10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2002

Commission File Number 1-898

AMPCO-PITTSBURGH CORPORATION

Pennsylvania	25-1117717
(State of Incorporation)	I.R.S. Employer ID No.
600 Grant Street, Suite 4600
Pittsburgh, PA 15219	412/456-4400
(Address of principal executive offices)	(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:

	Name of each exchange
Title of each class	on which registered
Common stock, $1 par value	New York Stock Exchange
	Philadelphia Stock Exchange
Series A Preference Stock	New York Stock Exchange
Purchase Rights	Philadelphia Stock Exchange

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

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

YesxNoo

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

     As of March 4, 2003, 9,632,497 common shares were outstanding. The aggregate market value of the voting stock of Ampco-Pittsburgh Corporation held by non-affiliates on June 28, 2002 (based upon the closing price of these shares on the New York Stock Exchange) was approximately $79 million.

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

YesxNoo

     DOCUMENTS INCORPORATED BY REFERENCE: Parts I, II and IV of this report incorporate by reference certain information from the Annual Report to Shareholders for the year ended December 31, 2002.

PART I

ITEM 1 - BUSINESS

(a)     GENERAL DEVELOPMENT OF BUSINESS

     Ampco-Pittsburgh Corporation (the “Corporation”) was incorporated in Pennsylvania in 1929.

     The Corporation classifies it’s businesses in three segments – Forged and Cast Rolls, Air and Liquid Processing, and Plastics Processing Machinery.

     In 2002, Formet Ltd., the small forging operation in the United Kingdom, which was included in the Forged and Cast Rolls segment, was sold. The Corporation continues to evaluate the businesses it operates to ensure that they meet the long term objectives of achieving maximum shareholder value.

     The Corporation, individually or together with its consolidated subsidiaries, is also referred to herein as the Registrant.

(b)     FINANCIAL INFORMATION ABOUT SEGMENTS

     The sales and operating profit of the Corporation’s three segments and the identifiable assets attributable to each segment for the three years ended December 31, 2002 are set forth in Note 18 (Business Segments) on page 25 of the Annual Report to Shareholders for the year ended December 31, 2002, which is incorporated herein by reference.

(c)     NARRATIVE DESCRIPTION OF BUSINESS

     Forged and Cast Rolls Segment

     Union Electric Steel Corporation produces forged hardened steel rolls for producers of steel, aluminum and other metals throughout the world. It is headquartered in Carnegie, Pennsylvania with three manufacturing facilities in Pennsylvania and one in Indiana. Union Electric Steel Corporation is considered one of the largest producers of forged hardened steel rolls in the world. In addition to several domestic competitors, several major European, South American and Japanese manufacturers also compete in both the domestic and foreign markets.

     The Davy Roll Company Limited produces cast rolls for hot and cold strip mills, medium/heavy section mills and plate mills in a variety of iron and steel qualities. It is located in Gateshead, England and is a major European supplier of cast rolls to the metal working industry worldwide. It primarily competes with one British company and several European and American companies in both the domestic and foreign markets.

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Air and Liquid Processing Segment

     Aerofin Corporation produces finned tube and plate finned heat exchange coils for the commercial and industrial construction, process and utility industries and is headquartered in Lynchburg, Virginia.

     Buffalo Air Handling Company produces large standard and custom air handling systems used in commercial, institutional and industrial buildings and is headquartered in Amherst, Virginia.

     Buffalo Pumps, Inc. manufactures a line of centrifugal pumps for the refrigeration, power generation and marine defense industries and is headquartered in North Tonawanda, New York.

     All three of the companies in this segment compete with several major competitors.

Plastics Processing Machinery Segment

     New Castle Industries, Inc. and its subsidiaries primarily produce feed screws, barrels and chill rolls for use principally in the plastics processing industry and is headquartered in New Castle, Pennsylvania. The New Castle Industries group competes with a number of small regional companies.

     F. R. Gross Company, located in Stow, Ohio, manufactures heat transfer rolls and chill rolls for use by original equipment machinery manufacturers and processors principally serving the plastics industry but also the paper, packaging, printing and converting industries. Keystone Rolls Company manufactures heat transfer rolls for the sheet, film, paper coating and textile industries. Both of these companies compete with a number of small regional companies.

     In all three segments, the products are dependent on engineering, principally custom designed and are sold to sophisticated commercial and industrial users in the United States and countries outside of the United States.

     No one customer’s purchases in any segment were material to the Corporation. Contracts that may be subject to renegotiation or termination are not material to the Corporation. The Corporation’s businesses are not seasonal but are subject to the cyclical nature of the industries and markets served.

     For additional information on the products produced and financial information about each segment, see page 4 and Note 18 (Business Segments) on page 25 of the Annual Report to Shareholders for the year ended December 31, 2002, which are incorporated herein by reference.

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Raw Materials

     Raw materials used in all segments are generally available from many sources and the Corporation is not dependent upon any single supplier for any raw material. Certain of the raw materials used by the Corporation have historically been subject to variations in price. The Corporation generally does not purchase or arrange for the purchase of a major portion of raw materials significantly in advance of the time it requires them.

Patents

     While the Corporation holds some patents, trademarks and licenses, in the opinion of management, they are not material to any segment of the Corporation’s business other than in protecting the goodwill associated with the names under which products are sold.

Working Capital

     Each of the Corporation’s businesses maintains levels of inventory, which generally reflect normal requirements and are believed to reflect the practices of its industries. Production in all segments is generally to custom order and requires inventory levels of raw materials or semi-finished products with only a limited level of finished products. The Corporation extends credit terms consistent with practices of the industries served.

Backlog

     The backlog of orders at December 31, 2002 was approximately $106,088,000 compared to a backlog of $107,608,000 at year-end 2001. Most of those orders are expected to be filled in 2003.

Competition

     The Corporation faces considerable competition from a large number of companies in each segment. The Corporation believes, however, that it is a significant factor in each of the principal markets which it serves. Competition in all segments is based on quality, service, price and delivery.

Research and Development

     As part of an overall strategy to develop new markets and maintain leadership in each of the industry niches served, each of the Corporation’s businesses in all three

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segments incur expenditures for research and development. The activities that are undertaken are designed to develop new products, improve existing products and processes, enhance product quality, adapt products to specific customer requirements and reduce costs. In the aggregate, these expenditures approximate $1,000,000 per year.

Environmental Protection Compliance Costs

     Expenditures for environmental control matters were not material to any segment in 2002 and such expenditures are not expected to be material in 2003.

Employees

     In December 2002, the Corporation had 1,448 active employees.

Available Information

     The Corporation’s website can be found at www.ampcopittsburgh.com. The Corporation makes available free of charge on or through our internet website, access to our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such material is filed, or furnished, to the Securities and Exchange commission.

     (d)     FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS

     The Forged and Cast Rolls segment has a manufacturing operation in the United Kingdom and a European sales and engineering support group in Belgium. For financial information relating to foreign and domestic operations see Note 18 (Business Segments) on page 25 of the Annual Report to Shareholders for the year ended December 31, 2002, which is incorporated herein by reference.

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ITEM 2 - PROPERTIES

     The location and general character of the principal locations in each of the three segments, all of which are owned unless otherwise noted, are as follows:

Company and		Principal	Approximate	Type of
Location		Use	Square Footage	Construction
Forged and Cast Rolls Segment
Union Electric Steel Corp.
	Route 18	Manufacturing	186,000 on	Metal and steel
	Burgettstown, PA 15021	facilities	55 acres
	726 Bell Street	Manufacturing	153,000 on	Metal and steel
	Carnegie, PA 15106	facilities and	5 acres
		offices
	U.S. Highway 30	Manufacturing	88,000 on	Metal and steel
	Valparaiso, IN 46383	facilities	20 acres
	1712 Greengarden Road	Manufacturing	40,000*	Metal and steel
	Erie, PA 16501	facilities
	Industrie Park	Sales and	4,500*	Cement block
	B-3980 Tessenderlo	engineering
	Belgium	offices
The Davy Roll Company
	Gateshead Division Coulthards Lane Gateshead, England	Manufacturing facilities and offices	274,000 on 12 acres	Steel framed, metal and brick

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Company and Location		Principal Use	Approximate Square Footage	Type of Construction
Air and Liquid Processing Segment
Aerofin Corporation
	4621 Murray Place Lynchburg, VA 24506	Manufacturing facilities and offices	146,000 on 15.3 acres	Brick, concrete and steel
Buffalo Air Handling Company
	Zane Snead Drive Amherst, VA 24531	Manufacturing facilities and offices	89,000 on 19.5 acres	Metal and steel
	12740 Lynchburg Salem Turnpike Forest, VA	Assembly facility	16,240*	Metal and steel
Buffalo Pumps, Inc.
	874 Oliver Street N. Tonawanda, NY 14120	Manufacturing facilities and offices	94,000 on 7 acres	Metal, brick and cement block
Plastics Processing Machinery Segment
Atlantic Grinding &Welding, Inc.
	9 Ricker Avenue Londonderry, NH 03053	Manufacturing facilities and offices	19,000 on 2.6 acres	Metal and Steel
Bimex Industries, Inc.
	319 Universal Street Wales, WI 53183	Manufacturing facilities and offices	33,500 on 7.8 acres	Metal and steel
F. R. Gross Co., Inc.
	1397 Commerce Drive Stow, OH 44224	Manufacturing facilities and offices	25,300 on 4.2 acres	Masonry, metal and steel
Keystone Rolls Company, Inc.
	40 Council Avenue Wheatland, PA 16161	Manufacturing facilities and offices	25,000 on 4.5 acres	Metal and steel

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Company and Location		Principal Use	Approximate Square Footage	Type of Construction
Plastics Processing Machinery Segment (cont’)
New Castle Industries, Inc.
	1399 Countyline Road New Castle, PA 16102	Manufacturing facilities and offices	81,600 on 18.5 acres	Metal and steel
	925 Industrial Street New Castle, PA 16102	Manufacturing facilities	31,000 on 5.3 acres	Masonry with steel truss roof

*     Facility is leased.

     The Corporate office space is leased as are several small sales offices. All of the owned facilities are adequate and suitable for their respective purposes.

     The Corporation estimates that all of its facilities were operated within 65% to 90% of their normal capacity during 2002. Normal capacity is defined as capacity under approximately normal conditions with allowances made for unavoidable interruptions, such as lost time for repairs, maintenance, breakdowns, set-up, failure, supply delays, labor shortages and absences, Sundays, holidays, vacation, inventory taking, etc. The number of work shifts is also taken into consideration.

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ITEM 3 - LEGAL PROCEEDINGS

     The Corporation and its subsidiaries are involved in various claims and lawsuits incidental to their businesses. In addition, claims have been asserted alleging personal injury from exposure to asbestos-containing components historically used in some products of certain of the Corporation’s subsidiaries. As of December 31, 2002, those subsidiaries, and in some cases, the Corporation, were defendants (among a number of defendants, typically over 50 and often over 100) in cases filed in various state and federal courts involving approximately 16,339 claimants. Most of the claims were made in a small number of lawsuits filed in Mississippi in 2002. The filings do not typically identify specific products as a source of asbestos exposure. The Corporation’s aggregate gross settlement costs, including defense costs, in 2002 were approximately $420,000, substantially all of which was paid by insurance. Eight cases, involving 17 claimants, have been dismissed in 2002 without any payment.

     On February 7, 2003, Utica Mutual Insurance Company (“Utica”) filed a lawsuit in the Supreme Court of the State of New York, County of Oneida against the Corporation and certain of the subsidiaries named in the underlying asbestos actions (the “Policyholder Defendants”) and three other insurance carriers that provided primary coverage to the Corporation (the “Insurer Defendants”). In the lawsuit, Utica has alleged (i) it has no coverage obligation for years where the Policyholder Defendants cannot establish the existence of insurance contracts or coverage, where exposure occurred outside of the Utica policy periods or with respect to allegedly excluded products; (ii) the Policyholder Defendants breached the insurance contracts; and (iii) the Insurer Defendants have defense and indemnity obligations under insurance contracts they have issued to the Policyholder Defendants. Utica is seeking a declaratory judgment from the court on these issues and recoupment of amounts it has already paid. Although the outcome of this action cannot be predicted with certainty, the Corporation believes that the lawsuit ultimately should benefit all parties by defining the obligations of Utica and the Insurer Defendants to the Corporation and that the majority of the defense and indemnity costs of the pending cases ultimately will be covered by the appropriate insurance policies.

     Based on the Corporation’s claims experience to date, insurance coverage and the identity of the subsidiaries that are named in the cases, the Corporation believes that the pending legal proceedings will not have a material adverse effect on its consolidated financial condition or liquidity. The outcome of any of the particular lawsuits, however, could be material to the consolidated results of operations of the period in which the costs, if any, are

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recognized. There can be no assurance that the Corporation or certain of its subsidiaries will not be subjected to significant additional claims in the future or that the Corporation’s or its subsidiaries’ ultimate liability with respect to these claims will not present significantly greater and longer lasting financial exposure than presently contemplated. Although it is probable that future costs will be incurred, the amounts cannot reasonably be estimated. Accordingly, the Corporation has not made an accrual for such costs in its financial statements. In addition, the Corporation has recently retained a law firm to advise it on all matters pertaining to these asbestos cases. As a result, the Corporation incurred uninsured legal costs approximating $400,000 in 2002 and expects that such costs may exceed $1 million in 2003.

     With respect to environmental matters, the Corporation is currently performing certain remedial actions in connection with the sale of real estate previously owned and has been named a Potentially Responsible Party at one third-party landfill site used by a division which was previously sold. Environmental exposures are difficult to assess and estimate for numerous reasons including lack of reliable data, the multiplicity of possible solutions, the years of remedial and monitoring activity required, and identification of new sites. While it is not possible to quantify with certainty the environmental exposure, in the opinion of management, the potential liability for all environmental proceedings, based on information known to date and the estimated quantities of waste at these sites, will not have a material adverse effect on the financial condition, results of operations or liquidity of the Corporation.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLD

     No matter was submitted to a vote of security holders during the fourth quarter.

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PART II

ITEM 5 - MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The information called for by this item is set forth on pages 26 and 27 of the Annual Report to Shareholders for the year ended December 31, 2002 which is incorporated herein by reference.

ITEM 6 - SELECTED FINANCIAL DATA

     The information called for by this item is set forth on page 27 of the Annual Report to Shareholders for the year ended December 31, 2002, which is incorporated herein by reference.

ITEM 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

     The information called for by this item is set forth on pages 6 through 10 of the Annual Report to Shareholders for the year ended December 31, 2002, which are incorporated herein by reference.

ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The information called for by this item is set forth in Note 11 (Financial Instruments) on pages 22 and 23 and Results of Operations on pages 6 through 10 of the Annual Report to Shareholders for the year ended December 31, 2002, which is incorporated herein by reference.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The information called for by this item is set forth on pages 11 through 26 of the Annual Report to Shareholders for the year ended December 31, 2002, which are incorporated herein by reference.

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

     There were none.

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PART III

ITEM 10 - DIRECTORS and EXECUTIVE OFFICERS

(a)     IDENTIFICATION OF DIRECTORS

Name, Age, Tenure as a Director, Position with the Corporation (1), Principal Occupation, Business Experience Past Five Years, and Other Directorships in Public Companies

Louis Berkman (age 94, Director since 1960; current term expires in 2005). He has been Chairman of the Board of the Corporation and Chairman of the Executive Committee of the Corporation for more than five years. He is also Chairman and a director of The Louis Berkman Investment Company (steel products, fabricated metal products, building and industrial supplies). (2)

Leonard M. Carroll (age 60, Director since 1996; current term expires in 2004). He has been Managing Director of Seneca Capital Management, Inc. (a private investment company) for more than five years. (2)(3)

William D. Eberle (age 79, Director since 1982; current term expires in 2003). He is a private investor and consultant and is Chairman of Manchester Associates, Ltd. He is also a director of Mitchell Energy & Development Co., America Service Group and Konover Property Trust. (N)(3)

Paul A. Gould (age 57, Director since 2002; current term expires in 2003). He has been for more than five years managing director of Allen & Co., Inc., an investment banking company. He is also a director of Liberty Media Corporation and On-command Corporation. (N)

Robert A. Paul (age 65, Director since 1970; current term expires in 2003). He has been President and Chief Executive Officer of the Corporation for more than five years. He is also President and a director of The Louis Berkman Investment Company and director of National City Corporation. (N)(2)

Laurence E. Paul (age 38, Director since 1998; current term expires in 2004). He is a managing principal of Laurel Crown Capital, a private investment company since 2002. From 2001 to 2002 he was a Vice President of The Louis Berkman Company. From 1995 to February 2001 he served in various capacities, including as a Managing Director, of Donaldson, Lufkin & Jenrette (Investment Banker). The firm was bought by Credit Suisse First Boston in 2000. He is also a director of Biovail Corporation.

