PARK OHIO INDUSTRIES INC/OH - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K
(MARK ONE)

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

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

OR

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

FOR THE TRANSITION PERIOD FROM _________________ TO _________________

COMMISSION FILE NUMBER 333-43005

PARK-OHIO INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

OHIO 34-6520107
- ----------------------------------------------------- -----------------------------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)

23000 EUCLID AVENUE
CLEVELAND, OHIO 44117
- ----------------------------------------------------- -----------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

Registrant's telephone number, including area code: (216) 692-7200

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

NONE

PURSUANT TO A CORPORATE REORGANIZATION EFFECTIVE JUNE 15, 1998, PARK-OHIO
INDUSTRIES, INC. BECAME A WHOLLY-OWNED SUBSIDIARY OF PARK-OHIO HOLDINGS CORP.

THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS I 1(a) AND
(b) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE
FORMAT.

Indicate by check mark whether the registrant (1) has filed 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. Yes [X] No [ ]

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]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes [ ] No [X]

All of the outstanding stock of the registrant is held by Park-Ohio
Holdings Corp. As of March 27, 2003, 100 shares of the registrant's common stock
$1 par value, were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE: NONE

PART I

ITEM 1. BUSINESS

THE COMPANY

Park-Ohio Industries, Inc. ("Park-Ohio"), a wholly-owned subsidiary of
Park-Ohio Holdings Corp. ("Holdings") was incorporated as an Ohio corporation in
1985. Park-Ohio, primarily through its subsidiaries, is a leading provider of
supply chain logistics services and a manufacturer of highly engineered
products. Reference herein to the "Company" includes, where applicable,
Holdings, Park-Ohio and its direct and indirect subsidiaries.

The Company operates through three segments, Integrated Logistics Solutions
("ILS"), Aluminum Products and Manufactured Products. ILS is a leading supply
chain logistics provider of production components to large, multinational
manufacturing companies, other manufacturers and distributors. In connection
with the supply of such production components, ILS provides a variety of
value-added, cost-effective supply chain management services. The principal
customers of ILS are in the semiconductor equipment, heavy-duty truck,
industrial equipment, aerospace and defense, electrical controls, heating,
ventilating and air-conditioning ("HVAC"), vehicle parts and accessories,
appliances and lawn and garden equipment industries. Aluminum Products
manufactures cast aluminum components for automotive, agricultural equipment,
heavy-duty truck and construction equipment manufacturers. Aluminum Products
also provides value-added services such as design and engineering, machining and
assembly. Manufactured Products operates a diverse group of niche manufacturing
businesses that design and manufacture a broad range of high quality products
engineered for specific customer applications. The principal customers of
Manufactured Products are original equipment manufacturers ("OEMs") and
end-users in the aerospace, automotive, steel, forging, railroad, truck, oil,
food processing and consumer appliance industries. As of December 31, 2002, the
Company employed approximately 2,900 persons.

OPERATIONS

The following chart highlights the Company's three business segments, the
primary industries they serve and the key products they sell.

INTEGRATED LOGISTICS SOLUTIONS

ILS is a leading provider of cross-industry supply chain management
services and specializes in the process of planning, implementing, and managing
the physical flow of production components to large multinational manufacturing
companies from the point of manufacturing to the point of use. ILS generated net
sales of $398.1 million, or 63% of the Company's net sales, for the year ended
December 31, 2002. ILS operates supply chain logistics facilities, throughout
the United States, Canada, Puerto Rico, Mexico and England. ILS continues to
consolidate its network of branches to reduce costs and serve its customers more
efficiently.

Large, multinational manufacturing companies continue to make it a priority
to reduce their total cost of production components. Administrative and overhead
costs to source, plan, purchase, quality-assure, inventory and handle production
components comprise a large portion of total cost. ILS has the size, experience,
highly-customized computer system and focus to reduce these costs substantially
while providing reliable just-in-time delivery directly to the point of use.

Products and Services. Supply chain management services, which is ILS'
primary focus for future growth, involves offering customers comprehensive,
on-site management for most of their production component needs. Some production
components are characterized by low per unit supplier prices relative to the
indirect costs of supplier management, quality assurance, inventory management
and delivery to the production line. In addition, ILS delivers an increasingly
broad range of higher cost production components including valves, fittings,
steering components and many others. Supply chain management customers receive
various value-added services, such as part usage and cost analysis, supplier
selection, quality assurance, bar coding, product packaging and tracking,
just-in-time delivery, electronic billing services and ongoing technical
support. ILS also provides engineering and design services to its customers.
Applications-engineering specialists and the direct sales force work closely
with the engineering staff of OEM customers to recommend the appropriate
production components for a new product or to suggest alternative components
that reduce overall production costs, streamline assembly or enhance the
appearance or performance of the end product. Recently, ILS has begun to provide
as an additional service, spare parts and aftermarket products to the final end
user of its customers' products.

Supply chain management services are typically provided to customers
pursuant to sole-source supply chain services contracts. These agreements enable
ILS' customers to both reduce procurement costs and better focus on their core
manufacturing competencies by: (i) significantly reducing the cost of production
component procurement by outsourcing many internal purchasing, quality assurance
and inventory fulfillment responsibilities; (ii) reducing the amount of working
capital invested in inventory; (iii) achieving purchasing efficiencies and cost
reductions as a result of supplier consolidation; and

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(iv) receiving technical expertise in the selection of production components for
certain manufacturing processes. The Company believes that such agreements
foster longer-lasting supply relationships with customers, who increasingly rely
on ILS for their production component needs, as compared to traditional buy/sell
distribution relationships. Sales pursuant to sole-source supply chain service
contracts have increased significantly in recent years and represented over 72%
of ILS' sales in 2002. ILS' remaining sales are generated through the wholesale
supply of industrial products to other manufacturers and distributors pursuant
to master or authorized distributor relationships.

ILS also engineers and manufactures precision cold formed and cold extruded
products including locknuts, SPAC(R) nuts and wheel hardware, which are
principally used in applications where controlled tightening is required due to
high vibration. ILS produces both standard items and specialty products to
customer specifications, which are used in large volumes by customers in the
automotive, truck and railroad industries.

Markets and Customers. In 2002, approximately 78% of ILS' net sales were
to domestic customers. Remaining sales were primarily to manufacturing
facilities of large, multinational customers located in Canada, Mexico and the
United Kingdom. Supply chain management services and production components are
used extensively in a variety of industries, and demand is generally related to
the state of the economy and to the overall level of manufacturing activity.

ILS markets and sells its services to over 10,000 customers domestically
and internationally. The principal markets served by ILS are semiconductor
equipment, heavy duty truck, industrial equipment, aerospace and defense,
electrical controls, HVAC, vehicle parts and accessories, appliances, and lawn
and garden equipment industries. The ten largest customers, within which ILS
sells through sole-source contracts to multiple operating divisions or
locations, accounted for approximately 40% of sales of ILS in 2002. Three of the
ten largest customers are in the heavy-duty truck industry. The loss of any one
of these customers would have a material adverse effect on this segment.

Competition. There are a limited number of companies who compete with ILS
for supply chain service contracts. ILS competes primarily on the basis of its
value-added services, which includes sourcing, engineering and delivery
capabilities, geographic reach, extensive product selection, price and
reputation for high service levels with primarily domestic competitors who are
capable of providing supply chain logistics services.

ALUMINUM PRODUCTS

The Aluminum Products segment generated net sales of $106.2 million, or 17%
of the Company's net sales, for the year ended December 31, 2002. Management
believes Aluminum Products is one of the few part suppliers that has the
capability to provide a wide range of high volume, high quality permanent mold,
sand-cast, die-cast and lost-foam products. Aluminum Products casts and machines
these products at three plants in two states. During the past two years,
Aluminum Products substantially improved its operating efficiency by
consolidating manufacturing facilities.

