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

Number of shares of Common Stock, $1.00 par value, outstanding as of November 8, 2002: 33,747,338

PART I Financial Information

Item 1. Financial Statements

Notes to Consolidated Condensed Financial Statements
(Unaudited)

Basis of Presentation
      In the opinion of management, the accompanying unaudited consolidated condensed financial statements contain all adjustments, including only normal recurring adjustments except for the matters discussed in the notes captioned "Discontinued Operations" and "Restructuring Costs," necessary to present fairly the company's financial position, results of operations and cash flows.

      The Consolidated Condensed Balance Sheet at December 31, 2001, has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

      Except as hereinafter described, the accounting policies followed by the company are set forth in the "Summary of Significant Accounting Policies" note to the consolidated financial statements included in the company's Annual Report on Form 10-K for the year ended December 31, 2001.

Change in Method of Accounting
      Effective January 1, 2002, the company adopted Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS No. 142). Under this standard, goodwill and certain other intangible assets are no longer amortized but rather are reviewed periodically for impairment. Application of the standard's nonamortization provisions resulted in an increase in pretax earnings from continuing operations of approximately $2.7 million ($1.9 million after tax) in the third quarter of 2002 and $8.1 million ($5.8 million after tax) for the nine months ended September 30, 2002.

      During the fourth quarter of 2002, the company will complete the transitional reviews of the recorded balances of goodwill and certain other intangible assets as of January 1, 2002 that are required by SFAS No. 142. Based on revised estimates, these reviews are now expected to result in a non-cash pretax goodwill impairment charge of between $200 million and $210 million ($155 million to $165 million after tax, or $4.65 to $4.95 per share). This charge will be announced early in 2003 in connection with the company's fourth quarter earnings release and recorded as the cumulative effect of a change in method of accounting retroactive to the beginning of 2002.

Discontinued Operations
      On August 30, 2002, the company completed the sale of its Widia and Werkö metalcutting tools businesses to Kennametal, Inc. for €188 million in cash (approximately $185 million), subject to post-closing adjustments. The transaction had originally been announced on May 6, 2002. Headquartered in Essen, Germany, Widia manufactures carbide metalcutting inserts, steel tool holders and carbide die and wear parts through major manufacturing facilities in Europe and India. In a separate but contingent transaction, the company purchased an additional 26% of the shares of Widia India, thereby increasing its ownership interest from 51% to 77%. The entire 77% of the Widia India shares was included in the transaction. Werkö, which is located in Königsee, Germany, manufactures round metalcutting tools. After deducting estimated post-closing adjustments, transaction costs and the cost to increase the company's ownership interest in Widia India, the ultimate net cash proceeds from the sale are expected to be approximately $147 million, most of which has been used to repay bank borrowings. The sale resulted in an after-tax loss of $15.3 million, or $.46 per share, which was recorded in the second quarter of 2002. Approximately $7 million of the loss resulted from the recognition of the cumulative foreign currency translation adjustments that have been recorded since the acquisition of Widia in 1995.

      On August 9, 2002, the company completed the sale of its Valenite metalcutting tools business to Sandvik AB for $175 million in cash, subject to post-closing adjustments. The transaction had originally been announced on June 18, 2002. After deducting estimated post-closing adjustments, transaction costs and related expenses, the net cash proceeds from the sale are ultimately expected to be approximately $150 million. A majority of cash received at closing has been used to repay bank borrowings. The company recorded an after-tax gain on the sale of $29.4 million, or $.88 per share, in the third quarter of 2002. Valenite manufactures carbide metalcutting inserts, steel toolholders and carbide die and wear parts through major facilities in Michigan, Texas and South Carolina.

      During the third quarter of 2002, the company retained advisors to explore strategic alternatives relating to two other metalworking technologies businesses - round metalcutting tools and grinding wheels. The company currently does not expect to record after-tax losses on their ultimate disposition.

      The round metalcutting tools business manufactures and sells solid carbide and high-speed steel drills, taps and end mills marketed under several brand names including Talbot, Brubaker Tool, New England Tap, Data Flute CNC and Minnesota Twist Drill. The business currently operates four manufacturing plants in the U.S. The grinding wheels business produces resinoid, vitrified, super abrasive and synthetic wheels used in a variety of industrial applications at its principal manufacturing plant in Cincinnati, Ohio and a smaller plant in Nogales, Mexico.

      The actions discussed above were initiated in connection with the company's recently announced strategy of focusing its capital and resources on building its position as a premier supplier of plastics processing technologies and strengthening its worldwide industrial fluids business. All of the businesses were previously included in the metalworking technologies segment and are reported as discontinued operations in the consolidated condensed financial statements. The consolidated condensed financial statements for all prior periods have been adjusted to reflect this presentation. Operating results for all of the businesses included in discontinued operations are presented in the following table.

