BRAND INTERMEDIATE HOLDINGS INC - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED
December 31, 2002

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BRAND INTERMEDIATE HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

DELAWARE 1700 13-3909682
(State or other jurisdiction of (Primary standard industrial (I.R.S. Employer
incorporation or organization) classification code number) Identification No.)

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15450 SOUTH OUTER HIGHWAY 40, #270
CHESTERFIELD, MISSOURI 63017
(636) 519-1000
(Address, including zip code, and Telephone Number, including area code, of
Registrant's principal executive offices)

Securities registered pursuant to Section 12(b) of the Act: NONE

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

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

Yes [ ] No [X]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (X)

State the aggregate market value of the voting stock held by nonaffiliates of
the registrant.

No market exists for the Common Stock of Brand Intermediate Holdings,
Inc. All of the outstanding shares of Common Stock are held by Brand
Holdings LLC.

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.

1

STATEMENT UNDER THE SECURITIES LITIGATION REFORM ACT OF 1995

This annual report on Form 10-K contains forward-looking statements
that involve a number of risks and uncertainties. Such forward-looking
statements are not historical facts and constitute or rely upon projections,
forecasts, assumptions or other forward-looking information. Generally these
statements may be identified by the use of forward-looking words or phrases such
as "believes," "expects," "anticipates," "intends," "plans," "estimates," "may,"
and "should." These statements are inherently subject to known and unknown
risks, uncertainties and assumptions. Our future results could differ materially
from those expected or anticipated in the forward-looking statements. Specific
factors that might cause such differences include factors described and
discussed in the description of our business in Item 1 and in our management's
discussion and analysis of financial condition and results of operation in Item
7 of this report

ITEM 1. BUSINESS (DOLLARS IN THOUSANDS)

General

Company History and Structure

Brand Intermediate Holdings, Inc. and its subsidiaries ("Brand" or "Brand
Intermediate") are 100% owned by Brand Holdings LLC ("the "LLC"). As of December
31, 2002, the voting equity interests of the LLC are owned 76.7% by J. P. Morgan
Partners and its affiliates ("JPMP"), and 23.3% by other equity investors, on a
fully diluted basis. Brand Services, Inc. is a wholly owned subsidiary of Brand
Intermediate Holdings, Inc. All references to "the Company", "we", "us", or
"our" mean Brand Intermediate Holdings, Inc. and its subsidiaries.

Prior to October 16, 2002, Brand Services, Inc. was a wholly owned subsidiary of
DLJ Brand Holdings, Inc. ("DLJ Brand"). DLJ Brand is also referred to as the
"Predecessor" company.

On October 16, 2002, DLJ Brand merged with Brand Acquisition Corp., a
wholly-owned subsidiary of the LLC. The merged entity was renamed Brand
Intermediate Holdings, Inc. The total amount of consideration paid in the
merger, including payment of transaction costs incurred by the buyer, was
approximately $524.4 million. The following events occurred in connection with
the Acquisition:

o an investment in the LLC made by affiliates of JPMP and other
equity investors, totaling $220.0 million.

o our borrowing of $130.0 million in term loans under a new Credit
Facility (the "Credit Facility"). The Credit Facility also
includes a $50.0 million revolving credit facility, and a $20.0
million letter of credit facility;

o an issuance to JPMP and certain selling stockholders of DLJ Brand
by Brand Intermediate of $35.0 million aggregate principal amount
of 13% senior subordinated pay-in-kind notes due 2013 and by the
LLC of warrants to purchase its common equity interests; and

o our issuance of the $150.0 million of 12% Senior Subordinated
Notes due 2012 ("Senior Notes").

o The payoff and redemption of our Old Credit Facility (the "Old
Credit Agreement"), our old 10-1/4 % Senior Notes due 2008 (the
"Old Senior Notes"), our old 7.03% Subordinated Note (the "Old
Subordinated Note"), and our old 14.5% Senior Exchangeable
Preferred Stock (the "Old Preferred Stock").

All of the above events are referred to as the "Transaction."

In connection with the Transaction, all of our assets and liabilities were
recorded at their fair values. Accordingly, the accounting for certain operating
expenses was affected by the Transaction. In the following discussion, certain
items, such as revenues, for 2002 are discussed on a year-to-date basis because
the accounting for these items was not impacted by the Transaction. However, the
discussion of operating expenses is divided between the period from January 1,
2002 through October 16, 2002, and the period from October 17, 2002 through
December 31, 2002, as some of these items were impacted by the Transaction.

2

Financial Information About Industry Segments

We operate in one segment and provide scaffolding services primarily to
refining, petrochemical, chemical, utility and pulp and paper industries, and to
a lesser extent general commercial clients. Our revenues, operating income and
total assets as of and for the periods indicated below, were as follows (in
thousands):

Description of Business

We are the largest North American provider of scaffolding services. Our services
in the industrial scaffolding market facilitate access to tall structures that
require on-going maintenance, periodic overhauls, or turnarounds, and capital
projects, principally in the refining, petrochemical, chemical, utility and pulp
and paper industries. Our scaffolding services in the commercial market
primarily serve the non-residential building construction and renovation
markets. Our turnkey services include equipment rental, labor for the erection
and dismantlement of scaffolding, scaffolding design services and the sale of
scaffolding equipment. We deliver our services through an extensive field
service organization of between 3,900 and 4,900 team members in 45 field offices
located throughout the United States and two in Canada.

Approximately 76%, 78%, and 82%, of our 2000, 2001, and 2002, respective
revenues were attributable to ongoing maintenance, overhauls and capital
projects of industrial facilities. We typically provide on-going maintenance
services under long-term contracts with a duration ranging from two to five
years. Overhauls, which are necessary to maintain the safety and efficiency of
most industrial facilities, occur every one to four years depending on the
industry and the type of overhaul being performed. We believe that the necessity
for on-going maintenance and periodic overhauls provides us with a stable,
recurring revenue base.

Our customers include major integrated oil companies, independent refiners,
large chemical and petrochemical companies, utilities, pulp and paper producers,
and large engineering and construction firms. One customer accounted for $40.3
million, or 11%, of our revenues for the year (combined twelve months) ended
December 31, 2002. Another customer accounted for $34.0 million, or 13%, and
$32.5 million, or 11%, or our revenues for the years ended December 31, 2000 and
2001, respectively. The loss of these customers could have a material adverse
effect on the Company's revenues and results of operations.

We believe our position as the largest supplier of industrial scaffolding
services provides us with a number of competitive advantages including:

o the ability to offer national coverage to large customers;

o the ability to provide required personnel and scaffolding to
process major turnarounds and unanticipated plant outages;

o higher asset use through the shifting of assets across regions and
across our large customer base;

o purchasing leverage with scaffolding manufacturers; and

o comprehensive safety training programs which have resulted in an
accident incident rate which is well below the industry average
and have enabled us to reduce insurance costs and accident-related
expenses.

Our size also enables us to maintain our own design department that specializes
in the custom design of industrial scaffolding. We use our design department to
assure a safe structure that complies with national, state, and local codes to
minimize the amount of scaffolding used and to maximize labor efficiency,
thereby providing us with a competitive advantage.

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Effects of Seasonality and Cyclicality

The market for industrial scaffolding services experiences seasonal fluctuations
in demand. In particular, because of high demand for gasoline for automobiles
during the summer, most refineries prefer to close down for overhauls during the
spring and fall. Similar seasonal patterns are evidenced for utilities.
Conversely, non-residential building construction, particularly in the
renovation business, occurs throughout the year, but is heaviest in the second
and third quarters.

We may be able to take advantage of differing seasonal patterns in other markets
we service, such as the commercial scaffolding market, but seasonality may still
lead to:

o low inventory use during periods of low demand;

o a lesser ability to adequately service all of our customers during
periods of high demand;

o price fluctuations; and

o periods of low cash flow.

Historically, the market for industrial scaffolding services has experienced a
degree of cyclicality. In particular, demand for nonresidential construction and
capital projects is highly cyclical. In addition, when refining products are in
high demand or the price of pulp is high, refineries and pulp and paper mills
often delay overhauls. It does not appear that any areas of our business exhibit
a significant degree of counter-cyclicality that would offset these effects. Any
sustained downturn in our end-markets could have a material adverse effect on
our Company because it will negatively impact our sales and lower our asset
utilization.

The Industry and Competition

The Company is the largest North American provider of scaffolding services. We
currently face competition from other existing scaffolding service providers,
including entities providing substantially similar services, some of which have
significantly greater resources than us. We also compete with larger engineering
and construction firms. While we believe that we currently have a strong
position in the industrial scaffolding market, we cannot assure that we will be
able to increase or maintain our market share.

The scaffolding industry provides services to the industrial market and the
commercial market, each of which requires different types of scaffolding
equipment and levels of expertise. Industrial applications generally require
systems scaffolding, which is highly versatile, can be quickly erected and
dismantled, is capable of conforming to irregularly shaped structures and
requires a higher level of skill to erect and dismantle. Commercial applications
generally require frame and brace scaffolding, which is less versatile and
requires a lower level of expertise.

Industrial Market

The North American industrial scaffolding market is approximately $1 billion and
is serviced predominantly by scaffolding specialists such as Brand. We estimate
that in 2002, the top five scaffolding specialists service almost 46% of the
total industrial scaffolding market.

Industrial customers use scaffolding for on-going maintenance, periodic
overhauls and capital projects. Among industrial applications, maintenance
represents approximately 74% and turnarounds represent approximately 26% of the
market. Since overhauls and capital projects may require the complete shutdown
of a facility, which results in the loss of substantial revenue per day, speed
and reliability are key customer considerations. Safety is another important
consideration for industrial customers as scaffolding contractor accident
incidents are counted against a facility's safety record and may cause increases
in both insurance premiums and attention by the Occupational Safety and Health
Administration ("OSHA").

Commercial Market

In North America, commercial scaffolding is used primarily in nonresidential
building construction and renovation projects. Commercial applications are
generally characterized by regularly shaped structures with few contoured or
angled surfaces. Due to the simple shapes required, commercial jobs generally
utilize frame and brace scaffolding, a less versatile type of equipment which is
not suited to industrial applications. Commercial scaffolding requires a less
skilled work force and has historically been less focused on safety issues. As a
result, many contractors have in the past chosen to utilize in-house scaffolding
services, and the balance of the market has historically been highly fragmented
with low barriers to entry. During the last five years, however, contractors
have increasingly outsourced their scaffolding needs, primarily due to greater
scrutiny by OSHA on commercial job sites, labor shortages and an increase in
relatively more complex renovation activity. While scaffolding providers have
historically only provided scaffolding equipment, as outsourcing has increased,
contractors

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have increasingly sought scaffold providers who provide both equipment and
labor. In determining to outsource their scaffolding needs, contractors
generally choose a scaffold provider based on reputation, customer service,
safety, price, speed and reliability.

Employees and Dependence on Labor

Brand typically employs between 3,900 to 4,900 team members, of which
approximately 32% are represented by a labor union. While we have excellent
relations with these unions and while we have experienced no material work
stoppages during the past six years, we cannot assure that strikes or other
types of conflicts with unions or personnel will not arise or that we will not
become a target for further union organizing activity. Since our business has a
high labor content, any such activity could have a material adverse effect on
the Company. We believe that we have a good relationship with our team members.

Our business has a high labor content and, as a result, our financial
performance is affected by the availability of qualified personnel and the cost
of labor. The availability of labor can vary depending on market conditions.
While we have been successful in hiring workers for our projects and we do not
believe that the availability of labor has had a material adverse effect on our
financial performance, we cannot assure that sufficient labor will be available
in the future or that the cost of labor will not rise, either of which could
have an adverse effect on the Company.

