations					19
Item 3. Quantitative and Qualitative Disclosures About Market Risk					30
Item 4. Controls and Procedures					31
			PART II. OTHER INFORMATION
Item 1. Legal Proceedings					31
Item 6. Exhibits and Reports on Form 8-K					31
Signatures					32
Certifications					41
Exhibit Index					43

~~Table~~TABLE ofOF ~~Contents~~CONTENTS

PART I. FINANCIAL INFORMATION


	Page
	Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets		4
Condensed Consolidated Statements of Income (Loss)		5
Condensed Consolidated Statements of Cash Flows		6
Notes to Condensed Consolidated Financial Statements		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
Item 3. Quantitative and Qualitative Disclosures About Market Risk		28
Item 4. Controls and Procedures		28
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		29
Item 6. Exhibits and Reports on Form 8-K		29
Signatures		30
Exhibit Index		39
EX-10.1
EX-10.2
EX-31.1
EX-31.2
EX-32.1
EX-32.2

~~Item 1. Financial~~DISCLOSURE ~~Statements.~~REGARDING FORWARD-LOOKING STATEMENTS

~~EaglePicher~~ Certain ~~Holdings~~of the matters discussed in this report may constitute forward-looking statements. Forward-looking statements can be identified by the use of forward-looking words such as “believes,” ~~Inc~~“expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates” or “anticipates” or the negative of these terms or other comparable words, or by discussions of strategy, plans or intentions. Statements in this report which are not historical facts are forward-looking statements. Without limiting the generality of the preceding statement, all statements in this report concerning or relating to estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results are forward-looking statements. In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments. Such forward-looking statements are necessarily estimates reflecting our judgment based upon current information and involve a number of risks and uncertainties. Other factors may affect the accuracy of these forward-looking statements and our actual results may differ materially from the results anticipated in these forward-looking statements.

CONDENSED CONSOLIDATED BALANCE SHEETS November 30, 2002 and February 28, 2003 (unaudited) (in thousands of dollars)

		November 30,			February 28,
		2002			2003
ASSETS
Current Assets:
	Cash and cash equivalents	$	31,522		$	32,290
	Receivables, net		23,704			24,373
	Retained interest in EaglePicher Funding Corporation, net		29,400			29,409
	Costs and estimated earnings in excess of billings		16,942			20,142
	Inventories		54,718			54,447
	Net assets of operations to be sold		643			494
	Prepaid expenses and other assets		15,667			18,861
	Deferred income taxes		10,798			10,798
			183,394			190,814
Property, Plant and Equipment, net			183,405			176,524
Goodwill, net			163,940			163,940
Prepaid Pension			54,796			54,613
Other Assets, net			27,506			25,777
		$	613,041		$	611,668
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
	Accounts payable	$	85,055		$	74,987
	Current portion of long-term debt		18,625			150,393
	Compensation and employee benefits		21,044			18,385
	Billings in excess of costs and estimated earnings		944			1,048
	Accrued divestiture reserve		17,662			15,198
	Other accrued liabilities		37,653			37,955
			180,983			297,966
Long-Term Debt, net of current portion			355,100			233,600
Postretirement Benefits Other Than Pensions			17,635			17,476
Other Long-Term Liabilities			8,928			9,506
			562,646			558,548
11.75% Cumulative Redeemable Exchangeable Preferred Stock			137,973			141,910
Commitments and Contingencies Shareholders’ Equity (Deficit):
	Common stock		10			10
	Additional paid-in capital		99,991			99,991
	Accumulated deficit		(175,112	)		(177,881	)
	Accumulated other comprehensive loss		(4,376	)		(2,819	)
	Treasury stock		(8,091	)		(8,091	)
			(87,578	)		(88,790	)
		$	613,041		$	611,668

The accompanying notes are an integral part of these consolidated balance sheets.

~~EaglePicher~~PART ~~Holdings, Inc~~I. FINANCIAL INFORMATION

~~CONDENSED~~Item ~~CONSOLIDATED~~1. ~~STATEMENTS~~Financial ~~OF INCOME (LOSS) Three Months Ended February 28, 2002 and 2003 (unaudited) (in thousands of dollars, except share and per share amounts)~~ Statements.

		2002			2003
Net Sales		$	163,229		$	170,310
Operating Costs and Expenses:
	Cost of products sold (exclusive of depreciation)		129,772			133,112
	Selling and administrative		13,482			14,551
	Depreciation and amortization of intangibles		11,038			11,607
	Goodwill amortization		3,956			—
	Loss from divestitures		125			—
			158,373			159,270
Operating Income			4,856			11,040
	Interest expense		(11,081	)		(9,409	)
	Other income, net		403			433
Income (Loss) Before Taxes			(5,822	)		2,064
	Income Taxes		385			896
Net Income (Loss)			(6,207	)		1,168
Preferred Stock Dividends Accreted			3,512			3,937
Loss Applicable to Common Shareholders		$	(9,719	)	$	(2,769	)
Basic and Diluted Net Loss per Share Applicable to Common Shareholders		$	(10.04	)	$	(2.98	)
Weighted Average Number of Common Shares			968,417			930,500

EaglePicher Holdings, Inc.

~~The~~CONDENSED ~~accompanying~~CONSOLIDATED ~~notes~~BALANCE ~~are~~SHEETS November 30, an2003 ~~integral~~and ~~part~~February 29, of2004 (unaudited) ~~these~~(in ~~consolidated~~thousands ~~financial~~of ~~statements.~~dollars)


	2003			2004
ASSETS
Current Assets:
Cash and cash equivalents	$	67,320		$	30,050
Receivables, net		25,943			28,090
Retained interest in EaglePicher Funding Corporation, net		63,335			60,914
Costs and estimated earnings in excess of billings		28,433			37,190
Inventories		53,205			57,380
Assets of discontinued operations		4,441			4,487
Prepaid expenses and other assets		10,394			11,531
Deferred income taxes		8,526			8,526

		261,597			238,168
Property, Plant and Equipment, net		151,894			152,127
Goodwill		159,640			167,140
Prepaid Pension		56,891			56,931
Other Assets, net		33,516			30,193

	$	663,538		$	644,559

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts payable	$	89,274		$	79,255
Current portion of long-term debt		13,300			3,300
Compensation and employee benefits		15,783			13,848
Billings in excess of costs and estimated earnings		2,098			988
Accrued divestiture reserve		9,297			9,401
Liabilities of discontinued operations		956			780
Other accrued liabilities		32,984			37,275

		163,692			144,847
Long-term Debt, net of current portion		408,570			407,835
Postretirement Benefits Other Than Pensions		17,418			17,354
Other Long-Term Liabilities		9,649			9,574
11.75% Cumulative Redeemable Exchangeable Preferred Stock		154,416			158,585

		753,745			738,195

Commitments and Contingencies
Shareholders’ Equity (Deficit):
Common stock		10			10
Additional paid-in capital		92,810			92,810
Accumulated deficit		(184,543	)		(190,343	)
Accumulated other comprehensive income		1,516			3,887

		(90,207	)		(93,636	)

	$	663,538		$	644,559

~~Table~~The accompanying notes are an integral part of ~~Contents~~these consolidated balance sheets.

~~EaglePicher Holdings, Inc.~~4

CONDENSEDTable CONSOLIDATED STATEMENTS OF CASH FLOWS Three-Months Ended February 28, 2002 and 2003 (unaudited) (in thousands of dollars) Contents

					2002			2003
Cash Flows From Operating Activities:
	Net income (loss)				$	(6,207	)	$	1,168
	Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
		Depreciation and amortization				15,649			12,390
		Loss from divestitures				125			—
		Changes in assets and liabilities:
				Sale of receivables, net (See Note F)		43,775			—
				Receivables and retained interest in EaglePicher Funding Corporation, net		2,897			(678	)
				Inventories		5,507			271
				Prepaid expenses		171			(3,194	)
				Other assets		(1,323	)		126
				Accounts payable		(9,527	)		(10,068	)
				Accrued liabilities		6,332			(4,717	)
				Other, net		(7,118	)		(2,883	)
			Net cash provided by (used in) operating activities			50,281			(7,585	)
Cash Flows From Investing Activities:
	Proceeds from sales of divisions					6,300			—
	Proceeds from the sale of property and equipment, and other, net					—			329
	Capital expenditures					(5,106	)		(3,903	)
	Other, net					122			—
			Net cash provided by (used in) investing activities			1,316			(3,574	)
Cash Flows From Financing Activities:
	Reduction of long-term debt					(12,800	)		(4,232	)
	Net borrowings (repayments) under revolving credit agreements					(36,088	)		14,500
	Acquisition of treasury stock					156			—
			Net cash (used in) provided by financing activities			(48,732	)		10,268
Effect of Exchange Rates on Cash						151			1,659
Net Increase in Cash and Cash Equivalents						3,016			768
Cash and Cash Equivalents, beginning of period						24,620			31,522
Cash and Cash Equivalents, end of period					$	27,636		$	32,290
Supplemental Cash Flow Information:
	Interest paid				$	5,003		$	3,068
	Income taxes paid (refunded), net				$	267		$	—

EaglePicher Holdings, Inc.

~~The~~CONDENSED ~~accompanying~~CONSOLIDATED ~~notes~~STATEMENTS ~~are~~OF anINCOME ~~integral~~(LOSS) Three ~~part~~Months Ended February 28, 2003 and February 29, 2004 (unaudited) (in thousands of ~~these~~dollars, ~~consolidated~~except ~~financial~~share ~~statements.~~and per share amounts)


	2003			2004
Net Sales	$	164,039		$	166,782

Operating Costs and Expenses:
Cost of products sold (exclusive of depreciation)		127,756			128,996
Selling and administrative		14,128			16,869
Depreciation and amortization of intangibles		11,114			9,965
Loss from divestitures		—			2,600

		152,998			158,430

Operating Income		11,041			8,352
Interest expense		(8,373	)		(9,255	)
Preferred stock dividends accrued (see Note F)		—			(4,169	)
Other income (expense), net		324			(293	)

Income (Loss) for Continuing Operations Before Taxes		2,992			(5,365	)
Income tax provision		896			373

Income (Loss) From Continuing Operations		2,096			(5,738	)
Discontinued Operations:
Loss from operations of discontinued businesses		(928	)		—
Loss on disposal of discontinued business		—			(62	)

Net Income (Loss)		1,168			(5,800	)
Preferred Stock Dividends Accreted (See Note F)		(3,937	)		—

Loss Applicable to Common Shareholders	$	(2,769	)	$	(5,800	)

Basic and Diluted Net Loss per Share Applicable to Common Shareholders:
Loss from continuing operations	$	(1.98	)	$	(5.74	)
Loss from discontinued operations		(1.00	)		(0.06	)

Net Loss	$	(2.98	)	$	(5.80	)

Weighted Average Number of Common Shares		930,500			1,000,000

~~Table~~The accompanying notes are an integral part of ~~Contents~~these consolidated financial statements.

~~EaglePicher Holdings, Inc.~~5

NOTESTable TOof CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Contents

~~A. BASIS~~EaglePicher OFHoldings, ~~REPORTING FOR INTERIM FINANCIAL STATEMENTS~~Inc.

~~Our~~CONDENSED ~~accompanying~~CONSOLIDATED ~~unaudited~~STATEMENTS ~~condensed~~OF ~~consolidated~~CASH ~~financial statements~~FLOWS ~~have~~Three-Months ~~been~~Ended ~~prepared~~February 28, ~~pursuant~~2003 ~~to the rules~~ and ~~regulations~~February 29, ~~of the Securities and~~2004 ~~Exchange Commission~~ (~~“SEC”~~unaudited). ~~Certain information and footnote disclosures normally included~~ (in ~~financial~~thousands ~~statements prepared in accordance with accounting principles generally accepted in the United States~~ of ~~America have~~dollars) ~~been omitted pursuant to such rules and regulations, although we believe that~~ ~~the disclosures are adequate to make the information presented not misleading.~~ These financial statements should be read in conjunction with our financial statements and notes thereto for the fiscal year ended November 30, 2002 presented in our Form 10-K, filed with the SEC on March 3, 2003.

The financial statements presented herein reflect all adjustments (consisting of normal and recurring adjustments), which, in our opinion are necessary to fairly state the results of operations for the three month periods ended February 28, 2002 and 2003. Results of operations for interim periods are not necessarily indicative of results to be expected for an entire year.


	2003			2004
Cash Flows From Operating Activities:
Net income (loss)	$	1,168		$	(5,800	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		11,897			10,458
Preferred stock dividends accrued		—			4,169
Loss on disposal of discontinued operations		—			62
Loss from divestitures		—			2,600
Changes in assets and liabilities:
Sale of receivables, net (See Note E)		(2,700	)		10,245
Receivables and retained interest in EaglePicher Funding Corporation, net		1,653			(8,868	)
Costs and estimated earnings in excess of billings and billings in excess of costs and estimated earnings, net		(3,096	)		(9,867	)
Inventories		(3	)		(4,034	)
Accounts payable		(9,915	)		(10,545	)
Accrued liabilities		(4,769	)		(405	)
Other, net		(2,763	)		(2,079	)

Net cash used in Operating activities		(8,528	)		(14,064	)

Cash Flows From Investing Activities:
Proceeds from the sale of property and equipment, and other, net		329			105
Capital expenditures		(3,720	)		(9,393	)
Acquisition of majority interest in EaglePicher Horizon Batteries LLC (See Note B)		—			(3,500	)

Net cash used in investing activities		(3,391	)		(12,788	)

Cash Flows From Financing Activities:
Reduction of long-term debt		(4,232	)		(10,769	)
Net borrowings under revolving credit agreements		14,500			—

Net cash (used in) provided by financing activities		10,268			(10,769	)

Net cash provided by (used in) discontinued operations		760			(284	)

Effect of Exchange Rates on Cash		1,659			635

Net Increase (Decrease) in Cash and Cash Equivalents		768			(37,270	)
Cash and Cash Equivalents, beginning of period		31,522			67,320

Cash and Cash Equivalents, end of period	$	32,290		$	30,050

Supplemental Cash Flow Information:
Interest paid	$	3,068		$	2,940

Income taxes paid (refunded), net	$	—		$	476

In the fourth quarter of fiscal 2002, we restated our financial statements to reflect the appropriate adoption of EITF 00-10, “Accounting for Shipping and Handling Fees and Costs,” which we should have adopted in 2001. EITF 00-10 states that all amounts billed to a customer in a sale transaction related to shipping and handling represent revenues earned for the goods provided and should be classified as revenue. Prior to the adoption of EITF 00-10, some of the costs billed to customers for shipping and handling costs (our transportation expenses) were included as an offset to our costs. This restatement had no impact on operating income, net income, or cash flows. The ~~impacts~~ toaccompanying ~~the~~notes ~~financial~~are ~~statements for the three months ended February 28, 2002 was~~ an ~~increase~~integral inpart ~~Net Sales and Cost~~ of ~~Products~~these ~~Sold~~consolidated byfinancial $3statements.~~9 million.~~ ~~In addition, certain amounts in 2002 have been reclassified to conform to the~~ ~~2003 financial statement presentation.~~

~~Inventories~~6

InventoriesTable consisted of the following at November 30, 2002 and February 28, 2003 (in thousands of dollars): Contents

	2002		2003
Raw materials and supplies	$	25,365	$	28,124
Work-in-process		14,058		13,331
Finished goods		15,295		12,992
	$	54,718	$	54,447

EaglePicher Holdings, Inc.

~~Comprehensive~~NOTES ~~Income~~TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (~~Loss~~unaudited)

~~During~~A. ~~the~~BASIS ~~three~~OF ~~months~~REPORTING ~~ended~~FOR ~~February 28,~~INTERIM ~~2002~~FINANCIAL ~~and 2003 our comprehensive loss was as follows (in thousands of dollars):~~ STATEMENTS

	2002			2003
Net income (loss)	$	(6,207	)	$	1,168
Gain (loss) on interest rate swap agreements		45			545
Gain (loss) on forward foreign currency contracts		323			(647	)
Change in currency translation adjustment		(217	)		1,659
	$	(6,056	)	$	2,725

Our accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations, although we believe that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with our financial statements and notes thereto for the fiscal year ended November 30, 2003 presented in our Form 10-K, filed with the SEC on February 17, 2004.

6 The financial statements presented herein reflect all adjustments (consisting of normal and recurring adjustments), which, in our opinion are necessary to fairly state the results of operations for the three month periods ended February 28, 2003 and February 29, 2004. Results of operations for interim periods are not necessarily indicative of results to be expected for an entire year.

~~Table of Contents~~ Inventories

~~B. GOODWILL~~ Inventories consisted of the following at November 30, 2003 and February 29, 2004 (in thousands of dollars):

On December 1, 2002, we adopted SFAS No. 142, “Goodwill and Other Intangible Assets.” The ratable amortization of goodwill and other intangible assets with indefinite lives was replaced with an annual test for impairment. Accordingly, we ceased amortization of goodwill on December 1, 2002. We have determined that we have six reporting units, as defined in SFAS No. 142, within our three reportable business segments. The following goodwill amounts by reporting unit were recorded as of November 30, 2002 and February 28, 2003 (in thousands of dollars):


	2003		2004
Raw materials and supplies	$	24,441	$	26,487
Work-in-process		13,784		15,959
Finished goods		14,980		14,934

	$	53,205	$	57,380

Reporting Unit	Segment	Amount
Hillsdale Division	Automotive	$	34,816
Wolverine Division	Automotive		47,268
Power Group	Technologies		44,486
Specialty Materials Group	Technologies		31,398
Pharmaceutical Services (formerly ChemSyn)	Technologies		2,929
Filtration and Minerals	Filtration and Minerals		3,043
		$	163,940

Comprehensive Income (Loss)

WeDuring ~~have~~the ~~completed~~three ~~our~~months ~~initial~~ended ~~impairment test as of December~~February 128, ~~2002,~~2003 and ~~determined~~ ~~that~~February 29, no2004 ~~impairment charge exists. Our fair values for each~~our ~~reporting~~comprehensive ~~unit~~income ~~were~~(loss) was ~~determined~~as ~~based~~follows on(in ~~our~~thousands ~~estimate~~ of ~~future cash flows by~~dollars): ~~reporting unit, which were derived from our annual forecasting process.~~

The following pro forma disclosure presents our net income (loss) and basic and diluted net income (loss) per share applicable to common shareholders for the three-months ended February 28, 2002 and 2003 as if SFAS No. 142 had been adopted on December 1, 2001 (in thousands of dollars, except per share amounts):


	2003			2004
Net income (loss)	$	1,168		$	(5,800	)
Gain on interest rate swap agreements		545			1,031
Gain (loss) on forward foreign currency contracts		(647	)		705
Change in currency translation adjustment		1,659			635

	$	2,725		$	(3,429	)

		2002			2003
Reported Net Income (Loss)		$	(6,207	)	$	1,168
	Goodwill amortization		3,956			—
As Adjusted Net Income (Loss)		$	(2,251	)	$	1,168
Reported Basic and Diluted Net Income (Loss) per Share Applicable to Common Shareholders		$	(10.04	)	$	2.98
	Goodwill amortization		4.09			—
As Adjusted Basic and Diluted Net Income (Loss) per Share Applicable to Common Shareholders		$	(5.95	)	$	2.98

Revenue Recognition

C For certain products sold under fixed-price contracts and subcontracts with various United States Government agencies and aerospace and defense contractors, we utilize the percentage-of-completion method of accounting. ~~RECENTLY~~ When ~~RELEASED~~we ORuse ~~ADOPTED~~the ~~ACCOUNTING~~percentage-of-completion ~~STANDARDS~~method, we measure our percent complete based on total costs incurred to date as compared to our best estimate of total costs to be incurred.

InThe ~~June~~following ~~2001,~~provides ~~the~~information ~~FASB~~on ~~issued~~contracts ~~SFAS~~in ~~No. 143,~~progress ~~“Accounting~~at ~~for Asset~~November ~~Retirement Obligations~~30,” ~~which~~2003 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived assets and ~~depreciated over their estimated useful life while the liability is accreted to its expected obligation amount upon retirement. We adopted SFAS No.~~February ~~143 on December 1~~29, ~~2002.~~2004 ~~The~~(in ~~adoption~~thousands ~~did not have a material impact on our financial condition or results~~ of ~~operations.~~dollars):

~~In September 2001, the FASB issued SFAS No. 144, “Accounting for the~~7 Impairment or Disposal of Long-Lived Assets,” which superceded SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of.” The primary difference is that goodwill and certain intangibles with indefinite lives have been removed from the scope of SFAS No. 144, as they are covered by SFAS No. 142, as described above. It also broadens the presentation of discontinued operations to include a component of an entity rather than a segment of a business. A component of an entity comprises operations and cash flows that can clearly be distinguished operationally and for financial accounting purposes from the rest of the entity. We adopted SFAS No. 144 on December 1, 2002. The adoption did not have a material impact on our financial condition or results of operations.

7 Table of Contents


	2003			2004
Costs incurred on uncompleted contracts	$	167,091		$	154,712
Estimated earnings		45,606			47,907

		212,697			202,619
Less: billings to date		(186,362	)		(166,417	)

	$	26,335		$	36,202

Costs and estimated earnings in excess of billings	$	28,433		$	37,190
Billings in excess of costs and estimated earnings		(2,098	)		(988	)

	$	26,335		$	36,202

~~In June 2002, the FASB issued SFAS No~~B. ~~146,~~ “Accounting for Costs Associated with Exit or disposal Activities,” which is effective for exit or disposal activities initiated after December 31, 2002. SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” The adoption of this statement did not have a material impact on our financial condition or results of operations. GOODWILL

InEaglePicher ~~November~~Horizon ~~2002,~~Batteries ~~the~~LLC ~~FASB~~was ~~issued~~a ~~Interpretation~~50% ~~No. 45~~owned ~~(“FIN~~venture ~~45”) “Guarantor’s~~that ~~Accounting~~we ~~and~~did ~~Disclosure requirements for Guarantees, Including~~not ~~Indirect~~control ~~Guarantees~~as of ~~Indebtedness~~November 30, ~~of Others~~2003.” ~~FIN~~Effective 45December 1, ~~elaborates on the existing disclosure requirements for most guarantees~~2003, ~~including~~this ~~loan~~venture was ~~guarantees.~~amended Itand ~~also~~we ~~clarifies~~acquired ~~that~~an atincremental ~~the~~12% ~~time~~interest afrom ~~company~~our ~~issues~~venture ~~a guarantee,~~partner ~~the~~for ~~company~~$7.5 million. ~~must~~We ~~recognize~~paid, ~~an initial liability~~ for ~~the~~cash ~~fair~~flow ~~value~~purposes, ~~or market value, of~~ the ~~obligations it assumes under that guarantee~~$7.5 million ~~However,~~in ~~the~~two ~~provisions~~installment ~~related~~payments ~~to recognizing a liability at inception~~ of ~~the~~$4.0 million ~~guarantee~~in ~~for the~~November 2003 ~~fair~~and ~~value~~$3.5 million ~~of the guarantor’s obligations does not apply to product~~in ~~warranties or to guarantees accounted for as derivatives~~December 2003. ~~The~~We ~~initial recognition~~also ~~and~~obtained ~~initial~~rights ~~measurement~~to ~~provisions~~appoint ~~apply~~the onGeneral aManager ~~prospective basis to~~and ~~guarantees~~control ~~issued~~over orthree ~~modified~~of ~~after~~the ~~December 31,~~five ~~2002.~~members ~~The disclosure requirements~~ of ~~FIN~~the 45board. ~~are~~We ~~effective~~now ~~for~~own ~~financial~~62% ~~statements~~ of ~~interim or~~this ~~annual~~venture ~~periods~~and ~~ending~~control ~~after~~the ~~December 15~~operating board, ~~2002.~~and ~~FIN~~accordingly 45consolidated ~~does not affect the~~this ~~accounting~~entity ~~for~~in ~~guarantees~~our ~~issued~~financial ~~prior~~results tobeginning ~~the~~with ~~effective~~our ~~date,~~quarter ~~unless~~ended ~~the guarantee is modified subsequent to December~~February 3129, ~~2002~~ 2004. WeEaglePicher ~~adopted~~Horizon ~~the disclosure~~Batteries ~~requirements~~LLC onmanufactures ~~December 1, 2002,~~ and ~~the~~distributes ~~initial recognition and~~next ~~measurement~~generation ~~provisions~~lead-acid inwoven ~~our~~battery ~~February 28,~~technology. ~~2003~~We ~~financial~~recognized ~~statements~~$7.5 million ~~The~~of ~~adoption~~additional ofgoodwill ~~FIN~~related 45to ~~did~~taking ~~not~~control ~~have~~and aconsolidating ~~material~~the ~~impact~~entity on in our financial ~~condition or results of operations~~statements.

