SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q/A
Amendment #1

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2003

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) 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 North Tatum Blvd. Suite 110, Phoenix, Arizona 85028

Registrant’s telephone number, including area code:
602-652-9600

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  o  No  x  (See explanatory note immediately above.)

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

     Yes  o  No  x

1,000,000 shares of common capital stock, $0.01 par value each, were issued and outstanding at July 29, 2003

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TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
PART II. OTHER INFORMATION
	SIGNATURES
CERTIFICATIONS

TABLE OF ADDITIONAL REGISTRANTS

	Jurisdiction			IRS Employer
	Incorporation or	Commission		Identification
Names	Organization	File Number		Number
EaglePicher Incorporated	Ohio		333-49957		31-0268670
Daisy Parts, Inc.	Michigan		333-49957-02		38-1406772
EaglePicher Development Co., Inc.	Delaware		333-49957-03		31-1215706
EaglePicher Far East, Inc.	Delaware		333-49957-04		31-1235685
EaglePicher Filtration & Minerals, Inc.	Nevada		333-49957-06		31-1188662
EaglePicher Technologies, LLC	Delaware		333-49957-09		31-1587660
Hillsdale Tool & Manufacturing Co.	Michigan		333-49957-07		38-0946293
EPMR Corporation (f/k/a Michigan Automotive Research Corp.)	Michigan		333-49957-08		38-2185909

REASON FOR AMENDMENT

This Amendment on Form 10-Q/A constitutes Amendment No. 1 to EaglePicher Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended May 31, 2003, which was previously filed with the Securities and Exchange Commission on July 11, 2003. The sole purpose of this amendment is to correct a typographical error in the Company Outlook subsection of the Company Discussion section of Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, under Part I, Financial Information. The remainder of the information contained in the original Form 10-Q is not amended hereby and shall be as set forth in the original filing.

TABLE OF CONTENTS

		Page
		Number
	PART I. FINANCIAL INFORMATION
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			3
	PART II. OTHER INFORMATION
Signatures			21
Certifications			30

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PART I. FINANCIAL INFORMATION

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

Critical Accounting Policies

     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:

     Environmental Reserves

     We 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.

     We 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, including currently-owned and formerly-owned plants. Also, we have received notice that we may have liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 as a potentially responsible party at a number of sites (“Superfund Sites”).

     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%.

     As of November 30, 2002, we had $17.7 million accrued primarily for sold divisions or businesses related to legal and environmental remediation matters, and $2.4 million recorded in other accrued liabilities related to environmental remediation matters for our on-going businesses. As of May 31, 2003, we had $13.6 million accrued primarily for sold divisions or businesses related to legal and environmental remediation matters, and $1.6 million recorded in other accrued liabilities related to environmental remediation matters for our on-going businesses. We believe such reserves to be adequate under the current circumstances.

     Impairment of Long-Lived Assets, including Goodwill

     We 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, the carrying value of a long-lived asset is considered impaired if the sum of the undiscounted cash flows is less than the carrying value of the asset. If this occurs, an impairment charge is recorded for the amount by which the carrying value of the long-lived assets exceeds its fair value. Effective December 1, 2002, we adopted SFAS No. 142, “Goodwill and Other Intangible 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 No. 142, within our three reportable business segments. We have completed our initial

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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 May 31, 2003, we had recorded $163.9 million of goodwill. In addition as of November 30, 2002, we had recorded $177.1 million of property, plant, and equipment, net (our primary long-lived asset), and as of May 31, 2003 we had recorded $164.7 million of property, plant, and equipment, net.

     Revenue Recognition

     We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed and determinable, and collectibility is reasonably assured. Generally, all of these conditions are met at the time we ship our products to our customers. Net Sales and Cost of Products Sold include transportation costs. 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. 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 the percentage-of-completion method, contract costs include direct material, labor costs, and those indirect costs related to contract performance, 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 in 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 $0.5 million at November 30, 2002 and May 31, 2003. The percentage of completion method requires a higher degree of judgment and use of estimates than other revenue recognition methods. 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 and Postretirement Benefit Plan Assumptions

     We sponsor pension plans covering substantially all employees who meet certain eligibility requirements. We also sponsor postretirement benefit plans 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 and liability related to these plans. These factors include key assumptions, such as discount rate, expected return on plan assets, rate of increase of health care costs and rate of future compensation increases. In addition, our actuarial consultants also use subjective factors such as withdrawal and mortality rates to estimate these factors. The actuarial assumptions we use may differ materially from actual results due to changing market and economic conditions, higher or lower withdrawal rates or longer or shorter life spans of participants. These differences may result in a significant impact to the amount of pension or postretirement benefits expenses we have recorded or may record in the future. Assuming a constant employee base, the most important estimate associated with our post retirement plan is the assumed health care cost trend rate. As of November 30, 2002, a 100 basis point increase in this estimate would increase the expense by approximately $0.2 million. A similar analysis for the expense associated with our pension plans is more difficult due to the variety of assumptions, plan types and regulatory requirements for these plans around the world. However, for example, our U.S. plans, which represent approximately 90% of the consolidated projected benefit obligation at November 30, 2002, a 25 basis point change in the discount rate, would change the annual pension expense by approximately $0.8 million, and the annual post-retirement expense by approximately $0.1 million. Additionally, a 25 basis point change in the expected return on plan assets would change the pension expense by approximately $0.6 million.

     Deferred Stripping Costs

     In our Filtration and Minerals Segment, we generally charge our mining costs to Cost of Products Sold as sales are incurred. However, we defer and amortize certain mining costs on a units-of-production basis over the estimated life of the particular section of a mine, based on estimated recoverable cubic yards of ore in that section. These mining costs, which are commonly referred to as “deferred stripping” costs, are incurred in mining activities that are normally associated with the removal of waste rock. The deferred stripping accounting method is generally accepted in the mining

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industry where mining operations have diverse grades and waste-to-ore ratios; however industry practice does vary. By deferring stripping costs, we match the costs of production when the sale of diatomaceous earth occurs with an appropriate amount of waste removal cost. If we were to expense deferred stripping costs as incurred, there could be greater volatility in our period-to-period operating results. Deferred stripping costs recorded in our accompanying balance sheets totaled $3.7 million at November 30, 2002 and $5.7 million at May 31, 2003.