ITEM 2. PROPERTIES

We operate facilities in 46 locations (45 field offices and 1 headquarters
location). We maintain a substantial inventory of scaffolding at our field
offices as well as at customer sites throughout the United States and Canada.
Our facilities are concentrated near our customers to minimize transportation
costs, to shorten lead times and to strengthen oversight and project management
abilities. Brand owns two locations in Canada, two in Texas, one in Alabama and
one in Louisiana. We lease the remaining 39 facilities as well as one site used
for our corporate headquarters located in Chesterfield, Missouri. Our facilities
typically include a small office, warehouse and yard and range in size from
2,000 to 40,000 square feet under roof with yards from half an acre to more than
nine acres. Our headquarters are located in a 9,500 square foot facility in
Chesterfield, Missouri.

ITEM 3. LEGAL PROCEEDINGS

We are a party to various legal proceedings and administrative actions, all of
which are of an ordinary or routine nature incidental to the operations of the
Company. In the opinion of the Company's management, such proceedings and
actions should not, individually or in the aggregate, have a material adverse
effect on our financial condition or results of operations.

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

No matters were submitted to a vote of security holders in the fourth quarter of
2002.

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

All of our outstanding common stock is held by the LLC and, accordingly, there
is no established public trading market for our common stock. We have paid no
dividends since inception and our ability to pay dividends is limited by the
terms of certain agreements related to our indebtedness.

ITEM 6. SELECTED FINANCIAL DATA

The following table presents selected historical financial data for DLJ Brand
(the Predecessor company) for the years ended December 31, 1998, 1999, 2000, and
2001, and for the period from January 1, 2002 through October 16, 2002 and for
Brand Intermediate Holdings, Inc. for the period from October 17, 2002 through
December 31, 2002, and has been derived from the audited financial statements.
The information as of December 31, 2002 and for the period from October 17, 2002
through December 31, 2002 may not be directly comparable to the information
provided related to the Predecessor company as a result of the effect of the
revaluation of assets and liabilities to their estimated fair market values in
accordance with the application of purchase accounting pursuant to Statement of
Financial Accounting Standards No. 141, "Business Combinations." The financial
data set forth below should be read in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and our financial
statements and notes thereto included elsewhere herein.

5

(1) Adjusted EBITDA is EBITDA, which we define for this purpose, as net income
(loss) before interest, income taxes, depreciation and amortization,
accretion of preferred stock dividends of subsidiary, adjusted for the
period from January 1, 2002 through October 16, 2002 to exclude $2.5
million of non-cash compensation expense related to the issuance of stock
options, $5.3 million of transaction expenses, and $0.2 million of the
write-down of the cash surrender value of a split dollar life insurance
policy of one of our officers. We present EBITDA because management
believes it provides useful information regarding a company's ability to
service and/or incur debt and is used by some investors, analysts and
others to make informed investment decisions. Our management uses EBITDA to
evaluate our operating performance, to allocate resources and capital to
our business operations and as a measure of performance for incentive
compensation purposes. EBITDA is not intended to represent cash flows for
the period, nor has it been presented as an alternative to operating income
as an indicator of operating performance and should not be considered in
isolation or as a substitute for measures of performance, profitability or
liquidity prepared in accordance with accounting principles generally
accepted in the United States. Our method for calculating EBITDA may not be
comparable to methods used by other companies. A reconciliation of pretax
income under generally accepted accounting principles to EBITDA and
adjusted EBITDA follows:

(2) Cash interest expense represents total interest expense less amortization
of deferred financing fees, amortization of the discounts on long-term
debt, accretion of the $35.0 million, 13% Senior Subordinated Pay-in-Kind
Notes due 2013 (the "Holdings Notes") and accretion of the Old Subordinated
Note. Amortization of deferred financing fees were $724, $722, $545, $546,
$433, and $380 for the years ended December 31, 1998, 1999, 2000 and 2001,
and for the periods from January 1, 2002 through October 16, 2002, and from
October 17, 2002, through December 31, 2002, respectively. Amortization of
the discount of long-term debt was $84 for the period from October 17, 2002

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through December 31, 2002. Accretion of the Holdings Notes was $963 for the
period from October 17, 2002 through December 31, 2002. Accretion of the
Old Subordinated Note was $1,151, $1,374, $1,638, $1,953, and $1,812 for
the years ended December 31, 1998, 1999, 2000 and 2001 and the period from
January 1, 2002 through October 16, 2002.

(3) For the purposes of calculating the ratio of earnings to fixed charges and
preferred stock dividends, earnings represent income (loss) before income
taxes plus fixed charges. Fixed charges consist of interest expense on all
indebtedness plus the interest portion of rental expense on noncancelable
leases, amortization of debt issuance costs and accretion of preferred
stock dividends. The deficiency of earnings to cover fixed charges for the
years ended December 31, 1998, 1999, and 2000 and for the period from
October 17, 2002 through December 31, 2002, were $5,347, $8,745, $7,172 and
$2,961, respectively.

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

The following discussion and analysis should be read in conjunction with the
financial statements and notes thereto included elsewhere in this report.

Overview

The Company is the largest North American provider of scaffolding services and
operates in the industrial and commercial scaffolding markets. The Company
provides turnkey services that include equipment rental, labor for the erection
and dismantlement of the scaffolding and scaffolding design services. The
Company also sells a small amount of scaffolding.

Our services in the industrial scaffolding segment facilitate access to tall,
often irregular-shaped structures that require ongoing maintenance, periodic
overhauls and capital projects related to capacity additions and regulatory
compliance, principally in the refining, petrochemical, chemical, electric
utility and pulp and paper industries. Our services in the commercial
scaffolding segment primarily serve the non-residential building construction
market. Each job type derives revenue from one or more of the following sources:
(1) the provision of labor for the design, erection and dismantlement of
scaffolding, (2) rental of scaffolding equipment and (3) sales of new and used
scaffolding equipment.

Critical Accounting Policies

Our significant accounting policies are more fully described in Note 2 to our
consolidated financial statements. Certain of our accounting policies as
discussed below require the application of significant judgment by management in
selecting the appropriate assumptions for calculating amounts to record in our
financial statements. By their nature, these judgments are subject to an
inherent degree of uncertainty.

We recognize deferred income tax assets and liabilities based on the differences
between the financial statement carrying amounts and the tax basis of assets and
liabilities. Deferred income taxes also include net operating loss carryforwards
primarily due to the accelerated depreciation of our scaffolding equipment over
book depreciation. We regularly review our deferred income tax assets for
recoverability and establish a valuation allowance when it is more likely than
not such assets will not be recovered, taking into consideration historical net
income (losses), projected future income (losses) and the expected timing of the
reversals of existing temporary differences. As of December 31, 2000, we had a
valuation allowance of $10.9 million. During the year ended December 31, 2001,
the valuation allowance was reduced by $3.3 million, reducing our effective tax
rate and total income tax expense to zero. As of December 31, 2001, we had a
valuation allowance of $7.6 million. During the period from January 1, 2002
through October 16, 2002, the valuation allowance on deferred tax assets was
reduced to $0 as we determined that it is more likely than not that all deferred
tax assets would be realized based upon year-to-date operating results and
anticipated operating results of future periods.

As part of our ongoing business, we make payments for workers' compensation and
health benefit claims. We have purchased insurance coverage for large claims.
Our workers' compensation and health benefit liabilities are developed using
actuarial methods based upon historical data for payment patterns, cost trends,
utilization of healthcare services and other relevant factors. While we believe
our liabilities for workers' compensation and health benefit claims of $13.6
million as of December 31, 2002, are adequate and that the judgment applied is
appropriate, such estimated liabilities could differ materially from what will
actually transpire in the future.

Prior to the Transaction we used the intrinsic value method prescribed by APB
Opinion No. 25, "Accounting for Stock issued to Employees," to account for stock
compensation plans. Non-cash compensation expense of $2.5 million for the period
from January 1, 2002 through October 16, 2002 was recorded in the consolidated
statement of operations since the

8

exercise prices of certain stock compensation awards were less than the
estimated fair values of the underlying stock on the date of the grant.
Estimated fair values were determined by using the valuation inherent in our
sale to JPMP as this transaction provided independent third-party evidence of
the fair value of the underlying stock. For periods prior to 2002, the fair
value of the underlying stock was determined by our board of directors based
upon a multiple of EBITDA, as this provided the best available evidence at that
time.

Acquisitions

In December 2001, the Company purchased the scaffolding business of United
Rentals, Inc. for an aggregate purchase price of $3.8 million in cash and $0.5
million in note payable that was entirely allocated to property and equipment.
The purchase price approximated the fair market value of the assets purchased.
The acquisition was accounted for using the purchase method of accounting, and
accordingly has been included in the financial statements from the date of
acquisition.

During 2000, the Company acquired four companies in four separate transactions
for an aggregate purchase price of $11.0 million in cash, $3.3 million in notes
payable, and $3.0 million of possible future payments conditioned upon the
operating results of two of the acquired companies. The purchase prices,
allocated to assets and liabilities assumed, were based on relative fair values.
In connection with the acquisitions, the Company recorded goodwill in the amount
of $6.0 million based upon the allocation of the purchase prices of the
acquisitions. Each of the above acquisitions was accounted for using the
purchase method of accounting, and accordingly have been included in the
financial statements from the respective date of acquisition.

Revenues

Approximately 76%, 78%, and 82% of the Company's 2000, 2001, and 2002,
respective revenues were attributable to on-going maintenance, turnarounds and
capital projects of industrial facilities.

The Company typically provides on-going maintenance services under long-term
contracts; the duration of these contracts is usually one to five years.
Turnarounds occur every one to four years depending on the industry and the type
of turnaround being performed. Although some turnarounds may be postponed for a
period of time, they are a necessary component of maintaining industrial
facilities and are required to ensure the safe and efficient operation of such
facilities. While the postponement of scheduled turnarounds causes fluctuations
in the Company's quarterly and annual results, the Company believes the
necessity for on-going maintenance and turnarounds provides a stable, recurring
revenue base.

Revenues from capital projects involving the industrial scaffold market, which
represented approximately 6%, 14%, and 26% of our 2000, 2001, and 2002 revenues,
respectively, resulted from new plant construction, plant expansions and
modifications. Capital projects can and have had material impacts on the
Company's results of operations.

Commercial scaffolding revenues, which represented approximately 24%, 22%, and
18% of 2000, 2001, and 2002 revenues, respectively, are related to the level of
nonresidential construction and renovation.

The Company's business is seasonal. End-use industries such as the refining and
utility industries experience increased demand for their products during the
summer months. Consequently, turnarounds are generally scheduled during the
first and fourth quarters of the year.

The following discussion of results of operations is presented for the years
ended December 31, 2000, and 2001, and for the periods from January 1, 2002
through October 16, 2002 and from October 17, 2002 through December 31, 2002.

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Results of Operations

Summary of Historical Financial Results
(In thousands)

(1) Adjusted EBITDA is EBITDA, which we define for this purpose, as net income
(loss) before interest, income taxes, depreciation and amortization,
accretion of preferred stock dividends of subsidiary adjusted for the
period from January 1, 2002 through October 16, 2002 to exclude $2.5
million of non-cash compensation expense related to the

10

issuance of stock options, $5.3 million of transaction expenses, and $0.2
million of the write-down of the cash surrender value of a split dollar
life insurance policy of one of our officers. We present EBITDA because
management believes it provides useful information regarding a company's
ability to service and/or incur debt and is used by some investors,
analysts and others to make informed investment decisions. Our management
uses EBITDA to evaluate our operating performance, to allocate resources
and capital to our business operations and as a measure of performance for
incentive compensation purposes. EBITDA is not intended to represent cash
flows for the period, nor has it been presented as an alternative to
operating income as an indicator of operating performance and should not be
considered in isolation or as a substitute for measures of performance,
profitability or liquidity prepared in accordance with accounting
principles generally accepted in the United States. Our method for
calculating EBITDA may not be comparable to methods used by other
companies. A reconciliation of pretax income under generally accepted
accounting principles to EBITDA and adjusted EBITDA follows:

Year Ended December 31, 2002, as Compared to Year Ended December 31, 2001

Revenue

Total revenue rose from $305.1 million for the year ended December 31, 2001 to
$369.8 million for the year (combined twelve months) ended December 31, 2002,
which represented an increase of $64.7 million, or 21.2%. Labor revenue was the
biggest factor in the increase in overall revenues. Labor revenue increased
$59.0 million, or 26.1%, for the combined twelve months ended December 31, 2002
as compared to the year ended December 31, 2001. Rental revenue increased by
$6.7 million, or 9.8%, from $68.1 million for the year ended December 31, 2001
to $74.8 million for the combined twelve months ended December 31, 2002. The
majority of the revenue growth was driven by the industrial segment of our
business, as we were awarded new refinery contracts and new power plant
construction contracts. The nature of these work opportunities caused labor
revenue to grow at a faster rate than rental revenue, as this type of work is
more labor intensive than commercial work. Equipment sales declined by $1.1
million, or 9.8%, during the combined twelve months ended December 31, 2002 as
compared to the year ended December 31, 2001.

