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, 2004

Commission file number 333-102511-14

Brand Intermediate Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of

incorporation or organization)

1700

(Primary standard industrial

classification code number)

13-3909682

(I.R.S. Employer

Identification No.)

___________

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 __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.

Class		Outstanding at March 15, 2005
Brand Intermediate Holdings, Inc.. Common Stock, $0.01 Par Value		1,000 shares

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 March 1, 2005, the voting equity interests of the LLC are owned 73.0% by J. P. Morgan Partners and its affiliates ("JPMP"), and 27.0% 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 $35.0 million of letter of credit facilities;

·	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."

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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):

	Predecessor		Brand Intermediate Holdings, Inc.
	January 1, 2002 through October 16, 2002		October 17, 2002 through December 31, 2002		2003		2004

Revenue	$	290,473	$	79,296	$	347,737	$	333,954
Operating income		31,703		3,985		24,389		24,163
Total assets				605,738		590,659		567,575

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 3,000 and 5,000 team members in 47 field offices located throughout the United States and two in Canada.

Approximately 82%, 80%, and 77% of our 2002, 2003, and 2004, 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 $35.6 million or 11% and $37.6 million or 11% of our revenues for the years ended December 31, 2004 and 2003, respectively. Another customer accounted for $34.6 million or 10% and $37.3 million or 11% of our revenues for the years ended December 31, 2004 and 2003, respectively. 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.

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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:

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.

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During the last several 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 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 3,000 to 5,000 team members, of which approximately 29% are represented by a labor union. While we have excellent relations with these unions and have experienced no material work stoppages during the past eight 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 49 locations (48 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, shorten lead times and 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 42 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 12,600 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 2004.

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, 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 for the years ended December 31, 2003 and 2004, and has been derived from the audited financial statements. The information as of December 31, 2002, 2003 and 2004, for the period from October 17, 2002 through December 31, 2002 and for the years ended December 31, 2003 and 2004, 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

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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.

	Predecessor									Brand Intermediate Holdings, Inc.
	2000			2001			January 1, 2002 through October 16, 2002			October 17, 2002 through December 31, 2002			Year Ended December 31, 2003			Year Ended December 31, 2004
(Dollars in Thousands)
INCOME STATEMENT DATA:

Revenue	$	264,066		$	305,089		$	290,473		$	79,296		$	347,737		$	333,954
Operating expenses		203,689			232,292			218,480			65,303			279,223			264,413
Gross profit		60,377			72,797			71,993			13,993			68,514			69,541

Selling and administrative expenses		39,254			42,785			32,502			10,008			44,125			45,145
Non-cash compensation		-			-			2,491			-			-			233
Transaction expenses		-			-			5,297			-			-			-
Operating income		21,123			30,012			31,703			3,985			24,389			24,163

Interest expense		22,052			22,750			15,525			7,105			32,718			33,673
Interest income		(95	)		(609	)		(151	)		(159	)		(267	)		(284	)
Accretion of preferred stock Dividends of subsidiary		6,338			7,308			6,576			-			-			-
Income (loss) before provision for Income tax		(7,172	)		563			9,753			(2,961	)		(8,062	)		(9,226	)
Provision (benefit) for income tax		-			-			1,335			(1,116	)		(2,221	)		(2,420	)
Net income (loss)	$	(7,172	)	$	563		$	8,418		$	(1,845	)	$	(5,841	)	$	(6,806	)

OTHER DATA:
Net cash provided by (used for):

Operating activities		19,494			29,441			36,219			8,449			36,601			26,848
Investing activities		(39,517	)		(20,564	)		(10,182	)		(527,648	)		(10,148	)		(12,728	)
Financing activities		22,918			644			(34,813	)		520,132			(8,170	)		(22,812	)

Depreciation and amortization		25,419			26,616			18,303			9,130			38,503			28,935
Cash interest expense (1)		19,869			20,251			13,280			5,678			26,522			26,173

