POINDEXTER J B & CO INC - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
- --------------------------------------------------------------------------------

(MARK ONE) [X] ANNUAL REPORT UNDER 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 33-75154
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J.B. POINDEXTER & CO., INC.
(Exact name of registrant as specified in its charter)

DELAWARE 76-0312814
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

1100 LOUISIANA
SUITE 5400
HOUSTON, TEXAS 77002
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(Address if principal executive offices) (Zip Code)

(Registrant's telephone number, including area code) (713) 655-9800

Securities registered pursuant to Section 12(b) of the Act: None
Name of each exchange where registered: None

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

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

State the aggregate market value of the voting stock held by non-affiliates of
the registrant: $ 0
---

The number of shares outstanding of each of the registrants' classes of common
stock as of March 7, 2003:3059 Documents Incorporated by Reference: None

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

PART I.

ITEM 1. BUSINESS

J.B. Poindexter & Co., Inc. ("JBPCO") operates primarily manufacturing
businesses. JBPCO's operating subsidiaries are Morgan Trailer Mfg. Co.,
("Morgan"), Truck Accessories Group, Inc., ("TAG"), and the Specialty
Manufacturing Group, ("SMG") comprising EFP Corporation, ("EFP"), Magnetic
Instruments Corp., ("MIC Group") and its subsidiaries Universal Brixius, Inc.,
("Universal") and SWK Holdings, Inc., f.k.a. KWS Manufacturing Company, Inc.
("KWS").

Unless the context otherwise requires, the "Company" refers to JBPCO
together with its consolidated subsidiaries. The Company is controlled by John
B. Poindexter. In May 1994, the Company completed an initial public offering of
$100 million, 12 1/2% Senior Notes due 2004 (sometimes referred to herein as the
"Note Offering"). Concurrent with the Note Offering the Company, including its
Morgan subsidiary, acquired, from John B. Poindexter and various minority
interests, TAG, EFP and MIC Group. During 1998, the Company's management made
the strategic decision to concentrate resources on the Company's manufacturing
operations. Consequently, principally all the retail and wholesale distribution
operations of TAG were sold or closed down. MIC Group acquired Universal and KWS
during March 2000, which combined with MIC Group and EFP, form the SMG business
segment. During 2002 the Company sold KWS and identified for sale certain other
loss making operations of TAG which have been sold subsequent to December 31,
2002. These operations are treated as discontinued operations for all relevant
periods in the Consolidated Financial Statements of the Company. The Company
manages its assets on a decentralized basis, with a small corporate staff
providing strategic direction and support.

The Company operates and manages its subsidiaries within three separate
business segments. See Note 3 to the Consolidated Financial Statements of the
Company.

MORGAN

Morgan is the nation's largest manufacturer of commercial van bodies
("van bodies") for medium-duty trucks. Morgan products, which are mounted on
truck chassis manufactured and supplied by others, are used for general freight
and deliveries, moving and storage and distribution of refrigerated consumables.
Its 65 authorized distributors, six manufacturing plants and seven service
facilities are in strategic locations to provide nationwide service to its
customers, including rental companies, truck dealers and companies that operate
fleets of delivery vehicles. Formed in 1952, Morgan is headquartered in
Morgantown, Pennsylvania, and was acquired in 1990.

Morgan's van bodies are manufactured and installed on truck chassis,
which are classified by hauling capacity or gross vehicular weight rating
("GVWR"). There are eight classes of GVWR. Morgan generally manufactures
products for Classes 3 through 7, those having a GVWR of between 10,001 pounds
(light-duty dry freight vans) and 33,000 pounds (medium-duty trucks). It
generally does not manufacture products for Classes 1 or 2 (pickup trucks) or
Class 8.

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J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

The principal products offered by Morgan are: dry freight bodies that are
typically fabricated with pre-painted aluminum or fiberglass reinforced plywood
("FRP") panels, hardwood floors and various door configurations to accommodate
end-user loading and unloading requirements; refrigerated van bodies fabricated
with insulated aluminum or FRP panels that accommodate controlled temperature
and refrigeration needs of end-users; and aluminum or FRP cutaway van bodies
that are installed only on cutaway chassis, and are available with or without
access to the cargo area from the cab. Morgan also manufactures stake bodies,
which are flatbeds with various configurations of removable sides and a limited
quantity of overhead doors for use on van bodies produced by Morgan and other
truck body manufacturers.

Some of the components of Morgan's products are proprietary. Morgan
distributes spare parts through and offers limited service programs at its own
service and parts facilities and through its 65 authorized distributors.

Customers and Sales. The truck body industry has two major categories of
customers: (1) customers operating their own fleets of vehicles or who lease
their vehicles to third parties (collectively, "fleet/leasing customers"); and
(2) truck dealers and distributors who sell vehicles to others (collectively,
"dealer/distributor customers").

Morgan's net sales constituted 45%, 48% and 55% of the Company's total
net sales in 2002, 2001 and 2000, respectively. Morgan's revenue is generated by
principally three sources: (1) sales to commercial divisions of leasing
companies, companies with fleets of delivery vehicles, truck dealers and
distributors ("Commercial Sales"); (2) sales to consumer rental companies
("Consumer Rental Sales"); (3) parts and service.

Consumer Rental Sales are composed of sales to companies that maintain
large fleets of one-way and local hauling vehicles available for rent to the
general public. Procurement contracts for Consumer Rental Sales are negotiated
annually, usually in late summer to early fall and tend to be the most volatile
and price sensitive aspect of Morgan's business.

Morgan's two largest customers, Ryder Truck Leasing, Inc. and Penske
Truck Leasing, L.P., have, together, historically represented approximately 35%
to 50% of Morgan's total net sales. Each has been a customer of Morgan for
approximately 20 years and management considers relations with each to be good.
Sales to these customers represented 16%, 19% and 25% of the Company's
consolidated net sales during the years 2002, 2001 and 2000, respectively.

Morgan sells products through its own sales force and through
independent distributors. Most of the distributors sell a wide variety of truck
related equipment to truck dealers and end-users.

Manufacturing and Supplies. Morgan operates manufacturing, body mounting
and parts and service facilities in Pennsylvania, Wisconsin, Georgia, Texas and
Arizona. It also has sales, service and body mounting facilities in Florida,
California and Colorado. All Morgan's manufacturing facilities are ISO 9000
certified.

Generally, all van bodies manufactured by Morgan are produced to order.
The shipment of a unit is dependent upon receipt of the chassis supplied by the
customer and the customer's arrangements for delivery of completed units.
Revenue is recognized and the customer is billed

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J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

upon final body assembly and quality inspection. Because contracts for Consumer
Rental Sales are entered into in the summer or fall but production does not
begin until the following January Morgan generally has a significant backlog of
Consumer Rental Sales orders at the end of each year that is processed through
May of the following year. In addition, Morgan typically maintains a significant
backlog of Commercial Sales. At December 31, 2002 and 2001, Morgan's total
backlog was approximately $46.3 million and $30.1 million, respectively. All of
the products under the orders outstanding at December 31, 2002 are expected to
be shipped during 2003.

Morgan maintains an inventory of raw materials necessary to build van
bodies according to customers' orders. Raw materials are acquired from a variety
of sources and Morgan has not experienced significant shortages of materials in
recent years. Morgan's customers purchase their truck chassis from major truck
manufacturing companies. The delivery of a chassis to Morgan is dependent upon
truck manufacturers' production schedules, which are beyond Morgan's control.
Delays in chassis deliveries can disrupt Morgan's operations and can increase
its working capital requirements.

Industry. Industry revenue and growth are dependent primarily on the
demand for delivery vehicles in the general freight, moving and storage, parcel
delivery and food distribution industries. Replacement of older vehicles in
fleets represents an important revenue source, with replacement cycles varying
from approximately four to six years, depending on vehicle types. During
economic downturns, replacement orders are often deferred or, in some cases,
older vehicles are retired without replacement.

Competition. The van body manufacturing industry is highly competitive.
Morgan competes with a limited number of large manufacturers and a large number
of smaller manufacturers. Some of Morgan's competitors operate from more than
one location. Certain competitors are publicly owned with substantial capital
resources. Competitive factors in the industry include product quality, delivery
time, geographic proximity of manufacturing facilities to customers, warranty
terms, service and price.

TAG

TAG is primarily a manufacturing operation consisting of Leer, Century
Fiberglass (Century) and Raider Industries Inc. (Raider). TAG also operates
Midwest Truck Aftermarket (MTA), which comprises a wholesale distribution
business and two retail stores.

TAG is the nation's largest manufacturer of pickup truck caps and
tonneau covers and its products are marketed under the brand names Leer, Raider,
LoRider and Century. Caps and tonneau covers are fabricated enclosures that fit
over the beds of pickup trucks, converting the beds into weatherproof storage
areas. TAG's six manufacturing plants and its network of over 1,680 independent
dealers provide a national network through which its products are marketed to
individuals, small businesses and fleet operators. TAG's net sales constituted
39%, 35% and 29% of the Company's total net sales during 2002, 2001 and 2000,
respectively.

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J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

Customer and Sales. Most of TAG's products are purchased by individuals
through a national network of independent dealers. TAG also sells its products
in Canada and Europe. In 2002, foreign sales (primarily in Canada) represented
approximately 11% of TAG's total net sales and less than 4% of the Company's
total net sales.

Manufacturing and Supplies. TAG designs and manufactures caps and
tonneau covers in six manufacturing facilities located in California, Indiana,
Pennsylvania and Saskatchewan, Canada. Raw materials are obtained from a variety
of sources and TAG has not experienced significant shortages of materials in
recent years. TAG purchases a substantial majority of its windows for caps from
a single supplier. Although the loss of that supplier would disrupt TAG's
production activities until a replacement supplier could be located, management
does not believe that such loss would have a material adverse effect on the
Company. TAG's products are typically manufactured upon receipt of an order by
the dealer and, consequently, backlog at TAG represents between one and two
weeks production or approximately $3.6 million.

Industry. Sales of caps and tonneaus tend to correspond to the level of
new pickup truck sales. Cap and tonneau sales are seasonal, with sales typically
being higher in the spring and fall than in the summer and winter.

Competition. The cap and tonneau cover industry is highly competitive.
Competitive factors include product availability, quality and price.

SPECIALTY MANUFACTURING GROUP

SMG manufactures precision metal parts, performs machining services,
molds and markets expandable foam plastics used primarily by the automotive,
electronics, furniture and appliance industries as packaging, shock absorbing
and material handling products. SMG's sales made up 16%, 18% and 16% of the
Company's net sales during each of the last three years respectively. SMG
comprises MIC Group acquired in 1992, Universal Brixius acquired in March 2000,
and EFP acquired in 1985.

Products. SMG manufactures precision metal parts used in energy
exploration and production, aerospace and other industries and performs
machining services for manufacturers of metal parts and components used in
products such as small gasoline powered engines. SMG also manufactures and
markets custom made packaging and shock absorbing products sold to manufacturers
who use them to package and ship a wide assortment of industrial and consumer
products; material handling products including reusable trays and containers
that are used for transporting components to or from a customer's manufacturing
facility and, components used as the energy absorbing elements of automobile
bumpers and other applications including a line of its StyroCast(R) foam foundry
patterns used by foundries in the "lost foam" or evaporative metal casting
process.

Customers and Sales. SMG sells products to international oilfield
service companies and a variety of businesses in the consumer products and other
industries. One oilfield service customer represented approximately 14%, 21% and
20% of the total sales of SMG during 2002, 2001 and 2000, respectively.
Management considers relations with its customers to be good.

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J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

Manufacturing and Supplies. SMG's operations are located in Alabama,
Indiana, Tennessee, Texas, and Wisconsin. Management believes that SMG's
manufacturing capabilities are among the more sophisticated in the industry.
SMG's facilities in Alabama, Indiana, and Texas are ISO 9000 certified and its
facility in Wisconsin is QS 9000 certified. It performs a broad range of
services including computer-controlled precision machining and welding,
electrostatic discharge machining, electron beam welding, trepanning, gun
drilling and investment casting. At December 31, 2002 and 2001, SMG's backlog
was $18.1 million and $15.3 million, respectively.

Products are manufactured from a wide variety of materials including
expandable polystyrene, polypropylene, polyethylene and resins, which are
subject to cost fluctuations based on changes to the price of oil in the
international markets. Also SMG utilizes ferrous and non-ferrous materials
including stainless steel, alloy steels, nickel-based alloys, titanium, brass,
beryllium-copper alloys and aluminum. Materials are obtained from a variety of
sources and SMG has not experienced significant shortages in materials in recent
years.

Industry. SMG's customers operate in a wide variety of businesses. The
demand for equipment and services supplied to the oilfield service industry and,
in turn, sales of related manufactured parts are directly correlated to the
level of worldwide oil and gas drilling activity. Otherwise most of SMG's
products are manufactured for use by other industries; economic conditions that
affect those other industries will generally affect SMG's operations. In
particular, growth or a downturn in the automotive, electronics, furniture or
appliance industries generally would be expected to have a corresponding effect
on SMG's business.

Competition. SMG competes with other businesses engaged in the
machining, casting and manufacturing of parts, equipment utilized in the oil and
gas exploration industry, aerospace and general industry and molded, expandable
plastic producers. Technological know-how and production capacity are the
primary competitive factors in SMG's industry.