Gross Profit

Gross profit is comparable year-over-year except for the depreciation expense on
our property and equipment, which increased during the period from October 17,
2002 through December 31, 2002, due to the write-up of our property and
equipment to its fair value in connection with the Transaction. During the
period from October 17, 2002 through December 31, 2002, as compared to the
period from January 1, 2002 through October 16, 2002, monthly depreciation
increased approximately $1.2 million. Depreciation expense on our scaffolding
equipment is included in equipment rental operating expenses.

Overall gross profit increased from $72.8 million for the year ended December
31, 2001 to $86.0 million for the combined twelve months ended December 31,
2002, which was an increase of $13.2 million, or 18.1%. Labor gross profit
(labor revenue less labor cost) increased by 22.0%, or $9.6 million, from 2001
to 2002, while labor gross profit

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percentage (labor gross profit as a percentage of labor revenue) decreased from
19.2% for the year ended December 31, 2001 to 18.6% for the combined twelve
months ended December 31, 2002. The decrease in labor gross profit percentage is
a result of the mix of jobs completed and increased claims costs during 2002 as
compared to 2001. Rental gross profit increased $4.1 million, or 9.7%, from the
year ended December 31, 2001 to the combined twelve months ended December 31,
2002. As a result of lower sales revenue, sales gross profit declined from $4.0
million for the year ended December 31, 2001 to $3.3 million for the year ended
December 31, 2002.

Selling and Administrative Expenses

Selling and administrative expenses are not comparable year-over-year due to the
change in the basis of accounting as a result of the Transaction on October 16,
2002, mostly due to the amortization expense relating to our customer
relationships intangible asset, which is being amortized over a twelve year
period and will amount to an annual amortization of $4.5 million.

Non-Cash Compensation

Non-cash compensation expense of $2.5 million for the period from January 1,
2002 through October 16, 2002 was recorded in the consolidated statement of
operations since the exercise prices of certain stock compensation awards were
less than the estimated fair values on the date of the grant. Estimated fair
values were determined by using the stock price used in the Transaction, as this
provided independent third-party evidence of the fair value of the underlying
stock.

Transaction Expenses

Transaction expenses represent those costs associated with the Transaction which
were not capitalizable under generally accepted accounting principles. Of the
$5.3 million of transaction expenses in the period from January 1, 2002 through
October 16, 2002, $5.0 million represents completion bonuses paid to members of
management upon the consummation of the Transaction.

Operating Income

Operating income increased by $5.7 million, or 18.9%, from $30.0 million for the
year ended December 31, 2001 to $35.7 million for the combined twelve months
ended December 31, 2002.

Interest Expense

Interest expense is not comparable from 2001 to 2002 due to the new financing
obtained and the repayment of all of the prior debt in connection with the
Transaction.

Accretion of Preferred Stock Dividends of Subsidiary

Accretion of preferred stock dividends of subsidiary represents dividends
accreted on the Old Preferred Stock. Such dividends accreted on a compounded
basis and increased the liquidation value of the Old Preferred Stock. The
preferred stockholders were paid in full in connection with the Transaction.

Provision for Income Tax

For the period from January 1, 2002 through October 16, 2002, the Company
recorded an income tax provision of $1.3 million, net of a reduction in the
valuation allowance on deferred tax assets by $7.6 million. During the period
from January 1,2002 through October 16, 2002, the valuation allowance on
deferred tax assets was reduced to $0 as the Company determined that it was more
likely than not that all deferred tax assets would be realized based upon
current operating results and anticipated operating results of future periods.

Net Income

Net income is not comparable from 2001 to 2002 due to the changes in the basis
of accounting as a result of the Transaction on October 16, 2002.

12

Year Ended December 31, 2001, as Compared to Year Ended December 31, 2000

Revenue

Revenue increased by $41.0 million, or 15.5%, from $264.1 million in 2000 to
$305.1 million in 2001. Labor revenue increased by $36.3 million, or 19.1%, from
$189.8 million in 2000 to $226.1 million in 2001. Equipment rental revenue
increased by $1.1 million, or 1.6%, from $67.0 million in 2000 to $68.1 million
in 2001. Equipment sales revenue increased by $3.8 million, or 52.6%, from $7.1
million in 2000 to $10.9 million in 2001. Revenue from all sources (labor,
rental and sales) increased from 2000 to 2001; however, the industrial business
was particularly strong with additional work in the refining and utility
sectors. Commercial work remained flat from 2000 to 2001. The revenue growth
from 2000 to 2001 can be attributed 89% to increases in industrial work and 11%
from a full year contribution of acquisitions made in 2000.

Gross Profit

Gross profit increased by $12.4 million, or 20.6%, from $60.4 million in 2000 to
$72.8 million in 2001. Labor gross profit (labor revenue less labor cost)
increased by $8.6 million, or 24.8%, from $34.8 million in 2000 to $43.4 million
in 2001. Equipment rental gross profit increased by $2.5 million, or 6.2%, from
$39.6 million in 2000 to $42.1 million in 2001. Equipment sales gross profit
increased by $1.7 million, or 75.1%, from $2.3 million in 2000 to $4.0 million
in 2001. Labor gross profit as a percent of labor revenue increased from 18.3%
to 19.2%, increasing gross profit over revenue growth. Additionally, sales of
both new and used equipment generated higher gross profit margins in 2001 than
in 2000.

Selling and Administrative Expenses

Selling and administrative expenses increased by $3.6 million, or 9%, from $39.3
million in 2000 to $42.8 million in 2001. Selling and administrative expenses as
a percentage of revenue decreased from 14.9% in 2000 to 14.0% in 2001. During
2001, we recorded a $1.4 million impairment charge relating to goodwill for an
acquisition made in 2000. During 2001, we successfully integrated companies
acquired in prior years into our existing business, reducing administrative
expenses as a percentage of revenue. We also continued to actively manage
spending relating to selling and administrative expenses.

Accretion of preferred stock dividends of subsidiary

Accretion of preferred stock dividends of subsidiary represents dividends
accreted on our subsidiary's 14.5% Senior Exchangeable Preferred Stock. Such
dividends accrete on a compounded basis and increase the liquidation value until
such time that our subsidiary is permitted to pay cash dividends.

Operating Income

Operating income increased by $8.9 million, or 42.1%, from $21.1 million in 2000
to $30.0 million in 2001. This increase in operating income is directly related
to increases in gross profit exceeding increases in selling and administrative
expenses.

Interest Expense

Interest expense increased by $0.7 million, or 3.2%, from $22.1 million in 2000
to $22.8 million in 2001. In April 2001, we borrowed $10.0 million under the
Term B loan portion of our existing credit facility, and in May 2001, we
borrowed an additional $5.0 million under the Term B Loan facility. The proceeds
of these loans were used to repay the revolving loans and for working capital
needs.

Net Income (Loss)

Net income (loss) increased by $7.8 million from a loss of $7.2 million in 2000
to income of $0.6 million in 2001.

13

Liquidity and Capital Resources

The Company has historically utilized internal cash flow from operations and
borrowings under the old credit facility to fund its operations, capital
expenditures and working capital requirements. In the future, the Company
expects to use the Credit Facility for these items. As of December 31, 2002, the
Company had working capital of $35.9 million, including cash and cash
equivalents of $4.8 million.

For the years ended December 31, 2000 and 2001 and for the periods from January
1, 2002 through October 16, 2002 and from October 17, 2002 through December 31,
2002, cash provided by operating activities was $19.5 million, $29.4 million,
$36.2 million and $8.4 million, respectively.

The Company's capital expenditure requirements are comprised of maintenance and
expansion expenditures. Capital expenditures were $32.2 million, $19.6 million,
$12.8 million, and $3.7 million, for the years ended December 31, 2000 and 2001,
and for the periods from January 1, 2002 through October 16, 2002 and from
October 17, 2002 through December 31, 2002, respectively.

Our Credit Facility provides for $130.0 million of term loans, a $50.0 million
revolving loan facility and a $20.0 million letter of credit facility. Up to
$20.0 million of the $50.0 million revolving loan facility may be used for
letters of credit. As of December 31, 2002, the Company had no borrowings
outstanding under the revolving credit facility and had total outstanding
letters of credit of $30.6 million.

The interest rate on the $130.0 million of term loans under the Credit Facility
is variable. For the period from October 17, 2002 through December 31, 2002, the
weighted average interest rate on the term loans was 5.6%. The interest rate on
the term loans under the Old Credit Agreement was variable, and the weighted
average interest rate on the loans outstanding under the old term loan facility
for the period from January 1, 2002 through October 16, 2002 was 5.7%.

Our estimated interest payment obligation for 2003 is $27.0 million. We are
required to make semi-annual interest payments on the Senior Notes in the amount
of $9.0 million in April and October of every year until the Senior Notes mature
in October 2012. We are also required to make quarterly interest payments on
loans under our Credit Facility, which bears interest at a floating rate based
upon either the base rate (as defined in our credit agreement, for base rate
loans) or the LIBOR rate (for LIBOR loans) plus a spread of 2.5% to 4.0%,
depending on the ratio of our consolidated debt to EBITDA. As of December 31,
2002, the interest rate on our term loans was 5.41%. We are not required to make
interest payments on the Intermediate Notes, as these notes are pay-in-kind
notes.

The Credit Facility requires financial and operating covenants, including among
other things, that the Company maintain certain financial ratios, and imposes
limitations on the Company's ability to make capital expenditures, to incur
indebtedness, and to pay dividends. The Company was in compliance with all loan
covenants at December 31, 2002.

Contractual Obligations

The following is a summary of contractual cash obligations as of December 31,
2002 (dollars in thousands):

14

Effect of Inflation; Seasonality

Inflation has not generally been a material factor affecting the Company's
business. The Company's general operating expenses, such as salaries, employee
benefits and facilities costs are subject to normal inflationary pressures.

The operations of the Company are generally subject to seasonal fluctuations
coinciding with the spring and fall turnaround schedules of its major customers.

New Accounting Standards

In July 2001, the Financial Accounting Standards Board issued SFAS No. 141
"Business Combinations" and No. 142, "Goodwill and Other Intangible Assets."
SFAS No. 141 requires all business combinations initiated after June 30, 2001,
to be accounted for using the purchase method of accounting. The Company adopted
SFAS No. 141 for its December 2001 acquisition.

SFAS No. 142 was implemented by the Company on January 1, 2002. Under SFAS No.
142, goodwill is no longer subject to amortization over its useful life; rather,
it is subject to at least annual assessments of impairment. Goodwill
amortization for the years ended December 31, 2000 and 2001 was $0.5 million and
$2.8 million, respectively. Goodwill expense for the year ended December 31,
2001 included an impairment charge of $1.4 million.

Under SFAS No. 143, "Accounting for Asset Retirement Obligations", the fair
value of a liability for an asset retirement obligation is required to be
recognized in the period in which it is incurred if a reasonable estimate of
fair value can be made. The associated asset retirement costs are capitalized as
part of the carrying amount of the long-lived asset. SFAS No. 143 was
implemented by the Company on January 1, 2002 with no material impact on the
Company's financial statements.