~~In January 2003, the FASB issued Interpretation No~~C. 46 ~~(“FIN~~RECENTLY ~~46”) “Consolidation~~RELEASED ofOR ~~Variable~~ADOPTED ~~Interest~~ACCOUNTING Entities.” Until this interpretation, a company generally included another entity in its consolidated financial statements only if it controlled the entity through voting interests. FIN 46 requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or entitled to receive a majority of the entity’s residual returns. FIN 46 applies to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest in after that date. A public entity with a variable interest in a variable interest entity created before February 1, 2003, shall apply the provisions of this interpretation (other than the transition disclosure provisions in paragraph 26) to that entity no later than the beginning of the first interim or annual reporting period beginning after June 15, 2003. The related disclosure requirements are effective immediately. The impact of this interpretation is not expected to have a material impact on our financial condition or results of operations. STANDARDS

In ~~November 2002~~January 2003, the ~~EITF~~Financial Accounting Standards Board (“FASB”) issued Interpretation ~~EITF~~(“FIN”) ~~00-21~~No. 46, “~~Revenue~~Consolidation ~~Arrangements~~of ~~with Multiple~~Variable ~~Deliverables.”~~Interest ~~EITF~~Entities ~~00-21~~— An ~~prescribes~~Interpretation aof ~~method~~Accounting toResearch ~~account~~Bulletin ~~for~~(“ARB”) No. 51.” This ~~contracts~~interpretation ~~that~~was ~~have~~subsequently ~~multiple~~revised ~~elements~~by orFIN ~~deliverables.~~46 It(Revised ~~provides~~2003) ~~guidance~~in onDecember ~~how~~2003. toThis ~~allocate~~revised ~~the~~interpretation ~~value~~states ofthat aconsolidation ~~contract~~of tovariable interest ~~its~~entities ~~different~~will ~~deliverables,~~be asrequired ~~well as~~by ~~guidance~~the onprimary ~~when~~beneficiary toif ~~recognize~~the ~~revenue~~entities do ~~allocated~~not toeffectively ~~each~~disperse ~~deliverable~~risks ~~over~~among ~~its performance~~the ~~period~~parties involved. WeThe requirements are ~~required~~effective tofor ~~adopt~~fiscal ~~EITF~~years ~~00-21~~ending onafter December 115, 2003. for Wespecial-purpose ~~are~~entities ~~evaluating~~and ~~the~~for ~~impact~~all ~~EITF~~other ~~00-21~~types ~~will~~of ~~have~~entities onfor usperiods ending after March 31, ~~but~~2004. We do not ~~expect~~believe ~~it to~~that FIN No. 46(R) will have a material impact on our financial condition or results of operations.

D In March 2004, the Emerging Issues Task Force (“EITF”) reached a consensus on EITF No. ~~RESTRUCTURING~~ 03-16, “Accounting for Investments in Limited Liability Companies.” This consensus would require that we account for our investment in a start-up manufacturing company, as described in Note S of our Form 10-K for the year ended November 30, 2003, filed on February 17, 2004, as an equity method investment. As of February 29, 2004, we have $1.2 million recorded in our balance sheet related to this investment. The consensus, if ratified by the FASB, would be effective for us on September 1, 2004 and would require that we record a cumulative effect of a change in accounting principle in our fourth quarter of 2004.

~~During~~The ~~2001,~~EITF weis ~~recorded~~currently ~~asset~~considering ~~write~~Issue No. 03-~~downs~~R, ~~and~~“The ~~other~~Accounting ~~charges totaling~~for ~~$14.1 million~~Certain Costs in ~~connection~~the ~~with~~Mining aIndustry, ~~restructuring~~Including ~~plan~~Deferred ~~(the~~Stripping ~~“Plan~~Costs.”) ~~announced in~~The ~~November~~issue ~~2001.~~is ~~The~~attempting ~~Plan~~to ~~primarily~~address ~~relocated~~numerous ~~our~~implementation ~~corporate~~and ~~headquarters~~consistency ~~from~~issues ~~Cincinnati,~~for ~~Ohio~~the tomining ~~Phoenix~~industry, ~~Arizona~~including ~~and~~the ~~closed~~appropriate ~~three~~accounting ~~plants~~for indeferred stripping costs. Any conclusions by the EITF on this issue could result in a ~~Technologies~~change ~~Segment~~to our accounting policy on Deferred Stripping and as a result ofcould have ~~the~~a ~~elimination~~material ofimpact ~~certain~~on ~~product~~our ~~lines~~financial ~~in the~~condition ~~Power~~or ~~Group~~results ~~business~~of operations.

In ~~May~~December 2003, ~~2002~~the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 132 (Revised 2003), weEmployers’ ~~announced~~Disclosures weabout Pensions ~~would~~and ~~exit~~Other Postretirement Benefits. This standard increases the existing ~~Gallium~~disclosure ~~business~~requirements inby ~~our~~requiring more details about pension plan ~~Technologies~~assets, ~~Segment~~benefit ~~due~~obligations, cash flows, benefit costs and related information. We will be required to ~~the~~segregate ~~downturn~~plan inassets ~~the~~by ~~fiber-optic~~category, ~~telecommunication~~such as debt, equity and ~~semiconductor~~real ~~markets~~estate, and to provide certain expected rates of return and other informational disclosures. We will be required to adopt the ~~primary~~disclosure requirements ~~markets~~of ~~for~~SFAS No. 132(R) when we issue our ~~Gallium~~November 30, ~~products.~~2004 ~~This~~financial ~~action~~statements, ~~resulted~~and we will be required to disclose various elements of pension and postretirement benefit costs in ainterim-period ~~$5.5~~financial statements for quarters beginning after December ~~million~~15, ~~charge~~2003 to(our ~~restructuring~~second ~~expense~~quarter of fiscal 2004 ending May 31, 2004).

~~The remaining balance of $2~~D.~~2 million~~ asDIVESTITURES ofAND ~~February 28,~~DISCONTINUED 2003, is included in Other Accrued Liabilities in our balance sheets. An analysis of the facilities, severance and other costs incurred related to restructuring reserves since November 30, 2002 is as follows (in thousands of dollars): OPERATIONS

								Other
		Facilities			Severance			Costs			Total
Balance at November 30, 2002		$	1,629		$	314		$	1,340		$	3,283
	Amounts spent		(271	)		(55	)		(745	)		(1,071	)
Balance at February 28, 2003		$	1,358		$	259		$	595		$	2,212

Divestitures

E We have indemnified buyers of our former divisions and subsidiaries for certain liabilities related to items such as environmental remediation and warranty issues on divisions sold in previous years. ~~DIVESTITURES~~ ~~AND~~We ~~DISCONTINUED~~had ~~OPERATIONS~~previously recorded liabilities for these exposures; however, from time to time, as additional information becomes available, additional amounts need to be recorded.

~~Divestitures~~ An analysis of the liabilities related to divestitures is as follows (in thousands of dollars):

We have indemnified buyers of our former divisions and subsidiaries for certain liabilities related to items such as environmental remediation and warranty issues on divisions sold in previous years. We had previously recorded liabilities for these exposures; however, from time to time, as additional information becomes available, additional amounts need to be recorded.


Balance at November 30, 2003	$	9,297
Cash paid		(2,496	)
Additional charges.		2,600

Balance at February 29, 2004	$	9,401

AnIn ~~analysis~~the offirst ~~the~~quarter ~~liabilities~~of ~~related~~2004, towe ~~divestitures~~recorded is$2.6 million asof ~~follows~~expense ~~(in~~related ~~thousands~~to a litigation settlement of ~~dollars):~~a warranty claim related to a division sold effective December 1999.

Balance at November 30, 2002		$	17,662
	Amounts spent		(2,464	)
Balance at February 28, 2003		$	15,198

Discontinued Operations

~~Discontinued~~ During the second quarter of 2003, we reached an agreement in principle for the sale of certain assets at our Hillsdale U.K. Automotive operation (a former component of our Automotive Segment) for cash of $1.1 million. The sale closed on June 11, 2003. In addition, we wound down the remaining operations of our Hillsdale U.K. Automotive operation during 2003. Accordingly, effective in the second quarter of 2003, upon receipt of authority from our Board of Directors, we discontinued the operations of our Hillsdale U.K. Automotive operation and restated all prior period financial statements. We have included in Loss from Operations of Discontinued Businesses in our Statements of Income (Loss) a loss of $0.3 million in the first quarter of 2003, which is net of a zero tax provision (benefit). We expect to incur an additional $0.3 million of shutdown costs during 2004, which have not been incurred as of February 29, 2004.

~~Effective~~In ~~December~~July 142003, ~~2001,~~ we ~~sold~~completed ~~certain~~the sale of ~~the~~certain assets of our ~~former~~ ~~Construction~~Germanium-based ~~Equipment~~business ~~Division.~~in ~~This division represented~~ our ~~entire~~Technologies ~~former Machinery~~ Segment. ~~The~~for ~~sale~~net ~~price~~cash ~~was~~proceeds of approximately $614.10 million. inThese ~~cash,~~assets ~~plus~~relate anto ~~estimated~~the production of ~~working~~Germanium-based ~~capital~~products ~~adjustment~~primarily ofused ~~$1.0 million,~~in the infrared optics and ~~the~~fiber ~~assumption~~optics applications and do not include any of ~~approximately~~our assets that are involved in the ~~$6.7 million~~production of ~~current~~Germanium ~~liabilities~~substrates and wafers. We ~~retained~~agreed that if the ~~land~~buyer ~~and~~is required ~~buildings~~to ofdivest the ~~Construction~~ ~~Equipment~~acquired ~~Division’s~~business ~~main~~due ~~facility~~to incertain ~~Lubbock,~~regulatory ~~Texas~~proceedings commenced ~~and~~within ~~leased~~ one year of the ~~facility~~sale, tothen we would reimburse the buyer for 50% aof ~~five-year~~the ~~term.~~amount ~~The~~by ~~buyer~~which ~~has~~the ansale ~~option~~price is less than $15.0 million up to ~~buy~~a ~~the~~maximum ~~facility~~reimbursement ~~for~~of $24.50 million, ~~increasing~~and ~~$100,000~~we ~~per~~would ~~year~~receive ~~over~~50% ~~the~~of ~~term~~any ofexcess of the ~~lease.~~sale Weprice ~~also~~over ~~retained~~the $~~900,000~~15.0 million ofup ~~accounts~~to ~~receivable,~~a ~~and~~maximum ~~approximately~~ of $24.30 million. ofWe believe ~~raw~~that ~~materials~~the ~~inventory,~~expected ~~which~~present ~~the~~value ~~buyer~~of ~~was~~being required to ~~purchase~~ ~~within~~make ~~one~~a ~~year.~~payment pursuant ~~The~~to ~~buyer~~these ~~failed~~provisions tois ~~purchase~~immaterial, ~~approximately~~and ~~$400~~therefore,~~000~~ we have not recorded a liability. During the third quarter of 2003, we discontinued the ~~inventory.~~operations of Weour ~~are~~Germanium-based ~~pursuing~~business ~~collection~~and ~~actions~~restated all prior period financial statements. ~~The~~We ~~Net~~have ~~Assets~~included in Loss from Operations of Discontinued ~~Operations~~Businesses toin beour ~~Sold~~Statements atof ~~November 30,~~Income ~~2002~~(Loss) ~~and~~a ~~February 28,~~loss ~~2003~~of ~~are~~$0.7 million ~~primarily~~ in the first ~~remaining~~quarter ~~balance~~of 2003, which is net of ~~the~~a ~~inventory~~zero tax provision (benefit). In addition, asduring the ~~liabilities~~first ~~associated~~quarter ~~with~~of ~~this transaction~~2004, ~~totaling~~we ~~$2.9 million~~recorded ~~and~~in ~~representing~~Loss ~~primarily~~on ~~environmental~~Disposal of ~~liabilities,~~Discontinued ~~had~~Businesses ~~been~~a ~~transferred~~loss toof ~~the~~$0.1 million, ~~Accrued~~which ~~Divestitures~~is ~~reserve~~net atof zero tax ~~November 30~~provision (benefit), ~~2002~~related to incremental sale costs.

F We do not allocate any general corporate overhead to Loss from Operations of Discontinued Businesses or Loss on Disposal of Discontinued Businesses. However, ~~ACCOUNTS~~in ~~RECEIVABLE~~accordance ~~ASSET~~with the provisions of EITF No. 87-~~BACKED~~24, ~~SECURITIZATION~~“Allocation of Interest to Discontinued Operations” we do allocate to Loss from Operations of Discontinued Businesses (~~QUALIFYING~~i) interest ~~SPECIAL~~on ~~PURPOSE~~debt ~~ENTITY~~that is to be assumed by buyers, (ii) interest on debt that is required to be repaid as a result of the divestiture, and (iii) a portion of our remaining consolidated interest expense that is not directly attributable to or related to our other operations. Other consolidated interest expense that is not attributed to our other operations is allocated based on the ratio of net assets to be sold or discontinued less debt that is required to be paid as a result of the disposal transaction to the sum of our total consolidated net assets plus our consolidated debt other than (a) debt of the discontinued operation that will be assumed by the buyer, (b) debt that is required to be paid as a result of the disposal transaction, and (c) debt that can be directly attributed to our other operations. Interest expense included in Loss from Operations of Discontinued Businesses for the three months ended February 28, 2003 was $1.0 million. We do not allocate any interest expense to the Loss on Disposal of Discontinued Businesses.

~~During the first quarter of 2002, we entered into an agreement with a~~9 major U.S. financial institution to sell an interest in certain receivables through an unconsolidated qualifying special purpose entity, EaglePicher Funding Corporation (“EPFC”). Initially $47.0 million of proceeds from this new facility were used primarily to payoff amounts outstanding under our existing Receivables Loan Agreement with our wholly owned subsidiary, EaglePicher Acceptance Corporation. This agreement provides for the sale of certain receivables to EPFC, which in turn sells an interest in a revolving pool of receivables to the financial institution. EPFC has no recourse against us for failure of the debtors to pay when due. The agreement provides for the continuation of the program on a revolving basis until the earlier of a) the maturity of our senior credit facility, or b) assuming we are able to refinance our senior credit facility, the fourth quarter of 2004.

WeTable account for the securitization of these sold receivables in accordance with SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities—a Replacement of FASB Statement No. 125.” Under this Contents

9 At February 29, 2004, the remaining balance in Assets of Discontinued Operations was primarily an insurance receivable related to an entity that was supposed to provide a source of Germanium for the sale of certain assets within our Germanium-based business. The balance in Liabilities of Discontinued Operations was primarily accounts payable and accrued liabilities related to our Hillsdale U.K. Automotive operation.

~~Table~~E. ofACCOUNTS ~~Contents~~RECEIVABLE ASSET-BACKED SECURITIZATION (QUALIFYING SPECIAL PURPOSE ENTITY)

~~guidance,~~ We athave ~~the~~an ~~time~~agreement ~~the~~with a major United States financial institution to sell an interest in certain receivables ~~are~~through ~~sold~~an unconsolidated qualifying special purpose entity, ~~the~~EaglePicher ~~balances~~Funding ~~are~~Corporation (“EPFC”). The size of ~~removed~~this ~~from~~facility ~~our~~is $55.0 million, subject to certain financial ~~statements~~covenant limitations. ~~For~~This ~~purposes~~agreement provides for the sale of ~~calculating~~certain ~~our~~receivables ~~debt~~to ~~covenant~~EPFC, ~~compliance~~which ~~under~~in ~~our~~turn ~~Credit~~sells ~~Agreement~~an interest in a revolving pool of receivables to the financial institution. EPFC has no recourse against us for failure of the debtors to pay when due. In the third quarter of 2003, we ~~include~~amended this agreement to extend the ~~debt~~receivables ~~outstanding~~program until the earlier of (a) 90 days onprior ~~EPFC~~to the maturity of our Credit Agreement or (b) January 2008.

InWe ~~conjunction~~account ~~with~~for the ~~initial~~securitization ~~transaction~~of ~~during~~these ~~2002, we~~ sold ~~$82.5 million of~~ receivables toin ~~EPFC,~~accordance with ~~and~~SFAS ~~we incurred charges of $1~~No.5 ~~million~~140, ~~which are~~“Accounting ~~included~~for inTransfers ~~Interest~~and ~~Expense~~Servicing ~~in the accompanying condensed consolidated statements~~ of ~~income~~Financial ~~(loss) for the three-months ended February 28, 2002. We~~Assets ~~continue to service sold receivables~~ and ~~receive~~Extinguishment ~~a monthly servicing fee from EPFC~~ of ~~approximately~~Liabilities—a 1%Replacement ~~per annum~~ of ~~the~~FASB ~~receivable~~Statement ~~pool’s average balance~~No. 125.” AsUnder this ~~servicing fee approximates our cost to service~~guidance, ~~no servicing asset or liability has been recorded~~ at ~~November 30,~~the ~~2002~~time ~~or February 28, 2003. We retain an interest in a portion of~~ the receivables ~~transferred~~are sold, ~~representing an over collateralization on~~ the ~~securitization.~~balances ~~Our involvement with both this~~are ~~over~~removed ~~collateralization~~from ~~interest~~our ~~and~~financial ~~the transferred receivables is generally limited to the servicing performed~~statements. ~~The~~For ~~carrying~~purposes ~~value~~ of calculating our ~~interest in the~~debt ~~receivables~~covenant iscompliance ~~carried~~under atour ~~fair~~Credit ~~value~~Agreement, ~~which~~we isinclude ~~estimated~~the ~~as its net realizable~~outstanding ~~value~~obligations ~~due to the short duration~~ of ~~the receivables transferred~~EPFC. ~~The net~~ ~~realizable value considers the collection period and includes an estimated~~ ~~provision for credit losses and returns and allowances, which is based on our~~ ~~historical results and probable future losses.~~

AtWe ~~November 30,~~continue ~~2002,~~to ~~our~~service ~~interest~~sold inreceivables ~~EPFC,~~and ~~including~~receive a ~~service~~monthly ~~fee~~servicing ~~receivable,~~fee ~~was~~from ~~$29.4 million~~EPFC ~~and the revolving pool~~ of ~~receivables~~approximately ~~that~~1% ~~we serviced~~per ~~totaled~~annum ~~$77.5 million. At November 30, 2002, the outstanding balance~~ of the ~~interest~~receivable ~~sold to the financial institution recorded on EPFC~~pool’s ~~financial~~average ~~statements was $46~~balance.~~5 million.~~ ~~During~~As ~~the~~this ~~three~~servicing ~~months~~fee ~~ended~~approximates ~~February 28, 2002,~~our wecost ~~sold, outside of the initial sale, $109.0 million of accounts receivable~~ to ~~EPFC. During the same period~~service, ~~EPFC~~no ~~collected $104.5 million of~~servicing ~~cash~~asset ~~that~~or ~~was~~liability ~~reinvested~~has inbeen ~~new~~recorded ~~securitizations.~~at ~~At February~~November 2830, 2003, ~~our interest~~or ~~in EPFC~~February 29, ~~including a service fee receivable, was $29~~2004.~~4 million and the~~ ~~revolving~~The ~~pool~~carrying value of ~~receivables~~our ~~that~~retained weinterest ~~serviced~~is ~~totaled~~recorded ~~$75.0 million.~~at ~~At February 28,~~fair ~~2003~~value, ~~the outstanding balance of the interest sold to the~~which ~~financial~~is ~~institution~~estimated ~~recorded~~as onits ~~EPFC’s~~net ~~financial~~realizable ~~statements~~value ~~was~~due ~~$43.8 million.~~to ~~During~~ the ~~three~~short ~~months~~duration ~~ended~~of ~~February 28, 2003, we sold $138.6~~the ~~million~~receivables oftransferred ~~accounts receivable~~ to EPFC. ~~During~~The ~~the~~net ~~same~~realizable ~~period,~~value ~~EPFC~~considers ~~collected~~the ~~$130.9 million~~collection ofperiod ~~cash~~and ~~that~~includes ~~was~~an ~~reinvested~~estimated inprovision ~~new~~for ~~securitizations.~~credit ~~The~~losses and ~~effective~~returns ~~interest~~and ~~rate~~allowances, aswhich ofis ~~February 28,~~based ~~2003~~on inour ~~the~~historical ~~securitization~~results ~~was~~and probable ~~approximately~~future 2losses.~~5%.~~

G As of November 30, 2003, our retained interest in EPFC was $63. ~~LEGAL~~3 million and ~~MATTERS~~the revolving pool of receivables that we serviced totaled $64.9 million. At November 30, 2003, the outstanding balance of the interest sold to the financial institution recorded on EPFC’s financial statements was zero. During the three months ended February 28, 2003, we sold $138.6 million of accounts receivable to EPFC, and during the same period, EPFC collected $130.9 million of cash that was reinvested in new securitizations. The effective interest rate as of November 30, 2003 in the securitization was approximately 2.95%.

OnAs ~~January~~of February 2529, ~~1996~~2004, ~~Richard~~our ~~Darrell~~retained ~~Peoples,~~interest ain ~~former~~EPFC ~~employee,~~was ~~filed a~~$60.9 million ~~lawsuit~~and in the ~~United~~revolving ~~States~~pool ~~District Court for the Western District~~ of ~~Missouri~~ ~~claiming~~receivables that we ~~violated~~serviced ~~the~~totaled ~~federal False Claims Act based on alleged irregularities in testing procedures in connection with certain U~~$72.S6 million. ~~Government~~At ~~contracts. Mr.~~February ~~Peoples~~29, ~~filed~~2004, ~~this lawsuit under a procedure which gives a private individual~~ the ~~right~~outstanding tobalance ~~file a lawsuit for a violation~~ of ~~a Federal~~the ~~statute~~interest ~~and~~sold ~~be awarded up~~ to ~~30% of any recovery. The government has~~ the financial ~~right~~institution torecorded ~~intervene~~on ~~and~~EPFC’s ~~take~~financial ~~control~~statements ofwas ~~such a lawsuit~~$10. ~~Following an~~2 ~~extensive investigation, the U~~million.S. ~~Government~~During ~~declined~~ the ~~opportunity~~three ~~to intervene~~months orended ~~take control of this suit. The allegations in the lawsuit are similar to allegations made by Mr.~~February ~~Peoples~~29, ~~and investigated by our outside counsel~~2004, ~~prior~~we tosold ~~the filing of the lawsuit~~$129. ~~Our outside counsel’s~~4 ~~investigation~~million ~~found~~of noaccounts ~~evidence~~receivable to ~~support any of Mr. Peoples’ allegations~~EPFC, ~~except~~ ~~for~~and ~~some~~during ~~inconsequential~~the ~~expense~~same ~~account~~period, ~~matters. The case is in a~~EPFC ~~discovery~~collected ~~phase~~$115. ~~Recently the court disqualified Mr.~~6 ~~Peoples’~~million ~~lawyer from the case after he read some~~ of ~~our~~cash ~~attorney-client privileged documents~~ that ~~Mr. Peoples~~was ~~took~~reinvested ~~from~~in ~~our~~new ~~lawyers’ offices without authorization~~securitizations. ~~We intend to~~ ~~contest~~The ~~this~~effective ~~suit~~interest ~~vigorously~~rate ~~and~~as doof ~~not~~February 29, ~~believe~~2004 ~~that~~in the ~~resolution~~securitization ~~of this~~was ~~lawsuit~~approximately ~~will have a material adverse effect on our financial condition, results of operations or cash flows~~4.36%.

~~On May 8, 1997, Caradon Doors and Windows, Inc~~F. (“Caradon”), filed a suit against us in the United States District Court for the Northern District of Georgia alleging breach of contract, negligent misrepresentation, and contributory infringement and seeking contribution and indemnification in the amount of approximately $2011.~~0 million.~~75% ~~This~~CUMULATIVE ~~suit~~REDEEMABLE ~~arose~~EXCHANGEABLE ~~out~~PREFERRED of patent infringement litigation between Caradon and Therma-Tru Corporation extending over the 1989-1996 time period, the result of which was for Caradon to be held liable for patent infringement. In June 1997, we filed a motion with the United States Bankruptcy Court for the Southern District of Ohio, Western Division, seeking an order that Caradon’s claims had been discharged by our bankruptcy and enjoining Caradon from pursuing its lawsuit. On December 24, 1997, the Bankruptcy Court held that Caradon’s claims had been discharged and enjoined Caradon from pursuing its lawsuit. Caradon appealed the Bankruptcy Court’s decision to the United States District Court for the Southern District of Ohio, and on February 3, 1999, the District Court reversed on the grounds that the Bankruptcy Court had not done the proper factual analysis and remanded the matter back to the Bankruptcy Court. The Bankruptcy Court held a hearing on this matter on September 24 and 25, 2001, and on May 9, 2002 again held that Caradon’s claims had been discharged and enjoined Caradon from pursuing the Caradon Suit. Caradon has again appealed this decision to the District Court. We intend to contest this suit vigorously and do not believe that the resolution of this suit will have a material adverse effect on our financial condition, results of operations or cash flows. STOCK

10 Effective September 1, 2003, we adopted SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity” which requires that certain instruments be classified as liabilities in our balance sheet. The effect of the adoption was that, as of September 1, 2003, we reclassified the current redemption value plus unpaid dividends of our preferred stock to long-term liabilities and the accrual of the dividends subsequent to September 1, 2003 has been recorded as a component of non-operating expenses in our consolidated statements of income. In accordance with this statement, the prior period financial statements have not been reclassified.

~~Table~~G. ofLEGAL ~~Contents~~MATTERS

InOn ~~addition~~May 8, we1997, ~~are~~Caradon ~~involved~~Doors inand ~~routine litigation~~Windows, ~~environmental proceedings~~Inc. ~~and~~(“Caradon”) ~~claims~~filed ~~pending~~a ~~with~~suit against ~~respect~~us toin ~~matters~~the ~~arising~~United ~~out~~States ofDistrict Court for the ~~normal~~ ~~course~~Northern District of Georgia ~~our~~alleging ~~business.~~breach Inof ~~our opinion~~contract, ~~the~~negligent ~~ultimate~~misrepresentation, ~~liability~~and ~~resulting~~contributory ~~from~~infringement ~~all~~and ~~claims,~~seeking ~~individually~~contribution orand indemnification in the ~~aggregate, will not~~ ~~materially~~amount ~~affect our financial position, results~~ of ~~operations~~approximately ~~or cash flows~~$20.0 million.

