AMERICAN PLUMBING & MECHANICAL INC - 10-Q Quarterly Report

Back to GetFilings.com

================================================================================

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

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

For the quarter ended March 31, 2003

OR

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

Commission File No. 333-81139

American Plumbing & Mechanical, Inc.
(Exact name of Registrant as Specified in Its Charter)

DELAWARE 76-0577626
(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)

1950 LOUIS HENNA BLVD.
ROUND ROCK, TEXAS 78664
(Address of Principal Executive Offices) (ZIP Code)

(512) 246-5260
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 of 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 whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

As of May 15, 2003, there were outstanding 13,211,383 shares of common
stock and 331,116 shares of Class B common stock of the Registrant.

================================================================================

AMERICAN PLUMBING & MECHANICAL, INC. AND SUBSIDIARIES

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2003

TABLE OF CONTENTS

Part I - Financial Information..................................................................................2
ITEM 1. Financial Statements................................................................................2
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations..............13
ITEM 3. Quantitative and Qualitative Disclosures About Market Risks........................................20
ITEM 4. Controls and Procedures............................................................................20
Part II - Other Information....................................................................................22
ITEM 1. - Legal Proceedings.................................................................................22
ITEM 2. - Changes in Securities and Use of Proceeds.........................................................23
ITEM 3. - Defaults Upon Senior Securities...................................................................23
ITEM 4. - Submission of Matters to a Vote of Security Holders...............................................23
ITEM 5. - Other Information.................................................................................23
ITEM 6. - Exhibits and Reports on Form 8-K..................................................................23
SIGNATURES.....................................................................................................24

1

PART I - FINANCIAL INFORMATION

ITEM 1. Financial Statements

AMERICAN PLUMBING & MECHANICAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Data)

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

2

AMERICAN PLUMBING & MECHANICAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands)
(Unaudited)

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

3

AMERICAN PLUMBING & MECHANICAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)
(Unaudited)

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

4

AMERICAN PLUMBING & MECHANICAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. ORGANIZATION AND BASIS OF PRESENTATION

American Plumbing & Mechanical, Inc. and subsidiaries ("AMPAM" or the
"Company"), is the largest company in the United States focused primarily on the
residential plumbing contracting services industry. The Company also provides
heating, ventilation and air conditioning ("HVAC") and mechanical contracting
services. AMPAM provides plumbing, mechanical and HVAC installation services to
single family residential, multifamily residential and commercial construction
customers.

These unaudited interim statements should be read in conjunction with
the Company's historical consolidated financial statements and related notes
included in the Annual Report on Form 10-K as filed with the Securities and
Exchange Commission for the year ended December 31, 2002.

These unaudited interim financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America and the rules and regulations of the Securities and Exchange Commission
for reporting interim financial information. Accordingly, they do not include
all of the information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial statements.
Management believes all adjustments necessary for a fair presentation of these
interim statements have been included and are of a normal and recurring nature.
The results of operations for interim periods are not necessarily indicative of
the results for the fiscal year.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires the use
of estimates and assumptions by management in determining the reported amounts
of assets and liabilities, disclosures of contingent liabilities at the date of
the financial statements, and the reported amounts of revenue and expenses
during the reporting period. Significant estimates are used to determine the
Company's revenue on uncompleted contracts. These estimates also impact the
current asset "Costs and estimated earnings in excess of billings on uncompleted
contracts" and the current liability "Billings in excess of costs and estimated
earnings on uncompleted contracts". See REVENUE RECOGNITION for a further
discussion. Estimates of the ultimate liability for losses under self insured
insurance programs are also included in the Company's consolidated financial
statements. These estimates are developed based on the Company's historical
losses and industry standard claims growth factors. Significant estimates are
also used for goodwill impairment calculations. See GOODWILL for further
discussion. Actual results could differ from those estimates.

REVENUE RECOGNITION

AMPAM recognizes revenue from construction contracts on the
percentage-of-completion method measured by the percentage of cost incurred to
total estimated costs for each contract. Contract costs include all direct
material and labor costs. Changes in job performance, job conditions, estimated
profitability, and final contract settlements may result in revisions to costs
and income, the effects of which are recognized in the period the revisions are
determined. If the revised estimated direct costs will

5

result in a "loss" contract, an accrual is made to record the future loss at
that time. The current asset, "Costs and estimated earnings in excess of
billings on uncompleted contracts," represents estimated revenue recognized in
excess of amounts billed. The current liability, "Billings in excess of costs
and estimated earnings on uncompleted contracts," represents billings in excess
of estimated revenue recognized.

GOODWILL

AMPAM evaluates the carrying value of its goodwill and other intangible
assets at least annually. Potential goodwill impairment is assessed using a
discounted cash flow methodology. The Company uses estimates to determine future
discounted cash flows. Estimates used include, estimates of future cash flows,
future short-term and long-term growth rates, and weighted average cost of
capital. See note 8 for further discussion.

3. DISCONTINUED OPERATIONS

In August 2002, management decided to discontinue the single family
operations in southern Virginia. Following the standards set by Statement of
Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets," ("SFAS 144"), the Company did not expense the
estimated future costs of the discontinued operation at the time the decision
was made. Under SFAS 144, the costs are recorded in the statement of income
under operations until the impaired asset has been either completely disposed of
or abandoned and all costs associated with it have been recorded. In the fourth
quarter of 2002, the discontinued southern Virginia business unit ceased to
operate. Accordingly, the results of this operation were reflected as a loss on
discontinued operations, net of tax benefit in the statement of income.

The results of the discontinued operation for the presented periods are
as follows (in thousands):

The discontinued operations were abandoned except for leasehold
improvements of $0.2 million related to the leased facility. This amount is
included in the consolidated balance sheet at March 31, 2003. The leased
facility is for sale by the owner who, upon sale of the facility, has verbally
agreed to reimburse the Company for the amount of the leasehold improvements.
The Company expects to realize this asset in 2003.