In August 2001, the Financial Accounting Standards Board issued SFAS No. 144,
"Accounting for the Impairment of Disposal of Long-Lived Assets." SFAS No. 144
addresses financial accounting and reporting for the impairment of long-lived
assets and for long-lived assets to be disposed of and supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of." SFAS No. 144 establishes a single accounting model for
long-lived assets to be disposed of by sale and resolves implementation issues
related to SFAS No. 121. SFAS No. 144 was implemented by the Company on January
1, 2002 with no material impact on the Company's financial statements.

In April 2002, the Financial Accounting Standards Board issued SFAS No. 145,
"Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement
No. 13, and Technical Corrections." SFAS No. 145 provides for the rescission of
several previously issued accounting standards, new accounting guidance for the
accounting for certain lease modifications and various technical corrections
that are not substantive in nature to existing pronouncements. SFAS No. 145 will
be adopted by us beginning January 1, 2003, except for the provisions relating
to the amendment of SFAS No. 13, which will be adopted for transactions
occurring subsequent to May 15, 2002. Adoption of SFAS No. 145 did not have a
material impact on our condensed financial statements.

In June 2002, the Financial Accounting Standards Board issued SFAS No. 146,
"Accounting for Costs Associated with Exit or Disposal Activities." SFAS No. 146
nullifies Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)," and requires that a
liability for costs associated with an exit or disposal activity be recognized
when the liability is incurred rather than when a company commits to such an
activity. SFAS No. 146 also established that fair value be the objective for
initial measurement of the liability. SFAS No. 146 will be adopted by us for
exit or disposal activities that are initiated after December 31, 2002. Adoption
will not have a material impact on our consolidated financial statements.

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting
and Disclosure requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others." The Interpretation elaborates on the existing
disclosure requirements for most guarantees, including loan guarantees such as
standby letters of credit. It also clarifies that at the time a company issues a
guarantee, the company must recognize an initial liability for the fair value,
or market value, of the obligations it assumes under that guarantee and must
disclose that information in its interim and annual financial statements. The
initial recognition and initial measurement provisions apply on a prospective
basis to guarantees issued or modified after December 31, 2002, regardless of
the guarantor's fiscal year-end. The disclosure

15

requirements in the Interpretation are effective for financial statements of
interim or annual periods ending after December 15, 2002. FASB Interpretation 45
was implemented in the fourth quarter 2002. The adoption of this FASB
Interpretation did not have a material impact on the consolidated financial
statements of the Company.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure-an Amendment of FASB Statement No. 123."
This statement provides alternative methods of transition for a voluntary change
to the fair value based method of accounting for stock-based employee
compensation. In addition, this statement amends the disclosure requirements of
Statement 123 to require disclosures in both annual and interim financial
statements about the method of accounting for stock-based employee compensation
and the effect of the method used on reported results. Implementation of SFAS
No. 148 will not have a material impact on the results of operations of the
Company.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to interest rate risk related to changes in interest
rates on its variable rate debt. The value of market risk sensitive instruments
is subject to change as a result of movements in market rates and prices.
Sensitivity analysis is one technique used to evaluate these impacts. Based upon
a hypothetical ten percent change in interest rates, the potential losses in
future earnings, fair value and cash flows are not material. The Company did not
have any derivative financial instruments in place at December 31, 2002.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See "Index to Financial Statements and Financial Statement Schedules" on Page
F-1.

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

On January 7, 2003, the Board of Directors authorized the engagement of Ernst &
Young LLP ("E&Y") to serve as independent public accountants for the fiscal year
ending December 31, 2002. KPMG LLP ("KPMG") had been engaged as independent
public accountants for the predecessor company for the most recent fiscal year
until their resignation on December 18, 2002.

None of KPMG's reports on DLJ Brand's consolidated financial statements for the
fiscal years ended December 31, 2001 and December 31, 2000 contained an adverse
opinion or disclaimer of opinion, nor was any such report qualified or modified
as to uncertainty, audit scope, or accounting principles.

During the fiscal years ended December 31, 2001 and December 31, 2000, there
were no disagreements between Brand and KPMG on any matters of accounting
principles or practices, financial statement disclosures, or auditing scope or
procedure, which disagreements, if not resolved to KPMG's satisfaction, would
have caused KPMG to make reference to the subject matter of the disagreement in
connection with its reports. None of the reportable events described under Item
304(a)(1)(iv) of Regulation S-K occurred within the fiscal years ended December
31, 2001 and December 31, 2000.

During the most recent fiscal years and the subsequent interim period, the
Company did not consult E&Y with respect to the application of accounting
principles to a specified transaction, either completed or proposed, or the type
of audit opinion that might be rendered on the Company's financial statements,
or any other matters or reportable events listed in Item 304(a)(1)(iv) of
Regulation S-K.

16

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Directors and Executive Officers

The following table sets forth certain information with respect to directors and
executive officers of the Company as of March 31, 2002. Each director and
officer holds office until a successor is elected and qualified or until his
earlier death, resignation or removal.

John M. Monter has served as our Chief Executive Officer, President and one of
our directors since 1996. Mr. Monter has served as our Chairman of the Board
since April 2001. Prior to joining our company, he held a variety of corporate
and operating assignments at Cooper Industries, Inc., an electrical products and
tools and hardware manufacturer, where he began his career in 1977. Mr. Monter
was President of the Bussmann Division of Cooper, which manufactures electrical
overcurrent fuses, from 1992 to 1996. Mr. Monter has been a director of Belden,
Inc. since May 2000. Mr. Monter holds a B.S. from Kent State University and an
M.B.A. from the University of Chicago.

Jeffrey W. Peterson has served as our Chief Financial Officer and Vice
President, Finance since April 2001. From 1992 to April 2001, he was our
Corporate Controller and Region Controller. Mr. Peterson held the position of
Division Controller over various divisions of Waste Management, Inc., a waste
services provider, from 1987 to 1992. He began his career in public accounting
with the firms of Coopers and Lybrand and Peat Marwick, Mitchell and Company.
Mr. Peterson earned a B.S. from Brigham Young University and is a Certified
Public Accountant.

Raymond L. Edwards has served as our Vice President, Operations Support Services
and Secretary since October, 2002. Prior to that, he was our Vice President,
Administration from November 1996 to October 2002. Prior to joining us, he held
a variety of management positions, most recently, with Cooper Industries, Inc.,
from 1984 to 1996, including Vice President, Human Resources from 1990 to 1996.
Mr. Edwards received a B.S. and an M.P.A. from the University of Colorado.

Guy S. Huelat has been our Vice President, Operations-Southwest Region, since
October 2002. Prior to that, he was Vice President, Resource Management since
January 1997. Prior to joining us, Mr. Huelat was a Plant Manager from 1989 to
1994 and a Materials Manager from 1994 to 1996 at Cooper Industries, Inc. From
1996 to 1997, he was Director of Logistics for Planning and Customer Service for
Kimble Glass, Inc., a designer and producer of glass tubing and fabricated glass
products. Mr. Huelat holds a B.S. from Gannon University.

Scott M. Robinson has served as our Vice President, Business Development, since
October 2002. He served as our Vice President, Operations--Southwest Region,
from January 1998 to October 2002. Mr. Robinson joined us as Vice President,
Marketing in March 1997. Prior to joining us, he held various positions at
Cooper Industries, Inc., including Vice President, Sales from 1993 to 1997 and
Vice President, Marketing from 1987 to 1993. Mr. Robinson received a B.S. and an
MS from Virginia Polytechnic Institute.

David R. Cichy has been our Vice President, Operations--Northern Region since
1996. Beginning in 1978, Mr. Cichy served in various construction management
functions with Rust Industrial Services ("RIS") including Vice President,
Resource Management from 1993 to 1996. Mr. Cichy attended Chicago Technical
College.

17

James "Marty" McGee has served as our Vice President, Operations--Southeast
Region since 1996. From 1993 until 1996, Mr. McGee held various region
management positions with RIS and Waste Management Technologies. He has been
with us in various management positions since 1981, including President,
Southern Regional Scaffolding in 1993, Southern Region Manager in 1994 and Vice
President, Southern Operations for WMX Services group (29 locations, five
different Rust companies), from 1995 to 1996. Mr. McGee attended Louisiana State
University.

Arnold L. Chavkin is an Executive Partner of JPMP. Prior to joining JPMP, Mr.
Chavkin was a member of Chemical Bank's merchant banking group and a generalist
in its corporate finance group specializing in mergers and acquisitions and
private placements for the energy industry. His experience prior to Chemical
Bank included corporate development for Freeport McMoRan as well as positions
with Gulf and Western Industries and Arthur Young & Company. Mr. Chavkin is a
Certified Public Accountant. He received his B.A. and M.B.A. degrees from
Columbia University. Mr. Chavkin is a director of American Tower Corporation,
Better Minerals & Aggregates, Crown Media Holdings, Inc., Encore Acquisition
Partners, HDFC Bank, and Triton PCS, Inc. He serves on the Advisory Investment
Boards of Richina Group, the India Private Equity Fund, and the Asia Development
Partners Fund.

Christopher C. Behrens is a Partner of JPMP. Mr. Behrens holds a B.A. from the
University of California, Berkeley and an M.A. from Columbia University. Mr.
Behrens is a director of Berry Plastics, Carrizo Oil and Gas, Chromalox Corp.,
Domino's Pizza, Erickson Air Crane, Haddington Energy Partners, InterLine
Brands, and Portola Packaging. Mr. Behrens is also on the Investment Committee
of the Chase Private Equity Partners Select, a private equity fund of funds.
Prior to joining JPMP, Mr. Behrens was a Vice President in Chase's Merchant
Banking Group.

Sean E. Epps is a Principal of JPMP. Prior to joining JPMP, Mr. Epps was an
Associate at Paribas Principal Partners. Mr. Epps also held positions at
Donaldson, Lufkin & Jenrette Securities Corp. and The Chase Manhattan Bank. He
holds a B.A. from Hamilton College and an M.B.A. from The Wharton School,
University of Pennsylvania. He is a director of Chromalox Corp.

ITEM 11. EXECUTIVE COMPENSATION

The information contained in Item 11 is not presented in thousands of dollars.

Compensation Committee

Compensation of the Company's management is determined by a committee comprised
of Messrs. Behrens and Epps.

Executive Compensation

The following table sets forth the compensation earned by the Chief Executive
Officer and the most highly paid executive officers for services rendered in
2000, 2001, and 2002:

Summary Compensation Table

18

Guy S. Huelat, 2002 161,221 453,465 -- 2,000
Vice President Operations - 2001 153,546 184,255 -- 1,700
Southwest Region 2000 144,165 160,898 -- 1,700

David R. Cichy, 2002 160,659 452,791 6,300 2,000
Vice President Operations - 2001 153,005 183,600 6,300 1,700
Northern Region 2000 145,018 160,889 6,300 1,700

James "Marty" McGee, 2002 162,074 454,489 -- 2,000
Vice President Operations - 2001 155,834 187,000 -- 1,700
Southeast Region 2000 147,014 136,241 -- 1,700

The individuals named in the foregoing table are collectively referred to as the
Brand Advisory Team.

19

Equity Incentive and Stock Options

In addition to compensation reflected in the foregoing table, the LLC has
provided members of the Brand Advisory Team an opportunity to participate in
both a time-based equity incentive program and a performance-based equity
incentive program. The following table reflects the number of Class C units of
the LLC issued to members of the Brand Advisory Team under these equity
incentive programs:

Prior to the merger, DLJ Brand had adopted equity incentive plans pursuant to
which members of the Brand Advisory Team and other team members of the Company
had been permitted to purchase shares (or had been granted options to acquire
shares) of DLJ Brand's common stock at prices equal to the fair market value of
such stock as of the date of grant.