     Legal Contingencies

     We are a defendant in numerous litigation and regulatory matters including those involving environmental law, employment law and patent law, as discussed in Notes K and G to the condensed consolidated financial statements in Item 1 of this report. As required by SFAS No. 5, we determine 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, which involves an analysis of potential results, assuming a combination of litigation and settlement strategies. Should these matters result in an adverse judgment or be settled for significant amounts, they could have a material adverse effect on our results of operations, cash flows and financial position in the period or periods in which such judgment or settlement occurs.

     Estimates Used Relating to Restructuring, Divestitures and Asset Impairments

     Over the last several years we have engaged in significant restructuring actions and divestitures, which have required us to develop formalized plans as they relate to exit activities. These plans have required us to utilize significant estimates related to 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 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.

     Income Taxes and Tax Valuation Allowances

     We record the estimated future tax effects of temporary differences between the tax bases of assets and liabilities and amounts reported in our balance sheets, as well as operating loss and tax credit carryforwards. We follow very specific and detailed guidelines in each tax jurisdiction regarding the recoverability of any tax assets recorded on the balance sheet and provide necessary valuation allowances as required. We regularly review our deferred tax assets for recoverability based on historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. If we continue to operate at a loss in certain jurisdictions, as we have in the United States, or are unable to generate sufficient future taxable income, or if there is a material change in the actual effective tax rates or time period within which the underlying temporary differences become taxable or deductible, we could be required to increase the valuation allowance against all or a significant portion of our deferred tax assets resulting in a substantial increase in our effective tax rate and a material adverse impact on our operating results.

     Risk Management Activities

     We are exposed to market risk including changes in interest rates, currency exchange rates and commodity prices. 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, 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. Accounting for derivative instruments is complex, as evidenced by the significant interpretations of the primary accounting standard, and continues to evolve. As of November 30, 2002 we had a notional amount of $13.5 million and at May 31, 2003 we had a notional amount of $23.6 million of foreign forward

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exchange contracts. In addition, at November 30, 2002 and May 31, 2003, we had notional amounts of $90.0 million of interest rate swap contracts to hedge our interest rate risks. The impact of a 1.0% increase in interest rates would result in additional interest expense of approximately $0.7 million on an annual basis.

     Other Significant Accounting Policies

     Other significant accounting policies, not involving the same level of 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 of Operations

     The following summary financial information about our industry segment data is presented to gain a better understanding of the narrative discussion below about our business segments. See Note O in our Form 10-K for the year ended November 30, 2002, filed on March 3, 2003, for additional financial information by segment.

     As discussed in Note Q to our financial statements for the year ended November 30, 2002, the accompanying 2002 financial information has been restated to reflect the appropriate adoption of EITF 00-10 which resulted in an increase to Net Sales and Cost of Products Sold for transportation costs billed to our customers. This restatement had no impact on operating income, net income or cash flows. The following discussion and analysis gives effect to the restatement.

     As discussed in Note G to our financial statements in Item 1 of this report, the accompanying 2002 financial information has been restated to reflect our Hillsdale U.K. Automotive operation as a discontinued business. The operation was sold on June 11, 2003. The following discussion and analysis gives effect to the restatement (in thousands of dollars).

					Three Months Ended May 31,
		2002			2003			Variance			%
Net Sales
Hillsdale Division		$	93,524		$	85,064		$	(8,460	)		(9.1	)
Wolverine Division			19,707			23,189			3,482			17.7
	Automotive		113,231			108,253			(4,978	)		(4.4	)
Power Group			25,173			34,097			8,924			35.5
Precision Products- divested July 17, 2002			1,388			—			(1,388	)		(100.0	)
Specialty Materials Group			17,501			13,211			(4,290	)		(24.5	)
Pharmaceutical Services (formerly ChemSyn)			3,776			3,383			(393	)		(10.4	)
	Technologies		47,838			50,691			2,853			6.0
Filtration and Minerals			20,809			19,765			(1,044	)		(5.0	)
		$	181,878		$	178,709		$	(3,169	)		(1.7	)
Operating Income (Loss)
Automotive		$	3,898		$	6,696		$	2,798			71.8
Technologies			(8,626	)		14,976			23,602			N/A
Filtration and Minerals			3,589			1,621			(1,968	)		(54.8	)
Divested Divisions			(5,845	)		—			5,845			100.0
Corporate/ Intersegment			(3,271	)		(2,027	)		1,244			38.0
		$	(10,255	)	$	21,266		$	31,521			N/A

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					Six Months Ended May 31,
		2002			2003			Variance			%
Net Sales
Hillsdale Division		$	174,806		$	164,937		$	(9,869	)		(5.7	)
Wolverine Division			37,355			43,907			6,552			17.5
	Automotive		212,161			208,844			(3,317	)		(1.6	)
Power Group			47,800			66,137			18,337			38.4
Precision Products- divested July 17, 2002			2,603			—			(2,603	)		(100.0	)
Specialty Materials Group			30,775			26,672			(4,103	)		(13.3	)
Pharmaceutical Services (formerly ChemSyn)			7,181			5,286			(1,895	)		(26.4	)
	Technologies		88,359			98,095			9,736			11.0
Filtration and Minerals			40,035			38,671			(1,364	)		(3.4	)
		$	340,555		$	345,610		$	5,055			1.5
Operating Income (Loss)
Automotive		$	7,093		$	11,913		$	4,820			68.0
Technologies			(7,955	)		23,022			30,977			N/A
Filtration and Minerals			4,895			1,510			(3,385	)		(69.2	)
Divested Divisions			(5,970	)		—			5,970			100.0
Corporate/ Intersegment			(3,783	)		(4,063	)		(280	)		(7.4	)
		$	(5,720	)	$	32,382		$	38,102			N/A

          Automotive Segment

     Sales in our Automotive Segment decreased $5.0 million, or 4.4%, to $108.3 million in the second quarter of 2003 from $113.2 million in the second quarter of 2002, and decreased $3.3 million, or 1.6%, to $208.8 million in the first six months of 2003 from $212.2 million in the first six months of 2002.

     In the second quarter of 2003, our Wolverine division’s sales increased $3.5 million, or 17.7%, and in the first six month of 2003, they increased $6.6 million, or 17.5%. These increases are due primarily to an approximate 10% year over year volume increase despite lower North American automotive production levels, driven by increased penetration of the aftermarket and small engine markets, and new programs with original equipment manufacturers through Federal Mogul and Taiho. The balance of the increase was favorable foreign currency as a result of the strengthening of the Euro. Approximately 38% of our Wolverine division’s sales are from Europe.

