UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

Commission file number 333-102511-14

Brand Intermediate Holdings, Inc.

15450 South Outer Highway 40, #270
Chesterfield, Missouri 63017
(636) 519-1000

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 [X]        No [  ]

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 126-2).

Yes [  ]        No [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, 2003, the voting equity interests of the LLC are owned 74.1% by J. P. Morgan Partners and its affiliates (“JPMP”), and 25.9% 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:

•		an investment in the LLC made by affiliates of JPMP and other equity investors, totaling $220.0 million.
•		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;
•		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
•		our issuance of the $150.0 million of 12% Senior Subordinated Notes due 2012 (“Senior Notes”).
•		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.”

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 78%, 81%, and 79% of our 2001, 2002, and 2003, 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 $37.3 million or 11% and $32.5 million or 11% of our revenue for the years ended December 31, 2003 and 2001, respectively. Another customer accounted for $37.6 million or 11% of our revenues for the year ended December 31, 2003, while another customer accounted for $40.3 million, or 11%, of our revenues for the year (combined twelve months) ended December 31, 2002. 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:

•		the ability to offer national coverage to large customers;
•		the ability to provide required personnel and scaffolding to process major turnarounds and unanticipated plant outages;
•		higher asset use through the shifting of assets across regions and across our large customer base;
•		purchasing leverage with scaffolding manufacturers; and
•		comprehensive safety training programs which have resulted in an accident incident rate which is 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.

3

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:

•		low inventory use during periods of low demand;
•		a lesser ability to adequately service all of our customers during periods of high demand;
•		price fluctuations; and
•		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 serviced 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 several years; however, contractors have increasingly outsourced their scaffolding needs, primarily due to greater

4

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 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 24% 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 seven 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 48 locations (47 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 41 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 2003.

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, 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 year ended December 31, 2003, and has been derived from the audited financial statements. The information as of December 31, 2002 and 2003, for the period from October 17, 2002 through December 31, 2002 and for the year ended December 31, 2003, 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

5

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.

6

(1)

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 $722, $545, $546, $433, $380 and $1,109 for the years ended December 31, 1999, 2000 and 2001, for the periods from January 1, 2002 through October 16, 2002 and from October 17, 2002 through December 31, 2002, and for the year ended December 31, 2003, respectively. Amortization of the discounts on long-term debt was $84 and $412 for the period from October 17, 2002 through December 31, 2002 and for the year ended December 31, 2003, respectively. Accretion of the Holdings Notes was $963 and $4,675 for the period from October 17, 2002 through December 31, 2002 and the year ended December 31, 2003, respectively. Accretion of the Old Subordinated Note was $1,374, $1,638, $1,953, and $1,812 for the years ended December 31, 1999, 2000 and 2001 and the period from January 1, 2002 through October 16, 2002, 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.

Impairment Policies

The Company accounts for its long-lived assets excluding goodwill and tradenames, in accordance with Statement of Financial Accounting Standards (SFAS) 144, which requires the Company to assess the recoverability of these assets when events or changes in circumstances indicate that the carrying amount of the long-lived asset (group) might not be recoverable. If impairment indicators exist, the Company determines whether the projected undiscounted cash flows will be sufficient to cover the carrying value of such assets. This requires the Company to make significant judgements about the expected future cash flows of the asset group. The future cash flows are dependent on general and economic conditions and are subject to change.

The Company accounts for its goodwill and tradenames in accordance with SFAS 142, which requires the Company to test goodwill and tradenames for impairment annually and whenever events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. For purposes of applying the provisions, the Company has determined that it will perform its impairment analysis on a consolidated enterprise level. Because quoted market prices do not exist for the Company, management uses the present value of expected future cash flows to estimate fair value. Management must make significant judgements and estimates about future conditions to estimate future cash flows. Unforeseen events and changes in circumstances and market conditions including general economic and competitive conditions, could result in significant changes in those estimates and material charges to income.