TRADEMARKS AND PATENTS

The Company owns rights to certain presentations of Leer's name (part
of TAG), which the Company believes are valuable insofar as management believes
that "Leer" is recognized as being a leading "brand name." The Company also owns
rights to certain other trademarks and trade names, including certain
presentations of Morgan's name. Although these and other trademarks and trade
names used by the Company help customers differentiate Company product lines
from those of competitors, the Company believes that the trademarks or trade
names themselves are less important to customers than the quality of the
products and services. The Company's subsidiaries, principally Morgan and EFP,
hold, directly or indirectly through subsidiaries, patents on certain products
and components used in the manufacturing processes.

EMPLOYEES

At January 31, 2003, the Company had approximately 2,400 full-time
employees. Personnel are unionized in EFP's Decatur, Alabama facility (covering
approximately 60 persons, with a contract expiring in August 2003); and, TAG's
Raider Industries facilities in Canada (covering approximately 214 persons, with
a contract that expires in March 2005). The Company believes that relations with
its employees are good.

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J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

ENVIRONMENTAL MATTERS

The Company's operations are subject to numerous environmental statutes
and regulations, including laws and regulations affecting its products and the
materials used in and wastes generated by manufacturing the Company's products.
In addition, certain of the Company's operations are subject to federal, state
and local environmental laws and regulations that impose limitations on the
discharge of pollutants into the air and water of the United States. The Company
also generates non-hazardous wastes. The Company has received notices of
noncompliance, from time to time, with respect to its operations, which are
typically resolved by correcting the conditions and the payment of minor fines,
none of which individually or in the aggregate has had a material adverse effect
on the Company. However, the Company expects that the nature of its operations
will continue to make it subject to increasingly stringent environmental
regulatory standards. Although the Company believes it has made sufficient
capital expenditures to maintain compliance with existing laws and regulations,
future expenditures may be necessary, as compliance standards and technology
change. Unforeseen significant expenditures required to maintain such future
compliance, including unforeseen liabilities, could limit expansion or otherwise
have a material adverse effect on the Company's business and financial
condition.

Since 1989, Morgan has been named as a potentially responsible party
("PRP") with respect to the generation of hazardous materials alleged to have
been handled or disposed of at two federal superfund sites in Pennsylvania and
one in Kansas. Although a precise estimate of liability cannot currently be made
with respect to these sites, the Company currently believes that its
proportionate share, if any, of the ultimate costs related to any necessary
investigation and remedial work at those sites will not have a material adverse
effect on the Company. To date, Morgan's expenditures related to those sites
have not been significant.

In a memorandum dated January 10, 2002 and written by the Georgia
Environmental Protection Division ("EPD"), TAG was notified that it may be a PRP
in a Georgia state superfund site. Although a precise estimate of liability
cannot currently be made with respect to this site, the Company currently
believes that its proportionate share, if any, of the ultimate costs related to
any necessary investigation and remedial work at this site will not have a
material adverse effect on the Company.

On October 4, 2001, the United States Environmental Protection Agency
("USEPA") filed an administrative complaint against TAG. The USEPA claimed that
the Company failed to timely file certain forms allegedly required pursuant to
Section 313 of the Emergency Planning and Community Right-to-Know Act, and
regulations promulgated thereunder. The USEPA originally sought a penalty of
$59,000 for issues that arose in 1996. TAG self disclosed issues in other years
and has now resolved these claims and the Consent Order and Final Agreement
(CAFO) with USEPA Region V was signed October 24, 2002. The settlement proposed
an initial penalty of $161,769, which was reduced to $35,910 by implementing two
Supplemental Environmental Projects which were undertaken in connection with the
settlement of this enforcement action.

On January 29, 2003, USEPA notified Century that it had reviewed a
self-disclosure regarding failure to file certain forms allegedly required
pursuant to Section 313 of the Emergency Planning and Community Right-to-Know
Act, and regulations promulgated thereunder. USEPA is

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J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

proposing a penalty of $139,786. The Company is engaged in settlement
discussions to resolve these and other potential claims. Although a precise
estimate of liability cannot currently be made with respect to the alleged
violation, the Company currently believes that the ultimate cost of this matter
will not have a material adverse effect on the Company.

During a Phase II Environmental Assessment in November 2002 at KWS
Manufacturing, in preparation for its sale, two areas of potential contamination
were identified. As a part of the sale agreement, a Phase III project was
undertaken to determine the exact level of contamination and potential
remediation, if necessary. The Company has entered into a "Voluntary Clean Up
Project" with the Texas Commission on Environmental Quality that is expected to
be completed by August 2003. Although a precise estimate of liability cannot
currently be made with respect to the contamination levels or potential
remediation, the Company currently believes that the ultimate costs of this
matter will not have a material adverse effect on the Company.

ITEM 2. PROPERTIES

The Company owns or leases the following manufacturing, office and
sales facilities as of March 7, 2003:

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J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

The Company believes that its facilities are adequate for its current
needs and are capable of being utilized at higher capacities to supply increased
demand, if necessary.

ITEM 3. LEGAL PROCEEDINGS

The Company is involved in various lawsuits, which arise in the
ordinary course of business. In the opinion of management, the ultimate outcome
of these lawsuits will not have a material adverse effect on the Company.

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

No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this report.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The registrant's common equity is privately held and not publicly
traded. As of March 7, 2003, one individual owned all of the registrant's issued
and outstanding common equity. During the last three fiscal years, the Company
paid no cash dividends.

The Senior Note Indenture, dated as of May 23, 1994 and the Loan and
Security Agreement, as amended and dated as of June 28, 1996 with Congress
Financial Corporation, restricts the registrant's ability to pay dividends on
its common equity.

ITEM 6. SELECTED FINANCIAL DATA

The historical financial data presented below, for the years ended
December 31, 2002, 2001, 2000, 1999 and 1998, are derived from the audited
Consolidated Financial Statements of the Company. The data presented below
should be read in conjunction with Management's Discussion and Analysis of
Financial Condition and Results of Operations and the Consolidated Financial
Statements of the Company and notes thereto.

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J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

(a) "EBITDA" is net income from continuing operations increased by the sum
of interest expense, income taxes, depreciation and amortization and
other non-cash items for those operations defined as restricted
subsidiaries in the Indenture pertaining to the Senior Notes. EBITDA is
not included herein as operating data and should not be construed as an
alternative to operating income (determined in accordance with
accounting principles generally accepted in the United States) as an
indicator of the Company's operating

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J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

performance. The Company has included EBITDA because it is relevant for
determining compliance under the Indenture and because the Company
understands that it is one measure used by certain investors to analyze
the Company's operating cash flow and historical ability to service its
indebtedness. The following are the components of the Company's EBITDA:

(b) "Consolidated EBITDA Coverage Ratio" is the ratio of EBITDA to interest
expense of the Company and its subsidiaries that guarantee the Notes.
It is used in the Indenture to limit the amount of indebtedness that
the Company may incur. Certain of the Company's subsidiaries are not
guarantors of the Notes; see Note 17 of Notes to Consolidated Financial
Statements.

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

The following discussion of the Company's financial condition and
results of operations should be read in conjunction with the Consolidated
Financial Statements of the Company and the notes thereto.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The discussion and analysis of financial condition and the results of
operations are based upon the consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires the use of
estimates that affect the reported amounts of assets, liabilities, revenues and
expenses and related disclosure of contingent assets and liabilities. The
estimates are evaluated continually, including those related to warranties
offered on products, self-insurance reserves, bad debts, inventory obsolescence,
investments, intangible assets and goodwill, income taxes, financing operations,
workers' compensation insurance, and contingent liabilities. The estimates are
based on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.

We believe the following are the most critical accounting policies of
the Company.

Revenue Recognition - Revenue is recognized upon shipment of the
product to customers, except for Morgan where revenue is recognized when title
transfers to the customer upon final body assembly, quality inspection and
customer notification. The Company classifies amounts billed to customers
related to shipping and handling as revenue. The costs associated with the
shipping and handling revenue are included in cost of sales.

Warranties - Reserves for costs associated with fulfilling warranty
obligations offered on TAG and Morgan products are established based on
historical experience and an estimate of future

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J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

claims. Increases in the incidence of product defects would result in additional
reserves being required in the future and would reduce income in the period of
such determination.

Self-Insurance Risks - The Company utilizes a combination of insurance
coverage and self-insurance programs for property, casualty, including workers'
compensation and health care insurance. The Company records an actuarially
determined, fully developed self insurance reserve to cover the self-insured
portion of these risks based on known facts and historical industry trends.
Changes in the assumptions used by the actuary could result in a different
self-insurance reserve.

Valuation Allowance for Deferred Tax Assets - The Company records a
valuation allowance to reduce deferred tax assets to the amount that is more
likely than not to be realized. The Company has considered on-going prudent and
feasible tax planning strategies in assessing the need for the valuation
allowance. There are significant assumptions inherent in the Company's prudent
and feasible tax planning strategies. Changes in these assumptions would impact
the estimated amount of deferred tax assets realized by these tax planning
strategies. Should the Company determine that it is more likely than not able to
realize the deferred tax assets in the future in excess of the net recorded
amount, an adjustment to the valuation allowance would increase income in the
period such determination was made. Likewise, should the Company determine that
it is more likely than not unable to realize all or part of the net deferred tax
asset in the future, an adjustment to the valuation allowance would reduce
income in the period such determination was made.

Goodwill Impairment - The Company performs a test of its goodwill
annually as of October 1 as prescribed by Statement of Financial Accounting
Standards ("SFAS") 142, Goodwill and Other Intangibles. The fair value of the
Company's reporting units is based on acquisition multiples, which are derived
from information and analysis of recent acquisitions in the market place for
companies with similar operations. Changes in the assumptions used in the fair
value calculation could result in an estimated reporting unit fair value that is
below the carrying value, which may give rise to an impairment of goodwill. In
addition to the annual review, the Company also tests for impairment should an
event or circumstance change that may indicate a reduction in the fair value of
a reporting unit below its carrying value.

Contingent Liabilities - Reserves are established for estimated loss
contingencies when a loss is probable and the amount of the loss can be
reasonably estimated. Revisions to contingent liabilities are reflected in
income in the period in which different facts or information become known or
circumstances change that affect the previous assumptions with respect to the
likelihood or amount of loss. Reserves for contingent liabilities are based upon
the assumptions and estimates regarding the probable outcome of the matter.
Should the outcome differ from the assumptions and estimates, revisions to the
estimated reserves for contingent liabilities would be required.

BASIS OF FINANCIAL STATEMENTS

Effective March, 2002 EFP was included in SMG for management and
reporting purposes. The results of operations for all periods presented have
been restated to reflect the change,

During the quarter ended December 31, 2002, the Company identified
certain under performing operations and held them for sale including the Gem Top
division of TAG, the bulk material handling operations of SMG (KWS) and the
plant and related operations of the EFP division of SMG located in Marlin,
Texas. The sale of these operations has been completed as of March 7, 2003. The
Company completed the closure of the polymer division of TAG during the

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J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

quarter ended December 31, 2002. Accordingly all these operations have been
treated as discontinued in the Consolidated Financial Statements for all periods
presented.

Effective June 27, 2001, TAG's subsidiary Welshman Industries, a
non-guarantor unrestricted subsidiary, was merged into TAG. The merger had no
effect on the operations of TAG or the Company.

During December 2000, the Company sold two minor operations. SMG sold
its Astro Pattern machining operations, which during 2000 generated revenues of
$2.4 million and an operating loss of $0.5 million. SMG sold its electronic
assembly and testing unit that during 2000 generated revenues of $2.6 million
and an operating loss of $0.8 million.

OVERVIEW

The Company operates and manages its subsidiaries within three separate
business segments. The businesses are dependent on various factors reflecting
general economic conditions including corporate profitability, consumer spending
patterns, sales of truck chassis and new pickup trucks and the level of oil and
gas exploration activity. The recession in demand for capital goods and consumer
durables continues to adversely affect the Company's business

The following table represents the net sales, operating income (loss)
and operating margin percentages for each business segment and on a consolidated
basis.

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J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

RESULTS OF CONTINUING OPERATIONS

CONSOLIDATED OPERATING RESULTS FROM CONTINUING OPERATIONS
COMPARISON OF 2002 TO 2001

Net sales decreased $31.6 million, or 9% to $331.0 million for the year
ended December 31, 2002 compared to $362.6 million during 2001. Morgan's net
sales decreased 14% or $24.7 million as unit shipments decreased 8% to
approximately 19,500 units. Shipments of products to consumer rental companies,
usually large production runs completed by the end of the second quarter,
increased 26% while sales of all other products, principally commercial units
sold to truck dealers, distributors and companies with fleets of delivery
trucks, decreased 18%. TAG's net sales increased 3% or $3.3 million on a 4%
increase in units shipped. Sales of fiberglass caps and tonneaus increased 5% or
$5.4 million on a 5% increase in shipments. Pick up truck sales, a leading
indicator for TAG's business, decreased approximately 7% during 2002 compared to
2001. SMG's net sales decreased 16% or $10.1 million due primarily to a $10.1
million or 37% decrease in sales to customers in the energy services business.
The average United States rig count for 2002, a leading indicator for the energy
services industry, was 28% below levels of 2001.

Morgan's backlog at December 31, 2002 was $46.3 million compared to $30.1
million at December 31, 2001. SMG's backlog at December 31, 2002 was $18.1
million compared to $15.3 million at the end of December 2001. TAG maintains a
backlog of approximately 2 weeks of production or approximately $3.6 million at
December 31, 2002, comparable to its backlog at the end of 2001.