Capital expenditures		32,234			19,635			12,821			3,708			11,921			14,092

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	December 31

	2000			2001			2002		2003		2004
	(Dollars in Thousands)
BALANCE SHEET DATA:

Working capital	$	9,757		$	22,542		$	35,850	$	53,624	$	42,010
Total assets		246,249			257,436			605,738		590,659		567,575
Long-term debt (including current portion and Revolving loan)		191,594			195,510			307,732		306,532		291,514
Notes payable and capital lease obligation (including current portion)		6,276			4,917			2,708		825		777
14.5% senior exchangeable preferred stock		47,742			55,050			-		-		-
Stockholder’s equity (deficit)		(37,343	)		(36,857	)		221,793		219,379		213,960

(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 $545, $546, $433, $380, $1,109 and $1,420 for the years ended December 31, 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 years ended December 31, 2003 and 2004, respectively. Amortization of the discounts on long-term debt was $84, $412 and $468 for the period from October 17, 2002 through December 31, 2002 and for the years ended December 31, 2003 and 2004, respectively. Accretion of the Holdings Notes was $963, $4,675 and $5,612 for the period from October 17, 2002 through December 31, 2002 and the years ended December 31, 2003 and 2004, respectively. Accretion of the Old Subordinated Note was $1,638, $1,953, and $1,812 for the years ended December 31, 2000 and 2001 and the period from January 1, 2002 through October 16, 2002, respectively.

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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.

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, 2004, are adequate and that the judgment applied is appropriate, such estimated liabilities could differ materially from what will actually transpire in the future.

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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

On June 1, 2004, the Company purchased the assets of Levitator, Inc., a commercial scaffolding company, for an aggregate purchase price of $1.0 million in cash and a $0.4 million note payable. The price was allocated to the assets and liabilities assumed, based on relative fair values. In connection with the acquisition, the Company recorded goodwill of $0.2 million based upon the allocation of the purchase price. The acquisition was accounted for using the purchase method of accounting, and accordingly has been included in the financial statements from the date of the acquisition.

Revenues

Approximately 82%, 80%, and 77% of the Company’s 2002, 2003, and 2004, 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 26%, 18%, and 6% of our 2002, 2003, and 2004 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 18%, 20%, and 23% of 2002, 2003, and 2004 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.

Results of Operations

The following discussion of results of operations is presented for the year ended December 31, 2004 compared to the results for the year ended December 31, 2003, 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 for 2003 to the 2002 pro forma information will provide more meaningful comparisons.

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Summary of Historical Financial Results

(In thousands)

	Predecessor			Brand Intermediate Holdings, Inc.
	January 1, 2002 through October 16, 2002			October 17, 2002 through December 31, 2002			Year Ended December 31, 2003			Year Ended December 31, 2004
Income Statement Data:
Revenue:
Labor	$	222,312		$	62,823		$	267,964		$	260,825
Equipment rental		59,951			14,886			72,408			66,335
Equipment sales		8,210			1,587			7,365			6,794

Total revenue		290,473			79,296			347,737			333,954
Operating expenses:
Labor		179,579			52,575			222,005			214,485
Equipment rental		20,410			8,260			36,395			28,182
Equipment sales		5,455			1,067			5,005			4,720
Divisional operating expenses		13,036			3,401			15,818			17,026

Total operating expenses		218,480			65,303			279,223			264,413

Gross profit		71,993			13,993			68,514			69,541

Selling and administrative expenses		32,502			10,008			44,125			45,145
Non-cash compensation		2,491			-			-			233
Transaction expenses		5,297			-			-			-

Operating income		31,703			3,985			24,389			24,163

Interest expense		15,525			7,105			32,718			33,673
Interest income		(151	)		(159	)		(267	)		(284	)
Accretion of preferred stock Dividends of subsidiary		6,576			-			-			-

Income (loss) before provision (benefit) for income tax		9,753			(2,961	)		(8,062	)		(9,226	)

Provision (benefit) for income tax		1,335			(1,116	)		(2,221	)		(2,420	)

Net income (loss)	$	8,418		$	(1,845	)	$	(5,841	)	$	(6,806	)

Other Data:
Net cash provided by (used for):

Operating activities	$	36,219		$	8,449		$	36,601		$	26,848
Investing activities		(10,182	)		(527,648	)		(10,148	)		(12,728	)
Financing activities		(34,813	)		520,132			(8,170	)		(22,812	)

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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 10¼% 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.