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(a)     IDENTIFICATION OF DIRECTORS (cont’)

Name, Age, Tenure as a Director, Position with the Corporation (1), Principal Occupation, Business Experience Past Five Years, and Other Directorships in Public Companies

Stephen E. Paul (age 35, Director since 2002; current term expires in 2005). He is a managing principal of Laurel Crown Capital, a private investment company since 2002. From 2001 to 2002 he was a Vice President of The Louis Berkman Company. From 1998 to 2001 he was Vice President of Business Development for eToys, Inc.

Carl H. Pforzheimer, III (age 66, Director since 1982; current term expires in 2005). For more than five years he has been Managing Partner of Carl H. Pforzheimer & Co. (member of the New York and American Stock Exchanges). (3)

Ernest G. Siddons (age 69, Director since 1981; current term expires in 2004). He has been Executive Vice President and Chief Operating Officer of the Corporation for more than five years. (2)

(N)      Nominee for election at the April 22, 2003 Annual Meeting of Shareholders.

(1)     Officers serve at the discretion of the Board of Directors.

(2)     Member of Executive Committee.

(3)     Member of Audit, Salary, Stock Option and Nominating Committees.

(b)     IDENTIFICATION OF EXECUTIVE OFFICERS

In addition to Louis Berkman, Robert A. Paul and Ernest G. Siddons (see “Identification of Directors” above) the following are also Executive Officers of the Corporation:

Name, Age, Position with the Corporation (1), Business Experience Past Five Years

Rose Hoover (age 47). She has been a Vice President of the Corporation since June 1999 and has been Secretary for more than five years. For more than five years before June 1999, she was Manager of Real Property and Environmental Control.

Marliss D. Johnson (age 38). She has been Vice President, Controller and Treasurer of the Corporation since July 1999. For five years before July 1999, she was a Senior Manager with PricewaterhouseCoopers LLP (a public accounting firm).

Terrence W. Kenny (age 43). He has been Group Vice President of the Corporation since February 1999 and was Vice President Corporate Development & Planning from April 1998 to February 1999. For five years prior to 1998, he was Vice President and Treasurer of Buffalo Pumps, Inc., a subsidiary of the Corporation.

Robert F. Schultz (age 55). He has been Vice President Industrial Relations and Senior Counsel of the Corporation for more than five years.

(1)     Officers serve at the discretion of the Board of Directors and none of the listed individuals serve as a director of a public company.

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(c)     IDENTIFICATION OF CERTAIN SIGNIFICANT EMPLOYEES

None.

(d)     FAMILY RELATIONSHIPS

     Louis Berkman is the father-in-law of Robert A. Paul, and grandfather of Laurence E. Paul and Stephen E. Paul (sons of Robert A. Paul). There are no other family relationships among the Directors and Executive Officers.

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ITEM 11 - EXECUTIVE COMPENSATION

     The following table sets forth certain information as to the total remuneration received for the past three years by the five most highly compensated executive officers of the Corporation, including the Chief Executive Officer (the “Named Executive Officers”):

SUMMARY COMPENSATION TABLE
Annual Compensation
(a)	(b)	(c)	(d)	(e)		(g)
				Other
Name and				Annual		Securities
Principal		Salary	Bonus	Compensation		Underlying
Position	Year	($)	($)	($) (1)		Options(#)(2)
Robert A. Paul	2002	400,000	60,000	3,333
President and Chief	2001	400,000	0	822
Executive Officer	2000	375,000	63,750	1,584		60,000
Louis Berkman	2002	300,000	0	739
Chairman of the Board	2001	400,000	0	1,645
and Executive Committee	2000	375,000	63,750	978		60,000
Ernest G. Siddons	2002	370,000	55,500	1,582
Executive Vice President	2001	360,000	0	2,131
and Chief Operating	2000	336,000	57,120	1,336		50,000
Officer
Terrence W. Kenny	2002	146,000	36,500	1,183
Group Vice President	2001	140,000	38,500	134
	2000	120,000	30,000	282		12,500
Robert F. Schultz	2002	158,000	15,000	26,777(3	)
Vice President	2001	153,000	0	21,190(3	)
Industrial Relations	2000	47,000	18,000	23,767(3	)	10,000
and Senior Counsel

(1)	Unless otherwise noted, amount represents reimbursement of taxes in connection with a medical reimbursement plan.
(2)	Options granted in April 2000 and exercisable in June 2000.
(3)	Mr. Schultz was the only individual in the compensation table whose total value of personal benefits exceeded the reporting threshold. Of the total value reported for 2002, 2001 and 2000, the value attributable to the personal use of a company provided vehicle was $8,554,$8,098 and $7,177 respectively.

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     (b)     COMPENSATION PURSUANT TO PLANS

Stock Option Plan

     The Corporation’s 1997 Stock Option Plan, as amended, permits the grant of options exercisable for shares of Common Stock to corporate officers and other key employees of the Corporation and its subsidiaries upon such terms, including exercise price and conditions and timing of exercise, as may be determined by the Stock Option Committee. The Stock Option Plan authorizes the grants of awards up to a maximum of 600,000 shares of the Corporation’s Common Stock, however, the maximum number of Shares with respect to which stock options may be granted to any one Participant in any fiscal year may not exceed 150,000. No options were granted in 2002.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Values
Name	Shares Acquired on Exercise (#)	Value Realized ($)		Number of Securities Under- lying Unexercised Options at Fiscal Year End(#)	Value of Unexercised In-the-Money Options at Fiscal Year End($) Exercisable/Unexercisable
Robert A. Paul	0		0	120,000/0	210,450/0
Louis Berkman	0		0	120,000/0	210,450/0
Ernest G. Siddons	20,000	$	42,019	80,000/0	132,175/0
Robert F. Schultz	0		0	30,000/0	56,675/0
Terrence W. Kenny	0		0	25,000/0	43,844/0

Pension Benefits

     The Corporation has a tax qualified retirement plan (the “Plan”) applicable to the Executive Officers and other employees, to which the Corporation makes annual contributions, as required, in amounts determined by the Plan’s actuaries. The Plan does not have an offset for Social Security and is fully paid for by the Corporation. Under the Plan, employees become fully vested after five years of participation and normal retirement age under the Plan is age 65 but actuarially reduced benefits may be available for early retirement at age 55. The primary benefit formula is 1.1% of the highest consecutive five year average earnings in the final ten years, times years of service. Federal law requires that 5% owners start receiving a pension no later than April 1 following the calendar year in which the age 70-1/2 is reached. Louis Berkman is currently receiving $6,622 a month pursuant to the Plan. As an active employee, Mr. Berkman continues to receive credit for additional service rendered after age 70-1/2.

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     The Corporation adopted a Supplemental Executive Retirement Plan (SERP) in 1988 (amended and restated in 1996) for certain officers and key employees covering retirement after completion of ten years of service and attainment of age 55. All officers listed in the compensation table are Participants in the SERP, except Louis Berkman. The combined retirement benefit at age 65 or older provided by the Plan and the SERP is 50% of the highest consecutive five year average earnings in the final ten years of service. The participants are eligible for reduced benefits for early retirement at age 55. A benefit equal to 50% of the benefit otherwise payable at age 65 is paid to the surviving spouse of any participant, who has had at least five years of service, commencing on the later of the month following the participant’s death or the month the participant would have reached age 55. In addition, there is an offset for pensions from other companies. Certain provisions, applicable if there is a change of control, are discussed below under Termination of Employment and Change of Control Arrangement.

     The following shows the estimated annual pension that would be payable, without offset, under the Plan and the SERP, if applicable, to the individuals named in the compensation table assuming continued employment to retirement at age 65 or older, and assuming the total salary and bonus stated in the table for 2002 is the final five year average:

Louis Berkman		(1)
Robert A. Paul	$	230,000
Ernest G. Siddons	$	212,750
Terrence W. Kenny	$	91,250
Robert F. Schultz	$	86,500

(1)     Mr. Berkman is currently receiving a pension pursuant to the Plan as described above.

     (c)     COMPENSATION OF DIRECTORS

     In 2002, each Director who was not employed by the Corporation received an annual retainer of $6,000 (payable quarterly), $1,000 for each Board meeting attended and $500 for each Committee meeting attended. Attendance could be either in person or by telephonic connection. Directors did not receive a fee for either Board or Committee meetings if they did not attend.

     (d)     TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS

     Mr. Berkman, Mr. Paul and Mr. Siddons have two year contracts (which automatically renew for one year periods unless the Corporation chooses not to extend) providing for compensation equal to five times their annual compensation

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(with a provision to gross up to cover the cost of any federal excise tax on the benefits) in the event their employment is terminated following a change of control (including a voluntary departure for good cause) and the right to equivalent office space and secretarial help for a period of one year after a change in control. Mr. Schultz, Mr. Kenny, the two remaining Vice Presidents and one other employee have two year contracts providing for three times their annual compensation in the event their employment is terminated following a change in control (including a voluntary departure for good cause). All of the contracts provide for the continuation of employee benefits, for three years for the three senior executives and two years for the others, and the right to purchase the leased car used by the covered individual at the Corporation’s then book value. The same provisions concerning change in control that apply to the contracts apply to the SERP and vest the right to that pension arrangement. A change of control triggers the right to a lump sum payment equal to the present value of the vested benefit under the SERP, if applicable.

     (e)     SALARY COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION DECISIONS

     A Salary Committee is appointed each year by the Board of Directors. The Salary Committee for the year 2002 was comprised of three Directors: William D. Eberle (Chairman), Leonard M. Carroll and Carl H. Pforzheimer, III. None of the Committee members is now, or ever has been, an officer or employee of the Corporation.

     (f)     SALARY COMMITTEE REPORT ON EXECUTIVE COMPENSATION

     The Salary Committee approves salaries for executive officers within a range from $150,000 up to $200,000 and increases in the salary of any executive officer, which would result in such officer earning a salary within such range. Salaries of $200,000 per year and above must be approved by the Board of Directors, after a recommendation by the Salary Committee. Salaries for executive officers below the level of $150,000 are set by the Chairman, President and Executive Vice President of the Corporation.

     The compensation for the Chief Executive Officer of the Corporation, as well as the other applicable executive officers, is typically based on an analysis conducted by the Salary Committee. The Committee does not specifically link remuneration solely to quantitative measures of performance because of the cyclical nature of the industries and markets served by the Corporation. In setting compensation, the Committee also considers various qualitative factors, including competitive compensation arrangements of other companies within relevant industries, individual contributions, leadership ability and an executive officer’s overall performance. In this way, it is believed that the Corporation will attract and retain quality management, thereby benefiting the long-term interest of shareholders.

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     In establishing the compensation reported in the table for the last completed fiscal year, the Committee conducted its analysis as described above and considered the weak results of the Corporation. Notwithstanding the belief that the results were reflective of the depressed economy and the down cycle of industries served, the salary of the Chief Executive Officer was not increased, the salary of the Chairman of the Board was reduced and the Chief Operating Officer was granted a modest increase. In addition, the Chairman of the Board elected not to participate in the 2002 and future incentive bonus plans.

     The incentive bonus program for 2002 previously approved by the Salary Committee covered Robert A. Paul and Ernest G. Siddons. Incentive payments were to be determined, based on the Corporation’s 2002 income from operations performance as compared to the Corporation’s business plan. These payments were to be limited to 35% of base salary of participants. In 2002, Mr. Paul earned $60,000 and Mr. Siddons earned $55,500.

     This report of the Salary Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this 10-K report into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent that the Corporation specifically incorporates this report and the information contained herein by reference, and shall not otherwise be deemed filed under such Acts.

William D. Eberle, Chairman

Leonard M. Carrol

Carl H. Pforzheimer, III

19

     (g)     STOCK PERFORMANCE GRAPH

Comparative Five-Year Total Returns*
Ampco-Pittsburgh Corporation, Standard & Poors 500 and Value Line Steel (Integrated) Index
(Performance results through 12/31/02)

[GRAPHIC APPEARS HERE]

     Assumes $100 invested at the close of trading on the last trading day preceding January 1, 1998 in Ampco-Pittsburgh Corporation common stock, Standard & Poors 500 and Steel (integrated).

     *Cumulative total return assumes reinvestment of dividends.

     In the above graph, the Corporation has used Value Line’s Steel (Integrated) Index for its peer comparison. The diversity of products produced by subsidiaries of the Corporation made it difficult to match to any one product-based peer group. The Steel Industry was chosen because it is impacted by some of the same end markets that the Corporation ultimately serves, such as the automotive, appliance and construction industries. Historical stock price performance shown on the above graph is not necessarily indicative of future price performance.

20

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     (a)     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

     As of March 4, 2003, Louis Berkman owned directly 215,000 shares of the Common Stock of the Corporation and had the right to acquire 120,000 shares pursuant to stock options. As of the same date, The Louis Berkman Investment Company, P. O. Box 576, Steubenville, OH 43952 owned beneficially and of record 2,363,842 shares of the Common Stock of the Corporation. Louis Berkman, an officer and director of The Louis Berkman Investment Company, owns directly 61.51% of its common stock. Robert A. Paul, an officer and director of The Louis Berkman Investment Company, disclaims beneficial ownership of the 38.49% of its common stock owned by his wife. Louis Berkman and Robert A. Paul are trustees of The Louis and Sandra Berkman Foundation and disclaim beneficial ownership of the 1,266 shares of the Corporation’s Common Stock held by such Foundation.

     In March 1998, Gabelli Funds, Inc. and affiliates, Corporate Center, Rye, NY 10580, filed an amendment to its Schedule 13D reporting they owned 1,893,500 shares or 19.77%. In February 2003, Dimensional Fund Advisors Inc., 1299 Ocean Avenue, Santa Monica, CA 90401 filed a 13G disclosing that as of December 31, 2002 it had sole voting and dispositive power of 777,600 shares or 8.07% (all of which shares are held in portfolios of various investment vehicles). In September 2002, Van Den Berg Management, 1301 Capitol of Texas Hwy, Austin, TX 78746 filed a 13G disclosing that as of September 2002 it had shared and sole voting and dispositive power of 838,262 shares or 8.7%.

     (b)     SECURITY OWNERSHIP OF MANAGEMENT

     The following table sets forth as of March 4, 2003 information concerning the beneficial ownership of the Corporation’s Common Stock by the Directors and Named Executive Officers and all Directors and Executive Officers of the Corporation as a group:

Name of Beneficial owner	Amount and nature of beneficial ownership			Percent of class
Louis Berkman	2,701,108	(1)	(2)	28.04
Robert A. Paul	177,922	(2)	(3)	1.85
Ernest G. Siddons	81,833	(4)		.85
Robert F. Schultz	30,200	(5)		.31
Terrence W. Kenny	25,000	(6)		.26
Paul A. Gould	3,000			*
Carl H. Pforzheimer, III	2,733	(7)		*
Leonard M. Carroll	1,500			*
Laurence E. Paul	1,000			*
Stephen E. Paul	1,000			*
William D. Eberle	1,000	(8)		*
Directors and Executive Officers as a group
(13 persons)	3,045,030	(9)		31.61

*less than .1%

21

(1)	Includes 215,000 shares owned directly, 120,000 shares which he has the right to acquire within sixty days pursuant to stock options, 2,363,842 shares owned by The Louis Berkman Investment Company, and the following shares in which he disclaims beneficial ownership: 1,266 shares held by The Louis and Sandra Berkman Foundation of which Louis Berkman and Robert A. Paul are trustees, and 1,000 shares owned by his wife.
(2)	The Louis Berkman Investment Company owns beneficially and of record 2,363,842 shares of the Corporation’s Common Stock. Louis Berkman is an officer and director of The Louis Berkman Investment Company and owns directly 61.51% of its common shares. Robert A. Paul, an officer and director of The Louis Berkman Investment Company, disclaims beneficial ownership of the 38.49% of its common stock owned by his wife. The number of shares shown in the table for Robert A. Paul does not include any shares held by The Louis Berkman Investment Company.
(3)	Includes 42,889 shares owned directly, 120,000 shares which he has the right to acquire within sixty days pursuant to stock options, and the following shares in which he disclaims beneficial ownership: 13,767 shares owned by his wife and 1,266 shares held by The Louis and Sandra Berkman Foundation of which Robert A. Paul and Louis Berkman are Trustees.
(4)	Includes 1,833 shares owned jointly with his wife and 80,000 shares which he has the right to acquire within sixty days pursuant to stock options.
(5)	Includes 200 shares owned jointly with his wife and 30,000 shares which he has the right to acquire within sixty days pursuant to stock options.
(6)	Shares which he has the right to acquire within sixty days pursuant to stock options.
(7)	Includes 1,000 shares owned directly, 800 shares held by a trust of which he is a trustee and principal beneficiary, and the following shares in which he disclaims beneficial ownership: 133 shares held by his daughter and 800 shares held by a trust of which he is a trustee.
(8)	Shares held by a trust of which he is a trustee.
(9)	Includes 395,000 shares which certain officers have the right to acquire within sixty days pursuant to stock options and excludes double counting of shares deemed to be beneficially owned by more than one Director.
	Unless otherwise indicated the individuals named have sole investment and voting power.