Cost of sales decreased 6% this year and gross profit decreased 21% to
$45.1 million. Gross profit at Morgan decreased 9% or $1.8 million, on lower
production volume, to $17.5 million (12% of net sales) compared to $19.3 million
(11% of net sales) during 2001. Morgan reduced its manufacturing overhead for
the period by approximately $6.2 million and cut manufacturing labor costs by
13% through a 13% reduction in average annual headcount. TAG's gross profit
decreased $4.7 million to $16.7 million (13% of net sales) compared to $21.4
million (17% of net sales) for the same period last year. Increased material,
labor and overhead costs relative to sales at its Leer division were partly
offset by improved sales and higher gross profits at the other TAG divisions.
Gross profit at SMG for the period was $10.9 million, a decrease of 33% or $5.4
million, primarily as a result of lower production volumes on the 37% decrease
in sales to customers in the energy services business.

Selling, general and administrative expenses increased $1.1 million or 3%
to $40.1 million (12% of net sales) for the year ended December 31, 2002
compared to $38.9 million (11% of net sales) during 2001. Selling, general and
administrative expenses decreased $1.3 million or 10% at Morgan and $0.9 million
or 11% at SMG primarily as a result of reduced personnel and related costs.
Average general and administrative headcount was reduced 21% at Morgan and 23%
at SMG during 2002 compared to 2001. Expenses increased at TAG $1.1 million or
8% due primarily to additional personnel and related costs of $0.6 million.
Parent company expenses increased $2.3 million compared to the prior year due
primarily to an increase of $0.6 million in executive compensation and severance
costs and due to a $1.3 million increase in casualty insurance reserves and
prior year insurance premium costs of $0.4 million. Parent company expenses have
been

14

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

reduced by approximately $0.7 million a year with reductions in staffing levels
and rent costs and TAG has eliminated approximately $0.8 million of personnel
related costs.

Closed and excess facility costs include $0.2 million for the write down of
the Morgan facility in Mexico to its estimated realizable value. Morgan ceased
production at the facility during 2002 and expects to sell the facility in 2003.

During 2002, the Company liquidated certain life insurance policies related
to its Lowy operations that were sold in 1999. Cash proceeds of $0.9 million
were used to pay down revolver borrowing and the Company recorded a gain of $0.1
million on the sale. SMG received approximately 18,000 shares of common stock in
an insurance company as a result of its demutualization. SMG sold the shares and
realized a gain of approximately $0.6 million; the net proceeds of $0.6 million
were used to pay down revolver debt. The gains on the liquidation of the life
insurance policies and the sale of stock are included in Other Income for the
period ended December 31, 2002.

Operating income decreased 69% to 2% of net sales compared to 5% of net
sales in 2001. Morgan's operating income was 4% of sales compared to 3% last
year in the face of a $24.7 million or 14% decrease in net sales. TAG's
operating income decreased to 2% of net sales for the period from 7% last year,
primarily as a result of the decline in gross profits resulting from higher
manufacturing costs at the Leer division. SMG's operating income decreased to 7%
of net sales from 12%, as a result of lower sales to the energy services
business.

Interest expense was $12.5 million for the year ended December 31, 2002, 5%
less than the $13.2 million during 2001 on lower interest rates and lower
average revolver borrowings as a result of lower economic activity. Average
monthly revolver borrowings decreased $3.8 million or 21% during 2002 to $13.9
million compared to $17.7 million during 2001.

The income tax benefit for the year ended December 31, 2002 of $1.2 million
differs from amounts computed based on the federal statutory rates principally
due to state and foreign taxes in jurisdictions where net operating losses were
not available to reduce current period taxable income and a $0.5 million
valuation allowance recorded against net operating loss carryforwards in
continuing operations.

COMPARISON OF 2001 TO 2000

Net sales decreased $64.6 million, or 15% to $362.6 million for the year
ended December 31, 2001 compared to $427.1 million during 2000 primarily due to
Morgan and SMG whose operations were most impacted by the domestic manufacturing
recession. TAG's net sales increased as demand for its core fiberglass products
increased during the third and fourth quarters of 2001. The Company reacted to
the deteriorating business environment by reducing both fixed and variable costs
at those operations affected by the decrease in business.

Morgan's net sales decreased 26% or $62.2 million and unit shipments
decreased 22% to approximately 21,000 units. Consumer rental product shipments,
which represent approximately 20% of the total shipments, increased 53%;
however, shipments of commercial sales units decreased 32%. Morgan's business
was negatively impacted by a severe decline in demand for new

15

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

commercial leasing units and overall, the market for Morgan's commercial sales
products is estimated to have declined approximately 35% during 2001 compared to
2000 as a result of economic conditions in the trucking industry. TAG's net
sales increased $1.8 million or 1% to $123.5 million on a 2% decrease in units
shipped. The increase in TAG's sales for the year was principally due to a 12%
increase in units shipped during the fourth quarter of 2001 compared to the same
period of 2000, primarily as a result of increased new pickup truck sales. SMG's
net sales decreased $4.2 million or 6% to $64.1 million. Excluding sales during
the 2000 period of $5.0 million from operations sold during December of 2000 and
including pre-acquisition sales of $1.8 million for the period January 1, 2000
through the acquisition date from operations acquired during March 2000, SMG's
sales decreased $1.0 million or less than 2%, primarily due to decreased
shipments of packaging products to customers in the consumer electronics
business partially offset by increased demand during the first three quarters of
2001 from customers in the energy services industry.

Morgan's backlog at December 31, 2001 was $30.1 million compared to $38.7
million at December 31, 2000. The decline was primarily due to a reduction in
commercial sales orders. However, the decline in backlog at December 31, 2001
reflects an improvement in the overall 35% decline in business experienced
during 2001. SMG's backlog at December 31, 2001 was $15.3 million compared to
$16.3 million at the end of December 2000. TAG maintains a backlog of
approximately 2 weeks of production or approximately $4.0 million at December
31, 2001, comparable to its backlog at the end of 2000.

Cost of sales decreased 17% to $305.6 million for the year ended December
31, 2001 compared to $366.4 million during the 2000 period. Gross profit
decreased 6% to $56.9 million (16% of net sales) during the 2001 period compared
to $60.7 million (14% of net sales) for 2000. Gross profit at Morgan decreased
$7.6 million or 28% to $19.3 million or 11% of sales compared to 11% of sales
during 2000, primarily due to lower volume. In reaction to the downturn in
business, Morgan reduced its average manufacturing headcount by 33% and the
related costs by 31% during the 2001 period compared to 2000. TAG's gross profit
increased $4.5 million or 27% to $21.4 million (17% of net sales) during 2001
compared to $16.8 million (14% of net sales) during 2000. SMG's gross profit
decreased $0.6 million to $16.3 million (25% of net sales) compared to $16.9
million (25% of net sales) during 2000. The slight decline in the gross profit
was due primarily to increased overhead costs relative to sales in the
non-energy services related businesses.

Selling, general and administrative expenses decreased $1.7 million or 4%
to $38.9 million (11% of net sales) for the year ended December 31, 2001
compared to $40.6 million (10% of net sales) during 2000. Selling, general and
administrative expenses decreased $2.2 million or 14% at Morgan and $0.9 million
or 10% at SMG primarily as a result of reduced personnel and related costs.
Average general and administrative headcount was reduced 30% at Morgan and 17%
at SMG during 2001 compared to 2000.

Operating income decreased 10% or $2.1 million to $18.2 million (5% of net
sales) for the year ended December 31, 2001 compared to $20.3 million (5% of net
sales) in 2000. Morgan's operating income decreased $5.5 million for the period
on lower sales. TAG's operating income for 2001 of $8.2 million was $3.0 million
or 58% less than the prior period. SMG's operating income approximated that of
the prior year. Operating income from energy related operations increased $0.7
million (16%) which was offset by a decline in non-oil related operating income
resulting from the overall decline in manufacturing during the economic
recession in 2001.

16

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

Interest expense was $13.2 million for the year ended December 31, 2001,
11% less than the $14.8 million during the same period in 2000 on lower interest
rates and lower revolver borrowings as a result of improved working capital
performance and lower economic activity. Average monthly revolver borrowings
decreased $10.4 million or 37% during 2001 to $17.7 million compared to $28.1
million during 2000.

The income tax expense for the year ended December 31, 2001 of $2.8 million
differs from amounts computed based on the federal statutory rates principally
due to state and foreign taxes in jurisdictions where net operating losses were
not available to reduce current period taxable income.

DISCONTINUED OPERATIONS

Specialty Manufacturing Group-KWS Operations

During the fourth quarter of 2002, the Company committed to a plan to sell
principally all of the assets, excluding accounts receivable and less certain of
the liabilities of the KWS operations of SMG. The sale was completed effective
December 31, 2002. The Company realized net cash proceeds of approximately $3.2
million from the sale that were used to repay acquisition debt of approximately
$0.8 million and revolver borrowings of approximately $2.4 million. The Company
recorded a loss on disposal of approximately $1.9 million which included the
write down of related goodwill of $1.2 million, assets of $300,000 and accrued
costs related to the sale of $339,000, including environmental remediation costs
of $55,000.

SMG-Marlin Operations

SMG'S Marlin Operation was one of five locations that manufactures
expandable foam plastic packaging materials. The operation lost a major customer
during 2001 and a failure to replace the lost production volume resulted in
management's decision, during 2002, to close or sell the operation. An agreement
to transfer the operations to a third party was reached during the fourth
quarter of 2002 and the transfer was completed effective January 31, 2003. The
third party assumed the operating lease on the premises and acquired the
inventory, principally finished goods at book value. Cash proceeds of
approximately $0.2 million from the transaction, received during January 2003,
were used to repay revolver borrowings. The Company recorded a loss on disposal
of approximately $0.2 million which included the write down of remaining
property, plant and equipment.

TAG-Gem Top Operations

During the fourth quarter of 2002, the Company committed to a plan to
sell principally all of the assets, less certain of the liabilities of the Gem
Top operations of TAG. The sale was completed effective February 28, 2003. The
Company realized net cash proceeds of approximately $840,000 from the sale. The
Company accrued certain closing costs and wrote down the value of inventory and
fixed assets and recorded an impairment loss of approximately $0.6 million as of
December 31, 2002.

17

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

TAG-Polymer Products Division (PPD)

During the first quarter of 2002, management decided to cease production
of polymer based products at TAG and the closure of the PPD division was
completed during the fourth quarter. Limited production of certain tonneau
models continued in 2002. The Company wrote off the product molds and inventory
associated with the discontinued products of approximately $0.6 million and
expensed approximately $0.7 million associated with potential future product
warranty costs during the year ended December 31, 2001

LIQUIDITY AND CAPITAL RESOURCES

Operations used cash during the year ended December 31, 2002 of $0.5
million. Working capital at December 31, 2002 was $5.6 million compared to $13.5
million at December 31, 2001. The decrease in working capital was due primarily
an increase in revolver borrowings. Days sales open at December 31, 2002 were 25
compared to 22 at December 31, 2001, inventory turns for the twelve months ended
December 31, 2002 were 12.0 compared to 13.0 during the prior year and days
payable open at December 31, 2002 were 20 days compared to 19 days last year.

The ability to borrow under the Revolving Loan Agreement depends on the
amount of eligible collateral, which, in turn, depends on certain advance rates
applied to the value of accounts receivables and inventory. At March 7, 2003,
the Company had unused available borrowing capacity of approximately $12.0
million under the terms of the Revolving Loan Agreement. Borrowings under the
Revolving Loan Agreements at December 31, 2002 were $15.9 million compared to
$8.0 million at December 31, 2001. Increased borrowings were used to fund
operations and capital expenditures net of proceeds from the sale of
discontinued operations of $3.4 million and cash proceeds of $1.5 million from
cancelled life insurance policies and the sale of stock in a life insurance
company received as part of a demutualization of that company.

Capital expenditures for the year ended December 31, 2002 were $5.5 million
compared to $7.9 million during the same period in 2001 and were comprised
mainly of maintenance type expenditures and product mold costs of $2.6 million
for the TAG operations.

The Revolving Loan Agreement was renewed, effective March 26, 2003, and
automatically renews for a one year period unless cancelled by either party to
the agreement at least 60 days prior to March 30.

At December 31, 2002 the consolidated EBITDA coverage Ratio, as defined in
the 2004 12 1/2% Senior Notes Bond Indenture was less than 2:1. As a result, the
Company is limited in its ability to incur additional borrowings, excluding
borrowings under the Revolving Loan agreement, enter into capital leases,
provide certain guarantees or incur liens on its assets. As discussed in Notes 6
and 7 to the Consolidated Financial Statements, the Company's Revolving Loan
Agreement and Senior Notes Indenture restrict the ability of the Company to
dispose of assets, incur debt, pay dividends, and undertake certain corporate
activities.

The Company continually evaluates, depending on market conditions, the most
efficient use of its capital and contemplates various strategic options, which
may include, without limitation, restructuring its business, indebtedness or
capital structure. Accordingly, the Company or its subsidiaries may from time to
time consider, among other things, purchasing, refinancing or

18

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

otherwise retiring certain outstanding indebtedness (whether in the open market
or by other means), public or private issuances of debt or equity securities,
joint venture transactions, new borrowings, tender offers, exchange offers or
any combination thereof, although there can be no assurances that such financing
sources will be available on commercially reasonable terms. There can be no
assurances that these strategic options, if pursued, will be consummated.