During 2001, members of the Brand Advisory Team were granted purchase rights at
$2.55 per share of DLJ Brand's common stock as set forth in the following table.
The table also reflects the number of shares subject to options, if any, held by
the Brand Advisory Team as of December 31, 2001. All of the following shares
were redeemed on October 16, 2002 in connection with the Transaction:

(1) None of such shares were exercisable at December 31, 2001.

(2) All shares were exercisable at December 31, 2001.

In connection with the exercise, in 1999, of options originally granted during
1997 and 1998, certain members of the Brand Advisory Team entered into
restricted stock agreements ("RSAs") with DLJ Brand, pursuant to which a portion
of the shares acquired upon exercise of the options would be subject to
forfeiture in the event of a termination of employment prior to full vesting
under the terms of the RSAs. Annual vesting of the shares subject to the RSAs
was dependent upon the achievement of annual operating budgets or other targets
established by the board of directors. As of December 31, 2001, vesting under
the RSAs was complete and the forfeiture restrictions applicable to the
remaining 20% of the shares originally subject to the RSAs expired. The total
number of shares of DLJ Brand common stock originally covered by the RSAs held
by members of the Brand Advisory Team is as follows: John M. Monter, 437,500;
Raymond L. Edwards, 42,000; Guy S. Huelat, 42,000; Scott M. Robinson, 40,000;
David R. Cichy, 40,000; and James "Marty" McGee, 42,000.

As shareholders of DLJ Brand prior to the merger of DLJ Brand and Brand
Acquisition Corp., members of the Brand Advisory Team and other team members of
the Company were entitled to receive the per share cash purchase price payable
in connection with the merger in exchange for each share of DLJ Brand common
stock they owned. However, members of the Brand Advisory Team and other team
members used some of the proceeds from the redemption of the

20

DLJ Brand stock they owned to purchase equity interest in the LLC. The amount of
equity interests of the LLC purchased in this manner was $6.7 million.

During 2001, in connection with the purchase of certain shares pursuant to the
foregoing equity incentives and stock option programs, DLJ Brand extended loans
to members of the Brand Advisory Team as follows: John M. Monter, $160,650;
Jeffrey W. Peterson, $95,040; Raymond L. Edwards, $50,490; and Guy S. Huelat,
$50,490. Such loans were represented by recourse notes and were secured by the
respective shares of common stock purchased with the proceeds. Also during 2001,
members of the Brand Advisory Team executed new, consolidated notes in respect
of prior loans made by DLJ Brand relating to the purchase of shares, and
exercise of options, relating to DLJ Brand's common stock. Such consolidated
notes were also on a recourse basis and secured by the respective shares of
common stock purchased with the proceeds. These loans were repaid in connection
with the Transaction.

Employment Agreements

Mr. Monter has entered into an amended and restated employment agreement with us
which became effective with the closing of the Transactions pursuant to which he
will serve as the Chief Executive Officer. The amended and restated employment
agreement terminates on December 31, 2007, and provides for an annual salary of
not less than $425,000. Mr. Monter is also eligible for a bonus of up to 150% of
his base salary. We are, under certain circumstances (including that such
remittance is permitted by law), obligated to remit the remaining two annual
scheduled payments of premiums in the amount of $200,000 each, on an insurance
policy pursuant to a split-dollar agreement entered into between us and Mr.
Monter. We are obligated to establish a nonqualified deferred compensation plan
pursuant to which we shall make an annual contribution during each year of Mr.
Monter's employment term in an amount equal to 25% of Mr. Monter's base salary.
As a part of the amended and restated employment agreement, Mr. Monter has
entered into covenants prohibiting him from competing with us, working for any
of our competitors or using proprietary information for a 24-month period
following the termination of his employment with us. Mr. Monter's receipt of
post-termination severance benefits are conditioned upon his releasing us from
certain potential claims and upon his compliance with confidentiality and
non-competition provisions included in the amended and restated employment
agreement.

Each of Raymond L. Edwards, Jeffrey W. Peterson, Guy S. Huelat, James McGee,
Scott M. Robinson and David R. Cichy (the "Executives") has entered into an
amended and restated employment agreement with us, each of which became
effective with the closing of the Transactions, for terms effective through the
second anniversary of the closing of the Transactions. The employment agreements
will automatically extend thereafter for one-year terms unless a written notice
to terminate is provided by us not less than 30 days nor more than 60 days prior
to the end of the then-current term. We are obligated to establish a
nonqualified deferred compensation plan for each such Executive pursuant to
which we shall make an annual contribution during each year of such Executive's
employment term in an amount equal to 15% of such Executive's base salary. As a
part of each amended and restated employment agreement, each Executive has
entered into covenants prohibiting such Executive from competing with us,
working for any of our competitors or using proprietary information for a
24-month period following his departure from us. Each Executive's receipt of
post-termination severance benefits is conditioned upon such Executive releasing
us from certain potential claims and upon such Executive's compliance with
confidentiality and non-competition provisions included in the amended and
restated employment agreement.

Equity Programs

In connection with the Transaction, our executive officers and certain of our
other team members have been or will be offered the opportunity to invest in
equity securities of the LLC pursuant to the following equity participation
programs.

The Management Equity Incentive Program. As a portion of the employment
compensation packages offered by us to our management, the LLC will provide
certain members of our management an opportunity to participate in both a
time-based equity incentive program and a performance-based equity incentive
program. A portion of this time- and performance-based equity was issued to
management as of the closing of the Transaction. The remainder was reserved by
the LLC for issuance to new hires or existing managers following the closing of
the Transaction.

Under the time-based equity incentive program, certain members of our management
will have an opportunity to earn, as a group, up to two percent of the
fully-diluted equity of the LLC (as calculated at the time of the closing of the
merger). Such time-based equity units shall vest over a five-year period, with
various restrictions and accelerators.

21

Under the performance-based equity incentive program, certain members of our
management will have an opportunity to earn, as a group, up to 12% of the
fully-diluted equity of the LLC (as calculated at the time of the closing of the
Transaction). The percentage of the outstanding performance-vesting incentive
units that shall vest will be determined by the net equity valuation of the LLC
at a liquidity event or at the seventh anniversary of the closing of the
Transaction.

The Leveraged Employee Co-Investment Program. Subject to the satisfaction of
certain requirements, certain of our managers, including our executive officers,
will have the opportunity to participate in a leveraged employee co-investment
program. Under this program, the LLC will provide these managers with eight-year
term loans, bearing interest at a cumulative rate per annum equal to the federal
funds rate in effect at the time the loan is made, for the purpose of financing
such managers' purchase of additional equity interests in the LLC. It is
anticipated that the executive officers and team members will borrow
approximately $4 million to purchase equity interests in the LLC under this
plan. Each loan made to a manager will be secured, at a minimum, by a pledge of
all of the equity interests in the LLC purchased by such manager with the
proceeds of the loan.

The Direct Investment Program. In addition to the foregoing equity programs, the
LLC will provide certain of our managers with the opportunity to purchase
additional equity interests in the LLC for the same per unit cash purchase price
paid by JPMP and certain other equity investors in connection with the closing
of the Transaction. No loans will be provided to the team members under the
Direct Investment Program.

Performance Bonuses

As approved by the shareholders of DLJ Brand, the boards of directors of DLJ
Brand and Brand Services authorized the payment of performance bonuses of $1.97
million to Mr. Monter, $0.26 million to Mr. Peterson and approximately $2.77
million to other members of management. These bonuses were expensed in the
period from January 1, 2002 through October 16, 2002.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Principal Stockholders

All of the issued and outstanding common stock of Brand Services, Inc. is owned
by Brand Intermediate Holdings, Inc. and all of the issued and outstanding
common stock of Brand Intermediate Holdings, Inc. is owned by the LLC. The
following table sets forth certain information with respect to the beneficial
ownership of the voting equity interests of the LLC as of December 31, 2002, by
(i) each person or group known to the Company who beneficially owns more than
five percent of the common stock of the LLC and (ii) all directors and executive
officers of the Company as a group:

22

James "Marty" McGee (2) 38,325 0.2

Arnold L. Chavkin (2)(3) 13,466,227 77.0

Christopher C. Behrens (2)(3) 13,466,227 77.0

Sean E. Epps (2)(3) 13,466,227 77.0

All directors and officers as a group (3) 14,153,658 81.0

- ----------

(1) Consists of equity interests held by J.P. Morgan Partners (BHCA), L.P.
("BHCA"), J.P. Morgan Partners Global Investors, L.P., J.P. Morgan
Partners Global Investors (Cayman), L.P., J.P. Morgan Partners Global
Investors A, L.P., and J.P. Morgan Partners Global Investors (Cayman)
II, L.P., each of which is affiliated with BHCA.

(2) The address for officers and directors is c/o Brand Services, Inc.,
15450 South Outer Highway 40, #270, Chesterfield, MO 63017.

(3) Includes 13,467,277 shares held by BHCA and its affiliates. Messrs.
Chavkin, Behrens and Epps are partners and/or principals of J.P. Morgan
Partners, LLC, an affiliate of BHCA and therefore may be considered to
share the beneficial ownership of the shares held by BHCA and its
affiliates. Messrs. Chavkin, Behrens and Epps disclaim beneficial
ownership of these shares.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

JPMorgan Chase Bank is the syndication agent, and its affiliate, J.P. Morgan
Chase & Co., is a lender under the Credit Facility. JPMorgan Chase Bank and J.P.
Morgan Chase & Co. received fees of approximately $1.25 million for acting in
such capacities. J.P. Morgan Chase & Co. will receive interest and other
payments as a lender under the Credit Facility as provided in our credit
agreement governing the Credit Facility.

J.P. Morgan Securities Inc. was one of the initial purchasers in our October
2002 offering of the Senior Notes due 2012 and was also a dealer manager for the
debt tender offer and consent solicitation relating to our Old Senior Notes and
received fees of approximately $1.9 million for acting in such capacities. J.P.
Morgan Securities also received a commitment fee of approximately $0.8 million
for providing a bridge loan commitment.

Each of JPMorgan Chase Bank, J.P. Morgan Chase & Co. and J.P. Morgan Securities
Inc. are affiliates of J.P. Morgan Partners (BHCA), L.P., J.P. Morgan Partners
Global Investors, L.P., J.P. Morgan Partners Global Investors (Cayman), L.P.,
J.P. Morgan Partners Global Investors A, L.P., and J.P. Morgan Partners Global
Investors (Cayman) II, L.P., who collectively own 65.1% of the equity interests
(76.7% of the voting equity interests) in our parent company, Brand Holdings,
LLC. Arnold L. Chavkin and Christopher C. Behrens, who serve as our directors,
are executive officers of J.P. Morgan Partners, LLC, which serves as investment
advisor to J.P. Morgan Partners (BHCA), L.P., and JPMP Capital Corp., a
subsidiary of J.P. Morgan Chase & Co., which is the general partner of the
general partner of each of J.P. Morgan Partners (BHCA), L.P., J.P. Morgan
Partners Global Investors, L.P., J.P. Morgan Partners Global Investors (Cayman),
L.P., J.P. Morgan Partners Global Investors A, L.P., and J.P. Morgan Partners
Global Investors (Cayman) II, L.P.

In connection with the consummation of the Transaction, JPMP received a
financial advisory fee of $5.0 million.

ITEM 14. CONTROLS AND PROCEDURES

The Company's chief executive officer and chief financial officer have evaluated
the effectiveness of the Company's disclosure controls and procedures (as
defined in Exchange Act Rules 13a - 14(c) and 15d-14(c)) as of a date within 90
days prior to the filing date of this annual report on Form 10-K (the
"Evaluation Date"). Based on such evaluation, each such officer has concluded
that, as of the Evaluation Date, the Company's disclosure controls and
procedures are effective in alerting them on a timely basis to material
information relating to the Company required to be included in the Company's
reports filed or submitted under the Exchange Act.

Since the Evaluation Date, there have not been any significant changes in the
Company's internal controls, or in the other factors that could significantly
affect such controls.

23

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

Documents Filed as Part of this Report

(1) and (2) Financial Statements.

See Index to Financial Statements on Page F-1 of this report.