7

Workers’ Compensation Claims

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. These liabilities take into account incurred but not reported (IBNR) claims. While we believe our liabilities for workers’ compensation and health benefit claims of $14.4 million as of December 31, 2003, are adequate and that the judgment applied is appropriate, such estimated liabilities could differ materially from what will actually transpire in the future.

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. 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 on-hand 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.

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.

Revenues

Approximately 78%, 81%, and 79% of the Company’s 2001, 2002, and 2003, 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 13%, 26%, and 18% of our 2001, 2002, and 2003 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 21%, 18%, and 20% of 2001, 2002, and 2003 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.

8

Results of Operations

The following discussion of results of operations is presented for the year ended December 31, 2001 compared to the pro forma results for the year ended December 31, 2002, and for the year ended December 31, 2003 compared to the pro forma results for the year ended December 31, 2002. Because our operating results in 2002 contained a split reporting period under two different accounting bases, we are providing the unaudited pro forma 2002 results of operations for comparative purposes. We believe comparing our results of operations to the 2002 pro forma information will provide more meaningful comparisons.

Summary of Historical Financial Results
(In thousands)

9

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

On October 16, 2002, DLJ Brand merged with Brand Acquisition Corp., which was a wholly owned subsidiary of Brand Holdings, LLC (“the LLC”). The LLC is controlled by JPMP and its affiliates. The total amount of consideration paid in the merger, including amounts related to the repayment of indebtedness, the redemption of the outstanding preferred stock and the payment of transaction costs incurred by the buyer, was approximately $524.4 million. The following events occurred in connection with the Acquisition:

•

an investment in the LLC made by affiliates of JPMP and other equity investors, including $6.7 million of rollover equity, totaling $220 million;

•

the merger of Brand Acquisition Corp. into DLJ Brand, with DLJ Brand as the surviving corporation; DLJ Brand was renamed Brand Intermediate Holdings, Inc. after the Acquisition;

•

our borrowing of $130 million in term loans under a new credit facility and the repayment of our old credit facility. The new credit facility includes a $50 million revolving credit facility, and a $20 million letter of credit facility;

•

our repurchase of $130 million aggregate principal amount of our old 10-1/4% Senior Notes due 2008;

•

our repurchase of $14.5 million aggregate principal amount of our old 7.03% subordinated note;

•

our redemption of the $62.4 million aggregate liquidation preference of our 14.5% Senior Exchangeable Preferred Stock due 2008;

•

an issuance to JPMP and certain selling stockholders of DLJ Brand by Holdings of $35 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

•

our issuance of the notes.

The following unaudited pro forma consolidated financial information of Brand Intermediate Holdings (“Holdings”) and its subsidiaries is based on our historical financial statements contained elsewhere in this report, adjusted to give pro forma effect to the foregoing.

Holdings is a guarantor of the notes and of the senior credit facility and has no material assets or operations other than its ownership of 100% of the capital stock of Brand Services. Holdings is the issuer of the Holdings notes.

The unaudited pro forma consolidated statements of operations for the year ended December 31, 2002 give the effect to the Transactions as if they had occurred on January 1, 2002. The unaudited pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable under the circumstances. The unaudited pro forma consolidated financial statement information does not purport to represent what the results of operations or financial condition of Holdings and its subsidiaries would actually have been had the Transactions in fact occurred on such dates, nor do they purport to project the results of operations or financial condition of Holdings and its subsidiaries for any future period or date. The information set forth below should be read together with the other information contained under the captions “Selected Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in the historical financial statements of Holdings and its subsidiaries included elsewhere in this report.

The Acquisition was accounted for as a purchase business combination in accordance with Statement of Financial Accounting Standards No. 141, “Business Combinations.” The purchase price was pushed down to Holdings’ financial statements. The assets and liabilities were recorded at their estimated fair values. The purchase price allocations are based on valuations as of the date of acquisition. The allocation of the purchase consideration is based, in part, on preliminary information which is subject to adjustment upon obtaining complete valuation information and is subject to post-closing purchase price adjustments. These uncertainties include finalization of the income tax analysis, transaction expenses and the valuation assigned to property and equipment and intangible assets.