The Company believes that it has adequate resources to meet its working
capital and capital expenditure requirements consistent with past trends and
practices. Operating cash flows are a principal source of liquidity to the
Company and the diverse nature of the operations of the Company, in management's
opinion, reduces exposure to economic factors such as the current manufacturing
recession. Additionally, the Company believes that its borrowing availability
under the Revolving Credit Agreement and potentially available sources of
long-term financing will satisfy the Company's cash requirements for the coming
year, given its anticipated additional capital expenditures, working capital
requirements and its known obligations. The Company has commenced negotiations
to refinance its Senior Notes due in May 2004. Unless otherwise refinanced, the
Company's cash flow may be insufficient to pay the Senior Notes when due and
there can be no assurances that any refinancing will be successfully completed.

The Company commits to the purchase of certain amounts of aluminum for the
next operating year based on expected levels of production.

The Company's future obligations are:

OTHER MATTERS

The Company is significantly leveraged and had a $18.3 million
stockholder's deficit at December 31, 2002 compared to a deficit of $5.9 million
at December 31, 2001. Through its floating rate debt, the Company is subject to
interest rate fluctuations. The Company operates in cyclical businesses and the
markets for its products are highly competitive. In addition, the Company has
two customers that accounted for 16% of 2002 consolidated net sales. The
combination of these factors, which are outside the Company's control, cause it
to be subject to changes in economic trends and new business developments.

The Company had net operating loss carryforwards of approximately $31.3
million for U.S. federal income tax purposes at December 31, 2002, which, if not
utilized, will begin to expire in 2006. The Company has recorded a valuation
allowance of $2.7 million as of the December 31, 2002 against the net operating
loss carryforwards as the Company believes that the corresponding deferred tax
asset may not be realizable. The Company has considered prudent and feasible tax
planning strategies in assessing the need for the valuation allowance. There are
significant assumptions inherent in the Company's prudent and feasible tax
planning strategies. Changes in these assumptions would impact the estimated
amount of deferred tax assets realized by these tax planning strategies. The
Company had a valuation allowance related to net operating loss carryforwards of
$2.2 million as of December 31, 2000. During 2000, the Company realized tax
benefits of $2.2 million from utilizing net operating loss

19

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

carryforwards for which deferred tax valuation allowances had been previously
established resulting in a corresponding reduction in income tax expense.

In the event that market conditions necessitate implementing the strategic
options available to the Company including the refinancing of its debt or the
sale of one or more of its businesses, management believes that such events
would generate sufficient taxable income to utilize its net operating loss
carryforwards against which a valuation allowance has not been recorded.

Historically, inflation has not materially affected the Company's business,
although raw materials and general operating expenses, such as salaries and
employee benefits, are subject to normal inflationary pressures. The Company
believes that, generally, it has been able to increase its selling prices to
offset increases in costs due to inflation.

The Company's operations are subject to numerous environmental statutes and
regulations, including laws and regulations affecting its products and the
materials used in and wastes generated by manufacturing the Company's products.
In addition, certain of the Company's operations are subject to federal, state
and local environmental laws and regulations that impose limitations on the
discharge of pollutants into the air and water of the United States. The Company
also generates non-hazardous wastes. The Company has received notices of
noncompliance, from time to time, with respect to its operations, which are
typically resolved by correcting the conditions and the payment of minor fines,
none of which individually or in the aggregate has had a material adverse effect
on the Company. However, the Company expects that the nature of its operations
will continue to make it subject to increasingly stringent environmental
regulatory standards. Although the Company believes it has made sufficient
capital expenditures to maintain compliance with existing laws and regulations,
future expenditures may be necessary, as compliance standards and technology
change. Unforeseen significant expenditures required to maintain such future
compliance, including unforeseen liabilities, could limit expansion, or
otherwise, have a material adverse effect on the Company's business and
financial condition.

Since 1989, Morgan has been named as a potentially responsible party
("PRP") with respect to the generation of hazardous materials alleged to have
been handled or disposed of at two Federal Superfund sites in Pennsylvania and
one in Kansas. Although a precise estimate of liability cannot currently be made
with respect to these sites, the Company currently believes that its
proportionate share, if any, of the ultimate costs related to any necessary
investigation and remedial work at those sites will not have a material adverse
effect on the Company. To date, Morgan's expenditures related to those sites
have not been significant.

In a memorandum dated January 10, 2002 and written by the Georgia
Environmental Protection Division ("EPD"), TAG was notified that it may be a PRP
in a Georgia state superfund site. Although a precise estimate of liability
cannot currently be made with respect to this site, the Company currently
believes that its proportionate share, if any, of the ultimate costs related to
any necessary investigation and remedial work at this site will not have a
material adverse effect on the Company.

On October 4, 2001, USEPA filed an administrative complaint against the
TAG. USEPA claimed that the Company failed to timely file certain forms
allegedly required pursuant to Section 313 of the Emergency Planning and
Community Right-to-Know Act, and regulations promulgated thereunder. The USEPA
originally sought a penalty of $59,000 for issues related to 1996. TAG

20

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

self disclosed issues in other years and has now resolved these claims and the
Consent Order and Final Agreement (CAFO) with USEPA Region V was signed October
24, 2002. The settlement proposed an initial penalty of $161,769, which was
reduced to $35,910 by implementing two Supplemental Environmental Projects which
were undertaken in connection with the settlement of this enforcement action.

On January 29, 2003, USEPA notified Century that it had reviewed a
self-disclosure regarding failure to file certain forms allegedly required
pursuant to Section 313 of the Emergency Planning and Community Right-to-Know
Act, and regulations promulgated thereunder. USEPA is proposing a penalty of
$139,786. The Company is engaged in settlement discussions to resolve these and
other potential claims. Although a precise estimate of liability cannot
currently be made with respect to the alleged violation, the Company currently
believes that the ultimate cost of this matter will not have a material adverse
effect on the Company.

During a Phase II Environmental Assessment in November 2002 at KWS
Manufacturing in preparation for its sale, two areas of potential contamination
were identified. As a part of the sale agreement, a Phase III project was
undertaken to determine the exact level of contamination and potential
remediation, if necessary. The Company has entered into a "Voluntary Clean Up
Project" with the Texas Commission on Environmental Quality that is expected to
be completed by August 2003. Although a precise estimate of liability cannot
currently be made with respect to the contamination levels or potential
remediation, the Company currently believes that the ultimate costs of this
matter will not have a material adverse effect on the Company.

The Company pays fees to a corporation, owned by Mr. Poindexter, for
services provided by Mr. Poindexter. Mr. Poindexter does not receive a salary
from the Company. The Company charges the Subsidiaries for their use of funds
and for stewardship services provided to them by the Company.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is subject to certain market risks, including interest rate
risk and foreign currency risk. The adverse effects of potential changes in
these market risks are discussed below. The sensitivity analyses presented do
not consider the effects that such adverse changes may have on overall economic
activity, nor do they consider additional actions management may take to
mitigate the Company's exposure to such changes. Actual results may differ. See
the Notes to the Consolidated Financial Statements for a description of the
Company's accounting policies and other information related to these financial
instruments.

INTEREST RATES

Variable-Rate Debt. As of December 31, 2002, the Company had approximately
$15.9 million outstanding under its asset-based, revolving credit facilities.
The interest rates on the revolving credit facilities are based upon a spread
above either the Prime Interest Rate or the London Interbank Overnight Rate
(LIBOR). Which rate used is determined at the Company's option. The amount
outstanding under this revolving credit facility will fluctuate throughout the
year based upon working capital requirements. Based upon the monthly average of
$13.9 million outstanding under the revolving credit facilities during 2002, a
1% change in the interest rate would have caused a change in interest expense of
approximately $139,000 on an annual basis. The Company's

21

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

objective in maintaining these variable rate borrowings is the flexibility
obtained regarding early repayment without penalties and lower overall cost as
compared with fixed-rate borrowings.

Fixed-Rate Debt. As of December 31, 2002 and 2001, the Company had
$85.0 million of 12 1/2% Senior Notes, long-term debt, outstanding, with an
estimated fair value of approximately $69.7 million and $69.0 million based upon
their publicly traded value at December 31, 2002 and 2001, respectively. Market
risk, estimated as the potential increase in fair value resulting from a
hypothetical 1.0% decrease in interest rates, was approximately $1.3 million as
of December 31, 2002 and $1.4 million as of December 31, 2001.

FOREIGN CURRENCY

Raider Industries, a subsidiary of TAG, has two manufacturing plants in
Canada, which generated revenues of approximately $20.6 million during the year
ended December 31, 2002. The functional currency of Raider Industries is the
Canadian Dollar. Management does not currently employ risk management techniques
to manage this potential exposure to foreign currency fluctuations; however, the
majority of goods manufactured in Canada are exported and sold to customers in
the United States. Therefore, a weakening of the United States Dollar in
relation to the Canadian Dollar may have the effect of decreasing Raider
Industries' gross margin, assuming that the United States sales price remains
unchanged.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Forward-looking statements in this report including, without limitation,
statements relating to the Company's plans, strategies, objectives,
expectations, intentions and adequacy of resources, are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that such forward-looking statements involve risks and
uncertainties including without limitation, the following: (1) the Company's
plans, strategies, objectives, expectations and intentions are subject to change
at any time at the discretion of the Company; (2) other risks and uncertainties
indicated from time to time in the Company's filings with the Securities and
Exchange Commission.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

22

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholder
J.B. Poindexter & Co., Inc.

We have audited the accompanying consolidated balance sheets of J.B. Poindexter
& Co., Inc. and subsidiaries as of December 31, 2002 and 2001 and the related
consolidated statements of operations, stockholder's deficit, 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of J.B.
Poindexter & Co., 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 2 to the Consolidated Financial Statements, the Company
adopted Statement of Financial Accounting Standard 142. "Goodwill and Other
Intangible Assets" in 2002.

ERNST & YOUNG LLP

Houston, Texas
March 27, 2003

23

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)

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

24

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)

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

25

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

The accompanying notes are an integral part of these
consolidated financial statements

26

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)

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

27

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION & BUSINESS:

J.B. Poindexter & Co., Inc. ("JBPCO") and its subsidiaries (the
"Subsidiaries", and together with JBPCO, the "Company") operate primarily
manufacturing businesses principally in North America. JBPCO and the
Subsidiaries are controlled by John B. Poindexter.

MORGAN TRAILER MANUFACTURING CO. ("MORGAN") manufactures truck bodies
for dry freight and refrigerated vans (excluding those made for pickup trucks
and tractor-trailer trucks). Its customers include rental companies, truck
dealers and companies that operate fleets of delivery vehicles.

TRUCK ACCESSORIES GROUP, INC. ("TAG") manufactures pickup truck "caps"
and tonneau covers, which are fabricated enclosures that fit over the open beds
of pickup trucks, converting the beds into weatherproof storage areas. TAG
includes Leer, Century Fiberglass (Century), Raider Industries Inc. (Raider) and
Midwest Truck Aftermarket (MTA).

SPECIALTY MANUFACTURING GROUP ("SMG") MIC Group ("MIC Group"),
manufacturer, investment caster and assembler of precision metal parts for use
in the worldwide oil and gas exploration, aerospace and general industries.
Universal Brixius, Inc. ("Universal") acquired March 17, 2000 is a diversified
contract machining company. EFP Corporation ("EFP") molds, fabricates and
markets expandable foam products which are used as casting patterns, packaging,
shock absorbing and materials handling products primarily by the automotive,
electronics, furniture, appliance and other industries. It also manufactures
products used as thermal insulators.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation. The consolidated financial statements have
been prepared in accordance with accounting principles generally accepted in the
United States. All intercompany accounts and transactions have been eliminated
in consolidation.

Restricted Cash. At December 31, 2002 and 2001, substantially all of
the Company's cash is restricted pursuant to the terms of the revolving credit
facility (See Note 6).

Accounts Receivable. Accounts receivable are stated net of an allowance
for doubtful accounts of $828,000 and $870,000 at December 31, 2002 and 2001,
respectively. The Company establishes an allowance for doubtful accounts
receivable on a case by case basis when it believes that the required payment of
specific amounts owed is unlikely to occur. During the years ended December 31,
2002, 2001 and 2000, the Company charged to expense, $195,000, $984,000 and
$42,000, respectively, as a provision for doubtful accounts and deducted from
the allowance $238,000, $942,000 and $219,000, respectively, for write-offs of
bad debts. The carrying amounts of trade receivables approximate fair value
because of the short maturity of those instruments. The Company is not aware of
any significant credit risks related to its customer base and does not
generally require collateral or other security to support customer receivables.

Inventories. Inventories are stated at the lower of cost or market.
Cost is determined by the first-in, first-out (FIFO) method.

Property, Plant and Equipment. Property, plant and equipment, including
property under capital leases, are stated at cost. The cost of property under
capital leases represents the present value of the future minimum lease payments
at the inception of the lease. Depreciation and amortization is computed by
using the straight-line method over the estimated useful lives of the applicable
assets. The

28

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

cost of maintenance and repairs is charged to operating expense as incurred and
the cost of major replacements and significant improvements is capitalized.

Warranty. Morgan provides product warranties for periods up to five
years. TAG provides a warranty period, exclusive to the original truck owner,
which is, in general but with exclusions, one year for parts, five years for
paint and lifetime for structure. A provision for warranty costs is included in
cost of sales when goods are sold based on historical experience and estimated
future claims. The Company had accrued warranty costs of $2,519,000 and
$2,696,000 at December 31, 2002 and 2001, respectively. During the years ended
December 31, 2002, 2001 and 2000, the Company charged to expense $913,000,
$106,000 and $1,106,000 and deducted from the accrual costs of $1,090,000,
$1,377,000 and $1,337,000, respectively.