Aluminum Products' cast aluminum parts are manufactured for automotive,
agricultural equipment, heavy-duty truck and construction equipment OEMs
primarily located in North America. Aluminum Products' principal products
include: transmission pump housings, intake manifolds, planetary pinion
carriers, oil filter adapters, clutch retainers, bearing cups, brackets, oil
pans and flywheel spacers. Aluminum Products also provides value-added services
such as machining, drilling, tapping and part assembly. Although these parts are
lightweight, they possess high durability and integrity characteristics even
under extreme pressure and temperature conditions. Demand by OEMs for aluminum
castings has increased in recent years as OEMs have sought lighter alternatives
to heavier steel and iron components. Lighter aluminum cast components increase
an automobile's fuel efficiency without decreasing structural integrity.
Management believes this replacement trend will continue as end-users and
government standards regarding automotive fuel efficiency become increasingly
stringent. The five largest customers, of which Aluminum Products sells to
multiple operating divisions through sole source contracts, accounted for
approximately 84% of Aluminum Products sales in 2002. The loss of any one of
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these customers would have a material adverse effect on this segment. The
domestic aluminum castings industry is highly competitive. Aluminum Products
competes principally on the basis of its ability to: (i) engineer and
manufacture high quality, cost effective, machined castings utilizing multiple
casting technologies in large volumes; (ii) provide timely delivery; and (iii)
retain the manufacturing flexibility necessary to quickly adjust to the needs of
its customers. Although there are a number of smaller domestic companies with
aluminum casting capabilities, the customers' stringent quality and service
standards enable only large suppliers with the requisite quality certifications
to compete effectively. As one of these suppliers, Aluminum Products is
structured to benefit as customers continue to consolidate their supplier base.

MANUFACTURED PRODUCTS

The Manufactured Products segment includes businesses involved in the
manufacturing of induction systems, rubber products, forged and machined
products, and other capital equipment. Manufactured Products generated net sales
of $130.2 million, or 20% of the Company's net sales, for the year ended
December 31, 2002. The five largest customers, within which Manufactured
Products sells primarily through sole-source contracts to multiple operating
divisions, accounted for approximately 25% of Manufactured Products sales in
2002. The loss of business from any one of these customers would have an adverse
effect on this segment.

The Company's induction heating and melting business, Ajax Tocco
Magnethermic ("Ajax Tocco"), specializes in the engineering, construction,
service, and repair of induction systems primarily for the steel, coatings,
forging, foundry, automotive and construction equipment industries. Ajax Tocco's
induction systems are engineered and built to customer specifications and are
used primarily for melting, heating, and surface hardening of metals and curing
of coatings. Approximately half of Ajax Tocco's revenue is derived from the sale
of replacement parts and provision of field service, primarily for the installed
base of its own products. Ajax Tocco competes with small- to medium-sized,
domestic and international equipment manufacturers on the basis of service
capability, ability to meet customer specifications, delivery performance and
engineering expertise.

The Company manufactures injection molded rubber and silicone products for
use in automotive and industrial applications. The rubber products facilities
manufacture products for customers in the automotive, food processing and
consumer appliance industries. Their products include wire harnesses, shock and
vibration mounts, spark plug boots and nipples and general sealing gaskets.
During 2002, the Company reduced rubber products' costs and discontinued
underperforming products by selling one business unit and closing one other
manufacturing plant. The rubber products operating units compete primarily on
the basis of price and product quality with other domestic small- to
medium-sized manufacturers of injection molded rubber and silicone products.

The Company produces forged and machined products consisting of closed-die
metal forgings of up to 6,000 pounds, including crankshafts and aircraft landing
gears. Some forged products are sold primarily to machining companies, and
sub-assemblers who finish the products for sale to OEMs in the railroad and
aerospace industries. The Company also machines, induction hardens and surface
finishes crankshafts and camshafts used primarily in locomotives. In 2002, the
Company opened a new manufacturing facility, which began shipping forged rail
products in early 2003. Forged and machined products are sold to a wide variety
of domestic and international OEMs and other manufacturers, primarily in the
transportation industries. The Company's forged and machined products business
competes domestically and internationally with other small- to medium-sized
businesses on the basis of product quality and precision.

The Company also produces other capital equipment including pipe threading
equipment and related parts for the oil drilling industry, and complete oven
systems that combine heat processing and curing technologies with material
handling and conveying methods. Through 2001, the Company engineered,
manufactured and serviced mechanical forging presses for the automotive and
truck manufacturing industries. The Company continues to provide some spare
parts and field service for the existing

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installed base of forging presses. These capital equipment units compete with
small to medium-sized domestic and international equipment manufacturers on the
basis of service capability, ability to meet customer specifications, delivery
performance and engineering expertise.

SALES AND MARKETING

ILS markets its products and services in the United States, Mexico, Canada
and Europe, primarily through its direct sales force, which is assisted by
applications engineers who provide the technical expertise necessary to assist
the engineering staff of OEM customers in designing new products and improving
existing products. Aluminum Products primarily markets and sells its products in
North America through internal sales personnel. Manufactured Products primarily
markets and sells its products in North America through both internal sales
personnel and independent sales representatives. Induction heating and pipe
threading equipment is also marketed and sold in Asia, Latin America and North
Africa through both internal sales personnel and independent sales
representatives. In some instances, the internal engineering staff assists in
the sales and marketing effort through joint design and applications-engineering
efforts with major customers.

RAW MATERIALS AND SUPPLIERS

ILS purchases substantially all of its production components from
third-party suppliers. Aluminum Products and Manufactured Products purchase
substantially all of their raw materials, principally metals and certain
component parts incorporated into their products, from third-party suppliers and
manufacturers. Management believes that raw materials and component parts other
than certain specialty products are available from alternative sources. ILS has
multiple sources of supply for its products. Approximately 25% of ILS' delivered
components are purchased from suppliers in foreign countries, primarily Taiwan,
South Korea and China. The Company is dependent upon the ability of such
suppliers to meet stringent quality and performance standards and to conform to
delivery schedules. Most raw materials required by Aluminum Products and
Manufactured Products are commodity products available from several domestic
suppliers.

CUSTOMER DEPENDENCE

The Company has thousands of customers who demand quality, delivery and
service. Numerous customers have recognized our performance by awarding the
Company with supplier quality awards. Ford Motor Company is the only customer
accounting for more than 10% of consolidated sales within the past three years
(only in the year 2000).

BACKLOG

Management believes that backlog is not a meaningful measure for ILS, as a
majority of ILS' customers require just-in-time delivery of production
components. Management believes that Aluminum Products' and Manufactured
Products' backlog as of any particular date is not a meaningful measure of sales
for any future period as a significant portion of sales are on a release or firm
order basis.

ENVIRONMENTAL REGULATIONS

The Company is subject to numerous federal, state and local laws and
regulations designed to protect public health and the environment
("Environmental Laws"), particularly with regard to discharges and emissions, as
well as handling, storage, treatment and disposal, of various substances and
wastes. Pursuant to certain Environmental Laws, owners or operators of
facilities may be liable for the costs of response or other corrective actions
for contamination identified at or emanating from current or former locations,
without regard to whether the owner or operator knew of, or was responsible for,
the presence of any such contamination, and for related damages to natural
resources. Additionally, persons who arrange for the disposal or treatment of
hazardous substances or materials may be liable

5

for costs of response at sites where they are located, whether or not the site
is owned or operated by such person.

In general, the Company has not experienced difficulty in complying with
Environmental Laws in the past, and compliance with Environmental Laws has not
had a material adverse effect on the Company's financial condition, liquidity
and results of operations. The Company's capital expenditures on environmental
control facilities were not material during the past five years and such
expenditures are not expected to be material to the Company in the foreseeable
future.

The Company has been identified as a potentially responsible party at
third-party sites under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, or comparable state laws, which provide
for strict and, under certain circumstances, joint and several liability. The
Company is participating in the cost of certain clean-up efforts at several of
these sites. The availability of third-party payments or insurance for
environmental remediation activities is subject to risks associated with the
willingness and ability of the third party to make payments. However, the
Company's share of such costs has not been material and, based on available
information, the Company does not expect its exposure at any of these locations
to have a material adverse effect on its results of operations, liquidity or
financial condition.

INFORMATION AS TO INDUSTRY SEGMENT REPORTING AND GEOGRAPHIC AREAS

The information contained under the heading of "Note J--Industry Segments"
of notes to consolidated financial statements included herein, relating to net
sales, income before income taxes, identifiable assets and other information by
industry segment for the years ended December 31, 2002, 2001, and 2000 is
incorporated herein by reference.