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BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

For the year ended December 31, 2002

(in thousands)

		COMBINED HISTORICAL			PRO FORMA ADJUSTMENTS			PRO FORMA
Revenues	$	369,769		$	—		$	369,769
Operating expenses		283,783			7,027(a	)		290,810
Gross profit		85,986			(7,027	)		78,959
Selling and administrative expenses		42,510			(375)(b	)
506 (a)
3,369 (c)								46,010
Non-cash compensation		2,491			—			2,491
Non-recurring transaction expenses		5,297			—			5,297
Operating income		35,688			(10,527	)		25,161
Interest expense		22,630			11,072 (d	)		33,702
Interest income		(310	)		—			(310	)
Accretion of preferred stock dividends of subsidiary		6,576			(6,576)(e	)		—
Income (loss) before income tax provision (benefit)		6,792			(15,023	)		(8,231	)
Income tax provision (benefit)		219			(3,511(f	))		(3,292	)

Net income (loss)	$	6,573		$	(11,512	)	$	(4,939	)

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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:

	Year ended December 31, 2002

Interest on borrowings under new credit facility:
Interest on term loans at LIBOR plus 400 bps (estimated rate of 5.8%)	$	7,540
Interest on the senior subordinated notes at 12%		18,000
Accretion of senior subordinated notes and Holdings notes		400
Interest on Holdings notes at 13%		4,550
Revolver fee		197
Notes and capital lease payable		290
Letter of credit fee		1,247
Amortization of deferred debt financing costs incurred in connection with the acquisition		1,478
Elimination of historical interest expense		(22,630	)
	$	11,072

(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%.

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Year Ended December 31, 2004 as Compared to Year Ended December 31, 2003

Revenue

Total revenue declined to $334.0million for the year ended December 31, 2004 from $347.7 million for the year ended December 31, 2003, which represented a decrease of $13.7 million, or 4.0%. The primary reason for the decrease was a $27.1 million decrease in the utility capital sector, much of which was anticipated, due to large projects in the Northeast and West Coast that were completed in 2003. This decrease was partially offset by increases in the commercial and other industrial sectors.

Gross Profit

Overall gross profit increased by $1.0 million or 1.5% for the year ended December 31, 2004 compared to the year ended December 31, 2003. Labor gross profit increased by $0.4 million despite a $7.1 million decrease in labor revenues. The percentage of labor gross profit to labor revenues increased to 17.8% in 2004 from 17.2% in 2003, primarily due to lower insurance claim costs. Equipment rental gross profit increased $2.1 million despite a $6.1 million decrease in rental revenue. The primary reason for this was an $8.4 million decrease in depreciation expense that resulted from groups of assets that became fully depreciated at the end of 2003. These increases were partially offset by a decline in equipment sales gross profit of $0.3 million, primarily due to a $0.6 million decrease in equipment sales revenue, and an increase in divisional operating expenses of $1.2 million. Higher truck expense, primarily due to higher fuel and maintenance costs, was the main factor in the divisional operating expense increase.

Selling and Administrative Expenses

Selling and administrative expenses increased $1.0 million to $45.1 million for the year ended December 31, 2004, from $44.1 million for the year ended December 31, 2003. This is primarily the result of increased salaries and travel expenses as well as small increases in a number of miscellaneous accounts, partially offset by lower depreciation expense.

Operating Income

As a result of the factors discussed above, operating income decreased by $0.2 million, or 0.9%, to $24.2 million for the year ended December 31, 2004 from $24.4 million for the year ended December 31, 2003.