Advertising Expense. The Company expenses advertising costs as
incurred. During the years ended December 31, 2002, 2001 and 2000, advertising
expense was approximately $1,793,000, $1,774,000 and $2,464,000, respectively.

Income Taxes. The Company accounts for income taxes under the
provisions of Statement of Financial Accounting Standards (SFAS) No. 109. Under
SFAS No. 109, deferred tax assets and liabilities are computed based on the
difference between the financial statement and income tax bases of assets and
liabilities using the enacted tax rates.

The Company records a valuation allowance to reduce deferred tax assets
to the amount that is more likely than not to be realized. The Company has
considered on-going prudent and feasible tax planning strategies in assessing
the need for the valuation allowance. There are significant assumptions inherent
in the Company's prudent and feasible tax planning strategies. Changes in these
assumptions would impact the estimated amount of deferred tax assets realized by
these tax planning strategies. Should the Company determine that it is more
likely than not able to realize the deferred tax assets in the future in excess
of the net recorded amount, an adjustment to the valuation allowance would
increase income in the period such determination was made. Likewise, should the
Company determine that it is more likely than not unable to realize all or part
of the net deferred tax asset in the future, an adjustment to the valuation
allowance would reduce income in the period such determination was made.

Revenue Recognition. Revenue is recognized upon shipment of the product
to customers, except for Morgan where revenue is recognized when title transfers
to the customer upon final body assembly, quality inspection and customer
notification. The Company classifies amounts billed to customers related to
shipping and handling as revenue. The costs associated with the shipping and
handling revenue are included in cost of sales.

Self-Insurance Risks - The Company utilizes a combination of insurance
coverage and self-insurance programs for property, casualty, including workers'
compensation and health care insurance. The Company records an actuarially
determined, fully developed self insurance reserve to cover the self insured
portion of these risks based on known facts and historical industry trends.
Changes in the assumptions used by the actuary could result in a different
self insurance reserve.

Contingent Liabilities - Reserves are established for estimated
environmental and legal loss contingencies when a loss is probable and the
amount of the loss can be reasonably estimated. Revisions to contingent
liabilities are reflected in income in the period in which different facts or
information become known or circumstances change that affect the previous
assumptions with respect to the likelihood or amount of loss. Reserves for
contingent liabilities are based upon the assumptions and estimates regarding
the probable outcome of the matter. Should the outcome differ from the
assumptions and estimates, revisions to the estimated reserves for contingent
liabilities would be required.

29

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Use of 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.

Reclassifications. Certain prior year amounts have been reclassified to
conform to the fiscal year 2002 presentation.

Accounting Changes. Prior to the adoption of SFAS No. 142, Goodwill and
Other Intangible Assets, the excess of the purchase price over the estimated
fair value of net assets acquired was accounted for as goodwill and was
amortized on a straight lines basis over a 20 to 40 year life. In accordance
with SFAS No. 142, goodwill is tested at the reporting unit level, which is
defined as an operating segment or a component of an operating segment that
constitutes a business for which financial information is available and is
regularly reviewed by management. Management has determined that the Company's
reporting units are the same as its operating segments for the purpose of
allocating goodwill and the subsequent testing of goodwill for impairment with
the exception of the SMG operating segment. Management has determined that SMG
has two reporting units that include EFP and MIC Group. No impairment test was
performed on EFP because the reporting unit had no goodwill or indefinite-lived
intangible assets at January 1, 2002.

During the first quarter of 2002, the Company implemented SFAS No. 142
and performed the initial impairment test of goodwill on its three reporting
units with goodwill. The test was applied utilizing the estimated fair value of
the reporting units as of January 1, 2002. The fair value of the Company's
reporting units is based on acquisition multiples, which are derived from
information and analysis of recent acquisitions in the market place for
companies with similar operations. No impairment was recorded in any of the
Company's three reporting units with goodwill. The Company completed its
subsequent annual impairment review effective October 1, 2002, which indicated
that there was no impairment (See Note 5). Pro forma results for the years ended
December 31, 2001 and 2000, assuming the discontinuation of amortization of
goodwill as of January 1, 2000, are shown below:

30

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recently Issued Accounting Standards. In April 2002, the FASB issued
SFAS 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13 and Technical Corrections. This statement eliminates the
requirement under SFAS 4 to aggregate and classify all gains and losses from
extinguishment of debt as an extraordinary item, net of the related income tax
effect. This statement also amends SFAS 13 to require certain lease
modifications with economic effects similar to sale-leaseback transactions to be
accounted for in the same manner as sale-leaseback transactions. In addition,
SFAS 145 requires reclassification of gains and losses in all prior periods
presented in comparative financial statements related to debt extinguishment
that do not meet the criteria for extraordinary items in APB 30. The statement
is effective for fiscal years beginning after May 15, 2002. The Company will
adopt SFAS 145 effective January 1, 2003. Management does not expect adoption of
this statement to have a material effect on the Company's consolidated financial
position or results of operations.

In July 2002, the FASB issued SFAS 146, Obligations Associated with
Disposal Activities, which is effective for disposal activities initiated after
December 15, 2002. SFAS 146 addresses financial accounting and reporting for
costs associated with exit or disposal activities and nullifies EITF issue No.
94-3, "Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in Restructuring)."
Under this statement the liability for a cost associated with an exit or
disposal activity would be recognized and measured at its fair value when it is
incurred rather at the date of commitment to an exit plan. Under SFAS 146,
severance pay would be recognized over time rather than in advance provided the
benefit arrangement requires employees to render future service beyond a
"minimum retention period", which would be based on the legal notification
period, or if there is no such requirement, 60 days, thereby allowing a
liability to be recorded over the employees' future service period. The Company
will adopt SFAS 146 effective with disposal activities initiated after December
15, 2002. Management does not expect adoption of this statement to have a
material effect on the Company's consolidated financial position or results of
operations.

In December 2002, the FASB issued Interpretation ("FIN") 45,
Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN 45 requires that at the time
a company issues a guarantee, the company must recognize an initial liability
for the fair value, or market value, of the obligations it assumes under that
guarantee. This interpretation is applicable on a prospective basis to
guarantees issued or modified after December 31, 2002. The Company does not
anticipate adoption of this interpretation will have a significant impact on its
consolidated financial position and results of operations

3. SEGMENT DATA:

The Company operates and manages its subsidiaries within the separate
business segments described in Note 1. The Company evaluates performance and
allocates resources based on the operating income of each segment. The
accounting policies of the reportable business segments are the same as those
described in the summary of significant accounting policies.

31

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following is a summary of the business segment data for the years
ended December 31, (dollars in thousands):

Effective March 1, 2002 EFP was included in the Specialty Manufacturing
Group for management and reporting purposes. The business segment information
for all prior periods presented has been restated to reflect the change.

Morgan has two customers (truck leasing and rental companies) that
accounted for, on a combined basis, approximately 35%, 39% and 47% of Morgan's
net sales during 2002, 2001 and 2000, respectively. SMG has one customer in the
international oil field service industry that accounted for approximately 14%,
21% and 20% of SMG's net sales during 2002, 2001 and 2000, respectively.

32

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company's operations are located principally in the United States.
However, Raider is located in Canada. Long-lived assets relating to these
foreign operations were $4,188,000 and $4,340,000 at December 31, 2002 and 2001,
respectively. Consolidated net sales include $13,633,000, $13,827,000 and
$12,541,000 in 2002, 2001 and 2000, respectively, to customers outside the
United States.

4. INVENTORIES:

Consolidated net inventories consist of the following (dollars in thousands):

Inventories are stated net of an allowance for shrinkage, excess and
obsolete inventory of $2,123,000 and $1,981,000 at December 31, 2002 and 2001,
respectively. During the years ended December 31, 2002, 2001 and 2000, the
Company charged to expense $378,000, $1,044,000 and $1,254,000, respectively, as
a provision for excess and obsolete inventory and deducted from the allowance
$393,000, $1,296,000 and $1,439,000, respectively, for write-offs of excess and
obsolete inventory.

5. LONG LIVED ASSETS

Property, plant and equipment, as of December 31, 2002 and 2001,
consisted of the following (dollars in thousands):

Machinery and Equipment included approximately $966,000 of equipment
recorded under capital leases as of December 31, 2002 and 2001.

Depreciation expense was $9,136,000, $9,221,000 and $8,467,000 and
included $149,000, $93,000 and $0 for assets recorded under capital leases, for
the years ended December 31, 2002, 2001 and 2000, respectively.

33

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other assets and goodwill as of December 31, 2002 and 2001, consist of
the following (dollars in thousands):

Amortization expense was $132,000, $1,184,000 and $1,470,000 for the
years ended December 31, 2002, 2001 and 2000.

The Company records impairment losses on long-lived assets used in
operations when events and circumstances indicate that the assets may be
impaired and the undiscounted cash flows estimated to be generated by those
assets are less than the carrying amounts of those assets. At December 31, 2002
goodwill comprised of approximately $2,181,000, $10,684,000, and $3,951,000 for
the Morgan, TAG and MIC Group reporting units, respectively.

During 2002 Morgan discontinued operations at its Mexico plant. As of
December 31, 2002, Morgan's facility in Monterrey, Mexico, comprising land and
buildings, is being held for sale with a net book value of approximately
$910,000. Morgan wrote down the carrying value of the building by $240,000,
which is included in Closed and Excess facility costs for the year ended
December 31, 2002.

6. REVOLVING CREDIT AGREEMENTS:

Amounts outstanding under the Revolving Credit Agreement as of
December 31, 2002 and 2001 were (in thousands):

The Company's Revolving Loan Agreement was renewed on March 26, 2003,
and it automatically renews each year, subject to cancellation by either party
not less than 60 days prior March 30 of that year. The Agreement allows the
Company to borrow funds and provides for the guarantee of letters of credit and
certain foreign exchange contracts, issued by the Company's banks, up to the
lesser of $40,000,000, reduced from $58,000,000 effective March 31, 2003, or an
amount based on advance rates applied to the total amounts of eligible accounts
receivable and inventories of the Subsidiaries. The advance rates are 85% for
receivables with the exception of TAG for which the receivable advance rate is
80% and 60% for inventory excluding work in process. The Revolving Loan
Agreement provides for borrowing at variable rates of interest, based on either
LIBOR (London Interbank Offered Rate, 1.92% at December 31, 2002) plus a margin
of 2% or U.S. prime rate (4.25% at December 31, 2002). Interest is payable
monthly including a fee of one-half of one percent on a portion of unused
borrowing availability. The Subsidiaries, with the exception of Beltrami Door
company, are guarantors

34

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

of this indebtedness, and inventory and receivables are pledged under the
Revolving Loan Agreement. At December 31, 2002, the Company had total borrowings
of $15,866,000 and letters of credit of $4,080,000 outstanding pursuant to the
Revolving Loan Agreement. At December 31, 2002, the Company's unused available
borrowing under the Revolving Loan Agreement totaled approximately $10,366,000
based on eligible accounts receivable and inventories.

The Revolving Loan Agreement contains provisions allowing the lender to
accelerate debt repayment upon the occurrence of an event the lender determines
to represent a material adverse change. Balances outstanding under the Revolving
Loan Agreement are classified as current liabilities. The Revolving Loan
Agreement also contains restrictive covenants, which, among other things,
restrict the ability of the Company to dispose of assets, incur debt and
restrict certain corporate activities. At December 31, 2002, the Company was in
compliance with all covenants of the Revolving Loan Agreement. The Company
believes that it has adequate resources to meet its working capital and capital
expenditure requirements consistent with past trends and practices. At December
31, 2002, the Company was prohibited from paying dividends under the terms of
the Revolving Loan Agreement. Additionally, the Company's cash balance is
restricted under the terms of the Revolving Loan Agreement. The Company
anticipates that it will be in compliance with all covenants of the Revolving
Loan Agreement in 2003.

7. LONG-TERM DEBT AND NOTE OFFERING:

Long-term debt as of December 31, 2002 and 2001 consists of the
following (Dollars in the table in thousands):

The Senior Notes Indenture contains restrictive covenants, which, among
other things, restrict the ability of the Company to dispose of assets, incur
debt and restrict certain corporate activities. At

35

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2002, the Company was in compliance with all covenants of the
Senior Notes Indenture. The Company anticipates that it will be in compliance
with all covenants of the Senior Notes Indenture in 2003. Under the terms of the
Senior Notes Indenture, proceeds in excess of $2,000,000 from the sale of
assets, including the stock of the Company's subsidiaries, are required to be
used to repay borrowings under the Revolving Loan Agreement. Proceeds in excess
of amounts outstanding under the Revolving Loan Agreement may be re-invested in
assets of the Company within one year of the asset sale. At December 31, 2002,
the Company was prohibited from paying dividends under the terms of the Senior
Notes Indenture.

At December 31, 2002, the Consolidated EBITDA Coverage Ratio, as
defined in the 12 1/2% Senior Notes Bond Indenture, was less than 2:1. As a
result, the Company is limited in its ability to incur additional borrowings,
excluding borrowings under the Revolving Loan Agreement, enter into capital
leases, provide certain guarantees or incur liens on its assets. Prior to
September 30, 2001, the ratio was greater than 2:1 and the Company had the
ability to incur additional debt. During the six months ended June 30, 2001, the
Company acquired certain equipment under capital lease arrangements in the
amount of approximately $1.0 million.