      As reflected in the preceding table, allocated interest expense includes interest on debt assumed or expected to be assumed by the respective buyers, interest on borrowings that were required to be repaid using a portion of the proceeds from the Widia and Werkö transaction and the Valenite transaction, and an allocated portion of other consolidated interest expense based on the ratio of net assets sold or to be sold to consolidated assets.

      The major classes of assets and liabilities of discontinued operations in the Consolidated Condensed Balance Sheets as of September 30, 2002 and December 31, 2001 are as follows:

Restructuring Costs
      As discussed more fully in the "Restructuring Costs" note to the consolidated financial statements included in the company's Annual Report on Form 10-K for the year ended December 31, 2001, in the third and fourth quarters of 2001 the company's management formally approved plans to consolidate certain manufacturing operations and reduce its cost structure. Implementation of these plans has resulted in pretax charges to earnings from continuing operations of $18.0 million. Of the total cost of the plans, $13.8 million was recorded in 2001. An additional $4.2 million was charged to expense in continuing operations during 2002. In addition to the amounts related to continuing operations, the company's discontinued operations recorded restructuring charges of $13.2 million in the third and fourth quarters of 2001 and $3.3 million in the first three quarters of 2002.

      As they relate to continuing operations, the 2001 plans involved the closure of four manufacturing facilities in North America and the elimination of several sales and administrative locations worldwide. The consolidations and overhead reductions resulted in the elimination of approximately 450 manufacturing and administrative positions within the company's continuing operations, principally in the U.S. and Europe. The net cash cost of implementing the plans related to continuing operations will be approximately $17.8 million. Of the total cash cost, $5.7 million was spent in 2001 and an additional $10.7 million was spent in the first three quarters of 2002.

      During 2001, the company's management also approved a plan to integrate the operations of EOC and Reform (see Acquisitions) with D-M-E's existing European mold base and components business. The total cost of the integration was $8.9 million, of which $1.2 million is included in reserves for employee termination benefits and facility exit costs that were established in the allocations of the EOC and Reform acquisition costs. The remainder is being charged to expense, including $3.4 million in the fourth quarter of 2001 and $4.3 million in the first three quarters of 2002. As approved by management, the plan involved the consolidation of the manufacturing operations of five facilities located in Germany and Belgium into three facilities, the reorganization of warehousing and distribution activities in Europe, and the elimination of approximately 230 manufacturing and administrative positions, substantially all of which have been eliminated through September 30, 2002. The total cash cost of the integration plan will be approximately $8.6 million, of which $1.1 million was spent in 2001. An additional $7.4 million was spent in the first three quarters of 2002.

      In connection with all of the plans initiated in 2001, the company recorded pretax restructuring costs related to continuing operations of $8.5 million in the first three quarters of 2002 compared to $5.3 million in 2001. Additional cash costs for the restructuring and integration actions for the remainder of 2002 are expected to total $1.5 million.

      In the third quarter of 2002, the company's management approved additional restructuring plans for the purpose of further reducing the company's cost structure in certain businesses and to reduce corporate costs as a result of the disposition of Widia, Werkö and Valenite. These actions resulted in third quarter restructuring costs of $1.3 million.

      On November 8, 2002, the company announced additional restructuring initiatives intended to improve operating efficiency and customer service. The first action involves the transfer of all manufacturing of container blow molding machines and structural foam systems from the Uniloy plant in Manchester, Michigan to the company's more modern and efficient facility near Cincinnati, Ohio. In the second initiative, the manufacture of special mold bases for injection molding at D-M-E's Monterey Park, California plant will be phased out and transferred to various other facilities in North America. These additional actions are expected to result in incremental restructuring costs of approximately $7 million. Of the total cost of the actions, approximately $4 million will be charged to expense in 2002 with the remainder being recorded in 2003. The total cash cost of these initiatives is expected to be approximately $4 million, substantially all of which will be spent in 2003. The pretax annualized cost savings are expected to exceed $4 million, most of which will be realized in 2003.

      As presented in the Consolidated Condensed Statements of Earnings for the third quarters of 2002 and 2001 and the nine month periods ended September 30, 2002 and 2001, the line captioned "Restructuring costs" includes the following components:

      The status of the reserves for the initiatives discussed above as well as certain other reserves that were established in prior years is summarized in the following tables. To the extent that any unused reserves that were established in the allocation of acquisition costs remain after the completion of the respective actions, those amounts will be applied as reductions of the goodwill arising from the acquisitions.