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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

For the Quarterly Period Ended March 31, 2003

For the Transition Period From                          to                         

Commission file number 1-12716

KOPPERS INC.

(Exact name of registrant as specified in its charter)

436 Seventh Avenue

Pittsburgh, Pennsylvania 15219

(Address of principal executive offices)

(412) 227-2001

(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 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods 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 Act).  Yes  ¨  No  x

Common Stock, par value $.01 per share, outstanding at April 10, 2003 amounted to 1.0 million shares.

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

KOPPERS INC.

CONSOLIDATED STATEMENT OF OPERATIONS

(In millions except per share amounts)

See accompanying notes.

2

KOPPERS INC.

CONDENSED CONSOLIDATED BALANCE SHEET

(In millions)

See accompanying notes.

3

KOPPERS INC.

CONDENSED CONSOLIDATED BALANCE SHEET

(In millions except per share amounts)

See accompanying notes.

4

KOPPERS INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(In millions)

See accompanying notes.

5

KOPPERS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The financial information included herein should be read in conjunction with the Company’s consolidated financial statements and related notes in its 2002 Annual Report on Form 10-K.

The cumulative effect of the change on prior years resulted in a charge to income of $18.1 million, net of income taxes of $11.7 million ($17.31 per share and $5.34 per share for basic and diluted, respectively). The effect of the change on the three months ended March 31, 2003 was to increase income before the cumulative effect of the accounting change by $0.3 million ($0.30 per share and $0.09 per share for basic and diluted, respectively). The pro forma effects of the application of Statement No. 143 as if the Statement had been adopted on January 1, 2002 (rather than January 1, 2003) are presented below:

The Company recognizes asset retirement obligations for i) storage tank inspections and the removal and disposal of residues; ii) dismantling of certain tanks required by governmental authorities; iii) inspection, cleaning and dismantling costs for owned railcars; and iv) inspection and cleaning costs for leased railcars and barges. The following table describes changes to the Company’s asset retirement obligation liability at March 31, 2003 (in millions):

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KOPPERS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

The pro forma asset retirement obligation liability balances as if Statement No. 143 had been adopted on January 1, 2002 (rather than January 1, 2003) are as follows:

In December 2002 the Financial Accounting Standards Board issued Statement No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure, effective for fiscal years ending after December 15, 2002. Statement 148 amends Statement No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition to Statement 123’s fair value method of accounting for stock-based employee compensation. Statement 148 also amends the disclosure provisions of Statement 123 and APB Opinion No. 28, Interim Financial Reporting, to require disclosure in the summary of significant accounting policies of the effects of an entity’s accounting policy with respect to stock-based employee compensation on reported net income and earnings per share in annual and interim financial statements. For the three months ended March 31, 2003 the effect of expensing stock options was immaterial to net income and earnings per share.

In July 2002 the Financial Accounting Standards Board issued Statement No. 146, Accounting for Costs Associated with Exit or Disposal Activities, to be applied prospectively to exit or disposal activities initiated after December 31, 2002. The standard requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Examples of costs covered by the standard include lease termination costs and certain employee severance costs that are associated with a restructuring, discontinued operation, plant closing, or other exit or disposal activity. Effective January 1, 2003 the Company adopted the provisions of Statement No. 146, which had no impact on the earnings or financial position of the Company.

Government Investigation

On December 4, 2002 European Commission (“EC”) representatives visited the offices of the Company’s subsidiaries located in Nyborg, Denmark and Scunthorpe, England and obtained documents pursuant to legal process as part of an investigation of industry competitive practices concerning pitch, creosote and naphthalene. The United States Department of Justice (“DOJ”) also served a subpoena for similar documents at the Company’s headquarters in Pittsburgh, Pennsylvania. The investigation is continuing and the Company is cooperating with both the EC and the DOJ. As a result of such cooperation, in February 2003 the EC granted the Company’s request for exemption from penalties for any infringement the Commission may find as a result of its investigation concerning pitch. Additionally, in April 2003 the DOJ granted the Company’s request for exemption from penalties for any infringement the DOJ may find as a result of imports of pitch, creosote and naphthalene, or the purchase for export of coal tar used to produce these products. These exemptions were granted upon certain conditions, including the continued cooperation of the Company. The Company is currently unable to determine the outcome of the investigations. There can be no assurance that the outcome of these matters will not have a material adverse effect on the business, financial condition, cash flows and results of operations of the Company.