The Company believes that it has adequate resources to meet its working
capital and capital expenditure requirements consistent with past trends and
practices. Operating cash flows are a principal source of liquidity to the
Company and the diverse nature of the operations of the Company, in management's
opinion, reduces exposure to economic factors such as the current manufacturing
recession. Additionally, the Company believes that its borrowing availability
under the Revolving Credit Agreement and potentially available sources of
long-term financing will satisfy the Company's cash requirements for the coming
year, given its anticipated additional capital expenditures, working capital
requirements and its known obligations. The Company has commenced negotiations
to refinance its Senior Notes due in May 2004. Unless otherwise refinanced, the
Company's cash flow may be insufficient to pay the Senior Notes when due and
there can be no assurances that any refinancing will be successfully completed.

The Company's obligations under the Senior Notes are guaranteed by all
direct wholly owned subsidiaries of JBPCO (the "Subsidiary Guarantors"). Each
guarantee is a senior unsecured obligation of the subsidiary providing such
Guarantee and ranks pari passu with all other senior unsecured indebtedness of
such subsidiary. In addition, the Subsidiary Guarantors guarantee the
indebtedness outstanding under the Revolving Loan Agreement and have pledged
their receivables, inventory and intangible property. Separate financial
statements of the Subsidiary Guarantors are not included because all the
Subsidiary Guarantors provide the Guarantees, and the Subsidiary Guarantors are
jointly and severally liable on a full and unconditional basis.

The Company's obligation under the term loan due March 31, 2007 is
secured by a lien upon the property of Universal in the amount of approximately
$1,793,000 granted to the lender. MIC Group acquired 100% of the stock of
Universal effective March 17, 2000 (See Note 13). The stock of Universal is
pledged to the seller to secure the Seller's Note due March 31, 2003.

The Company's only un-restricted non-guarantor subsidiary is Beltrami
Door Company, a wholly owned subsidiary of Morgan.

The Company estimates the fair value of the 12 1/2% Senior Notes at
December 31, 2002 and 2001 to be approximately $69,700,000 and $69,000,000,
respectively, based on their publicly traded value at that date compared to a
recorded amount of $85,000,000 as of December 31, 2002 and 2001.

36

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The carrying values of receivables, payables and debt maturing within
one year contained in the Consolidated Balance Sheets as of December 31, 2002
and 2001 approximate the fair value of those instruments.

MATURITIES. Aggregate principal payments on long-term debt for the next
five years and thereafter to December 31, 2002, are as follows (dollars in
thousands):

2003 .................... $ 982
2004 .................... 85,637
2005 .................... 653
2006 .................... 581
2007 .................... 20
---------
$ 87,873
=========

8. OPERATING LEASES:

The Company leases certain manufacturing facilities and equipment under
noncancelable operating leases certain of which contain renewal options. The
future minimum lease payments for the next five years subsequent to December 31,
2002 are as follows (dollars in thousands):

2003 .................... $ 8,654
2004 .................... 6,581
2005 .................... 4,539
2006 .................... 3,726
2007 .................... 2,640

Total rental expense included in continuing operations under all
operating leases was $9,451,000, $10,615,000 and $8,614,000 for the years ended
December 31, 2002, 2001 and 2000, respectively.

9. SUPPLEMENTAL CASH FLOW INFORMATION:

Cash payments for interest were $12,255,000, $13,134,000 and
$14,575,000 for the years ended December 31, 2002, 2001 and 2000, respectively.
Cash payments for income taxes, net, were $1,440,000, $948,000 and $1,400,000
for the years ended December 31, 2002, 2001 and 2000, respectively.

Non-cash investing activities for the year ended December 31, 2000
included $2,875,000 related to that portion of the purchase price of Universal
(See Note 13) evidenced by a promissory note.

37

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10. INCOME TAXES:

The income tax provision consists of the following for the years ended
December 31, 2002, 2001 and 2000 (dollars in thousands):

The following table reconciles the differences between the federal
statutory income tax rate and the effective tax rate for the years ended
December 31, 2002, 2001 and 2000 (Dollars in thousands):

The domestic and foreign components of Income (Loss) from Continuing
Operations before Income Taxes were:

38

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred income taxes are based on the estimated future tax effects of
differences between the financial statements and tax basis of assets and
liabilities given the provisions of the enacted tax laws. The net deferred tax
assets and liabilities as of December 31, 2002 and 2001 were (dollars in
thousands):

TAX CARRYFORWARDS. The Company has alternative minimum tax credit
carryforwards of approximately $947,000 at December 31, 2002 for U.S. federal
income tax purposes, which may be carried forward indefinitely. The Company has
net operating loss carryforwards of approximately $31,291,000 for U.S. federal
income tax purposes at December 31, 2002, which if not utilized, will begin to
expire in 2006. Management has determined that a portion of the deferred tax
assets will more than likely not be realized and has recorded a valuation
allowance of $2,665,000 as of December 31,2002.

11. COMMON STOCK:

As of December 31, 2002 and 2001, there were 100,000 shares authorized
and 3,059 shares issued and outstanding of JBPCO common stock with a par value
of $.01 per share. JBPCO was incorporated in Delaware. No other classes of
common stock, preferred stock or common stock equivalents exist.

39

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. EMPLOYEE BENEFIT PLANS:

DEFINED CONTRIBUTION PLANS

JBPCO 401(k) PLAN. The JBPCO-sponsored 401(k) savings plan allows
participating employees to contribute through salary deductions up to 15% of
gross pay and provides for Company matching contributions up to two percent of
the first six percent of gross pay as well as the opportunity for an annual
discretionary contribution. The Company reduced the matching percentage from
three percent effective August 1, 2002 and has not made an annual discretionary
contribution. Vesting in the Company matching contribution is 20% per year over
the first five years. The Company incurred related employer matching
contribution and administrative expenses of $1,044,000, $918,000 and $1,242,000
during the years ended December 31, 2002, 2001 and 2000, respectively.

Morgan sponsors a defined contribution profit sharing plan that
provides retirement benefits to employees. Morgan suspended contributions to the
plan, indefinitely, effective January 1, 2001. Morgan incurred related
contribution and administrative expenses of $185,000 during the year ended
December 31, 2000.

Effective December 31, 2000, SMG sold its Astro division however,
substantially all the employees were covered by a defined contribution money
purchase pension plan. The plan was terminated effective with the sale and all
participants became fully vested, however, SMG contributed $55,000 to the plan
during the year ended December 31, 2001 in order to fulfill the final settlement
obligations of the plan.

DEFINED BENEFIT PLANS

Morgan assumed future sponsorship of the National Steel Service
Centers' pension plan, a company that ceased doing business and into which
Morgan was merged in 1993, and continued to make contributions to the plan in
accordance with the funding requirements of the Internal Revenue Service. No
further benefits have accrued subsequent to February 12, 1992. The plan was
terminated effective December 31, 1999 and the distribution of plan assets in
satisfaction of plan obligations was completed during 2000. The plan assets
remaining after the plan obligations were settled, reverted back to the Company
in December 2001, in the amount of $428,000.

TAG had a defined benefit plan covering hourly employees at its Gem Top
division. The plan was frozen effective March 31, 1996 and at December 31, 2002
and 2001 the plan was underfunded by approximately $147,000 and $77,000,
respectively.

The Company's funding policy for the TAG plan is to make the minimum
annual contributions required by applicable regulations.

40

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table sets forth the funded status and amounts recognized
in the Company's consolidated balance sheets as of December 31, 2002 and 2001,
and the significant assumptions used in accounting for the defined benefit
plans. (dollars in thousands):

13. ACQUISITIONS:

FABRICATION BUSINESS OF POLYFOAM

Effective September 28, 2001, SMG acquired the foam fabrication
business of Polyfoam Inc., located in Nashville, TN. SMG paid approximately
$39,000 in cash for the assets of the operation.

41

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNIVERSAL BRIXIUS, INC. (UNIVERSAL)

Effective March 17, 2000, MIC Group acquired the stock of Universal.
MIC Group paid approximately $11,584,000, net of cash acquired for the stock of
Universal, of which $8,725,000 was paid in cash. In addition, $2,875,000 of the
purchase price was evidenced by a promissory note payable in 12 consecutive
quarterly installments of principal and interest. The Company recorded goodwill
of approximately $4,290,000. The acquisition was treated as a purchase and
revenues and operating income from the date of acquisition until December 31,
2000 of $9,120,000 and $2,213,000, respectively, were included in the
consolidated results of operations for the year ended December 31, 2000.

KWS MANUFACTURING CO. (KWS)

Effective March 8, 2000, MIC Group acquired the stock of KWS and the
operations became part of SMG. MIC Group paid approximately $5,843,000, net of
cash acquired for the stock of KWS. The Company sold the operations of KWS
effective December 31, 2002. See Note 16.

14. COMMITMENTS AND CONTINGENCIES:

CLAIMS AND LAWSUITS. The Company is involved in certain claims and
lawsuits arising in the normal course of business. In the opinion of management,
the ultimate resolution of these matters will not have a material adverse effect
on the financial position or results of operations of the Company.

LETTERS OF CREDIT AND OTHER COMMITMENTS. The Company had $4,080,000 and
$4,425,000 in standby letters of credit outstanding at December 31, 2002 and
2001, primarily securing the Company's insurance programs.

ENVIRONMENTAL MATTERS. The Company's operations are subject to numerous
environmental statutes and regulations, including laws and regulations affecting
its products and the materials used in and wastes generated by manufacturing the
Company's products. In addition, certain of the Company's operations are subject
to federal, state and local environmental laws and regulations that impose
limitations on the discharge of pollutants into the air and water of the United
States. The Company also generates non-hazardous wastes. The Company has
received notices of noncompliance, from time to time, with respect to its
operations, which are typically resolved by correcting the conditions and the
payment of minor fines, none of which individually or in the aggregate has had a
material adverse effect on the Company. However, the Company expects that the
nature of its operations will continue to make it subject to increasingly
stringent environmental regulatory standards. Although the Company believes it
has made sufficient capital expenditures to maintain compliance with existing
laws and regulations, future expenditures may be necessary, as compliance
standards and technology change. Unforeseen significant expenditures required to
maintain such future compliance, including unforeseen liabilities, could limit
expansion, or otherwise, have a material adverse effect on the Company's
business and financial condition.

Since 1989, Morgan has been named as a potentially responsible party
("PRP") with respect to the generation of hazardous materials alleged to have
been handled or disposed of at two Federal Superfund sites in Pennsylvania and
one in Kansas. Although a precise estimate of liability cannot currently be made
with respect to these sites, the Company currently believes that its
proportionate share, if any, of

42

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the ultimate costs related to any necessary investigation and remedial work at
those sites will not have a material adverse effect on the Company. To date,
Morgan's expenditures related to those sites have not been significant.

In a memorandum dated January 10, 2002 and written by the Georgia
Environmental Protection Division ("EPD"), TAG was notified that it may be a PRP
to a Georgia state superfund site. Although a precise estimate of liability
cannot currently be made with respect to this site, the Company currently
believes that its proportionate share, if any, of the ultimate costs related to
any necessary investigation and remedial work at this site will not have a
material adverse effect on the Company.

On October 4, 2001, USEPA filed an administrative complaint against the
TAG. The USEPA claimed that the Company failed to timely file certain forms
allegedly required pursuant to Section 313 of the Emergency Planning and
Community Right-to-Know Act, and regulations promulgated thereunder. The USEPA
originally sought a penalty of $59,000 for issues related to 1996. TAG self
disclosed issues in other years and has now resolved these claims and the
Consent Order and Final Agreement (CAFO) with USEPA Region V was signed October
24, 2002. The settlement proposed an initial penalty of $161,769, which was
reduced to $35,910 by implementing two Supplemental Environmental Projects which
were undertaken in connection with the settlement of this enforcement action.

On January 29, 2003, USEPA notified Century that it had reviewed a
self-disclosure regarding failure to file certain forms allegedly required
pursuant to Section 313 of the Emergency Planning and Community Right-to-Know
Act, and regulations promulgated thereunder. USEPA is proposing a penalty of
$139,786. The Company is engaged in settlement discussions to resolve these and
other potential claims. Although a precise estimate of liability cannot
currently be made with respect to the alleged violation, the Company currently
believes that the ultimate cost of this matter will not have a material adverse
effect on the Company.

During a Phase II Environmental Assessment in November 2002 at KWS
Manufacturing in preparation for its sale, two areas of potential contamination
were identified. As a part of the sale agreement, a Phase III project was
undertaken to determine the exact level of contamination and potential
remediation, if necessary. The Company has entered into a "Voluntary Clean Up
Project" with the Texas Commission on Environmental Quality that is expected to
be completed by August, 2003. Although a precise estimate of liability cannot
currently be made with respect to the contamination levels or potential
remediation, the Company currently believes that the ultimate costs of this
matter will not have a material adverse effect on the Company.

15. RELATED PARTY TRANSACTIONS:

The Company is party to a Management Services Agreement with
Southwestern Holdings, Inc. a corporation ("Southwestern") owned by Mr.
Poindexter. Pursuant to the Management Services Agreement, Southwestern provides
services to the Company, including those of Mr. Poindexter. The Company pays to
Southwestern a base fee of approximately $46,000 per month for these services,
subject to annual automatic increases based upon the consumer price index. Prior
to the resignation of Mr. Magee, the Company's Chief Financial Officer, in April
2001, the Company paid Southwestern Holdings approximately $66,500 per month.
The Company may also pay a discretionary annual bonus to Southwestern subject to
certain limitations; none was paid in 2002 or 2001, $686,000 was paid in 2000.
The Company paid Southwestern $549,000, $757,000, and $1,377,000 during 2002,
2001 and

43

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2000, respectively, for all these services. Welshman Industries, which was not a
restricted subsidiary under the terms of the Bond Indenture or a guarantor under
the terms of the Company's Revolving Loan Agreement, paid Southwestern Holdings
$50,000 during 2000, for certain services.