~~H. BUSINESS SEGMENT INFORMATION~~10

OurTable Automotiveof Segment provides mechanical and structural parts and raw materials for passenger cars, trucks, vans and sport utility vehicles for original equipment manufacturers and replacement markets. Resources are concentrated in serving the North American, European and Pacific Rim markets. Our Hillsdale operation is a precision-machined components business, and our Wolverine operation is a rubber coated metal products business. Contents

~~Our~~This ~~Technologies~~suit ~~Segment~~arose isout aof ~~diverse~~patent ~~group~~infringement oflitigation ~~businesses~~between ~~with~~Caradon ~~a broad~~and ~~spectrum~~Therma-Tru Corporation extending over the 1989-1996 time period, the result of which ~~technologies~~was ~~and~~for ~~capabilities~~Caradon to be held liable for patent infringement. ItIn isJune 1997, we filed a ~~major~~motion ~~supplier~~with ofthe ~~batteries and~~United ~~power~~States ~~systems~~Bankruptcy ~~components~~Court for ~~aerospace~~the Southern District of Ohio, ~~defense~~Western Division, seeking an order that Caradon’s claims had been discharged by our bankruptcy and ~~telecommunications~~enjoining Caradon from pursuing its ~~applications~~lawsuit. InOn ~~addition~~December 24, it1997, ~~produces~~the ~~high-purity~~Bankruptcy ~~specialty~~Court ~~material~~held ~~compounds~~that Caradon’s claims had been discharged and ~~rare~~enjoined ~~metals~~Caradon from pursuing its lawsuit. Caradon appealed the Bankruptcy Court’s decision to the United States District Court for the Southern District of Ohio, ~~industrial~~and ~~chemicals~~on February 3, ~~bulk~~1999, ~~pharmaceuticals~~the District Court reversed on the grounds that the Bankruptcy Court had not done the proper factual analysis and ~~super-clean~~remanded the matter back to the Bankruptcy Court. The ~~containers,~~Bankruptcy ~~which~~Court ~~meet~~held ~~strict~~a ~~EPA~~hearing ~~protocols~~on this matter on September 24 and 25, ~~for~~2001, and ~~environmental~~on ~~sampling~~May 9, 2002 again held that Caradon’s claims had been discharged and enjoined Caradon from pursuing the Caradon Suit. ~~This~~Caradon has again appealed ~~segment~~this ~~serves~~decision to the ~~commercial~~District ~~aerospace,~~Court. ~~nuclear,~~We ~~telecommunication~~intend ~~electronics~~to contest this suit vigorously and ~~other~~do ~~industrial~~not ~~markets~~believe ~~globally.~~that ~~Some~~the resolution of ~~these~~this ~~products~~suit ~~are~~will ~~also~~have ~~used~~a inmaterial ~~defense~~adverse ~~applications~~effect on our financial condition, results of operations or cash flows.

~~Our~~In ~~Filtration~~March 2002, a purported class action on behalf of approximately 3,000 homeowners was filed in state court in Colorado against us and ~~Minerals~~a ~~Segment~~company ~~mines~~with a facility adjacent to our facility in Colorado Springs, Colorado seeking property damages, testing and ~~refines~~remediation ~~diatomaceous~~costs ~~earth~~and punitive damages arising ~~products~~out of chlorinated solvents and nitrates in the groundwater alleged to arise out of activities at our facility and the adjacent facility. The case has been removed to federal court and there has been no decision whether to certify a class. In September 2002, as amended in May 2003, a trust purportedly the assignee of approximately 200 property owners filed suit against us and the same co-defendant in Colorado state court, which was subsequently removed to Federal District Court in Colorado. This lawsuit seeks unspecified damages to provide for remediation of the groundwater contamination as well as unspecified punitive damages. The owner of the adjacent facility, which is upgradient from our facility, is operating a remediation system aimed at chlorinated solvents in the groundwater originating from its facility under a compliance order on consent with the Colorado Department of Public Health and Environment (“CDPHE”). We are ~~used~~operating ~~globally~~a remediation system for nitrates in ~~high~~the groundwater ~~purity~~originating ~~filtration~~from ~~applications~~our facility, also under a compliance order on ~~primarily~~consent with CDPHE. We do not believe that nitrates in groundwater materially affect any of the properties related to the plaintiffs in these lawsuits. Neither the United States Environmental Protection Agency nor the CDPHE has ever required us to undertake a cleanup for chlorinated solvents. In November 2003, we settled the purported class action lawsuit for $0.3 million, conditioned on the court’s certification of the purported class. In November 2003, we also settled the lawsuit brought by the ~~food~~trust, and ~~beverage~~claims ~~industry~~of certain other individuals, for $0.3 million, ~~These~~conditioned ~~products~~on ~~are~~at ~~also~~least ~~used~~90% asof the 440 ~~industrial~~individuals ~~absorbents~~covered by the settlement executing releases. In the first quarter of 2004, more than 90% of the individuals signed releases and this portion of the settlement was finalized. Certification of the class action is still pending.

~~Sales~~On ~~between~~December 10, ~~segments~~2003, ~~were~~a purported class action on behalf of approximately 600 members of the Quapaw Tribe of Oklahoma owning or possessing lands within the Quapaw Reservation was filed in the United States District Court for the Northern District of Oklahoma against us and six other corporations. The lawsuit alleges liability for property damage resulting from historical mining activities prior to 1959. We believe that any possible liability to members of the Quapaw Tribe was discharged in connection with our bankruptcy reorganization in 1996. We intend to contest this lawsuit vigorously and do not believe that the resolution of this suit will have a material adverse effect on our financial condition, results of operations, or cash flows.

~~The~~In ~~following~~addition, ~~data~~we ~~represents~~are ~~financial~~involved ~~information~~in ~~about~~routine ~~our~~litigation, ~~reportable~~environmental ~~business~~proceedings ~~segments for the three-months ended February 28, 2002~~ and ~~2003. During~~claims ~~2002,~~pending wewith ~~elected~~respect to ~~modify~~matters ~~our~~arising ~~internal~~out ~~methodology~~ of ~~allocating~~the ~~certain~~normal ~~expenses~~course ~~from~~of ~~the~~our ~~corporate~~business. ~~segment~~In toour opinion, the ~~operating~~ultimate ~~segments.~~liability ~~In the~~resulting ~~following~~from ~~tables~~all claims, ~~the~~individually ~~financial~~or ~~information~~in ~~for~~ the ~~three-months ended February 28~~aggregate, ~~2002~~will ~~has~~not ~~been~~materially ~~restated~~affect our tofinancial ~~conform~~position, toresults ~~the~~of ~~new~~operations ~~presentation~~or ~~(in~~cash ~~thousands of dollars)~~flows.

		2002			2003
Net Sales
Hillsdale Division		$	85,834		$	83,282
Wolverine Division			17,648			20,718
	Automotive		103,482			104,000
Power Group			22,870			32,283
Precision Products- divested July 17, 2002			1,215			—
Specialty Materials Group			13,031			13,219
Pharmaceutical Services (formerly ChemSyn)			3,405			1,902
	Technologies		40,521			47,404
Filtration and Minerals			19,226			18,906
		$	163,229		$	170,310
Operating Income (Loss)
Automotive		$	3,516		$	5,141
Technologies			668			8,046
Filtration and Minerals			1,306			(111	)
Divested Divisions			(125	)		—
Corporate/ Intersegment			(509	)		(2,036	)
		$	4,856		$	11,040

BUSINESS SEGMENT INFORMATION

11 During the first quarter of 2004, we elected to modify our reportable business segment information and move from reporting three business segments (Automotive, Technologies and Filtration and Minerals) to reporting six business segments (Hillsdale, Wolverine, Power Group, Specialty Materials Group, Pharmaceutical Services, and Filtration and Minerals), which is consistent with how our chief operating decision maker reviews the performance of the businesses. We have restated our prior period segment information to conform to the new presentation.

~~Table~~ The ofHillsdale ~~Contents~~Segment produces noise, vibration and harshness (“NVH”) dampers for engine crankshafts and drivelines, yokes and flanges, transmission and engine pumps, automatic transmission filtration products, chassis corners and knuckle assemblies and other precision machined components.

		2002		2003
Depreciation and Amortization of Intangibles
Automotive	$	9,801	$	8,946
Technologies		3,659		1,616
Filtration and Minerals		1,420		1,258
Corporate/ Intersegment		114		(213	)
	$	14,994	$	11,607

I. SUBSEQUENTTable EVENT of Contents

InThe ~~April~~Wolverine ~~2003,~~Segment weproduces ~~reached~~rubber-coated anmaterials ~~agreement~~and ingaskets ~~principle~~ for ~~the sale of~~ ~~certain~~automotive ~~assets at our Hillsdale U.K. Automotive operation for cash of $1.1 million. In addition, we will be winding down the remaining operations of our Hillsdale U.K. Automotive operation~~ and expect to incur $1.5 million to $2.0 million of shutdown costs during 2003. In addition to the shutdown costs, we believe we will realize a loss of approximately $2.0 million to $3.0 million during the second quarter of 2003 related to this sale. We also believe we will realize net cash proceeds from the sale of this operation of $1.5 million to $2.0 million (including the $1.1 million above related to the sale of the operation) during 2003. We will account for this sale as a Discontinued Operation when we file our second quarter of 2003 Form 10non-Q.automotive ~~During the year ended November 30, 2002, our Hillsdale U~~applications.~~K. Automotive operation had $13.9~~ ~~million in revenues, and as of November 30, 2002, had $11.5 million in total~~ ~~assets, which were comprised of primarily inventory, accounts receivable, and~~ ~~property, plant and equipment. During the three months ended February 28, 2003, the Hillsdale U.K. Automotive operation had $3.4 million in revenues.~~

~~J. SUBSIDIARY~~ Our ~~GUARANTORS~~Power ~~AND~~Group ~~NON-GUARANTORS~~Segment develops and commercializes advanced power systems for defense, aerospace and commercial applications.

Our ~~Credit~~Specialty ~~Agreement~~Materials ~~and~~Group ~~the~~Segment ~~Senior~~produces ~~Subordinated~~boron ~~Notes~~isotopes ~~were~~for ~~issued by our~~nuclear ~~wholly~~radiation ~~owned~~containment ~~subsidiary, EaglePicher Incorporated (“EPI”),~~ and ~~are~~supplies ~~guaranteed on a full, unconditional, and joint and several basis by us and certain of our wholly~~ultra-~~owned~~clean ~~domestic~~scientific ~~subsidiaries~~containers ~~(“Subsidiary Guarantors”). We have~~for ~~determined~~pharmaceutical ~~that full financial statements~~ and ~~other~~environmental ~~disclosures concerning EPI or the Subsidiary Guarantors would not be material to investors, and such financial statements are not presented~~testing. ~~EPI and the Subsidiary Guarantors are~~ ~~subject to restrictions on the payment of dividends under the terms of both the~~ ~~Credit Agreement and the Senior Subordinated Notes. The following supplemental~~ ~~condensed combining financial statements present information regarding EPI, as the Issuer, the Subsidiary Guarantors and Non-Guarantor Subsidiaries.~~

12 Our Pharmaceutical Services Segment provides contract pharmaceutical services.

~~Table~~ Our ofFiltration ~~Contents~~and Minerals Segment mines, processes and markets diatomaceous earth and perlite for use as a filtration aid, absorbent, performance additive and soil amendment.

~~EAGLEPICHER~~ Sales ~~HOLDINGS,~~between ~~INC. SUPPLEMENTAL~~segments ~~CONDENSED~~were ~~COMBINING~~not ~~BALANCE SHEETS~~material. ~~AS OF NOVEMBER 30, 2002~~ ~~(in thousands of dollars)~~

				Guarantors
										Non-Guarantors
				EaglePicher			Subsidiary			Foreign
	Issuer			Holdings, Inc.			Guarantors			Subsidiaries		Eliminations			Total
ASSETS
Current Assets:
Cash and cash equivalents	$	27,694		$	1		$	(4,895	)	$	7,902	$	820		$	31,522
Receivables and retained interest, net		2,535			—			31,472			19,097		—			53,104
Costs and estimated earnings in excess of billings		—			—			16,942			—		—			16,942
Intercompany accounts receivable		1,997			—			6,228			2,037		(10,262	)		—
Inventories		3,957			—			39,394			13,283		(1,916	)		54,718
Net assets of operations to be sold		643			—			—			—		—			643
Prepaid expenses		7,840			—			4,755			4,686		(1,614	)		15,667
Deferred income taxes		10,798			—			—			—		—			10,798
		55,464			1			93,896			47,005		(12,972	)		183,394
Property, Plant and Equipment, net		24,016			—			129,052			30,337		—			183,405
Investment in Subsidiaries		239,864			58,509			18,286			—		(316,659	)		—
Goodwill, net		37,339			—			116,586			13,154		(3,139	)		163,940
Prepaid Pension		54,796			—			—			—		—			54,796
Other Assets		14,296			(8,091	)		21,744			11,070		(11,513	)		27,506
	$	425,775		$	50,419		$	379,564		$	101,566	$	(344,283	)	$	613,041
LIABILITIES AND SHAREHOLDERS’ EQUITY(DEFICIT)
Current Liabilities:
Accounts payable	$	15,398		$	—		$	53,151		$	15,686	$	820		$	85,055
Intercompany accounts payable		3,171			—			5,887			1,184		(10,242	)		—
Long-term debt-current portion		18,625			—			—			—		—			18,625
Other accrued liabilities		46,313			—			25,128			5,862		—			77,303
		83,507			—			84,166			22,732		(9,422	)		180,983
Long-term Debt, less current portion		355,100			—			—			11,491		(11,491	)		355,100
Postretirement Benefits Other Than Pensions		17,635			—			—			—		—			17,635
Deferred Income Taxes		—			—			—			—		—			—
Other Long-term Liabilities		8,687			—			—			216		25			8,928
		464,929			—			84,166			34,439		(20,888	)		562,646
Intercompany Accounts		(282,707	)		24			269,573			23,930		(10,820	)		—
Preferred Stock		—			137,973			—			—		—			137,973
Shareholders’ Equity(Deficit)		243,553			(87,578	)		25,825			43,197		(312,575	)		(87,578	)
	$	425,775		$	50,419		$	379,564		$	101,566	$	(344,283	)	$	613,041

The following data represents financial information about our reportable business segments for the three-months ended February 28, 2003 and February 29, 2004 (in thousands of dollars).


	2003			2004
Net Sales
Hillsdale	$	79,873		$	74,048
Wolverine		20,718			24,107

Automotive Business Unit		100,591			98,155

Power Group		32,283			39,836
Specialty Materials Group		10,357			7,175
Pharmaceutical Services		1,902			2,881

Technologies Business Unit		44,542			49,892

Filtration and Minerals Business Unit		18,906			18,735

	$	164,039		$	166,782

Operating Income (Loss)
Hillsdale	$	2,078		$	739
Wolverine		3,389			3,615

Automotive Business Unit		5,467			4,354

Power Group		5,305			5,621
Specialty Materials Group		3,010			2,136
Pharmaceutical Services		(344	)		285

Technologies Business Unit		7,971			8,042

Filtration and Minerals Business Unit		(111	)		582

Corporate/ Intersegment		(2,286	)		(4,626	)

	$	11,041		$	8,352

Depreciation and Amortization of Intangibles
Hillsdale	$	7,336		$	5,809
Wolverine		1,349			1,110

Automotive Business Unit		8,685			6,919

Power Group		813			873
Specialty Materials Group		347			270
Pharmaceutical Services		224			241

Technologies Business Unit		1,384			1,384

Filtration and Minerals Business Unit		1,258			1,176

Corporate/ Intersegment		(213	)		486

	$	11,114		$	9,965

~~Table of Contents~~12

EAGLEPICHERTable HOLDINGS, INC. SUPPLEMENTAL CONDENSED COMBINING BALANCE SHEETS AS OF FEBRUARY 28, 2003 (in thousands of dollars) Contents

				Guarantors
									Non-Guarantors
				EaglePicher			Subsidiary		Foreign
	Issuer			Holdings, Inc.			Guarantors		Subsidiaries		Eliminations			Total
ASSETS
Current Assets:
Cash and cash equivalents	$	19,714		$	1		$	2,178	$	10,397	$	—		$	32,290
Receivables and retained interest, net		2,427			—			30,187		21,168		—			53,782
Costs and estimated earnings in excess of billings		—			—			17,485		2,657		—			20,142
Intercompany accounts receivable		2,783			—			5,863		132		(8,778	)		—
Inventories		4,353			—			39,219		12,917		(2,042	)		54,447
Net assets of operations to be sold		494			—			—		—		—			494
Prepaid expenses		9,163			—			5,813		3,885		—			18,861
Deferred income taxes		10,798			—			—		—		—			10,798
		49,732			1			100,745		51,156		(10,820	)		190,814
Property, Plant and Equipment, net		23,761			—			121,671		31,092		—			176,524
Investment in Subsidiaries		237,685			61,229			17,467		1		(316,382	)		—
Goodwill, net		37,339			—			116,586		13,154		(3,139	)		163,940
Prepaid Pension		54,613			—			—		—		—			54,613
Other Assets		22,517			(8,091	)		22,868		13,082		(24,599	)		25,777
	$	425,647		$	53,139		$	379,337	$	108,485	$	(354,940	)	$	611,668
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts payable	$	13,310		$	—		$	52,473	$	9,204	$	—		$	74,987
Intercompany accounts payable		—			—			124		8,453		(8,577	)		—
Long-term debt - current portion		150,393			—			—		—		—			150,393
Other accrued liabilities		44,136			—			21,920		6,530		—			72,586
		207,839			—			74,517		24,187		(8,577	)		297,966
Long-term Debt, less current portion		233,600			—			—		12,941		(12,941	)		233,600
Postretirement Benefits Other Than Pensions		17,476			—			—		—		—			17,476
Other Long-term Liabilities		7,861			—			131		1,514		—			9,506
		466,776			—			74,648		38,642		(21,518	)		558,548
Intercompany Accounts		(286,286	)		19			281,711		25,902		(21,346	)		—
Preferred Stock		—			141,910			—		—		—			141,910
Shareholders’ Equity (Deficit)		245,157			(88,790	)		22,978		43,941		(312,076	)		(88,790	)
	$	425,647		$	53,139		$	379,337	$	108,485	$	(354,940	)	$	611,668

SUBSEQUENT EVENTS

14 Subsequent to February 29, 2004, we entered into an amendment with the lenders of our Credit Agreement. We reduced the interest rate spread on the Term Loan by 50 basis points. The new interest rate, effective April 1, 2004, is at our option, a rate equal to (i) LIBOR plus 300 basis points or (ii) Alternate Base Rate (as defined) plus 200 basis points. In addition, as part of entering into this amendment we were provided certain adjustments to our financial covenant limitations. We paid the lenders of the Credit Agreement an amendment fee of 1/8%, or $342,000.

~~Table~~ In April 2004, we sold our Environmental Sciences & Technology division within our Technologies Business Unit’s Specialty Materials Group Segment for cash of ~~Contents~~approximately $23.0 million. We will account for this sale as a Discontinued Operation when we file our second quarter of 2004 Form 10-Q. During the year ended November 30, 2003, our Environmental Sciences & Technology division had approximately $12.0 million in revenues, and as of November 30, 2003, had approximately $14.0 million in total assets, which were comprised of primarily inventory, accounts receivable, property, plant and equipment, and goodwill. During the three months ended February 29, 2004, the Environmental Sciences & Technology division had approximately $3.0 million in revenues.

~~EAGLEPICHER HOLDINGS, INC~~J. ~~SUPPLEMENTAL~~ ~~CONDENSED~~SUBSIDIARY ~~COMBINING~~GUARANTORS ~~STATEMENTS~~AND ~~OF INCOME (LOSS) THREE MONTHS ENDED FEBRUARY 28, 2002 (in thousands of dollars)~~ NON-GUARANTORS

					Guarantors
											Non-Guarantors
					EaglePicher			Subsidiary			Foreign
		Issuer			Holdings, Inc.			Guarantors			Subsidiaries			Eliminations			Total
Net Sales:
	Customers	$	11,635		$	—		$	130,645		$	20,949		$	—		$	163,229
	Intercompany		3,623			—			2,826			2			(6,451	)		—
			15,258			—			133,471			20,951			(6,451	)		163,229
Operating Costs and Expenses:
	Cost of products sold (exclusive of depreciation)		8,512			—			110,775			16,936			(6,451	)		129,772
	Selling and administrative		6,295			—			5,317			1,917			(47	)		13,482
	Intercompany charges		(2,650	)		—			2,466			137			47			—
	Depreciation and amortization		1,147			—			9,125			766			—			11,038
	Goodwill amortization		934			—			2,775			247			—			3,956
	Divestitures		125			—			—			—			—			125
			14,363			—			130,458			20,003			(6,451	)		158,373
Operating Income (Loss)			895			—			3,013			948			—			4,856
Other Income (Expense):
	Interest (expense) income		(2,931	)		—			(7,522	)		(1,273	)		645			(11,081	)
	Other income (expense), net		478			—			404			166			(645	)		403
	Equity in earnings (losses) of consolidated subsidiaries		(4,070	)		(6,207	)		579			—			9,698			—
Income (Loss) Before Taxes			(5,628	)		(6,207	)		(3,526	)		(159	)		9,698			(5,822	)
Income Taxes			—			—			12			373			—			385
Net Income (Loss)		$	(5,628	)	$	(6,207	)	$	(3,538	)	$	(532	)	$	9,698		$	(6,207	)

Our Senior Unsecured Notes and Senior Subordinated Notes were issued by our wholly owned subsidiary, EaglePicher Incorporated (“EPI”), and are guaranteed on a full, unconditional, and joint and several basis by us and certain of our wholly-owned United States subsidiaries (“Subsidiary Guarantors”). We have determined that full financial statements and other disclosures concerning EPI or the Subsidiary Guarantors would not be material to investors, and such financial statements are not presented. EPI is subject to restrictions on the payment of dividends under the terms of both the Credit Agreement and the Senior Unsecured Notes. The following supplemental condensed combining financial statements present information regarding EPI, as the Issuer, the Subsidiary Guarantors and Non-Guarantor Subsidiaries. We only accrue interest income and expense on intercompany loans once a year in our fourth fiscal quarter.

15 As part of executing the supplemental indenture to the Senior Subordinated Notes, as described above, we removed all reporting obligations to those note holders. Accordingly, effective with the issuance of our August 31, 2003 financial statements, we have only included supplemental guarantor and non-guarantor financial statements for Subsidiary Guarantors of the Senior Unsecured Notes. Therefore, the enclosed supplemental condensed combining financial statements may not be comparable from one period to the next. There are only minor differences between the presentation of these two sets of guarantor and non-guarantor financial statements.