4. SHUTDOWN OPERATIONS

Also in August 2002, management decided to shut down the commercial
operations in Sacramento, CA and Pensacola, FL. For the quarter ended March 31,
2003, these operations collectively incurred operating losses of $1.9 million on
a pretax basis. Management expects to incur an additional $1.0 million to $2.0
million pretax loss related to the shut down of these operations. The major
portion of these losses relate to the Company's commercial operations in
Sacramento, CA.

6

Management expects the shutdown locations' operations to be virtually
completed by June 30, 2003. Loss reserves of $1.6 million have been recorded at
March 31, 2003 to reflect expected costs in excess of contract revenue at our
Sacramento, CA and Pensacola, FL commercial operation locations. As of March 31,
2003, there were 19 active jobs as compared to 91 active jobs at June 30, 2002,
at these locations.

The results of these shutdown operations included in income from
operations for the presented periods are as follows (in thousands):

5. WARRANTY RESERVE

For certain contracts, the Company warrants labor for one year after
completion of a plumbing or air conditioning installation. A reserve for
warranty costs is recorded based upon the historical level of warranty claims
and management's estimate of future costs.

The changes in the consolidated warranty liability for the presented
periods are as follows:

6. LONG TERM DEBT

Long-term debt consists of the following (in thousands):

7

THE BANK CREDIT FACILITY

The bank credit facility, as amended, (the "Credit Facility") is a
senior secured revolving commitment in an aggregate principal amount of $84.0
million. The Credit Facility was used to (a) fund acquisitions, (b) repurchase
Senior Subordinated Notes, (c) repurchase Class B common stock (d) redeem
preferred stock and (e) provide working capital. The Credit Facility bears
interest, at the option of the Company, at the base rate of the arranging bank
plus an applicable margin or at LIBOR, plus an applicable margin. The applicable
margin is 4.50% above LIBOR or 3.50% above the agent bank's base rate. Interest
on base rate loans is payable monthly in arrears and interest on LIBOR loans is
payable at the end of each borrowing period. In 2001, the Company amended and
restated its Credit Facility to extend the maturity to March 31, 2004. All
principal amounts borrowed will be payable in full at maturity. The Credit
Facility is secured by (1) the accounts receivable, inventory, equipment and
other personal property of the Company, and (2) all of the capital stock owned
by AMPAM of its existing or later-formed domestic subsidiaries. The Company is
required to make prepayments or commitment reductions on the Credit Facility
under certain circumstances. As of March 31, 2003, the average interest rate on
the Credit Facility was 5.52%. Because the maturity of the Credit Facility is
now one year from the end of the reporting period, the outstanding amount of the
Credit Facility has been classified as a component of "Current maturities of
long-term debt." As of March 31, 2003, the Company had borrowings under the
Credit Facility of $72.5 million and outstanding letters of credit of $7.0
million, leaving $4.5 million in availability under the Credit Facility.

The Credit Facility requires the Company to maintain compliance with
certain specified financial covenants including maximum ratios of funded debt to
EBITDA, a minimum fixed charge coverage ratio, a minimum net worth, a capital
expenditure covenant, minimum EBITDA and other restrictive covenants.
Additionally, the terms of the Credit Facility limit the ability of the Company
to incur additional indebtedness, dispose of assets, make acquisitions or other
investments, and to make various other payments. On March 28, 2003, an amendment
to the Credit Facility was executed which amended certain covenants
prospectively. The Company met the amended covenants as of March 31, 2003 and
believes that it will continue to meet the amended covenants. As a condition of
the amendment, certain fees were paid and the interest rate on the Credit
Facility was increased by 0.5%. Additionally, if the Company does not repay its
obligation under the Credit Facility by July 31, 2003, an additional 1% fee will
be due the banks.

AMPAM utilizes its cash flow from operations and to the extent
available, borrowings under the Credit Facility, to enable the Company to meet
its working capital needs, debt service requirements and planned capital
expenditures for property and equipment. As of April 30, 2003, the Company had
borrowings under the Credit Facility of $76.9 million, outstanding letters of
credit of $7.0 million and cash on hand of $6.1 million. As the Company is fully
borrowed under the Credit Facility, all future cash flow requirements must be
provided by operating activities. If cash flows from operations are insufficient
to meet the Company's operating cash requirements, the Company will be forced to
seek additional sources of liquidity or take other actions, which may include
protection provided by the Federal reorganization statutes.

SENIOR SUBORDINATED NOTES

On May 19, 1999, the Company completed an offering of $125.0 million of
11 5/8% senior subordinated notes due in 2008 (the "Senior Subordinated Notes").
Subsequently, $30.0 million in face value of the outstanding Senior Subordinated
Notes were repurchased and retired. The Senior Subordinated Notes are
subordinated to all existing and future senior indebtedness of the Company and
are guaranteed by each of the Company's current and future subsidiaries.
Separate financial information of the subsidiary guarantors is not presented as
the parent company has no independent assets or operations, and the guarantees
as to the Senior Subordinated Notes are full and unconditional and joint

8

and several. There are no restrictions on the ability of the parent company to
obtain funds from the subsidiary guarantors. The Company has the option to
redeem the Senior Subordinated Notes at any time on or after 2004 at specified
redemption prices. Additionally, the Company is required under certain
circumstances to offer to repurchase the Senior Subordinated Notes at specified
redemption prices in the event of a change in control. The terms of the Senior
Subordinated Notes limit the ability of the Company to, among other things,
incur additional indebtedness, dispose of assets, make acquisitions, make other
investments, pay dividends and to make various other payments. The Senior
Subordinated Notes are reflected in the accompanying balance sheet net of an
original issuance discount of approximately $1.1 million which is being
amortized to interest expense over the term of the bonds. The Company makes
semi-annual interest payments on the Senior Subordinated Notes of $5.5 million
on April 15 and October 15 of each year. The Company made the April 15, 2003
interest payment as scheduled. The Company's Credit Facility and Senior
Subordinated Notes contain cross default provisions.