10

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

For the year ended December 31, 2002
(in thousands)

11

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)

(a)		Represents the adjustment to depreciation expense as a result of the write-up of property and equipment in connection with the Acquisition depreciated over an estimated weighted-average useful life of five years.
(b)		Represents the elimination of the annual management fee of $.5 million historically paid to Carlisle Enterprises and affiliates of DLJ Merchant Banking Fund, Inc. for management services provided to the Company. JPMP and its affiliates do not charge a management fee.
(c)		Represents amortization expense of the intangible assets arising from the acquisition over an estimated weighted average useful life of twelve years.
(d)		Represents adjustments to interest expense incurred as a result of the acquisition:

(e)

Represents the elimination of historical accretion of preferred stock dividends.

(f)

Income tax effects of pre-tax pro forma adjustments. The pro forma income tax expense principally reflects the estimated effective tax rate of 40%.

12

Year Ended December 31, 2003, as Compared to Year Ended December 31, 2002 (Pro Forma)

As discussed previously, the Transaction occurred on October 16, 2002. This created two stub reporting periods in 2002, January 1, 2002 through October 16, 2002 and October 17, 2002 through December 31, 2002. Because of the uniqueness of the cut-off dates and the impact of the Transaction on the financial statements, these stub periods are not readily comparable to the year ended December 31, 2003. In order to facilitate a meaningful comparison we will compare the year ended December 31, 2003 with the Pro Forma results for the year ended December 31, 2002, as if the Transaction had occurred on January 1, 2002. The major impacts of the Transaction on the Pro Forma financial statements were to significantly increase depreciation expense, amortization expense, and interest expense as a result of revaluing the assets, creating an intangible asset for customer relationships to be amortized over 12 years, and incurring a substantial amount of increased debt. Additionally, there were a significant amount of non-recurring transaction expenses incurred in 2002, and the old preferred stock was redeemed resulting in no more accretion of preferred stock dividends.

Revenue

Total revenue declined to $347.7 million for the year ended December 31, 2003 from $369.8 million for the pro forma year ended December 31, 2002, which represented a decrease of $22.0 million, or 6.0%. Labor revenue decreased $17.2 million, or 6.0% for the year ended December 31, 2003 as compared to the pro forma year ended December 31, 2002. The majority of the labor revenue decrease was caused by a decline in utility capital work in the second half of 2003 as some large new power plant construction projects were completed. Although some of this business was replaced with utility maintenance and other industrial work, it was not sufficient to offset the total decline. Rental revenue decreased $2.4 million, or 3.2% due to the utility capital decrease mentioned above and the loss of a large rental contract. Equipment sales declined by $2.4 million, or 24.8%, due to a softening in sales of new equipment.

Gross Profit

Overall gross profit decreased to $68.5 million for the year ended December 31, 2003 from $78.9 million for the pro forma year ended December 31, 2002, which was a decrease of $10.4 million, or 13.2%. The decline in revenue accounts for approximately $5.0 million of the gross profit shortfall. The remainder of the shortfall is primarily due to a combination of higher insurance costs and a shift in revenue mix to lower margin industrial maintenance work.

Selling and Administrative Expenses

Selling and administrative expenses decreased $1.9 million to $44.1 million for the year ended December 31, 2003, from $46.0 million for the pro forma year ended December 31, 2002. This is primarily the result of a significantly lower bonus accrual, partially offset by higher salaries, medical, and other miscellaneous expenses.

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

As a result of the factors discussed above, operating income decreased by $0.8 million, or 3.1%, to $24.4 million for the year ended December 31, 2003 from $25.2 million for the pro forma year ended December 31, 2002.

13

Interest Expense

Interest expense decreased by $1.0 million to $32.7 million for the year ended December 31, 2003, from $33.7 million for the pro forma year ended December 31, 2002. This decrease is primarily due to a lower average interest rate on the Term Debt in 2003.

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. We have eliminated the impact of the accretion of preferred stock dividends from the pro forma 2002 results.