~~Table of Contents~~13

EAGLEPICHERTable HOLDINGS, INC. SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF INCOME (LOSS) THREE MONTHS ENDED FEBRUARY 28, 2003 (in thousands of dollars) Contents

					Guarantors
											Non-Guarantors
					EaglePicher			Subsidiary			Foreign
		Issuer			Holdings, Inc.			Guarantors			Subsidiaries			Eliminations			Total
Net Sales:
	Customers	$	12,714		$	—		$	128,647		$	28,949		$	—		$	170,310
	Intercompany		4,516			—			4,450			314			(9,280	)		—
			17,230			—			133,097			29,263			(9,280	)		170,310
Operating Costs and Expenses:
	Cost of products sold (exclusive of depreciation)		11,085			—			107,192			24,114			(9,279	)		133,112
	Selling and administrative		6,399			1			6,144			2,007			—			14,551
	Intercompany charges		(1,656	)		—			1,615			41			—			—
	Depreciation and amortization		947			—			9,260			1,400			—			11,607
			16,775			1			124,211			27,562			(9,279	)		159,270
Operating Income (Loss)			455			(1	)		8,886			1,701			(1	)		11,040
Other Income (Expense):
	Interest (expense) income		3,273			—			(12,653	)		(29	)		—			(9,409	)
	Other income (expense), net		55			—			420			(42	)		—			433
	Equity in earnings (losses) of consolidated subsidiaries		(2,179	)		1,169			510			—			500			—
Income (Loss) Before Taxes			1,604			1,168			(2,837	)		1,630			499			2,064
Income Taxes			—			—			10			886			—			896
Net Income (Loss)		$	1,604		$	1,168		$	(2,847	)	$	744		$	499		$	1,168

EAGLEPICHER HOLDINGS, INC.
SUPPLEMENTAL CONDENSED COMBINING BALANCE SHEETS
AS OF NOVEMBER 30, 2003
(in thousands of dollars)


				Guarantors
				EaglePicher			Subsidiary			Non-Guarantors
	Issuer			Holdings, Inc.			Guarantors			Subsidiaries		Eliminations			Total
ASSETS
Current Assets:
Cash and cash equivalents	$	52,478		$	1		$	(2,732	)	$	17,573	$	—		$	67,320
Receivables and retained interest, net		62,937			—			4,668			21,673		—			89,278
Costs and estimated earnings in excess of billings		—			—			17,386			11,047		—			28,433
Intercompany accounts receivable		1,764			—			7,476			1,852		(11,092	)		—
Inventories		5,762			—			37,949			11,595		(2,101	)		53,205
Assets of discontinued operations		—			—			4,093			348		—			4,441
Prepaid expenses and other assets		2,218			—			4,301			3,875		—			10,394
Deferred income taxes		8,526			—			—			—		—			8,526

		133,685			1			73,141			67,963		(13,193	)		261,597
Property, Plant and Equipment, net		24,823			—			103,234			23,837		—			151,894
Investment in Subsidiaries		288,465			68,121			30,455			—		(387,041	)		—
Goodwill		37,339			—			112,286			13,154		(3,139	)		159,640
Prepaid Pension		56,891			—			—			—		—			56,891
Other Assets, net		11,366			2,472			23,809			24,190		(28,321	)		33,516

	$	552,569		$	70,594		$	342,925		$	129,144	$	(431,694	)	$	663,538

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts payable	$	22,125		$	—		$	56,412		$	10,737	$	—		$	89,274
Intercompany accounts payable		—			—			1,840			9,252		(11,092	)		—
Current portion of long-term debt		13,300			—			—			—		—			13,300
Liabilities of discontinued operations		—			—			—			956		—			956
Other accrued liabilities		29,347			—			22,470			8,345		—			60,162

		64,772			—			80,722			29,290		(11,092	)		163,692
Long-term Debt, net of current portion		423,295			—			720			15,318		(30,763	)		408,570
Postretirement Benefits Other Than Pensions		17,418			—			—			—		—			17,418
Other Long-term Liabilities		7,651			—			—			1,998		—			9,649
Preferred Stock		—			154,416			—			—		—			154,416

		513,136			154,416			81,442			46,606		(41,855	)		753,745
Intercompany Accounts		(216,625	)		10,790			181,907			29,234		(5,306	)		—
Shareholders’ Equity (Deficit)		256,058			(94,612	)		79,576			53,304		(384,533	)		(90,207	)

	$	552,569		$	70,594		$	342,925		$	129,144	$	(431,694	)	$	663,538

~~Table of Contents~~14

EAGLEPICHERTable HOLDINGS, INC. SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF CASH FLOWS THREE MONTHS ENDED FEBRUARY 28, 2002 (in thousands of dollars) Contents

					Guarantors
											Non-Guarantors
					EaglePicher			Subsidiary			Foreign
		Issuer			Holdings, Inc.			Guarantors			Subsidiaries			Eliminations			Total
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)		$	(5,628	)	$	(6,207	)	$	(3,538	)	$	(532	)	$	9,698		$	(6,207	)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
	Equity in (earnings) loss of consolidated subsidiaries		4,070			6,207			(579	)		—			(9,698	)		—
	Depreciation and amortization		2,891			—			11,745			1,013			—			15,649
	Loss from Divestitures		125			—			—			—			—			125
	Changes in assets and liabilities, net of effect of non-cash items		36,959			312			59,229			(2,990	)		(52,796	)		40,714
			38,417			312			66,857			(2,509	)		(52,796	)		50,281
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of divisions			6,300			—			—			—			—			6,300
Capital expenditures			(232	)		—			(4,608	)		(266	)		—			(5,106	)
Other			5			—			1,401			(1,284	)		—			122
			6,073			—			(3,207	)		(1,550	)		—			1,316
CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction of long-term debt			(12,800	)		—			(42,452	)		—			42,452			(12,800	)
Net borrowings (repayments) under revolving credit agreements			(22,000	)		—			(14,246	)		158			—			(36,088	)
Other			—			(312	)		483			(15	)		—			156
			(34,800	)		(312	)		(56,215	)		143			42,452			(48,732	)
Effect of exchange rates on cash			—			—			—			151			—			151
Net increase (decrease) in cash and cash equivalents			9,690			—			7,435			(3,765	)		(10,344	)		3,016
Intercompany accounts			(6,113	)		—			(6,452	)		2,288			10,277			—
Cash and cash equivalents, beginning of period			17,145			1			471			6,936			67			24,620
Cash and cash equivalents, end of period		$	20,722		$	1		$	1,454		$	5,459		$	—		$	27,636

EAGLEPICHER HOLDINGS, INC.
SUPPLEMENTAL CONDENSED COMBINING BALANCE SHEETS
AS OF FEBRUARY 29, 2004
(in thousands of dollars)


				Guarantors
				EaglePicher			Subsidiary		Non-Guarantors
	Issuer			Holdings, Inc.			Guarantors		Subsidiaries		Eliminations			Total
ASSETS
Current Assets:
Cash and cash equivalents	$	10,451		$	1		$	2,917	$	16,681	$	—		$	30,050
Receivables and retained interest, net		60,534			—			4,042		24,428		—			89,004
Costs and estimated earnings in excess of billings		—			—			23,807		13,383		—			37,190
Intercompany accounts receivable		1,867			—			6,023		1,602		(9,492	)		—
Inventories		6,523			—			40,124		12,919		(2,186	)		57,380
Assets of discontinued operations		—			—			4,093		394		—			4,487
Prepaid expenses and other assets		3,507			—			4,346		3,678		—			11,531
Deferred income taxes		8,526			—			—		—		—			8,526

		91,408			1			85,352		73,085		(11,678	)		238,168
Property, Plant and Equipment, net		23,857			—			102,568		25,702		—			152,127
Investment in Subsidiaries		295,714			63,235			29,878		—		(388,827	)		—
Goodwill		37,339			—			112,286		20,654		(3,139	)		167,140
Prepaid Pension		56,931			—			—		—		—			56,931
Other Assets, net		11,243			2,324			23,946		21,552		(28,872	)		30,193

	$	516,492		$	65,560		$	354,030	$	140,993	$	(432,516	)	$	644,559

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts payable	$	19,622		$	—		$	48,709	$	10,924	$	—		$	79,255
Intercompany accounts payable		—			—			1,593		7,899		(9,492	)		—
Current portion of long-term debt		3,300			—			—		—		—			3,300
Other accrued liabilities		33,957			—			20,056		8,279		—			62,292

		56,879			—			70,358		27,102		(9,492	)		144,847
Long-term Debt, net of current portion		423,123			—			635		15,361		(31,284	)		407,835
Postretirement Benefits Other Than Pensions		17,354			—			—		—		—			17,354
Other Long-term Liabilities		7,098			—			—		2,477		(1	)		9,574
Preferred Stock		—			158,585			—		—		—			158,585

		504,454			158,585			70,993		44,940		(40,777	)		738,195
Intercompany Accounts		(240,870	)		10,494			196,739		39,057		(5,420	)		—
Shareholders’ Equity (Deficit)		252,908			(103,519	)		86,298		56,996		(386,319	)		(93,636	)

	$	516,492		$	65,560		$	354,030	$	140,993	$	(432,516	)	$	644,559

~~Table of Contents~~15

EAGLEPICHERTable HOLDINGS, INC. SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF CASH FLOWS THREE MONTHS ENDED FEBRUARY 28, 2003 (in thousands of dollars) Contents

					Guarantors
											Non-Guarantors
					EaglePicher			Subsidiary			Foreign
		Issuer			Holdings, Inc.			Guarantors			Subsidiaries			Eliminations			Total
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)		$	1,604		$	1,168		$	(2,847	)	$	744		$	499		$	1,168
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
	Equity in (earnings) loss of consolidated subsidiaries		2,179			(1,169	)		(510	)		—			(500	)		—
	Depreciation and amortization		1,730			—			9,260			1,400						12,390
	Changes in assets and liabilities, net of effect of non-cash items		(30,577	)		24			(393	)		(1,133	)		10,936			(21,143	)
			(25,064	)		23			5,510			1,011			10,935			(7,585	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures			(422	)		—			(2,437	)		(1,044	)		—			(3,903	)
Proceeds from sale of property and equipment, and other, net			—			—			329			—			—			329
			(422	)		—			(2,108	)		(1,044	)		—			(3,574	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction of long-term debt			(4,232	)		—			—			—			—			(4,232	)
Net borrowings (repayments) under revolving credit agreements			14,500			—			—			—			—			14,500
			10,268			—			—			—			—			10,268
Effect of exchange rates on cash			—			—			—			1,659			—			1,659
Net increase (decrease) in cash and cash equivalents			(15,218	)		23			3,402			1,626			10,935			768
Intercompany accounts			7,238			(23	)		3,671			869			(11,755	)		—
Cash and cash equivalents, beginning of period			27,694			1			(4,895	)		7,902			820			31,522
Cash and cash equivalents, end of period		$	19,714		$	1		$	2,178		$	10,397		$	—		$	32,290

EAGLEPICHER HOLDINGS, INC.
SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF INCOME (LOSS)
THREE MONTHS ENDED FEBRUARY 28, 2003
(in thousands of dollars)


				Guarantors
				EaglePicher			Subsidiary			Non-Guarantors
	Issuer			Holdings, Inc.			Guarantors			Subsidiaries			Eliminations			Total
Net Sales:
Customers	$	12,714		$	—		$	125,785		$	25,540		$	—		$	164,039
Intercompany		4,516			—			4,450			314			(9,280	)		—

		17,230			—			130,235			25,854			(9,280	)		164,039

Operating Costs and Expenses:
Cost of products sold (exclusive of depreciation)		11,085			—			104,637			21,313			(9,279	)		127,756
Selling and administrative		6,399			1			6,144			1,584			—			14,128
Intercompany charges		(1,656	)		—			1,615			41			—			—
Depreciation and amortization of intangibles		947			—			9,028			1,139			—			11,114

		16,775			1			121,424			24,077			(9,279	)		152,998

Operating Income (Loss)		455			(1	)		8,811			1,777			(1	)		11,041
Other Income (Expense):
Interest expense		(8,373	)		—			—			—			—			(8,373	)
Other income (expense), net		55			—			420			(151	)		—			324
Equity in earnings (losses) of consolidated subsidiaries		(2,179	)		1,169			510			—			500			—

Income (Loss) Before Taxes		(10,042	)		1,168			9,741			1,626			499			2,992
Income Taxes		—			—			10			886			—			896

Income (Loss) from Continuing Operations		(10,042	)		1,168			9,731			740			499			2,096
Discontinued Operations		—			—			(655	)		(273	)		—			(928	)

Net Income (loss)	$	(10,042	)	$	1,168		$	9,076		$	467		$	499		$	1,168

~~Table of Contents~~16

Item 2. Management’sTable Discussion and Analysis of Financial Condition and Results of Operations. Contents

~~Critical~~EAGLEPICHER ~~Accounting~~HOLDINGS, ~~Policies~~INC. SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF INCOME (LOSS) THREE MONTHS ENDED FEBRUARY 29, 2004 (in thousands of dollars)

Our financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the use of estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. We believe that our critical accounting policies, which involve a higher degree of judgments, estimates and complexity, are as follows:


				Guarantors
				EaglePicher			Subsidiary			Non-Guarantors
	Issuer			Holdings, Inc.			Guarantors			Subsidiaries			Eliminations			Total
Net Sales:
Customers	$	13,891		$	—		$	120,156		$	32,735		$	—		$	166,782
Intercompany		6,464			—			3,552			435			(10,451	)		—

		20,355			—			123,708			33,170			(10,451	)		166,782

Operating Costs and Expenses:
Cost of products sold (exclusive of depreciation)		13,849			—			100,000			25,598			(10,451	)		128,996
Selling and administrative		6,073			—			7,911			2,885			—			16,869
Intercompany charges		(1,660	)		—			1,526			134			—			—
Depreciation and amortization of intangibles		1,422			—			7,440			1,103			—			9,965
Loss from divestitures		2,600			—			—			—			—			2,600

		22,284			—			116,877			29,720			(10,451	)		158,430

Operating Income (Loss)		(1,929	)		—			6,831			3,450			—			8,352
Other Income (Expense):
Interest (expense) income		(9,255	)		—			—			—			—			(9,255	)
Preferred stock dividends accrued		—			(4,169	)		—			—			—			(4,169	)
Other income (expense), net		(921	)		148			530			(50	)		—			(293	)
Equity in earnings (losses) of consolidated subsidiaries		7,249			(4,886	)		(577	)		—			(1,786	)		—

Income (Loss) from Continuing Operations Before Taxes		(4,856	)		(8,907	)		6,784			3,400			(1,786	)		(5,365	)
Income Taxes		30			—			—			343			—			373

Income (Loss) from Continuing Operations		(4,886	)		(8,907	)		6,784			3,057			(1,786	)		(5,738	)
Discontinued Operations		—			—			(62	)		—			—			(62	)

Net Income (Loss)	$	(4,886	)	$	(8,907	)	$	6,722		$	3,057		$	(1,786	)	$	(5,800	)

~~Environmental Reserves~~17

WeTable are subject to extensive and evolving Federal, state and local environmental laws and regulations. Compliance with such laws and regulations can be costly. Governmental authorities may enforce these laws and regulations with a variety of enforcement measures, including monetary penalties and remediation requirements. We have policies and procedures in place to ensure that our operations are conducted in compliance with such laws and regulations and with a commitment to the protection of the environment. Contents

WeEAGLEPICHER ~~are involved in various stages of investigation and remediation related to environmental remediation projects at a number of sites as a result of past and present operations~~HOLDINGS, ~~including currently-owned and formerly-owned plants~~INC. ~~Also,~~SUPPLEMENTAL weCONDENSED ~~have~~COMBINING ~~received~~STATEMENTS ~~notice~~OF ~~that~~CASH weFLOWS THREE ~~may~~MONTHS ~~have~~ENDED ~~liability~~FEBRUARY ~~under the Comprehensive Environmental Response~~28, ~~Compensation and Liability Act of 1980 as~~2003 a(in ~~potentially~~thousands ~~responsible party at a number~~ of ~~sites (“Superfund Sites”~~dollars).

The ultimate cost of site remediation is difficult to predict given the uncertainties regarding the extent of the required remediation, the interpretation of applicable laws and regulations and alternative remediation methods. Based on our experience with environmental remediation matters, we have accrued reserves for our best estimate of remediation costs, and we do not believe that remediation activities will have a material adverse impact on our financial condition, results of operations or cash flows. In addition, in the course of our bankruptcy described in Item 3 of our Form 10-K for the year ended November 30, 2002, filed on March 3, 2003, we obtained an agreement with the U.S. Environmental Protection Agency and the states of Arizona, Michigan and Oklahoma whereby we are limited in our responsibility for environmental sites not owned by us that allegedly arise from pre-bankruptcy activities. We retain all of our defenses, legal or factual, at such sites. However, if we are found liable at any of these sites, we would only be required to pay as if such claims had been resolved in our bankruptcy and therefore our liability is paid at approximately 37%.


				Guarantors
				EaglePicher			Subsidiary			Non-Guarantors
	Issuer			Holdings, Inc.			Guarantors			Subsidiaries			Eliminations			Total
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(10,042	)	$	1,168		$	9,076		$	467		$	499		$	1,168
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Equity in (earnings) loss of consolidated subsidiaries		2,179			(1,169	)		(510	)		—			(500	)		—
Depreciation and amortization		1,730			—			9,028			1,139			—			11,897
Changes in assets and liabilities, net of effect of non-cash items		(30,577	)		24			(644	)		(1,332	)		10,936			(21,593	)

		(36,710	)		23			16,950			274			10,935			(8,528	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(422	)		—			(2,329	)		(969	)		—			(3,720	)
Proceeds from sale of property and equipment, and other, net		—			—			329			—			—			329

		(422	)		—			(2,000	)		(969	)		—			(3,391	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction of long-term debt		(4,232	)		—			—			—			—			(4,232	)
Net borrowings (repayments) under revolving credit agreements		14,500			—			—			—			—			14,500

		10,268			—			—			—			—			10,268

Cash provided by discontinued operations		—			—			375			385			—			760

Effect of exchange rates on cash		—			—			—			1,659			—			1,659

Net increase (decrease) in cash and cash equivalents		(26,864	)		23			15,325			1,349			10,935			768
Intercompany accounts		18,884			(23	)		(8,252	)		1,146			(11,755	)		—
Cash and cash equivalents, beginning of period		27,694			1			(4,895	)		7,902			820			31,522

Cash and cash equivalents, end of period	$	19,714		$	1		$	2,178		$	10,397		$	—		$	32,290

~~As of November 30, 2002, we had $17.7 million accrued for sold divisions~~18 or businesses related to legal and environmental matters, and $2.4 million recorded in other accrued liabilities related to environmental liabilities for our on-going businesses. As of February 28, 2003, we had $15.2 million accrued for sold divisions or businesses related to legal and environmental matters, and $2.2 million recorded in other accrued liabilities related to environmental liabilities for our on-going businesses. We believe such reserves to be adequate under the current circumstances.

ImpairmentTable of Long-Lived Assets, including Goodwill Contents

WeEAGLEPICHER ~~review for impairment the carrying value of our long-lived assets held for use and assets to be disposed of. For all assets excluding goodwill~~HOLDINGS, ~~the carrying value of a long-lived asset is considered impaired if the sum of the undiscounted cash flows is greater than the carrying value of the asset~~INC. If ~~this~~SUPPLEMENTAL ~~occurs,~~CONDENSED anCOMBINING ~~impairment~~STATEMENTS ~~charge~~OF isCASH ~~recorded for the amount by which the~~FLOWS ~~carrying~~FOR ~~value~~THE ofTHREE ~~the~~MONTHS ~~long-lived~~ENDED ~~assets~~FEBRUARY ~~exceeds its fair value. Effective December 1~~29, ~~2002, we adopted SFAS No. 142, “Goodwill and Other Intangible~~2004 Assets.” Under this new accounting standard, we no longer amortize our goodwill and will be required to complete an annual impairment test. We have determined that we have six reporting units, as defined (in ~~SFAS~~thousands No. 142, within our three reportable business segments. We have completed our initial impairment test required by this accounting standard and have determined there was no impairment charge related to the adoption of this accounting standard on December 1, 2002. These impairment tests require us to forecast our future cash flows, which requires significant judgment. As of November 30, 2002 and February 28, 2003, we had recorded $163.9 million of goodwill. In addition as of November 30, 2002, we had recorded $183.4 million of property, plant, and equipment, net (our primary long-lived assetdollars)~~, and as of February 28, 2003 we~~ ~~had recorded $176.5 million of property, plant, and equipment, net.~~


				Guarantors
				EaglePicher			Subsidiary			Non-Guarantors
	Issuer			Holdings, Inc.			Guarantors			Subsidiaries			Eliminations			Total
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(4,886	)	$	(8,907	)	$	6,722		$	3,057		$	(1,786	)	$	(5,800	)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
Equity in (earnings) loss of consolidated subsidiaries		(7,249	)		4,886			577			—			1,786			—
Depreciation and amortization		1,767			148			7,440			1,103			—			10,458
Preferred stock dividends accrued		—			4,169			—			—			—			4,169
Loss on disposal of discontinued operations		—			—			62			—			—			62
Loss on divestitures		2,600			—			—			—			—			2,600
Changes in assets and liabilities, net of effect of non-cash items		1,700			—			(20,616	)		(6,721	)		84			(25,553	)

		(6,068	)		296			(5,815	)		(2,561	)		84			(14,064	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of property and equipment and other		—			—			105			—			—			105
Capital expenditures		(473	)		—			(6,239	)		(2,681	)		—			(9,393	)
Acquisition of majority interest in EaglePicher Horizon Battery LLC		—			—			—			(3,500	)		—			(3,500	)

		(473	)		—			(6,134	)		(6,181	)		—			(12,788	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction of long-term debt		(10,769	)		—			—			—			—			(10,769	)

		(10,769	)		—			—			—			—			(10,769	)

Cash provided by discontinued operations		—			—			—			(284	)		—			(284	)

Effect of exchange rates on cash		—			—			—			635			—			635

Net increase (decrease) in cash and cash equivalents		(17,310	)		296			(11,949	)		(8,391	)		84			(37,270	)
Intercompany accounts		(24,717	)		(296	)		17,598			7,499			(84	)		—
Cash and cash equivalents, beginning of period		52,478			1			(2,732	)		17,573			—			67,320

Cash and cash equivalents, end of period	$	10,451		$	1		$	2,917		$	16,681		$	—		$	30,050

~~Table of Contents~~19

RevenueTable Recognition of Contents

WeItem ~~recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed and determinable, and collectibility is reasonably assured~~2. ~~Generally,~~Management’s ~~all~~Discussion ~~of these conditions are met at the time we ship our products to our customers. Net Sales~~ and ~~Cost~~Analysis of ~~Products~~Financial ~~Sold include~~Condition ~~transportation costs. For certain products sold under fixed-price contracts~~ and ~~subcontracts~~Results ~~with various United States Government agencies and aerospace and defense contractors, we utilize the percentage-~~of~~-completion method~~ ~~of accounting~~Operations. ~~When we use the percentage-of-completion method, we measure our percent complete based on total costs incurred to date as compared to our best estimate of total costs to be incurred.~~

~~Under~~All ~~the~~references ~~percentage-of-completion~~herein ~~method, contract costs include direct material, labor costs, and those indirect costs related~~ to ~~contract performance,~~years ~~such as indirect labor, supplies, tools and repairs. Selling and administrative expenses~~ are ~~charged~~ to ~~expense as incurred. Provisions for estimated losses on uncompleted contracts are made in~~ the ~~period~~three-months inended which such losses are determined. Changes to job performance, job conditions, and estimated profitability may result in revisions to contract revenue and costs and are recognized in the period in which the revisions are made. We provided for estimated losses on uncompleted contracts of $0.5February ~~million at November 30~~28, ~~2002~~2003 ~~and~~or February 2829, ~~2003.~~2004 ~~The~~unless ~~percentage~~otherwise ~~of completion method requires a higher degree of judgment and use of estimates than other revenue recognition methods~~indicated. ~~The primary judgments and estimates involved include our ability to~~ ~~accurately estimate the contracts’ percent complete and the reasonableness of~~ ~~the estimated costs to complete as of each financial reporting period.~~

~~Pension~~DISCLOSURE ~~and~~REGARDING ~~Postretirement~~FORWARD-LOOKING ~~Benefit Plan Assumptions~~STATEMENTS

WeCertain ~~sponsor~~of ~~pension~~the ~~plans~~matters ~~covering~~discussed ~~substantially~~in ~~all~~this ~~employees~~report ~~who~~may ~~meet~~constitute ~~certain~~forward-looking ~~eligibility requirements~~statements. WeForward-looking ~~also~~statements ~~sponsor~~can ~~postretirement~~be ~~benefit~~identified ~~plans~~by ~~that make health care and life insurance benefits available for certain employees. Several statistical and other factors that attempt to anticipate future events are used in calculating~~ the ~~expense~~use ~~and~~of ~~liability~~forward-looking ~~related~~words ~~to these plans. These factors include key assumptions,~~ such as ~~discount~~“believes,” ~~rate~~“expects, ~~expected~~” ~~return on plan assets~~“may,” ~~rate of increase of health care costs and rate~~“will,” of“should,” ~~future~~“seeks,” ~~compensation~~“approximately,” ~~increases.~~“intends,” ~~In addition~~“plans,” ~~our~~“estimates” ~~actuarial consultants also~~or ~~use~~“anticipates” ~~subjective~~or ~~factors~~the ~~such~~negative asof ~~withdrawal and mortality rates to estimate~~ these ~~factors.~~ ~~The~~terms ~~actuarial~~or ~~assumptions~~other wecomparable ~~use may differ materially from actual results due to changing market and economic conditions~~words, ~~higher~~ or ~~lower~~by ~~withdrawal~~discussions ~~rates~~of orstrategy, ~~longer~~plans or ~~shorter life spans of participants~~intentions. ~~These differences~~Statements ~~may result~~ in athis ~~significant~~report ~~impact to the amount of pension or~~which ~~postretirement~~are ~~benefits~~not ~~expenses~~historical wefacts ~~have~~are ~~recorded~~forward-looking orstatements. ~~may~~Without ~~record~~limiting in the ~~future.~~ ~~Assuming~~generality aof ~~constant~~the ~~employee~~preceding ~~base~~statement, ~~the~~all ~~most~~statements ~~important~~in ~~estimate~~this ~~associated~~report ~~with~~concerning ~~our~~or ~~post~~relating ~~retirement~~to ~~plan~~estimated isand ~~the~~projected ~~assumed~~earnings, ~~health~~margins, ~~care~~costs, ~~cost trend rate. As of November 30~~expenditures, cash ~~2002~~flows, agrowth ~~100~~rates ~~basis~~and ~~point~~financial ~~increase~~results inare ~~this~~forward-looking ~~estimate would increase~~statements. ~~the~~In ~~expense~~addition, bywe, ~~approximately~~through ~~$0.2 million. A similar analysis for the expense associated with~~ our ~~pension~~senior ~~plans~~management, isfrom ~~more~~time ~~difficult due~~ to ~~the~~time ~~variety of~~make ~~assumptions;~~forward-looking ~~plan~~public ~~types~~statements ~~and~~concerning ~~regulatory~~our ~~requirements~~expected ~~for~~future ~~these~~operations ~~plans around the~~and ~~world.~~performance ~~However,~~and ~~for~~other ~~example, our U~~developments.S. ~~plans,~~Such ~~which~~forward-looking ~~represent~~statements ~~approximately 90%~~are ofnecessarily ~~the~~estimates ~~consolidated~~reflecting ~~projected~~our ~~benefit~~judgment ~~obligation~~based atupon ~~November 30,~~current ~~2002,~~information and involve a ~~25 basis~~number ~~point~~of ~~change~~risks inand ~~the~~uncertainties. ~~discount~~Other ~~rate,~~factors ~~would~~may ~~change~~affect the ~~annual pension~~ ~~expense~~accuracy byof ~~approximately~~these ~~$0.8 million, and the annual post~~forward-~~retirement~~looking ~~expense by~~statements ~~approximately~~and ~~$0.1 million.~~our ~~Additionally,~~actual aresults 25may ~~basis~~differ materially ~~point~~from ~~change in~~ the ~~expected~~ ~~return~~results onanticipated ~~plan~~in ~~assets~~these ~~would~~forward-looking ~~change the pension expense by approximately $0~~statements.~~6 million.~~

~~Legal~~CRITICAL ~~Contingencies~~ACCOUNTING POLICIES

We ~~are~~have included a ~~defendant~~summary inof ~~numerous~~our ~~litigation~~Critical ~~and~~Accounting ~~regulatory~~Policies ~~matters~~in ~~including~~our ~~those~~annual ~~involving~~report ~~environmental~~on ~~law,~~Form ~~employment~~10-K ~~law~~for ~~and patent law, as discussed in Note G to~~ the ~~condensed~~year ~~consolidated~~ended ~~financial statements. As required by SFAS No.~~November 530, we2003, ~~determine~~filed whether an estimated loss from a loss contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. We analyze our litigation and regulatory matters based on ~~available information to assess potential liability. We develop our views on estimated losses in consultation with outside counsel and environmental experts handling our defense in these matters~~February 17, ~~which involves an analysis of potential results, assuming a combination of litigation and settlement strategies~~2004. ~~Should these~~There ~~matters result in an adverse judgment or be settled for significant amounts, they could~~ have abeen no material ~~adverse~~changes ~~effect~~to onthe ~~our~~summary ~~results of~~provided ~~operations, cash flows and financial position~~ in ~~the~~that ~~period or periods in which such judgment or settlement occurs~~report.