Mr. Poindexter is an officer of JBPCO and is a partner in a partnership
that leases to Morgan certain real property in Georgia. Morgan paid $290,000,
$287,000, and $275,000 in rent to the partnership in 2002, 2001 and 2000
pursuant to such lease.

16. DISCONTINUED OPERATIONS

Specialty Manufacturing Group-KWS Operations

During the fourth quarter of 2002, the Company committed to a plan to
sell principally all the assets, excluding accounts receivable and less certain
of the liabilities of the KWS operations of SMG. The sale was completed
effective December 31, 2002. The Company realized net cash proceeds of
approximately $3.2 million from the sale. KWS, which comprised the bulk material
handling operations of the Company's SMG business segment, was acquired
effective March 8, 2000 by MIC Group. MIC Group paid approximately $5,843,000,
net of cash for the stock of KWS. The results of operations have been reported
as discontinued operations in the consolidated financial statements for the
periods presented. In addition, the net assets and liabilities which were
disposed of have been segregated within the consolidated balance sheet as "net
assets of discontinued operations".

Condensed financial information related KWS at December 31, 2002 and
2001 is as follows (in thousands):

KWS's revenues were $7,802,000, $9,926,000 and $8,703,000 and income
(loss) before tax was $(4,230,000), $(2,029,000) and $(262,000), for the twelve
months ended December 31, 2002, 2001 and 2000, respectively. The Company
recorded a loss on disposal of approximately $1,865,000 which included the write
off of related goodwill of $1,159,000.

The income (loss) from discontinued operations related to KWS during
the twelve months ended December 31, 2002, 2001, and 2000, were as follows (in
thousands):

44

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Losses from KWS's operations include interest expense of $223,000,
$342,000 and $236,000 related to the borrowings of KWS under the Revolving Loan
Agreement, the term loan due March 31, 2007 and the cash flow loan due March 31,
2003, for the twelve months ended December 31, 2002, 2001, and 2000,
respectively. The borrowings were repaid using the proceeds from the sale.

SMG-Marlin Operations

SMG'S Marlin Operation was one of five locations that manufactures
expandable foam plastic packaging materials. The operation lost a major customer
during 2001 and a failure to replace the lost production volume resulted in
management's decision, during 2002, to close or sell the operation. An agreement
to sell the operations to a third party was reached during the fourth quarter of
2002 and the sale completed effective January 31, 2003. The third party assumed
the operating lease on the premises. There were no net cash proceeds from the
transaction. Accordingly, the results of operations have been reported as
discontinued operations in the consolidated financial statements for the periods
presented. In addition, the net assets and liabilities which were disposed of
have been segregated within the consolidated balance sheet as "net assets of
discontinued operations".

Condensed financial information related SMG'S Marlin Operations at
December 31,2002 and 2001 is as follows (in thousands):

SMG's Marlin Operation's revenues were $4,090,000, $1,998,000 and
$5,174,000, and the income (loss) before income taxes was $(748,000),
$(1,403,000) and $(10,000) for the twelve months ended December 31, 2002, 2001
and 2000, respectively. The Company recorded a loss on disposal of approximately
$172,000, which included the write down of remaining property plant, and
equipment.

The income (loss) from discontinued operations related to SMG'S Marlin
Operations during the twelve months ended December 31, 2002, 2001, and 2000,
were as follows (in thousands):

45

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TAG-Gem Top Operations

During the fourth quarter of 2002, the Company committed to a plan to
sell principally all the assets, less certain of the liabilities of the Gem Top
operations of TAG. The sale was completed effective February 28, 2003. The
Company realized net cash proceeds of approximately $840,000 from the sale.
Accordingly the results of operations have been reported as discontinued
operations in the consolidated financial statements for the periods presented.
In addition, the net assets and liabilities which were disposed of subsequent to
December 31, 2002 have been segregated within the consolidated balance sheet as
"net assets of discontinued operations".

Condensed financial information related Gem Top at December 31, 2002
and 2001 is as follows (in thousands):

Gem Top's revenues were $6,056,000, $9,946,000 and $7,463,000, and the
income (loss) before income taxes was $(1,544,000), $500,000 and $79,000, for
the twelve months ended December 31, 2002, 2001 and 2000, respectively. The
Company accrued certain closing costs and wrote down the value of inventory and
fixed assets recording an impairment loss of approximately $632,000 as of
December 31, 2002. Accrued closing costs included severance costs of $128,000.
The loss from discontinued operations related to Gem Top during the twelve
months ended December 31, 2002, 2001, and 2000, were as follows (in thousands):

TAG-Polymer Products Division (PPD) and TAG Distribution

During the fourth quarter of 2001, management decided to cease
production of polymer based products at TAG and the closure of the PPD division
was completed during the fourth quarter. Limited production of certain tonneau
models continued in 2002. Accordingly the results of operations have been
reported as discontinued operations in the consolidated financial statements for
the periods presented. In addition, the net assets and liabilities have been
segregated within the consolidated balance sheet as "net assets of discontinued
operations".

46

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Condensed financial information related to PPD and TAG Distribution at
December 31, 2002 and 2001 is as follows (in thousands):

PPD's revenues were $410,000, $4,479,000 and $4,339,000 and the income
(loss) before income taxes was $(542,000), $(4,225,000) and $(733,000) for the
twelve months ended December 31, 2002, 2001 and 2000, respectively. The Company
wrote off the product molds and inventory associated with the discontinued
products of approximately $611,000 and expensed approximately $682,000
associated with potential future product warranty costs during the year ended
December 31, 2001. Additionally, during 2002, TAG incurred an expense related to
the TAG Distribution operations that were sold during the year ended December
31, 1999 of $146,000 net of applicable taxes. The loss from discontinued
operations related to PPD and Tag Distribution during the twelve months ended
December 31, 2002, 2001, and 2000, were as follows (in thousands):

17. SUPPLEMENTAL GUARANTOR INFORMATION:

The Company's obligations under the Senior Notes are guaranteed by each
directly wholly-owned Subsidiary of JBPCO. In addition, the Subsidiary
Guarantors guarantee the indebtedness outstanding under the Revolving Loan
Agreement. The Indenture and Revolving Loan Agreement provide for subsidiaries
acquired subsequent to the issuance of the Senior Notes to be designated as
guarantors of the Senior Notes, provided certain financial ratio tests are met.

The following consolidating financial information is presented for
purposes of complying with the reporting requirements of the parent company and
the Guarantor Subsidiaries. The financial information includes condensed balance
sheet information as of December 31, 2002 and 2001 and condensed operating
statement and cash flow information for the years ended December 31, 2002, 2001
and 2000. The Company's non-guarantor subsidiaries are Beltrami Door Company and
Acero-Tech, S.A. de C.V. Welshman Industries was merged into TAG effective June
27, 2001, and the results of operations and cash flows for Welshman are included
with those of the non-guarantor subsidiaries below for the period prior to the
merger into TAG.

47

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATING CONDENSED BALANCE SHEET INFORMATION (DOLLARS IN THOUSANDS):
December 31, 2002

48

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS INFORMATION FOR THE YEAR ENDED:

December 31, 2002

49

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

50

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

18. SELECTED QUARTERLY INFORMATION

Shown below are the selected unaudited quarterly data:

51

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

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

None.

PART III.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The directors and executive officers of the Company are set forth
below. All directors hold office until the next annual meeting of stockholders
of the Company or until their successors are duly elected and qualified.
Executive officers of the Company are appointed by the Board of Directors
annually and serve at the discretion of the Board of Directors.

John B. Poindexter has served as Chairman of the Board and Director of
the Company since 1988, Chief Executive Officer since 1994 and President since
November 2002. From 1985 through 1996, Mr. Poindexter was the majority limited
partner of J.B. Poindexter & Co., L.P., a privately held, long-term equity
investment and management firm formed by Mr. Poindexter. From 1983 through 1985,
he was co-managing partner of KD/P Equities, a privately held equity investment
firm that he co-founded. From 1976 through 1985, Mr. Poindexter worked for Smith
Barney, Harris Upham & Co. While with Smith Barney, he became a senior vice
president for its Smith Barney Venture Corporation and Smith Barney Capital
Corporation ("SBCC") affiliates and a partner in First Century Partnership II,
an investment fund managed by SBCC.

Stephen P. Magee served as Treasurer and a Director of the Company
since the Company was formed in 1988 and as Chief Financial Officer of the
Company from 1994 to 2001. Mr. Magee also serves as Chairman of the Audit
Committee of the Board of Directors.

William J. Bowen retired in 1992 as the Chairman of the Board of
Transco Energy Company ("Transco"), a diversified energy company based in
Houston, Texas. Mr. Bowen served as Chief Executive Officer of Transco from 1974
until his retirement from that position in 1987.

Andrew Foskey has served as Vice President Business Development since
July 2001.

Robert S. Whatley has served as Vice President since June 1994.

Larry T. Wolfe has served as Vice President of Administration since May
of 1995.

Directors who are officers or employees of the Company do not receive
fees for serving as directors. The Company pays $20,000 per year as director's
fees to each outside director.

52

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

OTHER SIGNIFICANT PERSONS

Although not an executive officer of the Company, each of the following
persons is an officer of the referenced Subsidiary or division thereof and is an
important contributor to the Company's operations:

Nelson Byman became President of MIC in June of 1998 and President of
SMG in January 2001. Previously Mr. Byman was Vice President/General Manager of
a domestic division of Weatherford/Enterra, a manufacturer of oilfield related
equipment.

Bruce L. Freeman was named Senior Vice President of Operations of J.B
Poindexter & Co., Inc., on November 15, 2001 and became President of TAG during
July 2002. Previously, Mr. Freeman spent 20 years with the General Electric
Company in a variety of operations, senior management and President assignments
followed by four years as President of AEC Sterling and later was a Senior Vice
President with Northwestern Corporation.

Robert Ostendorf, Jr. became President and Chief Operating Officer of
Morgan Trailer Mfg., Co. in November 1999. Previously, Mr. Ostendorf served as
President of the Truck Group of Cambridge Industries, Inc. He has over 23 years
of experience in a variety of manufacturing and general management positions in
the truck and automotive related industries.

ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth certain information regarding the
compensation paid to the Company's Chief Executive Officer and the other
executive officers whose total annual salary and bonus are anticipated to exceed
$100,000 for the fiscal years ended December 31, 2002, 2001 and 2000:

SUMMARY COMPENSATION TABLE

53

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

(a) Mr. Poindexter does not receive a salary from the Company. Rather, his
services are provided to the Company pursuant to a Management Services
Agreement. See "Management Services Agreement."

The Company's incentive compensation plan covering certain of its
executive officers is similar to the Subsidiary Incentive Plans described below.
During 2000, the Company implemented its long-term compensation plan in order to
provide the opportunity for key members of the Company and its Subsidiaries to
be rewarded with financial incentives for achieving the financial objectives of
the Company. Awards under the plan vest over a three year period provided
certain financial obligations have been met.

Mr. Poindexter is covered by the various insurance programs provided by
Morgan to its employees.

MANAGEMENT SERVICES AGREEMENT

Concurrently with the Note Offering, the Company entered into a
Management Services Agreement with a corporation ("Southwestern") owned by Mr.
Poindexter. Pursuant to the Management Services Agreement, Southwestern provides
services to the Company, including those of Mr. Poindexter who serves as the
Company's Chairman of the Board and Chief Executive Officer. The Company paid to
Southwestern approximately $549,000 during the year ended December 31, 2002 for
the services of Mr. Poindexter. The annual fee is subject to annual automatic
increases based upon the consumer price index. The Company may pay a
discretionary annual bonus to Southwestern for the provision of Mr. Poindexter's
services and may increase the annual fee payable above the automatic annual
increase, in each case subject to certain limitations, if after giving effect to
such payment and/or increase the Company's Consolidated EBITDA Coverage Ratio,
as defined in the Indenture, is 2.00 to 1 or higher.

SUBSIDIARY INCENTIVE PLANS

The Company has adopted an incentive compensation plan for members of
upper management of each of its Subsidiaries (collectively the "Incentive
Plans") to provide for the payments of annual bonuses based upon the attainment
of performance-based goals. Eligible employees are entitled to receive a bonus
if the Subsidiary attains or surpasses a stated percentage (which varies by
Subsidiary) of that Subsidiary's budgeted pre-tax profit, with the amount of
bonus being tied to the Subsidiary's actual pre-tax profits. Individual bonuses
are then allocated among the eligible employees based upon their individual
achievement of stated performance objectives. The Subsidiaries also maintain
certain other benefit plans for their respective officers and employees. See
Note 12 to the Consolidated Financial Statements for the Company.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company does not have a compensation committee.

54

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

ITEM 12. SECURITY OF OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Mr. Poindexter has sole voting and investment power with respect to all
shares that he beneficially owns.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Mr. Poindexter is a member of a partnership ("Bartow") that leases
certain real property in Georgia to Morgan. During each of 2002, 2001 and 2000,
Morgan paid $290,000, $287,000 and $275,000, respectively as rent to Bartow, and
it will continue to pay such rent to Bartow in the future. The Company believes
that the rent paid by Morgan to Bartow is a competitive market rate for the
location.