     Offsetting our Wolverine division’s sales increase was a decrease in our Hillsdale division’s sales during the second quarter of 2003 of $8.5 million, or 9.1%, and a decrease in the first six months of 2003 of $9.9 million, or 5.7%. Our Hillsdale division’s sales were lower due to (a) a $3.5 million decline in the second quarter of 2003 ($6.3 million in the first six months of 2003) in transmission pump sales related to a Ford Company program phase-out, (b) price decreases of $0.9 million, or 1.0%, in the second quarter of 2003 ($1.7 million, or 1.0%,, in the first six months of 2003), and (c) $4.1 million, or 4.4%, decline in the second quarter of 2003 ($1.9 million, or 1.0%, in the first six months of 2003) in volume related to other mature program phase outs and reduced North American automotive builds. These volume declines related to the North American automotive build are below the industry estimated averages of approximately 7-8% in the second quarter of 2003 (3-4% in the first six months of 2003) due to our strong position with Japanese automotive manufacturers which represent approximately 35% of our Hillsdale division’s sales, and a strong presence on General Motors light truck platforms.

     Operating income increased $2.8 million, or 71.8%, to $6.7 million in the second quarter of 2003 from $3.9 million in the second quarter of 2002, and increased $4.8 million, or 68.0%, to $11.9 million in the first six months of 2003 from $7.1 million in the first six months of 2002. In the second quarter of 2003, this improved performance was primarily due to the following favorable/(unfavorable) items:

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a.	$2.3 million reduction in costs due to productivity improvements;
b.	($0.9) million in price decreases;
c.	$2.0 million reduction in goodwill amortization expense in 2003 compared to 2002 (due to the adoption of SFAS No. 142, Goodwill and Other Intangible Assets, which no longer requires the amortization of goodwill);
d.	$0.3 million less depreciation expenses; and
e.	($0.9) million in higher operating costs, primarily energy costs, and wage and benefits expenses at our unionized facilities.

     Also in the second quarter of 2003, the impact on margins due to decreased volumes was offset by favorable sales mix and favorable foreign currency as a result of the strengthening of the Euro.

     In the first six months of 2003, this improved performance was primarily due to the following favorable/(unfavorable) items:

a.	$4.4 million reduction in costs due to productivity improvements;
b.	$1.4 million increase in margin due primarily to favorable sales mix and favorable foreign currency as a result of the strengthening of the Euro, partially offset by decreases in sales volume in our Hillsdale division;
c.	($1.7) million in price decreases;
d.	$4.0 million of reduction in goodwill amortization expense in 2003 compared to 2002 (due to the adoption of SFAS No. 142, Goodwill and Other Intangible Assets, which no longer requires the amortization of goodwill);
e.	($0.9) million more depreciation expenses;
f.	($1.0) million increase in energy costs; and
g.	($1.4) million in higher operating costs, primarily related to wage and benefits expenses at our unionized facilities.

          Technologies Segment

     Sales in our Technologies Segment increased $2.9 million, or 6.0%, to $50.7 million in the second quarter of 2003 from $47.8 million in the second quarter of 2002, and increased $9.7 million, or 11.0%, to $98.1 million in the first six months of 2003 from $88.4 million in the first six months of 2002. Excluding sales from our Precision Products business, which we divested in July 2002, this segment’s sales increased $4.2 million, or 9.1% in the second quarter of 2003, and increased $12.3 million, or 14.4% in the first six months of 2003.

     Sales in the Power Group increased $8.9 million, or 35.5%, in the second quarter of 2003, and $18.3 million, or 38.4%, in the first six months of 2003. The increase in our Power Group sales is primarily related to new programs, improved pricing, and increased defense spending, as well as an increase of $0.6 million, or 24.7%, in the second quarter of 2003 (and a $1.6 million, or 33.2%, in the first six months of 2003) in our commercial power sales, as a result of new sales initiatives in the commercial market. Partially offsetting the strong increase in our Power Group sales were declines in our Specialty Materials Group and our Pharmaceutical Services businesses. In our Specialty Materials Group, sales decreased $4.3 million in the second quarter of 2003 and $4.1 million in the first six months of 2003. The second quarter decrease was due to (a) $3.7 million decrease in enriched Boron related products due to the timing of customer orders and (b) $0.6 million decrease primarily related to decreased Germanium based products due to the weak telecommunications, fiber optics, and semiconductor markets. The decrease in our Specialty Materials Group’s sales in the first six months of 2003 was due to (a) $1.7 million decrease in enriched Boron related products due to the timing of customer orders, (b) $2.0 million decrease related to decreased Germanium based products due to the weak telecommunications, fiber optics, and semiconductor markets and (c) $0.4 million of less product sales for products exited as part of our restructuring announced in November 2001. In addition, Pharmaceutical Services sales decreased $0.4 million in the second quarter of 2003 and $1.9 million in the first six months of 2003 due to a cancellation of a drug program with one of its largest customers, and a general softening in the market.

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     Operating income improved $23.6 million to income of $15.0 million in the second quarter of 2003 from a loss of $8.6 million in the second quarter of 2002, and improved $31.0 million to income of $23.0 million in the first six months of 2003 from a loss of $8.0 million in the first six months of 2002. Included in the second quarter of 2002 amounts were the following unusual items:

a.	$4.5 million of legal expenses and legal settlement charges ($5.7 million in the first six months of 2002) recorded in Selling and Administrative expenses as described in Item 3 of our Form 10-K for the year ended November 30, 2002;
b.	$3.1 million loss for an insurance receivable primarily related to inventories damaged in a fire during the third quarter of 2001 at our Missouri bulk pharmaceutical manufacturing plant;
c.	$5.5 million charge in Restructuring expense associated with our decision to exit our Gallium-based specialty material business due to continued soft demand from customers in the telecommunications and semi-conductor markets. The $5.5 million restructuring charge included an inventory write-down of $2.9 million, representing the estimated loss incurred from the liquidation of current inventory. An additional $2.4 million was recorded in other accrued liabilities primarily related to the estimated loss of inventory to be purchased under a firm purchase commitment. Finally, a $0.2 million asset impairment charge was recorded against property, plant and equipment; and
d.	$1.2 million of income related to the reversal of a portion of our fourth quarter 2001 Restructuring expense related to severance payments made by the pension plan.