~~Estimates~~RESULTS ~~Used~~OF ~~Relating to Restructuring, Divestitures and Asset~~OPERATIONS ~~Impairments~~

~~Over~~The ~~the~~following ~~last~~summary ~~several~~financial ~~years~~information weabout ~~have~~our ~~engaged~~business ~~in significant restructuring~~segment ~~actions~~data ~~and~~is ~~divestitures,~~presented ~~which~~to ~~have~~gain ~~required~~a usbetter tounderstanding ~~develop~~of ~~formalized~~the ~~plans~~narrative asdiscussion ~~they~~below ~~relate~~about toour ~~exit~~business ~~activities.~~segments ~~These~~(in ~~plans~~thousands ~~have~~of ~~required us to utilize~~dollars). ~~significant estimates related to~~


	2003			2004			Variance			%
Net Sales
Hillsdale	$	79,873		$	74,048		$	(5,825	)		(7.3	)
Wolverine		20,718			24,107			3,389			16.4

Automotive Business Unit		100,591			98,155			(2,436	)		(2.4	)

Power Group		32,283			39,836			7,553			23.4
Specialty Materials Group		10,357			7,175			(3,182	)		(30.7	)
Pharmaceutical Services		1,902			2,881			979			51.5

Technologies Business Unit		44,542			49,892			5,350			12.0

Filtration and Minerals Business Unit		18,906			18,735			(171	)		(0.9	)

	$	164,039		$	166,782		$	2,743			1.7

Operating Income (Loss)
Hillsdale	$	2,078		$	739		$	(1,339	)		(64.4	)
Wolverine		3,389			3,615			226			6.7

Automotive Business Unit		5,467			4,354			(1,113	)		(20.4	)

Power Group		5,305			5,621			316			6.0
Specialty Materials Group		3,010			2,136			(874	)		(29.0	)
Pharmaceutical Services		(344	)		285			629			N/A

Technologies Business Unit		7,971			8,042			71			0.9

Filtration and Minerals Business Unit		(111	)		582			693			N/A

Corporate/Intersegment		(2,286	)		(4,626	)		(2,340	)		(102.4	)

	$	11,041		$	8,352		$	(2,689	)		(24.4	)

~~Table of Contents~~20

Table salvage values of assets that were made redundant or obsolete. In addition, we have had to record estimated expenses for severance and other employee separation costs, lease cancellation and other exit costs. Given the significance of, and the timing of the execution of such actions, this process is complex and involves periodic reassessments of estimates made at the time the original decisions were made. Our policies, as supported by current authoritative guidance, require us to continually evaluate the adequacy of the remaining liabilities under our restructuring initiatives. As we continue to evaluate the business, there may be supplemental charges for new plan initiatives as well as changes in estimates to amounts previously recorded as payments are made or actions are completed. Contents

~~Income~~ Hillsdale ~~Taxes~~Segment ~~and~~(Automotive ~~Tax~~Business ~~Valuation Allowances~~Unit)

WeSales ~~record~~in ~~the~~our ~~estimated~~Hillsdale ~~future~~Segment ~~tax~~decreased ~~effects~~$5.8 million, ofor ~~temporary~~7.3%, ~~differences~~to $74.0 ~~between~~million ~~the~~in ~~tax~~2004 ~~bases~~from of$79.9 million ~~assets~~in ~~and~~2003. ~~liabilities~~This ~~and~~decrease ~~amounts~~was ~~reported~~primarily ~~in our~~related ~~balance~~to ~~sheets,~~$4.6 million asof ~~well~~volume asdecreases ~~operating loss~~ and ~~tax~~$1.2 million ~~credit~~of ~~carryforwards~~price decreases. WeThe ~~follow~~volume ~~very~~decreases ~~specific~~are ~~and~~primarily ~~detailed~~$2.4 million ~~guidelines~~related into ~~each~~Honda ~~tax~~build ~~jurisdiction regarding~~schedules ~~the~~and ~~recoverability of any tax assets recorded on~~ the ~~balance~~continued ~~sheet~~phase-out ~~and~~of ~~provide necessary~~three ~~valuation~~specific ~~allowances as required~~programs. WeThe ~~regularly review our deferred~~customers’ ~~tax~~decision ~~assets~~to ~~for~~not ~~recoverability~~select ~~based~~Hillsdale on ~~historical~~the ~~taxable~~successor ~~income,~~platforms ~~projected future~~for ~~taxable~~these ~~income,~~three programs ~~the~~was ~~expected~~made ~~timing~~well ofbefore the ~~reversals~~current ofmanagement ~~existing temporary~~team ~~differences~~joined ~~and~~in ~~tax planning strategies~~2002. IfThe sales wedecrease ~~continue~~attributable to ~~operate at~~the athree ~~loss~~program inphase-outs ~~certain~~totaled ~~jurisdictions~~$2.6 million, asincluding we$1.1 million ~~have~~for ina ~~the~~Ford ~~United~~Motor ~~States,~~Company ortransmission ~~are~~pump, ~~unable~~$0.9 million tofor ~~generate~~a ~~sufficient~~General ~~future~~Motors ~~taxable~~connecting ~~income~~rod program, orand if$0.6 million ~~there is a material~~for ~~change~~an inAcura ~~the~~knuckle ~~actual~~program. ~~effective~~Partially ~~tax~~offsetting ~~rates~~these orprogram ~~time~~losses ~~period~~was ~~within which the~~$1.6 ~~underlying~~million ~~temporary~~primarily ~~differences~~related ~~become~~to ~~taxable~~a ornew ~~deductible,~~technology wemicro-filtration ~~could be~~transmission ~~required~~program toand ~~increase~~a ~~the~~Mitsubishi ~~valuation~~knuckle ~~allowance~~program. ~~against~~The ~~all~~remaining or$1.2 million aof ~~significant~~volume ~~portion~~decreases ofare ~~our~~primarily ~~deferred~~the ~~tax~~result ~~assets~~of ~~resulting~~the intiming aof ~~substantial~~volume ~~increase~~production infrom ~~our~~the ~~effective~~transition ~~tax~~of ~~rate~~old ~~and~~programs athat ~~material~~have ~~adverse~~phased-out ~~impact~~to onnew ~~our~~programs ~~operating~~beginning ~~results~~to ramp-up.

~~Risk~~The ~~Management~~North ~~Activities~~American automotive market remains a highly competitive market that is subject to potentially significant volume changes. We expect these competitive pressures to continue and possibly intensify. There are indications that our customers are consolidating their supplier base, increasing international sourcing and intensifying pressure for price reductions. We have been and will continue to respond to these pressures by (a) continually improving productivity through Lean manufacturing, six sigma, and increased sourcing from lower cost international suppliers, (b) improving our technology positions, including designing products to be manufactured at a lower cost, and (c) achieving cost reductions from our existing supplier base. The Hillsdale Segment’s operations are also being impacted by a recent significant increase in steel prices and surcharges being imposed by metal suppliers. These increases and surcharges may not in all cases be passed on to customers. The net impact in the first quarter of 2004 was not significant.

WeOperating ~~are~~income ~~exposed~~decreased ~~to market risk including changes in interest rates, currency exchange rates and commodity prices~~$1. ~~We use derivative instruments to manage our interest rate and foreign currency exposures. We do not use derivative instruments for speculative or trading purposes. Generally~~4 million, ~~we enter into hedging relationships such that changes in the fair values~~ or ~~cash flows of items and transactions being hedged are expected to be offset by corresponding changes in the values of the derivatives~~64. ~~Accounting for derivative instruments is complex~~4%, ~~as evidenced by the significant interpretations of the primary accounting standard, and continues~~ to ~~evolve~~$0. ~~As of November~~7 ~~30,~~million ~~2002~~in we2004 from ~~had~~ $132.51 million ~~and~~in ~~at February 28,~~ 2003 ~~we had $12~~.~~9 million~~ ofThis ~~foreign~~decrease ~~forward~~was ~~exchange~~primarily ~~contracts.~~due Into ~~addition,~~the ~~at November~~following ~~30,~~favorable/ ~~2002 and February~~(unfavorable) ~~28, 2003, we had $90.0 million of interest rate swap~~items: ~~contracts to hedge our interest rate risks.~~

~~Other~~a. ~~Significant~~$2.8 ~~Accounting~~million ~~Policies~~ reduction in costs due to productivity and cost improvements; b. ($1.2) million in price decreases; c. ($1.1) million of decreased margin as a result of the volumes discussed above; d. ($0.4) million of cost investments to focus on our global sourcing initiatives; and e. ($1.5) million in other cost increases and production issues. These cost increases were primarily related to higher costs for purchased castings, healthcare costs, and wages at our unionized facilities. Additionally, we continued to experience increased start-up costs related to a new Visteon program.

~~Other~~ Wolverine ~~significant~~Segment ~~accounting~~(Automotive ~~policies,~~Business ~~not involving the same level of~~Unit) ~~uncertainties as those discussed above, are nevertheless important to an~~ ~~understanding of our financial statements. See Note B to the consolidated~~ financial statements, Summary of Significant Accounting Policies, included in our Form 10-K for the year ended November 30, 2002, filed on March 3, 2003, which discusses accounting policies that must be selected by us when there are acceptable alternatives.

~~Results~~ Sales in our Wolverine Segment increased $3.4 million, or 16.4%, to $24.1 million in 2004 from $20.7 million in 2003 due primarily to a 9.2% volume increase. The volume increase is primarily related to brake programs in Europe and engine gasket programs in the United States. The remaining increase in sales is primarily related to the favorable foreign currency exchange rates as a result of ~~Operations~~the strengthening of the Euro. Approximately 40% of the Wolverine division’s sales are from Europe.

~~The~~Operating ~~following~~income ~~summary~~increased ~~financial~~$0.2 million, ~~information~~or ~~about~~6.7%, ~~our industry segment data is presented~~ to ~~gain a better understanding of the narrative discussion below about our business segments~~$3.6 million ~~See Note O~~ in ~~our Form 10-K for the year~~2004 ~~ended~~from ~~November~~$3.4 ~~30,~~million ~~2002,~~in ~~filed on March 3,~~ 2003~~, for additional financial information by segment~~. ~~All~~This ~~references~~increase ~~herein~~in toperformance ~~years~~was ~~are~~primarily todue to the ~~three-months ended~~following ~~February 28 unless otherwise indicated~~ favorable/(~~in thousands of dollars~~unfavorable). items:

Asa. ~~discussed~~$1.7 inmillion ~~Note~~from Qincreased tosales ~~our~~volumes ~~financial~~and ~~statements~~favorable ~~for~~foreign ~~the~~currency ~~year~~exchange ~~ended November 30,~~rates; ~~2002,~~b. ~~the~~($0.5) ~~accompanying~~million ~~2002~~of ~~financial~~shutdown ~~statements~~costs ~~have~~related ~~been restated~~ to ~~reflect~~ the ~~appropriate~~closing ~~adoption~~ of ~~EITF~~our ~~00-10~~high ~~which~~cost ~~resulted~~Inkster, inMichigan ~~an increase~~manufacturing toline; ~~Net~~c. ~~Sales~~($1.0) ~~and~~million ~~Cost~~in ofother ~~Products~~cost ~~Sold~~increases ~~for~~primarily ~~transportation~~related ~~costs billed~~ to ~~our~~healthcare ~~customers.~~costs, ~~This~~wages ~~restatement~~at ~~had~~our nounionized ~~impact~~facilities, onand ~~operating~~additional ~~income,~~costs ~~net income~~due orto ~~cash~~weather ~~flows.~~conditions ~~The~~which ~~following~~shut ~~discussion~~down ~~and~~the ~~analysis~~primary ~~gives~~manufacturing ~~effect~~facility ~~to the~~for ~~restatement~~six days.

		2002			2003			Variance			%
Net Sales
Hillsdale Division		$	85,834		$	83,282		$	(2,552	)		(3.0	)
Wolverine Division			17,648			20,718			3,070			17.4
	Automotive		103,482			104,000			518			0.5
Power Group			22,870			32,283			9,413			41.2
Precision Products- divested July 17, 2002			1,215			—			(1,215	)		(100.0	)
Specialty Materials Group			13,031			13,219			188			1.4
Pharmaceutical Services (formerly ChemSyn)			3,405			1,902			(1,503	)		(44.1	)
	Technologies		40,521			47,404			6,883			17.0
Filtration and Minerals			19,226			18,906			(320	)		(1.7	)
		$	163,229		$	170,310		$	7,081			4.3
Operating Income (Loss)
Automotive		$	3,516		$	5,141		$	1,625			46.2
Technologies			668			8,046			7,378			1,104.5
Filtration and Minerals			1,306			(111	)		(1,417	)		(108.5	)
Divested Divisions			(125	)		—			125			100.0
Corporate/ Intersegment			(509	)		(2,036	)		(1,527	)		(300.0	)
		$	4,856		$	11,040		$	6,184			127.3

Power Group Segment (Technologies Business Unit)

~~Automotive~~ Sales in our Power Group Segment increased $7.6 million, or 23.4%, to $39.9 million in 2004 from $32.3 million in 2003. The increase in sales is primarily related to higher volumes and improved pricing for our defense and space batteries. In addition, during 2004, we shipped our first EaglePicher Horizon Batteries and recognized approximately $1.0 million of revenue. These batteries utilize a next generation lead-acid woven technology that has been well received in the marketplace. The increased defense and space volumes were attributable to strong battery sales to U.S. Army CECOM (Communications Electronic Command) mobile communications program, increased space battery sales, and a $2.5 million, or 150%, increase in customer funded product development contracts. The increase in customer funded product development contracts is particularly important as they represent a foundation for future production awards.

~~Sales~~As inof ~~our~~February 29, ~~Automotive~~2004, the Power Group Segment’s ~~increased~~backlog has increased $010.53 million, or 07.5%, to $~~104~~146.0 5 million ~~in 2003~~ from $~~103~~136.52 million inat ~~2002. The Wolverine division sales increased $3.1~~November ~~million~~30, 2003 ~~or 17.4%, due~~ primarily ~~to an 11% volume increase~~ as a ~~result~~ ~~of increased penetration of the aftermarket and small engine markets, and favorable foreign currency as a~~ result of the ~~strengthening~~award of ~~the Euro. Approximately 38.8% of the Wolverine division’s sales are from Europe. Partially offsetting the Wolverine division’s sales increase was~~ a $219.~~6 million, or 3.~~0~~%, decline in our Hillsdale division’s sales due to (a)~~ ~~a $2.8~~ million ~~decline~~space ~~in transmission pump sales related to a program phase-out, and~~station ~~(b) a $1.3 million decline in sales of our Hillsdale U.K. Automotive operation~~contract, which iswas ~~in the process of being sold. These decreases are~~ partially offset by a ~~modest~~reductions ~~increase~~ in ~~North~~backlog ~~American sales due to the increase~~ in ~~automotive~~defense ~~builds~~batteries indue ~~2003 compared~~ to ~~2002.~~sales ~~The pending sale of the Hillsdale U~~volumes.K. ~~Automotive operation is discussed in Note I of Item 1 of this report. We~~ ~~anticipate that the net charge to our earnings related to this divestiture will~~ ~~be approximately $3.5 million to $5.0 million in 2003, with net cash proceeds of approximately $1.5 million to $2.0 million.~~

Operating income increased $10.63 million, or 466.20%, to $5.16 million in ~~2003~~2004 from $3.5 ~~million in 2002~~. ~~This improved performance was primarily due to a $0.9~~3 million ~~reduction~~ in ~~depreciation and amortization expense due to the elimination of $2.0 million of goodwill amortization expense in~~ 2003 ~~compared to 2002 (due to the adoption of SFAS No~~. ~~142,~~ ~~Goodwill~~This ~~and Other Intangible Assets, which no longer requires the amortization of goodwill), which was partially offset by a $1.1 million~~ increase in ~~tooling~~performance ~~amortization expenses. The remaining $0.7 million of operating income improvement~~ was primarily due to ~~favorable~~the ~~foreign~~following ~~currency~~favorable/ ~~exchange rates. Productivity improvements and improved sales mix were largely offset by price decreases~~ (~~$0.9 million~~unfavorable) ~~and higher wage and benefit costs in unionized facilities ($0.8~~ ~~million).~~items:

~~Technologies~~a. ~~Segment~~ $1.4 million increase in margin from the increased volumes and pricing discussed above; b. $1.5 million related to productivity initiatives, primarily related to improved supply chain management and automation of production processes; c. ($0.4) million of negative mix primarily related to our distributed battery business in our commercial power business. The distributed battery business had negative mix due to decreased volumes of higher margin batteries sold into the telecommunications market; d. ($1.0) million primarily related to management infrastructure expenses to support growth of our commercial power business; and e. ($1.2) million in other cost increases primarily related to energy, healthcare costs, wage increases at our unionized facilities, and increased legal costs.

Sales in our Technologies Segment increased $6.9 million, or 17.0%, to $47.4 million in 2003 from $40.5 million in 2002. Excluding sales from our Precision Products business, which we divested in July 2002, this segment’s sales increased $8.1 million, or 20.6%. Sales in the Power Group increased $9.4 million, or 41.2%, during 2003 compared to 2002, which was partially offset by a decrease of $1.5 million in our Pharmaceutical Services businesses. The increase in our Power Group sales is primarily related to new programs, improved pricing, and increased spending in our defense power business, as well as a $1.0 million, or 43%, increase in our commercial power sales, as a result of new initiatives in the commercial market. Decreased sales in our Pharmaceutical Services business is the result of lower sales to our larger customers and short-term operational issues. Sales increased $0.2 million in our Specialty Materials Group ~~due~~Segment ~~primarily~~(Technologies toBusiness ~~continued strong demand for~~Unit) ~~enriched Boron related~~

22 Sales in our Specialty Materials Group Segment decreased $3.2 million, or 30.7%, to $7.2 million in 2004 from $10.4 million in 2003. This sales decrease was primarily due to reduced volumes in our enriched Boron business due to the timing of shipments, and the exiting in 2003 of certain product lines. Operating income decreased $0.9 million, or 29.0%, to $2.1 million in 2004 from $3.0 million in 2003 primarily due to lower volumes.

~~products~~ Pharmaceutical ~~which~~Services ~~increased~~Segment ~~$2.2 million,~~(Technologies orBusiness ~~50.7%, partially offset by the~~Unit) ~~continued decline of Germanium and the exiting of our Gallium-based products~~ ~~sold to the telecommunications, fiber optics, and semiconductor markets.~~

~~Operating~~Sales ~~income~~in our Pharmaceuticals Services Segment increased $71.40 million, or 51.5%, to $82.09 million in ~~2003~~2004 from $01.6 9 million in ~~2002~~2003. ~~This~~As ~~improved~~previously disclosed ~~performance~~in ~~resulted~~our ~~primarily~~Form ~~from~~10-K ~~operational improvements~~for ofthe ~~$5.5 million~~year ~~related~~ended toNovember 30, ~~higher sales volumes~~2003, ~~productivity~~our ~~initiatives,~~Pharmaceutical ~~improved~~Services ~~sales~~business ~~mix~~had ~~and~~a ~~pricing,~~fire asat ~~well~~one asof ~~$1.2 million~~its offacilities ~~lower~~in 2001. ~~legal~~That ~~expenses~~fire ~~and~~had ~~settlement~~significantly ~~charges~~disrupted operations of the business in 2002 and 2003; ~~compared~~however, towe ~~2002.~~have Inseen ~~addition~~an increase in orders for this business, and accordingly, during the ~~elimination~~first quarter of $12004, we realized 51.~~9 million~~5% ofgrowth entirely ~~goodwill~~from ~~amortization~~volumes. ~~expense~~Operating ~~during~~results ~~2003 compared~~improved $0.6 million to ~~2002~~income ~~due~~of $0.3 million toin ~~our~~2004 ~~adoption~~from ofa ~~SFAS~~loss Noof $0.3 ~~142,~~million ~~Goodwill~~in ~~and~~2003 ~~Other Intangible~~due ~~Assets,~~to ~~contributed~~increased volumes toand ~~the~~favorable ~~improved~~sales ~~performance~~mix.

~~Filtration and Minerals Segment~~22

SalesTable inof our Filtration and Minerals Segment decreased $0.3 million, or 1.7%, to $18.9 million in 2003 from $19.2 million in 2002. Contents

~~Operating~~ Filtration ~~results decreased $1.4 million to a loss of $0.1 million in 2003 from income of $1.3 million in 2002. The decreased earnings were due to severance~~ and ~~recruiting~~Minerals ~~costs~~Segment ~~of $0.5 million related to restructuring the segment’s management team~~ (and ~~additional~~Business ~~freight costs of $0.8 million largely~~Unit) ~~related to the resolution of disputed freight claims with a former carrier.~~

~~Company~~ Sales ~~Discussion~~in our Filtration and Minerals Segment decreased $0.2 million, or 0.9%, to $18.7 million in 2004 from $18.9 million in 2003. The decrease was primarily related to volume and price decreases, which were partially offset by favorable foreign currency exchange rates as a result of the strengthening of the Euro.

~~Net~~Operating ~~Sales.~~results ~~Net~~improved ~~sales increased~~ $70.17 million, ~~or 4.3%,~~ to ~~$170.3 million in~~income ~~2003~~of ~~from~~ $~~163~~0.26 million in ~~2002.~~2004 from ~~Excluding~~a ~~the~~loss ~~sale in July 2002~~ of ~~our Precision Products business included in our Technologies Segment, our net sales increased~~ $80.31 million, ~~or 5.1%,~~ in 2003 ~~compared to 2002~~. ~~This~~The ~~increase~~improved ~~was primarily~~earnings ~~driven~~were ~~by a $9.4 million increase in our Technologies Segment’s Power Group due~~ primarily due to ~~new~~favorable ~~programs,~~foreign ~~improved~~currency ~~pricing,~~exchange ~~and~~rates ~~increased spending in our defense power business,~~ as ~~well as~~ a ~~$1.0 million, or 43%, increase in our commercial power sales, as a~~ result of ~~new initiatives in~~ the ~~commercial~~strengthening ~~market, and a $3.1 million increase in our Automotive Segment’s Wolverine division due primarily to the penetration~~ of the ~~aftermarket~~Euro, ~~and small engine markets. These increases were~~ partially offset by ~~reduced~~lower ~~sales~~volumes ofand ~~$2.6 million~~higher innatural ~~our~~gas ~~Automotive~~costs ~~Segment’s Hillsdale division~~ due to ~~the~~higher ~~continued phase~~prices ~~out~~and ofincreased angas ~~automotive~~usage ~~transmission~~resulting ~~pump~~from ~~program~~unfavorable ~~and lower sales at our~~weather ~~Hillsdale U~~conditions.~~K. Automotive operation, which is in the process of being sold.~~

~~Cost~~ Company ~~of Products Sold (exclusive of depreciation). Our gross margins~~Discussion ~~increased by $3.7 million from $33.5 million in 2002 to $37.2 million in 2003~~ ~~as a result of higher volumes, improved sales mix, and productivity~~ improvements. Our gross margin increased 1.3 points to 21.8% in 2003 from 20.5% in 2002, despite a negative impact of $0.5 million (0.3 points) in pension costs. The margin rate improvement was primarily a result of productivity improvements in our Automotive and Technologies Segments.

~~Selling~~Net ~~and Administrative~~Sales. ~~Selling~~Net ~~and~~sales ~~administrative expenses~~ increased $12.18 million, or 71.97%, to $14166.68 million in ~~2003~~2004 from $13164.50 million in ~~2002~~2003. The increase iswas primarily ~~attributable~~driven toby a $0.7.6 million, ~~for~~or ~~increased~~23.4%, increase in our Technologies Business Unit’s Power ~~compensation~~Group ~~costs~~Segment related to higher volumes and improved pricing in our ~~long-term~~defense and space ~~annual~~businesses, ~~management~~as ~~bonus~~well ~~plans~~as the initial shipments of our EaglePicher Horizon Batteries that resulted in revenue of $1.0 million. In addition, the increase ~~higher~~was ~~insurance~~driven ~~costs~~by a $3.4 million, ~~wage~~or ~~increases~~16.4%, ~~and~~increase ~~increased~~in ~~selling~~our ~~costs~~Automotive Business Unit’s Wolverine Segment primarily due to a 9.2% volume increase. These ~~higher~~increases ~~sales~~were ~~volumes~~partially offset by a $5.8 million decrease in our Automotive Business Unit’s Hillsdale Segment as well as decreases in our Technologies Business Unit’s Specialty Materials Group Segment. See above for a more detailed discussion of the individual segments’ results.