The Company has entered into a Management Services Agreement with
Southwestern Holdings, Inc. a corporation ("Southwestern") owned by Mr.
Poindexter. Pursuant to the Management Services Agreement, Southwestern provides
services to the Company, including those of Mr. Poindexter. The Company pays to
Southwestern approximately $46,000 per month for these services, subject to
annual automatic increases based upon the consumer price index. The Company may
also pay a discretionary annual bonus to Southwestern subject to certain
limitations. For all services the Company paid Southwestern $549,000, $757,000
and $1,377,000 during 2002, 2001 and 2000, respectively.

55

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

There have been no significant changes in our internal controls or in
other factors that could significantly affect these controls subsequently to the
last time such controls were evaluated by management, including no corrective
actions with respect to significant deficiencies and material weaknesses in such
controls.

(a)(1) Financial Statements - None, other than as previously listed in response to Item 8.

(a)(2) Financial Statement Schedules - Disclosures included in the Notes to the Consolidated
Financial Statements

(a)(3) Exhibits - None

3.1(a) Second Restated Certificate of Incorporation

3.1.1(b) Certificate of First Amendment to Second Restated Certificate of Incorporation.

3.2(a) Amended and Restated Bylaws

4.1(b) Form of 12 1/2% Senior Note due 2004 (included in Exhibit 4.2)

4.2(b) Indenture dated as of May 23, 1994

4.2.1(c) First Supplemental Indenture dated as of May 11, 1995. Incorporated by reference to Exhibit
4.1 to the Form 10-Q for the quarterly period ended June 30, 1995, as filed with the
Commission on August 15, 1995

4.2.2(c) Second Supplemental Indenture dated as of June 26, 1995. Incorporated by reference to
Exhibit 4.2 to the Form 10-Q for the quarterly period ended June 30, 1995, as filed with
the Commission on August 15, 1995.

4.2.3 Third Supplemental Indenture dated as of March 8, 2000.

4.2.4 Fourth Supplemental Indenture dated as of March 17, 2000.

4.2.5 Fifth Supplemental Indenture dated as of September 29, 2000.

4.3(a) List of certain promissory notes

10.1.5(d) Loan and Security Agreement by and among Congress Financial Corporation and J.B. Poindexter
& Co., Inc., dated June 28, 1996.

10.1.6(f) Amendment No. 1 to Loan and Security Agreement by and among Congress Financial Corporation
and J.B. Poindexter & Co., Inc., dated May 13, 1998.

10.1.7(f) Amendment No. 2 to Loan and Security Agreement by and among Congress Financial Corporation
and J.B. Poindexter & Co., Inc., dated June 30, 1998

10.1.8(f) Amendment No. 3 to Loan and Security Agreement by and among Congress Financial Corporation
and J.B. Poindexter & Co., Inc., dated June 24, 1999

10.1.9(f) Amendment No. 4 to Loan and Security Agreement by and among Congress Financial Corporation
and J.B. Poindexter & Co., Inc., dated February 25, 2000

10.1.10(f) Amendment No. 5 to Loan and Security Agreement by and among Congress Financial Corporation
and J.B. Poindexter & Co., Inc., dated March 8, 2000

10.1.11(f) Amendment No. 6 to Loan and Security Agreement by and among Congress Financial Corporation
and J.B. Poindexter & Co., Inc., dated March 17, 2000

10.1.12(f) Amendment No. 7 to Loan and Security Agreement by and among Congress Financial Corporation
and J.B. Poindexter & Co., Inc., dated March 17, 2000

10.1.13(f) Amendment No. 8 to Loan and Security Agreement by and among Congress Financial Corporation
and J.B. Poindexter & Co., Inc., dated October 31, 2000

10.1.14(g) Amendment No. 9 to Loan and Security Agreement by and among Congress Financial Corporation
and J.B. Poindexter & Co., Inc., dated March 27, 2001

10.1.15(g) Waiver of Fixed Charge Coverage Ratio by and among Congress Financial Corporation and KWS as
a part of J.B. Poindexter & Co., Inc., dated May 14, 2001

56

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

10.1.16(g) Amendment No. 10 to Loan and Security Agreement by and among Congress Financial Corporation
and J.B. Poindexter & Co., Inc., dated June 21, 2001

10.1.17(h) Amendment No. 11 to Loan and Security Agreement by and among Congress Financial Corporation
and J.B. Poindexter & Co., Inc., dated August 14, 2001

10.1.18(h) Amendment No. 12 to Loan and Security Agreement by and among Congress Financial Corporation
and J.B. Poindexter & Co., Inc., dated December 13, 2001

10.1.19(h) Consent to Intercompany Loan to KWS and Brixius to Loan and Security Agreement by and among
Congress Financial Corporation and J.B. Poindexter & Co., Inc., dated August 14, 2001.

10.1.20(i) Amendment No. 13 to Loan and Security Agreement by and among Congress Financial Corporation
and J.B. Poindexter & Co., Inc., dated March 1, 2002

10.1.21(i) Amendment No. 14 to Loan and Security Agreement by and among Congress Financial Corporation
and J.B. Poindexter & Co., Inc., dated April 22, 2002

10.1.22 Amendment No. 15 to Loan and Security Agreement by and among Congress Financial Corporation
and J.B. Poindexter & Co., Inc., dated May 30, 2002

10.23(a) Lease Agreement, dated as of March 29, 1990, between Bartow Partners, L.P. and Morgan
Trailer Manufacturing Co., d/b/a Morgan Corporation, as amended by the First Amendment to
Lease Agreement, dated June 13, 1991

10.26(a) Form of Incentive Plan for certain employees of the Subsidiaries

10.27(a) Morgan Trailer Mfg. Co. Long-Term Management Equity Appreciation Program

10.86(e) Management Services Agreement dated as of May 23, 1994, between J.B. Poindexter & Co., Inc.
and Southwestern Holdings, Inc.

10.102(c) Asset Purchase Agreement, dated as of June 15, 1995, among Leer Inc., 20th Century
Fiberglass, Inc., Steven E. Robinson and Ronald E. Hickman. Incorporated by reference to
Exhibit 10.1 to the current report on Form 8-K, dated June 29, 1995, as filed with the
Commission on September 11, 1995

10.109(c) Share Purchase Agreement dated as of June 30, 1995, between Raider Industries, Inc. and
Martin Brown

10.110(c) Asset Purchase Agreement dated as of June 30, 1995, by and between Raider Industries Inc.,
Pro-More Industries Ltd., Brown Industries (1976) Ltd. and Martin Brown

10.111(e) Loan and Security Agreement by and between Congress Financial Corporation and Welshman
Industries Inc., dated October 31,1997

10.112(e) Asset Purchase Agreement by and among Radco Industries Inc. and Midwest Truck After Market
and William J. Avery, Sr. and Sarah A. Avery, dated October 31.1997

10.113(e) Asset Purchase Agreement by and among Lowy Group, Inc., J.B. Poindexter & Co., Inc. and
Blue Ridge Acquisition Company, LLC, dated August 31, 1998.

10.114(a) J.B. Poindexter & Co., Inc. Long-Term Performance Plan.

10.115(e) Asset Purchase Agreement between L.D. Brinkman & Co. (Texas) Inc. and Lowy Group, Inc. dated
June 7, 1999.

21.1 Subsidiaries of the Registrant

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

(a) Incorporated by reference to the Company's Registration Statement on
Form S-1 (No. 33-75154) as filed with the Commission on February 10,
1994

(b) Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended December 31, 1994, as filed with the Commission on
March 31, 1995.

(c) Incorporated by reference to the Company's Annual Report on form 10-K
for the year ended December 31, 1995, as filed with the Commission on
March 29, 1996.

57

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

(d) Incorporated by reference to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1996, as filed with the Commission
on August 13, 1996.

(e) Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended December 31, 1997, as filed with the Commission on
March 30, 1998.

(f) Incorporated by reference to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1998, as filed with the Commission
on August 14, 1998.

(g) Incorporated by reference to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 2001, as filed with the Commission
on August 14, 2001.

(h) Incorporated by reference to the Company's Annual Report on Form 10-K
for the year ended December 31, 2001, as filed with the Commission on
March 29, 2002.

(i) Incorporated by reference to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 2002, as filed with the Commission
on August 16, 2002

(b) Reports of Form 8-K. The Company filed the following reports on Form
8-K during the year:

Form 8-K, dated August 15, 2002 reporting the certification of
the Chief Executive officer and Chief Financial Officer pursuant to 18 U.S.C.
1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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.

The registrant has not delivered to its security holders any annual report to
security holders covering the last fiscal year, proxy statement, form of proxy
or other proxy soliciting material (as described under this caption in Form 10-K
as promulgated by the Securities and Exchange Commission). A copy of this Form
10-K will be sent to each registered holder of the registrant's 12 1/2% Senior
Notes due 2004.

58

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

Certifications:

I, John B. Poindexter, certify that:

1. I have reviewed this annual report on Form 10-K of J.B. Poindexter & Co.,
Inc.;

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

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

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;

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

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

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

6. The registrant's other certifying officers and I have indicated in this
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 28, 2003 /s/ John B. Poindexter
-----------------------
Chief Executive Officer

59

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

I, Robert S. Whatley, certify that:

1. I have reviewed this annual report on Form 10-K of J.B. Poindexter & Co.,
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 statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;

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

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

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
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 function):

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

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

6. The registrant's other certifying officers and I have indicated in this
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 28, 2003 /s/ Robert S. Whatley
---------------------------
Principal Financial Officer

60

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

J.B. POINDEXTER & CO., INC.

Date: March 28, 2003 By: /s/ John B. Poindexter
-------------------------------------------------
John B. Poindexter, Chairman of the
Board, President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

Date: March 28, 2003 /s/ John B. Poindexter
-------------------------------------------------
John B. Poindexter
Chairman and Chief Executive Officer and Director
(Principal Executive Officer)

Date: March 28, 2003 /s/ Stephen P. Magee
-------------------------------------------------
Stephen P. Magee
Director

Date: March 28, 2003 /s/ W.J. Bowen
-------------------------------------------------
W.J. Bowen
Director

Date: March 28, 2003 /s/ Robert S. Whatley
-------------------------------------------------
Robert S. Whatley
Vice President Finance
(Principal Financial and Accounting Officer)

61

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

EXHIBIT INDEX

56

J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

10.1.16(g) Amendment No. 10 to Loan and Security Agreement by and among Congress Financial Corporation
and J.B. Poindexter & Co., Inc., dated June 21, 2001

10.1.17 Amendment No. 11 to Loan and Security Agreement by and among Congress Financial Corporation
and J.B. Poindexter & Co., Inc., dated August 14, 2001

10.1.18 Amendment No. 12 to Loan and Security Agreement by and among Congress Financial Corporation
and J.B. Poindexter & Co., Inc., dated December 13, 2001

10.1.19 Consent to Intercompany Loan to KWS and Brixius to Loan and Security Agreement by and among
Congress Financial Corporation and J.B. Poindexter & Co., Inc., dated August 14, 2001.

10.1.20(h) Amendment No. 13 to Loan and Security Agreement by and among Congress Financial Corporation
and J.B. Poindexter & Co., Inc., dated March 1, 2002

10.1.21(h) Amendment No. 14 to Loan and Security Agreement by and among Congress Financial Corporation
and J.B. Poindexter & Co., Inc., dated April 22, 2002

10.1.22 Amendment No. 15 to Loan and Security Agreement by and among Congress Financial Corporation
and J.B. Poindexter & Co., Inc., dated May 30, 2002

10.23(a) Lease Agreement, dated as of March 29, 1990, between Bartow Partners, L.P. and Morgan
Trailer Manufacturing Co., d/b/a Morgan Corporation, as amended by the First Amendment to
Lease Agreement, dated June 13, 1991

10.26(a) Form of Incentive Plan for certain employees of the Subsidiaries

10.27(a) Morgan Trailer Mfg. Co. Long-Term Management Equity Appreciation Program

10.86(e) Management Services Agreement dated as of May 23, 1994, between J.B. Poindexter & Co., Inc.
and Southwestern Holdings, Inc.

10.102(c) Asset Purchase Agreement, dated as of June 15, 1995, among Leer Inc., 20th Century
Fiberglass, Inc., Steven E. Robinson and Ronald E. Hickman. Incorporated by reference to
Exhibit 10.1 to the current report on Form 8-K, dated June 29, 1995, as filed with the
Commission on September 11, 1995

10.109(c) Share Purchase Agreement dated as of June 30, 1995, between Raider Industries, Inc. and
Martin Brown

10.110(c) Asset Purchase Agreement dated as of June 30, 1995, by and between Raider Industries Inc.,
Pro-More Industries Ltd., Brown Industries (1976) Ltd. and Martin Brown

10.111(e) Loan and Security Agreement by and between Congress Financial Corporation and Welshman
Industries Inc., dated October 31,1997

10.112(e) Asset Purchase Agreement by and among Radco Industries Inc. and Midwest Truck After Market
and William J. Avery, Sr. and Sarah A. Avery, dated October 31.1997

10.113(e) Asset Purchase Agreement by and among Lowy Group, Inc., J.B. Poindexter & Co., Inc. and
Blue Ridge Acquisition Company, LLC, dated August 31, 1998.

10.114(a) J.B. Poindexter & Co., Inc. Long-Term Performance Plan.

10.115(e) Asset Purchase Agreement between L.D. Brinkman & Co. (Texas) Inc. and Lowy Group, Inc. dated
June 7, 1999.

21.1 Subsidiaries of the Registrant