     The following favorable items totaling $11.7 million in the second quarter of 2003 (and $17.9 million in the first six months of 2003) contributed to the improvement in operating income:

a.	$1.3 million in the second quarter of 2003 ($3.6 million in the first six months of 2003) related to productivity initiatives;
b.	$2.0 million in the second quarter of 2003 ($4.0 million in the first six months of 2003) related to increased volumes, favorable sales mix, and improved pricing;
c.	$1.9 million in the second quarter of 2003 ($3.8 million in the first six months of 2003) of less goodwill amortization expense due to our adoption of SFAS No. 142, Goodwill and Other Intangible Assets, on December 1, 2002; and
d.	$6.5 million insurance gain in the second quarter of 2003 and the first six months of 2003 primarily related to the settlement of a claim with our insurance carrier over the coverage on a fire which occurred at one of our facilities during 2002.

          Filtration and Minerals Segment

     Sales in our Filtration and Minerals Segment decreased $1.0 million, or 5.0%, to $19.8 million in the second quarter of 2003 from $20.8 million in the second quarter of 2002, and decreased $1.4 million, or 3.4%, to $38.7 million in the first six months of 2003 from $40.0 million in the first six months of 2002. These decreased results were due primarily to lower volumes, which were partially offset by favorable foreign currency as a result of the strengthening of the Euro. During the fourth quarter of 2002, we were, but are no longer, exploring the possible sale of our Filtration and Minerals business. This potential sale diverted a significant amount of divisional management attention from operational focus, which has had a negative impact on 2003 performance. In the past two months, new divisional leadership has been put in place, including a divisional president.

          Operating income decreased $2.0 million, or 54.8%, to $1.6 million in the second quarter of 2003 from $3.6 million in the second quarter of 2002, and decreased $3.4 million, or 69.2%, to $1.5 million in the first six months of 2003 from $4.9 million in the first six months of 2002. These decreased earnings are due to lower volumes, severance and recruiting costs related to restructuring the segment’s management team and additional freight costs largely related to the resolution of disputed freight claims with a former carrier, which were partially offset by favorable foreign currency as a result of the strengthening of the Euro.

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Company Discussion

     Net Sales. Net Sales decreased $3.2 million, or 1.7%, to $178.7 million in the second quarter of 2003 from $181.9 million in the second quarter of 2002, and increased $5.1 million, or 1.5%, to $345.6 million in the first six months of 2003 from $340.6 million in the first six months of 2002. Excluding sales from our Precision Products business within our Technologies Segment, which we divested in July 2002, net sales decreased $1.8 million, or 1.0%, in the second quarter of 2003, and increased $7.7 million, or 2.3%, in the first six months of 2003.

     In the second quarter of 2003, the decrease was due to sales decreases of 9.1% in our Automotive Segment’s Hillsdale business and 5.0% in our Filtration and Minerals Segment, partially offset by strong increases of 17.7% in our Automotive Segment’s Wolverine business and 35.5% in our Technologies Segment’s Power Group. See above for a discussion of the individual segments’ results. In the first six months of 2003, the increase was due to strong increases of 17.5% in our Automotive Segment’s Wolverine business and 38.4% in our Technologies Segment’s Power Group, partially offset by decreases of 5.7% in our Automotive Segment’s Hillsdale business and 3.4% in our Filtration and Minerals Segment. See above for a discussion of the individual segments’ results.

     Cost of Products Sold (exclusive of depreciation). Costs of products sold decreased $5.2 million, or 3.7%, to $136.0 million in the second quarter of 2003 from $141.1 million in the second quarter of 2002, and decreased $1.0 million, or 0.4%, to $266.3 million in the first six months of 2003 from $267.3 million in the first six months of 2002. Our gross margins increased $2.0 million to $42.7 million in the second quarter of 2003 from $40.7 million in the second quarter of 2002, and the gross margin percentage increased 1.5 points to 23.9% from 22.4%, despite an increase of $1.2 million (0.7 points) in pension costs, and a $0.5 million increase as a result of higher energy costs. Our gross margins increased $6.0 million to $79.3 million in the first six months of 2003 from $73.3 million in the first six months of 2002, and the gross margin percentage increased 1.5 points to 23.0% from 21.5%, despite an increase of $2.0 million (0.6 points) in pension costs, and a $0.7 million increase as a result of higher energy costs. These margin rate improvements are primarily the result of productivity improvements in our Automotive and Technologies Segments, improved sales mix and price increases in our Technologies Segment, improved sales mix in our Automotive Segment, and favorable foreign currency as a result of the strengthening of the Euro in the Automotive and Filtration and Minerals Segments.

     Selling and Administrative. Selling and administrative expense decreased $5.0 million, or 24.2%, to $15.7 million in the second quarter of 2003 from $20.7 million in the second quarter of 2002, and decreased $4.0 million, or 11.8%, to $29.8 million in the first six months of 2003 from $33.8 million in the first six months of 2002. These decreases were primarily due to $4.8 million of legal expenses and legal settlement charges included in the second quarter of 2002 ($6.3 million in the first six months of 2002) as described in Item 3 of our Form 10-K for the year ended November 30, 2002. In addition, selling and administrative expense also increased $0.3 million in the second quarter of 2003 and $1.0 million in the first six months of 2003 due to increased compensation costs related to our long-term bonus plan.

     Goodwill Amortization. Due to the adoption of SFAS No. 142, Goodwill and Other Intangible Assets, no goodwill amortization expense was recorded in 2003 while 2002 included $4.0 million of goodwill amortization expense in the second quarter of 2002 and $7.9 million in the first six months of 2002. This new accounting standard required that we cease the amortization of goodwill, effective December 1, 2002, and complete an annual impairment test to determine if an impairment charge has occurred. We have completed our initial impairment test as required by this accounting standard and have determined that our goodwill was not impaired at the time we adopted this accounting standard.

     Restructuring. On May 31, 2002 we announced we would exit our Gallium business in our Technologies Segment due to the downturn in the fiber-optic, telecommunication and semiconductor markets. This resulted in a $5.5 million charge recorded to Restructuring expense during the second quarter of 2002. We also reduced the amounts previously expensed and accrued as Restructuring expense in 2001 by $2.5 million primarily to reflect severance payments made from our over-funded pension plan at November 30, 2001 to eligible employees.

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     Management Compensation – Special. Management compensation- special expenses of $2.4 million in the second quarter of 2002 and $0.4 million in the second quarter of 2003 relate to compensation for former officers upon their separation of employment. In 2002, these amounts related to two (2) former officers and in 2003, these amounts related to three (3) former officers.