7. COMMITMENTS AND CONTINGENCIES

LEGAL PROCEEDINGS

In October 2001, AMPAM and its operating subsidiary AMPAM Christianson,
L.P. filed suit against two former stockholders of Christianson Enterprises who
were holders of approximately one-half of AMPAM's Series A Redeemable Preferred
Stock ("preferred stock") alleging, among other things, breaches of certain
provisions of the underlying acquisition agreement pursuant to which AMPAM
purchased Christianson Enterprises n/k/a AMPAM Christianson. In February 2002,
the defendants filed a counterclaim alleging, among other things, anticipatory
breach of the acquisition agreement. On April 1, 2002, the parties finalized a
settlement agreement and general release pursuant to which the defendants and
related parties tendered all of their preferred stock and AMPAM paid the
defendants and related parties $3.1 million. Upon transfer of consideration,
AMPAM retired the preferred stock and realized an increase in Additional Paid in
Capital of $3.8 million representing the liquidation value of the preferred
stock received net of the proceeds attributable to the preferred stock and costs
incurred to facilitate the settlement. As of April 1, 2002, the defendants and
their related parties held 524,410 shares of preferred stock with a liquidation
value of $6.8 million and were due approximately $0.5 million for outstanding
but undeclared dividends, all of which were included in the settlement. The
parties have no further duties, obligations, or liabilities to each other
related to the acquisition agreement or preferred stock and have released any
and all claims against each other.

Three remaining holders of preferred stock hold 524,410 combined
shares. The remaining preferred stockholders have exercised their right under
the terms of the preferred stock designation to require the Company to purchase
all of their preferred stock. Restrictions within the terms of the Company's
Credit Facility preclude redemption of the preferred stock and the payment of
further dividends. Because the preferred stock has been "put" to AMPAM, the
liquidation value of these shares has been classified as "Other long-term
liabilities" on the balance sheet as of March 31, 2003. On or about January 22,
2003, the remaining preferred stockholders initiated a binding arbitration
proceeding against the Company seeking, among other things, specific performance
by the Company to purchase all of their preferred stock. The Company intends to
defend the arbitration vigorously but can make no representation as to the
outcome of the arbitration.

Additionally, because the Company has not purchased the preferred
stock, pursuant to the terms of the preferred stock designation, the Company may
not engage in the following activities without the affirmative vote of not less
than a majority of the holders of the preferred stock, voting together as a
single class:

(i) incur any additional indebtedness for borrowed money other
than borrowings under any credit facility to which the Company
is a party at such time and as in effect when any

9

redemption payment becomes due and is unpaid or at the time
any dividend payment becomes due and is unpaid;

(ii) effect (or make any agreement or become obligated to effect)
any (a) sale, lease, assignment, transfer or other conveyance
of the assets of the Company or its subsidiaries which
individually or in the aggregate would constitute a
significant subsidiary, (b) consolidation or merger involving
the Company or any of its subsidiaries, or (c) dissolution,
liquidation or winding-up of the Company or any of its
subsidiaries; provided however that in no event shall the
Company effect any sale, lease, assignment, transfer or other
conveyance of the assets of the Company or its subsidiaries to
affiliates of the Company;

(iii) make (or permit any subsidiary to make) any loan or advance
to, or own any stock or other securities of, any subsidiary or
other corporation, partnership, or other entity unless it is
wholly owned by the Company and except for any such loans and
advances which do not in the aggregate exceed $250,000;

(iv) make any loan or advance to any person, including, without
limitation, any employee or director of the Company or any
subsidiary, except advances and similar expenditures in the
ordinary course of business; or

(v) acquire, by purchase, exchange, merger or otherwise, all or
substantially all of the properties or assets of any other
corporation or entity.

The Company is also involved in other disputes or legal actions arising
in the ordinary course of business. Management does not believe the outcome of
such "ordinary course" legal actions will have a material adverse effect on the
Company's financial position or results of operations.

INSURANCE

The Company is self insured for health care, workers' compensation, and
general, property and auto liability up to predetermined amounts above which
third party insurance applies. As of March 31, 2003, the Company has accrued for
the expected costs under the self insured programs. These accruals are based on
industry development factors that may change based upon AMPAM's actual claim
experience. The Company is insured through third party insurance for other types
of exposures including an umbrella policy up to specific limits.

8. GOODWILL

In June 2001, the FASB issued SFAS No. 142 "Goodwill and Other
Intangible Assets." SFAS 142, effective January 1, 2002, established new
accounting and reporting requirements for goodwill and other intangible assets
and addressed the accounting and reporting for acquired goodwill and other
intangible assets. It also provides that goodwill should not be amortized, but
must be tested for impairment annually or more frequently if circumstances
indicate potential impairment. SFAS 142 also required the Company to complete a
transitional goodwill impairment test within six months from the date of
adoption and at least annually thereafter. Under SFAS 142, the impairment
adjustment, if any, recognized at adoption of the new rules was to be reflected
as a cumulative effect of change in accounting principle in the statement of
income. Prospectively, goodwill impairment will be assessed using a discounted
cash flow methodology. Impairment adjustments recorded subsequently are required
to be recognized as an operating expense.

10

Significant estimates used in the methodologies include estimates of
future cash flows, future short-term and long-term growth rates, and weighted
average cost of capital. On an ongoing basis (absent any impairment indicators),
the Company will perform impairment tests annually.

In the first quarter of 2002, goodwill was tested for impairment by
comparing the fair value of each business segment with its carrying value. Based
on the impairment tests performed, the Company recognized a charge of $34.6
million (net of tax) in the first quarter of 2002 to reduce the carrying value
of goodwill associated with the commercial segment to its implied fair value.
This adjustment was reflected as a cumulative effect of a change in accounting
principle in the first quarter 2002 statement of income. Due to further
deterioration of the commercial segment in 2002, AMPAM re-evaluated the carrying
value of the goodwill for each segment as of December 31, 2002. Upon completion
of the evaluation, the Company recorded an impairment of the remaining goodwill
related to the commercial segment of $12.7 million in December 2002. Because the
expensing of goodwill is almost entirely non-deductible for tax purposes,
neither of these expenses created a material tax benefit for the Company. At
March 31, 2003, the Company had $107.2 million of goodwill remaining on the
balance sheet.