RECENT DEVELOPMENTS

The information contained under the heading of "Note C--Acquisitions and
Dispositions" and "Note L--Restructuring and Unusual Charges" of notes to
consolidated financial statements included herein, is incorporated by reference.

ITEM 2. PROPERTIES

The Company's operations include numerous manufacturing and supply chain
logistics services facilities located in twenty-two states in the United States,
and in Puerto Rico, as well as in Belgium, Canada, England and Mexico.
Approximately 93% of the available square footage is located in the United
States. Approximately 43% of the available square footage is owned. In 2002,
approximately 32% of the available domestic square footage was used by the ILS
segment, 52% was used by the Manufactured Products segment and 16% by the
Aluminum Products segment. Approximately 49% of the available foreign square
footage was used by the ILS segment and 51% was used by the Manufactured
Products segment. In the opinion of management, Park-Ohio's facilities are
generally well maintained and are suitable and adequate for their intended uses.

6

The following table provides information relative to the principal
facilities of Park-Ohio and its subsidiaries.

7

ITEM 3. LEGAL PROCEEDINGS

The Company is subject to various pending and threatened lawsuits in which
claims for monetary damages are asserted in the ordinary course of business.
While any litigation involves an element of uncertainty, in the opinion of
management, liabilities, if any, arising from currently pending or threatened
litigation will not have a material adverse effect on the Company's financial
condition, liquidity or results of operations. The Company has been named as one
of many defendants in asbestos-related personal injury lawsuits. The Company's
cost of defending such lawsuits has not been material to date and based upon
available information, management of the Company does not expect the Company's
future costs for asbestos-related lawsuits to have a material adverse effect on
its results of operations, liquidity or financial condition. You can find more
information about our legal proceedings under Management's Discussion and
Analysis of Financial Condition and Results of Operations.

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

Information required by this item has been omitted pursuant to General
Instruction I of Form 10-K.

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PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS

The registrant is a wholly-owned subsidiary of Park-Ohio Holdings Corp. and
has no equity securities that trade.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

Information required by this item has been omitted pursuant to General
Instruction I of Form 10-K.

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

The consolidated financial statements of the Company include the accounts
of Park-Ohio Industries, Inc. and its subsidiaries. All significant intercompany
transactions have been eliminated in consolidation. The historical financial
information is not directly comparable on a year-to-year basis, primarily due to
the divestiture of Kay Home Products in 2000, a fire at one of the Company's
rubber plants in 2000, restructuring and unusual charges taken in 2001 and 2002,
a goodwill impairment charge as of January 1, 2002 to reflect the cumulative
effect of an accounting change and the elimination of goodwill amortization in
2002. Goodwill amortization was $3.7 million in 2001 and $3.9 million in 2000.

OVERVIEW

The Company operates through three segments, ILS, Aluminum Products and
Manufactured Products. ILS is a leading supply chain logistics provider of
production components to large, multinational manufacturing companies, other
manufacturers and distributors. In connection with the supply of such production
components, ILS provides a variety of value-added, cost-effective supply chain
management services. The principal customers of ILS are in the semiconductor
equipment, heavy-duty truck, industrial equipment, aerospace and defense,
electrical controls, HVAC, vehicle parts and accessories, appliances, and lawn
and garden equipment industries. Aluminum Products manufactures cast aluminum
components for automotive, agricultural equipment, heavy-duty truck and
construction equipment manufacturers. Aluminum Products also provides
value-added services such as design and engineering, machining and assembly.
Manufactured Products operates a diverse group of niche manufacturing businesses
that design and manufacture a broad range of high quality products engineered
for specific customer applications. The principal customers of Manufactured
Products are OEMs and end-users in the aerospace, automotive, steel, forging,
railroad, truck, oil, food processing and consumer appliance industries.

Between 1993 and 1999, the Company grew significantly, through both
internal growth and acquisitions. Over this period, the Company's net sales
increased at a 40% compounded annual growth, from $94.5 million to $717.2
million. Over the same period, income before income taxes increased from $3.9
million to $28.6 million.

Growth continued through the first half of 2000, but the Company's sales
volume and profitability dropped substantially in the second half. First half
2000 net sales totaled $410.9 million, but dropped 16% to $343.8 million in the
second half. This decline was primarily due to the reduction of build rates in
the heavy-duty truck industry (the Company's largest customer segment) starting
in the third quarter, and a decline in orders received from customers in the
automotive industry (the Company's second largest customer segment).

The Company's sales volumes and profitability continued to decline during
2001, due to overall weakness in the manufacturing economy, particularly in the
heavy-duty truck and automotive industries. Despite these sales declines, the
Company believes it has retained or gained market share in most

9

major markets served. In 2001, the Company incurred a net loss of $25.4 million,
which included $20.3 million after-tax restructuring and impairment charges and
non-operating items.

The Company responded to this downturn by restructuring its businesses,
increasing specific prices and selling non-core manufacturing assets. The
restructuring included facility consolidations and closings, personnel
reductions and other cost reductions in selling and administrative departments
in all business units. Despite customer pricing pressures, the Company
negotiated significantly increased prices for several particularly low-margin
product lines in the Aluminum Products and Manufactured Products segments. The
Company consolidated twenty logistics facilities and closed or sold eight
manufacturing facilities in 2001 and 2002. With regard to these actions, the
Company recorded restructuring, impairment and unusual charges of $28.5 million
in 2001 and $19.2 million in 2002. The 2002 charges included $8.3 million for
severance and exit costs, $5.6 million recorded in cost of products sold,
primarily to write down inventory of discontinued businesses and other product
lines to fair value, and $5.3 million for the impairment of property and
equipment and other long-term assets. The Company sold non-core manufacturing
assets, further detailed below. Management's actions are intended to position
the Company for increased profitability when the manufacturing economy
stabilizes and returns to growth.

The Company's actions resulted in increased profitability in 2002 compared
to 2001. Operating income was $16.6 million in 2002, after restructuring and
impairment charges of $19.2 million, compared to an operating loss of $3.9
million in 2001, after restructuring and impairment charges of $28.5 million and
goodwill amortization of $3.7 million.

The Company sold substantially all the assets of Castle Rubber Company
during the second quarter of 2002, for cash of approximately $2.5 million. The
Company acquired substantially all the assets of Ajax Magnethermic Corp. in the
third quarter of 2002, for cash of approximately $5.5 million.

The Company sold substantially all the assets of Cleveland City Forge in
the fourth quarter of 2001, for cash of approximately $6.1 million. During 2001,
the Company expensed $1.9 million of non-recurring business interruption costs,
caused by the June 2000 fire that destroyed the Cicero Flexible Products plant,
which were not covered by insurance.

In the second quarter of 2000, the Company sold substantially all the
assets of Kay Home Products for cash of approximately $9.2 million and recorded
a pretax loss of approximately $15.3 million.

On January 1, 2002, the Company adopted Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets" ("FAS 142"). Under FAS
142, goodwill and intangible assets with indefinite lives are no longer
amortized, but are reviewed for impairment annually, or more frequently if
impairment indicators arise. The Company reviewed its goodwill and other
intangible assets and recorded a non-cash goodwill impairment charge of $48.8
million, which was recorded as the cumulative effect of a change in accounting
principle effective January 1, 2002. This charge will have no effect on the
future operating results of the Company. There was no goodwill amortization in
2002, compared to $3.7 million in 2001 and $3.9 million in 2000.

RESULTS OF OPERATIONS

2002 versus 2001

Net sales declined by $1.9 million from $636.4 million in 2001 to $634.5
million in 2002. After excluding sales from Castle Rubber and Cleveland City
Forge in 2001 and 2002 and sales since the acquisition of Ajax Magnethermic,
sales increased $4.9 million. ILS net sales declined 5%, or $18.8 million, due
primarily to the sales volume reductions in heavy truck and other customer
industries. Aluminum Products net sales increased 25%, or $21.3 million,
primarily due to the initiation or ramp-up of new production contracts.
Manufactured Products net sales declined 3%, or $4.4 million. After excluding
sales from Castle Rubber and Cleveland City Forge in 2001 and 2002 and sales
since the acquisition of Ajax Magnethermic, sales increased $2.4 million, which
reflected increased customer demand.