22

     (c)     CHANGES IN CONTROL

     The Corporation knows of no arrangements which may at a subsequent date result in a change in control of the Corporation.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     In 2002 the Corporation bought industrial supplies from The Louis Berkman Company in transactions in the ordinary course of business amounting to approximately $1,853,000. Additionally, The Louis Berkman Company paid the Corporation $235,000 for certain administrative services. Louis Berkman was an officer, director and shareholder, Robert A. Paul was an officer and director, and Laurence E. Paul and Stephen E. Paul were officers, of that company. These transactions and services were at prices generally available from outside sources. Transactions between the parties will take place in 2003.

23

PART IV

ITEM 14 - CONTROLS AND PROCEDURES

     Within 90 days prior to the filing of this report, the Chief Executive Officer and Chief Financial Officer undertook an evaluation of the Corporation’s disclosure controls and procedures. Based upon that evaluation, they have concluded that there are in place disclosure controls and procedures necessary to ensure that material information relating to the Corporation, including its consolidated subsidiaries, is made known to them by others in the Corporation, particularly with respect to the period covered by this report. Subsequent to the date of this evaluation there have been no significant changes in the internal controls or in other factors that could significantly affect the internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

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

(a)	1.	Financial Statements
		The consolidated financial statements, together with the report thereon of Deloitte & Touche LLP appearing on pages 11 through 25 and page 27 of the Annual Report to Shareholders for the year ended December 31, 2002 are incorporated by reference in this Form 10-K Annual Report.
	2.	Financial Statement Schedules
		The following additional financial data should be read in conjunction with the consolidated financial statements in the accompanying Annual Report. Schedules not included with this additional financial data have been omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

	Schedule Number	Page Number
Index to Ampco-Pittsburgh Corporation Financial Data		F-1
Report of Independent Accountants		F-2
Valuation and Qualifying Accounts and Reserves II		F-3

24

		3.	Exhibits
Exhibit No.
	(3)	Articles of Incorporation and By-laws
		a.	Articles of Incorporation
			Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended March 31, 1983; the Quarterly Report on Form 10-Q for the quarter ended March 31, 1984; the Quarterly Report on Form 10-Q for the quarter ended March 31, 1985; the Quarterly Report on Form 10-Q for the quarter ended March 31, 1987; and the Quarterly Report on Form 10-Q for the quarter ended September 30, 1998.
		b.	By-laws
			Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1994 and the Quarterly Report on Form 10-Q for the quarter ended March 31, 1996 and 10-Q for the Quarter ended June 30, 2001.
	(4)	Instruments defining the rights of securities holders
		a.	Rights Agreement between Ampco-Pittsburgh Corporation and Chase Mellon Shareholder Services dated as of September 28, 1998.
			Incorporated by reference to the Form 8-K Current Report dated September 28, 1998.
	(10)	Material Contracts
		a.	1988 Supplemental Executive Retirement Plan
			Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended March 31, 1996.
		b.	Severance Agreements between Ampco-Pittsburgh Corporation and certain officers and employees of Ampco-Pittsburgh Corporation.
			Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1988; the Quarterly Report on Form 10-Q

25

			for the quarter ended September 30, 1994, the Annual Report on Form 10-K for fiscal year ended December 31, 1994; the Quarterly Report on Form 10-Q for the quarter ended June 30, 1997; the Annual Report on Form 10-K for fiscal year ended December 31, 1998; and the Quarterly Report on Form 10-Q for the quarter ended June 30, 1999.
		c.	1997 Stock Option Plan
			Incorporated by reference to the Proxy Statement dated March 14, 1997 and the Proxy Statement dated March 15, 2000.
	(13)	Annual Report to Shareholders for the fiscal year ended December 31, 2002
	(21)	Significant Subsidiaries
	(23)	Consent of Expert
	(99.1)	Certification of Principal Executive Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
	(99.2)	Certification of Principal Financial Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002.
(b)	Reports on Form 8-K
	None.

26

SIGNATURE

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

	AMPCO-PITTSBURGH CORPORATION
	(Registrant)
March 13, 2003
	By	/s/ LOUIS BERKMAN
		Director, Chairman of the Board -
		Louis Berkman
	By	/s/ ROBERT A. PAUL
		Director, President and Chief Executive Officer -
		Robert A. Paul
	By	/s/ ERNEST G. SIDDONS
		Director, Executive Vice President and Chief Operating Officer -
		Ernest G. Siddons
	By	/s/ MARLISS D. JOHNSON
		Vice President, Controller and Treasurer (Principal Financial Officer) -
		Marliss D. Johnson

27

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

March 13, 2003

By	/s/ LEONARD M. CARROLL
	Leonard M. Carroll
By	/s/ WILLIAM D. EBERLE
	William D. Eberle
By	/s/ PAUL A. GOULD
	Paul A. Gould
By	/s/ LAURENCE E. PAUL
	Laurence E. Paul
By	/s/ STEPHEN E. PAUL
	Stephen E. Paul
By	/s/ CARL H. PFORZHEIMER, III
	Carl H. Pforzheimer, III

28

     AMPCO-PITTSBURGH CORPORATION

Certification

I, Robert A. Paul, certify that:

1.	I have reviewed this annual report on Form 10-K of Ampco-Pittsburgh Corporation (“the registrant”);
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.	The registrant’s other certifying officer 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 annual report is being prepared;
	b)	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and
	c)	presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

29

	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 officer and I have indicated in this annual 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/ ROBERT A. PAUL

Robert A. Paul
Chief Executive Officer
March 13, 2003

AMPCO-PITTSBURGH CORPORATION

Certification

I, Marliss D. Johnson, certify that:

1.	I have reviewed this annual report on Form 10-K of Ampco-Pittsburgh Corporation (“the registrant”);
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.	The registrant’s other certifying officer 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 annual report is being prepared;
	b)	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and
	c)	presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent 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 officer and I have indicated in this annual 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/ MARLISS D. JOHNSON

Marliss D. Johnson
Vice President, Controller and Treasurer
Chief Financial Officer
March 13, 2003

Index to Ampco-Pittsburgh Corporation Financial Data

	Schedule	Page
	Number	Number
Index to Ampco-Pittsburgh Corporation Financial Data		F-1
Report of Independent Accountants		F-2
Valuation and Qualifying Accounts and Reserves	II	F-3

F-1

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of
Ampco-Pittsburgh Corporation

We have audited the consolidated balance sheets of Ampco-Pittsburgh Corporation and subsidiaries as of December 31, 2002 and 2001, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2002, and have issued our report thereon dated February 10, 2003; such consolidated financial statements and report are included in your 2002 Annual Report to Shareholders and are incorporated herein by reference. Our audits also included the financial statement schedule II, Valuation of Qualifying Accounts, of Ampco-Pittsburgh Corporation and subsidiaries for the years ended December 31, 2002, 2001, and 2000. This financial statement schedule is the responsibility of the Corporation’s management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

/s/ DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
February 10, 2003

F-2

Schedule II

Ampco-Pittsburgh
Corporation
Valuation and Qualifying Accounts
For the Years Ended December 31, 2002, 2001 and 2000

Column A	Column B		Column C			Column D				Column E
			Additions
Description	Balance at beginning of period		Charged to costs and expenses		Charged to other accounts - describe	Deductions- describe				Balance at end of period
Year ended December 31, 2002
Allowance for doubtful accounts	$	1,450,868	$	295,872		($	194,206	)	(1)	$	1,552,534
Year ended December 31, 2001
Allowance for doubtful accounts	$	626,727	$	1,099,889		($	275,748	)	(1)	$	1,450,868
Year ended December 31, 2000
Allowance for doubtful accounts	$	364,138	$	384,251		($	121,662	)	(1)	$	626,727

(1) Represents primarily writeoff of accounts receivable customer balances.

F-3

EX-13

Financial Highlights

		Year Ended December 31,
		2002		2001			2000
Net Sales		$	212,367,000	$	219,167,000		$	228,028,000
Income from Operations			9,863,000		1,144,000			22,111,000
Net Income (Loss)			2,261,000		(983,000	)		16,192,000
Shareholders’ Equity			150,021,000		157,407,000			162,477,000
Per Share:
	Basic and Diluted Earnings		0.23		(0.10	)		1.68
	Shareholders’ Equity		15.57		16.38			16.92
	Dividends		0.40		0.40			0.40
	Market Price at Year End		12.16		10.75			12.00

Table of Contents

Letter to Shareholders	2
Business Summary	4
Results of Operations	6
Consolidated Balance Sheets	11
Consolidated Statements of Operations	12
Consolidated Statements of Shareholders’ Equity	13
Consolidated Statements of Cash Flows	14
Notes to Consolidated Financial Statements	15
Quarterly Information-Unaudited	26
Common Stock Information	26
Five-Year Summary of Selected Financial Data	27
Report of Independent Accountants	27
Directors and Officers	28
Operating Companies	28
Shareholder Information	29

1

Letter to Shareholders

     Year 2002 presented many challenges for the Corporation. The industrial economy continued to be weak with business investment at extremely low levels. The Corporation consists of businesses in cyclical industries. Although historically the timing of the cycles has varied, the present downturn is of such duration that each operation has suffered during the year. This is seen in the financial results for 2002 and in the lower level of incoming orders during the year which have set the stage for lower business activity in 2003.

     While overall results of the Corporation improved when compared with 2001, sales and earnings were substantially lower than those of earlier years. The Air and Liquid Processing segment achieved record earnings; however, there was a significant slow-down in both shipments and orders in the last six months. Whereas the Forged and Cast Rolls segment began to pick up in both earnings and orders as the year ended. The Plastics Processing Machinery segment incurred losses as the industry it serves continued to operate at levels materially below capacity. Elsewhere in this report you will find more financial analysis of the segments and overall results of the Corporation.

Business Review

     Despite relief granted to the U.S. steel industry by introduction of temporary tariffs on steel imports, the industry continued to be in disarray. Bankruptcies, consolidations and survival operating modes of many customers of the Forged and Cast Rolls group forced continuation of reduced demand for rolls and pressure on prices and margins. Even with this backdrop, Union Electric Steel Corporation’s forged hardened steel roll operations began a slow, modest recovery. The strength of the dollar against the euro, which has made exports to Europe difficult and increased domestic competition from foreign producers, began to wane towards year end. The weaker dollar is expected to aid profitability and offset surging scrap, alloy, natural gas, insurance and medical benefit costs. Davy Roll Company, the cast roll producer in England, again incurred losses which resulted in a complete overhaul of costs and a permanent reduction in manning levels. While the outlook is still uncertain, order intake towards year end provides optimism for improvement. Davy, as is the case with Union Electric Steel, expanded its sales to the burgeoning steel industry in China. In December, an agreement to supply technology to a cast roll producer in China was finalized and will help strengthen our involvement in the region.

     The Air and Liquid Processing group enjoyed a record earnings year. The level and quality of order backlog at the beginning of the year was the primary reason for the good results. However, as the year progressed, a significant fall in demand for power generation equipment and a reduction in construction spending created a change in the incoming order levels for Buffalo Pumps Inc. and Buffalo Air Handling Company. Accordingly, it was necessary to make permanent reductions in manning levels during the last months of the year. While improvements in product offerings of pumps for the refrigeration and chemical processing industries are expected to result in a modest increase in sales, the outlook for the next several years is for a significant reduction in demand for lube oil pumps for the power generation industry. Marketing efforts are in place to expand pump export opportunities but this will take time and is subject

2

to the vagaries of exchange rates. Projects for air handling systems have slowed as investments for pharmaceutical, hospital and institutional construction have been curtailed. In consequence, prices and margins have been adversely impacted as competitors pursue the much reduced available work. However, the heat exchange equipment operation of Aerofin enjoyed a much better year benefitting in the early part of 2002 from the high but diminishing demand from the heating and air conditioning markets. In addition, the strength of that operation’s product line brought increased business from the utility market which is expected to spill over into 2003.

     The severe downturn in the plastics processing and plastics machinery industries continued through its second year in 2002. The New Castle Industries group suffered its worst operating loss ever as a result of low demand and predatory pricing. A significant restructuring resulting in the closure of a small feed screw plant and a permanent reduction in manning was implemented in the third quarter, which has helped to reduce break-even level. Unfortunately, the plastics machinery industry is undergoing structural change with more manufacturing going off shore, particularly to Asia. Accordingly, the demand for components from traditional original equipment customers has reduced significantly. Expanded sales efforts to service plastics processors have been successful in increasing market penetration to that sector. However, we are concerned that there are no clear signs of improved market conditions and we continue to explore further actions to better position the business to reach profitability.

Outlook

     Although we are in the midst of one of the most difficult periods for manufacturing industry for decades, the Corporation is financially strong. During the year, cash balances doubled to more than $27 million. Accordingly, the Corporation is positioned to successfully get through these troubled times. Finally, it is expected that results of the Corporation in 2003 will continue to be weak. Increases in capital spending levels and a strengthening of the U.S. economy are required before there can be a significant improvement in earnings. This will not deter the Corporation from taking advantage of appropriate investment and growth opportunities. Meanwhile, we thank our employees, customers, suppliers and shareholders for their support.

/s/ LOUIS BERKMAN	/s/ ROBERT A. PAUL	/s/ ERNEST G. SIDDONS
Louis Berkman	Robert A.Paul	Ernest G.Siddons
Chairman of the Board	President and Chief Executive Officer	Executive Vice President and Chief Operating Office

3

Business Summary

FORGED AND CAST ROLLS PLASTICS PROCESSING MACHINERY

[logo]

     Union Electric Steel Corporation was founded in 1923 as a manufacturer of several forged steel products. In 1930, it changed its focus to the sole production of forged hardened steel rolls. That specialization continues today and has made this company a world leader in this market.

     Roll manufacturing is a highly technical field and leadership in this industry requires a plan of continuous improvement. Union Electric achieves this with its comprehensive research and development program whereby it continually develops new chemistry and heat treatment combinations to provide new products with increased value.

[photo]

     Two recent forged steel roll developments are high alloy 4% chromium ultra-deep hardened cold mill work rolls which eliminate the need for the more expensive electroslag remelt material and special die steel alloy for hot roughing mill work rolls which have proven advantages over traditional cast roll materials.

     Headquartered in Carnegie, Pennsylvania with manufacturing facilities in Pennsylvania and Indiana, Union Electric supplies rolls for use in ferrous and non-ferrous rolling mills throughout the world.

     In 1999, the acquisition of The Davy Roll Company expanded the product line to include cast rolls.

     Davy, by its recent development of unique heat treatment designed for centrifugally cast high speed steel hot strip mill work rolls, has optimized performance and reliability of one of its most significant product lines.

     Headquartered in Gateshead, England, Davy Roll is a recognized leader in the cast roll market. Together, Union Electric Steel Corporation and The Davy Roll Company are synonymous with excellence in forged and cast roll technology.

[logo]

     New Castle Industries was formed in 1971 and is headquartered in New Castle, Pennsylvania. It specializes in the design, engineering and manufacture of feed screws and barrels for injection molding and extrusion, and chill rolls for sheet, film, converting, printing, and other heat transfer plastic processes. The products are made in six plants located throughout the United States and are supplied to both original equipment manufacturers and plastic processors. A commitment to research and development has also helped this segment to maintain innovative screw technology advancements and plastic process development. This commitment has been enhanced by the completion in 2002 of a laboratory which allows the company and its customers to test and refine product and process improvements.