     Insurance Related Losses/ (Gains). During the second quarter of 2002, we recorded a $3.1 million loss for an insurance receivable primarily related to inventories damaged in a fire during the third quarter of 2001 at our Missouri bulk pharmaceutical manufacturing plant. We recorded this charge to fully reserve the receivable because the insurance underwriter is contesting the coverage on these assets. We are disputing the insurance carrier’s position and are vigorously pursuing efforts to collect on our claims, but the recovery of our claim is uncertain. In the second quarter of 2003, we recorded a $5.7 million gain primarily related to the settlement of a claim with our insurance carrier over the coverage on a fire during 2002 at our Seneca, Missouri non-operating facility.

     Loss from Divestitures. During 2002, we recorded approximately $3.2 million in additional accruals for costs related to certain litigation issues and environmental remediation related to operations divested prior to November 30, 2001. In addition, during 2002 we signed a letter of intent to sell certain assets and liabilities of our Precision Products business in our Technologies segment to a group of employees and management personnel. We recorded a $2.8 million loss on sale, which was completed in July 2002.

     Interest Expense. Interest expense was $10.9 million in the second quarter of 2002 and $9.0 million in the second quarter of 2003 (not including $0.3 million in the second quarter of 2002 and 2003 which was allocated to discontinued operations). Interest expense was $21.7 million in the first six months of 2002 and $18.1 million in the first six months of 2003 (not including $0.6 million in first six months of 2002 and 2003 which was allocated to discontinued operations). Also included in the first six months of 2002, but not the second quarter of 2002, was $1.5 million in fees and other costs, primarily related to establishing our accounts receivable asset-backed facility (see Accounts Receivable Asset-Backed Securitization under Liquidity and Capital Resources). Our year over year reduced interest expense is due to lower interest rates and lower debt levels.

     Income (Loss) from Continuing Operations Before Taxes. Income (Loss) from Continuing Operations Before Taxes improved $32.7 million in the second quarter of 2003 to income of $12.0 million, and improved $40.8 million in the first six months of 2003 to income of $14.3 million. These changes were primarily the result of the following decreases in operating costs and expenses (in thousands of dollars):

	Second		First Six
	Quarter		Months of
	of 2003		2003
a. Management compensation-special	$	1,957	$	1,957
b. Loss from divestitures		5,845		5,970
c. Restructuring		2,998		2,998
d. Legal and Settlement costs (included in Selling and Administrative)		4,800		6,250
e. Insurance related losses(gains)		8,836		8,836
f. Depreciation adjustment related to equipment useful lives		1,100		1,100
g. Goodwill amortization		3,956		7,912
	$	29,492	$	35,023

     The remaining improvements of $3.2 million in the second quarter of 2003 and $5.8 million in the first six months of 2003 are primarily related to productivity initiatives, improved pricing, favorable sales mix, and lower interest expense. The impact of foreign currency gains on a consolidated basis is not material as the gains in our operating segments are offset by losses at the Corporate Segment as a result of foreign currency forward contract hedges.

     Income Taxes. Income tax provision was $0.8 million in the second quarter of 2002 compared to $1.2 million in the second quarter of 2003. Income tax provision was $1.2 million in the first six months of 2002 compared to $2.0 million in the first six months of 2003 (not including a $0.6 million tax benefit in the second quarter of 2003 which was allocated to discontinued operations). The provision in 2002 and 2003 relates to the allocation of income and loss

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between the United States and foreign jurisdictions and primarily 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 net tax benefit or provision recorded during 2002 and 2003.

     Discontinued Operations. During the second quarter of 2003, we accounted for our Hillsdale U.K. Automotive operation as a discontinued operation and restated our prior period financial statements to conform to the discontinued operations presentation. The Hillsdale U.K. Automotive operation was sold on June 11, 2003. See Note G in our financial statements in Item 1 of this report.

     Net Income (Loss). Net Income (Loss) improved $29.7 million in the second quarter of 2003 to income of $7.7 million, and improved $37.0 million in the first six months of 2003 to income of $8.9 million as a result of the items discussed above.

     Company Outlook. Projected sales for 2003 are estimated to be in the range of $690.0 million to $700.0 million compared to $682.8 million in 2002, which is restated to exclude our Hillsdale U.K. Automotive operation, which was accounted for as a discontinued operation in the second quarter of 2003. The sales estimate for 2003 reflects the anticipated decrease in sales of approximately $15.0 million related to the phase-out of a Ford Company automotive transmission pump program in our Hillsdale Division and the current uncertainty regarding industry forecasted automotive builds for 2003.

     We are projecting 2003 Operating Income to be in the range of $59.2 million to $63.2 million, which includes the insurance gain of $5.7 million that we recorded in the second quarter of 2003. This amount includes $45.0 million of depreciation and amortization, and excludes $0.5 million of non-operating income. These Operating Income estimates also include $3.0 million of expense related to non-cash provisions for our long-term bonus program, which for purposes of determining our debt covenant calculations are added back to Operating Income.

     On the basis of these projections, we believe we will be in compliance with all covenants under our various credit facilities during 2003.

Liquidity and Capital Resources

     Our cash flows from operations and availability under our credit facilities are considered adequate to fund our short-term capital needs. As of May 31, 2003, we had $71.5 million unused under our various credit facilities. However, due to various financial covenant limitations under our senior credit agreement measured at the end of each quarter, on May 31, 2003, we could only incur an additional $66.8 million of indebtedness.

     We are currently negotiating a new senior secured credit facility in the approximate amount of $275.0 million to replace our current credit facility, which provided for an original term loan of $75.0 million, as amended, and a $220.0 million revolving facility.

     In July 2003, we also announced the commencement of a cash tender offer and consent solicitation for our 9 3/8% Senior Subordinated Notes Due 2008 (the “Notes”). We are seeking to acquire any and all of our approximately $220.0 million of Notes outstanding. The consent solicitation seeks consent of the holders of the Notes to amend the indenture governing the Notes to eliminate certain of the restrictive covenants and other contractual obligations. The tender offer and consent solicitation are being made in accordance with and subject to the terms and conditions stated in EaglePicher Incorporated’s Offer to Purchase and Consent Solicitation Statement dated July 9, 2003. EaglePicher Incorporated intends to finance the tender offer and consent solicitation with the proceeds of its offering of approximately $220.0 million aggregate principal amount of senior unsecured notes pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended (the “Securities Act”), together with other funds. The securities to be offered have not been offered or sold in the United States, absent registration or an applicable exemption from such registration requirements. There is no assurance that this offering will be successful.