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Cost of products sold was $546.9 million in 2002, including inventory
write-downs of $5.6 million, compared to cost of products sold of $552.3 million
in 2001, including inventory write-downs of $10.3 million. Inventory write-downs
included in cost of products sold primarily related to discontinued product
lines. Gross profit increased $3.5 million from $84.1 million in 2001 to $87.6
million in 2002. Gross margin increased to approximately 13.8% in 2002, from
13.2% in 2001. After inventory write-downs and the effect of the sales of Castle
Rubber in early 2002 and Cleveland City Forge in late 2001 and the acquisition
of Ajax Magnethermic in late 2002, gross profit increased $.5 million. After
these exclusions, gross margin declined to 14.7% in 2002 from 14.8% in 2001,
reflecting decreased margins in the ILS and Manufactured Products segments,
partially offset by increased margins in Aluminum Products. Declines in ILS and
Manufactured Products gross margins related primarily to reduced volumes
resulting in the absorption of fixed operational overheads over a smaller sales
or production base. The increase in Aluminum Products gross margin related to
new, higher-margin contracts, discontinuation of low margin contracts, cost
reductions, plant closures and the absorption of fixed manufacturing overheads
over a larger production base.

Selling, general and administrative ("SG&A") expenses decreased by 13%, or
$8.7 million, from $66.1 million in 2001 to $57.4 million for 2002. This
decrease was primarily due to cost reductions in all three segments resulting
from business restructuring initiatives implemented by the Company. During 2002,
SG&A expenses were negatively affected by a decrease in net pension credits of
$.8 million, reflecting less favorable investment returns on pension plan
assets. Consolidated SG&A expenses as a percentage of net sales were 9.0% during
2002 as compared to 10.4% for 2001.

Interest expense decreased by $3.5 million from $31.1 million in 2001 to
$27.6 million in 2002 due to lower average debt outstanding and lower average
interest rates during 2002. For the year ended December 31, 2002, the Company
averaged outstanding borrowings of $333.6 million as compared to $353.4 million
for the prior year. The $19.8 million decrease in borrowings related primarily
to working capital reductions in 2001, which were retained in 2002. The average
borrowing rate of 8.30% for the year ended December 31, 2002 was 50 basis points
lower than the average rate of 8.80% for 2001, primarily due to decreased rates
on the Company's revolving credit facility.

In accordance with the provision of Statement of Financial Accounting
Standards No. 109 ("FAS 109"), "Accounting for Income Taxes," the Company
recorded no tax benefit for the 2002 net loss, because it had incurred three
years of cumulative losses. Income taxes of $.9 million were provided in 2002,
primarily for state and foreign taxes on profitable operations. The effective
tax rate for 2001 was 30.9%, which was less than the statutory rate due to the
amortization of non-deductible goodwill and other non-deductible items. At
December 31, 2002, subsidiaries of the Company had $25.6 million of net
operating loss carryforwards for federal tax purposes. The Company has not
recognized any tax benefit for these loss carryforwards.

2001 versus 2000

Net sales declined by $118.3 million, or 16%, from $754.7 million in 2000
to $636.4 million in 2001. Sales declined 14%, or $105.5 million, excluding the
$12.8 million from the divestiture of Kay Home Products. ILS net sales declined
14%, or $65.3 million, due primarily to the volume reductions in heavy truck and
other customer industries. Aluminum Products net sales decreased 24%, or $26.5
million. This included a $12.5 million decrease relating to the ending of
certain sales contracts which were anticipated, and $3.7 million relating to the
Company's decision to discontinue production of low-volume products, while the
remainder, $10.3 million, resulted from reductions in production releases for
ongoing automotive contracts. Manufactured Products net sales declined 16%, or
$26.4 million, of which $12.8 million related to the sale of Kay Home Products,
while the remainder, $13.6 million, reflected reduced customer demand.

Cost of products sold was $552.3 in 2001, including inventory write-downs
of $10.3 million, compared to cost of products sold of $627.2 million in 2000.
Inventory write-downs included in cost of products sold primarily related to
discontinued product lines. Gross profit declined $43.4 million from

11

$127.5 million in 2000 to $84.1 million in 2001. Gross margin declined from
16.9% in 2000 to 13.2% in 2001. After inventory write-downs gross profit
declined $33.1 million and gross margin declined to 14.8% in 2001, reflecting
decreased margins in all three segments. The decline in ILS gross margin related
to reduced volumes resulting in the absorption of fixed operational overheads
over a smaller sales base. For Aluminum Products, the decrease in gross margins
related to the absorption of fixed manufacturing overheads over a smaller
production base. The decrease in margins in the Manufactured Products segment
resulted from decreased production levels which absorbed fixed overhead costs
over a smaller production base, and from cost overruns on several large capital
equipment systems.

Selling, general and administrative expenses decreased by 12% or $8.7
million, from $74.8 million in 2000 to $66.1 million for 2001. This decrease was
due to cost reductions in all three segments, plus $2.1 million from the
divestiture of Kay Home Products. During 2001, SG&A expenses were negatively
affected by a decrease in net pension credits of $.8 million, reflecting less
favorable investment returns on pension plan assets. Consolidated SG&A expenses
as a percentage of net sales were 10.4% during 2001 as compared to 9.9% for
2000.

Interest expense increased by $.3 million from $30.8 million in 2000 to
$31.1 million in 2001 due to higher average debt outstanding, partially offset
by lower average interest rates during 2001. For the year ended December 31,
2001, the Company averaged outstanding borrowings of $353.4 million as compared
to $342.4 million for the prior year. The $11.0 million increase related
primarily to higher working capital levels in the first half of the year. The
average borrowing rate of 8.80% for the year ended December 31, 2001 was 20
basis points lower than the average rate of 9.00% for 2000, primarily due to
decreased rates on the Company's revolving credit facility.

The effective income tax rate for 2001 was 31%, compared to 41% in 2000,
before considering the tax effect of the divestiture of Kay Home Products. This
decrease resulted from the tax-rate impact of permanent tax items such as
goodwill amortization given the pretax loss during 2001, as compared to a pretax
profit in 2000. At December 31, 2001, subsidiaries of the Company had $14.3
million of net operating loss carryforwards for federal tax purposes.

CRITICAL ACCOUNTING POLICIES

Preparation of financial statements in conformity with accounting
principles generally accepted in the United States ("GAAP") requires management
to make certain estimates and assumptions which affect amounts reported in the
Company's consolidated financial statements. Management has made their best
estimates and judgments of certain amounts included in the financial statements,
giving due consideration to materiality. The Company does not believe that there
is great likelihood that materially different amounts would be reported under
different conditions or using different assumptions related to the accounting
policies described below. However, application of these accounting policies
involves the exercise of judgment and use of assumptions as to future
uncertainties and, as a result, actual results could differ from these
estimates.

The Company does not have off-balance-sheet arrangements, financings or
other relationships with unconsolidated entities or other persons, also known as
special purpose entities. The Company currently uses no derivative instruments.

Revenue Recognition: The Company recognizes more than 95% of its revenue
when title is transferred to unaffiliated customers, typically upon shipment.
The Company's remaining revenue, from long-term contracts, is recognized using
the percentage of completion method of accounting. Selling prices are fixed
based on purchase orders or contractual arrangements. The Company's revenue
recognition policies are in accordance with the SEC's Staff Accounting Bulletin
("SAB") No. 101, "Revenue Recognition."

Allowance for Uncollectible Accounts Receivable: Accounts receivable have
been reduced by an allowance for amounts that may become uncollectible in the
future. Allowances are developed by the individual operating units based on
historical losses, adjusting for economic conditions. The Company's

12

policy is to identify and reserve for specific collectibility concerns based on
customers' financial condition and payment history. The establishment of
reserves requires the use of judgment and assumptions regarding the potential
for losses on receivable balances. Writeoffs of accounts receivable have
historically been low.

Allowance for Obsolete and Slow Moving Inventory: Inventories are stated
at the lower of cost or market value and have been reduced by an allowance for
obsolete and slow-moving inventories. The estimated allowance is based on
management's review of inventories on hand with minimal sales activity over the
past twelve months, which is compared to estimated future usage and sales.
Inventories identified by management as slow-moving or obsolete are reserved for
based on estimated selling prices less disposal costs. Though the Company
considers these allowances adequate and proper, changes in economic conditions
in specific markets in which the Company operates could have a material effect
on reserve allowances required.