~~Goodwill~~Cost ~~Amortization~~of Products Sold (exclusive of depreciation). ~~Due~~Cost toof ~~the~~products ~~adoption~~sold (exclusive of ~~SFAS~~depreciation) Noincreased $1.2 ~~142~~million, ~~Goodwill~~or ~~and~~1.0%, to $129.0 million ~~Other~~in ~~Intangible~~2004 ~~Assets,~~from no$127.8 million ~~goodwill~~in ~~amortization~~2003. ~~expense~~Our ~~was~~gross ~~recorded~~margin ~~2003 while~~increased ~~2002~~by ~~included~~$1.5 million from $336.93 million ofin ~~goodwill~~2003 ~~amortization~~to ~~expense~~$37.8 million ~~This~~in ~~new accounting~~2004 ~~standard~~as ~~required~~a ~~that~~result weof higher ~~cease~~volumes, ~~the~~improved ~~amortization~~sales ~~of goodwill~~mix, ~~effective~~ ~~December 1,~~productivity ~~2002~~improvements, and ~~complete~~favorable foreign ancurrency ~~annual~~exchange ~~impairment~~rates. ~~test~~Our togross ~~determine if~~margin anincreased ~~impairment~~0.6 ~~charge~~points ~~has~~to 22.7% ~~occurred~~in 2004 from 22.1% Wein ~~have~~2003, ~~completed~~despite ~~our~~higher ~~initial~~energy, ~~impairment~~healthcare, ~~test~~restructuring asand ~~required~~shutdown bycosts, ~~this~~as ~~accounting~~well ~~standard~~as ~~and~~China ~~have~~sourcing ~~determined~~and ~~that~~higher ~~our~~wage ~~goodwill~~costs. ~~was~~The ~~not~~margin ~~impaired~~rate atimprovement ~~the~~was ~~time~~primarily a result of weproductivity improvements ~~adopted~~in ~~this~~our ~~accounting~~Automotive ~~standard~~Business Unit’s Hillsdale Segment and our Technologies Business Unit’s Power Group Segment.

~~Interest~~Selling ~~Expense~~and Administrative. ~~Interest~~Selling ~~expense~~and ~~was~~administrative expenses increased $112.17 million, inor ~~2002~~19.4%, ~~and~~to $916.4 8 million in ~~2003.~~2004 ~~Included~~from ~~in interest expense in 2002 are~~ $114.51 million in ~~fees~~2003. ~~and~~This ~~other~~increase ~~costs,~~is primarily ~~related~~due to ~~our~~expenses, ~~accounts~~such ~~receivable~~as ~~asset-backed securitization~~selling ~~(see Accounts Receivable Asset-Backed Securitization under Liquidity~~ and ~~Capital Resources). Excluding these $1.5 million in fees and~~management ~~other~~infrastructure costs ~~in 2002~~, ~~our~~to ~~2002~~support ~~interest~~growth ~~expense~~initiatives ~~was $9.6 million. This represents a decrease of 2.1%, or $0.2 million,~~ in ~~2003~~our ~~compared~~Power toGroup ~~2002~~Segment. ~~The~~ ~~decrease in interest expense is due to lower interest rates and lower debt~~ ~~levels.~~

23 Depreciation and Amortization of Intangibles. Depreciation and amortization of intangibles decreased $1.1 million, or 10.3%, to $10.0 million in 2004 from $11.1 million in 2003. This decrease was primarily related to certain assets whose depreciation was completed in 2003.

~~Table~~ Loss from Divestitures. All amounts recorded in loss from divestitures expense relate to operations that were sold or that were divested prior to November 30, 2003. During 2004, we recorded a $2.6 million charge related to the litigation settlement of ~~Contents~~a warranty claim related to a division sold effective December 1999. We paid this settlement in the second quarter of 2004.

~~Income~~Interest ~~(Loss) Before Taxes~~Expense. ~~Income~~Interest ~~(Loss)~~expense ~~Before~~was ~~Taxes improved~~ $78.9 4 million in 2003 (excluding $1.0 million which was allocated to ~~income~~discontinued ofoperations) and $29.13 million in ~~2003~~2004. ~~compared~~Including the interest allocated to discontinued operations, this represents a ~~loss~~decrease of 1.1%, or $50.8 1 million, in ~~2002.~~2004 ~~This~~compared ~~improvement~~to 2003. The decrease is ~~primarily~~the ~~related~~result ~~to:~~of lower average debt levels.

a. Preferred ~~$3.7~~Stock ~~million~~Dividends ofAccrued. ~~higher~~Effective ~~gross~~September 1, ~~margin~~2003, ~~due~~we toadopted SFAS ~~increased~~No. 150, ~~sales~~“Accounting ~~volume~~for ~~and~~Certain aFinancial ~~1.3~~Instruments ~~point~~with Characteristics ~~gross~~of ~~margin~~both ~~rate~~Liabilities ~~improvement~~and ~~for~~Equity” ~~the~~which ~~reasons~~requires ~~discussed~~that ~~above,~~certain instruments b.be ~~$3.9~~classified ~~million~~as ofliabilities ~~goodwill amortization expense~~ in ~~2002~~our ~~which~~balance wesheet. ~~are~~The noeffect ~~longer~~of the ~~required~~adoption towas ~~expense~~that, ~~with~~as ~~the~~of ~~adoption~~September 1, of2003, ~~SFAS~~we ~~No.~~reclassified ~~142,~~the ~~Goodwill~~current redemption ~~and~~value ~~Other~~plus ~~Intangible~~unpaid ~~Assets,~~dividends on ~~December~~our 1,redeemable ~~2002,~~preferred c.stock ~~$1.5~~to long-term ~~million~~liabilities ofand ~~additional~~the ~~interest~~accrual ~~expense~~of individends ~~2002~~payable ~~related~~subsequent to September 1, ~~our~~2003 ~~accounts~~has ~~receivable~~been ~~asset-backed~~recorded ~~securitization~~as ~~(see~~a ~~Accounts~~component ~~Receivable~~of ~~Asset~~non-~~Backed~~operating ~~Securitization~~expenses ~~under~~in our ~~Liquidity~~consolidated ~~and~~statements ~~Capital~~of ~~Resources~~income (loss),. ~~and~~In d.accordance ~~$1.1~~with ~~million~~this statement, ~~increase~~the inprior ~~Selling~~period ~~and~~financial ~~Administrative~~statements ~~expense,~~have asnot ~~discussed~~been ~~above~~reclassified.

~~Income Taxes. Income tax provision was $0.9 million in 2003 compared to~~23 $0.4 million in 2002. The provision in 2003 and 2002 relates to the allocation of income and loss between the United States and foreign jurisdictions and represents the estimated tax that will be due in certain jurisdictions where no tax benefit can be assured from utilizing previous losses. There is no U.S. Federal or state net tax benefit or provision recorded during 2002 and 2003.

NetTable Income (Loss). The net income (loss) improved $7.4 million to net income of $1.2 million in 2003 from a net loss of $6.2 million in 2002. The improved net income (loss) is the result of the items discussed above. Contents

~~Preferred~~Income ~~stock~~(Loss) ~~dividend~~from ~~accretion~~Continuing ofOperations $3Before Taxes.~~9 million~~ inIncome ~~2003~~(Loss) ~~decreased our~~from ~~net~~Continuing ~~income~~Operations ofBefore ~~$1.2 million~~Taxes todeclined ~~a net loss applicable to common shareholders of~~ $2.8.4 million. Infrom ~~2002,~~income ~~preferred stock dividend accretion~~ of $3.~~5 million~~0 ~~increased~~million ~~the~~in ~~net~~2003 to a loss of $65.24 million toin a2004. ~~net~~This ~~loss~~decline ~~applicable~~is primarily related to ~~common shareholders~~the offollowing ~~$9.7~~favorable/ (unfavorable) ~~million.~~items:

~~Company~~a. ~~Outlook~~$1.5 ~~Projected~~million ~~sales~~of ~~for~~additional ~~2003~~gross ~~are~~margin ~~estimated~~due to behigher involumes, ~~the~~improved ~~range of~~sales ~~$670.0 million~~mix, toproductivity ~~$700.0 million~~improvements, ~~compared~~and tofavorable foreign currency exchange rates; b. ($~~696~~2.8 7) million inof ~~2002.~~additional ~~The 2003~~selling ~~sales~~and ~~range~~administrative isexpenses primarily ~~attributed~~ to ~~the~~support ~~current~~growth ~~uncertainty~~initiatives ~~regarding industry~~in ~~forecasted~~our ~~automotive~~Power ~~builds~~Segment; ~~for~~c. ~~2003~~($2.6) ~~Also,~~million ~~the~~of ~~sales~~Loss ~~estimate~~from ~~for 2003~~Divestitures ~~reflects the anticipated decrease~~ in ~~sales~~2004; ofand ~~approximately~~d. ($154.0 2) million ~~related~~ ~~to the phase-out~~ of anPreferred ~~automotive~~Stock ~~transmission~~Dividends ~~pump~~accruals ~~program~~ in ~~our Hillsdale~~2004 ~~Division,~~(these aswere ~~well~~not asrecorded ~~our~~in ~~decision~~2003 toas ~~sell~~a ~~our~~component ~~Hillsdale~~of ~~U.K. Automotive~~the ~~operation,~~income ~~which~~statement ~~will~~under ~~have~~US ~~approximately $10~~GAAP).~~0 million less sales in 2003 compared to 2002.~~

~~We are projecting 2003 Operating~~ Income toTax ~~be in the range of $53~~Provision.~~5 million~~ toIncome ~~$57.5 million.~~tax ~~This~~provision ~~amount~~was ~~includes~~ $~~45.~~0.4 million ofin ~~depreciation~~2004 ~~and~~compared ~~amortization~~to ~~of intangibles, and excludes~~ $0.59 million ofin ~~non-operating income~~2003. These ~~Operating~~provisions ~~Income~~relate ~~estimates~~to ~~also~~the ~~include~~allocation ~~$3.0 million~~ of ~~expense~~ ~~related~~income toand ~~non-cash~~loss ~~provisions~~between ~~for~~the ~~our~~United ~~long-term~~States ~~bonus~~and ~~program,~~foreign ~~which~~jurisdictions ~~are added~~and ~~back~~represent tothe ~~Operating~~estimated ~~Income~~tax ~~for~~that ~~purposes~~will ofbe ~~determining~~due ~~our~~in ~~debt~~certain ~~covenant calculations.~~jurisdictions Inwhere ~~2002,~~no tax ~~our~~benefit ~~Operating~~can ~~Income~~be ~~was~~assured ~~$5.3 million,~~from ~~which~~utilizing ~~included $64~~previous losses.~~0 million~~ inThere ~~depreciation~~is ~~and~~no ~~amortization of intangibles expense, and~~U.S. ~~excluded~~Federal ~~$1.6 million~~or ofstate ~~non-operating~~net ~~income.~~tax ~~This~~benefit ~~projected~~or ~~improved Operating~~provision ~~Income,~~recorded ~~despite~~during ~~lower~~2003 ~~sales,~~and ~~primarily reflects:~~2004.

a. Discontinued ~~the adoption of SFAS No~~Operations. ~~142,~~During ~~Goodwill~~the ~~and~~second ~~Other~~quarter ~~Intangible~~of ~~Assets~~2003, ~~which~~we ~~eliminated~~accounted for ~~the~~our ~~amortization~~Automotive ofBusiness ~~goodwill,~~Unit’s ~~effective~~Hillsdale ~~December 1, 2002 (approximately $16~~U.0K. ~~million)~~operation b.as a ~~reduction of special charges of approximately $26~~discontinued operation.0 ~~million~~During inthe ~~2002~~third ~~related~~quarter toof ~~legal expenses and legal settlements~~2003, ~~divestitures,~~we ~~restructuring~~accounted ~~expenses~~for ~~and~~the ~~other~~sale ~~unusual~~of certain ~~charges,~~assets c.of ~~improved~~our ~~sales~~Germanium-based ~~mix~~business in our Technologies ~~and~~Business Unit ~~Automotive~~as ~~Segments,~~a ~~and~~discontinued ~~improved pricing in our Technologies Segment, d~~operation. ~~cost reductions and productivity initiatives across all businesses~~Accordingly, e.we anhave ~~approximate~~restated ~~$4.8 million increase in~~ our ~~pension~~prior period ~~expense,~~financial ~~from~~statements ~~$3.8 million of income in 2002 (excluding special termination benefits incurred in 2002)~~ to anconform ~~estimated $1.0 million of expense in 2003, and f. approximately $2.0 million in increased compensation costs related~~ to ~~our~~the ~~long-term~~discontinued ~~and annual management bonus plans~~operations presentation.

OnNet ~~the~~Income ~~basis~~(Loss). Our net income (loss) declined $7.0 million to a net loss of ~~these~~$5.8 million ~~projections,~~in we2004 ~~believe~~compared weto ~~will~~net beincome of $1.2 million in ~~compliance~~2003. ~~with~~The ~~all~~decline ~~covenants~~is ~~under~~the ~~our~~result ~~various~~of ~~credit~~the ~~facilities~~items ~~during~~discussed ~~2003~~above.

~~Liquidity~~LIQUIDITY ~~and~~AND ~~Capital~~CAPITAL ~~Resources~~RESOURCES

Our cash flows from operations and availability under our credit facilities are considered adequate to fund our short-term and long-term capital needs. As of February 29, 2004, we had $126.2 million unused under our various credit facilities. However, due to various financial covenant limitations under our Credit Agreement measured at the end of each quarter, on February 29, 2004, we could only incur an additional $37.6 million of indebtedness.

24 At February 29, 2004, we were in compliance with all of our debt covenants. We expect to remain in compliance with our debt covenants throughout fiscal year 2004.

~~Table~~ Cash ~~of Contents~~Flows

~~capital~~ Operating ~~needs~~Activities. AsOperating ofactivities ~~February~~used $14.1 ~~28,~~million ~~2003,~~in wecash during ~~had~~2004 compared to $~~43.~~8.5 million ~~unused~~in ~~under~~2003. In 2003, cash flows from operating activities were impacted by our net income of $1.2 million and a ~~senior~~non-cash ~~credit~~charge ~~agreement~~of $11.9 million ~~However~~from depreciation and amortization, ~~due~~resulting in cash sources of $13.1 million compared to ~~various~~a ~~financial~~2004 ~~covenant~~amount of $11.5 million. ~~limitations~~The ~~under~~2004 ~~our~~amount ~~senior~~of ~~credit~~$11.5 million ~~agreement~~is ~~measured~~comprised atof ~~the~~our ~~end~~net loss of ~~each quarter~~$5.8 million, and onnon-cash ~~February~~charges of $10.5 ~~28,~~million ~~2003~~from depreciation and amortization, we$4.2 million ~~could~~for ~~only~~preferred ~~incur~~stock andividends ~~additional~~accrued, $390.91 million from loss from ofdiscontinued ~~indebtedness~~operations, and $2.6 million from loss from divestitures.

AtThe ~~February 28,~~operating ~~2003,~~cash weflow ~~were~~for in2003 ~~compliance~~was ~~with~~also ~~all~~decreased ~~our~~by ~~debt covenants~~$21.6 million due ~~Also,~~to ~~based~~changes onin ~~our~~certain ~~projections~~assets ~~for~~and ~~2003~~liabilities, weresulting ~~expect~~in tonet ~~remain~~cash used in operating ~~compliance~~activities ~~with all~~of ~~covenants~~$8.5 million. ~~Our~~This ~~senior~~$21.6 million ~~secured~~decease ~~credit~~was ~~agreement expires in February 2004.~~primarily Wedue ~~will need~~ to ~~replace~~a or$9.9 million ~~extend~~decrease ~~this~~in ~~facility~~accounts ~~before that date~~payable. ~~Although there~~The ~~are~~remaining ~~no guarantees this can be accomplished, based on the projections~~decreases ~~described~~were in the ~~Company~~result ~~Outlook section under the Results~~ of ~~Operations~~increases ~~above and~~in ~~discussion~~production ~~with~~on ~~potential lenders, we believe we can obtain a new credit facility sufficient to meet our~~ long-term ~~capital~~defense ~~requirements.~~contracts ~~As described~~where ~~below~~costs ~~under~~are ~~Accounts~~incurred ~~Receivable~~before ~~Asset-Backed~~shipments ~~Securitization,~~or ~~our~~milestone ~~qualifying special~~billings ~~purpose~~are ~~entity,~~made ~~which is an important element of our liquidity~~ and ~~capital~~collected; ~~resources~~this ~~will~~was ~~terminate~~primarily ~~upon~~driven ~~the~~by ~~expiration~~increases ofin our ~~senior~~Power ~~credit~~Group Segment ~~agreement~~revenues, ~~unless~~and ~~the~~decreases ~~senior~~in ~~credit~~our ~~agreement~~accrued ~~is refinanced~~liabilities.

~~All~~The ~~references~~operating ~~herein~~cash toflow ~~years~~for ~~are~~2004 towas ~~the~~also ~~three-months~~decreased ~~ended~~by ~~February~~$25.6 28million due ~~unless~~to ~~otherwise~~changes ~~indicated~~in certain assets and liabilities, resulting in net cash used in operating activities of $14.1 million. This was primarily due to:

Cash Flows

	a.		$10.2 million source of cash as a result of the issuance of beneficial interests by our accounts receivable asset-backed securitization, EaglePicher Funding Corporation;

	b.		$23.4 million use of cash as a result of negative movement in the primary working capital areas of accounts receivable, inventories, and accounts payable;

~~Operating Activities. Net cash used in operating activities during 2003~~24 was $7.6 million compared to net cash provided by operating activities of $50.3 million in 2002, which includes $43.8 million as a result of selling certain of our receivables to an unconsolidated qualifying special purpose entity, as discussed below in Accounts Receivable Asset-Backed Securitization. The remaining difference between 2003 and 2002 operating activities is primarily the use of cash for our accrued liabilities of $4.7 million in 2003, compared to a source of cash of $6.3 million in accrued liabilities in 2002. This change is primarily related to 2003 spending on restructuring and legal settlement matters which were expensed during 2002. Approximately $8.0 million of 2002 litigation settlements were paid in the first quarter of 2003.

InvestingTable Activities. Investing activities used $3.6 million in cash during 2003 compared to providing $1.3 million in 2002. During 2002, $6.3 million was provided by proceeds from the sale of our Construction Equipment Division, which represented our former Machinery Segment, which was offset by capital expenditures of $5.1 million in 2002. During 2003, our net cash used in investing activities was primarily for capital expenditures. We expect our capital expenditures during 2003 will be approximately $22.0 million to $25.0 million, with the largest increase in our Technologies Segment. Contents

Financing Activities. Financing activities provided $10.3 million during 2003 compared to using $48.7 million during 2002. During 2002, we used $36.1 million to reduce our revolving credit facility, primarily from proceeds associated with the sale of our receivables to an unconsolidated qualifying special purpose entity, as discussed below under Accounts Receivable Asset-Backed Securitization. Both regularly scheduled debt payments and the proceeds from the sale of CED resulted in a $12.8 million decline in our long-term debt during 2002. During 2003, we used $14.5 million under our revolving credit facility to pay off $4.2 million of long-term debt, and to fund our capital expenditures and reductions in accounts payable and accrued liabilities.

	c.		$9.9 million increase in production on long-term defense contracts where costs are incurred before shipments or milestone billings are made and collected; this was primarily driven by a 23.4% increase in our Power Group Segment’s revenues; and

	d.		$2.5 million use of cash primarily from the payment of legacy legal and environmental matters.

~~Accounts~~Investing ~~Receivable~~Activities. ~~Asset-Backed~~Investing ~~Securitization~~activities ~~(Qualifying~~used ~~Special~~$12.8 million of cash ~~Purpose~~during ~~Entity)~~2004 compared to using $3.4 million in 2003. The 2004 amount primarily includes $9.4 million for capital expenditures and $3.5 million for the purchase of a controlling interest in EaglePicher Horizon Batteries LLC, a previously unconsolidated venture. The 2003 amount primarily includes $3.7 million for capital expenditures. We expect our capital expenditures to be between $35.0 million to $40.0 million in 2004.

~~During~~Financing ~~the~~Activities. ~~first~~Financing ~~quarter~~activities ofused ~~2002,~~$10.8 million weof ~~entered into an agreement with a~~cash ~~major~~during ~~U.S.~~2004 ~~financial~~compared ~~institution~~ to ~~sell~~providing ~~an interest in certain receivables through an unconsolidated qualifying special purpose entity, EaglePicher Funding Corporation (“EPFC”). Initially~~ $4710.03 million ofduring ~~proceeds~~2003. ~~from~~During ~~this~~2004, the ~~new~~use ~~facility~~of ~~were~~cash ~~used~~was primarily to ~~payoff~~pay ~~amounts~~off ~~outstanding~~one ~~under~~of our ~~existing~~ ~~Receivables~~Industrial ~~Loan~~Revenue ~~Agreement with our wholly owned subsidiary, EaglePicher Acceptance Corporation~~Bonds. ~~This agreement provides for the sale of~~ ~~certain~~During ~~receivables to EPFC~~2003, ~~which~~the insource ~~turn sells an interest in a revolving pool~~ of ~~receivables~~cash towas ~~the~~primarily ~~financial~~due ~~institution. EPFC has no recourse against us for failure of the debtors~~ to ~~pay~~a ~~when due~~$4.2 million ~~The agreement provides for the~~reduction ~~continuation~~in oflong-term ~~the~~debt, ~~program~~which onwas amore ~~revolving~~than ~~basis~~offset ~~until~~by ~~the earlier of~~ a) ~~the maturity~~$14.5 million ofincrease ~~our senior credit facility, or b) assuming we are able to refinance~~on our ~~senior~~revolving credit ~~facility, the fourth quarter of 2004~~agreement.

~~We account for the securitization of these sold receivables in accordance~~Capitalization ~~with SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets~~ ~~and Extinguishment of Liabilities—a Replacement of FASB Statement No. 125.”~~ Under this guidance, at the time the receivables are sold, the balances are removed from our financial statements. For purposes of calculating our debt covenant compliance under our Credit Agreement, we include the debt outstanding on EPFC.

25 Our capitalization, which excludes the obligations of our accounts receivable asset-backed securitization of zero at November 30, 2003 and $10.2 million at February 29, 2004, consisted of the following at November 30, 2003 and February 29, 2004 (in thousands of dollars):


	2003			2004
Credit Agreement:
Revolving credit facility	$	—		$	—
Term loan		149,625			148,875
Senior Unsecured Notes, 9.75% interest, due 2013, net of $1.9 million discount		248,040			248,074
Senior Subordinated Notes, 9.375% interest, due 2008		9,500			9,500
Industrial Revenue Bonds, 1.8% to 2.2% interest, due in 2004 and 2005		13,600			3,600
Other		1,105			1,086

		421,870			411,135
Preferred Stock		154,416			158,585
Shareholders’ Deficit		(90,207	)		(93,636	)

	$	486,079		$	476,084

InCredit ~~conjunction~~Agreement. ~~with~~We ~~the~~have ~~initial~~a ~~transaction~~syndicated ~~during~~senior ~~2002,~~secured weloan ~~sold $82.5~~facility ~~million~~(“Credit ofAgreement”) ~~receivables~~providing toan ~~EPFC,~~original ~~and~~term weloan ~~incurred~~(“Term ~~charges~~Loan”) of $1150.5 0 million, ~~which are~~and ~~included~~a in$125.0 million ~~Interest~~revolving ~~Expense~~credit infacility ~~the~~(“Facility”). ~~accompanying~~The Facility ~~condensed~~and ~~consolidated statements~~the ofTerm ~~income~~Loan ~~(loss) for~~bear ~~the~~interest, ~~three-months~~at ~~ended~~our ~~February 28~~option, ~~2002.~~at ~~We continue~~a rate equal to ~~service~~(i) LIBOR ~~sold~~plus ~~receivables~~350 ~~and~~basis ~~receive~~points aor ~~monthly~~(ii) an ~~servicing~~Alternate ~~fee~~Base ~~from EPFC~~Rate of(which ~~approximately~~is 1%equal ~~per~~to the ~~annum~~highest of (a) the ~~receivable pool~~agent’s ~~average~~prime ~~balance. As~~rate, ~~this~~(b) the ~~servicing~~Federal ~~fee~~funds ~~approximates~~effective ~~our~~rate plus ~~cost~~50 tobasis ~~service~~points, ~~no servicing asset~~ or ~~liability~~ ~~has~~(c) the ~~been~~base ~~recorded~~CD atrate ~~November 30,~~plus ~~2002~~100 orbasis ~~February 28,~~points) ~~2003.~~plus We250 ~~retain~~basis anpoints. ~~interest~~Interest inis agenerally ~~portion~~payable ofquarterly on the ~~receivables~~Facility ~~transferred,~~and ~~representing an~~Term ~~over collateralization on the securitization~~Loan. ~~Our~~We ~~involvement~~are ~~with~~permitted ~~both~~to ~~this over~~enter ~~collateralization~~into interest ~~and~~rate ~~the~~swap ~~transferred~~agreements ~~receivables~~to ~~is generally~~manage ~~limited~~our tovariable ~~the~~interest ~~servicing~~rate ~~performed~~exposure. ~~The~~However, ~~carrying~~as ~~value~~ of ~~our~~February 29, ~~interest~~2004, inwe ~~the~~had ~~receivables~~no isinterest ~~carried~~rate atswaps ~~fair~~outstanding. ~~value,~~The ~~which~~Credit isAgreement ~~estimated~~also ascontains ~~its net realizable~~certain ~~value~~fees. ~~due~~There toare ~~the~~fees ~~short~~for ~~duration~~letters of ~~the~~credit ~~receivables~~equal ~~transferred~~to 3.5% ~~The~~per ~~net realizable~~annum ~~value~~for ~~considers~~all issued ~~the~~letters ~~collection~~of ~~period~~credit, and ~~includes~~there anis ~~estimated provision~~a ~~for~~commitment ~~credit~~fee ~~losses~~on ~~and~~the ~~returns~~Facility ~~and~~equal to ~~allowances,~~0.5% ~~which~~per isannum ~~based~~of onthe ~~our historical~~unused ~~results~~portion ~~and~~of ~~probable~~the ~~future losses~~Facility.