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     At May 31, 2003, we were in compliance with all of our debt covenants. We expect to remain in compliance with our debt covenants for the remainder of fiscal year 2003. Our senior secured credit facility matures in February 2004, by which time we must either refinance this credit facility or extend its maturity date. Although we are currently negotiating a new credit facility, as described above, we can make no assurances that we can successfully refinance or extend the maturity date of our senior secured credit facility. However, even if we do not consummate the new credit facility we are currently negotiating, we believe we can obtain a new credit facility on terms and conditions that are sufficient to meet our long-term capital requirements based upon discussions with potential lenders and the projections described in the Company Outlook section under the Results of Operations above.

     Our Accounts Receivable Asset-Backed Securitization, as described below, also is an important element in managing our liquidity and capital resources. The Accounts Receivable Asset Backed-Securitization will terminate upon the maturity date of our senior secured credit facility unless we refinance our senior secured credit facility, in which case it will mature in the fourth quarter of 2004.

     During the second quarter of 2003, we sold to our controlling common shareholder, Granaria Holdings B.V.; Bert Iedema, one of our directors and an executive officer of Granaria Holdings B.V.; and certain of our executive officers the 69,500 shares of common stock held in our Treasury for $13.00 per share, or $0.9 million.

     Cash Flows

     All references herein to years are to the six-months ended May 31 unless otherwise indicated.

     Operating Activities. Operating activities used $11.8 million in cash during 2003 compared to providing $61.6 million in 2002. In 2002, cash flows from operating activities were impacted by our net loss of $28.2 million, which was offset by non-cash charges of $32.0 million from depreciation and amortization, $6.0 million from losses from divestitures, and $3.1 million from insurance related losses, which results in cash sources of $12.9 million compared to a similarly calculated amount in 2003 of $30.2 million. The 2003 amount of $30.2 million, an improvement of $17.3 million over 2002, is comprised of our net income of $8.9 million, and non-cash charges of $24.0 million from depreciation and amortization, $3.0 million from provisions from discontinued operations, and $5.7 million from insurance related gains. The cash flow for 2002 was also increased by $48.7 million due to changes in certain assets and liabilities, resulting in net cash provided by operating activities of $61.6 million primarily due to $52.4 million of proceeds from the sale of receivables to our unconsolidated qualifying special purpose entity (see Accounts Receivable Asset-Backed Securitization below). The cash flow for 2003 was reduced by $42.0 million due to changes in certain assets and liabilities, resulting in net cash used in operating activities of $11.8 million, primarily due to $20.1 million of payments to reduce the amounts outstanding under our accounts receivable asset-backed facility (see Accounts Receivable Asset-Backed Securitization below), approximately $12.0 million for payments on restructuring and legal matters which were expensed in 2002, and other working capital uses, primarily increases in accounts receivable and inventory and decreases in accounts payable.

     Investing Activities. Investing activities used $7.7 million in cash during 2003 compared to using $7.4 million in 2002. These amounts primarily relate to capital expenditures. We expect our capital expenditures during 2003 will be approximately $20.0 million to $25.0 million, with the largest increase in our Technologies Segment.

     Financing Activities. Financing activities used $2.1 million during 2003 compared to using $63.3 million during 2002. During 2002, we used $43.9 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. Also during 2002, regularly scheduled debt payments and divestitures resulted in an $18.6 million decline in our long-term debt. During 2003, $5.5 million was provided by our revolving credit facility to pay off $8.5 million of long-term debt, and to fund our capital expenditures and reductions in accounts payable and accrued liabilities. During the second quarter of 2003, we sold to our controlling common shareholder, Granaria Holdings B.V.; Bert Iedema, one of our directors and an executive officer of Granaria Holdings B.V.; and certain of our executive officers the 69,500 shares of common stock held in our Treasury for $13.00 per share, or $0.9 million.

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Accounts Receivable Asset-Backed Securitization (Qualifying Special Purpose Entity)

     During the first quarter of 2002, we entered into an agreement with a major U.S. financial institution to sell an interest in certain receivables through an unconsolidated qualifying special purpose entity, Eagle-Picher 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.

     We 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 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.

     In conjunction with the initial transaction during 2002, we sold $82.5 million of receivables to EPFC, and we incurred charges of $1.5 million, which were included in Interest Expense in the accompanying condensed consolidated statements of income (loss) for the six-months ended May 31, 2002. We continue to service sold receivables and receive a monthly servicing fee from EPFC of approximately 1% per annum of the receivable pool’s average balance. As this servicing fee approximates our cost to service, no servicing asset or liability has been recorded at November 30, 2002 or May 31, 2003. We retain an interest in a portion of the receivables transferred, representing an over collateralization on the securitization. Our involvement with both this over collateralization interest and the transferred receivables is generally limited to the servicing performed. The carrying value of our interest in the receivables is recorded at fair value, which is estimated as its net realizable value due to the short duration of the receivables transferred. 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.

     At November 30, 2002, our interest in EPFC was $29.4 million and the revolving pool of receivables that we serviced totaled $77.5 million. At November 30, 2002, the outstanding balance of the interest sold to the financial institution recorded on EPFC’s financial statements was $46.5 million.

     As of May 31, 2003, we reduced the amount due to the financial institution by EPFC, and as a result our cash and cash equivalents balance decreased and our retained interest in Eagle-Picher Funding Corporation increased from November 30, 2002. At May 31, 2003, our interest in EPFC was $49.5 million and the revolving pool of receivables that we serviced totaled $77.2 million. At May 31, 2003, the outstanding balance of the interest sold to the financial institution recorded on EPFC’s financial statements was $26.2 million. The effective interest rate for the six month period ended May 31, 2003 in the securitization was approximately 2.5%.

     We believe that EPFC is an important element of our ability to manage our liquidity, capital resources and credit risk with certain major customers.

     Accounts Receivable Asset-Backed Securitization (Qualifying Special Purpose Entity) Financial Covenants

     EPFC has two financial covenants contained in its asset-backed 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.

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     As of May 31, 2003, we were in compliance with the covenant calculations described above. Additionally, based on the required calculations, we could have had $60.7 million less in EBITDA (as calculated above) minus actual capital expenditures, or $70.6 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.