Provision for Income Tax

For the year ended December 31, 2003, the benefit for incomes taxes was recorded at an effective rate of 27.5% versus an estimated effective tax rate of 40% for the pro forma year ended December 31, 2002. The lower benefit rate in 2003 is primarily due to additional Canadian income taxes, as well as not fully booking the benefit of pre-tax losses for state income taxes.

Net Income (Loss)

Net loss increased $0.9 million to ($5.8) million for the year ended December 31, 2003 from ($4.9) million for the pro forma year ended December 31, 2002.

Year Ended December 31, 2002 (Pro Forma), as Compared to Year Ended December 31, 2001

As discussed previously, the Transaction occurred on October 16, 2002. This created two stub reporting periods in 2002, January 1, 2002 through October 16, 2002 and October 17, 2002 through December 31, 2002. Because of the uniqueness of the cut-off dates and the impact of the Transaction on the financial statements, these stub periods are not readily comparable to the prior year. In order to facilitate a meaningful comparison we will compare the Pro Forma results for the year ended December 31, 2002 as if the Transaction had occurred on January 1, 2002, with the results of the historical year ended December 31, 2001. The major impacts of the Transaction on the Pro Forma financial statements were to significantly increase depreciation expense, amortization expense, and interest expense as a result of revaluing the assets, creating an intangible asset for customer relationships to be amortized over 12 years, and incurring a substantial amount of increased debt. Additionally, there were a significant amount of non-recurring start-up expenses incurred in 2002, and the old preferred stock was redeemed resulting in no more accretion of preferred stock dividends.

Revenue

Total revenue rose from $305.1 million for the year ended December 31, 2001 to $369.8 million for the pro forma year 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 year ended December 31, 2002 as compared to the year ended December 31, 2001. Rental revenue increased $6.7 million, or 9.8% from $68.1 million for the year ended December 31, 2001, to $74.8 million for the pro forma year 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 year ended December 31, 2002 as compared to the year ended December 31, 2001.

Gross profit

Pro forma 2002 gross profit of $78.9 million was 21.4% of revenue compared to $72.8 million and 23.9% of revenue for 2001. The primary reason for the decrease as a percentage of revenue to 21.2% from 23.9% is due to an approximate $8 million increase in depreciation expense in 2002 as a result of the Transaction.

14

Selling and administrative expenses

Selling and administrative expenses increased by $3.2 million in 2002 from $42.8 million to $46.0 million. The primary reason for the increase is due to $4.5 million in amortization of the customer relationship intangible asset and $0.6M of higher depreciation expense as a result of the Transaction, as well as higher bonus expense of $1.2M. These increases were partially offset by a decrease in goodwill amortization and impairment charge of $2.7M and the elimination of the $0.5 million management fee charged by the predecessor owners. JPMP and its affiliates are not charging a management fee.

Non Cash Compensation

Non-cash compensation expense of $2.5 million for year ended 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 that could not be capitalized under generally accepted accounting principles. $5.3 million of transaction expenses were recorded in 2002, of which $5.0 million represents completion bonuses paid to members of management upon the consummation of the Transaction.

Operating Income

As a result of the factors discussed above operating income for the pro forma year ended 2002 decreased by $4.8 million to $25.2 million.

Interest expense

Net interest expense increased by $11.3 million in 2002 compared to 2001. The primary reason for the increase was due to higher debt levels as a result of the Transaction.

Accretion of preferred stock dividends of subsidiary

Accretion of preferred stock dividends decreased from $7.3 million in 2001 to $0 for pro forma 2002. Prior to the Transaction, accretion of preferred stock dividends of subsidiary represented dividends accreted on our subsidiary’s 14.5% Senior Exchangeable Preferred Stock (the “Old Preferred Stock”). The Old Preferred Stock was redeemed and paid in full in connection with the Transaction.

Net Income (Loss)

Net income (loss) decreased by $5.5 million from income of $0.6 million in 2001 to a pro forma loss of ($4.9) million for 2002.

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 continue to use internal cash flow from operations and the Credit Facility for these items. As of December 31, 2003, the Company had working capital of $53.6 million, including cash and cash equivalents of $23.1 million.