Interest Expense

Interest expense increased by $1.0 million to $33.7 million for the year ended December 31, 2004, from $32.7 million for the year ended December 31, 2003. This increase is primarily due to bank fees paid associated with obtaining waivers and amendments to our credit agreement and the compounding effect on interest on the 13% pay-in-kind notes. These increases were partially offset by the impact of lower senior debt levels due to principal prepayments made in December of 2003 and March of 2004.

Income Tax Benefit

For the year ended December 31, 2004, the benefit for incomes taxes was recorded at an effective rate of 26.2% versus an effective tax rate of 27.5% for the year ended December 31, 2003. This rate is lower than the U.S. statutory rate of 34.0% primarily due to Canadian taxes and a portion of the interest expense on the pay-in-kind notes not being deductible for tax purposes.

Net Loss

Net loss increased $0.9 million to $6.8 million for the year ended December 31, 2004 from $5.9 million for the year ended December 31, 2003.

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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.

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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.

Income Tax Benefit

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 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.

Liquidity and Capital Resources

The Company has historically utilized internal cash flow from operations and borrowings under the Credit Facility to fund its operations, capital expenditures and working capital requirements. As of December 31, 2004, the Company had working capital of $42.0 million, including cash and cash equivalents of $14.4 million.

For the periods from January 1, 2002 through October 16, 2002 and from October 17, 2002 through December 31, 2002, and for the years ended December 31, 2003 and 2004, cash provided by operating activities was $36.2 million, $8.4 million, $36.6 million and $26.8 million, respectively.

The Company believes that its existing working capital, borrowings available under its Credit Facility and internal cash flow from operations should provide sufficient resources to support current business activities. To the extent the Company accelerates its growth plans, consummates acquisitions or has lower than anticipated sales or increases in expenses, it may also need to raise additional capital. In particular, increased working capital needs occur whenever the Company consummates acquisitions or experiences strong incremental demand.

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 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 $12.8 million, $3.7 million, $11.9 million and $14.1 million, for the periods from January 1, 2002 through October 16, 2002 and from October 17, 2002 through December 31, 2002, and for the years ended December 31, 2003 and 2004, respectively.

Our Credit Facility provides for $130.0 million of term loans, a $50.0 million revolving loan facility and $35.0 million of letter of credit facilities. Up to $20.0 million of the $50.0 million revolving loan facility may be used for additional letters of credit. The Credit Facility was amended on February 3, 2004. The amendment increased the letter of credit facilities from $20.0 million to $35.0 million and lowered the interest rate margin on the term loans by 0.75%. As of December 31, 2004, the Company had no borrowings outstanding under the revolving credit facility and had total outstanding letters of credit of $34.5 million.

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The Credit Facility contains 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 obtained a waiver from the lenders under the Credit Facility from compliance with the minimum interest coverage ratio and the maximum leverage ratio covenants for the periods ended June 30 and September 30, 2004; absent such waiver, the Company would have violated the covenants for these periods. The Credit Facility was amended effective November 9, 2004, to reset the minimum interest coverage ratio and maximum leverage ratio covenants through December 31, 2006, and to allow the Company to borrow an additional $25 million in term debt to be used to finance a potential acquisition, if necessary. The Company was in compliance with all loan covenants at December 31, 2004.

The interest rate on the term loans under the Credit Facility is variable. For the years ended December 31, 2004 and 2003, the weighted average interest rate on the term loans was 4.8% and 5.2%, respectively.

Our estimated interest payment obligation for 2005 is $26.2 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 1.75% to 3.25%, depending on the ratio of our consolidated debt to EBITDA. As of December 31, 2004, the interest rate on our term loans averaged 5.66%. We are not required to begin making interest payments on the Intermediate Notes until 2008, as these notes are pay-in-kind notes.