7

KOPPERS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

The Company is subject to federal, state, local and foreign laws and regulations and potential liabilities relating to, among other things, the treatment, storage and disposal of wastes, the discharge of effluent into waterways, the emission of substances into the air and various health and safety matters. The Company expects to incur substantial costs for ongoing compliance with such laws and regulations. The Company may also face governmental or third party claims for cleanup or for injuries resulting from contamination at sites associated with past and present operations. The Company accrues for environmental liabilities when a determination can be made that they are probable and reasonably estimable.

Environmental and Other Liabilities Retained or Assumed by Others

The Company has agreements with former owners of certain of its operating locations under which the former owners retained or assumed and agreed to indemnify the Company against certain environmental and other liabilities. The most significant of these agreements was entered into at the Company’s inception on December 29, 1988 (the “Acquisition”). Under the related asset purchase agreement between the Company and Beazer East, Beazer East assumed the responsibility for and agreed to indemnify the Company against certain liabilities, damages, losses and costs, to the extent attributable to acts or omissions occurring prior to the Acquisition, including, with certain limited exceptions, liabilities and costs of compliance with environmental laws (the “Indemnity”). Beazer Limited unconditionally guaranteed Beazer East’s performance of the Indemnity pursuant to a guarantee (the “Guarantee”). Beazer Limited became a wholly owned indirect subsidiary of Hanson PLC on December 4, 1991. In 1998 Hanson PLC purchased an insurance policy under which the funding and risk of certain environmental liabilities relating to the former Koppers Company, Inc. operations of Beazer East (which includes locations purchased from Beazer East by the Company) are underwritten by subsidiaries of reinsurance companies Centre Solutions (a member of the Zurich Group) and Swiss Re.

The Indemnity provides different mechanisms by which Beazer East is to indemnify Koppers with regard to environmental claims or environmental cleanup liabilities and imposes certain conditions on the Company before receiving such indemnification. The Company believes that it has taken appropriate steps to satisfy all of such conditions, but Beazer East may elect to challenge the Company’s compliance with such conditions.

Four sites owned and/or operated by Koppers are listed on the National Priorities List (“NPL”) promulgated under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”). The sites include the Gainesville, Florida wood treating facility; the Galesburg, Illinois wood treating facility; the Florence, South Carolina wood treating facility; and the Follansbee, West Virginia carbon materials and chemicals facility. In addition, many Koppers sites are or have been operated under Resource Conservation and Recovery Act (“RCRA”) permits, and RCRA remedial and closure activities are being conducted on several of these sites. Currently, at the properties acquired from Beazer East (which include all of the NPL sites and all but one of the RCRA-permitted sites), substantially all investigative, cleanup and closure activities are being conducted and paid for by Beazer East pursuant to the terms of the Indemnity.

To date, the parties that retained, assumed or agreed to indemnify the Company against the liabilities referred to above have performed their obligations in all material respects. However, disputes have arisen with such parties as to the obligation of such parties to indemnify in certain cases. The Company believes that for the last three years amounts paid by Beazer East that are the subject of the environmental remediation portion of the Indemnity have averaged approximately $8 million per year. If for any reason (including disputed coverage or financial incapability) one or more of such parties fails to perform their obligations and the Company is held liable for or otherwise required to pay all or part of such liabilities without reimbursement, the imposition of such liabilities on the Company could have a material adverse effect on the Company’s business, financial condition, cash flow and results of operations. In addition, if the Company were required to record a liability with respect to all or a portion of such matters on its balance sheet, the amount of its total liabilities could exceed the book value of its assets by an amount that could be significant.

8

KOPPERS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Green Spring

The Company was named as a defendant in a toxic tort action, along with Beazer East and CSX Transportation, Inc. (“CSX”) arising from the operation of the Company’s wood treating facility in Green Spring, West Virginia (“Green Spring”). A trial of the claims of eight “test” plaintiffs began on March 11, 2002. As a result of the Company’s motion for summary judgment filed before the commencement of the trial and the Company’s motion for a directed verdict during the trial, the court found the claims against the Company to be without merit and dismissed all such claims. The Court entered judgment for the Company on June 25, 2002. The court also ruled, among other things, that the Company was not the successor company to Beazer East and that the plaintiffs could introduce no evidence against the Company for events that occurred before the creation of the Company on December 29, 1988. The time in which to appeal the judgment in favor of the Company has expired.