Impairment of Long-Lived Assets: Long-lived assets are reviewed by
management for impairment whenever events or changes in circumstances indicate
the carrying amount may not be recoverable. During 2002 and 2001, the Company
decided to exit certain under-performing product lines and to close or
consolidate certain operating facilities and, accordingly, recorded
restructuring and impairment charges as discussed above and in Note L to the
Consolidated Financial Statements.

Restructuring: The Company recognizes costs in accordance with Emerging
Issues Task Force Issue No. 94-3 "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs incurred in a Restructuring)" and the SEC Staff Accounting Bulletin No.
100, "Restructuring and Impairment Charges." Detailed contemporaneous
documentation is maintained and updated on a quarterly basis to ensure that
accruals are properly supported. If management determines that there is a change
in the estimate, the accruals are adjusted to reflect the changes.

Goodwill: Through December 31, 2001, the Company amortized goodwill
primarily over forty years using the straight-line method. The Company adopted
Financial Accounting Standard ("FAS") No. 142 "Goodwill and Other Intangible
Assets" as of January 1, 2002. Under FAS 142, the Company no longer amortizes
goodwill, but is required to review goodwill for impairment annually, or more
frequently if impairment indicators arise.

The Company, with assistance of an outside consultant, completed the
transitional impairment review of goodwill during the fourth quarter of 2002 and
recorded a non-cash charge of $48.8 million. The charge has been reported as a
cumulative effect of a change in accounting principle. The Company has also
completed the annual impairment test as of October 1, 2002, and has determined
that no additional goodwill impairment existed as of that date.

Deferred Income Tax Assets and Liabilities: The Company accounts for
income taxes under the liability method, whereby deferred tax assets and
liabilities are determined based on temporary differences between the financial
reporting and the tax bases of assets and liabilities and are measured using the
currently enacted tax rates. In determining these amounts, management determined
the probability of realizing deferred tax assets, taking into consideration
factors including historical operating results, expectations of future earnings
and taxable income and the extended period of time over which the postretirement
benefits will be paid.

At December 31, 2002, the Company has net operating loss carryforwards for
income tax purposes of approximately $25.6 million, which will expire in 2021 or
2022. In accordance with the provisions of FAS 109 "Accounting for Income
Taxes", the tax benefits related to these carryforwards have been fully reserved
as of December 31, 2002 since the Company is in a three year cumulative loss
position.

Pension and Other Postretirement Benefit Plans: The Company and its
subsidiaries have pension plans, principally noncontributory defined benefit or
noncontributory defined contribution plans and postretirement benefit plans,
covering substantially all employees. The measurement of liabilities related to
these plans is based on management's assumptions related to future events,
including interest rates, return on pension plan assets, rate of compensation
increases, and health care cost trends.
13

Pension plan asset performance in the future will directly impact net income of
the Company. The Company has evaluated its pension and other postretirement
benefit assumptions, considering current trends in interest rates and market
conditions and believes its assumptions are appropriate.

Other Matters: Transactions with related parties, primarily building
leases, are in the ordinary course of business, are conducted on an arm's-length
basis, and are not material to the Company's financial position, net income or
cash flows.

SEASONALITY; VARIABILITY OF OPERATING RESULTS

The Company's results of operations are typically stronger in the first six
months rather than the last six months of each calendar year due to scheduled
plant maintenance in the third quarter to coincide with customer plant shutdowns
and to holidays in the fourth quarter.

The timing of orders placed by the Company's customers has varied with,
among other factors, orders for customers' finished goods, customer production
schedules, competitive conditions and general economic conditions. The
variability of the level and timing of orders has, from time to time, resulted
in significant periodic and quarterly fluctuations in the operations of the
Company's business units. Such variability is particularly evident at the
capital equipment businesses, included in the Manufactured Products segment,
which typically ship a few large systems per year.

FORWARD-LOOKING STATEMENTS

This Form 10-K contains certain statements that are "forward-looking
statements" within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. Certain statements in this Management's Discussion and
Analysis of Financial Condition and Results of Operations contain
forward-looking statements, including without limitation, discussion regarding
the Company's anticipated amounts of restructuring charges, credit availability,
levels and funding of capital expenditures and trends for 2003. Forward-looking
statements are necessarily subject to risks, uncertainties and other factors,
many of which are outside our control, which could cause actual results to
differ materially from such statements. These uncertainties and other factors
include such things as: general business conditions, competitive factors,
including pricing pressures and product innovation; raw material availability
and pricing; changes in the our relationships with customers and suppliers; our
ability to successfully integrate recent and future acquisitions into existing
operations; changes in general domestic economic conditions such as inflation
rates, interest rates, tax rates and adverse impacts to us, our suppliers and
customers from acts of terrorism or hostilities; our ability to meet various
covenants, including financial covenants, contained in our credit agreement and
the indenture governing the Senior Subordinated Notes; increasingly stringent
domestic and foreign governmental regulations including those affecting the
environment; inherent uncertainties involved in assessing our potential
liability for environmental remediation-related activities; the outcome of
pending and future litigation and other claims; dependence on the automotive and
heavy truck industries; dependence on key management; and dependence on
information systems. Any forward-looking statement speaks only as of the date on
which such statement is made, and we undertake no obligation to update any
forward-looking statement, whether as a result of new information, future events
or otherwise. In light of these and other uncertainties, the inclusion of a
forward-looking statement herein should not be regarded as a representation by
us that our plans and objectives will be achieved.

14

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL DATA

15

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

Board of Directors and Shareholder
Park-Ohio Industries, Inc.

We have audited the accompanying consolidated balance sheets of Park-Ohio
Industries, Inc. and subsidiaries (a wholly-owned subsidiary of Park-Ohio
Holdings Corp.) as of December 31, 2002 and 2001, and the related consolidated
statements of operations, shareholder's equity and cash flows for each of the
three years in the period ended December 31, 2002. These financial statements
are the responsibility of the Company'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. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Park-Ohio
Industries, Inc. and subsidiaries at December 31, 2002 and 2001 and the
consolidated 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.

As discussed in Note B to the consolidated financial statements, effective
January 1, 2002, the Company changed its method of accounting for goodwill.

/s/ Ernst & Young LLP

Cleveland, Ohio
February 25, 2003

16

PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

See notes to consolidated financial statements.
17

PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

See notes to consolidated financial statements.
18

PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY

See notes to consolidated financial statements.
19

PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

See notes to consolidated financial statements.
20

PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2002, 2001 AND 2000
(DOLLARS IN THOUSANDS)

NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation: The consolidated financial statements include the accounts
of the Company (a wholly-owned subsidiary of Park-Ohio Holdings Corp.) and all
of its subsidiaries. All significant intercompany accounts and transactions have
been eliminated upon consolidation.

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

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

Inventories: Inventories are stated at the lower of cost (principally the
first-in, first-out method for approximately 85% of its inventories and last-in,
first-out for the remainder) or market value. If the first-in, first-out method
of inventory accounting had been used exclusively by the Company, inventories
would have been approximately $4,500 higher than reported at December 31, 2002
and 2001.

Major Classes of Inventories

Property, Plant and Equipment: Property, plant and equipment are carried
at cost. Major additions and associated interest costs are capitalized and
betterments are charged to accumulated depreciation; expenditures for repairs
and maintenance are charged to operations. Depreciation of fixed assets is
computed principally by the straight-line method based on the estimated useful
lives of the assets. The Company reviews long-lived assets for impairment when
events or changes in business conditions indicate that their full carrying value
may not be recoverable (See Note L).

Goodwill: As discussed in Note B, the Company adopted Statement of
Financial Accounting Standards No. 142 ("FAS 142") "Goodwill and Other
Intangible Assets," as of January 1, 2002. Under FAS 142, goodwill is no longer
amortized but is subject to impairment testing. Prior to 2002, goodwill was
amortized primarily over forty years using the straight-line method.

Pensions and Other Postretirement Benefits: The Company and its
subsidiaries have pension plans, principally noncontributory defined benefit or
noncontributory defined contribution plans, covering substantially all
employees. In addition, the Company has two unfunded postretirement benefit
plans. For the defined benefit plans, benefits are based on the employee's years
of service and the Company's policy is to fund that amount recommended by its
independent actuaries. For the defined contribution plans, the costs charged to
operations and the amount funded are based upon a percentage of the covered
employees' compensation.