9. STOCK BASED COMPENSATION

In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure an amendment of FASB
Statement No. 123, 'Accounting for Stock-Based Compensation'", to provide
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. It also amends the
disclosure requirements of Statement 123 to require prominent disclosures in
both annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method of accounting for
stock-based compensation and the effect of the method used on reported results.
Certain disclosure requirements under SFAS No. 148 are effective for all
financial statements issued for fiscal years and interim reporting periods
ending after December 15, 2002.

The Company has elected to follow the disclosure only requirements of
SFAS 148 and thus will not record compensation expense for option issuances.
Therefore, in accordance with SFAS 148, the Company must disclose the proforma
amounts as if compensation expense had been recorded for all option issuances.
The Company uses the Black-Scholes pricing model to measure the pro-forma
compensation expense attributable to stock options granted to employees. If the
stock options granted had been expensed the Company's net loss would have been
increased to the pro forma amounts indicated below (in thousands):

As of March 31, 2003, approximately 2.2 million options for common
stock are available for grant under the Company's stock option plan.

The Company has reserved 108,928 shares of its common stock for
issuance to certain current and former employees pursuant to the Founding
Companies acquisition agreements.

11

10. OPERATING SEGMENTS

AMPAM's internal organizational structure is divided into three
reporting segments: single family residential, multifamily residential and
commercial. The Company's reportable segments offer the same products and
services to distinct customer groups. Because each business segment requires
different operating and marketing strategies they are managed and reviewed
separately. During the first quarter of 2003, AMPAM derived approximately 55%,
31% and 14% of its revenue from single family residential, multifamily
residential and commercial customers. These three reporting segments all operate
domestically, with no intersegment or foreign sales. The residential segments
share the same growth strategies and provide plumbing and HVAC services;
however, these different segments provide services to different customers and
have different competitors. The commercial segment is focused on obtaining
plumbing and mechanical contracts with higher margins.

The single family residential market includes housing projects, small
condominium projects and townhouse development. The multifamily residential
market includes large apartment and condominium projects. The commercial market
includes retail establishments, office buildings, hotels, manufacturing plants
and other industrial complexes and public and private institutional buildings
including schools, hospitals, dormitories, stadiums, airports and prisons.

The financial information presented for each segment does not allocate
corporate overhead costs. Corporate expenses in the quarters presented include
costs related to executive and operations management, sales and marketing,
accounting and administrative support. Corporate assets primarily include cash,
deferred tax assets, debt issuance costs, intangible assets (other than
goodwill), fixed assets related to the Company's corporate office and non-trade
accounts receivable. The goodwill associated with each segment is reflected in
total assets for the segment. The Company measures performance of the segments
based on income (loss) from operations.

Segment information for the three months ended March 31, 2003 and 2002
is as follows (unaudited, in thousands):

12

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES INCLUDED ELSEWHERE
IN THIS QUARTERLY REPORT ON FORM 10-Q AND THE CONSOLIDATED FINANCIAL STATEMENTS
AND RELATED NOTES AND OTHER DETAILED INFORMATION REGARDING AMPAM INCLUDED IN OUR
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002 AND OTHER
REPORTS FILED BY US WITH THE SECURITIES AND EXCHANGE COMMISSION.

This report contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended ("Securities Act") and
Section 21E of the Exchange Act to be covered by safe harbors created thereby.
Such forward-looking statements are made only as of the date of this report and
involve known and unknown risks, uncertainties and other important factors that
could cause the actual results, performance or achievements of the Company, or
industry results, to differ materially from any future results, performance or
achievements expressed or implied by such forward-looking statements. Readers
are cautioned that such information involves risks and uncertainties, including
those created by general market conditions, competition and the possibility that
events may occur which limit the ability of American Plumbing & Mechanical, Inc.
and subsidiaries ("AMPAM", the "Company", "we" or "us") to maintain or improve
its operating results. Such risks, uncertainties and other important factors
include, among others, retention of key management, a national economic downturn
or one or more regional downturns in construction, shortages of labor and
specialty building materials, difficulty in obtaining or increased costs
associated with debt financing, seasonal fluctuations in the demand for plumbing
and HVAC systems, existing or future claims that could exceed the levels at
which the Company is insured by third parties, the Company's ability to manage
its growth, the use of incorrect project cost estimates which are used to
determine our percentage of completion and revenue on uncompleted jobs and
goodwill impairment write-offs. For further details on these risks, refer to the
Risk Factor section of the Company's Form 10-K for the year ended December 31,
2002. All statements, other than statements of historical facts, included or
incorporated by reference in this report that address activities, events or
developments that we expect or anticipates will or may occur in the future,
including such things as future capital expenditures (including the amount and
nature thereof), business strategy and measures to implement such strategy,
competitive strengths, goals, expansion and growth of our business and
operations, plans, references to future success, as well as other statements
which include words such as "anticipate," "believe," "plan," "estimate,"
"expect," and "intend" and other similar expressions, constitute forward-looking
statements. Although we believe that the assumptions underlying the
forward-looking statements contained herein are reasonable, any of the
assumptions could be inaccurate, and the inclusion of such information should
not be regarded as a representation that it will occur.

GENERAL

American Plumbing and Mechanical, Inc. and subsidiaries ("AMPAM", the
"Company", "we" or "us") is the largest company in the United States focused
primarily on the residential plumbing contracting services industry. The Company
also provides heating, ventilation and air conditioning ("HVAC") and mechanical
contracting services. We provide plumbing, mechanical and HVAC installation
services to single family residential, multifamily residential and commercial
construction customers. The following discussion should be read in conjunction
with the consolidated financial statements.