(1) Exhibits

See Index on Page E-1 of this report.

Reports filed with Form 8-K

On August 9, 2002, Brand Services, Inc. filed a report on Form 8-K to announce
that DLJ Brand Holdings, Inc. was being acquired by J.P. Morgan Partners LLC.

On July 8, 2002, Brand Services, Inc. filed a report on Form 8-K to announce the
engagement of KPMG LLP as its independent public accountant.

24

INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

Brand Intermediate Holdings, Inc. and Subsidiaries:
Reports of Independent Public Accountants F-2

Consolidated Statements of Operations for the years ended December 31, 2000
and 2001, and for the periods from January 1, 2002 through October 16, 2002
and from October 17, 2002 through December 31, 2002 F-4

Consolidated Balance Sheets as of December 31, 2002 and 2001 F-5

Consolidated Statements of Cash Flows for the years ended December 31, 2000
and 2001, and for the periods from January 1, 2002 through October 16, 2002
and from October 17, 2002 through December 31, 2002 F-7

Consolidated Statements of Stockholder's Equity (Deficit) for the years ended
December 31, 2000 and 2001, and for the periods from January 1, 2002 through
October 16, 2002 and from October 17, 2002 through December 31, 2002 F-9

Notes to Consolidated Financial Statements F-13

F-1

REPORTS OF INDEPENDENT AUDITORS

Board of Directors Brand Intermediate Holdings, Inc.

We have audited the accompanying consolidated balance sheet of Brand
Intermediate Holdings, Inc. and subsidiaries as of December 31, 2002 and the
related consolidated statements of operations, stockholder's equity, and cash
flows for the period from October 17, 2002 through December 31, 2002. We have
also audited the consolidated statements of operations, stockholder's equity
(deficit), and cash flows of DLJ Brand Holdings, Inc. and subsidiaries
(Predecessor company) for the period from January 1, 2002 through October 16,
2002. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Brand
Intermediate Holdings, Inc. and subsidiaries at December 31, 2002 and the
consolidated results of their operations and their cash flows for the period
from October 17, 2002 through December 31, 2002 and the consolidated results of
operations and cash flows of DLJ Brand Holdings, Inc. (Predecessor company) for
the period from January 1, 2002 through October 16, 2002, in conformity with
accounting principles generally accepted in the United States.

As discussed in Note 4 to the consolidated financial statements, DLJ Brand
Holdings, Inc. and subsidiaries (Predecessor company) adopted Statement of
Financial Accounting Standard No. 142, "Goodwill and Other Intangible Assets",
in 2002.

ERNST & YOUNG LLP

St. Louis, Missouri
March 14, 2003

F-2

INDEPENDENT AUDITORS' REPORT

To DLJ Brand Holdings, Inc.:

We have audited the accompanying consolidated balance sheet of DLJ Brand
Holdings, Inc. (a Delaware corporation) and subsidiaries as of December 31,
2001, and the related consolidated statements of operations, stockholder's
equity (deficit), and cash flows for each of the years in the two-year period
ended December 31, 2001. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of DLJ Brand Holdings,
Inc. and subsidiaries as of December 31, 2001, and the results of their
operations and their cash flows for each of the years in the two-year period
ended December 31, 2001 in conformity with accounting principles generally
accepted in the United States of America.

KPMG LLP

St. Louis, Missouri
September 6, 2002

F-3

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)

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

F-4

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(In thousands except per share amounts)

(Continued on following page)

F-5

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Continued)
(In thousands except per share amounts)

The accompanying notes to the consolidated financial statements are an integral
part of these consolidated balance sheets.

F-6

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

(Continued on following page)

F-7

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In thousands)

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

F-8

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)
(In thousands except share amounts)

(Continued on following page)

F-9

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT) (Continued)
(In thousands except share amounts)

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

F-10

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT) (Continued)
(In thousands except share amounts)

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

F-11

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT) (Continued)
(In thousands except share amounts)

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

F-12

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share data)

1. ORGANIZATION AND BUSINESS:

Brand Intermediate Holdings, Inc. and its subsidiaries ("Brand") are 100% owned
by Brand Holdings LLC (the "LLC"). As of December 31, 2002, the voting equity
interests of the LLC are owned 76.7% by J.P. Morgan Partners and its affiliates
("JPMP"), and 23.3% by other equity investors, on a fully diluted basis. Brand
Services, Inc. is a wholly owned subsidiary of Brand Intermediate Holdings, Inc.
All references to "the Company", "we", "us", or "our" mean Brand Intermediate
Holdings, Inc. and its subsidiaries.

Prior to October 16, 2002, Brand Services, Inc. was a wholly owned subsidiary of
DLJ Brand Holdings, Inc. ("DLJ Brand" or the "Predecessor" company). On October
16, 2002, DLJ Brand merged with Brand Acquisition Corp., which was a
wholly-owned subsidiary of the LLC, and was renamed Brand Intermediate Holdings,
Inc. The preceding events are referred to as the "Transaction", as discussed
further in Note 15.

The information as of December 31, 2002 and for the period from October 17, 2002
through December 31, 2002 may not be directly comparable to the information
provided related to the Predecessor company as a result of the effect of the
revaluation of assets and liabilities to their estimated fair market values in
accordance with the application of purchase accounting pursuant to Statement of
Financial Accounting Standards No. 141, "Business Combinations."

The Company operates in one segment and provides scaffolding services primarily
to refining, petrochemical, chemical, utility and pulp and paper industries, and
to a lesser extent general commercial clients. Scaffolding services are
typically provided in connection with periodic, routine cleaning and maintenance
of refineries, chemical plants and utilities, as well as for new construction
projects. The Company provides personnel to erect and dismantle scaffolding
structures, transport scaffolding to project sites and supervise and manage such
activities. In addition, the Company rents and occasionally sells scaffolding
that is classified as property and equipment on the consolidated balance sheets.
The Company maintains a substantial inventory of scaffolding in the United
States and Canada.

The Company's services are not rendered to or dependent on any single customer
within the industrial or commercial markets and, therefore, the Company does not
believe that a material concentration of credit risk exists, except that one
customer accounted for $34.0 million (13%) and $32.5 million (11%), of revenue
for the years ended December 31, 2000, and 2001, respectively, and another
customer accounted for $40.3 million (11%) of our revenues for the combined
twelve months ended December 31, 2002.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Presentation

The accompanying financial statements are prepared on a consolidated basis and
include those assets, liabilities, revenues and expenses directly attributable
to the operations of the Company. All significant intercompany balances and
transactions have been eliminated.

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

Revenue Recognition

Labor revenues are recognized when the services are performed. Equipment rental
revenue is recognized based on the number of days the equipment is rented
beginning with the first day the equipment is under rental.

F-13

Sales of Scaffolding

The Company periodically sells new scaffolding directly to third parties. The
Company recognizes revenue upon shipment and records as operating expense, the
average cost of the scaffolding sold. The Company periodically sells scaffolding
to third parties, primarily to its rental customers. The Company recognizes
revenue for the proceeds of such sales and records as operating expense, the net
book value of the scaffolding. Net book value is determined assuming the oldest
scaffolding is sold first, as the Company maintains inventory records on a group
basis.

Cash and Cash Equivalents

The Company considers all short-term deposits purchased with original maturities
of three months or less to be cash equivalents.

Accrued Revenue

Accrued revenue represents work performed which either due to contract
stipulations or lacking contractual documentation requirements, could not be
billed. Substantially all unbilled amounts are expected to be billed and
collected within one year.

Property and Equipment

Property and equipment (including major repairs and improvements that extend the
useful life of the asset) are capitalized and stated at cost. Ordinary
maintenance and repairs of equipment are charged to expense. The cost of
property and equipment is depreciated over its estimated useful life on the
straight-line method as follows:

Buildings 10 to 30 years
Vehicles and other equipment 3 to 8 years
Scaffolding equipment 2 to 20 years
Leasehold improvements Life of the applicable lease or life of the
improvement, whichever is shorter

For the years ended December 31, 2000 and 2001, and for the periods from January
1, 2002 through October 16, 2002 and from October 17, 2002 through December 31,
2002, depreciation expense was $24,502, $23,488, $17,906, and $7,964,
respectively.

Deferred Financing Costs

In connection with borrowings under the old Credit Facility ("Old Credit
Facility") and the February 1998 issuance of 10-1/4% Senior Notes, ("Old Senior
Notes") the Company incurred financing fees and expenses that were deferred and
were being amortized generally over 10 years. For the years ended December 31,
2000 and 2001, and for the period from January 1, 2002 through October 16, 2002,
amortization expense related to deferred financing costs was $739, $737, and
$586, respectively.

In connection with the issuance of the new Credit Facility ("Credit Facility"),
the $150.0 million, 12% Senior Subordinated Notes ("Senior Notes"), and the
$35.0 million, 13%, pay-in-kind notes ("Intermediate Notes"), the Company
incurred financing fees and expenses that were deferred and are being amortized
over the lives of the individual debt instruments. For the period from October
17, 2002 through December 31, 2002, amortization expense relating to these
deferred financing costs was $380.

Asset Impairment

If facts and circumstances suggest that a long-lived asset may be impaired, the
carrying value is reviewed. If this review indicates that the value of the asset
will not be recoverable, as determined based on projected undiscounted cash
flows related to the asset over its remaining life, the carrying value of the
asset is reduced to its estimated fair value.

F-14

Deferred Revenue

Deferred revenue represents amounts collected from customers at a faster rate
than the work was performed on these contracts. Substantially all of the costs
related to these amounts will be incurred within one year.

Stock Based Employee Compensation

Prior to the Transaction, to account for the Company's stock option plan, (the
"Plan"), the Company adopted the disclosure-only provisions of Statement of
Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock Based
Compensation." The Company accounted for employee stock options under the Plan
under APB Opinion 25, as permitted under generally accepted accounting
principles. Accordingly, no compensation cost was recognized in the financial
statements for the years ended December 31, 2000 and 2001. During the period
from January 1, 2002 through October 16, 2002, non-cash compensation expense of
$2.5 million was recorded in the consolidated statement of operations since the
exercise prices of certain stock compensation awards were less than the
estimated fair values of the underlying stock on the date of grant. Estimated
fair values were determined by using the stock price inherent in the
Transaction. Had compensation cost been determined consistent with SFAS 123, the
Company's net income (loss) would reflect the following:

Workers' Compensation and Health Benefit Liabilities

The estimates of workers' compensation and health benefit liabilities are
developed using actuarial methods based upon historical data for payment
patterns, cost trends, utilization of health care services and other relevant
factors. These estimates are continually reviewed and adjustments, if necessary,
are reflected in the period known.

Foreign Operations

The assets and liabilities of the Company's wholly owned foreign subsidiary,
Brand Scaffold Services of Canada, Inc., which uses the Canadian dollar as its
functional currency, are translated at the rates of exchange in effect on the
balance sheet date while income statement accounts are translated at the average
exchange rate in effect during the period. The resulting translation adjustments
are charged or credited to the cumulative translation adjustment account
included in stockholder's equity (deficit). Revenue from the Canadian operation
and scaffolding equipment in Canada are less than 10% of the consolidated totals
for the Company.

3. NOTES RECEIVABLE:

Notes receivable primarily result from scaffolding sales. As of December 31,
2001 and 2002, $327 and $679, respectively, of such notes were outstanding with
interest rates ranging from 8.5% to 9.0%.

4. GOODWILL:

As of December 31, 2002, goodwill represents the amount paid in connection with
the Transaction in excess of the fair value of the identifiable net assets
acquired. Prior to December 31, 2001, goodwill was amortized using the
straight-line method over five years. Amortization expense related to goodwill
was $542 and $2,756 for the years ended December 31, 2000 and 2001,
respectively. Goodwill amortization for the year ended December 31, 2001
included an impairment charge of $1.4 million. During 2001, goodwill associated
with one of the acquired businesses in 2000 was written down

F-15

to $0 because management no longer believed the carrying value of that goodwill
was recoverable.