     In the event that EPFC failed to meet one of the financial covenants listed above, we would not be required to buy back any receivables from EPFC that had not been collected; however, we would no longer be able to sell any future receivables to EPFC. In addition, if EPFC fails to meet one of these financial covenants, we would be in default under our senior credit facility. This could have a significant impact on our liquidity and capital resources. We believe that based on our projected 2003 results, EPFC will remain in compliance with its financial debt covenants; however, there is no assurance this will occur.

     Capitalization

     Our capitalization, which excludes the debt of $46.5 million at November 30, 2002 and $26.2 million at May 31, 2003 of our off-balance sheet qualifying special purpose entity, consisted of the following at (in thousands of dollars):

		November 30,			May 31,
		2002			2003
Credit Agreement:
	Revolving credit facility, due February 27, 2004	$	121,500		$	127,000
	Term loan, due 2003		16,925			8,462
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			370,762
Preferred Stock			137,973			146,079
Shareholders’ Deficit			(87,578	)		(82,648	)
		$	424,120		$	434,193

     Credit Agreement. We have a syndicated senior secured loan facility (“Credit Agreement”) providing an original term loan (“Term Loan”) of $75.0 million, as amended, and a $220.0 million revolving credit facility (“Facility”). The Facility and the Term Loan bear interest, at our option, at LIBOR rate plus 2.75%, or the bank’s prime rate plus 1.5%. Interest is generally payable quarterly on the Facility and Term Loan. We have entered into interest rate swap agreements to manage our variable interest rate exposure.

     At May 31, 2003, we had $40.4 million in outstanding letters of credit under the Facility, which together with borrowings of $127.0 million, made our available borrowing capacity $52.6 million. The Credit Agreement also contains certain fees. There are fees for letters of credit equal to 2.75% per annum for all issued letters of credit, and there is a commitment fee on the Facility equal to 0.5% per annum of the unused portion of the Facility. 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 Credit Agreement is secured by our capital stock, the capital stock of our domestic United States subsidiaries, a certain portion of the capital stock of our foreign subsidiaries, and substantially all other property of our United States subsidiaries. Additionally, the Credit Agreement is guaranteed by us and certain of our subsidiaries.

     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 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

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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 May 31, 2003.

     We are currently negotiating a new senior secured credit facility in the approximate amount of $275.0 million to replace our current credit facility, which provided for an original term loan of $75.0 million, as amended, and a $220.0 million revolving facility.

     Senior 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 May 31, 2003. The Senior Subordinated Notes are guaranteed by us and certain of our subsidiaries.

     In July 2003, we also announced the commencement of a cash tender offer and consent solicitation for our 9 3/8% Senior Subordinated Notes Due 2008 (the “Notes”). We are seeking to acquire any and all of our approximately $220.0 million of Notes outstanding. The consent solicitation seeks consent of the holders of the Notes to amend the indenture governing the Notes to eliminate certain of the restrictive covenants and other contractual obligations. The tender offer and consent solicitation are being made in accordance with and subject to the terms and conditions stated in EaglePicher Incorporated’s Offer to Purchase and Consent Solicitation Statement dated July 9, 2003. EaglePicher Incorporated intends to finance the tender offer and consent solicitation with the proceeds of its offering of approximately $220.0 million aggregate principal amount of senior unsecured notes pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended (the “Securities Act”), together with other funds. The securities to be offered have not been offered or sold in the United States, absent registration or an applicable exemption from such registration requirements. There is no assurance that this offering will be successful.

     Industrial Revenue Bonds. Our industrial revenue bonds require monthly interest payments at variable interest rates based on the market for similar issues and are secured by letters of credit issued under the Facility described above.

     Preferred Stock. Our preferred stock increased $8.1 million during 2003 as a result of mandatory dividend accretion and the accrual for preferred dividends. Commencing March 1, 2003, dividends on our Cumulative Redeemable Exchangeable Preferred Stock became cash payable at 11.75% per annum; the first semiannual dividend payment of $8.3 million is due September 1, 2003. If we do not pay cash dividends on the preferred stock, then holders of the preferred stock become entitled to elect a majority of our Board of Directors. Dakruiter S.A. and Harbourgate B.V., both companies controlled by Granaria Holdings B.V., our controlling common shareholder, hold approximately 78% of our preferred stock, and therefore Granaria Holdings B.V. would continue to be able to elect our entire Board of Directors.

     Shareholders’ Deficit. Our shareholders’ deficit improved in 2003 primarily due to our comprehensive income of $12.1 million and the issuance of common shares from our Treasury of $0.9 million, which was partially offset by the accrual and accretion of preferred stock dividends of $8.1 million.

     Credit Agreement EBITDA

     In our senior credit facility, we have certain financial covenants, as discussed below in Credit Agreement Financial Covenants, which we believe are significant and material in the context of our capital structure. We believe these financial covenants are a material piece of information for the readers of our reports. To support our readers understanding of these financial covenants and our compliance with them, we have provided below a reconciliation from Generally Accepted Accounting Principles (GAAP) Net Income (Loss) to Credit Agreement EBITDA. For purposes of calculating our credit agreement financial covenants, Credit Agreement EBITDA is based on the last twelve months of operating results, which is summarized below.

     Our senior secured credit facility has several financial covenants which are based on Credit Agreement EBITDA as defined. Credit Agreement EBITDA is defined in the credit agreement as earnings before interest expense, income taxes, depreciation and amortization, determined (A) without giving effect to (i) any extraordinary gains or losses but with giving

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effect to gains or losses from sales of assets sold in the ordinary course of business, (ii) any impact from the LIFO method of inventory accounting, (iii) any non-cash charge other than routine recurring non-cash charges that result in an accrual of a reserve for cash charges in any future period deducted in determining consolidated net income for such period, (iv) amounts paid to present or future officers or employees in connection with their separation from employment, up to a limit, (v) a $16.0 million gain from the receipt of insurance proceeds in 2000, (vi) the loss from disposal of discontinued operations, and (B) with giving effect to proforma pre-acquisition consolidated EBITDA attributable to businesses acquired during the year.