Our internal organizational structure is divided into three reporting
segments: single family residential, multifamily residential and commercial.
These operating segments offer similar products and services with differing
complexities to distinct customer groups and have different competitors. Because

13

each business segment requires different operating and marketing strategies they
are managed and reviewed separately. All three reporting segments operate
domestically, with no intersegment or foreign sales. The residential segments
share similar growth strategies and provide plumbing and HVAC services. Our
commercial segment is focused on obtaining plumbing and mechanical contracts
with higher margins.

The single family residential market includes housing projects, small
condominium projects and townhouse development. The multifamily residential
market includes large apartment and condominium projects. The commercial market
includes retail establishments, office buildings, hotels, manufacturing plants
and other industrial complexes and public and private institutional buildings
including schools, hospitals, dormitories, stadiums, airports and prisons.

The financial information presented for each segment does not allocate
corporate overhead costs. Corporate expenses in the quarters presented include
costs related to executive and operations management, sales and marketing,
accounting and administrative support. Corporate assets primarily include cash,
deferred tax assets, debt issuance costs, intangible assets (other than
goodwill), fixed assets related to the Company's corporate office and non-trade
accounts receivable. The goodwill associated with each segment is reflected in
total assets for the segment. The Company measures performance of the segments
based on income (loss) from operations which is presented in the tables below:

As further discussed below, we are in the process of shutting down two
of our commercial operations and have completed the shutdown of one of our small
single family locations.

DISCONTINUED OPERATIONS

In August 2002, management decided to discontinue the single family
operations in southern Virginia. Following the standards set by Statement of
Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets," ("SFAS 144"), the Company did not expense the
estimated future costs of the discontinued operation at the time the decision
was made. Under SFAS 144, the costs are recorded in the statement of income
under operations until the impaired asset has been either completely disposed of
or abandoned and all costs associated with it have been recorded. In the fourth
quarter of 2002, the discontinued southern Virginia business unit ceased to

14

operate. Accordingly, the results of this operation were reflected as a loss on
discontinued operations, net of tax benefit in the statement of income.

The results of the discontinued operation for the presented periods are
as follows (in thousands):

SHUTDOWN OPERATIONS

Also in August 2002, management decided to shut down our commercial
operations in Sacramento, CA and Pensacola, FL. For the quarter ended March 31,
2003, these operations collectively incurred operating losses of $1.9 million on
a pretax basis. Management expects to incur an additional $1.0 million to $2.0
million pretax loss related to the shut down of these operations. The major
portion of these losses relate to our commercial operations in Sacramento, CA.
This operation expanded rapidly in late 2001 and early 2002 growing from
approximately 150 employees at September 30, 2001 to approximately 450 employees
at June 30, 2002. The loss at the shutdown locations resulted from underbidding
jobs, unfavorable changes in job estimates and poor field performance.

Management expects the shutdown locations' operations to be virtually
completed by June 30, 2003. Loss reserves of $1.6 million have been recorded at
March 31, 2003 to reflect expected costs in excess of contract revenue at our
Sacramento, CA and Pensacola, FL commercial operation locations. As of March 31,
2003, there were 19 active jobs as compared to 91 active jobs at June 30, 2002,
at these locations.

The results of these shutdown operations included in income from
operations for the presented periods are as follows (in thousands):

15

RESULTS OF ONGOING OPERATIONS

Our ongoing operations reflect the results of the Company excluding the
shutdown and discontinued operations.

SINGLE FAMILY SEGMENT

The results of the continuing single family operations for the
presented periods were as follows (in thousands):

Revenue from continuing single family operations increased $4.7 million
or 6.7% in the first quarter of 2003 compared to the first quarter of 2002. The
increase in revenue was due to an increased number of housing starts in our
Phoenix and Sacramento markets offset by a slowdown of service in our Las Vegas
market. The decrease in volume in our Las Vegas market is due to a deliberate
reduction in volume in an effort to improve our margins in the market. Gross
profit declined by $1.9 million or 15.3% in the first quarter of 2003 compared
to the first quarter of 2002, while gross margins from single family operations
decreased from 17.2% in the quarter ended March 31, 2002, to 13.7% in the
quarter ended March 31, 2003. The decrease in gross margins was mainly due to
declines in Las Vegas, northern Virginia and Maryland offset by improvements in
the Phoenix and Sacramento markets. The lower margins in our Las Vegas, northern
Virginia and Maryland markets were the result of inefficiencies in our material
utilization and higher labor costs offset by lower materials costs resulting
from the implementation of our national procurement strategy.

Selling, general and administrative expenses increased by $0.5 million
or 6.6% in the first quarter compared to the first quarter of 2002, due to
higher property and casualty insurance costs. As a percentage of revenue
selling, general and administrative expenses stayed consistent at 10.9% of
revenue for the quarters ended March 31, 2002 and 2003. Income from single
family operations declined by $2.4 million from 6.3% in the first quarter of
2002 to 2.8% in the first quarter of 2003 as a percentage of revenue due to the
factors discussed above.

MULTIFAMILY SEGMENT

The results of the multifamily operations for the presented periods
were as follows (in thousands):

16

Revenue from multifamily operations increased $3.6 million or 9.2% in
the first quarter of 2003 compared to the first quarter of 2002. The increase in
revenue was due mainly to increased levels of multifamily construction and
favorable changes in job cost estimates on jobs completed in the first quarter
of 2003 resulting in the recognition of the remaining revenue on these jobs,
particularly in our southern California, central Florida and Atlanta markets.
Gross profit from multifamily operations increased $2.0 million or 31.0% in the
first quarter of 2003 compared to the first quarter of 2002, while gross margins
increased from 16.6% in the quarter ended March 31, 2002, to 19.9% in the
quarter ended March 31, 2003. The increase in gross margins was due to higher
volume leveraged over relatively constant levels of field overhead, favorable
changes in jobs estimates and lower materials costs resulting from the
implementation of our national procurement strategy.