     Within the last eighteen months research and development has resulted in the filing of four patent applications (at this date three have been granted). These patents will be marketed as new product offerings to improve the throughput of plastic processor customers’ finished product.

4

2002

AIR AND LIQUID PROCESSING

[logo]

     Buffalo Air Handling Company manufactures custom air handling units and its designs are derived from knowledge gained through years of experience. The Buffalo Air Handling facility in Amherst, Virginia was built in 1977 to exclusively build these units. A second facility was opened in 2000 to increase manufacturing capacity. Today, Buffalo Air Handling produces units for many markets including pharmaceutical, hospital and health care, chemical, telecommunication, semi-conductor, biotech, institutional, pulp and paper, food, and automotive.

[photo]

     Buffalo Air Handling has developed a method to reduce the noise generated by air handling systems. This allows its equipment to exceed market requirements for noise reduction in buildings. In addition, the company has made significant technological advancements in thermal break design, which allow the system designs to meet the new indoor air quality requirements.

[logo]

     Buffalo Pumps, Inc. and its predecessors have been making quality centrifugal pumps for more than a century. Commercial use of these pumps dates back to 1887 and marine applications predate World War 1. Headquartered in North Tonawanda, New York, Buffalo Pumps is a leading supplier in the refrigeration, paper and lube oil markets. Its canned pump technology has long been recognized as the most advanced in the industry and it holds ISO 9001 certification as a pump supplier of the highest quality and dependability.

     During 2002, Buffalo Pumps developed and patented a bearing monitor device for its seal-less refrigeration pump line that will warn of any operational problems with the pump so as to avoid catastrophic failure. The system will cause the user to perform preventative maintenance and avoid costly system down time.

[photo]

[logo]

     Aerofin Corporation was founded in 1923 and is a leading manufacturer of finned tube heat exchanger coils and related heat transfer equipment and accessories. Headquartered in Lynchburg, Virginia, Aerofin products serve a variety of industries including HVAC, fossil fuel power generation, nuclear power generation, industrial process, pulp and paper, automotive and petrochemical.

     Aerofin completed the design, development and market release of the horizontal Aeromix™ coil product line. This completes their product offering of integral face and bypass coils. These coils are preferred by the HVAC industry over the conventional steam coils.

5

Results of Operations

(in thousands, except per share amounts)

     The following discussion should be read in connection with the consolidated financial statements of the Corporation and the related footnotes.

The Corporation

	2002		2001		2000
Sales	$	212,376	$	219,167	$	228,028
Operating income	$	9,863	$	1,144	$	22,111
Backlog	$	106,088	$	107,608	$	115,552

     Sales for 2002 decreased for each of the segments from 2001 due to the decline in the industrial economy and the sale of the small metals forging and feed roll businesses in June 2002 and May 2001, respectively. Sales for 2001 decreased from 2000 on lower sales for the Forged and Cast Rolls and Plastics Processing Machinery segments offset by improved sales for the Air and Liquid Processing segment. The backlog at December 31, 2002 is comparable to that as of December 31, 2001. An improvement in the backlog for the Forged and Cast Rolls segment offset the majority of the decline experienced by the Air and Liquid Processing segment. The reduction in backlog for December 31, 2001 against December 31, 2000 is due primarily to a lower ending backlog for the Forged and Cast Rolls segment.

     In the second half of 2002, as a result of weak economic conditions across each of the segments of the Corporation including a depressed steel industry, reduced demand for power generation equipment and a slowdown in construction and capital spending, the Corporation made reductions in manning levels at several of its operations and initiated the closure of its leased Plastics Processing Machinery facility in South Carolina resulting in pre-tax restructuring charges of approximately $1,241. In addition, in 2001 after reviewing its global roll-making capacity, the Corporation recorded a pre-tax charge of $7,280 for restructuring and other costs principally related to the permanent closure of its forged steel roll plant in Belgium. The net of 2002 restructuring and other charges and the reversal of unused restructuring provisions from 2001 resulted in a net charge of $579 to 2002 operating income. In addition the Corporation sold the land and building of the Belgian operation in 2002 resulting in a gain of $917. The Corporation estimates that following transition of roll production from Belgium to the U.S., which was completed in 2002, combined annual savings of the 2002 and 2001 restructurings will approximate $4,500 principally attributable to reduced labor costs. The corresponding impact on earnings could differ from this estimate based on changes in costs resulting from fluctuations in shipment and manufacturing levels as well as exchange rates and variations in product mix (see Note 2 to the Consolidated Financial Statements).

     In addition to the gain on the sale of the land and building of $917 and net restructuring and other charges of $579 and $7,280 for 2002 and 2001, respectively, operating income for 2001 was impacted by litigation costs of $2,378 associated with a lawsuit settled in the third quarter of 2001. The remaining decrease in operating income of $1,277 for 2002 from 2001 is attributable to lower earnings for the Air and Liquid Processing and Plastics Processing Machinery segments offset by improved results for the Forged and Cast Rolls segment. In addition to the restructuring and litigation costs, earnings for 2001 were lower than 2000 due to weaker results of the Forged and Cast Rolls and Plastics Processing Machinery segments countered by improved results for the Air and Liquid Processing segment. Favorable performance of pension plan assets in 2001 reduced pension costs by approximately $900 in comparison to 2002 and 2000.

     Gross margin, excluding depreciation, as a percentage of net sales approximated 22.4%, 22.5% and 26.4% for 2002, 2001 and 2000, respectively. The reduction for 2002 and 2001 from 2000 is due primarily to lower volumes and significantly reduced selling prices.

     Selling and administrative expenses totaled $30,150 (14.2% of net sales), $32,960 (15.0% of net sales) and $30,733 (13.5% of net sales) for 2002, 2001 and 2000, respectively. Expenses for 2002 include $670 for asbestos-related matters of which approximately $400 is for a law firm retained to advise on all aspects of asbestos litigation (see Note 16 to Consolidated Financial Statements). Included in 2001 is $2,378 of litigation costs incurred related to the lawsuit which was settled in the third quarter of 2001. After consideration of these costs, selling and administrative expenses for 2002, 2001 and 2000 are comparable.

     Depreciation expense of $7,630, $7,747 and $7,425 for 2002, 2001 and 2000, respectively, is comparable.

     Interest expense was $424, $659 and $922 for 2002, 2001 and 2000, respectively. The fluctuation is directly attributable to the decrease in interest rates. Other income (expense) equaled $353, ($382) and $753 for 2002, 2001 and 2000, respectively. Included in other income (expense) for 2001 are additional environmental costs of $550 estimated to be incurred with respect to remediation of real estate sold in 1996. The remaining increase in 2002 from 2001 is due to foreign exchange gains realized in 2002 versus foreign exchange losses for 2001 offset by lower interest income earned on cash and cash equivalents resulting from the continued decline in interest rates. The remaining decrease in 2001 from 2000 is attributable to lower interest income resulting from the decrease in interest rates and an increase in foreign currency exchange losses in 2001 versus 2000.

6

     In 2002 and 2001, the Corporation recorded a valuation allowance against the future tax benefit of the net operating loss carry forwards and foreign tax credits arising from its foreign operations because of the uncertainty of their ultimate realization. As a result, the Corporation recognized an income tax provision of $4,637 (47.4% effective tax rate), $1,086 on net income before tax of $103 and $5,750 (26.2% effective tax rate due to utilization of foreign tax credits) for 2002, 2001 and 2000, respectively.

     Effective January 1, 2002, the Corporation adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets”. SFAS No. 142, requires that goodwill no longer be amortized but instead tested for impairment at least annually. In accordance with the requirements of SFAS No. 142, the Corporation tested the goodwill attributable to each of its reporting units for impairment as of January 1, 2002. The Corporation’s reporting units are the major product lines comprising its reportable business segments. Fair value was estimated using discounted cash flow methodologies and market comparable information. As a result, $4,452 of goodwill specific to the heat-transfer rolls unit of the Plastics Processing Machinery segment was written off and is recorded as a cumulative effect of accounting change, net of income taxes, in the accompanying consolidated statements of operations. The impairment arises from the severe downturn in the plastics processing industry resulting in reduced selling prices and a significant reduction in demand.

     As a result of the above, net earnings for the Corporation were $2,261 or $0.23 per common share for 2002 in comparison to ($983) or ($0.10) per common share for 2001 and $16,192 or $1.68 per common share in 2000.

     A review of operations for each of the Corporation’s segments follows.

Forged and Cast Rolls

	2002		2001			2000
Sales	$	95,901	$	96,879		$	113,134
Operating income (loss)	$	4,093	$	(4,920	)	$	12,997
Backlog	$	72,158	$	60,701		$	70,125

     The Corporation sold the net assets, excluding primarily trade receivables and payables, of Formet Ltd., its small metals forging business, in June 2002 and Turner Chilled Rolls, Ltd., its small feed roll business, in May 2001 accounting for approximately $3,500 of the reduction in sales. Otherwise, sales for 2002 would have increased as a result of a higher volume of shipments for Davy Roll Company, the U.K. operations, compared with 2001. Sales in 2002 of Union Electric Steel Corporation, the U.S. operations, were comparable to 2001 but included a larger content of export shipments.

     Earnings for 2002 benefited from a credit of $249 representing the net of restructuring charges of $413 for severance costs associated with the permanent reduction in manning levels at its U.K. operations offset by the reversal of unused restructuring provisions of $441 and a foreign currency adjustment credit of $221 relating to closure of the Belgian plant in 2001. In addition, the Belgian facilities were sold in 2002 at a gain of $917. Operating income attributable to the U.S. operations improved as benefits from the preceding year’s closure of the Belgian plant were obtained. However, earnings were adversely impacted by higher costs of natural gas and alloys and poor selling prices and margins. The latter resulting in part from export sales due to the strength of the dollar against the euro. While results of the U.K. cast roll operations improved, losses continued to be incurred forcing further cost reduction actions including permanent reductions in manning levels.

     Order backlogs have increased significantly during the last several months of 2002 both for the U.S. and U.K. operations. Pricing levels however continue to be poor. The recent weakening of the dollar against the euro is expected to improve U.S. exports and margins and help combat skyrocketing energy costs. Unfortunately, the recent strengthening of the British pound against the dollar will have a dampening affect on sales to North America.

     In December 2002, Davy Roll signed an agreement with a roll producer in China to supply technology for the production of certain types of hot-strip mill rolls. The project is expected to be substantially completed in 2003 and 2004 and is expected to positively impact Davy’s earnings.

     Sales in 2001 compared with 2000 were adversely impacted by the severe economic downturn in the global steel industry which caused lower demand and an erosion of selling prices. The strength of the dollar and the British pound against foreign currencies, particularly the euro, negatively impacted prices and the level of export sales and allowed an increase in imports of competitors’ rolls into domestic markets. Operating losses were incurred in 2001 as a result of the permanent closure of the forged hardened steel roll operation in Belgium and the related restructuring and other charges of $7,280. In addition, results for 2001 compared with 2000 were adversely impacted by transition costs attributable to the transfer of the Belgian roll output to the U.S. as well as losses of the U.K. cast roll operation which suffered from shrinking demand from the British and European steel industries. In 2001, the segment also suffered losses of more than $1,500 from receivables and inventory write-downs as a result of bankruptcies and financial difficulties of steel industry customers. The reduction in backlog in 2001 from 2000 is reflective of the downturn in the global steel industry.

7

Results of Operations

Air and Liquid Processing

	2002		2001		2000
Sales	$	91,855	$	94,964	$	80,266
Operating income	$	11,547	$	11,105	$	10,539
Backlog	$	28,764	$	41,928	$	38,333

     The decrease in sales for 2002 is attributable to the Buffalo Air Handling Company business which was principally impacted by reduced construction spending whereas in 2001 the air handling business achieved record level sales primarily from greater penetration in the pharmaceutical, health care and institutional construction markets. Sales for Buffalo Pumps, Inc.’s business were principally affected by the decline in demand for pumps from the power generation industry; however, an increase in marine defense shipments allowed this business to achieve slightly higher sales in 2002 from 2001. In addition, demand from the utility markets for Aerofin Corporation’s heat exchange coils resulted in an improvement in sales from 2001. The increase in sales in 2001 from 2000 is attributable to the record level of sales of air handling systems and an increase in demand for lube oil pumps primarily from the power generation industry. Sales of heat exchange equipment in 2001 were adversely impacted by low demand from the recession-weakened industrial sector.

     Operating income for 2002 includes legal costs of $564 related to asbestos litigation and restructuring charges of $204 for severance costs associated with the permanent reduction in manning levels at each of its operating units whereas earnings for 2001 are after litigation costs of approximately $2,378. Lower pricing for pumps and air handling units coupled with lower shipments for the air handling business reduced operating income for 2002 in comparison to 2001. Increased volume, cost savings, and expanded capacity account for the improved results for 2001 against 2000.

     Declines in construction spending with resultant increase in competitive pressures and lower prices caused the significant reduction in orders for air handling equipment. This together with a dramatic reduction in demand for power generation equipment negatively impacted overall backlog for 2002 compared to 2001. The increase in backlog in 2001 from 2000 was primarily attributable to an increase in demand from the power generation industry.

Plastics Processing Machinery

		2002			2001			2000
Sales	$	24,620		$	27,324		$	34,628
Operating (loss) income	$	(1,171	)	$	(155	)	$	2,984
Backlog	$	5,166		$	4,979		$	7,094

     The downturn in the plastics processing and plastics machinery industries which began in 2001 continued through 2002. Although efforts to service plastic processors by the New Castle Industries group resulted in maintaining business levels to that sector, the segment lost significant sales in both 2002 and 2001 from the lack of demand from original equipment customers. This resulted from a major reduction in capital spending for plastic machinery by the industry at large which began in the fall of 2000. Accordingly, the decrease in sales and earnings for 2002 from 2001 is attributable to reduced demand and lower selling prices. Operating results for 2002 also include restructuring charges of $624 primarily for severance costs associated with the permanent reduction in manning levels and the closure of its feedscrews facility in South Carolina. While the break-even level has been lowered, management continues to be concerned with the excess capacity in the industry and the future direction of the segment. Sales and operating income decreased significantly in 2001 due to reduced volumes and unprecedented low selling prices.

     Backlog improved slightly at December 31, 2002 whereas the backlog at December 31, 2001 was reflective of the recession in the plastics industry compared to what was a more traditional level in 2000.

Liquidity and Capital Resources

     Net cash flows from operating activities were positive for 2002, 2001 and 2000 at $21,375, $9,893 and $15,796, respectively. The increase in 2002 is primarily a result of changes in working capital including a significant decrease in accounts receivables. The decrease in 2001 from 2000 is due principally to payments made in connection with the closure of the forged steel roll plant in Belgium.

     Net cash outflows used in investing activities were $3,010, $8,206 and $12,166 in 2002, 2001 and 2000, respectively. The decrease over the years is due primarily to lower capital expenditures which approximated $5,649, $9,423 and $13,170 in 2002, 2001 and 2000, respectively. In June 2002, the Corporation sold the net assets, excluding primarily trade receivables and payables, of its small metals forging business in England for approximately its net book value of $1,308. The balance of the proceeds of approximately $100, plus interest at the prevailing rate, is payable in June 2003. In addition, the remaining assets of the Belgian facility were sold in July 2002 for $1,447. In 2001, the Corporation sold the net assets, excluding primarily trade receivables and payables, of its small feed roll business in England for approximately its net book value of $1,060. In 2000, the Corporation sold the small roll division of Davy, excluding accounts receivable, for approximately $1,761 and its remaining property held for sale, which it carried as an investment, for its book value of approximately $1,300. In addition, the

8

Corporation acquired a small manufacturer of heat transfer rolls in 2000 for approximately $2,462. The Corporation continues to evaluate potential acquisitions and/or disposals of existing businesses. As of December 31, 2002, future capital expenditures totaling $2,263 have been approved. Funds on hand, funds generated from future operations and available lines of credit are expected to be sufficient to finance capital expenditure requirements.

     Net cash outflows used in financing activities include quarterly dividends of $0.10 per common share for each of the three years. Proceeds were received from the issuance of common stock under the Corporation’s stock option plan of $238, $16 and $125 in 2002, 2001 and 2000, respectively. In 2002, the Corporation repaid $1,350 of industrial revenue bonds which matured and in 2001 repaid short-term borrowings of $2,000 which it had outstanding as of December 31, 2000.