     The following is a reconciliation from Net Income (Loss) to our Credit Agreement EBITDA (in thousands of dollars):

		Quarter Ended
		August 31,			November 30,			February 28,		May 31,
		2002			2002			2003		2003
Net Income (Loss)		$	(3,571	)	$	(5,086	)	$	1,168	$	7,686
	Loss from discontinued business, net		902			228			273		158
	Loss on disposal of discontinued business, net		—			—			—		2,978
	Income taxes		750			646			896		1,150
	Interest expense		9,378			8,948			9,103		9,043
	Depreciation and amortization		15,991			16,354			11,346		11,112
	Restructuring expense		—			2,900			—		—
	Loss from divestitures		161			366			—		—
	Management compensation – special		524			552			—		424
	Severance		18			191			—		—
	Long-term bonus and share appreciation plans		450			420			600		700
	Insurance related losses (gains)		—			—			—		(5,736	)
	LIFO provision (benefit)		105			(1,272	)		—		—
	Legal and litigation costs		—			(200	)		—		—
	EBITDA impact from discontinued operations		(415	)		292			294		403
Quarterly Credit Agreement EBITDA		$	24,293		$	24,339		$	23,680	$	27,918
Last Twelve Months Credit Agreement EBITDA										$	100,230

     Credit Agreement EBITDA may not be comparable to similarly titled measures reported by other companies and should not be construed as an alternative to operating income, as determined by GAAP, as an indicator of our operating performance, or to cash flows from operating activities, as determined by GAAP, or as a measure of liquidity. Funds depicted by Credit Agreement EBITDA are not available for our discretionary use to the extent they are required for debt service and other commitments.

     Credit Agreement Financial Covenants

     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 Credit Agreement EBITDA, as defined in the agreement and as calculated above under Credit Agreement EBITDA), an interest coverage ratio (the ratio of Credit Agreement EBITDA to interest expense) and a fixed charge coverage ratio (the ratio of Credit Agreement EBITDA 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, 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.

     As of May 31, 2003, we were in compliance with the covenant calculations described above. Additionally, for purposes of the leverage ratio defined above, we could have had $14.8 million less in Credit Agreement EBITDA, or $66.8

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million more in total debt less cash on the balance sheet and continued to remain in compliance with the Credit Agreement’s financial covenants.

     As discussed above under our Accounts Receivable Asset-Backed Securitization (Qualifying Special Purpose Entity) Financial Covenants, as of May 31, 2003, we were in compliance with the covenants in our securitization Additionally, based on the required calculations of the securitization, we could have had $60.7 million less in EBITDA (as calculated above in accordance with the securitization) minus actual capital expenditures, or $70.6 million more of interest expense, scheduled payments of principal on debt, cash income taxes, and cash dividends, and continued to remain in compliance with the securitization’s financial covenants.

     The following table presents the required ratios and the actual ratios.

						Minimum Fixed
		Maximum		Minimum Interest		Charge 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
	Actual		3.83		2.93		1.84
August 31, 2003
	Required		4.25		2.25		1.40
November 30, 2003
	Required		4.25		2.50		1.40

     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 of the 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. 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 Obligations and Other Commercial Commitments

     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, 2002, filed on March 3, 2003. There have been no material changes to the summary provided in that report.

     Earnings to Fixed Charges and Preferred Stock Dividends

     During the second quarter of 2003, our ratio of earnings to fixed charges and preferred stock dividends was 1.57x, and in the second quarter of 2002, our earnings were insufficient to cover fixed charges and preferred stock dividends by $24.4 million. During the first six months of 2003, our ratio of earnings to fixed charges and preferred

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stock dividends was 1.23x, and during the first six months of 2002, our earnings were insufficient to cover fixed charges and preferred stock dividends by $33.7 million. These improvements are primarily related to our improved operating performance, and our adoption of SFAS No. 142 on December 1, 2002, which no longer requires us to recognize goodwill amortization expense.

Recently Released or Adopted Accounting Standards

     In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations,” which 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. 143 on December 1, 2002. The adoption did not have a material impact on our financial condition or results of operations.

     In September 2001, the FASB issued SFAS No. 144, “Accounting 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, “Goodwill and other Intangible Assets.” 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 and accounted for the sale of our Hillsdale U.K. Automotive operation in accordance with this statement.

     In June 2002, the FASB issued SFAS No. 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 will not have a material impact on our financial condition or results of operations.

     On April 30, 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” This statement amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133. This statement is effective for contracts entered into or modified after June 20, 2003, for hedging relationships designated after June 30, 2003, and to certain preexisting contracts. We will adopt SFAS No. 149 on a prospective basis at its effective date on July 1, 2003. We do not expect the adoption of this statement will have a material impact on our financial condition or results of operations.

     In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.” This statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. This statement is effective for financial instruments entered into or modified after May 31, 2003, except for mandatorily redeemable financial instruments. Mandatorily redeemable financial instruments are subject to the provisions of this statement beginning on January 1, 2004. We do not expect the adoption of this statement will have a material impact on our financial condition or results of operations.

     In 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 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

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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 of FIN 45 did not have a material impact on our financial condition or results of operations.

     In January 2003, the FASB issued Interpretation No. 46 (“FIN 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 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 were effective immediately. The impact of this interpretation is not expected to have a material impact on our financial condition or results of operations.

     In November 2002, the EITF issued EITF 00-21, “Revenue Arrangements with Multiple Deliverables.” EITF 00-21 prescribes a method to account for contracts that have multiple elements or deliverables. It provides guidance on how to 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 00-21 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.

Forward Looking Statements

     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.

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PART II. OTHER INFORMATION

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.

EAGLEPICHER HOLDINGS, INC.

/s/ Thomas R. Pilholski
Thomas R. Pilholski
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)

DATE: July 29, 2003

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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.

EAGLEPICHER INCORPORATED

/s/ Thomas R. Pilholski
Thomas R. Pilholski
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)

DATE: July 29, 2003

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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.

DAISY PARTS, INC.

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

DATE: July 29, 2003

23

SIGNATURES

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

EAGLEPICHER DEVELOPMENT CO., INC.

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

DATE: July 29, 2003

24

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.

EAGLEPICHER FAR EAST, INC.

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

DATE: July 29, 2003

25

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.

EAGLEPICHER FILTRATION & MINERALS, INC.

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

DATE: July 29, 2003

26

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.

EAGLEPICHER TECHNOLOGIES, LLC

/s/ Bradley J. Waters
Bradley J. Waters
Vice President and Chief Financial Officer
(Principal Financial Officer)

DATE July 29, 2003

27

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.

HILLSDALE TOOL & MANUFACTURING CO.

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

DATE: July 29, 2003

28

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: July 29, 2003

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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 & 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:	July 29, 2003
John H. Weber, President and Chief Executive Officer

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I, Thomas R. Pilholski, Senior Vice President and Chief Financial 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 & 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/ THOMAS R. PILHOLSKI	Date:	July 29, 2003
Thomas R. Pilholski, Senior Vice President and Chief Financial Officer

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