Selling, general and administrative expenses increased $0.3 million or
7.5% in the first quarter of 2003, compared to the first quarter of 2002, and
decreased slightly from 9.5% in the quarter ended March 31, 2002, to 9.4% in the
quarter ended March 31, 2003, as a percentage of revenue. Income from
multifamily operations increased $1.7 million from 7.1% in the quarter ended
March 31, 2002 to 10.6% in the quarter ended March 31, 2003, as a percentage of
revenue due to the factors discussed above.

COMMERCIAL SEGMENT

The results of the commercial operations for the presented periods were
as follows (in thousands):

Revenue from ongoing commercial operations increased $1.3 million or
7.0% in the first quarter of 2003 compared to the first quarter of 2002. The
increase in revenue was due mainly to renewed strength in the commercial
construction industry in our southern California market. Gross profit from
ongoing commercial operations increased $0.8 million in the first quarter of
2003, compared to the first quarter of 2002, while gross margins increased from
10.0% in the quarter ended March 31, 2002, to 13.8% in the quarter ended March
31, 2003. The increase in gross margins was due to our continued focus on higher
margin jobs, increased volume and more efficient production.

Selling, general and administrative expenses increased $0.3 million
from 8.3% in the quarter ended March 31, 2002, to 9.3% in the quarter ended
March 31, 2003, as a percentage of revenue. The increase in selling, general and
administrative costs was due to an increase in management and personnel costs.
Income from ongoing commercial operations increased $0.6 million from 1.8% in
the quarter ended March 31, 2002, to 4.5% in the quarter ended March 31, 2003,
as a percentage of revenue due to the factors as discussed above.

CORPORATE

Selling, general and administrative expenses at corporate decreased
$0.6 million from $2.2 million in the quarter ended March 31, 2002, to $1.6
million in the quarter ended March 31, 2003. The decrease in

17

selling, general and administrative expenses at corporate was mainly due to a
reduction in personnel and overall cost cutting efforts.

OTHER CONSOLIDATED ITEMS REQUIRED TO RECONCILE TO NET INCOME

Other expense, net, increased $0.3 million from $4.0 million in the
quarter ended March 31, 2002, to $4.3 million in the quarter ended March 31,
2003. The increase was mainly due to increased interest expense resulting from
the higher interest rate that the Company pays on its variable rate debt.

The provision for (benefit from) income taxes decreased $0.7 million
reflecting the tax benefit generated by the Company's operating loss during the
first quarter of 2003. Consolidated net loss decreased from a loss of $34.1
million for the quarter ended March 31, 2002, to a loss of $0.4 million for the
quarter ended March 31, 2003. The net loss in the quarter ended March 31, 2002
reflects the cumulative effect of a change in accounting principle resulting
from our adoption of SFAS 142.

SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires the use
of estimates and assumptions by management in determining the reported amounts
of assets and liabilities, disclosures of contingent liabilities at the date of
the financial statements, and the reported amounts of revenue and expenses
during the reporting period. Significant estimates are used to determine the
Company's revenue on uncompleted contracts. These estimates also impact the
current asset "Costs and estimated earnings in excess of billings on uncompleted
contracts" and the current liability "Billings in excess of costs and estimated
earnings on uncompleted contracts". See REVENUE RECOGNITION for a further
discussion. Estimates of the ultimate liability for losses under self insured
insurance programs are also included in the Company's consolidated financial
statements. These estimates are developed based on the Company's historical
losses and industry standard claims growth factors. Significant estimates are
also used for goodwill impairment calculations, see GOODWILL for a further
discussion. Actual results could differ from those estimates.

REVENUE RECOGNITION

AMPAM recognizes revenue from construction contracts on the
percentage-of-completion method measured by the percentage of cost incurred to
total estimated costs for each contract. Contract costs include all direct
material and labor costs. Changes in job performance, job conditions, estimated
profitability, and final contract settlements may result in revisions to costs
and income, the effects of which are recognized in the period the revisions are
determined. If the revised estimated direct costs will result in a "loss"
contract, an accrual is made to record the remaining loss at that time. The
current asset, "Costs and estimated earnings in excess of billings on
uncompleted contracts," represents estimated revenue recognized in excess of
amounts billed. The current liability, "Billings in excess of costs and
estimated earnings on uncompleted contracts," represents billings in excess of
estimated revenue recognized.

GOODWILL

AMPAM evaluates the carrying value of its goodwill and other intangible
assets at least annually. Potential goodwill impairment is assessed using a
discounted cash flow methodology. The Company uses estimates to determine future
discounted cash flows. Estimates used include, estimates of future cash flows,
future short-term and long-term growth rates, and weighted average cost of
capital.

18

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2003, current liabilities exceeded current assets by
$8.6 million reflecting the classification of amounts under the Credit Facility
due March 31, 2004 as a current liability. Additionally, the Company had $94.6
million of outstanding long-term indebtedness, including capital lease
obligations totaling $0.8 million.

For the three months ended March 31, 2003, net cash used in operating
activities was $9.3 million. This was primarily attributable to an increase in
the use of working capital and losses incurred at locations that are being
shutdown. Cash used in investing activities was $0.2 million which primarily
relates to capital expenditures of $0.3 million, offset by proceeds from sales
of property and equipment. Cash provided by financing activities for the three
months ended March 31, 2003, was $12.5 million and was obtained from net
borrowings on the Company's Credit Facility.

For the three months ended March 31, 2002, net cash used in operating
activities was $7.5 million. This use of cash was primarily attributable to an
increase in working capital. Cash used in investing activities was $0.9 million
which primarily relates to capital expenditures of $1.0 million. Cash provided
by financing activities for the three months ended March 31, 2002, was $9.1
million and was obtained from net borrowings on our Credit Facility.

The Company's Credit Facility, with a total commitment of $84.0
million, as amended, matures on March 31, 2004. Pursuant to the March 28, 2003,
amendment, the Credit Facility bears interest, at the option of the Company, at
the base rate of the arranging bank plus an applicable margin or at LIBOR, plus
an applicable margin. The applicable margin is 4.50% above LIBOR or 3.50% above
the agent bank's base rate. As of March 31, 2003, the Company had borrowings of
$72.5 million and outstanding letters of credit of $7.0 million, leaving $4.5
million available under the Credit Facility. Borrowings under the credit
facility are classified as a current liability as of March 31, 2003. The Company
is investigating alternative sources of borrowings to repay the Credit Facility
on or before maturity. There are no assurances that such borrowings will be
available to the Company.