Contractual Obligations

The following is a summary of contractual cash obligations as of December 31, 2004 (dollars in thousands):

	Payments due in:
		Total		2005		2006		2007		2008		2009		After 2009

Term Loan Principal	$	102,615	$	1,047	$	1,047	$	1,047	$	1,047	$	98,427	$	—
Expected Interest Payments on Term Loan (1)		25,543		5,778		5,719		5,660		5,601		2,785		—
Senior Notes Principal		150,000		—		—		—		—		—		150,000
Expected Interest Payments on Senior Notes		144,000		18,000		18,000		18,000		18,000		18,000		54,000
Intermediate Notes Principal		46,249		—		—		—		—		—		46,249
Expected Interest Payments on Intermediate Notes		71,450		—		—		—		8,675		8,675		54,100
Capital Leases		192		95		92		5		—		—		—
Operating Leases		8,862		2,857		2,417		1,832		1,144		536		76
Notes Payable		585		249		84		84		84		84		—
Total Contractual Cash Obligations	$	549,496	$	28,026	$	27,359	$	26,628	$	34,551	$	128,507	$	304,425

(1)

The interest rate on the Term Loan is floating. For purposes of this schedule we are using the December 31, 2004 interest rate of 5.66% 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 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.

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.

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

Change in Accounting Principle

Effective January 1, 2004, the Company adopted the fair value recognition provisions of Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation". The Company selected the modified prospective transition method under the provisions of SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure," which requires expensing options prospectively, beginning in the year of adoption. The Company expensed $0.2 million for year ended December 31, 2004, recorded in the caption Non-cash compensation.

Prior to 2004, the Company accounted for stock-based compensation under the recognition and measurement provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. For the period from October 17, 2002 through December 31 2002 and for the year ended December 31, 2003, no stock-based employee compensation expense was recorded as all options granted under those plans had an exercise price greater than the fair market value of the underlying equity on the date of grant. 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.

New Accounting Standards

On December 16, 2004, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 123 (revised 2004), Share-Based Payment, which is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation. Statement 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends FASB Statement No. 95, Statement of Cash Flows. Generally, the approach in Statement 123(R) is similar to the approach described in Statement 123. However, Statement 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. We expect to adopt Statement 123(R) on July 1, 2005.

The company plans to adopt Statement 123(R) using the modified-prospective method.

The company adopted the fair-value-based method of accounting for share-based payments effective January 1, 2004 using the "modified prospective method" described in FASB Statement No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure. Currently, the Company uses the minimal value method of the Black-Scholes model to estimate the value of stock options granted to employees and expects to continue to use this acceptable option valuation model upon the required adoption of Statement 123(R) on July 1, 2005. The company does not anticipate that adoption of Statement 123(R) will have a material impact on its results of operations or its financial position.

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. At December 31, 2004, the Company held approximately $298.9 million of long-term debt, with approximately $102.6 million subject to variable interest rates based upon LIBOR plus an applicable margin. If interest rates increased by 100 basis points, annualized cash interest expense would increase by approximately $1.0 million. This analysis does not reflect the effect that interest rates would have on other items, such as new borrowings nor the favorable impact declining rates would have on cash interest expense. The Company did not have any derivative financial instruments in place at December 31, 2004.

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

None.

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Item 9A. Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective. There were no changes in our internal control over financial reporting during the quarter ended December 31, 2004 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

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 10, 2005. Each director and officer holds office until a successor is elected and qualified or until his earlier death, resignation or removal.

Name	Age	Position and Offices

John M. Monter	57	Chairman and Director
Paul T. Wood	44	Chief Executive Officer, President and Director
Jeffrey W. Peterson	46	Chief Financial Officer and Vice President, Finance
Raymond L. Edwards	51	Vice President, Operations Support and Secretary
Scott M. Robinson	57	Vice President, Business Development
Guy S. Huelat	43	Vice President, Operations-Central Region
David R. Cichy	54	Vice President, Operations-Northern Region
James "Marty" McGee	49	Vice President, Operations-Southeast Region
Steven R. Loftus	47	Vice President, Operations-Western Region
John W. Breckenridge	43	Director
Christopher C. Behrens	44	Director
Sean E. Epps	36	Director
Gary W. Edwards	63	Director

John M. Monter has served as our Chief Executive Officer, President and one of our directors since 1996. Effective January 1, 2005, Mr. Monter resigned as Chief Executive Officer and President. 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.