Although the claims of the eight “test” plaintiffs against the Company were dismissed, the trial continued against Beazer East and CSX. In April 2002 the jury returned its verdict in the trial of the claims of the eight “test” plaintiffs. The jury found in favor of Beazer East and CSX with respect to the claims of four of the eight “test” plaintiffs relating to medical monitoring. With regard to the remaining four plaintiffs, the jury awarded damages against Beazer East and CSX totaling $825,000. Plaintiffs, Beazer East and CSX filed various post-trial motions in connection with the trial, and the presiding judge denied all motions other than that Beazer East and CSX had operated the facility as a joint venture. The parties have the right to appeal these rulings. Plaintiffs challenged certain of the judge’s rulings by a Writ of Prohibition to the West Virginia Supreme Court, which was denied.

The claims of the remaining plaintiffs (approximately 85) against the Company, Beazer East and CSX were stayed by the judge during the pendency of the trial of the claims of the eight “test” plaintiffs. In January 2003 the Court ordered a trial of the claims of the remaining plaintiffs on certain liability issues. The trial is scheduled for July 2003. The remaining plaintiffs are former employees of Green Spring, family members of such employees and residents from the communities surrounding Green Spring. Plaintiffs’ allegations against the defendants include personal injuries and property damage related to the operation of Green Spring over a lengthy period of time. There can be no assurance that an unfavorable resolution of this matter will not have a material adverse effect on the business, financial condition, cash flow and results of operations of the Company.

Grenada

The Company and other defendants including Beazer East, Illinois Central Railroad and Heatcraft, Inc. have been named in five toxic tort lawsuits in Mississippi arising from the operation of the Company’s wood treating facility in Grenada, Mississippi (“Grenada”) and an adjacent manufacturing facility operated by Heatcraft. The Complaints allege that plaintiffs were exposed to harmful levels of various toxic chemicals, including creosote and pentachlorophenol, as a result of soil, surface water, groundwater and air emissions from Grenada and the Heatcraft facility. Plaintiffs seek compensatory and punitive damages for, among other things, personal injuries and property damage. Although the Company intends to vigorously defend this case, there can be no assurance that an unfavorable resolution of this matter will not have a material adverse effect on the business, financial condition, cash flow and results of operations of the Company.

Other Environmental Matters

In October 1996 the Company received a Clean Water Act information request from the United States Environmental Protection Agency (“EPA”). This information request asked for comprehensive information on discharge permits, applications for discharge permits, discharge monitoring reports, and the analytical data in support of the reports and applications. EPA subsequently alleged that the Company violated various provisions of the Clean Water Act. In July 2000 the Company received a settlement demand from EPA requesting $4.5 million in settlement of alleged civil violations of the Clean Water Act. EPA and the Company subsequently agreed, among other things, to a $2.9 million settlement, payable over three years. The first payment in the amount of $1.0 million was made in April 2003.

9

KOPPERS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Additionally, during a Company-initiated investigation at Woodward Coke prior to its closure in January 1998, it was discovered that certain environmental records and reports related to the discharge of treated process water contained incomplete and inaccurate information. Corrected reports were submitted to the State of Alabama and EPA. The government and the Company subsequently entered into a plea agreement which provides, among other things, for the payment by the Company of a $2.1 million fine payable to EPA over three years and $0.9 million in restitution payable to the Black Warrior-Cahaba Rivers Land Trust over three years. The Company’s plea was entered in August 2002 and the sentencing of the Company occurred in December 2002. At the sentencing, the Court, among other things, approved the terms of the plea agreement previously negotiated between the Company and EPA. The first payments, totaling $1.0 million, were made in December 2002.

The following table sets forth the computation of basic and diluted earnings per share (in millions except per share amounts):

10

KOPPERS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

The senior convertible preferred stock and employee stock options were not included in the computation of diluted earnings per share for the three months ended March 31, 2002 since it would have resulted in an antidilutive effect.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

The following table sets forth certain sales and operating data, net of all inter-segment transactions, for the Company’s businesses for the periods indicated:

11

Comparison of Results of Operations for the Three Months Ended March 31, 2003 and 2002.

Net Sales. Net sales for the three months ended March 31, 2003 were higher than the same period in 2002 due primarily to higher sales for Carbon Materials & Chemicals. Net sales for Carbon Materials & Chemicals increased due primarily to higher selling prices for products in Europe and Australia. Net sales for Railroad & Utility Products increased slightly as higher sales prices for railroad crossties more than offset lower volumes for utility poles. Inter-segment revenues were $6.5 million and $5.2 million for Carbon Materials & Chemicals for the quarters ended March 31, 2003 and 2002, respectively.