     The change in the value of the euro and the British pound against the dollar increased cash and cash equivalents by $766 for 2002 and decreased cash and cash equivalents by $208 and $376 for 2001 and 2000, respectively.

     As a result of the above, cash and cash equivalents increased by $14,171 in 2002 and ended the year at $27,685 in comparison to $13,514 and $17,861 at December 31, 2001 and 2000, respectively. The Corporation maintains short-term lines of credit in excess of the cash needs of its businesses. The total available at December 31, 2002 was approximately $4,800.

     The Corporation is currently performing certain remedial actions in connection with real estate previously owned and has been named a Potentially Responsible Party at one third-party site used by a division also previously owned. The Corporation has accrued the estimated cost of remediation. While it is not possible to quantify with certainty the potential cost of actions regarding environmental matters, particularly any future remediation and other compliance efforts, in the opinion of management, compliance with the present environmental protection laws and the potential liability for all environmental proceedings will not have a material adverse effect on the financial condition, results of operations or liquidity of the Corporation (see Note 17 to Consolidated Financial Statements).

     The nature and scope of the Corporation’s business brings it into regular contact with a variety of persons, businesses and government agencies in the ordinary course of business. Consequently, the Corporation and its subsidiaries from time to time are named in various legal actions. The Corporation does not anticipate that its financial condition, results of operations or liquidity will be materially affected by the costs of known, pending or threatened litigation (see Note 16 to Consolidated Financial Statements).

Market Risk

     The Corporation views its primary market risk exposures to relate to changes in foreign currency exchange rates and changes in commodity prices. To manage certain foreign exchange exposures, the Corporation’s policy is to hedge a portion of its foreign currency denominated sales and receivables - primarily U.S. sales denominated in the euro and the British pound and foreign sales denominated in the dollar and the euro. Although further strengthening of the dollar could result in a lower volume of exports from the U.S. and reduced margins, it is expected that exports for the Corporation’s foreign operations would increase and gross margins would improve. Accordingly, a 10% strengthening of the dollar is not expected to have a significant effect on the Corporation’s consolidated financial statements.

     To reduce the effect of price changes for certain of its raw materials, the Corporation enters into futures contracts for a particular commodity and purchases a portion of its alloys in advance. Based on estimated annual purchases, a 10% fluctuation in commodity prices (including electricity, natural gas, scrap and alloys) would have less than a $2,500 impact (see Note 11 to Consolidated Financial Statements).

Effects of Inflation

     While inflationary and market pressures on costs are likely to be experienced in 2003, it is anticipated that ongoing improvements in manufacturing efficiencies and cost savings efforts will mitigate the effects of inflation on 2003 operating income.

Application of Critical Accounting Policies

     The Corporation has identified the most critical accounting policies that are important to the presentation of the Corporation’s financial condition, changes in financial condition and results of operations and involve the most complex or subjective assessments. The most critical accounting policies relate to accounting for pension and other postretirement benefits and assessing recoverability of goodwill and long-lived assets.

     Accounting for pensions and other postretirement benefits involves estimating the cost of benefits to be provided well into the future and attributing that cost over the time period each employee works. To accomplish this, expert actuarial advice is obtained and extensive use is made of assumptions about inflation, investment returns, mortality, turnover and discount rates. The Corporation believes that the amounts recorded in the accompanying financial statements related to pension and other postretirement benefits are based on appropriate assumptions although actual outcomes could differ. A percentage point decrease in the rate of return would increase pension expense by approximately $1,335 (see Note 8 to the Consolidated Financial Statements).

9

Results of Operations

     Property, plant and equipment are reviewed for recoverability whenever events or circumstances indicate the carrying amount of the long-lived assets may not be recoverable as outlined in SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. If the undiscounted cash flows generated from the use and eventual disposition of the assets are less than their carrying value, then the asset value may not be fully recoverable potentially resulting in a write-down of the asset value. Estimates of future cash flows are based on expected market conditions over the remaining useful life of the primary asset(s). Accordingly, assumptions are made about pricing, volume and asset-resale values. Actual results may differ from these assumptions. The Corporation believes the amounts recorded in the accompanying financial statements for property, plant and equipment are recoverable and are not impaired as of December 31, 2002.

     Goodwill is no longer amortized but tested for impairment at the reporting unit level at least annually in connection with the Corporation’s strategic planning process. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. Fair value is estimated using discounted cash flow methodologies and market comparable information and represents the amount at which the asset could be bought or sold in a current transaction between willing parties. Estimates of future cash flows are based on expected market conditions, pricing and volume. Actual results may differ from these assumptions. The Corporation believes the amount recorded in the accompanying financial statements for goodwill of $2,694 is recoverable and is not impaired as of December 31, 2002.

Recently Issued Accounting Pronouncements

     In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 143, “Accounting for Asset Retirement Obligations,” which is effective for the Corporation January 1, 2003. SFAS No. 143 establishes standards for accounting for obligations associated with the retirement of tangible long-lived assets. Adoption of SFAS No. 143 did not have a significant impact on the financial condition and results of operations of the Corporation.

     In June 2002, SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” was issued and requires recognition of a liability at its fair value for costs associated with exit or disposal activities when incurred versus the date at which an entity commits to an exit plan. SFAS No. 146 is effective for exit or disposal activities initiated by the Corporation after December 31, 2002.

     In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (FIN 45), which is effective for guarantees issued or modified after December 31, 2002. FIN 45 requires a guarantor to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The Corporation currently does not guarantee the obligations of others; accordingly, adoption of FIN 45 will not impact the financial condition and results of operations of the Corporation. FIN 45 also requires certain disclosures related to product warranty costs (see Note 7 to Consolidated Financial Statements).

     In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities” (FIN 46). FIN 46 requires existing unconsolidated variable interest entities to be consolidated by their primary beneficiary if the entities do not effectively disperse risks among the various parties involved. The Corporation currently does not have any unconsolidated variable interest entities; accordingly, adoption of FIN 46 will not impact the financial condition and results of operations of the Corporation.

Forward-Looking Statements

     The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of the Corporation. Results of Operations and other sections of the Form 10-K contain forward-looking statements that reflect the Corporation’s current views with respect to future events and financial performance.

     Forward-looking statements are identified by the use of the words “believe,” “expect,” “anticipate,” “estimate,” “projects,” “forecasts” and other expressions that indicate future events and trends. Forward-looking statements speak only as of the date on which such statements are made, are not guarantees of future performance or expectations and involve risks and uncertainties. In addition, there may be events in the future that the Corporation is not able to accurately predict or control which may cause actual results to differ materially from expectations expressed or implied by forward-looking statements. The Corporation undertakes no obligation to update any forward-looking statement, whether as a result of new information, events or otherwise. These forward-looking statements shall not be deemed incorporated by reference by any general statement incorporating by reference this Form 10-K into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934 and shall not otherwise be deemed filed under such Acts.

10

Consolidated Balance Sheets 2002

				December 31,
(in thousands)				2002			2001
Assets
	Current assets:
		Cash and cash equivalents		$	27,685		$	13,514
		Receivables, less allowance for doubtful accounts of $1,553 in 2002 and $1,451 in 2001			39,059			45,506
		Inventories			47,055			47,278
		Other			6,685			8,374
			Total current assets		120,484			114,672
	Property, plant and equipment, at cost:
		Land and land improvements			5,061			4,995
		Buildings			29,317			28,922
		Machinery and equipment			144,889			140,975
					179,267			174,892
		Accumulated depreciation			(95,535	)		(88,658	)
			Net property, plant and equipment		83,732			86,234
		Prepaid pensions			23,039			27,528
		Goodwill			2,694			7,146
		Other noncurrent assets			5,101			5,991
				$	235,050		$	241,571
Liabilities and Shareholders’ Equity
	Current liabilities:
		Current portion of long-term debt		$	—		$	1,350
		Accounts payable			12,289			13,039
		Accrued payrolls and employee benefits			8,413			7,597
		Other			14,201			13,138
			Total current liabilities		34,903			35,124
	Employee benefit obligations				16,305			16,951
	Industrial Revenue Bond debt				13,311			13,311
	Deferred income taxes				19,825			18,404
	Other noncurrent liabilities				685			374
			Total liabilities		85,029			84,164
	Shareholders’ Equity:
		Preference stock-no par value; authorized 3,000 shares; none issued			—			—
		Common stock-par value $1; authorized - 20,000 shares; issued and outstanding - 9,632 shares in 2002, 9,609 shares in 2001			9,632			9,609
		Additional paid-in capital			103,006			102,791
		Retained earnings			45,970			47,560
		Accumulated other comprehensive loss			(8,587	)		(2,553	)
			Total shareholders’ equity		150,021			157,407
				$	235,050		$	241,571

See Notes to Consolidated Financial Statements.

11

Consolidated Statements of Operations

		For The Year Ended December 31,
(in thousands, except per share amounts)		2002			2001			2000
Net sales		$	212,376		$	219,167		$	228,028
Operating costs and expenses:
	Costs of products sold (excluding depreciation)		164,758			169,842			167,785
	Selling and administrative		30,150			32,960			30,733
	Depreciation		7,630			7,747			7,425
	(Gain) loss on disposition of assets and businesses		(604	)		194			(26	)
	Restructuring and other charges		579			7,280			—
			202,513			218,023			205,917
Income from operations			9,863			1,144			22,111
Other income (expense):
	Interest expense		(424	)		(659	)		(922	)
	Other - net		353			(382)			753
			(71	)		(1,041	)		(169	)
Income before income taxes			9,792			103			21,942
Income taxes			4,637			1,086			5,750
Net income (loss) before cumulative effect of change in accounting for goodwill			5,155			(983	)		16,192
Cumulative effect of change in accounting for goodwill, net of income taxes of $1,558			(2,894	)		—			—
Net income (loss)		$	2,261		$	(983	)	$	16,192
Basic and diluted earnings per common share:
	Net income (loss) before cumulative effect of change in accounting for goodwill	$	0.53		$	(0.10	)	$	1.68
	Cumulative effect of change in accounting for goodwill	$	(0.30	)	$	—		$	—
	Net income (loss)	$	0.23		$	(0.10	)	$	1.68
Weighted average number of common shares outstanding			9,625			9,605			9,601

See Notes to Consolidated Financial Statements.

12

Consolidated Statements of Shareholders' Equity 2002

			Common Stock
										Accumulated Other Comprehensive Income (Loss)
			Stated Capital		Additional Paid-in Capital		Retained Earnings
(in thousands, except per share amounts)													Total
Balance January 1, 2000			$	9,595	$	102,664	$	40,034		$	327		$	152,620
Comprehensive income:
	Net income 2000							16,192						16,192
	Other comprehensive loss (a)										(2,619	)		(2,619	)
		Comprehensive income												13,573
Issuance of common stock				13		112								125
Cash dividends ($0.40 per share)								(3,841	)					(3,841	)
Balance December 31, 2000				9,608		102,776		52,385			(2,292	)		162,477
Comprehensive loss:
	Net loss 2001							(983	)					(983	)
	Other comprehensive loss (a)										(261	)		(261	)
		Comprehensive loss												(1,244	)
Issuance of common stock				1		15								16
Cash dividends ($0.40 per share)								(3,842	)					(3,842	)
Balance December 31, 2001				9,609		102,791		47,560			(2,553	)		157,407
Comprehensive loss:
	Net income 2002							2,261						2,261
	Other comprehensive loss (a)										(6,034	)		(6,034	)
		Comprehensive loss												(3,773	)
Issuance of common stock				23		215								238
Cash dividends ($0.40 per share)								(3,851	)					(3,851	)
Balance December 31, 2002			$	9,632	$	103,006	$	45,970		$	(8,587	)	$	150,021

(a)The following table summarizes the components of other comprehensive income (loss) and accumulated other comprehensive income (loss), net of tax:

		Foreign Currency Translation Adjustments									Unrealized Holding Gains (Losses) on Securities			Accumulated Other Comprehensive Income(Loss)
					Minimum Pension Liability
								Derivatives
Balance at January 1, 2000		$	693		$	(600	)	$	—		$	234		$	327
	Change during year		(2,566	)		(188	)		—			135			(2,619	)
Balance at December 31, 2000			(1,873	)		(788	)		—			369			(2,292	)
	Change during year		(64	)		(18	)		(100	)		(79	)		(261	)
Balance at December 31, 2001			(1,937	)		(806	)		(100	)		290			(2,553	)
	Change during year		2,515			(7,766	)		(472	)		(311	)		(6,034	)
Balance at December 31, 2002		$	578		$	(8,572	)	$	(572	)	$	(21	)	$	(8,587	)

See Notes to Consolidated Financial Statements.

13

Consolidated Statements of Cash Flows

					For The Year Ended December 31,
(in thousands)						2002			2001			2000
Cash flows from operating activities:
	Net income (loss)				$	2,261		$	(983	)	$	16,192
	Adjustments to reconcile net income (loss)to net cash flows from operating activities:
		Depreciation				7,630			7,747			7,425
		Deferred income taxes				2,958			2,013			2,215
		Pension benefit				(2,194	)		(3,889	)		(2,517	)
		Provisions for restructuring and other charges				579			7,280			—
		Write off of goodwill				2,894			—			—
		Provisions for bad debts and inventory write-downs				364			2,090			384
		Other - net				(967	)		216			310
	Changes in assets/liabilities, net of effects from business acquisitions and divestitures:
			Receivables			6,978			153			263
			Inventories			93			(1,111	)		(3,307	)
			Other assets			2,422			(1,350	)		(2,697	)
			Accounts payable			(2,152	)		2,605			77
			Accrued payrolls and employee benefits			(1,019	)		(491	)		(628	)
			Other liabilities			1,528			(4,387	)		(1,921	)
				Net cash flows from operating activities		21,375			9,893			15,796
Cash flows from investing activities:
	Purchases of property, plant and equipment					(5,649	)		(9,423	)		(13,170	)
	Proceeds from sale of businesses					1,225			1,060			1,761
	Proceeds from the sale of assets					1,470			—			—
	Business acquisition					—			—			(2,462	)
	Proceeds from sale of investments					—			—			1,297
	Other					(56	)		157			408
		Net cash flows used in investing activities				(3,010	)		(8,206	)		(12,166	)
Cash flows from financing activities:
	Dividends paid					(3,848	)		(3,842	)		(3,841	)
	(Repayment of) proceeds from short-term borrowings					—			(2,000	)		2,000
	Repayment of industrial revenue bond					(1,350	)		—			—
	Proceeds from the issuance of common stock					238			16			125
		Net cash flows used in financing activities				(4,960	)		(5,826	)		(1,716	)
Effect of exchange rate changes on cash and cash equivalents						766			(208	)		(376	)
Net increase (decrease) in cash and cash equivalents						14,171			(4,347	)		1,538
Cash and cash equivalents at beginning of year						13,514			17,861			16,323
Cash and cash equivalents at end of year					$	27,685		$	13,514		$	17,861
Supplemental information:
	Income tax payments				$	2,541		$	1,460		$	5,293
	Interest payments					380			643			917
Supplemental non-cash information:
	Recognition of funding (deficit) surplus (Note 8)				$	(8,552	)	$	6,435		$	—

See Notes to Consolidated Financial Statements.

14

Notes to Consolidated Financial Statements

(in thousands, except share and per share amounts)

Description of Business

     Ampco-Pittsburgh Corporation (the Corporation) is in three business segments that manufacture and sell primarily custom-engineered equipment. The Forged and Cast Rolls segment which consists of Union Electric Steel and Davy Roll located in England, manufactures and sells forged hardened steel rolls and cast rolls (iron and steel) to the metals industry. The Air and Liquid Processing segment consists of Aerofin-heat exchange coils, Buffalo Air Handling-air handling systems, and Buffalo Pumps-centrifugal pumps, all of which sell to a variety of commercial and industrial users. The Plastics Processing Machinery segment manufacturers and sells, through New Castle Industries, feed screws, barrels, chill rolls and heat transfer rolls principally to the plastics processing and plastics machinery industries.

Note 1 - Accounting Policies:

     The Corporation’s accounting policies conform to accounting principles generally accepted in the United States of America. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A summary of the significant accounting policies followed by the Corporation is presented below. Certain amounts for preceding periods have been reclassified for comparability with the 2002 presentation.

Consolidation

     All subsidiaries are wholly owned and are included in the consolidated financial statements. Intercompany accounts and transactions are eliminated.