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Paul T. Wood has served as our Chief Executive Officer and one of our directors since January 1, 2005. Mr. Wood was previously employed by General Electric for the past fifteen years. During that time Mr. Wood served in a series of functional and general management assignments, and most recently was the General Manager of GE’s Installation and Field Services business, a worldwide provider of installation and maintenance services for the utility, refinery and chemical industries. Mr. Wood has over twenty years of general management and industry experience. Mr. Wood holds a B.S. and M.S. from the Ohio State University in Welding & Metallurgical Engineering, graduated from General Electric’s executive management training program and is a certified Six Sigma Black Belt.

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.

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.

Steven R. Loftus has been our Vice President, Operations-Western Region, since June 2004. Prior to joining us, Mr. Loftus was Operations Manager from 2001 to 2003 for Chevron-Texaco in Maracaibo, Venezuela and Operations Manager for Texaco from 1999 to 2000 in Angola. Prior to that he held a variety of operations and asset management positions with Texaco in Angola, Indonesia, and the United States. Mr. Loftus holds a B.S. in engineering from Harvey Mudd College and an M.S. in engineering from the University of Southern California.

John W. Breckenridge was named a director of the Company effective February 28, 2005. Mr. Breckenridge is a partner in the New York office of JPMP. He has more than eighteen years of operating experience in the electronics, industrial and service sectors in the United States and Japan. Before joining JPMP in 2001, Mr. Breckenridge spent seven years with Invensys Plc, most recently as Chief Operating Officer of Densei-LambdaKK, a publicly traded Japanese electronics manufacturer controlled by Invensys. Previously, he was General Manager of several other Invensys’ divisions and Vice President of Sales and Marketing at an Invensys subsidiary in Texas. Earlier in his career, he was Vice President and General Manager of a U.S. subsidiary of Strafor-Facom SA and held engineering and technical sales positions at ATT Technology Systems (now Lucent). Mr. Breckenridge has a B.S. in Mechanical Engineering from the University of Vermont.

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Christopher C. Behrens is a Partner of JPMP and has been a director of the Company since October 2002. 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 and has been a director of the Company since October 2002. 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 Corporation and Pliant Corporation.

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, a past director of 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

The Company has adopted a code of ethics that applies to our Chief Executive Officer, Advisory Team Members, Senior Financial Officers, including the Controller and other persons performing similar functions, and all other management. This code of ethics is posted on our website, located at www.brandscaffold.com. We intend to satisfy the disclosure requirement under Item 10 of Form 8-K regarding an amendment to, or waiver from, a provision of this code of ethics by posting such information on our website, at the address specified above. Information contained in our website, whether currently posted or posted in the future, is not part of this document or the documents incorporated by reference in this document.

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 2002, 2003 and 2004:

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Summary Compensation Table

Name and Principal Position		Salary ($)		Bonus ($)		Other Compensation ($)		Company's matching 401-K contribution ($)
John M. Monter(1),	2004		449,010				16,398		2,050
Chief Executive Officer	2003		436,363		-		15,879		2,000
	2002		420,992		2,480,000		15,689		2,000

Jeffrey W. Peterson, Chief Financial	2004		170,581		-		-		1,646
Officer, Vice President, Finance	2003		165,609		-		-		2,000
	2002		160,014		452,017		-		2,000

Raymond L. Edwards,	2004		179,670		-		-		1,659
Vice President, Operations Support	2003		174,428		-		-		2,000
	2002		169,686		463,623		-		2,000

Scott M. Robinson,	2004		177,174		-		2,851		1,636
Vice President, Business Development	2003		172,432		-		2,851		2,000
	2002		167,731		461,277		-		2,000

Guy S. Huelat,	2004		171,870		-		-		1,587
Vice President Operations -	2003		166,857		-		-		2,000
Southwest Region	2002		161,221		453,465		-		2,000

David R. Cichy,	2004		170,518		-		7,835		1,646
Vice President Operations -	2003		165,963		-		6,300		2,000
Northern Region	2002		160,659		452,791		6,300		2,000

James "Marty" McGee,	2004		171,954		-		-		1,654
Vice President Operations -	2003		166,940		-		-		2,000
Southeast Region	2002		162,074		454,489		-		2,000

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

(1)	Mr. Monter resigned as Chief Executive Officer effective January 1, 2005. Mr. Monter continues to serve as the Company’s Chairman of the Board..