Gross Margin after Depreciation and Amortization. Gross margin after depreciation and amortization increased for both segments. Gross margin for Carbon Materials & Chemicals increased due primarily to higher prices for all major products in Europe and Australia. Gross margin for Railroad & Utility Products increased due primarily to a legal settlement in the prior year.

Selling, General and Administrative Expense. As a percent of net sales, selling, general and administrative expense increased due primarily to the expensing of certain acquisition costs.

Other Income. Other income for 2003 consists of income from equity investments. Other income for 2002 includes the monetization of energy tax credits related to the production of coke at the Company’s facility located in Monessen, Pennsylvania (the “Monessen Facility”). The tax credits expired at the end of 2002 and it has not been determined whether they will be renewed. See Note 6 of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002.

Interest Expense. Interest expense decreased due to lower debt levels and lower interest rates, as compared to the prior year quarter.

Income taxes. The effective tax rate for 2003 increased as a result of the composition of earnings among domestic and foreign operations.

Net Income. Net income was lower than 2002 primarily as a result of the adoption of Financial Accounting Standard No. 143, Accounting for Asset Retirement Obligations. See Note 4 of the Notes to Condensed Consolidated Financial Statements.

Liquidity and Capital Resources

The Company’s liquidity needs are primarily for debt service, capital maintenance and acquisitions. The Company believes that its cash flow from operations and available borrowings under its bank credit facilities will be sufficient to fund its anticipated liquidity requirements for at least the next twelve months. In the event that the foregoing sources are not sufficient to fund the Company’s expenditures and service its indebtedness, the Company would be required to raise additional funds. The Company is currently in the process of negotiating with financial institutions to obtain new financing for the expiring portions of its bank debt.

As of March 31, 2003 the Company had $11.4 million of cash and cash equivalents and $22.7 million of unused revolving credit availability for working capital purposes after restrictions by various debt covenants and letter of credit commitments. As of March 31, 2003 $12.2 million of commitments were utilized by outstanding standby letters of credit.

Net cash used in operating activities was lower than the prior year as the loss of cash from the Monessen tax credits was partially offset by the lack of dismantling expenditures related to the closure of the wood treating facility in Feather River, California in the prior year quarter. See Note 2 of the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002.

Capital expenditures were lower than the prior year due to severe winter weather.

Net cash provided by financing activities in 2003 increased due to a higher level of net borrowings to finance a larger increase in working capital requirements as compared to the prior year quarter.

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Schedule of Certain Contractual Obligations

The following table details the future projected payments for the Company’s significant contractual obligations.

Contractual Obligations

Schedule of Certain Other Commercial Commitments

The following table details the future projected payments for the Company’s significant other commercial commitments.

Other Commercial Commitments

Recently Issued Accounting Standards

Effective January 1, 2003 the Company changed its method of accounting for asset retirement obligations in accordance with FASB Statement No. 143, Accounting for Asset Retirement Obligations. Previously, the Company had not been recognizing amounts related to asset retirement obligations. Under the new accounting method, the Company now recognizes asset retirement obligations in the period in which they are incurred if a reasonable estimate of a fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset.

The cumulative effect of the change on prior years resulted in a charge to income of $18.1 million net of income taxes of $11.7 million ($17.31 per share and $5.34 per share for basic and diluted earnings per share, respectively). The Company recognizes asset retirement obligations for i) storage tank inspections and the removal and disposal of residues; ii) dismantling of certain tanks required by governmental authorities; iii) inspection, cleaning and dismantling costs for owned railcars; and iv) inspection and cleaning costs for leased railcars and barges.

Government Investigation

On December 4, 2002 EC representatives visited the offices of the Company’s subsidiaries located in Nyborg, Denmark and Scunthorpe, England and obtained documents pursuant to legal process as part of an investigation of industry competitive practices concerning pitch, creosote and naphthalene. The DOJ also served a subpoena for similar documents at the Company’s headquarters in Pittsburgh, Pennsylvania. The investigation is continuing and the Company is cooperating with both the EC and the DOJ. As a result of such cooperation, in February 2003 the European Commission granted the Company’s request for exemption from penalties for any infringement that the Commission may find as a result of its investigation concerning tar pitch.