AMPAM utilizes its cash flow from operations and to the extent
available, borrowings under the Credit Facility, to enable the Company to meet
its working capital needs, debt service requirements and planned capital
expenditures for property and equipment. As of April 30, 2003, the Company had
borrowings under the Credit Facility of $76.9 million, outstanding letters of
credit of $7.0 million and cash on hand of $6.1 million. As the Company is fully
borrowed under the Credit Facility, all future cash flow requirements must be
provided by operating activities. If cash flows from operations are insufficient
to meet the Company's operating cash requirements, the Company will be forced to
seek additional sources of liquidity or take other actions, which may include
protection provided by the Federal reorganization statutes. The Company makes
semi-annual interest payments on the Senior Subordinated Notes of $5.5 million
on April 15 and October 15 of each year. The Company made the April 15, 2003,
interest payment as scheduled.

The Credit Facility requires the Company to maintain compliance with
certain specified financial covenants including maximum ratios of funded debt to
EBITDA, a minimum fixed charge coverage ratio, a minimum net worth, a capital
expenditure covenant, minimum EBITDA and other restrictive covenants.
Additionally, the terms of the Credit Facility limit the ability of the Company
to incur additional indebtedness, dispose of assets, make acquisitions or other
investments and to make various other payments. On March 28, 2003, an amendment
to the Credit Facility was executed which amended certain covenants
prospectively. The Company met the amended covenants as of March 31, 2003 and
believes that it will continue to meet the amended covenants. As a condition of
the amendment, certain

19

fees were paid and the interest rate on the Credit Facility was increased by
0.5%. Additionally, if the Company does not repay its obligation under the
Credit Facility by July 31, 2003, an additional 1% fee will be due the banks.
The Company's Credit Facility and Senior Subordinated Notes contain cross
default provisions.

AMPAM has three remaining holders of preferred stock who cumulatively
hold 524,410 shares. As of March 31, 2003, the value of the outstanding
preferred shares was $6.8 million not including $0.5 million for accrued and
outstanding but undeclared dividends. The preferred stockholders have exercised
their right under the terms of the preferred stock designation to require the
Company to purchase all of their preferred stock. Restrictions within the terms
of the Company's Credit Facility preclude redemption of the preferred stock and
the payment of further dividends. Because the preferred stock has been "put" to
AMPAM, the liquidation value of these shares has been classified as "Other
long-term liabilities" on the balance sheet as of March 31, 2003. For further
discussion regarding the outstanding preferred shares refer to Part II, Item I,
Legal Proceedings.

SEASONALITY

The plumbing and HVAC industry is influenced by seasonal declines in
operations and demand that affect the construction business, particularly in
residential construction. These declines due to weather, buying trends and other
factors result in lower activity during the first and fourth quarters. There can
be no assurance that AMPAM's combined geographic, service and product mix will
be sufficient to overcome such declines that may occur in the future or that
other seasonal patterns will not emerge. The Company's quarterly results may
also be affected by the regional economic conditions. Accordingly, performance
in any particular quarter may not be indicative of the results that can be
expected for other quarters or for the entire year.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risks

We are exposed to various market risks primarily related to potential
adverse changes in interest rates. In the normal course of business, we employ
established policies and procedures to manage this risk. Our exposure to changes
in interest rates primarily results from our short-term and long-term debt with
both fixed and floating interest rates. AMPAM's debt with fixed interest rates
consists of Senior Subordinated Notes and capital leases. Our debt with variable
interest rates consists primarily of the Credit Facility.

If market interest rates were to increase immediately and uniformly by
100 basis points from levels as of March 31, 2003, the related annual interest
expense would increase by approximately $0.7 million.

Other than the items mentioned above, there were no other material
quantitative or qualitative changes during the first three months of fiscal 2003
in the Company's market risk sensitive instruments.

ITEM 4. Controls and Procedures

Within the 90-day period before the filing of this report, an
evaluation was carried out under the supervision and with the participation of
the Company's management, including the Chief Executive Officer ("CEO") and
Controller, of the effectiveness of the Company's disclosure controls and
procedures. Based on that evaluation, the CEO and Controller have concluded that
the Company's disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Company in reports that the Company
files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms, and that such information is accumulated and
communicated to the Company's management,

20

including the CEO and Controller, as appropriate, to allow timely decisions
regarding required disclosure.

AMPAM also maintains a system of internal accounting controls that are
designed to provide reasonable assurance that the books and records of the
Company accurately reflect the transactions of the Company and that the
Company's polices and procedures are followed. There have been no significant
changes in the Company's internal controls or in other factors that could
significantly affect such controls since the most recent evaluation of these
controls, including any corrective actions with regard to significant
deficiencies or material weaknesses in the Company's internal controls.

21

PART II - OTHER INFORMATION

ITEM 1. - Legal Proceedings

In October 2001, AMPAM and its operating subsidiary AMPAM Christianson,
L.P. filed suit against two former stockholders of Christianson Enterprises who
were holders of approximately one-half of AMPAM's Series A Redeemable Preferred
Stock ("preferred stock") alleging, among other things, breaches of certain
provisions of the underlying acquisition agreement pursuant to which AMPAM
purchased Christianson Enterprises n/k/a AMPAM Christianson. In February 2002,
the defendants filed a counterclaim alleging, among other things, anticipatory
breach of the acquisition agreement. On April 1, 2002, the parties finalized a
settlement agreement and general release pursuant to which the defendants and
related parties tendered all of their preferred stock and AMPAM paid the
defendants and related parties $3.1 million. Upon transfer of consideration,
AMPAM retired the preferred stock and realized an increase in Additional Paid in
Capital of $3.8 million representing the liquidation value of the preferred
stock received net of the proceeds attributable to the preferred stock and costs
incurred to facilitate the settlement. As of April 1, 2002, the defendants and
their related parties held 524,410 shares of preferred stock with a liquidation
value of $6.8 million and were due approximately $0.5 million for outstanding
but undeclared dividends, all of which were included in the settlement. The
parties have no further duties, obligations, or liabilities to each other
related to the acquisition agreement or preferred stock and have released any
and all claims against each other.