For the year ended December 31, 2001, for the periods from January 1, 2002 through October 16, 2002 and from October 17, 2002 through December 31, 2002, and for the year ended December 31, 2003, cash provided by operating activities was $29.4 million, $36.2 million, $8.4 million, and $36.6 million, respectively.

One of the Company’s major uses of cash is capital expenditures, primarily comprised of equipment expenditures. The Company’s maintenance capital expenditure requirements are generally for scaffolding planks and other items used in the

15

business, such as trucks and equipment. Expansion capital expenditures are for new scaffolding and vehicles, are discretionary and vary annually based on the Company’s level of scaffolding rental activity and growth opportunities. Capital expenditures were $19.6 million, $12.8 million, $3.7 million and $11.9 million, for the year ended December 31, 2001, for the periods from January 1, 2002 through October 16, 2002 and from October 17, 2002 through December 31, 2002, and for the year ended December 31, 2003, 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, 2003, the Company had no borrowings outstanding under the revolving credit facility and had total outstanding letters of credit of $35.1 million. The Credit Facility was amended on February 3, 2004. The amendment contains two significant revisions. First, it adds an additional letter of credit facility of $15 million, which will allow the Company to move $15 million of letters of credit outstanding against the revolver to the additional letter of credit facility, thus increasing the amount currently available to be borrowed under the revolver by $15 million. Second, the interest rate on term loans is reduced by 0.75%.

The interest rate on the term loans under the Credit Facility is variable. For the period from October 17, 2002 through December 31, 2002 and for the year ended December 31, 2003, the weighted average interest rate on the term loans was 5.6% and 5.2%, respectively. 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 2004 is $26.0 million, including commitment and letter of credit fees. 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 discussed above, the credit agreement was amended effective February 3, 2004, to lower the interest rate spread by 0.75% to a spread of 1.75% to 3.25%. As of December 31, 2003, the interest rate on our term loans averaged 5.16%. We are not required to make interest payments on the Intermediate Notes, as these notes are pay-in-kind notes.

The Credit Agreement 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, 2003.

Contractual Obligations

The following is a summary of contractual cash obligations as of December 31, 2003 (dollars in thousands):

(1)

The interest rate on the Term Loan is floating. For purposes of this schedule we are using the December 31, 2003 interest rate of 5.16% for all periods. Also, we have the option to make voluntary prepayments on the Term Loan and are required by the credit agreement to make prepayments equal to 50% of the free cash flow

16

generated in each year as defined in the Credit Agreement. For purposes of this schedule we have not attempted to estimate what, if any, prepayments might be made throughout the life of the agreement.

(2)

The Intermediate Notes are pay-in-kind notes. We are not expected to begin paying interest in cash until 2008. Interest expense prior to 2008 will accrete on the Notes and be paid upon maturity of the Notes.

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 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 was adopted by us for exit or disposal activities initiated after December 31, 2002. Adoption did not have any impact on our consolidated financial statements.

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, 2003.

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 year ended December 31, 2001 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 year ended December 31, 2001, 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 year ended December 31, 2001.

Prior to engaging Ernst & Young, 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

17

the Company’s financial statements, or any other matters or reportable events listed in Item 304(a)(1)(iv) of Regulation S-K.

Item 9a. Controls and Procedures

(a)

Evaluation of disclosure controls and procedures. The Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) have reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 240.13a-14(c) and 15d-14(c)) as of the end of the current reporting period. Based on that evaluation, the CEO and CFO have concluded that the Company’s current disclosure controls and procedures are effective in timely providing them with material information relating to the Company required to be disclosed in the reports the Company files or submits under the Exchange Act.

(b)

Changes in internal controls. There have not been any significant changes in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. There were no significant deficiencies or material weaknesses, and therefore no corrective actions were taken.

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 December 31, 2003. 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.

18

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.

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, InterLine Brands, and a number of private companies.

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.