13

Additionally, in April 2003 the DOJ granted the Company’s request for exemption from penalties for any infringement the DOJ may find as a result of imports of pitch, creosote or naphthalene, or the purchase for export of coal tar used to produce these products. These exemptions were granted upon certain conditions, including the continued cooperation of the Company. The Company is currently unable to determine the outcome of the investigations. There can be no assurance that the outcome of these matters will not have a material adverse effect on the business, financial condition, cash flows and results of operations of the Company.

Environmental and Other Matters

The Company is subject to federal, state, local and foreign laws and regulations and potential liabilities relating to, among other things, the treatment, storage and disposal of wastes, the discharge of effluent into waterways, the emission of substances into the air and various health and safety matters. The Company expects to incur substantial costs for ongoing compliance with such laws and regulations. The Company may also face governmental or third party claims for cleanup or for injuries resulting from contamination at sites associated with past and present operations. The Company accrues for environmental liabilities when a determination can be made that they are probable and reasonably estimable.

Environmental and Other Liabilities Retained or Assumed by Others

The Company has agreements with former owners of certain of its operating locations under which the former owners retained or assumed and agreed to indemnify the Company against certain environmental and other liabilities. The most significant of these agreements was entered into at the Acquisition. Under the related asset purchase agreement between the Company and Beazer East, Beazer East assumed the responsibility for and agreed to indemnify the Company against certain liabilities, damages, losses and costs, to the extent attributable to acts or omissions occurring prior to the Acquisition, including, with certain limited exceptions, liabilities and costs of compliance with environmental laws. Beazer Limited unconditionally guaranteed Beazer East’s performance of the Indemnity pursuant to a guarantee. Beazer Limited became a wholly owned indirect subsidiary of Hanson PLC on December 4, 1991. In 1998 Hanson PLC purchased an insurance policy under which the funding and risk of certain environmental liabilities relating to the former Koppers Company, Inc. operations of Beazer East (which includes locations purchased from Beazer East by the Company) are underwritten by subsidiaries of reinsurance companies Centre Solutions (a member of the Zurich Group) and Swiss Re.

The Indemnity provides different mechanisms by which Beazer East is to indemnify Koppers with regard to environmental claims or environmental cleanup liabilities and imposes certain conditions on the Company before receiving such indemnification. The Company believes that it has taken appropriate steps to satisfy all of such conditions, but Beazer East may elect to challenge the Company’s compliance with such conditions.

Four sites owned and/or operated by Koppers are listed on the NPL promulgated under CERCLA. The sites include the Gainesville, Florida wood treating facility; the Galesburg, Illinois wood treating facility; the Florence, South Carolina wood treating facility; and the Follansbee, West Virginia carbon materials and chemicals facility. In addition, many Koppers sites are or have been operated under RCRA permits, and RCRA remedial and closure activities are being conducted on several of these sites. Currently, at the properties acquired from Beazer East (which include all of the NPL sites and all but one of the RCRA-permitted sites), substantially all investigative, cleanup and closure activities are being conducted and paid for by Beazer East pursuant to the terms of the Indemnity.

To date, the parties that retained, assumed or agreed to indemnify the Company against the liabilities referred to above have performed their obligations in all material respects. However, disputes have arisen with such parties as to the obligation of such parties to indemnify in certain cases. The Company believes that for the last three years amounts paid by Beazer East that are the subject of the environmental remediation portion of the Indemnity have averaged approximately $8 million per year. If for any reason (including disputed coverage or financial incapability) one or more of such parties fails to perform their obligations and the Company is held liable for or otherwise required to pay all or part of such liabilities without reimbursement, the imposition of such liabilities on the Company could have a material adverse effect on the Company’s business, financial condition, cash flow and results of operations. In addition, if the Company were required to record a liability with respect to all or a portion of such matters on its balance sheet, the amount of its total liabilities could exceed the book value of its assets by an amount that could be significant.

14

Green Spring

The Company was named as a defendant in a toxic tort action, along with Beazer East and CSX, arising from the operation of Green Spring. A trial of the claims of eight “test” plaintiffs began on March 11, 2002. As a result of the Company’s motion for summary judgment filed before the commencement of the trial and the Company’s motion for a directed verdict during the trial, the court found the claims against the Company to be without merit and dismissed all such claims. The Court entered judgment for the Company on June 25, 2002. The court also ruled, among other things, that the Company was not the successor company to Beazer East and that the plaintiffs could introduce no evidence against the Company for events that occurred before the creation of the Company on December 29, 1988. The time within which to appeal the judgment in favor of the Company has expired.