Under SFAS No. 142, "Goodwill and Other Intangible Assets", goodwill is no
longer subject to amortization over its useful life; rather, it is subject to at
least annual assessments of impairment. Accordingly, amortization of goodwill
ceased effective January 1, 2002. The Company completed the required
transitional impairment test as of January 1, 2002, and in doing so determined
that goodwill was not impaired. The following table shows a reconciliation
between reported net income and adjusted net income had SFAS No. 142 been
implemented by the Company as of January 1, 2000:

5. OTHER ASSETS AND INTANGIBLES:

Other assets and intangibles consists of the following at December 31:

The customer relationships and trade names were recorded at their fair values as
a result of the Transaction. The fair value assigned to customer relationships
of $53,900 was based on the future discounted cash flows that are expected to
result from the customer relationships existing at October 16, 2002. The
customer relationships are amortized over twelve years. Amortization expense
relating to customer relationships for the period from October 17, 2002 through
December 31, 2002 was $1,123. The value assigned to trade names was $13,514. The
trade names will not be amortized as this intangible asset has an indefinite
life. Amortization expense related to the non-compete agreement was $182, $181,
$198, and $43 for the years ended December 31, 2000, and 2001, and for the
periods from January 1, 2002 through October 16, 2002 and from October 17, 2002
through December 31, 2002, respectively.

The following summarizes the balances of intangibles as of December 31, 2002:

F-16

Aggregate amortization expense for the period from October 17, 2002 through
December 31, 2002 was $1,166. Estimated amortization expense for the years ended
December 31, is as follows:

2003 $ 4,680
2004 4,517
2005 4,512
2006 4,492
2007 4,492

6. ALLOWANCE FOR DOUBTFUL ACCOUNTS:

Activity in the allowance for doubtful accounts consists of the following:

7. INCOME TAXES:

Deferred income taxes reflect the tax effects of temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. Deferred income taxes are not
provided on undistributed earnings of the Company's foreign subsidiary because
those earnings are considered to be permanently invested. If the reinvested
earnings were to be remitted, the U. S. income taxes under current law would be
immaterial.

For the years ended December 31, 2000 and 2001 and for the periods from January
1, 2002 through October 16, 2002 and from October 17, 2002 through December 31,
2002, the provision (benefit) for income taxes consisted of the following:

The reconciliation of the statutory federal income tax expense (benefit) on the
Company's pretax income (loss) to the actual provision (benefit) for income
taxes for the years ended December 31, 2000 and 2001 and the periods from
January 1, 2002 through October 16, 2002 and from October 17, 2002 through
December 31, 2002 follows:

F-17

The components of the net deferred income tax liability as of December 31, 2001
and 2002 are as follows:

The Company records a valuation allowance when it is more likely than not that
some portion or all of the deferred income tax assets will not be realized. For
the years ended December 31, 2000 and 2001, the valuation allowance increased
(decreased) $0.1 million, and $(3.3) million, respectively. During the period
from January 1, 2002 through October 16, 2002, the Company reduced the valuation
allowance on deferred tax assets by $7.6 million. The valuation allowance on
deferred tax assets was reduced to $0 because the Company determined that it was
more likely than not that all deferred tax assets would be realized based upon
current operating results and anticipated operating results for future periods.
At December 31, 2002, the Company had net operating loss carryforwards, for
federal income tax purposes, of $119.3 million which expire in various years
between 2011 and 2022. A majority of the net operating loss carryforwards are
subject to an annual limitation under Internal Revenue Code Section 382.

F-18

8. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

The major components of accounts payable and accrued expenses as of December 31,
2001 and 2002, are as follows:

9. NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS:

Notes payable and capital lease obligations as of December 31, 2001 and 2002,
are as follows:

Notes payable consist of several promissory notes with interest rates of 8.5% to
9.0%. Future principal payments total $1,038 for 2003, $660 for 2004, and $165
for 2005. See Note 11 for the amortization table of the capital lease
obligations.

10. LONG-TERM DEBT:

At December 31, 2001 and 2002, the long-term debt consisted of the following:

In connection with the Transaction, Brand issued $150.0 million of 12%, Senior
Subordinated Notes (the "Senior Notes") due in 2012. The Senior Notes were
issued at a discount of $4,216 and are subordinated to the Credit Facility (the
"Credit Facility"). Amortization expense related to the discount on the Senior
Notes for the period from October 17, 2002 through December 31, 2002 was $50.
Brand also entered into the Credit Facility which provides for $130.0 million

F-19

in term loans, a $50.0 million revolving credit facility and a $20.0 million
letter of credit facility. As of December 31, 2002, no borrowings were
outstanding under the revolving credit facility. Brand also issued $35.0 million
of 13%, pay-in-kind notes (the "Intermediate Notes"). The Intermediate Notes
were issued at a discount of $4,098. Amortization expense related to the
discount on the Intermediate Notes for the period from October 17, 2002 through
December 31, 2002 was $35. The Intermediate Notes are "pay-in-kind" notes due to
restrictions on interest payments in the Credit Facility. Accretion of interest
on the Intermediate Notes for the period from October 17, 2002 through December
31, 2002 was $962.

Interest rates under the Credit Facility are based upon the LIBOR rate (for
LIBOR loans under the term borrowing) or the base rate (for base rate loans
under the term borrowing) plus a margin of 2.5% to 4.0%. As of December 31,
2002, our term borrowings were LIBOR loans at a rate of 5.41%. The average
interest rate under term loans for the period from October 17, 2002 through
December 31, 2002 was 5.6%. Interest expense on the term loans and the Senior
Notes for the period from October 17, 2002 through December 31, 2002 was $5,357.
In connection with the Credit Facility, the Company incurred administrative fees
and commitment fees of 0.5% on the unused portion of the revolving credit
facility. The fees are included in interest expense and totaled $52 for the
period from October 17, 2002 through December 31, 2002.

Maturities of debt as of December 31, 2002, are as follows:

As a result of the Transaction, the loans outstanding under the old $190.0
million Credit Agreement (the "Old Credit Agreement"), the old 10 1/4%, $130.0
million Senior Notes (the "Old Senior Notes"), and the old $14.5 million
Subordinated Note (the "Old Subordinated Note") were all repaid in full. The
average interest rate under the Old Credit Agreement and the Old Senior Note was
10.20%, 9.63%, and 9.21%, for the years ended December 31, 2000 and 2001 and for
the period from January 1, 2002 through October 16, 2002, respectively. Interest
expense under the Old Credit Agreement and the Old Senior Notes for the years
ended December 31, 2000 and 2001 and for the period from January 1, 2002 through
October 16, 2002 was $16,691, $17,901, and $12,433, respectively. Under the Old
Credit Agreement, the Company incurred administrative and commitment fees,
included in interest expense, of $154, $173, and $158 for the years ended
December 31, 2000 and 2001, and for the period from January 1, 2002 through
October 16, 2002, respectively.

As of December 31, 2001 and 2002, the Company had outstanding letters of credit
of $15.0 million and $30.6 million, respectively. For the years ended December
31, 2000 and 2001 and for the periods from January 1, 2002 through October 16,
2002, and from October 17, 2002 through December 31, 2002, the Company paid fees
related to such commitments (included in interest expense) of $315, $414, $399
and $254, respectively.

Substantially all of the assets of the Company are pledged as collateral for the
Credit Facility. In addition, the Company was required under the Old Credit
Agreement and is required under the Credit Facility to comply with various
covenants. These covenants include, among other restrictions, the achievement of
certain financial ratios. The Company was in compliance with the various
covenants at December 31, 2002.

11. LEASE OBLIGATIONS:

The Company leases a portion of its operating and office facilities under
operating leases. For the years ended December 31, 2000 and 2001 and for the
periods from January 1, 2002 through October 16, 2002 and from October 17, 2002
through December 31, 2002, rent expense was $2,564, $2,970, $2,368, and $791,
respectively. The Company leases certain scaffolding equipment under capital
leases. The net book value of the scaffolding equipment under capital lease was
$2,559 and $1,489 as of December 31, 2001 and 2002, respectively.

F-20

The future minimum lease payments under noncancelable leases as of December 31,
2002, are as follows:

12. COMMITMENTS AND CONTINGENCIES:

In the ordinary course of conducting its business, the Company becomes involved
in various pending claims and lawsuits. These primarily relate to employee
matters. The outcome of these matters is not presently determinable; however, in
the opinion of management, based on the advice of legal counsel, the resolution
of these matters is not anticipated to have a material adverse effect on the
financial position or results of operations of the Company.

13. SENIOR EXCHANGEABLE PREFERRED STOCK OF SUBSIDIARY:

Prior to the Transaction, the Company had authorized 1,250,000 shares and at
December 31, 2001, had issued and outstanding 1,042,460 of Senior Exchangeable
Preferred Stock (the "Old Senior Preferred Stock"). The liquidation value of
each share of Old Senior Preferred Stock was $25.00 at issuance. Dividends were
calculated quarterly on the liquidation value of such shares (including accreted
dividends) at 14.5% annually. For the years ended December 31, 2000, and 2001,
and for the period from January 1, 2002 through October 16, 2002, dividends of
$6,338, $7,308, and $6,576, respectively, were accreted. All of the Old Senior
Preferred Stock was redeemed and paid in full in connection with the
Transaction.

14. STOCKHOLDERS' EQUITY (DEFICIT):

Subsequent to the Transaction, the Company adopted a Management Equity Incentive
Program (the "Management Equity Incentive Program"). Under this program,
employees of Brand are eligible to participate in both a time-based equity
incentive program and a performance-based equity incentive program to purchase
Class C units of the LLC. Under the time-based equity incentive program, for so
long as a member of management remains employed by Brand, and subject to an
accelerated vesting in the event of certain liquidity events, the time-based
incentive units issued to each employee vest over a five-year period. Under the
performance-based equity incentive program, the number of outstanding
performance-based units that will vest upon the occurrence of a liquidity event
will be determined by comparing the net equity valuation of Brand to certain net
equity valuation targets agreed to between management and the LLC. In the event
that no liquidity event occurs prior to October 16, 2009, the number of the
outstanding performance-based units that vest on that date will be determined by
the fair market value of the LLC on that date. As of December 31, 2002, 195,142
and 1,170,854 time-based and performance-based Class C units were issued and
outstanding, respectively.

The value of the Class C units under the Management Equity Incentive Program is
based upon a formula which calculates the net equity of the LLC. As such, the
Company will record compensation expense utilizing variable plan accounting to
account for the Management Equity Incentive Program. A liability will be
recorded for the amount that would be payable to Class C unit holders at each
balance sheet date. As of December 31,2002, the redemption value of the Class C
units is $0 and, accordingly, no liability has been recorded.

In 1997, the Board of Directors of DLJ Brand adopted the Plan for key employees
of the Company. In connection with the Transaction, all stock options were
exercised and all shares of stock were redeemed on October 16, 2002. The
following table summarizes stock option transactions under the Plan for 2000,
2001, and 2002:

F-21

The weighted-average exercise price of the outstanding options as of December
31, 2000 and 2001 was $1.03 and $1.53, respectively. Prior to the Transaction,
certain members of management were extended loans with full recourse for the
purchase of stock of the Predecessor company. In connection with the
Transaction, all loans were repaid in full.