AtSubsequent ~~November~~to February 3029, ~~2002~~2004, ~~our~~we ~~interest~~entered ininto ~~EPFC,~~an ~~including~~amendment awith ~~service fee~~the ~~receivable,~~lenders ~~was $29.4 million and the revolving pool~~ of ~~receivables~~our ~~that~~Credit ~~we serviced totaled $77~~Agreement.~~5 million.~~ AtWe ~~November 30,~~reduced ~~2002,~~ the ~~outstanding balance of the~~ interest ~~sold~~rate tospread on the Term ~~financial~~Loan ~~institution~~by ~~recorded~~50 onbasis ~~EPFC’s~~points. ~~financial statements~~The ~~was~~new ~~$46.5 million.~~interest Atrate, ~~February~~effective April 281, ~~2003~~2004, is at our ~~interest in EPFC~~option, ~~including~~ aequal ~~service~~to ~~fee~~(i) LIBOR ~~receivable,~~plus ~~was~~300 ~~$29.4 million~~basis ~~and~~points ~~the~~or ~~revolving~~(ii) Alternate Base ~~pool~~Rate ~~of receivables~~(as ~~that~~defined) weplus ~~serviced~~200 ~~totaled~~basis ~~$75~~points.~~0 million.~~ AtIn ~~February 28~~addition, ~~2003,~~as ~~the outstanding~~part ~~balance~~ of ~~the~~entering into ~~interest~~this ~~sold~~amendment towe ~~the~~were ~~financial~~provided ~~institution~~certain ~~recorded on~~adjustments ~~EPFC’s~~to our financial covenant ~~statements was $43~~limitations.~~8 million.~~ ~~The~~We ~~effective~~paid ~~interest~~the ~~rate as~~lenders of ~~February 28,~~the ~~203~~Credit inAgreement ~~the~~an ~~securitization~~amendment fee ~~was~~of ~~approximately~~1/8%, 2or $342,000.~~5%.~~

WeIf ~~believe~~we ~~that~~meet ~~EPFC~~certain isfinancial anbenchmarks, ~~important~~the ~~element~~interest ofrate ~~our~~spreads ~~ability~~on ~~to manage our~~the ~~liquidity~~Facility, ~~capital~~the ~~resources~~commitment fees and ~~credit~~the ~~risk~~fees ~~with~~for ~~certain~~letters ~~major~~of ~~customers~~credit may be reduced.

~~Accounts~~The ~~Receivable~~Term ~~Asset-Backed~~Loan ~~Securitization~~will mature upon the earlier of (~~Qualifying~~i) August 7, ~~Special Purpose~~2009, ~~Entity~~(ii) 180 days ~~Financial~~prior ~~Covenants~~to the maturity of our Senior Subordinated Notes if more than $5.0 million of aggregate principal amount of Senior Subordinated Notes are outstanding,

~~EPFC has two financial covenants contained in its asset-backed~~25 securitization agreement. They are a minimum fixed charge coverage ratio (the ratio of total EBITDA (earnings before interest, taxes, depreciation and amortization) minus capital expenditures to the sum of interest expense, scheduled payments of principal on debt, cash income taxes, and cash dividends, all as defined in the agreement), and a minimum EBITDA (as defined in the agreement) amount. These ratios and amounts are calculated based on the financial statement amounts of EaglePicher Holdings, Inc. and EPFC, which is not consolidated in our financial statements as EPFC is an off balance sheet qualifying special purpose entity.

AsTable of February 28, 2003, we were in compliance with the covenant calculations described above. Additionally, based on the required calculations, we could have had $30.6 million less in EBITDA (as calculated above) minus actual capital expenditures, or $22.5 million more of interest expense, scheduled payments of principal on debt, cash income taxes, and cash dividends, and continued to remain in compliance with EPFC’s financial covenants. Contents

Inor ~~the~~(iii) 180 days ~~event~~prior ~~that EPFC failed~~ to ~~meet~~the ~~one~~mandatory redemption of ~~the~~our ~~financial~~11.75% ~~covenants~~Cumulative ~~listed~~Redeemable ~~above,~~Exchangeable wePreferred ~~would~~Stock ~~not~~(“Preferred beStock”) ~~required~~if tomore ~~buy~~than ~~back~~$5.0 million ~~any~~of ~~receivables~~its ~~from~~aggregate ~~EPFC that~~liquidation ~~had~~preference ~~not~~remains ~~been~~outstanding. ~~collected;~~The Facility ~~however,~~will wemature ~~would~~upon nothe ~~longer~~earlier beof ~~able~~(i) August 7, to2008, ~~sell any~~(ii) 180 days ~~future~~prior ~~receivables~~ to ~~EPFC.~~the Inmaturity ~~addition,~~of ifour ~~EPFC~~Senior ~~fails~~Subordinated toNotes ~~meet~~if ~~one~~more ofthan ~~these~~$5.0 ~~financial~~million ~~covenants,~~of weaggregate ~~would~~principal beamount inof ~~default~~Senior ~~under~~Subordinated ~~our~~Notes ~~senior~~are outstanding, ~~credit~~or ~~facility. This~~(iii) 180 days ~~could~~prior ~~have~~to athe ~~significant~~mandatory ~~impact~~redemption onof our Preferred ~~liquidity~~Stock ~~and~~if ~~capital~~more ~~resources~~than $5. We0 million ~~believe~~of ~~that~~its ~~based~~aggregate onliquidation preference ~~our~~remains ~~projected~~outstanding. ~~2003~~Our ~~results,~~Senior ~~EPFC~~Subordinated ~~will~~Notes ~~remain~~mature inand our ~~compliance~~Preferred ~~with~~Stock ~~its~~is ~~financial~~scheduled ~~debt~~for ~~covenants;~~mandatory ~~however,~~redemption ~~there~~on isMarch 1, ~~no assurance this will occur~~2008.

26 At February 29, 2004, we had $27.1 million in outstanding letters of credit under the Facility, which together with borrowings of zero, made our available borrowing capacity of $97.9 million. However, due to various financial covenant limitations under our Credit Agreement measured at the end of each quarter, on February 29, 2004, we could only incur an additional $37.6 million of indebtedness.

~~Table~~ The Credit Agreement is secured by our capital stock, the capital stock of substantially ~~Contents~~all of our domestic United States subsidiaries, a certain portion of the capital stock of our foreign subsidiaries, and substantially all other assets of our United States subsidiaries. Additionally, the Credit Agreement is guaranteed by us and certain of our United States subsidiaries.

~~Capitalization~~The Credit Agreement contains covenants that restrict our ability to declare dividends or redeem capital stock, incur additional debt or liens, alter existing debt agreements, make loans or investments, form or invest in joint ventures, undergo a change in control or engage in mergers, acquisitions or asset sales. These covenants also limit the annual amount of capital expenditures and require us to meet certain minimum financial ratios. For purposes of determining outstanding debt under our Credit Agreement, we are required to include the outstanding obligations of EPFC, our off-balance sheet special purpose entity. We were in compliance with all covenants at February 29, 2004.

~~Our~~In ~~capitalization,~~addition ~~which~~to ~~excludes~~regularly scheduled payments on the ~~debt~~Credit Agreement, we are required to make mandatory prepayments equal to 50.0% of ~~our~~annual ~~off-balance~~excess ~~sheet~~cash ~~qualifying~~flow, ~~special~~as ~~purpose~~defined ~~entity~~in the Credit Agreement, ~~consisted~~beginning ofwith our fiscal year ending November 30, 2004. The net proceeds from the ~~following~~sale atof assets (insubject ~~thousands~~to ofcertain ~~dollars~~conditions):, the net proceeds of certain new debt issuance, and 50.0% of the net proceeds of any equity securities issuance are also subject to mandatory prepayments on the Credit Agreement.

		November 30,			February 28,
		2002			2003
Credit Agreement:
	Revolving credit facility, due February 27, 2004	$	121,500		$	136,000
	Term loan, due 2003		16,925			12,693
Senior Subordinated Notes, 9.375% interest, due 2008			220,000			220,000
Industrial Revenue Bonds, 1.8% to 2.2% interest, due 2005			15,300			15,300
			373,725			383,993
Preferred Stock			137,973			141,910
Shareholders’ Deficit			(87,578	)		(88,790	)
		$	424,120		$	437,113

Senior Unsecured Notes. In August 2003, we issued $250.0 million 9.75% Senior Unsecured Notes, due 2013, at a price of 99.2% of par to yield 9.875%. Accordingly, the net proceeds before issuance costs were $248.0 million. The discount is being amortized over the life of the Senior Unsecured Notes. The Senior Unsecured Notes require semi-annual interest payments on September 1 and March 1, beginning on March 1, 2004. The Senior Unsecured Notes are redeemable at our option, in whole or in part, any time after September 1, 2008 at set redemption prices. We are required to offer to purchase the Senior Unsecured Notes at a set redemption price should there be a change in control. The Senior Unsecured Notes contain covenants which restrict or limit our ability to declare or pay dividends, incur additional debt or liens, issue stock, engage in affiliate transactions, undergo a change in control or sell assets. We are in compliance with these covenants at February 29, 2004. The Senior Unsecured Notes are guaranteed by us and certain of our subsidiaries

~~Credit~~Senior ~~Agreement~~Subordinated Notes. WeOur ~~have~~Senior aSubordinated ~~syndicated~~Notes ~~senior~~require semi-annual ~~secured~~interest ~~loan~~payments ~~facility (“Credit~~on ~~Agreement”)~~September ~~providing~~1 anand ~~original~~March ~~term~~1. ~~loan~~In ~~(“Term~~connection ~~Loan”)~~with the issuance of ~~$75.0 million,~~the asSenior ~~amended,~~Unsecured ~~and~~Notes ain ~~$220.0~~August ~~million~~2003, ~~revolving~~as ~~credit~~described ~~facility~~above, ~~(“Facility”).~~we ~~The~~repurchased ~~Facility~~approximately ~~and~~95% of the ~~Term~~outstanding ~~Loan~~senior ~~bear~~subordinated ~~interest,~~ notes at par and executed a supplemental indenture on our ~~option,~~Senior atSubordinated Notes ~~LIBOR~~which ~~rate~~eliminated ~~plus~~substantially ~~2.75%,~~all orof the ~~bank’s~~restrictive ~~prime~~covenants ~~rate~~in ~~plus~~the 1Senior Subordinated Notes that remain outstanding.~~5%.~~ ~~Interest~~We ~~is generally~~continue ~~payable~~to ~~quarterly~~be required to make interest payments on the ~~Facility~~Senior Subordinated Notes and ~~Term~~will ~~Loan.~~be Werequired ~~have~~to ~~entered~~pay ~~into~~the ~~interest~~remaining ~~rate~~aggregate ~~swap~~principal ~~agreements~~amount tooutstanding ~~manage~~at ~~our~~maturity ~~variable~~in ~~interest rate exposure~~2008.

AtIndustrial ~~February 28,~~Revenue ~~2003, we had $40~~Bond.~~2 million~~ inOur ~~outstanding~~industrial ~~letters~~revenue ~~of credit~~bond ~~under~~requires ~~the Facility, which together with borrowings of $136.0 million,~~monthly ~~made~~interest ~~our~~payments ~~available~~at ~~borrowing~~variable ~~capacity~~interest ~~$43.8 million.~~rates ~~However,~~based ~~due~~on ~~to various financial covenant limitations under~~ the ~~Credit~~market ~~Agreement,~~for ~~we could only incur~~similar anissues ~~additional~~and ~~$39.9 million~~is ofsecured ~~indebtedness~~by ~~at February 28, 2003. The Credit Agreement also contains certain fees. There are fees for~~ letters of credit ~~equal~~ ~~to 2.75% per annum for all~~ issued ~~letters~~under ~~of credit, and there is a commitment fee on~~ the Facility ~~equal to 0.5% per annum of the unused portion of~~described ~~the Facility~~above. ~~If we meet or fail to meet certain financial benchmarks, the~~ ~~interest rate spreads on the borrowing, the commitment fees and the fees for~~ ~~letters of credit may be reduced or increased.~~

~~The~~Preferred ~~Credit~~Stock. ~~Agreement~~Our ispreferred ~~secured~~stock byincreased ~~our~~$4.2 million ~~capital~~during ~~stock,~~ the first ~~capital~~quarter ~~stock~~of 2004 as a result of ~~our~~ ~~domestic~~the ~~United~~accrual ~~States~~of ~~subsidiaries~~preferred dividends. Commencing March 1, a2003, ~~certain~~dividends ~~portion~~on ofour ~~the~~Preferred ~~capital~~Stock ~~stock~~became cash payable at 11.75% per annum of ~~our~~the ~~foreign~~liquidation ~~subsidiaries,~~preference if and ~~substantially~~when ~~all~~declared ~~other~~by ~~property~~the Board of ~~our~~Directors; ~~United States~~the ~~subsidiaries~~first semiannual dividend payment of $8.3 million ~~Additionally~~was due September 1, ~~the~~2003. The Credit Agreement isand ~~guaranteed~~the bySenior Unsecured Notes contain financial covenants that currently prohibit us from paying dividends on ~~and~~the ~~certain~~Preferred Stock. Our Board of ~~our~~Directors ~~subsidiaries~~did not declare a cash dividend as of September 1, 2003. If we do not pay cash dividends on the Preferred Stock, the holders

~~The Credit Agreement contains covenants that restrict our ability to~~26 declare dividends or redeem capital stock, incur additional debt or liens, alter existing debt agreements, make loans or investments, form joint ventures, undergo a change in control or engage in mergers, acquisitions or asset sales. These covenants also limit the annual amount of capital expenditures and require us to meet certain minimum financial ratios. For purposes of calculating our debt compliance under our Credit Agreement, we include the debt outstanding on EPFC, our off-balance sheet qualifying special purpose entity. See Accounts Receivable Asset-Backed Securitization above for a detailed discussion of EPFC. Also, see Credit Agreement Financial Covenants below for a summary of the debt covenant requirements. We were in compliance with all covenants at February 28, 2003.

SeniorTable Subordinated Notes. Our Senior Subordinated Notes, due in 2008, require semi-annual interest payments on September 1 and March 1. The Senior Subordinated Notes, which are unsecured, are redeemable at our option, in whole or in part, any time after February 28, 2003 at set redemption prices. We are required to offer to purchase the Senior Subordinated Notes at a set redemption price should there be a change in control. The Senior Subordinated Notes contain covenants which restrict or limit our ability to declare or pay dividends, incur additional debt or liens, issue stock, engage in affiliate transactions, undergo a change in control or sell assets. We are in compliance with these covenants at February 28, 2003. The Senior Subordinated Notes are guaranteed by us and certain of our subsidiaries. Contents

~~Industrial~~of ~~Revenue~~the ~~Bonds.~~Preferred ~~Our~~Stock ~~industrial~~may ~~revenue~~become ~~bonds~~entitled ~~require~~to ~~monthly~~elect a majority of our ~~interest~~Board ~~payments~~of atDirectors. ~~variable~~Dakruiter ~~interest~~S.A. ~~rates~~and ~~based~~Harbourgate onB.V., ~~the~~both ~~market~~companies controlled ~~for~~by ~~similar~~Granaria Holdings B.V., our controlling common shareholder, hold ~~issues~~approximately 78% of our Preferred Stock, and ~~are~~therefore ~~secured~~Granaria byHoldings ~~letters~~B.V. would continue to be able to elect our entire Board of ~~credit~~Directors. ~~issued~~The ~~under~~election of a majority of the ~~Facility~~directors ~~described~~is the only remedy of holders of the Preferred ~~above~~Stock for a failure to pay cash dividends. Unpaid dividends are cumulative but do not bear interest.

27 Shareholders’ Deficit. Our shareholders’ deficit increased $3.4 million during the first quarter of 2004 due to our comprehensive loss.

~~Table~~ Accounts ofReceivable ~~Contents~~Asset-Backed Securitization (Qualifying Special Purpose Entity)

~~Preferred~~We ~~Stock.~~have ~~Our~~an ~~preferred~~agreement ~~stock~~with ~~increased $3.9 million during 2003 as~~ a ~~result~~major ofUnited ~~mandatory~~States ~~dividend~~financial ~~accretion.~~institution ~~Commencing March 1, 2003,~~to ~~dividends~~sell onan ~~our~~interest ~~Cumulative~~in ~~Redeemable~~certain ~~Exchangeable~~receivables ~~Preferred~~through ~~Stock~~an ~~became~~unconsolidated ~~cash~~qualifying ~~payable~~special atpurpose ~~11.75%~~entity, ~~per~~EaglePicher ~~annum;~~Funding ~~the~~Corporation ~~first~~(“EPFC”). ~~semiannual~~The ~~dividend~~size ~~payment~~ of ~~$8.3~~ ~~million~~this facility is ~~due September~~$55.0 1million, ~~2003.~~subject Ifto wecertain dofinancial ~~not~~covenant limitations. ~~pay~~This ~~cash~~agreement ~~dividends~~provides onfor the ~~preferred~~ ~~stock,~~sale ~~then~~of ~~holders~~certain ofreceivables ~~the~~to EPFC, ~~preferred~~which ~~stock~~in ~~become~~turn ~~entitled~~sells toan ~~elect~~interest in a ~~majority~~ revolving pool of ~~our~~receivables ~~Board~~to ofthe financial ~~Directors~~institution. ~~Dakruiter~~EPFC ~~S.A.,~~has ano ~~company~~recourse ~~controlled~~against byus for failure of the ~~Granaria~~debtors ~~Holdings~~to Bpay when due.~~V.,~~ ~~our~~In ~~controlling~~the ~~common~~third ~~shareholder,~~quarter ~~holds~~of a2003, ~~majority~~we ofamended this ~~our~~agreement ~~preferred~~to ~~stock,~~extend ~~and~~the ~~therefore~~receivables ~~Granaria~~program ~~Holdings~~until ~~B.V.~~the ~~would~~earlier ~~continue~~of ~~to be~~(a) 90 days ~~able~~prior to ~~elect~~the maturity of our ~~entire~~Credit ~~Board~~Agreement of(as ~~Directors~~defined in the Capitalization Section above) or (b) January 2008.

~~Granaria~~We ~~Holdings~~account ~~B.V.~~for ~~and~~the ~~certain~~securitization ~~executive~~of ~~officers~~these ~~have~~sold ~~agreed~~receivables toin ~~buy~~accordance ~~the~~with 69SFAS No. 140,~~500~~ ~~shares~~“Accounting offor ~~our~~Transfers ~~Common~~and ~~Stock~~Servicing ~~held~~of inFinancial ~~our Treasury for $13.00 per~~Assets ~~share,~~and orExtinguishment of Liabilities—a ~~total~~Replacement ~~price~~ of $0FASB Statement No.9 ~~million~~125.” Under ~~This~~this ~~transaction~~guidance, isat ~~expected~~the totime ~~be completed in~~ the ~~second~~receivables ~~quarter~~are ofsold, ~~2003.~~the Inbalances ~~addition,~~are removed ~~Granaria~~from ~~Holdings~~our Bfinancial statements.~~V. and~~ ~~certain~~For ~~executive~~purposes ~~officers~~of ~~have~~calculating ~~agreed~~our todebt covenant ~~purchase~~compliance ~~for~~under ~~$13.00~~our ~~per~~Credit ~~share~~Agreement, ~~any future~~we ~~common~~include ~~stock~~the ~~re-purchases~~outstanding obligations byof usEPFC.

~~Shareholders’~~As ~~Deficit.~~of ~~Our~~November 30, ~~shareholders’~~2003, ~~deficit~~our ~~increased~~retained interest in ~~2003 primarily~~EPFC ~~due~~was to$63.3 million and the ~~required~~revolving ~~accretion~~pool of ~~our~~receivables ~~preferred~~that ~~stock~~we ~~discussed~~serviced ~~above~~totaled $64.9 million. At November 30, 2003, the outstanding balance of the interest sold to the ~~which~~financial ~~was~~institution ~~partially~~recorded ~~offset~~on byEPFC’s ~~our~~financial ~~comprehensive~~statements ~~income~~was zero. The effective interest rate as of $November 30, 2003 in the securitization was approximately 2.~~7 million~~95%.

~~Credit~~As ~~Agreement~~of ~~Financial~~February 29, ~~Covenants~~2004, our retained interest in EPFC was $60.9 million and the revolving pool of receivables that we serviced totaled $72.6 million. At February 29, 2004, the outstanding balance of the interest sold to the financial institution recorded on EPFC’s financial statements was $10.2 million. The effective interest rate as of February 29, 2004 in the securitization was approximately 4.36%.

There are three financial covenants contained in our senior secured credit agreement. They are a leverage ratio (the ratio of total debt less cash on the balance sheet to EBITDA, as defined in the agreement), an interest coverage ratio (the ratio of EBITDA, as defined in the agreement, to interest expense) and a fixed charge coverage ratio (the ratio of EBITDA, as defined in the agreement, to the sum of interest expense plus required principal payments plus cash dividends paid plus income taxes paid). For purposes of determining outstanding debt under our Credit Agreement, weand ~~include the debt outstanding on EPFC, our off-balance sheet qualifying special purpose entity. See~~ Accounts Receivable Asset-Backed Securitization Financial ~~above for a detailed discussion of EPFC.~~Covenants

AsThere ofare ~~February 28,~~three ~~2003,~~financial wecovenants ~~were~~contained in ~~compliance~~our ~~with~~Credit ~~the~~Agreement ~~covenant~~and ~~calculations~~the ~~described~~Accounts ~~above.~~Receivable ~~Additionally~~Asset-Backed Securitization, ~~for~~as ~~purposes~~amended. ofThey ~~the~~are a leverage ratio ~~defined~~ ~~above~~(the ratio of total debt, weincluding ~~could~~the ~~have~~obligations ~~had~~of ~~$15.2 million~~our accounts ~~less~~receivable inasset-backed securitization, to Credit Agreement EBITDA), an orinterest ~~$72.2 million~~coverage ratio (the ratio of Credit Agreement EBITDA to interest ~~more~~expense) inand ~~total~~a ~~debt~~fixed ~~less~~charge ~~cash~~coverage onratio (the ~~balance~~ratio ~~sheet~~of ~~and~~Credit ~~continued~~Agreement EBITDA minus capital expenditures to ~~remain~~the insum of interest expense plus scheduled ~~compliance~~principal ~~with~~payments plus cash dividends paid plus income taxes paid), all as defined in the Credit Agreement’s ~~financial~~and ~~covenants~~the Accounts Receivable Asset-Backed Securitization, as amended. As of February 29, 2004, we were in compliance with the covenant calculations described above.

AsBased ~~discussed~~on ~~above~~our ~~under~~projections ~~Accounts~~for ~~Receivable~~2004, ~~Asset-Backed~~we ~~Securitization~~expect to remain in compliance with ~~(Qualifying~~all ~~Special~~covenants. ~~Purpose~~However, ~~Entity)~~any ~~Financial~~adverse ~~Covenants~~changes in actual results from projections, asalong with the contractual tightening of ~~February 28,~~the covenants under the ~~2003~~Credit Agreement, wemay ~~were~~place inus ~~compliance~~at risk of not being able to comply with all of the covenants inof ~~our~~the ~~securitization Additionally,~~Credit ~~based~~Agreement. onIn the ~~required~~event ~~calculations~~we cannot comply with the terms of the ~~securitization~~Credit Agreement as currently written, weit would be necessary for ~~could~~us ~~have~~to ~~had~~obtain ~~$30.6 million~~a ~~less~~waiver inor ~~EBITDA~~renegotiate ~~(as~~our ~~calculated~~loan ~~above~~covenants, inand ~~accordance~~there can be no ~~with~~assurance ~~the~~that ~~securitization)~~such ~~minus~~negotiations ~~actual~~will ~~capital~~be ~~expenditures,~~successful. Any agreements to amend the covenants and/or ~~$22.5 million~~obtain waivers may likely require us to pay a fee and ~~more~~increase ofthe interest ~~expense,~~rate ~~scheduled~~payable ~~payments~~under ofthe ~~principal~~Credit onAgreement. ~~debt,~~The ~~cash~~amount ~~income~~of ~~taxes,~~such fee and ~~cash~~increase ~~dividends,~~in ~~and~~interest ~~continued~~rate towould ~~remain~~be determined in ~~compliance~~the ~~with~~negotiations of the ~~securitization’s~~ ~~financial covenants~~amendment.