Cash and Cash Equivalents

     Securities with purchased original maturities of three months or less are considered to be cash equivalents. The Corporation maintains cash and cash equivalents at various financial institutions which may exceed federally insured amounts.

Inventories

     Inventories are valued at cost, which is lower than market. Cost of domestic raw materials, work-in-process and finished goods inventories is primarily determined by the last-in, first-out (LIFO) method. Cost of domestic supplies and foreign inventories is primarily determined by the first-in, first-out method.

Property, Plant and Equipment

     Property, plant and equipment are recorded at cost with depreciation computed using the straight-line method over the following estimated useful lives: land improvements-15 to 20 years, buildings-25 to 50 years and machinery and equipment-5 to 25 years. Expenditures that extend economic useful lives are capitalized. Routine maintenance is charged to operating results. Gains or losses are recognized on retirements or disposals. Property, plant and equipment are reviewed for impairment whenever events or circumstances indicate the carrying amount may not be recoverable.

Goodwill

     Effective January 1, 2002, the Corporation adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets”. Accordingly, goodwill is no longer amortized but tested for impairment at the reporting unit level at least annually in conjunction with the Corporation’s strategic planning process. The Corporation’s reporting units are the major product lines comprising its reportable business segments. Fair value is estimated using discounted cash flow methodologies and market comparable information. Prior to the adoption of SFAS No. 142, goodwill was amortized over its estimated useful life. The Corporation does not have any other material intangible assets.

Other Comprehensive Loss

     Other comprehensive loss includes changes in net assets from non-owner sources including, foreign currency translation adjustments, changes in the minimum pension liability, changes in the fair value of derivatives and unrealized holding gains and losses on securities. Foreign currency translation adjustments exclude income tax benefit since earnings of non-U.S. subsidiaries are deemed to be reinvested for an indefinite period of time. The tax (expense) benefit associated with changes in the minimum pension liability was $(423), $10 and $101, for 2002, 2001 and 2000 respectively. A minimum pension liability was recorded in 2002 relating to the foreign pension plan and a valuation allowance was provided against the resulting deferred tax asset since it is more likely than not the asset will not be realized. The tax benefit associated with changes in the fair value of derivatives was $255 and $53 for 2002 and 2001, respectively. The tax benefit (expense) associated with changes in the unrealized holding gains and losses on securities was $168, $42, and $(73) for 2002, 2001 and 2000, respectively.

15

Notes to Consolidated Financial Statements

Revenue Recognition

     Revenue from sales is recognized when title to the product passes to the customer, which is generally when goods are shipped. Amounts billed to the customer for shipping and handling are recorded within net sales and the related costs are recorded within costs of products sold.

Product Warranty

     Provisions for product warranties are recognized based on historical experience as a percentage of sales adjusted for potential claims when a liability is probable and for known claims.

Foreign Currency Translation

     Assets and liabilities of the Corporation’s foreign operations are translated at year-end exchange rates and the statements of operations are translated at the average exchange rates for the year. Gains or losses resulting from translating foreign currency financial statements are accumulated as a separate component of other comprehensive loss until the entity is sold or substantially liquidated.

Financial Instruments

     Derivative instruments which include forward exchange and futures contracts are recorded in the balance sheet as either an asset or a liability measured at their fair value. The accounting for changes in the fair value of a derivative depends on the use of the derivative. To the extent that a derivative is effective as a cash flow hedge of an exposure to future changes in value, the change in fair value of the derivative is deferred in other comprehensive loss. Any portion considered to be ineffective is reported as a component of earnings immediately. To the extent that a derivative is effective as a hedge of an exposure to changes in fair value, the change in the derivative’s fair value will be offset in the statement of operations by the change in the fair value of the item being hedged and is recorded as a component of earnings. The Corporation does not enter into derivative transactions for speculative purposes and, therefore, holds no d erivative instruments for trading purposes.

Income Taxes

     Income taxes are recognized during the year in which transactions enter into the determination of financial statement income. Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the book carrying amounts and the tax basis of assets and liabilities including net operating loss carry forwards.

Stock-Based Compensation

     The Corporation accounts for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion (APB) No. 25, “Accounting for Stock Issued to Employees.” Under the intrinsic value method, compensation expense is generally recognized only to the extent the market price of the common stock exceeds the exercise price of the stock option at the date of the grant.

Earnings Per Share

     Basic earnings per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the year. The computation of diluted earnings per share is similar to basic earnings per share except that the denominator is increased to include the dilutive effect of the net additional common shares that would have been outstanding assuming exercise of outstanding stock options, calculated using the treasury stock method. The weighted average number of common shares outstanding assuming exercise of the stock options was 9,656,176 for 2002, 9,622,936 for 2001, and 9,620,469 for 2000.

Recently Issued Accounting Pronouncements

     In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations,” which is effective for the Corporation January 1, 2003. SFAS No. 143 establishes standards for accounting for obligations associated with the retirement of tangible long-lived assets. Adoption of SFAS No. 143 did not have a significant impact on the financial condition and results of operations of the Corporation.

     In August 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” which became effective for the Corporation January 1, 2002. SFAS No. 144 requires that long-lived assets be measured at the lower of carrying amount or fair value, less cost to sell, whether reported in continuing operations or in discontinued operations. Adoption of SFAS No. 144 did not have a significant impact on the financial condition and results of operations of the Corporation.

     In June 2002, SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” was issued and requires recognition of a liability at its fair value for costs associated with exit or disposal activities when incurred versus the date at which an entity commits to an exit plan. SFAS No. 146 is effective for exit or disposal activities initiated by the Corporation after December 31, 2002.

16

     In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (FIN 45), which is effective for guarantees issued or modified after December 31, 2002. FIN 45 requires a guarantor to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The Corporation currently does not guarantee the obligations of others; accordingly, adoption of FIN 45 will not impact the financial condition and results of operations of the Corporation. FIN 45 also requires certain disclosures related to product warranty costs (see Note 7).

     In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities” (FIN 46). FIN 46 requires existing unconsolidated variable interest entities to be consolidated by their primary beneficiary if the entities do not effectively disperse risks among the various parties involved. The Corporation currently does not have any unconsolidated variable interest entities; accordingly, adoption of FIN 46 will not impact the financial condition and results of operations of the Corporation.

Note 2 - Restructuring and Other Charges:

     In 2002, as a result of weak economic conditions across each of the segments of the Corporation including a depressed steel industry, reduced demand for power generation equipment and a slowdown in construction and capital spending, the Corporation made permanent reductions in manning levels at several of its operations and initiated the closure of its leased Plastics Processing Machinery facility in South Carolina and initially recognized pre-tax restructuring charges of approximately $1,337. The Corporation estimates annual savings from the restructuring beginning in 2003 of approximately $2,500 resulting primarily from reduced labor costs; however, the corresponding impact on earnings could differ from this estimate based on changes in costs resulting from fluctuations in shipment and manufacturing levels as well as exchange rates and variations in product mix.

     The initial restructuring provision and related activity for 2002 was as follows:

	Initial Provision		Utilized/Paid			Reversed to Income			Dec 31 2002
Employee costs	$	786	$	(558	)	$	(71	)	$	157
Asset impairment charges		340		(340	)		—			—
Costs associated with closure of leased facility		171		(136	)		(25	)		10
Other		40		(40	)		—			—
	$	1,337	$	(1,074	)	$	(96	)	$	167

     Employee costs are severance costs for the approximate 80 employees terminated. Asset impairment charges of $340 were recorded to reduce the value of the machinery to its estimated fair value, less costs to sell, of $60 which is lower than its carrying value. The remaining machinery which has a net realizable value of approximately $41 as of December 31, 2002 is expected to be sold by June 30, 2003. Costs associated with the closure of the leased facility include lease payments and holding costs through the estimated date of sublet. The restructuring reserve as of December 31, 2002 represents primarily severance costs to be paid in the first quarter of 2003.

     In addition, in 2001, the Corporation undertook a review of its global roll-making capacity and recorded a pre-tax charge of $7,280 primarily for restructuring and other costs associated with the permanent closure of its forged steel roll plant in Belgium. Other charges of $800 relate to the release of foreign currency adjustments recorded in accumulated other comprehensive loss. The Corporation estimates that following transition of roll production from Belgium to the United States which was completed in 2002, annual savings will approximate $2,000 beginning in 2003 principally related to a reduction in labor costs; however, the corresponding impact on earnings could differ from this estimate based on changes in costs resulting from fluctuations in shipment and manufacturing levels as well as exchange rates and variations in product mix.

     The initial restructuring provision and related activity for 2001 was as follows:

		Initial Provision		Utilized /Paid			Dec 31 2001
Employee costs	$	4,110	$	(3,196	)	$	914
Asset impairment charges		1,550		(1,550	)		—
Accrued liabilities and other costs		820		(125	)		695
	$	6,480	$	(4,871	)	$	1,609

     Employee costs are severance costs and pension-related costs for the approximate 96 employees terminated. Asset impairment charges of $1,550 were recorded to reduce the value of machinery to its estimated fair value less costs to sell, which is lower than its carrying value. Accrued liabilities and other costs of $820 include primarily estimated costs to restore the floor of the facility as a result of damage caused by the removal of machinery and estimated holding costs through disposition of the facility. As of December 31, 2001, outstanding restructuring costs, excluding pension-related liabilities of $875 which were reclassified to employee benefit obligations, approximated $1,609 for employee severance of $914, estimated costs to restore the floor

17

Notes to Consolidated Financial Statements

of the facility as a result of damage caused by the removal of machinery, and estimated holding costs through disposition of the facility.

     Restructuring activity for 2002 was as follows:

		Jan 1 2002		Utilized/Paid			Charged (Reversed) to Income			Dec 31 2002
Employee costs	$	914	$	(1,054	)	$	140		$	—
Accrued liabilities and other costs		695		(114	)		(581	)		—
	$	1,609	$	(1,168	)	$	(441	)	$	—

     The remaining assets, consisting primarily of the land and building in Belgium which had a carrying value of approximately $170 as of December 31, 2001, were sold in July 2002 resulting in a gain of approximately $917. The sale took place much sooner than had been anticipated and the buyer purchased the building “as is”. Accordingly, the provision for costs to restore the floor of the facility as a result of damage caused by the removal of the machinery and remaining holding costs was reversed to income in the third quarter of 2002. In addition, restructuring and other charges include a credit of $221 relating to foreign currency adjustments.

Note 3 - Goodwill:

     The Corporation tested the goodwill attributable to each of its reporting units for impairment as of January 1, 2002. As a result, $4,452 of goodwill specific to the heat-transfer rolls unit of the Plastics Processing Machinery segment was written off and is recorded as a cumulative effect of accounting change, net of income taxes, in the accompanying consolidated statements of operations. The impairment arises from the severe downturn in the plastics processing industry resulting in reduced selling prices and a significant reduction in demand. The Corporation tested remaining goodwill as of January 1, 2003 and no impairment existed.

     Included in net income (loss) for 2001 and 2000 was goodwill amortization of $297 and $449, respectively. The following information reconciles previously reported net income (loss) and earnings per common share to the amounts adjusted for the exclusion of goodwill amortization:

	Year Ended December 31,
		2002		2001			2000
Net income (loss), as reported	$	2,261	$	(983	)	$	16,192
Add goodwill amortization, net of tax		—		193			292
Net income (loss), as adjusted	$	2,261	$	(790	)	$	16,484
Basic and diluted earnings per common share, as reported	$	0.23	$	(0.10	)	$	1.68
Goodwill amortization, net of tax		—		0.02			0.03
Basic and diluted earnings per common share, as adjusted	$	0.23	$	(0.08	)	$	1.71

     The changes in the carrying amount of goodwill for the year ended December 31, 2002 were as follows:

	Air and Liquid Processing		Plastics Processing Machinery		Total
Goodwill as of December 31, 2001	$	2,694	$	4,452	$	7,146
Write-off of goodwill		—		4,452		4,452
Goodwill as of December 31, 2002	$	2,694	$	—	$	2,694

Note 4 - Acquisitions/Divestitures:

     In June 2002, the Corporation sold the net assets, excluding primarily trade receivables and payables, of Formet Ltd., its small metals forging business in England, for approximately its net book value or $1,308. A loss of approximately $240 was recognized relating primarily to the release of foreign currency translation losses previously recorded as a component of accumulated other comprehensive loss. Of the estimated proceeds approximately $100, plus interest at the prevailing rate, is payable in June 2003.

     In May 2001, the Corporation sold the net assets, excluding primarily trade receivables and payables, of Turner Chilled Rolls Ltd., its small feed roll business in England, for approximately $1,060. A loss of approximately $152 was recognized and relates primarily to the release of foreign currency translation losses previously recorded as a component of accumulated other comprehensive loss. In March 2000, the Corporation sold the net assets, excluding primarily trade receivables, of the small roll division of Davy for its net book value of approximately $1,761.

18

     On October 27, 2000, the Corporation purchased the outstanding stock of a company which manufactures heat transfer rolls for approximately $2,462, which includes payoff of debt assumed. The company complements the Plastics Processing Machinery segment. The acquisition was accounted for as a purchase transaction in accordance with APB. No. 16, “Business Combinations”.

     The Corporation continues to evaluate potential acquisitions and/or disposals of existing businesses to ensure that long-term objectives of achieving maximum shareholder value are met.

Note 5 - Inventories:

	2002		2001
Raw materials	$	12,807	$	14,853
Work-in-process		23,216		20,915
Finished goods		5,943		6,699
Supplies		5,089		4,811
	$	47,055	$	47,278

     The carrying amount of inventories valued on the LIFO method approximates current cost at December 31, 2002 and 2001. Approximately 70% and 73% of the inventory was valued using the LIFO method in 2002 and 2001, respectively.

Note 6 - Borrowing Arrangements:

     The Corporation maintains short-term lines of credit of approximately $4,800. No amounts were outstanding under these lines of credit as of December 31, 2002 and 2001.

     As of December 31, 2002, the Corporation had the following Industrial Revenue Bonds (IRBs) outstanding: (1) $4,120 tax-exempt IRB maturing in 2020, interest at a floating rate which averaged 1.58% during the current year; (2) $7,116 taxable IRB maturing in 2027, interest at a floating rate which averaged 1.94% during the current year and (3) $2,075 tax-exempt IRB maturing in 2029, interest at a floating rate which averaged 1.58% during the current year. The IRBs are secured by letters of credit of equivalent amounts and require, among other things, maintenance of a minimum net worth and prohibits a leverage ratio in excess of a stipulated amount. The Corporation was in compliance with the applicable bank covenants as of December 31, 2002.

Note 7 - Other Current Liabilities:

	2002		2001
Customer-related liabilities	$	6,298	$	4,660
Restructuring liabilities		167		1,609
Other		7,736		6,869
	$	14,201	$	13,138

     Included in customer-related liabilities are costs expected to be incurred with respect to product warranties. The following summarizes changes in the liability for product warranty claims for the year ended December 31, 2002.

Balance as of January 1, 2002	$	3,247
Satisfaction of warranty claims		(3,061	)
Provision for warranty claims		2,857
Other, primarily impact from changes in exchange rates		228
Balance as of December 31, 2002	$	3,271

Note 8 - Pension and Other Postretirement Benefits:

Pension Plans

     The Corporation has defined benefit pension plans covering substantially all of its employees, some of which require employee contributions. Generally, the benefits are based on years of service multiplied by either a fixed amount or a percentage of compensation. For its pension plans covered by the Employee Retirement Income Security Act of 1974 (ERISA), the Corporation’s policy is to fund at least the minimum actuarially computed annual contribution required under ERISA. Employees at certain operations have 401(k) retirement savings plans in lieu of defined benefit pension programs for which the Corporation contributed approximately $100 in 2002, 2001 and 2000, respectively.

     During 2000, employees of Davy became participants in a newly created contributory defined benefit plan and prior thereto, were participants in the seller’s plans. The actuarially determined amounts of assets and liabilities were determined in 2001 and transferred from the seller’s plans to the new plan. The plan was determined to have a funding surplus of $6,435 as of the date of acquisition, which was recognized as a prepaid pension asset and a reduction to property, plant and equipment (as an adjustment to the bargain purchase originally recorded). As of December 31, 2002, the accumulated benefit obligations exceeded the fair value of the assets; accordingly, the funding surplus of $7,414 was eliminated and an additional minimum pension liability of $1,138 was recognized.