15. THE TRANSACTION

On October 16, 2002, the LLC acquired 100% of DLJ Brand in a stock transaction
accounted for as a business combination using the purchase method of accounting.
The total amount of consideration paid in the Transaction, including the payment
of transaction costs incurred by the buyer, was approximately $524.4 million.
The financial statements of Brand Intermediate Holdings, Inc. have been prepared
utilizing push-down accounting reflecting the LLC's cost of the acquisition. The
following table summarizes the estimated fair values of the assets acquired and
the liabilities assumed on the date of the Transaction:

Current assets $ 62,662
Property and equipment 203,876
Other assets 12,916
Intangible assets not subject to amortization -
Trade names 13,514
Intangible assets subject to amortization -
Customer relationships (twelve year life) 53,900
Goodwill 247,891
--------
Total assets acquired 594,759
--------
Current liabilities 36,938
Deferred tax liability 33,421
--------
Total liabilities assumed 70,359
--------
Net assets acquired $524,400
========

In connection with the Transaction, the LLC made a capital contribution to Brand
Intermediate Holdings, Inc. in the amount of $223,498. The following unaudited
pro forma results of operations assume that the Transaction occurred as of the
beginning of each year presented:

F-22

16. RELATED-PARTY TRANSACTIONS:

Prior to the Transaction, certain shareholders of DLJ Brand received a quarterly
Management Advisory Fee in return for management, advisory and other services
rendered. For the years ended December 31, 2000 and 2001, and for the period
from January 1, 2002 through October 16, 2002, such fees totaled $500, $500, and
$375, respectively.

In connection with the consummation of the Transaction, JPMP received a
financial advisory fee of $5.0 million. Also, JPMP holds $15.0 million of the
$35.0 million Intermediate Notes and holds 221,484 warrants to purchase certain
voting equity interests of the LLC.

17. EMPLOYEE BENEFIT PLAN:

In 1997, the Company established the Brandshare 401(k) Savings Plan and Profit
Sharing Plan ("401(k) Plan"). Substantially all employees are eligible to
participate in the Plan, after one year of service. Participants may elect to
defer 1% to 25% of their salary, up to the Internal Revenue Service limitation.
The Company, at its sole discretion, may make matching contributions to the
401(k) Plan. For the years ended December 31, 2000 and 2001, and for the periods
from January 1, 2002 through October 16, 2002 and from October 17, 2002 through
December 31, 2002 the Company expensed $383, $411, $402, and $119, respectively,
for contributions to the 401(k) Plan.

18. FAIR VALUES OF FINANCIAL INSTRUMENTS:

The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:

Notes Receivable - Recorded amounts of notes receivable approximate their fair
value.

Term Loans - The carrying amounts of the term loans approximate their fair value
because such loans carry variable interest rates.

Old Senior Notes - The fair value of the Old Senior Notes is based on market
rates obtained from dealers.

Notes Payable and Capital Lease Obligations - Recorded amounts of the notes
payable and capital lease obligations approximate their fair value.

Old 14.5% Senior Exchangeable Preferred Stock - The fair value of the Old 14.5%
Senior Exchangeable Preferred Stock is based on market rates obtained from
dealers.

12% Senior Subordinated Notes - The fair value of the Senior Notes is based upon
market rates obtained from dealers.

13% Intermediate Notes - The carrying value of the Intermediate Notes
approximates fair value.

The carrying amounts and fair values of the Company's financial instruments at
December 31, 2001 and 2002, are as follows:

(a) Excludes discount.

F-23

19. ACQUISITIONS:

In December 2001, the Company purchased the scaffolding business of United
Rentals, Inc. for an aggregate purchase price of $3.8 million in cash and $0.5
million in a note payable, which was entirely allocated to property and
equipment. The purchase price approximated the fair market value of the assets
purchased. The acquisition was accounted for using the purchase method of
accounting, and accordingly has been included in the financial statements from
the date of acquisition. The pro forma effects of this acquisition are not
material to the financial position or results of operation of the company.

During 2000, the Company acquired four companies in four separate transactions
for an aggregate purchase price of $11.0 million in cash, $3.3 million in notes
payable, and $3.0 million of possible future payments conditioned upon the
operating results of two of the acquired companies. The purchase prices,
allocated to assets and liabilities assumed, were based on relative fair values.
In connection with the acquisitions, the Company recorded goodwill in the amount
of $6.0 million based upon the allocation of the purchase prices of the
acquisitions. Each of the above acquisitions was accounted for using the
purchase method of accounting, and accordingly has been included in the
financial statements from the respective date of acquisition.

20. NEW ACCOUNTING STANDARDS:

In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 141 "Business Combinations" and No.
142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires all business
combinations initiated after June 30, 2001, to be accounted for using the
purchase method of accounting. The Company adopted SFAS No. 141 for its December
2001 acquisition. See Note 4 for the disclosures required by SFAS No. 142.

Under SFAS No. 143, "Accounting for Asset Retirement Obligations", the fair
value of a liability for an asset retirement obligation is required to be
recognized in the period in which it is incurred if a reasonable estimate of
fair value can be made. The associated asset retirement costs are capitalized as
part of the carrying amount of the long-lived asset. SFAS No. 143 was
implemented by the Company on January 1, 2002 with no material impact on the
Company's financial statements.

In August 2001, the Financial Accounting Standards Board issued SFAS No. 144,
"Accounting for the Impairment of Disposal of Long-Lived Assets." SFAS No. 144
addresses financial accounting and reporting for the impairment of long-lived
assets and for long-lived assets to be disposed of and supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of." SFAS No. 144 establishes a single accounting model for
long-lived assets to be disposed of by sale and resolves implementation issues
related to SFAS No. 121. SFAS No. 144 was implemented by the Company on January
1, 2002 with no material impact on the Company's financial statements.

In April 2002, the Financial Accounting Standards Board issued SFAS No. 145,
"Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement
No. 13, and Technical Corrections." SFAS No. 145 provides for the rescission of
several previously issued accounting standards, new accounting guidance for the
accounting for certain lease modifications and various technical corrections
that are not substantive in nature to existing pronouncements. SFAS No. 145 will
be adopted by the Company beginning January 1, 2003, except for the provisions
relating to the amendment of SFAS No. 13, which will be adopted for transactions
occurring subsequent to May 15, 2002. Adoption of SFAS No. 145 will not have a
material impact on the financial statements of the Company.

In June 2002, the Financial Accounting Standards Board issued SFAS No. 146,
"Accounting for Costs Associated with Exit or Disposal Activities." SFAS No. 146
nullifies Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)," and requires that a
liability for costs associated with an exit or disposal activity be recognized
when the liability is incurred rather than when a company commits to such an
activity. SFAS No. 146 also establishes that fair value be the objective for
initial measurement of the liability. SFAS No. 146 will be adopted by the
Company for exit or disposal activities that are initiated after December 31,
2002. Adoption will not have a material impact on the consolidated financial
statements of the Company.

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting
and Disclosure requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others." The Interpretation elaborates on the existing
disclosure requirements for most guarantees, including loan guarantees such as
standby letters of credit. It also clarifies that at the time a company issues a
guarantee, the company must recognize an initial liability for the fair value,
or market

F-24

value, of the obligations it assumes under that guarantee and must disclose that
information in its interim and annual financial statements. The initial
recognition and initial measurement provisions apply on a prospective basis to
guarantees issued or modified after December 31, 2002, regardless of the
guarantor's fiscal year-end. The disclosure requirements in the Interpretation
are effective for financial statements of interim or annual periods ending after
December 15, 2002. FASB Interpretation 45 was implemented in the fourth quarter
2002. The adoption of this FASB Interpretation did not have a material impact on
the consolidated financial statements of the Company.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure-an Amendment of FASB Statement No. 123."
This statement provides alternative methods of transition for a voluntary change
to the fair value based method of accounting for stock-based employee
compensation. In addition, this statement amends the disclosure requirements of
Statement 123 to require disclosures in both annual and interim financial
statements about the method of accounting for stock-based employee compensation
and the effect of the method used on reported results. Implementation of SFAS
No. 148 will not have a material impact on the results of operations of the
Company.

21. SUPPLEMENTAL CONSOLIDATING INFORMATION:

The 12% Senior Notes, which are an obligation of Brand Services, Inc. are fully
and unconditionally guaranteed on a senior subordinated, joint, and several
basis by the other domestic subsidiaries of Brand Intermediate Holdings (which
are all 100% owned by Brand Intermediate Holdings) and by Brand Intermediate
Holdings, Inc. Supplemental consolidating information of Brand Intermediate
Holdings, Inc., Brand Services, Inc., the guarantor subsidiaries, and its
foreign non-guarantor subsidiaries is presented below. Investments in
subsidiaries are presented on the equity method of accounting. Separate
financial statements are not provided because management has concluded that the
summarized financial information below provides sufficient information to allow
investors to separately determine the nature of the asset held by and the
operations of the guarantor and non-guarantor subsidiaries.

F-25

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Brand Intermediate Holdings, Inc.
Condensed Consolidating Balance Sheet
December 31, 2002

F-26

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Brand Intermediate Holdings, Inc.
Condensed Consolidating Balance Sheet
December 31, 2002 (continued)

F-27

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DLJ Brand Holdings, Inc. (Predecessor)
Condensed Consolidating Balance Sheet
December 31, 2001

F-28

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DLJ Brand Holdings, Inc. (Predecessor)
Condensed Consolidating Balance Sheet
December 31, 2001 (continued)

F-29

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Brand Intermediate Holdings, Inc.
Condensed Consolidating Statement of Operations
For the Period from October 17, 2002 through December 31, 2002

F-30

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DLJ Brand Holdings, Inc. (Predecessor)
Condensed Consolidating Statement of Operations
For the Period from January 1, 2002 through October 16, 2002

F-31

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DLJ Brand Holdings, Inc. (Predecessor)
Condensed Consolidating Statement of Operations
For the Year Ended December 31, 2001

F-32

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DLJ Brand Holdings, Inc. (Predecessor)
Condensed Consolidating Statement of Operations
For the Year Ended December 31, 2000

F-33

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Brand Intermediate Holdings, Inc.
Condensed Consolidating Statement of Cash Flows
For the Period from October 17, 2002 through December 31, 2002

F-34

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DLJ Brand Holdings, Inc. (Predecessor)
Condensed Consolidating Statement of Cash Flows
For the Period from January 1, 2002 through October 16, 2002

F-35

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DLJ Brand Holdings, Inc. (Predecessor)
Condensed Consolidating Statement of Cash Flows
For the Year Ended December 31, 2001

F-36

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DLJ Brand Holdings, Inc. (Predecessor)
Condensed Consolidating Statement of Cash Flows
For the Year Ended December 31, 2000

F-37

SIGNATURES

Pursuant to the requirement 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.

BRAND INTERMEDIATE HOLDINGS, INC.

Date: March 31, 2003 By:
--------------------------------------
John M. Monter
Chief Executive Officer and President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on March 31, 2003.

By:
--------------------------------------
John M. Monter
Chief Executive Officer and President
(Principal Executive Officer)

By:
--------------------------------------
Jeffrey W. Peterson
Chief Financial Officer and Vice
President, Finance
(Principal Financial and Accounting
Officer)

--------------------------------------
Christopher C. Behrens
Director

--------------------------------------
Sean E. Epps
Director

--------------------------------------
Arnold L. Chavkin
Director

INDEX TO EXHIBITS

(1) Incorporated herein by reference to exhibit of the same number in
the Registrant's Registration Statement on Form S-1, Registration
Number 333-56817.

(2) Incorporated herein by reference for exhibit of the same number
in the Registrant's Registration Statement on Form S-4,
Registration Number 333-102511.

(3) Filed herewith.

Chief Executive Officer Certification

I, John M. Monter, certify that:

1. I have reviewed this annual report on Form 10-K of Brand Intermediate
Holdings, Inc. (the "Registrant").

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

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

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

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

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

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

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

a) all significant deficiencies in the design or operation of internal
controls which could adversely 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 officer and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

Date: March 31, 2003

/s/ John M. Monter
-----------------------------------------
John M. Monter
Chairman, Chief Executive Officer,
President and Director

Chief Financial Officer Certification

I, Jeffrey W. Peterson, certify that:

1. I have reviewed this annual report on Form 10-K of Brand Intermediate
Holdings, Inc. (the "Registrant").

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

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

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

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

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

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

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

c) 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

d) 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 officer and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

Date: March 31, 2003

/s/ Jeffrey W. Peterson
-----------------------------------------
Jeffrey W. Peterson
Chief Financial Officer and Vice
President, Finance