Three remaining holders of preferred stock hold 524,410 combined
shares. The remaining preferred stockholders have exercised their right under
the terms of the preferred stock designation to require the Company to purchase
all of their preferred stock. Restrictions within the terms of the Company's
Credit Facility preclude redemption of the preferred stock and the payment of
further dividends. Because the preferred stock has been "put" to AMPAM, the
liquidation value of these shares has been classified as "Other long-term
liabilities" on the balance sheet as of March 31, 2003. On or about January 22,
2003, the remaining preferred stockholders initiated a binding arbitration
proceeding against the Company seeking, among other things, specific performance
by the Company to purchase all of their preferred stock. The Company intends to
defend the arbitration vigorously but can make no representation as to the
outcome of the arbitration.

Additionally, because the Company has not purchased the preferred
stock, pursuant to the terms of the preferred stock designation, the Company may
not engage in the following activities without the affirmative vote of not less
than a majority of the holders of the preferred stock, voting together as a
single class:

(vi) incur any additional indebtedness for borrowed money other
than borrowings under any credit facility to which the Company
is a party at such time and as in effect when any redemption
payment becomes due and is unpaid or at the time any dividend
payment becomes due and is unpaid;

(vii) effect (or make any agreement or become obligated to effect)
any (a) sale, lease, assignment, transfer or other conveyance
of the assets of the Company or its subsidiaries which
individually or in the aggregate would constitute a
significant subsidiary, (b) consolidation or merger involving
the Company or any of its subsidiaries, or (c) dissolution,
liquidation or winding-up of the Company or any of its
subsidiaries; provided however that in no event shall the
Company effect any sale, lease, assignment, transfer or other
conveyance of the assets of the Company or its subsidiaries to
affiliates of the Company;

22

(viii) make (or permit any subsidiary to make) any loan or advance
to, or own any stock or other securities of, any subsidiary or
other corporation, partnership, or other entity unless it is
wholly owned by the Company and except for any such loans and
advances which do not in the aggregate exceed $250,000;

(ix) make any loan or advance to any person, including, without
limitation, any employee or director of the Company or any
subsidiary, except advances and similar expenditures in the
ordinary course of business; or

(x) acquire, by purchase, exchange, merger or otherwise, all or
substantially all of the properties or assets of any other
corporation or entity.

The Company is also involved in other disputes or legal actions arising
in the ordinary course of business. Management does not believe the outcome of
such "ordinary course" legal actions will have a material adverse effect on the
Company's financial position or results of operations.

ITEM 2. - Changes in Securities and Use of Proceeds

None

ITEM 3. - Defaults Upon Senior Securities

None

ITEM 4. - Submission of Matters to a Vote of Security Holders

None

ITEM 5. - Other Information

On or about April 23, 2003 Mr. David C. Baggett resigned his positions
as President, Chief Operating Officer and Chief Financial Officer. Mr. Robert A.
Christianson, the Company's Chief Executive Officer, has assumed Mr. Baggett's
operations responsibilities until a successor is identified. Mr. Paul Leleux,
the Company's Controller, has assumed Mr. Baggett's financial responsibilities
until a successor is identified.

ITEM 6. - Exhibits and Reports on Form 8-K

(a) The exhibits to this report are listed below

*3.1 Amended and Restated Certificate of Incorporation (American
Plumbing& Mechanical, Inc. Registration Statement on Form S-4
(File No. 333-81139), Exhibit 3.1).

*3.2 Amended and Restated Bylaws (American Plumbing & Mechanical,
Inc. Registration Statement on Form S-4 (File No. 333-81139),
Exhibit 3.2).

*3.3 Certificate of Designations of 10% Cumulative Redeemable
Convertible Preferred Stock, Series A (American Plumbing &
Mechanical, Inc. Registration Statement on Form S-4 (File No.
333-81139), Exhibit 3.3).

*4.1 Indenture, dated May 19, 1999, by and among American Plumbing
& Mechanical, Inc., State Street Bank and Trust Company and
the other parties named therein with respect to

23

$125,000,000 11 5/8% Senior Subordinated Notes due 2008
(American Plumbing & Mechanical, Inc. Registration Statement
on Form S-4 (File No. 333-81139), Exhibit 4.1).

99.1 Certification of Robert A. Christianson pursuant to 18 U.S.C.
Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

99.2 Certification of Paul Leleux pursuant to 18 U.S.C. Section
1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.

*Incorporated by reference

(b) The registrant filed no reports on Form 8-K during the period
covered by this quarterly report on Form 10-Q.

SIGNATURES

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

AMERICAN PLUMBING AND MECHANICAL, INC.

Date: May 15, 2003 By: /s/ Robert A. Christianson
----------------------------------

Robert A. Christianson
Chief Executive Officer

Date: May 15, 2003 By: /s/ Paul Leleux
----------------------------------

Paul Leleux
Controller

24

CERTIFICATIONS

I, Robert A. Christianson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of American
Plumbing & Mechanical, 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 quarterly report;

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

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

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

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

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

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

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

6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 15, 2003 /s/ Robert A. Christianson
------------------------------
Robert A. Christianson,
Chief Executive Officer
(Principal Executive Officer)

25

I, Paul Leleux, certify that:

1. I have reviewed this quarterly report on Form 10-Q of American
Plumbing & Mechanical, 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 quarterly report;

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

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

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

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

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

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

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

6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 15, 2003 /s/ Paul Leleux
-------------------------------
Paul Leleux,
Controller

26

INDEX TO EXHIBITS

- ----------

*Incorporated by reference