Although the claims of the eight “test” plaintiffs against the Company were dismissed, the trial continued against Beazer East and CSX. In April 2002 the jury returned its verdict in the trial of the claims of the eight “test” plaintiffs. The jury found in favor of Beazer East and CSX with respect to the claims of four of the eight “test” plaintiffs relating to medical monitoring. With regard to the remaining four plaintiffs, the jury awarded damages against Beazer East and CSX totaling $825,000. Plaintiffs, Beazer East and CSX filed various post-trial motions in connection with the trial, and the presiding judge denied all motions other than that Beazer East and CSX had operated the facility as a joint venture. The parties have the right to appeal these rulings. Plaintiffs challenged certain of the judge’s rulings by a Writ of Prohibition to the West Virginia Supreme Court, which was denied.

The claims of the remaining plaintiffs (approximately 85) against the Company, Beazer East and CSX were stayed by the judge during the pendency of the trial of the claims of the eight “test” plaintiffs. In January 2003 the Court ordered a trial of the claims of the remaining plaintiffs on certain liability issues. The trial is scheduled for July 2003. The remaining plaintiffs are former employees of Green Spring, family members of such employees and residents from the communities surrounding Green Spring. Plaintiffs’ allegations against the defendants include personal injuries and property damage related to the operation of Green Spring over a lengthy period of time. There can be no assurance that an unfavorable resolution of this matter will not have a material adverse effect on the business, financial condition, cash flow and results of operations of the Company.

Grenada

The Company and other defendants including Beazer East, Illinois Central Railroad and Heatcraft, Inc. have been named in five toxic tort lawsuits in Mississippi arising from the operation of the Company’s wood treating facility in Grenada, Mississippi and an adjacent manufacturing facility operated by Heatcraft. The Complaints allege that plaintiffs were exposed to harmful levels of various toxic chemicals, including creosote and pentachlorophenol, as a result of soil, surface water, groundwater and air emissions from Grenada and the Heatcraft facility. Plaintiffs seek compensatory and punitive damages for, among other things, personal injuries and property damage. Although the Company intends to vigorously defend this case, there can be no assurance that an unfavorable resolution of this matter will not have a material adverse effect on the business, financial condition, cash flow and results of operations of the Company.

Other Environmental Matters

In October 1996 the Company received a Clean Water Act information request from the United States Environmental Protection Agency (“EPA”). This information request asked for comprehensive information on discharge permits, applications for discharge permits, discharge monitoring reports, and the analytical data in support of the reports and applications. EPA subsequently alleged that the Company violated various provisions of the Clean Water Act. In July 2000 the Company received a settlement demand from EPA requesting $4.5 million in settlement of alleged civil violations of the Clean Water Act. EPA and the Company subsequently agreed, among other things, to a $2.9 million settlement, payable over three years. The first payment in the amount of $1.0 million was made in April 2003.

Additionally, during a Company-initiated investigation at Woodward Coke prior to its closure in January 1998, it was discovered that certain environmental records and reports related to the discharge of treated process water contained incomplete and inaccurate information. Corrected reports were submitted to the State of Alabama and EPA. The government and the Company subsequently entered into a plea agreement which provides, among other things, for the payment by the Company of a $2.1 million fine payable to EPA over three years and $0.9 million in restitution payable to the Black Warrior-Cahaba Rivers Land Trust over three years. The Company’s plea was entered in August 2002 and the sentencing of the Company occurred in December 2002. At the sentencing, the Court, among other things, approved the terms of the plea agreement previously negotiated between the Company and EPA. The first payments, totaling $1.0 million, were made in December 2002.

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ITEM 4. CONTROLS AND PROCEDURES

As of March 31, 2003 an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2003. There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect internal controls subsequent to March 31, 2003.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is being investigated for industry competitive practices concerning pitch, creosote and naphthalene. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources”.

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

At the annual meeting of shareholders on February 19, 2003 the following individuals were unanimously elected to continue as Directors: Robert Cizik, Christian L. Oberbeck, David M. Hillenbrand, Clayton A. Sweeney, and Walter W. Turner. Additionally, the shareholders unanimously ratified the retention of Ernst & Young LLP by the Audit Committee to continue as independent auditor of the Company.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

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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.

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CERTIFICATIONS

I, Walter W. Turner, certify that:

Date: May 6, 2003                    

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I, Donald E. Davis, certify that:

Date: May 6, 2003                    

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