     The Corporation also maintains a nonqualified defined benefit plan to provide supplemental retirement benefits for selected executives in addition to benefits provided under the Corporate sponsored pension plans. The Corporation contributed $300 in 2001 and $1,000 in 2000 to a grantor tax trust known as a “Rabbi” trust. The assets of the trust are subject to claims of the Corporation’s creditors, but otherwise must be used only for purposes of providing benefits under the plan. The fair market value of the trust at December 31, 2002 and 2001, which is included in

19

Notes to Consolidated Financial Statements

other noncurrent assets, was $3,927 and $4,429, respectively. Changes in the fair market value of the trust are recorded as a component of other comprehensive loss. For financial reporting purposes, the plan is treated as a non-funded pension plan. The accumulated benefit obligation for the plan at December 31, 2002 and 2001 was $3,591 and $4,740, respectively, and is included in employee benefit obligations.

Other Postretirement Benefits

     The Corporation provides postretirement health care benefits principally to the bargaining groups of one subsidiary (the Plan). The Plan covers participants and their spouses and/or dependents who retire under the existing pension plan on other than a deferred vested basis and at the time of retirement have also rendered 15 or more years of continuous service irrespective of age. Other health care benefits are provided to retirees under plans no longer being offered by the Corporation. Retiree life insurance is provided to substantially all retirees. Postretirement benefits with respect to health care are subject to certain Medicare offsets.

     The Corporation also provides health care and life insurance benefits to former employees of discontinued operations. This obligation had been estimated and provided for at the time of disposal.

     The Corporation’s postretirement health care and life insurance plans are unfunded.

     The following provides a reconciliation of benefit obligations, plan assets, and funded status of the plans.

		U.S.Pension Benefits						Foreign Pension Benefits						Other Postretirement Benefits
		2002			2001			2002			2001			2002			2001
Change in benefit obligation:
	Benefit obligation at January 1	$	98,120		$	94,563		$	21,037		$	16,602		$	9,171		$	9,486
	Service cost		1,984			1,759			972			859			173			117
	Interest cost		6,815			6,771			1,409			1,090			748			634
	Foreign currency exchange rate changes		—			—			2,390			—			—			—
	Plan amendments		3,758			—			—			—			786			—
	Actuarial loss (gain)		3,248			(129	)		(2,061	)		2,774			2,468			(477	)
	Participant contributions		—			—			290			315			447			298
	Benefits paid from plan assets		(4,981	)		(4,720	)		(658	)		(603	)		—			—
	Benefits paid by Corporation		(148	)		(124	)		—			—			(1,340	)		(887	)
	Benefit obligation at December 31	$	108,796		$	98,120		$	23,379		$	21,037		$	12,453		$	9,171
Change in plan assets:
	Fair value of plan assets at January 1	$	131,282		$	143,481		$	18,602		$	22,095		$	—		$	—
	Actual return on plan assets		(11,671	)		(7,479	)		(3,639	)		(3,273	)		—			—
	Foreign currency exchange rate changes		—			—			1,967			—			—			—
	Corporate contributions		148			124			845			68			893			589
	Participant contributions		—			—			290			315			447			298
	Gross benefits paid		(5,129	)		(4,844	)		(658	)		(603	)		(1,340	)		(887	)
	Fair value of plan assets at December 31	$	114,630		$	131,282		$	17,407		$	18,602		$	—		$	—
Funded status of the plans		$	5,834		$	33,162		$	(5,972	)	$	(2,435	)	$	(12,453	)	$	(9,171	)
	Unrecognized actuarial loss (gain)		7,252			(20,968	)		13,386			9,811			2,845			384
	Unamortized prior service cost (benefit)		6,353			3,203			—			—			(1,655	)		(2,988	)
	Unrecognized net transition obligation		9			15			—			—			—			—
	Adjustment to recognize minimum liability		—			—			(7,414	)		—			—			—
	Accrued benefit cost		3,591			4,740			—			—			11,263			11,775
	Prepaid benefit cost	$	23,039		$	20,152		$	—		$	7,376		$	—		$	—

20

Net periodic pension and other postretirement benefit costs include the following components:

	U.S. Pension Benefits									Foreign Pension Benefits						Other Postretirement Benefits
	2002			2001			2000			2002			2001			2002			2001			2000
Service cost	$	1,984		$	1,759		$	1,534		$	972		$	2,002		$	173		$	117		$	106
Interest cost		6,815			6,771			6,452			1,409			2,441			748			634			667
Expected return on plan assets		(11,102	)		(10,642	)		(9,718	)		(1,429	)		(3,963	)		—			—			—
Amortization of prior service cost (benefit)		614			325			228			—			—			(548	)		(614	)		(614	)
Actuarial (gain) loss		(881	)		(654	)		(501	)		531			(8	)		7			(2	)		21
Net benefit (income) cost	$	(2,570	)	$	(2,441	)	$	(2,005	)	$	1,483		$	472		$	380		$	135		$	180

Assumptions as of December 31:

	2002		2001		2000		2002		2001		2002		2001		2000
Discount rate	6.50	%	7.25	%	7.25	%	5.75	%	6.25	%	6.50	%	7.25	%	7.25	%
Expected long-term rate of return on plan assets	8.50	%	8.50	%	8.50	%	7.50	%	7.50	%	—		—		—
Rate of increases in compensation	3.00	%	3.00	%	3.00	%	2.75	%	2.80	%	—		—		—

The assumed health care cost trend rate at December 31, 2002 for other postretirement benefits is 10% for 2003, gradually decreasing to 4.75%. A one percentage point increase or decrease in the assumed health care cost trend rate would change the postretirement benefit obligation at December 31, 2002 and the annual benefit expense for 2002 by approximately $1,200 and $100, respectively.

Note 9 - Authorized and Issued Shares:

Under the Corporation’s Shareholder Rights Plan, each outstanding share of common stock carries one Preference Share Purchase Right (a Right). The Rights are designed to assure that all shareholders receive equal treatment in the event of a potential acquisition of the Corporation or a change in control. Under certain circumstances, each Right entitles the shareholder to buy 1/100 of a share of Series A Preference Stock at a $45.00 exercise price. The Rights are exercisable only if a party acquires, or commences a tender offer to acquire, beneficial ownership of 20% or more of the Corporation’s common stock without the approval of the independent directors on the Corporation’s Board of Directors.

     After the Rights become exercisable, if anyone acquires 30% or more of the Corporation’s stock or assets, merges into the Corporation or engages in certain other transactions, each Right may be used to purchase shares of the Corporation’s common stock (or, under certain conditions, the acquirer’s common stock) worth twice the exercise price. The Corporation may redeem the Rights, which expire in November 2008, for one cent per Right under certain circumstances. At December 31, 2002, there are 3,000,000 shares of unissued preference stock, of which 150,000 shares have been designated as Series A Preference Stock for issuance in connection with these Rights.

Note 10 - Stock Option Plan:

Under the terms of the 1997 Stock Option Plan, as amended, options may be granted to selected employees to purchase, in the aggregate, up to 600,000 shares of the common stock of the Corporation. Options may be either incentive or non-qualified and are subject to terms and conditions, including exercise price and timing of exercise, as determined by the Stock Option Committee of the Board of Directors. The options vest at date of grant and have a ten-year life. To date, options have been granted at an exercise price equivalent to the market price on the date of grant; accordingly, no stock-based compensation costs are recorded in net income. The weighted average fair value of the options granted in April 2000 and December 2000, estimated on the date

21

Notes to Consolidated Financial Statements

of grant using the Black-Scholes option-pricing model, was $3.08 and $2.94, respectively, based on the following assumptions: dividend yield of 3.7% and 3.6%, expected volatility of 33.9% and 32.9%, risk-free interest rate of 6.4% and 5.3%, respectively, and an expected option life of 5 years. The following table illustrates the effect on net income and earnings per share if the Corporation had applied the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation.”

	Year Ended December 31,
	2002		2001			2000
Net income (loss), as reported	$	2,261	$	(983	)	$	16,192
Less stock-based employee compensation expense determined under fair value based method, net of tax		—		—			556
Net income (loss), as adjusted	$	2,261	$	(983	)	$	15,636
Basic and diluted earnings per common share, as reported	$	0.23	$	(0.10	)	$	1.68
Less stock-based employee compensation expense determined under fair value based method, net of tax		—		—			0.05
Basic and diluted earnings per common share, as adjusted	$	0.23	$	(0.10	)	$	1.63

Stock option activity during 2000-2002 was as follows:

	Shares Under Options		Exercise Price		Weighted Average Exercise Price
Balance at January 1, 2000	265,000				$	10.00
Granted during 2000	277,500		$	10.82
Exercised during 2000	(12,500	)	$	10.00
Balance at December 31, 2000	530,000				$	10.43
Exercised during 2001	(1,400	)	$	10.81
Balance at December 31, 2001	528,600				$	10.43
Exercised during 2002	(23,600	)	$	10.12
Balance at December 31, 2002	505,000				$	10.44

     Stock options outstanding and exerciseable as of December 31, 2002 were as follows:

Shares Under Options	Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life in Years
232,500	$	10.00	6.0
267,500		10.81	7.3
5,000		11.13	8.0
505,000	$	10.44	6.7

Note 11 - Financial Instruments:

Forward Foreign Exchange and Futures Contracts

     Certain of the Corporation’s operations are subject to risk from exchange rate fluctuations in connection with sales in foreign currencies. To minimize this risk, forward foreign exchange contracts are purchased which are designated as fair value hedges or, beginning in 2002, cash flow hedges. As of December 31, 2002, approximately $10,187 of anticipated foreign denominated sales have been hedged with the underlying contracts settling at various dates beginning in 2003 through December 2004. As of December 31, 2002, the fair value of contracts expected to settle within the next 12 months which is recorded in other current liabilities approximated $1,169 and the fair value of the remaining contracts which is recorded in other noncurrent liabilities approximated $286 at December 31, 2002. The change in the fair value of the contracts designated as cash flow hedges is recorded as a component of other comprehensive loss and approximated $544, net of taxes, as of December 31, 2002. The change in fair value will be reclassified into earnings when the projected sales occur with approximately $359 expected to be released to earnings within the next 12 months.

     Gains (losses) on foreign exchange transactions approximated $264, $(233) and $(96) for 2002, 2001 and 2000, respectively.

     In addition, one of the Corporation’s subsidiaries is subject to risk from increases in the price of a commodity used in the production of inventory. To minimize this risk, futures contracts are entered into which are designated as cash flow hedges. At December 31, 2002, approximately 100% or $1,979 of anticipated commodity purchases over the next 15 months are hedged. The fair value of the contracts expected to be settled within the next 12 months approximated $29 and the fair value of the remaining contracts approximated $15 as of December 31, 2002. The change in the fair value of the contracts designated as cash flow hedges is recorded as a component of other comprehensive loss and approximated $28, net of taxes, as of December 31, 2002. The

22

change in fair value will be reclassified into earnings when the projected sales occur with approximately $19 expected to be released to earnings within the next 12 months.

Fair Value of Financial Instruments

     The fair market value of forward foreign exchange contracts is determined based on the fair value of similar contracts with similar terms and remaining maturities. The fair value of futures contracts is based on market quotations. The fair value of other financial instruments classified as current assets or current liabilities approximates their carrying values due to the short-term maturity of these instruments. The fair value of the floating rate IRB debt approximates its carrying value.

Note 12 - Income Taxes:

At December 31, 2002, the Corporation had foreign tax credit carry forwards of $638, which expire in 2005. In addition, foreign net operating loss carry forwards approximated $6,475, which carry forward indefinitely. A valuation allowance is provided when it is more likely than not that some or all of a deferred tax asset will not be realized.

     Pre-tax accounting income was comprised of the following:

	2002			2001			2000
Domestic	$	10,416		$	9,758		$	22,092
Foreign		(624	)		(9,655	)		(150	)
	$	9,792		$	103		$	21,942

     The provision (benefit) for taxes on income consisted of the following:

		2002		2001			2000
Current:
	Federal	$	1,173	$	(1,437	)	$	2,993
	State		500		500			542
	Foreign		6		10			—
			1,679		(927	)		3,535
Deferred:
	Federal		2,771		2,141			2,335
	State		187		262			408
	Foreign		—		(390	)		(528	)
			2,958		2,013			2,215
		$	4,637	$	1,086		$	5,750

Deferred tax assets and liabilities comprised the following:

		2002			2001
Assets
	Employment-related Liabilities	$	6,278		$	6,627
	Pension liability - foreign		341			—
	Liabilities related to discontinued operations and restructurings		1,846			2,879
	Net operating loss - foreign		1,943			1,621
	Goodwill		874			—
	Other		3,840			3,153
	Gross deferred tax assets		15,122			14,280
	Valuation allowance		(6,454	)		(3,013	)
			8,668			11,267
Liabilities
	Depreciation		(15,701	)		(15,116	)
	Prepaid pensions		(9,216	)		(10,282	)
	Other		—			(603	)
	Gross deferred tax liabilities		(24,917	)		(26,001	)
	Net deferred tax liability	$	(16,249	)	$	(14,734	)

The difference between statutory U.S. federal income tax and the Corporation’s effective income tax was as follows:

	2002			2001			2000
Computed at statutory rate	$	3,427		$	36		$	7,680
Foreign income taxes		167			101			24
State income taxes		325			325			352
Valuation allowance		869			658			300
Foreign tax credits		—			—			(1,307	)
Federal tax credits		—			—			(312	)
Other permanent items – net		(151	)		(34	)		(987	)
	$	4,637		$	1,086		$	5,750

Note 13 - Operating Leases:

The Corporation leases certain factory and office space and certain office equipment. Operating lease payments were $1,255 in 2002, $1,130 in 2001 and $1,171 in 2000. Operating lease payments for subsequent years are $964 for 2003, $709 for 2004, $515 for 2005, $121 for 2006, $29 for 2007 and $37 thereafter.

23

Notes to Consolidated Financial Statements

Note 14 - Research and Development Costs:

Expenditures relating to the development of new products, identification of products or process alternatives, and modifications and improvements to existing products and processes are expensed as incurred. These expenses approximated $1,000 for 2002, 2001 and 2000, respectively.

Note 15 - Related Parties:

The Corporation purchased industrial supplies from The Louis Berkman Company (LB Co) in the ordinary course of business. Certain directors of the Corporation are either officers, directors and/or shareholders of LB Co. The amounts purchased approximated $1,850 in 2002 and $1,600 in 2001 and 2000, respectively. In addition, LB CO paid the Corporation approximately $235 in 2002, $188 in 2001 and $172 in 2000 for certain administrative services. At December 31, 2002 and 2001, the net amount payable to LB CO approximated $106 and $142, respectively.

Note 16 - Litigation:

The Corporation and its subsidiaries are involved in various claims and lawsuits incidental to their businesses. In addition, claims have been asserted alleging personal injury from exposure to asbestos-containing components historically used in some products of certain of the Corporation’s subsidiaries. As of December 31, 2002, those subsidiaries, and in some cases, the Corporation were defendants (among a number of defendants, typically over 50 and often over 100) in cases filed in various state and federal courts involving approximately 16,339 claimants. Most of the claims were made in a small number of lawsuits filed in Mississippi in 2002. The filings do not typically identify specific products as a source of asbestos exposure. The Corporation’s aggregate gross settlement costs including defense costs in 2002 were approximately $420, substantially all of which was paid by insurance. Eight cases involving 17 claimants have been dismissed in 2002 without any payment.

     On February 7, 2003, Utica Mutual Insurance Company (“Utica”) filed a lawsuit in the Supreme Court of the State of New York, County of Oneida, against the Corporation and certain of the subsidiaries named in the underlying asbestos actions (the “Policyholder Defendants”) and three other insurance carriers that provided primary coverage to the Corporation (the “Insurer Defendants”). In the lawsuit, Utica has alleged (i) it has no coverage obligation for years where the Policyholder Defendants cannot establish the existence of insurance contracts or coverage, where exposure occurred outside of the Utica policy periods or with respect to allegedly excluded products; (ii) the Policyholder Defendants breached the insurance contracts; and (iii) the Insurer Defendants have defense and indemnity obligations under insurance contracts they have issued to Policyholder Defendants. Utica is seeking a declaratory judgment from the court on these issues and recoupment of amounts it has already paid. Although the outcome of this action cannot be predicted with certainty, the Corporation believes that the lawsuit ultimately should benefit all parties by defining the obligations of Utica and the Insurer Defendants to the Corporation and that the majority of the defense and indemnity costs of the pending cases ultimately will be covered by the appropriate insurance policies.