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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:

	Number of Units
	2002	2003	2004
John M. Monter	810,336	-	-
Jeffrey W. Peterson	92,610	-	-
Raymond L. Edwards	92,610	-	-
Scott M. Robinson	92,610	-	-
Guy S. Huelat	92,610	-	-
David R. Cichy	92,610	-	-
James "Marty" McGee	92,610	-	-
Steven R. Loftus	-	-	92,610

Employment Agreements

Mr. John 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 serves as Chairman. 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 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.

Mr. Paul Wood has entered into an employment agreement with us which became effective January 1, 2005 pursuant to which he will serve as Chief Executive Officer. The employment agreement terminates on December 31, 2007 and provides for an annual salary of not less than $400,000. The employment agreement will automatically extend thereafter for one-year terms unless a written notice to terminate is provided by the Company or Mr. Wood not less 60 days prior to the end of the then-current term. Mr. Woods was given a starting bonus of $50,000 and equity interests in our parent, Brand Holdings, LLC. Mr. Wood is also eligible for a bonus of up to 150% of his base salary. In the event Mr. Wood's employment term is terminated by the Company for cause or terminated by Mr. Wood other than for good reason, he is entitled to his base salary through the date of termination, earned bonus for the prior fiscal year but not yet paid, $50,000, and any unreimbursed business expenses. In the event that Mr. Wood's employment term is terminated by reason of his death or disability or by the Company without cause or by Mr. Wood for good reason, Mr. Wood will be entitled to (i) his base salary through the date of his termination, earned bonus for the prior fiscal year but not yet paid, $50,000, and any unreimbursed business expenses; (ii) continued payment of his base salary through the first anniversary of his termination (the "Severance Period"); (iii) continued coverage under our welfare benefits for up to the end of the Severance Period or such time as Mr. Wood is eligible to receive comparable welfare benefits; and (iv) a pro rated amount of the bonus Mr. Wood would have otherwise received. In the event that Mr. Wood's employment term is terminated by reason of his death or disability or by the Company without cause or by Mr. Wood for good reason, or in connection with a change of control, Mr. Wood will be entitled to sell to the Company his equity interests in the Company. As a part of the employment agreement, Mr. Wood has entered into covenants prohibiting him from competing with the Company, working for any of the Company’s competitors or using proprietary information for a 12-month period following the termination of his employment.

-23-

Each of Jeffrey W. Peterson, Raymond L. Edwards, Guy S. Huelat, James McGee, Scott M. Robinson, David R. Cichy and Steven R. Loftus (the "Executives") has entered into an employment agreement with us, each of which became effective October 16, 2004, for terms effective through October 16, 2007. 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 certain of the Executives 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. The employment agreements provide that if within 24 months following a change of control an Executive’s position is eliminated, their salary or bonus reduced or their employment is terminated, the Executive will be entitled to terminate his employment and receive his base salary and other benefits for a period of 24 months following such termination. As a part of each 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 12-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.

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.