Income Taxes: The Company accounts for income taxes under the liability
method, whereby deferred tax assets and liabilities are determined based on
temporary differences between the financial reporting and the tax bases of
assets and liabilities and are measured using the current enacted tax
21

PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

rates. In determining these amounts, management determined the probability of
realizing deferred tax assets, taking into consideration factors including
historical operating results, expectations of future earnings and taxable income
and the extended period of time over which the postretirement benefits will be
paid (See Note F).

Revenue Recognition: The Company recognizes revenue, other than from
long-term contracts, when title is transferred to the customer, typically upon
shipment. Revenue from long-term contracts (less than 5% of consolidated
revenue) is accounted for under the percentage of completion method, and
recognized on the basis of the percentage each contract's cost to date bears to
the total estimated contract cost. Revenue earned on contracts in process in
excess of billings is classified in other current assets in the accompanying
consolidated balance sheet. The Company's revenue recognition policies are in
accordance with the SEC's Staff Accounting Bulletin ("SAB") No. 101, "Revenue
Recognition."

Accounts Receivable: Accounts receivable are recorded at selling price
which is fixed based on a purchase order or contractual arrangement. Accounts
receivable are reduced by an allowance for amounts that may become uncollectible
in the future. The Company's policy is to identify and reserve for specific
collectibility concerns based on customers' financial condition and payment
history.

Concentration of Credit Risk: The Company sells its products to customers
in diversified industries. The Company performs ongoing credit evaluations of
its customers' financial condition but does not require collateral to support
customer receivables. The Company establishes an allowance for doubtful accounts
based upon factors surrounding the credit risk of specific customers, historical
trends and other information. Write-offs of accounts receivable have
historically been low. As of December 31, 2002, the Company had uncollateralized
receivables with seven customers in the automotive and heavy-duty truck
industries, each with several locations, aggregating $28,711, which represented
approximately 27% of the Company's trade accounts receivable. During 2002, sales
to these customers amounted to approximately $208,193, which represented 33% of
the Company's net sales.

Environmental: The Company accrues environmental costs related to existing
conditions resulting from past or current operations and from which no current
or future benefit is discernible. Costs which extend the life of the related
property or mitigate or prevent future environmental contamination are
capitalized. The Company records a liability when environmental assessments
and/or remedial efforts are probable and can be reasonably estimated. The
estimated liability of the Company is not discounted or reduced for possible
recoveries from insurance carriers.

Foreign Currency Translation: The functional currency for all subsidiaries
outside the United States is the local currency. Financial statements for these
subsidiaries are translated into United States dollars at year-end exchange
rates as to assets and liabilities and weighted-average exchange rates as to
revenues and expenses. The resulting translation adjustments are recorded in
shareholders' equity.

Impact of Other Recently Issued Accounting Pronouncements: In October
2001, the FASB issued Statement of Financial Accounting Standards No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS 144"),
which supersedes FAS 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of." Although retaining many of the
fundamental impairment and measurement provisions of FAS 121, the new rules
supersede the provisions of APB Opinion 30 with regard to reporting the effects
of a disposal of a segment of a business. The adoption of this standard by the
Company on January 1, 2002 did not impact the Company's financial position,
results of operations or cash flows.

In April 2002, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 145, "Rescission of FASB Statements No. 4, 44
and 64, Amendment of FASB Statement No. 13, and Technical Corrections," ("FAS
145"). FAS 145 rescinds FAS 4 and FAS 64 related to classification of gains and
losses on debt extinguishment such that most debt extinguishment gains and
22

PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

losses will no longer be classified as extraordinary. FAS 145 also amends FAS 13
with respect to sales-leaseback transactions. The Company adopted the provisions
of FAS 145 effective April 1, 2002, and the adoption had no impact on the
Company's reported results of operations or financial position.

In June 2002, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 146, "Accounting for Costs Associated with
Exit or Disposal Activities," ("FAS 146"), which addresses financial accounting
and reporting for costs associated with exit or disposal of activities and
nullifies Emerging Issues Task Force ("EITF") Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)." FAS 146
requires that a liability for a cost that is associated with an exit or disposal
activity be recognized when a legal liability is incurred. FAS 146 also
establishes that fair value is the objective for the initial measurement of the
liability. FAS 146 is effective for exit and disposal activities that are
initiated after December 31, 2002. It is currently the Company's policy to
recognize restructuring costs in accordance with EITF Issue No. 94-3.

In November 2002, the Financial Accounting Standards Board issued
Interpretation No. 45 ("FIN 45"), "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others". FIN 45 elaborates on required disclosures by a guarantor in its
financial statements about obligations under certain guarantees that it has
issued and requires a guarantor to recognize, at the inception of certain
guarantees, a liability for the fair value of the obligation undertaken in
issuing the guarantee. The Company is reviewing the provisions of FIN 45
relating to initial recognition and measurements of guarantor liabilities, which
are effective for qualifying guarantees entered into or modified after December
31, 2002, but does not expect the adoption to have a material impact on the
consolidated financial statements. The Company adopted the new disclosure
requirements for the year ended December 31, 2002.

Reclassification: Certain amounts in the prior years' financial statements
have been reclassified to conform to the current year presentation.

NOTE B -- ADOPTION OF FAS 142, "GOODWILL AND OTHER INTANGIBLE ASSETS"

Effective January 1, 2002, the Company adopted FAS 142, "Goodwill and Other
Intangible Assets." Under this standard, goodwill is no longer amortized, but is
subject to an impairment test at least annually. The Company has selected
October 1 as its annual testing date. In the year of adoption, FAS 142 also
requires the Company to perform a transitional test to determine whether
goodwill was impaired as of the beginning of the year. Under FAS 142, the
initial step in testing for goodwill impairment is to compare the fair value of
each reporting unit to its book value. To the extent the fair value of any
reporting unit is less than its book value, which would indicate that potential
impairment of goodwill exists, a second test is required to determine the amount
of impairment.

The Company, with assistance of an outside consultant, completed the
transitional impairment review of goodwill during the fourth quarter of 2002
using a discounted cash flow approach to determine the fair value of each
reporting unit. Based upon the results of these calculations, the Company
recorded a non-cash charge for goodwill impairment which aggregated $48,799. In
accordance with the provisions of FAS 142, the charge has been accounted for as
a cumulative effect of a change in accounting principle, retroactive to January
1, 2002. The Company also completed the annual impairment test as of October 1,
2002, and has determined that no additional impairment of goodwill existed as of
that date.

23

PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

The following table summarizes the transitional goodwill impairment charge
by reporting segment as well as the changes in the carrying amount of goodwill
for the year ended December 31, 2002.

In accordance with FAS 142, prior period amounts have not been restated.
The following table summarizes the reported results for 2001 and 2000, and the
results that would have been reported had the non-amortization provisions of FAS
142 been in effect for those years.

NOTE C -- ACQUISITIONS AND DISPOSITIONS

On September 10, 2002, the Company acquired substantially all of the assets
of Ajax Magnethermic Corporation ("Ajax"), a manufacturer of induction heating
and melting equipment. The purchase price of approximately $5.5 million and the
results of operations of Ajax prior to its date of acquisition were not deemed
significant as defined in Regulation S-X.

On April 26, 2002, the Company completed the sale of substantially all of
the assets of Castle Rubber Company for cash of approximately $2.5 million.
Castle Rubber, a non-core business is the Manufactured Products Segment, had
been identified as a business the Company was discontinuing as part of its
restructuring activities during 2001.

On December 21, 2001, the Company completed the sale of substantially all
of the assets of Cleveland City Forge for cash of approximately $6.1 million and
recorded a gain of approximately $.1 million. Cleveland City Forge was a
non-core business in the Manufactured Products Segment, producing clevises and
turnbuckles for the construction industry.

On September 30, 2000, the Company acquired IBM's plant automation software
product lines and related assets for cash of approximately $3.9 million. The
transaction has been accounted for as a purchase and the results of operations
prior to the date of acquisition were not deemed to be significant as defined in
Regulation S-X.