     Based on the Corporation’s claims experience to date, insurance coverage and the identity of the subsidiaries that are named in the cases, the Corporation believes that the pending legal proceedings will not have a material adverse effect on its consolidated financial condition or liquidity. The outcome of any of the particular lawsuits, however, could be material to the consolidated results of operations of the period in which the costs, if any, are recognized. There can be no assurance that the Corporation or certain of its subsidiaries will not be subjected to significant additional claims in the future or that the Corporation’s or its subsidiaries’ ultimate liability with respect to these claims will not present significantly greater and longer lasting financial exposure than presently contemplated. Although it is probable that future costs will be incurred, the amounts cannot reasonably be estimated. Accordingly, the Corporation has not made an accrual for such costs in its financial statements. In addition, the Corporation has recently retained a law firm to advise it on all matters pertaining to these asbestos cases. As a result, the Corporation incurred uninsured legal costs approximating $400 in 2002 and expects that such costs may exceed $1,000 in 2003.

Note 17 - Environmental Matters:

The Corporation is currently performing certain remedial actions in connection with real estate previously owned and has been named a Potentially Responsible Party at one third-party landfill site used by a division also previously owned. In the second quarter of 2001, the Corporation recorded an additional $550 for costs estimated to be incurred with respect to the remediation of real estate sold in 1996. As of December 31, 2002 and 2001, other liabilities include anticipated costs of likely remediation and other related actions, which are not material to the balance sheet.

     Environmental exposures are difficult to assess and estimate for numerous reasons including the lack of reliable data, the multiplicity of possible solutions, the years of remedial and monitoring activity required, and the identification of new sites. While it is not possible to quantify with certainty the environmental exposure, in the opinion of management, the potential liability for all environmental proceedings, based on information known to date and the estimated quantities of waste at these sites, will not have a material adverse effect on the financial condition, results of operations or liquidity of the Corporation.

24

Note 18 - Business Segments:

     The Corporation organizes its business into three operating segments. The accounting policies are the same as those described in Note 1. In the fourth quarter 2002, the Corporation began evaluating the performance of its segments based solely on income from operations without an allocation of corporate expenses to give it the ability to focus on actual operating performance of each of the segments. The Corporation previously evaluated the performance of its segments based on income from operations after allocating corporate expenses based on a sales, property, and payroll formula. Prior year information has been restated to conform to the 2002 presentation.

     Summarized financial information concerning the Corporation’s reportable segments is shown in the following tables. Corporate assets included under Identifiable Assets represent cash and cash equivalents, deferred tax assets, prepaid pensions and other items not allocated to reportable segments. Long-lived assets exclude deferred tax assets.

	Net Sales						Income (Loss) Before Taxes
	2002		2001		2000		2002			2001			2000
Forged and Cast Rolls (1)	$	95,901	$	96,879	$	113,134	$	4,093		$	(4,920	)	$	12,997
Air and Liquid Processing (2)		91,855		94,964		80,266		11,547			11,105			10,539
Plastics Processing Machinery		24,620		27,324		34,628		(1,171	)		(155	)		2,984
Total Reportable Segments		212,376		219,167		228,028		14,469			6,030			26,520
Other income (expense), including corporate costs		—		—		—		(4,677	)		(5,927	)		(4,578	)
Total	$	212,376	$	219,167	$	228,028	$	9,792		$	103		$	21,942

	Capital Expenditures						Depreciation Expense						Identifiable Assets
	2002		2001		2000		2002		2001		2000		2002		2001		2000
Forged and Cast Rolls	$	3,208	$	6,334	$	7,947	$	4,254	$	4,379	$	4,351	$	112,159	$	121,037	$	124,568
Air and Liquid Processing		936		2,005		2,684		1,866		1,756		1,633		44,647		48,776		46,994
Plastics Processing Machinery		1,465		1,006		2,487		1,467		1,573		1,409		22,912		27,858		31,762
Corporate		40		78		52		43		39		32		55,332		43,900		41,140
Total	$	5,649	$	9,423	$	13,170	$	7,630	$	7,747	$	7,425	$	235,050	$	241,571	$	244,464

	Net Sales (3)						Long-Lived Assets						Income (Loss) Before Taxes
Geographic Areas:	2002		2001		2000		2002		2001		2000		2002			2001			2000
United States (2)	$	144,002	$	147,992	$	152,887	$	112,197	$	117,010	$	112,790	$	10,416		$	9,758		$	22,092
Foreign (1)		68,374		71,175		75,141		2,343		9,663		10,691		(624	)		(9,655	)		(150	)
Total	$	212,376	$	219,167	$	228,028	$	114,540	$	126,673	$	123,481	$	9,792		$	103		$	21,942

(1)	Income (loss) before taxes for 2001 was impacted by restructuring and other charges of $7,280.
(2)	Income (loss) before taxes for 2001 was impacted by litigation costs of $2,378.
(3)	Net sales are attributed to countries based on location of customer.

25

Quarterly Information-Unaudited

(in thousands, except per share amounts)

2002		First Quarter			Second Quarter		Third Quarter		Fourth Quarter		Year
	Net sales	$	54,699		$	57,524	$	53,978	$	46,175	$	212,376
	Gross profit (1)		12,037			13,103		11,706		10,772		47,618
	Income before cumulative effect of change in accounting for goodwill		1,219			2,100		1,267		569		5,155
	Net income (loss) (2)		(1,675	)		2,100		1,267		569		2,261
	Basic and diluted earnings per common share:
	Income before cumulative effect of
	change in accounting for goodwill		0.13			0.22		0.13		0.06		0.53
	Net income (loss)		(0.17	)		0.22		0.13		0.06		0.23

2001		First Quarter			Second Quarter			Third Quarter		Fourth Quarter		Year
	Net sales	$	56,168		$	56,621		$	53,368	$	53,010	$	219,167
	Gross profit (1)		13,396			12,265			11,905		11,759		49,325
	Net income (loss) (3)		(2,700	)		(784	)		1,641		860		(983	)
	Basic and diluted earnings per common share:
	Net income (loss)		(0.28	)		(0.08	)		0.17		0.09		(0.10	)

(1)	Gross profit as used herein does not include a charge for depreciation.
(2)	Net income was impacted by the write off of goodwill of $2,894, net of tax, in the first quarter.
(3)	Net income (loss) was impacted by pre-tax restructuring and other charges of $6,920 and $360 in the first and second quarters, respectively, as well as pre-tax litigation costs of $117, $1,911 and $350 in the first, second and third quarters, respectively.

Common Stock Information

The shares of common stock of Ampco-Pittsburgh Corporation are traded on the New York Stock Exchange (symbol AP) and on the Philadelphia Stock Exchange. Cash dividends have been paid on common shares in every year since 1965.

Quarter	High		2002 Dividends Low		Declared		High		2001 Dividends Low		Declared
First	$	11.85	$	10.40	$	0.10	$	13.31	$	11.45	$	0.10
Second		12.35		11.46		0.10		11.75		10.32		0.10
Third		12.17		9.81		0.10		12.51		8.94		0.10
Fourth		12.81		9.81		0.10		10.75		8.90		0.10
Year		12.81		9.81	$	0.40		13.31		8.90	$	0.40

26

Five-Year Summary of Selected Financial Data 2002

(dollars, except per share amounts, and shares outstanding in thousands)

		Year Ended December 31,
		2002(1)		2001(2)			2000		1999(3)		1998
Net sales		$	212,367	$	219,167		$	228,028	$	214,157	$	190,086
Net income (loss) from continuing operations			2,261		(983	)		16,192		15,144		15,667
Total assets			235,050		241,571			244,464		235,808		211,811
Long-term obligations			13,311		13,311			14,661		14,661		12,586
Shareholders’ equity			150,021		157,407			162,477		152,620		142,299
Basic and diluted earnings per common share:
	Income (loss) from continuing operations		0.23		(0.10	)		1.68		1.58		1.64
Per share:
	Cash dividends declared		0.40		0.40			0.40		0.40		0.37
	Shareholders’ equity		15.57		16.38			16.92		15.91		14.86
	Market price at year end		12.16		10.75			12.00		10.13		10.88
Weighted average shares outstanding			9,625		9,605			9,601		9,586		9,578
Number of shareholders			891		929			1,027		1,138		1,226
Number of employees			1,448		1,618			1,817		1,886		1,350

(1)	Net income (loss) from continuing operations includes the after-tax write off of goodwill of $2,894.
(2)	Net income (loss) from continuing operations includes pre-tax restructuring and other charges of $7,280 and pre-tax litigation costs of $2,378.
(3)	Includes August 2, 1999 acquisition of Davy.

Report of Independent Accountants

Deloitte & Touche

To the Board of Directors and Shareholders of Ampco-Pittsburgh Corporation:

     We have audited the accompanying consolidated balance sheets of Ampco-Pittsburgh Corporation and subsidiaries as of December 31, 2002 and 2001, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2002 set forth on pages 11 through 25. These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

     In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Ampco-Pittsburgh Corporation and subsidiaries as of December 31, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America.

     As discussed in Note 1 to the consolidated financial statements, on January 1, 2002 the Corporation changed its method of accounting for goodwill to adopt Statement of Financial Standard No. 142, “Goodwill and Other Intangible Assets”.

/s/ DELOITTE & TOUCHE LLP

Pittsburgh, Pennsylvania

February 10, 2003

27

Directors and Officers

Louis Berkman(1)
	Director
	Chairman of the Board
	President, The Louis Berkman Company
Robert A. Paul(1)
	Director
	President and Chief Executive Officer
Ernest G. Siddons(1)
	Director
	Executive Vice President and
	Chief Operating Officer
Leonard M. Carroll(1)(2)(3)
	Director
	Managing Director
	Seneca Capital Management, Inc.
William D. Eberle(2)(3)
	Director
	Private Investor
Paul A. Gould
	Director
	Managing Director
	Allen & Company, Inc.
Laurence E. Paul
	Director
	Managing Principal, Laurel Crown Capital
Stephen E. Paul
	Director
	Managing Principal, Laurel Crown Capital
Carl H. Pforzheimer, III(2)(3)
	Director
	Managing Partner, Carl H. Pforzheimer & Co.
Rose Hoover
	Vice President and Corporate Secretary
Dee Ann Johnson
	Vice President, Controller and Treasurer
Terrence W. Kenny
	Group Vice President
Robert F. Schultz
	Vice President Industrial Relations
	and Senior Counsel
	(1) Member of the Executive Committee
	(2) Member of the Audit Committee
	(3) Member of the Salary, Stock Option and Nominating Committees

Operating Companies

Union Electric Steel Corporation
	www.uniones.com
	Carnegie, Pennsylvania
	Robert G. Carothers, President
	Subsidiary Company:
	The Davy Roll Company, Gateshead, England
New Castle Industries, Inc.
	www.newcas.com
	New Castle, Pennsylvania
	Thomas A. Doland, President
	Subsidiary Companies:
	F.R. Gross Company, Stow, Ohio
	Bimex Industries, Wales, Wisconsin
	Keystone Rolls, Wheatland, Pennsylvania
Aerofin Corporation
	www.aerofin.com
	Lynchburg, Virginia
	David L. Corell, President
Buffalo Air Handling Company
	www.buffaloair.com
	Amherst, Virginia
	William R. Phelps, President
Buffalo Pumps, Inc.
	www.buffalopumps.com
	North Tonawanda, New York
	Charles R. Kistner, President

28

Shareholder Information 2002

Corporate Headquarters
	600 Grant Street, Suite 4600
	Pittsburgh, PA 15219
	(412) 456-4400
Corporate Website
	www.ampcopittsburgh.com
Transfer Agent, Registrar, Dividend Paying Agent
	Mellon Investor Services LLC
	www.melloninvestor.com
	P.O. Box 3315
	South Hackensack, NJ 07606
	Phone: (800) 756-3353
	TDD for Hearing Impaired: (800) 231-5469
Annual Meeting
	The Annual Meeting of Shareholders will be held at 600 Grant Street, 33rd Floor Conference Room, Pittsburgh, PA 15219 on Tuesday, April 22, 2003 at 10:00 a.m.
10K Report
	A copy of Ampco-Pittsburgh Corporation's Annual Report on Form 10K as filed with the Securities and Exchange Commission is available without charge to shareholders upon written request to the Corporate Secretary at the Headquarters address above. It can also be accessed from our website without charge.
2002 Annual Report
	This Annual Report and the statements contained herein are submitted for the general information of the shareholders of Ampco-Pittsburgh Corporation and are not intended for use in connection with or to induce the sale or purchase of securities.
Employment Policy
	The Corporation is an Equal Opportunity Employer.

29

EX-21

Exhibit 21

SUBSIDIARIES

Name	Ownership	Jurisdiction of Incorporation
3048568 Nova Scotia Company	100% owned by Union Electric Steel Corporation	Nova Scotia
AP Venture Corp. III	100% owned by Ampco-Pittsburgh Corporation	Delaware
Aerofin Corporation	100% owned by Ampco-Pittsburgh Securities V Corporation	New York
Ampco NCII Sub, Inc.	100% owned by New Castle Industries, Inc.	Delaware
Ampco-Pittsburgh Securities III Corporation	100% owned by Ampco-Pittsburgh Corporation	Delaware
Ampco-Pittsburgh Securities V Corporation	100% owned by Ampco-Pittsburgh Corporation	Delaware
Ampco UES Sub, Inc.	100% owned by Union Electric Steel Corporation	Delaware
Atlantic Grinding & Welding, Inc.	100% owned by Ampco NCII Sub, Inc.	Pennsylvania
Bimex Industries, Inc.	100% owned by Ampco NCII Sub, Inc.	Delaware
Buffalo Air Handling Company	100% owned by Ampco-Pittsburgh Corporation	Delaware
Buffalo Pumps, Inc.	100% owned by Ampco-Pittsburgh Corporation	Delaware
F. R. Gross Co., Inc.	100% owned by Ampco-Pittsburgh Securities V Corporation	Pennsylvania
Keystone Rolls Company	100% owned by Ampco NCII Sub, Inc.	Pennsylvania
New Castle Industries, Inc.	100% owned by Ampco UES Sub, Inc.	Pennsylvania

SUBSIDIARIES (Cont’)

Name	Ownership	Jurisdiction of Incorporation
Union Electric Steel Corporation	100% owned by Ampco-Pittsburgh Securities V Corporation	Pennsylvania
Union Electric Steel B.V.B.A.	100% owned by 3048568 Nova Scotia Company	Belgium
Union Electric Steel (UK) Limited	100% owned by Ampco UES Sub, Inc.	England
The Davy Roll Company Limited	100% owned by Union Electric Steel (UK) Limited	England

     The financial statements of all subsidiaries have been consolidated with those of the Corporation. Names of other subsidiaries have been omitted because, considered in the aggregate as a single subsidiary, they would not constitute a significant subsidiary.

EX-23

Exhibit 23

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in Registration Statements on Form S-8 for the 1997 Stock Option Plan of Ampco-Pittsburgh Corporation filed with the Securities and Exchange Commission on March 26, 1999 and May 25, 2000 of our reports dated February 10, 2003, appearing in and incorporated by reference in this Annual Report on Form 10-K of Ampco-Pittsburgh Corporation for the year ended December 31, 2002.

/S/ DELOITTE & TOUCHE LLP

Pittsburgh, Pennsylvania

March 1, 2003

EX-99.1

Exhibit 99.1

AMPCO-PITTSBURGH CORPORATION

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Ampco-Pittsburgh Corporation (the “Corporation”) on Form 10-K for the period ending December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert A. Paul, Chief Executive Officer of the Corporation, certify to my knowledge, pursuant to 18 U.S.C. Section 1350 (including subsections (a) (b) and (c) thereof), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of section13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/ ROBERT A. PAUL

Robert A. Paul

Chief Executive Officer

March 13, 2003

EX-99.2

Exhibit 99.2

AMPCO-PITTSBURGH CORPORATION

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Ampco-Pittsburgh Corporation (the “Corporation”) on Form 10-K for the period ending December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Marliss D. Johnson, Vice President, Controller and Treasurer of the Corporation, certify to my knowledge, pursuant to 18 U.S.C. Section 1350 (including subsections (a) (b) and (c) thereof), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of section13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/ MARLISS D. JOHNSON

Marliss D. Johnson

Vice President, Controller and Treasurer

Chief Financial Officer

March 13, 2003