~~The~~Contractual ~~following~~Obligations ~~table presents the required ratios~~ and ~~the~~Other ~~actual~~Commercial ~~ratios.~~Commitments

						Minimum
				Minimum		Fixed Charge
		Maximum		Interest		Coverage
		Leverage Ratio		Coverage Ratio		Ratio
		(not more than)		(not less than)		(not less than)
November 30, 2002
	Required		4.75		2.00		1.25
	Actual		4.02		2.63		1.65
February 28, 2003
	Required		4.75		2.25		1.35
	Actual		4.02		2.75		1.74
May 31, 2003
	Required		4.50		2.25		1.35
August 31, 2003
	Required		4.25		2.25		1.40
November 30, 2003
	Required		4.25		2.50		1.40

We have included a summary of our Contractual Obligations and Other Commercial Commitments in our annual report on Form 10-K for the year ended November 30, 2003, filed on February 17, 2004. There have been no material

2827

Based on our projections for 2003, which are described under the Company Outlook section under the Results of Operations above, we expect to remain in compliance with all covenants. However, any adverse changes ~~in actual results from projections, along with the contractual tightening of the covenants under the Credit Agreement, would place us at risk of not being able~~ to ~~comply with all of~~ the ~~covenants~~summary ofprovided ~~the~~in Credit Agreement. In the event we cannot comply with the terms of the Credit Agreement as currently written, it would be necessary for us to obtain a waiver or renegotiate our loan covenants, and there can be no assurance that ~~such negotiations will be successful~~report. In ~~addition, EPFC would be in default under our accounts receivable asset-backed~~ ~~securitization, described above, and we would need to obtain a waiver. Any~~ agreements to amend the covenants and/or obtain waivers would likely require us to pay a fee and increase the interest rate payable under the Credit Agreement. The amount of such fee and increase in interest rate would be determined in the negotiations of the amendment.

~~Contractual~~Recently ~~Obligations~~Released ~~and~~or ~~Other~~Adopted ~~Commercial~~Accounting ~~Commitments~~Standards

WeIn ~~have~~January 2003, ~~included~~the aFASB ~~summary~~issued Interpretation (“FIN”) No. 46, “Consolidation of ~~our~~Variable ~~Contractual~~Interest ~~Obligations~~Entities ~~and~~— ~~Other~~An Interpretation of Accounting ~~Commercial~~Research ~~Commitments~~Bulletin in(“ARB”) ~~our~~No. 51.” ~~annual~~This ~~report~~interpretation onwas ~~Form~~subsequently revised by FIN 46 (Revised 2003) in December ~~10-K~~2003. ~~for~~This revised interpretation states that consolidation of variable interest entities will be required by the primary ~~year~~beneficiary ~~ended~~if the entities do not effectively disperse risks among the ~~November~~parties involved. The requirements are effective for fiscal years ending after December 3015, ~~2002,~~2003 ~~filed~~for onspecial-purpose entities and for all other types of entities for periods ending after March 331, ~~2003~~2004. ~~There~~We ~~have~~do ~~been~~not nobelieve ~~material~~that ~~changes~~FIN toNo. 46® ~~the~~will ~~summary~~have ~~provided~~a inmaterial ~~that~~impact ~~report~~on our financial condition or results of operations.

~~Earnings~~In March 2004, the EITF reached a consensus on EITF No. 03-16, “Accounting for Investments in Limited Liability Companies.” This consensus would require that we account for our investment in a start-up manufacturing company, as described in Note S of our Form 10-K for the year ended November 30, 2003, filed on February 17, 2004, as an equity method investment. As of February 29, 2004, we have $1.2 million recorded in our balance sheet related to ~~Fixed~~this investment. ~~Charges~~The consensus, if ratified by the FASB, would be effective for us on September 1, 2004 and ~~Preferred~~would ~~Stock~~require ~~Dividends~~that we record a cumulative effect of a change in accounting principle in our fourth quarter of 2004.

~~During~~The ~~2003,~~EITF ~~our~~is ~~earnings~~currently ~~were~~considering ~~insufficient~~Issue toNo. 03-R, ~~cover~~“The ~~fixed~~Accounting ~~charges and~~for ~~preferred~~Certain ~~stock~~Costs ~~dividends~~in bythe ~~$1.9 million~~Mining Industry, ~~and~~Including inDeferred ~~2002,~~Stripping ~~our~~Costs.” ~~earnings were~~The ~~insufficient~~issue is attempting to ~~cover~~address ~~fixed~~numerous ~~charges~~implementation and ~~preferred~~consistency ~~stock~~issues for ~~dividends~~the bymining ~~$9.3~~industry, including the appropriate accounting for deferred ~~million~~stripping costs. ~~This~~Any ~~improvement~~conclusions isby ~~primarily~~the ~~related~~EITF toon ~~our~~this ~~improved~~issue ~~operating~~could result in a ~~performance,~~change ~~and~~to our ~~adoption~~accounting ofpolicy ~~SFAS~~on ~~No. 142~~Deferred onStripping ~~December 1,~~and ~~2002,~~as ~~which~~a noresult could ~~longer~~have ~~requires~~a usmaterial toimpact ~~recognize~~on ~~goodwill~~our ~~amortization~~financial ~~expense~~condition or results of operations.

~~Recently~~ In ~~Released~~December 2003, orthe ~~Adopted~~FASB ~~Accounting~~issued ~~Standards~~SFAS No. 132 (Revised 2003), Employers’ Disclosures about Pensions and Other Postretirement Benefits. This standard increases the existing disclosure requirements by requiring more details about pension plan assets, benefit obligations, cash flows, benefit costs and related information. We will be required to segregate plan assets by category, such as debt, equity and real estate, and to provide certain expected rates of return and other informational disclosures. We will be required to adopt the disclosure requirements of SFAS No. 132® when we issue our November 30, 2004 financial statements, and we will be required to disclose various elements of pension and postretirement benefit costs in interim-period financial statements for quarters beginning after December 15, 2003 (our second quarter of fiscal 2004 ending May 31, 2004).

InItem ~~June 2001, the FASB issued SFAS No~~3. ~~142,~~ ~~“Goodwill~~Quantitative and ~~Intangible Assets”~~Qualitative ~~and~~Disclosures ~~effective~~About ~~December 1,~~Market 2002, we adopted this standard. This standard addresses goodwill and other intangible assets that have indefinite useful lives and, as such, prescribes that these assets will not be amortized, but rather tested, at least annually, for impairment. This standard also provides specific guidance on performing the annual impairment test for goodwill and intangibles with indefinite lives. Under this new accounting standard, we no longer amortize our goodwill and are required to complete an annual impairment test. We have had approximately $16.0 million of goodwill amortization per year that is no longer recognized as expense. We have determined that we have six reporting units, as defined in SFAS No. 142, within our three reportable business segments. We have completed our initial impairment test as of December 1, 2002 and determined that no impairment charge exists. Risk

InWe ~~June~~have ~~2001,~~included ~~the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations,” which requires that the fair value of~~ a ~~liability~~summary ~~for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate~~ of ~~fair~~our ~~value~~Quantitative ~~can~~and beQualitative ~~made. The associated~~Disclosure ~~asset~~About ~~retirement~~Market ~~costs~~Risk ~~are~~in ~~capitalized~~our asannual ~~part~~report ofon ~~the~~Form ~~carrying amount of the long~~10-~~lived~~K ~~assets~~for ~~and depreciated over their estimated useful life while~~ the ~~liability~~ isyear ~~accreted~~ended ~~to its expected obligation amount upon retirement. We~~November ~~adopted~~30, ~~SFAS~~2003, ~~No. 143~~filed on ~~December~~February 117, ~~2002~~2004. ~~The~~There ~~adoption~~have ~~did~~been ~~not~~no ~~have~~material achanges ~~material~~to ~~impact~~the onsummary ~~our~~provided ~~financial~~in ~~condition~~that ~~or results of operations~~report.

InItem ~~September 2001, the FASB issued SFAS No~~4. ~~144,~~ ~~“Accounting~~Controls ~~for the Impairment or Disposal of Long-Lived Assets,” which superceded SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets~~ and for Long-Lived Assets to Be Disposed of.” The primary difference is that goodwill and certain intangibles with indefinite lives have been removed from the scope of SFAS No. 144, as they are covered by SFAS No. 142, as described above. It also broadens the presentation of discontinued operations to include a component of an entity rather than a segment of a business. A component of an entity comprises operations and cash flows that can clearly be distinguished operationally and for financial accounting purposes from the rest of the entity. We adopted SFAS No. 144 on December 1, 2002. The adoption did not have a material impact on our financial condition or results of operations. Procedures

InOur ~~June 2002~~management, ~~the~~including ~~FASB~~our ~~issued~~Chief ~~SFAS~~Executive ~~No. 146,~~Officer ~~“Accounting~~and ~~for~~our ~~Costs~~Chief ~~Associated~~Financial ~~with~~Officer, ~~Exit~~conducted oran ~~disposal~~evaluation ~~Activities,”~~of ~~which~~our isdisclosure ~~effective~~controls ~~for exit or~~and ~~disposal~~procedures ~~activities~~as ~~initiated~~of ~~after~~the ~~December 31,~~end ~~2002.~~of ~~SFAS~~the ~~No. 146~~period ~~addresses financial~~covered ~~accounting~~by ~~and~~this ~~reporting~~report ~~for~~as ~~costs~~required ~~associated~~by the ~~with~~rules ~~exit~~of orthe ~~disposal activities~~Securities and ~~nullifies~~Exchange ~~Emerging~~Commission. ~~Issues~~Based ~~Task~~on ~~Force~~that ~~(EITF) Issue No. 94-3~~evaluation, ~~“Liability~~our ~~Recognition~~Chief ~~for~~Executive ~~Certain~~Officer ~~Employee~~and ~~Termination~~our ~~Benefits~~Chief ~~and~~Financial ~~Other Costs~~Officer tohave ~~Exit~~concluded anthat our ~~Activity~~disclosure ~~(including~~controls ~~Certain~~and ~~Costs~~procedures ~~Incurred~~are effective in aensuring that all ~~Restructuring).”~~material ~~The~~information ~~adoption~~required ofto ~~this~~be ~~statement~~filed ~~did~~in ~~not~~this ~~have~~report ahas ~~material~~been ~~impact on~~made ~~our~~known ~~financial~~to them ~~condition~~in ora ~~results~~timely ofmanner.

2928

~~operations~~PART II. OTHER INFORMATION

InItem November 2002, the FASB issued Interpretation No. 45 (“FIN 45”) “Guarantor’s Accounting and Disclosure requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN 45 elaborates on the existing disclosure requirements for most guarantees, including loan guarantees. It also clarifies that at the time a company issues a guarantee, the company must recognize an initial liability for the fair value, or market value, of the obligations it assumes under that guarantee. However, the provisions related to recognizing a liability at inception of the guarantee for the fair value of the guarantor’s obligations does not apply to product warranties or to guarantees accounted for as derivatives. The initial recognition and initial measurement provisions apply on a prospective basis to guarantees issued or modified after December 31, 2002. The disclosure requirements of FIN 45 are effective for financial statements of interim or annual periods ending after December 15, 2002. FIN 45 does not affect the accounting for guarantees issued prior to the effective date, unless the guarantee is modified subsequent to December 31, 2002. We adopted the disclosure requirements on December 1~~, 2002, and the initial recognition and measurement provisions in our February 28, 2003 financial statements~~. ~~The adoption~~Legal ~~of FIN 45 did not have a material impact on our financial condition or results of operations.~~ Proceedings

InPlease ~~January~~refer ~~2003,~~to ~~the~~Note ~~FASB~~G ~~issued~~regarding ~~Interpretation~~Legal ~~No. 46~~Matters ~~(“FIN~~contained ~~46”) “Consolidation of Variable Interest Entities.” Until this interpretation, a company generally included another entity~~ in its consolidated financial statements only if it controlled the entity through voting interests. FIN 46 requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or entitled to receive a majority of the entity’s residual returns. FIN 46 applies to variable interest entities created after JanuaryPart 31I, ~~2003,~~ ~~and to variable interest entities in which an enterprise obtains an interest in after that date. A public entity with a variable interest in a variable interest entity created before February~~Item 1~~, 2003, shall apply the~~ ~~provisions~~ of this ~~interpretation~~report, ~~(other~~which ~~than~~is ~~the~~incorporated ~~transition~~by ~~disclosure provisions~~reference in ~~paragraph~~this ~~26) to that entity no later than the beginning of the first interim or annual reporting period beginning after June~~Part 15II, ~~2003.~~as ~~The related~~its ~~disclosure requirements are effective immediately. The impact of this~~Item ~~interpretation is not expected to have a material impact on our financial condition or results of operations~~1.

InItem ~~November 2002, the EITF issued EITF 00-21, “Revenue Arrangements with Multiple Deliverables~~6.” ~~EITF~~Exhibits ~~00-21~~and ~~prescribes~~Reports ~~a method to account for contracts that have multiple elements or deliverables. It provides guidance~~ on ~~how~~ toForm allocate the value of a contract to its different deliverables, as well as guidance on when to recognize revenue allocated to each deliverable over its performance period. We are required to adopt EITF 008-~~21 on December 1, 2003. We are evaluating the impact EITF 00-21 will have on us, but do not expect it to have a material impact on our financial condition or results of operations.~~ K

~~Forward Looking Statements~~ (a) Exhibits:

This report contains statements which, to the extent that they are not statements of historical fact, constitute “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 21E of the Securities Exchange Act of 1934. The words “estimate,” “anticipate,” “project,” “intend,” “believe,” “expect,” and similar expressions are intended to identify forward-looking statements. Forward looking statements in this report include, but are not limited to, any statements under the “Company Outlook” heading. Such forward-looking information involves risks and uncertainties that could cause actual results to differ materially from those expressed in any such forward-looking statements. These risks and uncertainties include, but are not limited to, our ability to maintain existing relationships with customers, demand for our products, our ability to successfully implement productivity improvements and/or cost reduction initiatives, our ability to develop, market and sell new products, our ability to obtain raw materials, increased government regulation or changing regulatory policies resulting in conditions, acquisitions and divestitures, technological developments and changes in the competitive environment in which we operate. Persons reading this report are cautioned that such forward-looking statements are only predictions and that actual events or results may differ materially.


Exhibit
Number		Title of Exhibit	Note
10.1	–	Amendment to Credit Agreement dated as of March 31, 2004 among EaglePicher Holdings, Inc., EaglePicher Incorporated Harris Trust and Savings Bank, as administrative agent, and various lenders party thereto	*

10.2	–	Second Amendment to Credit Agreement dated as of March 31, 2004 among EaglePicher Holdings, Inc., EaglePicher Incorporated Harris Trust and Savings Bank, as administrative agent, and various lenders party thereto	*

31.1	–	Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as Amended	*

31.2	–	Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as Amended	*

32.1	–	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	*

32.2	–	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	*

~~Item 3. Quantitative~~ *Filed ~~and Qualitative Disclosures About Market Risk~~herewith

We(b) Reports ~~have included a summary of our Quantitative and Qualitative Disclosure About Market Risk in our annual report~~ on Form 108-K ~~for the year ended November~~ ~~30, 2002, filed on March 3, 2003. There have been no material changes to the~~ ~~summary provided in that report.~~

30 • Form 8-K, filed December 8, 2003, concerning our press release dated December 8, 2003 • Form 8-K, filed December 18, 2003, concerning our press release dated December 17, 2003 • Form 8-K, filed February 17, 2004, concerning our press release dated February 16, 2004

~~Table of Contents~~29

Item 4. ControlsTable andof Procedures Contents

~~Our management, including our Chief Executive Officer and our Chief~~SIGNATURES ~~Financial Officer, conducted an evaluation of our disclosure controls and~~ ~~procedures within 90 days of the filing of this report as required by the rules~~ ~~of the Securities and Exchange Commission. Based on that evaluation, our Chief~~ Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures are effective in ensuring that all material information required to be filed in this report has been made known to them in a timely manner. There have been no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date our Chief Executive Officer and our Chief Financial Officer completed their evaluation.

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

~~Item 1~~EAGLEPICHER HOLDINGS, INC. ~~Legal~~ ~~Proceedings~~ /s/ Thomas R. Pilholski Thomas R. Pilholski Senior Vice President and Chief Financial Officer (Principal Financial Officer)

~~Please~~DATE: ~~refer to Note G regarding Legal Matters contained in Part I, Item~~April ~~1 of this report~~5, ~~which is incorporated by reference in this Part II, as its Item~~2004 1.

~~Item 6. Exhibits and Reports on Form 8-K~~30

(a) Exhibits: Table of Contents

10.66	—	EaglePicher Incorporated (formerly Eagle-Picher Industries, Inc.)2002 Long-term Bonus Program
10.67	—	Amended and Restated Executive Employment Agreement dated December 1, 2002 between EaglePicher Incorporated and John W. Weber
12.1	—	Ratios of Earnings to Fixed Charges and Preferred Stock Dividends

SIGNATURES

~~(b) Reports~~Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on ~~Form 8-K~~its behalf by the undersigned thereunto duly authorized.

•EAGLEPICHER ~~Form~~INCORPORATED ~~8-K,~~/s/ ~~filed~~Thomas ~~January~~R. ~~16,~~Pilholski ~~2003,~~Thomas ~~concerning~~R. ~~our~~Pilholski ~~press~~Senior ~~release~~Vice ~~dated~~President ~~January~~and ~~16,~~Chief ~~2003~~Financial •Officer ~~Form~~(Principal ~~8-K,~~Financial ~~filed January 31, 2003, concerning our press release dated January 31, 2003 • Form 8-K, filed March 4, 2003, concerning our press release dated March 3, 2003~~Officer)

31DATE: April 5, 2004

~~Table of Contents~~31

SIGNATURES Table of Contents

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

~~EAGLEPICHER~~Pursuant ~~HOLDINGS,~~to ~~INC.~~the ~~/s/~~requirements ~~Thomas~~of R.the ~~Pilholski~~Securities ~~Thomas~~Exchange R.Act ~~Pilholski~~of ~~Senior~~1934, ~~Vice~~the registrant ~~President~~has ~~and~~duly ~~Chief~~caused ~~Financial~~this ~~Officer~~report ~~(Principal~~to ~~Financial~~be ~~Officer)~~signed on its behalf by the undersigned thereunto duly authorized.

~~DATE: April 14~~CARPENTER ENTERPRISES, ~~2003~~ INC. /s/ Thomas R. Pilholski Thomas R. Pilholski Vice President (Principal Financial Officer)

32DATE: April 5, 2004

~~Table of Contents~~32

SIGNATURES Table of Contents

~~EAGLEPICHER~~Pursuant ~~INCORPORATED~~to ~~/s/~~the ~~Thomas~~requirements R.of ~~Pilholski~~the ~~Thomas~~Securities R.Exchange ~~Pilholski~~Act ~~Senior~~of ~~Vice~~1934, ~~President~~the registrant ~~and~~has ~~Chief~~duly ~~Financial~~caused ~~Officer~~this ~~(Principal~~report ~~Financial~~to ~~Officer)~~be signed on its behalf by the undersigned thereunto duly authorized.

~~DATE: April 14~~DAISY PARTS, ~~2003~~ INC. /s/ Thomas R. Pilholski Thomas R. Pilholski Vice President (Principal Financial Officer)

33DATE: April 5, 2004

~~Table of Contents~~33

SIGNATURES Table of Contents

~~DAISY~~Pursuant ~~PARTS~~to the requirements of the Securities Exchange Act of 1934, ~~INC.~~the registrant ~~/s/~~has ~~Thomas~~duly R.caused ~~Pilholski~~this ~~Thomas~~report R.to ~~Pilholski~~be ~~Vice~~signed ~~President~~on ~~(Principal~~its ~~Financial~~behalf ~~Officer)~~by the undersigned thereunto duly authorized.

~~DATE: April 14~~EAGLE-PICHER FAR EAST, ~~2003~~ INC. /s/ Thomas R. Pilholski Thomas R. Pilholski Vice President (Principal Financial Officer)

34DATE: April 5, 2004

~~Table of Contents~~34

SIGNATURES Table of Contents

~~EAGLEPICHER~~Pursuant ~~DEVELOPMENT~~to ~~CO.~~the requirements of the Securities Exchange Act of 1934, ~~INC.~~the registrant ~~/s/~~has ~~Thomas~~duly R.caused ~~Pilholski~~this ~~Thomas~~report R.to ~~Pilholski~~be ~~Vice~~signed ~~President~~on ~~(Principal~~its ~~Financial~~behalf ~~Officer)~~by the undersigned thereunto duly authorized.

~~DATE:~~EAGLEPICHER ~~April 14~~FILTRATION & MINERALS, ~~2003~~ INC. /s/ Thomas R. Pilholski Thomas R. Pilholski Vice President (Principal Financial Officer)

35DATE: April 5, 2004

~~Table of Contents~~35

SIGNATURES Table of Contents

~~EAGLEPICHER~~Pursuant ~~FAR~~to ~~EAST~~the requirements of the Securities Exchange Act of 1934, ~~INC.~~the registrant ~~/s/~~has ~~Thomas~~duly R.caused ~~Pilholski~~this ~~Thomas~~report R.to ~~Pilholski~~be ~~Vice~~signed ~~President~~on ~~(Principal~~its ~~Financial~~behalf ~~Officer)~~by the undersigned thereunto duly authorized.

~~DATE:~~EAGLEPICHER ~~April 14~~TECHNOLOGIES, ~~2003~~ LLC /s/ Bradley J. Waters Bradley J. Waters Vice President and Chief Financial Officer (Principal Financial Officer)

36DATE April 5, 2004

~~Table of Contents~~36

SIGNATURES Table of Contents

~~EAGLEPICHER~~Pursuant ~~FILTRATION~~to ~~AND~~the ~~MINERALS~~requirements of the Securities Exchange Act of 1934, ~~INC.~~the registrant ~~/s/~~has ~~Thomas~~duly R.caused ~~Pilholski~~this ~~Thomas~~report R.to ~~Pilholski~~be ~~Vice~~signed ~~President~~on ~~(Principal~~its ~~Financial~~behalf ~~Officer)~~by the undersigned thereunto duly authorized.

~~DATE:~~EAGLEPICHER ~~April 14~~AUTOMOTIVE, ~~2003~~ INC. /s/ Thomas R. Pilholski Thomas R. Pilholski Vice President (Principal Financial Officer)

37DATE: April 5, 2004

~~Table of Contents~~37

SIGNATURES Table of Contents

~~EAGLEPICHER~~Pursuant ~~TECHNOLOGIES~~to the requirements of the Securities Exchange Act of 1934, ~~LLC~~the registrant ~~/s/~~has ~~Bradley~~duly J.caused ~~Waters~~this ~~Bradley~~report J.to ~~Waters~~be ~~Vice~~signed ~~President~~on ~~and~~its ~~Chief~~behalf ~~Financial~~by ~~Officer~~the undersigned ~~(Principal~~thereunto ~~Financial~~duly ~~Officer)~~authorized.

~~DATE~~EAGLEPICHER ~~April 14~~PHARMACEUTICAL SERVICES, ~~2003~~ LLC /s/ Thomas R. Pilholski Thomas R. Pilholski Vice President (Principal Financial Officer)

38DATE: April 5, 2004

~~Table of Contents~~38

SIGNATURES Table of Contents

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

HILLSDALE TOOL & MANUFACTURING CO. /s/ Thomas R. Pilholski Thomas R. Pilholski Vice President (Principal Financial Officer)


Exhibit
Number			Title of Exhibit	Note
	10.1	–	Amendment to Credit Agreement dated as of March 31, 2004 among EaglePicher Holdings, Inc., EaglePicher Incorporated Harris Trust and Savings Bank, as administrative agent, and various lenders party thereto	*

	10.2	–	Second Amendment to Credit Agreement dated as of March 31, 2004 among EaglePicher Holdings, Inc., EaglePicher Incorporated Harris Trust and Savings Bank, as administrative agent, and various lenders party thereto	*

	31.1	–	Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as Amended	*

	31.2	–	Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as Amended	*

	32.1	–	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	*

	32.2	–	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	*

~~DATE:~~ *Filed ~~April 14, 2003~~herewith

SIGNATURES

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

EPMR CORPORATION /s/ Thomas R. Pilholski Thomas R. Pilholski Vice President (Principal Financial Officer)

DATE: April 14, 2003

CERTIFICATIONS

I, John H. Weber, President and Chief Executive Officer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of EaglePicher Holdings, Inc. , EaglePicher Incorporated, Daisy Parts, Inc., EaglePicher Development Co., Inc., EaglePicher Far East, Inc., EaglePicher Filtration and Minerals, Inc., EaglePicher Technologies, LLC, Hillsdale Tool & Manufacturing Co. and EPMR Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

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

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

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

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

/s/ JOHN H. WEBER Date: April 14, 2003 John H. Weber, President and Chief Executive Officer

I, Thomas R. Pilholski, Senior Vice President and Chief Financial Officer, certify that:

/s/ THOMAS R. PILHOLSKI Date: April 14, 2003 Thomas R. Pilholski, Senior Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit
Number
10.66	—	EaglePicher Incorporated (formerly Eagle-Picher Industries, Inc.) 2002 Long-term Bonus Program
10.67	—	Amended and Restated Executive Employment Agreement dated December 1, 2002 between EaglePicher Incorporated and John W. Weber
12.1	—	Ratios of Earnings to Fixed Charges and Preferred Stock Dividends

Filing Compare · EAGLE PICHER HOLDINGS INC