On June 30, 2000, the Company completed the sale of substantially all of
the assets of Kay Home Products for cash of approximately $9.2 million and
recorded a loss of approximately $15.3 million, which is included in
non-operating items, net in the consolidated statement of operations. Kay Home
Products was a non-core business producing and distributing barbecue grills,
tray tables, screen houses and plant stands.

24

PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE D -- ACCRUED EXPENSES

Accrued expenses include the following:

Substantially all advance billings and warranty and installation accruals
relate to the Company's capital equipment businesses. The 2002 increase in
accrued expenses was primarily due to the acquisition of Ajax Magnethermic.

The changes in the aggregate product warranty liability are as follows for
the year ended December 31, 2002 and 2001:

NOTE E -- FINANCING ARRANGEMENTS

Long-term debt consists of the following:

Maturities of long-term debt during each of the five years following
December 31, 2002 are approximately $1,306 in 2003, $114,985 in 2004, $925 in
2005, $930 in 2006 and $200,876 in 2007.

25

PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

The Company is a party to a credit and security agreement dated December
31, 2000, as amended ("Credit Agreement"), with a group of banks, under which it
may borrow or issue standby letters of credit or commercial letters of credit up
to $160 million. The Credit Agreement currently contains a detailed borrowing
base formula which provides borrowing capacity to the Company based on
negotiated percentages of eligible accounts receivable, inventory and fixed
assets. At December 31, 2002, the Company had approximately $33.0 million of
unused borrowing capacity available under the Credit Agreement. Interest is
payable quarterly at either the bank's prime lending rate plus .5%-1.5% (5.25%
at December 31, 2002) or, at Park-Ohio's election, at LIBOR plus 2.75%-3.50%.
The Company's ability to elect LIBOR-based interest as well as the overall
interest rate are dependent on the Company's ratio of senior funded indebtedness
to pro forma earnings before interest, taxes, depreciation and amortization
("EBITDA"), as defined in the Credit Agreement, and adjusted every quarter. As
of December 31, 2002, the Company was limited to prime-based borrowings. Up to
$7.0 million in standby letters of credit and commercial letters of credit may
be issued under the Credit Agreement. In addition to the bank's customary letter
of credit fees, a 3/4% fee is assessed on standby letters of credit on an annual
basis. As of December 31, 2002, in addition to amounts borrowed under the Credit
Agreement, there is $2.3 million outstanding primarily for standby letters of
credit. A fee of .25% to .50% is imposed by the bank on the unused portion of
available borrowings. The Credit Agreement expires on June 30, 2004 and
borrowings are secured by substantially all of the Company's assets.

Provisions of the indenture governing the Senior Subordinated Notes and the
revolving credit agreement contain restrictions on the Company's ability to
incur additional indebtedness, to create liens or other encumbrances, to make
certain payments, investments, loans and guarantees and to sell or otherwise
dispose of a substantial portion of assets or to merge or consolidate with an
unaffiliated entity. The Credit Agreement also requires maintenance of specific
financial ratios. At December 31, 2002, the Company was in compliance with all
financial covenants of the credit agreement.

The weighted average interest rate on all debt was 7.69% at December 31,
2002.

The fair market value of the Senior Subordinated Notes based on published
market prices was approximately $129,955 and $122,957 at December 31, 2002 and
2001, respectively. The carrying value of cash and cash equivalents, accounts
receivable, accounts payable, and borrowings under the credit agreement
approximate fair value at December 31, 2002 and 2001.

NOTE F -- INCOME TAXES

Income taxes consisted of the following:

26

PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

The reasons for the difference between income tax expense and the amount
computed by applying the statutory Federal income tax rate to income before
income taxes are as follows:

Significant components of the Company's net deferred tax assets and
liabilities are as follows:

At December 31, 2002, the Company has net operating loss carryforwards for
income tax purposes of approximately $25.6 million, which will expire in 2021 or
2022. In accordance with the provisions of FAS 109 "Accounting for Income
Taxes", the tax benefits related to these carryforwards have been fully reserved
as of December 31, 2002 since the Company is in a three year cumulative loss
position.

NOTE G -- LEGAL PROCEEDINGS

The Company is subject to various pending and threatened lawsuits in which
claims for monetary damages are asserted in the ordinary course of business.
While any litigation involves an element of uncertainty, in the opinion of
management, liabilities, if any, arising from currently pending or threatened
litigation will not have a material adverse effect on the Company's financial
condition, liquidity and results of operations.

27

PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE H -- PENSIONS AND POSTRETIREMENT BENEFITS

The following tables set forth the change in benefit obligation, plan
assets, funded status and amounts recognized in the consolidated balance sheet
for the defined benefit pension and postretirement benefit plans as of December
31, 2002 and 2001:

Amounts recognized in the consolidated balance sheets consists of:

The Company recorded a minimum pension liability of $5,555 at December 31,
2002, as required by Financial Accounting Standards Board Statement No. 87. The
adjustment is reflected in other comprehensive income and long-term liabilities.
The adjustment relates to two of the Company's defined benefit
28

PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

plans, for which the accumulated benefit obligations of $15,573 exceed the fair
value of the underlying pension assets of $12,047.

The following tables summarize the assumptions used by the consulting
actuary and the related cost information.

For measurement purposes, a 6.25% percent annual rate of increase in the
per capita cost of covered health care benefits was assumed for 2003. The rate
was assumed to decrease gradually to 5.75% for 2004 and remain at that level
thereafter.

The Company recorded $2,700 of non-cash pension curtailment charges in 2002
and $400 in 2001 related to the disposal of two manufacturing facilities. These
were classified as restructuring charges in both years.

The Company has two postretirement benefit plans. Under both of these
plans, health care benefits are provided on both a contributory and
noncontributory basis. The assumed health care cost trend rate has a significant
effect on the amounts reported. A one-percentage-point change in the assumed
health care cost trend rate would have the following effects:

The total contribution charged to pension expense for the Company's defined
contribution plans was $1,273 in 2002, $1,382 in 2001 and $1,418 in 2000.

29

PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE I -- LEASES

Rental expense for 2002, 2001 and 2000 was $10,749, $12,638 and $12,816,
respectively. Future minimum lease commitments during each of the five years
following December 31, 2002 are as follows: $8,561 in 2003, $5,358 in 2004,
$3,814 in 2005, $2,093 in 2006, $1,193 in 2007 and $2,433 thereafter.

NOTE J -- INDUSTRY SEGMENTS

The Company operates through three segments: Integrated Logistics Solutions
("ILS"), Aluminum Products and Manufactured Products. ILS is a leading supply
chain logistics provider of production components to large, multinational
manufacturing companies, other manufacturers and distributors. In connection
with the supply of such production components, ILS provides a variety of
value-added, cost-effective supply chain management services. The principal
customers of ILS are in the semiconductor equipment, heavy-duty truck,
industrial equipment, aerospace and defense, electrical controls, HVAC, vehicle
parts and accessories, appliances, and lawn and garden equipment industries.
Aluminum Products manufactures cast aluminum components for automotive,
agricultural equipment, heavy-duty truck and construction equipment. Aluminum
Products also provides value-added services such as design and engineering,
machining and assembly. Manufactured Products operates a diverse group of niche
manufacturing businesses that design and manufacture a broad range of high
quality products engineered for specific customer applications. The principal
customers of Manufactured Products are original equipment manufacturers and
end-users in the aerospace, automotive, railroad, truck and oil industries.

The Company's sales are made through its own sales organization,
distributors and representatives. Intersegment sales are immaterial and
eliminated in consolidation and are not included in the figures presented.
Intersegment sales are accounted for at values based on market prices. Income
allocated to segments excludes certain corporate expenses and interest expense.
Identifiable assets by industry segment include assets directly identified with
those operations.

Corporate assets generally consist of cash and cash equivalents, deferred
tax assets, property and equipment, and other assets.

30

PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

For the years ended December 31, 2002 and 2001, sales to no single customer
were greater than 10% of consolidated net sales. For the year ended December 31,
2000, all three segments of the Company had sales to Ford Motor Company, which
aggregated $73,039 and represented approximately 10% of consolidated net sales.

For the three years ended 2002, approximately 80% of the Company's net
sales were within the United States and 13% were within Canada. Approximately
91% of the Company's assets are maintained in the United States.