Gary W. Edwards was elected to the Board of Directors in December, 2003. Mr. Edwards is currently a consultant in the energy field. From November 1999 until the time of his retirement in December 2001, he was Senior Executive Vice President, Corporate Strategy & Development, Conoco, Inc., and had been Executive Vice President, Refining, Marketing, Supply & Transportation of Conoco from September 1991 until November 1999. From September 1991 to October 1998, Mr. Edwards was also a Senior Vice President, E.I. duPont de Nemours and Company (Conoco’s parent). Mr. Edwards is a director of Sunoco Partners LLC, the American Petroleum Institute, and a past director and Vice President of the European Petroleum Industry Association in Brussels.

Audit Committee

The Company’s audit committee is comprised of Sean E. Epps (Chairperson), Christopher C. Behrens and Gary W. Edwards. Gary W. Edwards is “independent” as defined in Rule 4200(a)(15) of the National Association of Securities Dealers’ listing standards. The Company’s board of directors has determined that it does not have an “audit committee financial expert” serving on its audit committee. The board of directors believe that the committee members have the appropriate experience and ability to perform the duties of the audit committee, although no member meets the definition of an “audit committee financial expert” as that term is defined in item 401 (h) (2) of Regulation S-K, as amended, promulgated by the SEC.

Code of Ethics

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:

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 annual scheduled payment of premiums in the amount of $200,000, 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 Jeffrey W. Peterson, Raymond L. Edwards, 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 Transaction, for terms effective through the second anniversary of the closing of the Transaction. 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

21

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.

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. Certain of our managers, including our executive officers, were given the opportunity to participate in a leveraged employee co-investment program. Under this program, the LLC provided these managers with eight-year term loans, bearing interest at a cumulative rate per annum equal to 3.27%, for the purpose of financing such managers’ purchase of additional equity interests in the LLC. The executive officers and team members borrowed approximately $2.9 million to purchase equity interests in the LLC under this plan. Each loan made to a manager is 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 provided 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 were 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, 2003, 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

(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 13,466,277 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 63.9% of the equity interests (74.1% 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. Principal Accounting Fees and Services

The following fees were paid to Ernst & Young LLP for services rendered during the years ended December 31, 2002 and 2003:

23

AUDIT FEES: $179,148 and $159,060 for 2002 and 2003, respectively, for services rendered for the audits of our financial statements, SEC registration statement filings and reviews of the financial statements included in our Forms 10-Q.

AUDIT-RELATED FEES: $13,000 and $13,500 for 2002 and 2003, respectively, for services rendered for assurance and related services reasonably related to the performance of the audits of our financial statements not reported under the caption “Audit Fees” above.

TAX FEES: None

ALL OTHER FEES: $1 million for various advisory services related to the transaction in 2002 and none in 2003.

Consistent with the Securities and Exchange commission requirements regarding auditor independence, the Audit committee has adopted a policy to pre-approve all audit and permissible non-audit services provided by the independent auditor. Under the policy, the Committee must pre-approve services prior to the commencement of the specified service. All services provided by Ernst & Young, LLP subsequent to May 6, 2003, have been preapproved by the Audit Committee.

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

None

24

INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

F-1

REPORTS OF INDEPENDENT AUDITORS

Board of Directors Brand Intermediate Holdings, Inc.

We have audited the accompanying consolidated balance sheets of Brand Intermediate Holdings, Inc. and subsidiaries as of December 31, 2002 and 2003, and the related consolidated statements of operations, stockholder’s equity, and cash flows for the period from October 17, 2002 through December 31, 2002 and for the year ended December 31, 2003. 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 2003, and the consolidated results of their operations and their cash flows for the period from October 17, 2002 through December 31, 2002 and for year ended December 31, 2003, 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.

ERNST & YOUNG LLP

St. Louis, Missouri
February 27, 2004

F-2

INDEPENDENT AUDITORS’ REPORT

To DLJ Brand Holdings, Inc.:

We have audited the accompanying consolidated statements of operations, stockholder’s equity (deficit), and cash flows of DLJ Brand Holdings, Inc. and subsidiaries (the Company) for the year 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 audit.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of DLJ Brand Holdings, Inc. and subsidiaries for year 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)

(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)