NOTE K -- NON-OPERATING ITEMS, NET

In June 2000, the Company's Cicero Flexible Products plant was destroyed in
a fire. For the year ended December 31, 2000, the Company received a partial
settlement from its insurance carrier primarily reflecting the replacement cost
of fixed assets and recognized a net gain of $5.2 million. During 2001, the
Company expensed $1.9 million of non-recurring business interruption costs,
which were not covered by insurance. In June 2000, the Company completed the
sale of substantially all of the assets of Kay Home Products and recorded a
pretax loss of approximately $15.3 million.

31

PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE L -- RESTRUCTURING AND UNUSUAL CHARGES

The Company responded to the economic downturn by reducing costs in a
variety of ways, including restructuring businesses and selling non-core
manufacturing assets. These activities generated restructuring and asset
impairment charges in 2001 and 2002, as the Company's restructuring efforts
continued and evolved.

During 2001, the Company recorded restructuring and asset impairment
charges aggregating $28.5 million, primarily related to management decisions to
exit certain under-performing product lines and to close or consolidate certain
operating facilities in 2002. The Company's actions included 1) selling or
discontinuing the businesses of Castle Rubber and Ajax Manufacturing, 2) closing
the Cicero Flexible Products' manufacturing facility and discontinue certain
product lines, 3) inventory write-downs and other restructuring activities at
St. Louis Screw & Bolt and Tocco, 4) closing twenty ILS branch warehouses and
two ILS manufacturing plants, 5) closing an Aluminum Products machining
facility, and 6) write-down of certain Corporate assets to current value. The
charges were composed of $11.3 million for the impairment of property and
equipment and other long-term assets; $10.3 million of cost of goods sold,
primarily to write down inventory of discontinued businesses and product lines
to current market value; and $6.9 million for severance (525 employees) and exit
costs. Below is a summary of these charges by segment.

During 2002, the Company recorded further restructuring and asset
impairment charges aggregating $19.2 million, primarily related to management
decisions to exit additional product lines and consolidate additional
facilities. The Company's planned actions included 1) selling or discontinuing
the businesses of St. Louis Screw & Bolt and Green Bearing, 2) closing five
additional ILS branch warehouses and 3) closing or selling two Aluminum Products
manufacturing plants (one of which was closed as of December 31, 2002). The
charges were composed of $5.6 million for severance (490 employees) and exit
costs, $2.7 million for pension curtailment costs; $5.6 million of costs of
goods sold, primarily to write down inventory of discontinued businesses and
product lines to current market value; and $5.3 million for impairment of
property and equipment and other long-term assets. Below is a summary of these
charges by segment.

32

PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

The accrued liability for severance and exit costs and related cash
payments consisted of:

Severance and exit charges recorded in 2001................. $ 6,883
Cash payments made in 2001.................................. (2,731)
Balance at December 31, 2001................................ 4,152
Severance and exit charges recorded in 2002................. 5,599
Cash payments made in 2002.................................. (5,706)
-------
Balance at December 31, 2002................................ $ 4,045
=======

As of December 31, 2002, all of the 525 employees identified in 2001 and
all but 80 of the 490 employees identified in 2002 had been terminated. The
workforce reductions under the restructuring plan consisted of hourly and salary
employees at various operating facilities due to either closure or
consolidation.

At December 31, 2002, the Company's balance sheet reflected assets held for
sale at their estimated current value of $6.1 million for inventory and $15.2
million for property, plant and equipment and other long-term assets. Net sales
for the businesses held for sale (Ajax Manufacturing, Castle Rubber, St. Louis
Screw & Bolt and Green Bearing) were $19,159 in 2002, $25,356 in 2001, and
$27,145 in 2000. Operating income (loss), excluding restructuring and unusual
charges for these entities were $(334) in 2002, $703 in 2001, and $1,021 in
2000.

33

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

There were no changes in nor disagreements with Park-Ohio's independent
auditors on accounting and financial disclosure matters within the two-year
period ended December 31, 2002.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information required by this item has been omitted pursuant to General
Instruction I of Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION

Information required by this item has been omitted pursuant to General
Instruction I of Form 10-K.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

Information required by this item has been omitted pursuant to General
Instruction I of Form 10-K.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information required by this item has been omitted pursuant to General
Instruction I of Form 10-K.

ITEM 14. CONTROLS AND PROCEDURES

During the 90-day period prior to the filling date of this report,
management, including our chief executive officer and chief financial officer,
evaluated the effectiveness of the design and operation of the Company's
disclosure controls and procedures. Based upon, and as of the date of, that
evaluation, our chief executive officer and chief financial officer concluded
that the disclosure controls and procedures were effective, in all material
respects, to ensure that information required to be disclosed in the reports we
file and submit under the Securities Exchange Act of 1934, as amended, is
recorded, processed, summarized and reported as and when required.

There have been no significant changes in the Company's internal controls
or in other factors that could significantly affect internal controls subsequent
to the date the Company carried outs its evaluation. There were no significant
deficiencies or material weaknesses identified in the evaluation and, therefore,
no corrective actions were taken.

34

PART IV

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

(a)(1) The following financial statements are included in Part II, Item 8:

(2) Financial Statement Schedules

All Schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
the related instructions or are not applicable and, therefore, have been
omitted.

(3) Exhibits:

The Exhibits filed as part of this Form 10-K are listed on the Exhibit Index
immediately preceding such exhibits, incorporated herein by reference.

(b) Reports on Form 8-K filed in the fourth quarter of 2002:

None

Supplemental Information to be furnished with reports filed pursuant to
Section 15(d) of the Act by registrants which have not registered securities
pursuant to Section 12 of the Act.

No annual report or proxy statement covering the Company's last fiscal year
has been or will be circulated to security holders.

35

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.

PARK-OHIO INDUSTRIES, INC.
(Registrant)

By: /s/ RICHARD P. ELLIOTT
------------------------------------
Richard P. Elliott, Vice President
and Chief Financial Officer

Date: March 27, 2003

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE
DATES INDICATED.

* Chairman, Chief Executive Officer and
- --------------------------------------------- President (Principal Executive Officer)
Edward F. Crawford and Director

* Vice President -- and Chief Financial
- --------------------------------------------- Officer (Principal Financial and
Richard P. Elliott Accounting Officer)

* Senior Vice President and Director
- ---------------------------------------------
Matthew V. Crawford

* Director
- ---------------------------------------------
Kevin R. Greene

* Director March 27, 2003
- ---------------------------------------------
Lewis E. Hatch, Jr.

* Director
- ---------------------------------------------
Lawrence O. Selhorst

* Director
- ---------------------------------------------
Ronna Romney

* Director
- ---------------------------------------------
James W. Wert

* The undersigned, pursuant to a Power of Attorney executed by each of the
Directors and officers identified above and filed with the Securities and
Exchange Commission, by signing his name hereto, does hereby sign and execute
this report on behalf of each of the persons noted above, in the capacities
indicated.

March 27, 2003
By: /s/ ROBERT D. VILSACK
------------------------------------
Robert D. Vilsack, Attorney-in-Fact

36

CERTIFICATIONS

I, Edward F. Crawford, certify that:

1. I have reviewed this annual report on Form 10-K of Park Ohio
Industries, Inc.;

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 statement 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 officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
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 officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):

a. all significant deficiencies in the design or operation of
internal controls which could adversely effect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weakness in internal controls; and

b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and

6. The registrant's other certifying officers and I have indicated in this
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.

Date: March 27, 2003 /s/ EDWARD F. CRAWFORD
-----------------------------------------------------
Edward F. Crawford, Chairman, Chief Executive Officer
and President

CERTIFICATIONS

I, Richard P. Elliott, certify that:

1. I have reviewed this annual report on Form 10-K of Park Ohio
Industries, Inc.;

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 statement 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 officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
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 officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):

d. all significant deficiencies in the design or operation of
internal controls which could adversely effect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weakness in internal controls; and

e. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and

6. The registrant's other certifying officers and I have indicated in this
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.

Date: March 27, 2003 /s/ RICHARD P. ELLIOTT,
-----------------------------------------------------
Richard P. Elliott, Vice President and Chief
Financial Officer

ANNUAL REPORT ON FORM 10-K
PARK-OHIO INDUSTRIES, INC.

FOR THE YEAR ENDED DECEMBER 31, 2002

EXHIBIT INDEX