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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 March 1, 2005, 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:

Name and Address of Beneficial Owner	Number of Voting Equity Interests		Percentage of Class
J.P. Morgan Partners (BHCA), L.P. 1221 Avenue of the Americas, 39th Floor New York, NY 10020 (1)		13,466,227		73.0	%
Teachers Insurance and Annuity Association of America 730 Third Avenue New York, NY 10019		1,210,164		6.7
John M. Monter (2)		411,482		2.3
Paul T. Wood		303,488		1.6
Jeffrey W. Peterson (2)		60,790		0.3
Raymond L. Edwards (2)		77,500		0.4
Scott M. Robinson (2)		36,750		0.2
Guy S. Huelat (2)		54,602		0.3
David R. Cichy (2)		57,618		0.3
James "Marty" McGee (2)		60,825		0.3
Steven R. Loftus (2)		11,250		0.1
John W. Breckenridge (2)(3)		13,466,227		73.0
Christopher C. Behrens (2)(3)		13,466,227		73.0
Sean E. Epps (2)(3)		13,466,227		73.0

All directors and officers as a group (3)		14,540,532		78.8

-25-

(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. Breckenridge, 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. Breckenridge, 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. During the year ended December 31, 2004, J.P. Morgan Securities received fees of approximately $0.4 million for services provided in connection with credit agreement amendments.

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 (73.0% of the voting equity interests) in our parent company, Brand Holdings, LLC. John W. Breckenridge 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 information contained in Item 14 is not presented in thousands of dollars.

The following fees were paid to Ernst & Young LLP for services rendered during the years ended December 31, 2003 and 2004:

AUDIT FEES: $163,454 and $184,493 for 2003 and 2004, 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: $13,200 and $12,480 for 2003 and 2004, 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: $0 and $176,844 for 2003 and 2004, respectively.

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ALL OTHER FEES: None

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

Current Report on Form 8-K filed on January 6, 2005

Current Report on Form 8-K filed on March 3, 2005.

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INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

Report of Independent Auditors	F-2
Consolidated Statements of Operations for the periods from January 1, 2002 through October 16, 2002 and from October 17, 2002 through December 31, 2002, and for the years ended December 31, 2003 and 2004	F-3
Consolidated Balance Sheets as of December 31, 2003 and 2004	F-4
Consolidated Statements of Cash Flows for the periods from January 1, 2002 through October 16, 2002 and from October 17, 2002 through December 31, 2002, and for the years ended December 31, 2003 and 2004	F-6

Consolidated Statements of Stockholder’s Equity (Deficit) for the periods from January 1, 2002 through October 16, 2002 and from October 17, 2002 through December 31, 2002, and for the years ended December 31, 2003 and 2004	F-8
Notes to Consolidated Financial Statements	F-12

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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, 2003 and 2004, and the related consolidated statements of operations, stockholder’s equity (deficit), and cash flows for the period from October 17, 2002 through December 31, 2002 and for the years ended December 31, 2003 and 2004. 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 the standards of the Public Accounting Oversight Board. 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 consideration of internal controls over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal controls over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and 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, 2003 and 2004, and the consolidated results of their operations and their cash flows for the period from October 17, 2002 through December 31, 2002 and for years ended December 31, 2003 and 2004, 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 U.S. generally accepted accounting principles.

As discussed in Note 2 to the financial statements, in 2004 the Company changed its method of accounting for stock-based compensation.

ERNST & YOUNG LLP

St. Louis, Missouri

February 25, 2005

F-2

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands)

	Predecessor			Brand Intermediate Holdings, Inc.
	January 1, 2002 through October 16, 2002			October 17, 2002 through December 31, 2002			Year Ended December 31, 2003			Year Ended December 31, 2004

Revenue:
Labor	$	222,312		$	62,823		$	267,964		$	260,825
Equipment rental		59,951			14,886			72,408			66,335
Equipment sales		8,210			1,587			7,365			6,794

Total revenue		290,473			79,296			347,737			333,954

Operating expenses:
Labor		179,579			52,575			222,005			214,485
Equipment rental		20,410			8,260			36,395			28,182
Equipment sales		5,455			1,067			5,005			4,720
Divisional operating expenses		13,036			3,401			15,818			17,026

Total operating expenses		218,480			65,303			279,223			264,413

Gross profit		71,993			13,993			68,514			69,541

Selling and administrative expenses		32,502			10,008			44,125			45,145
Non-cash compensation		2,491			-			-			233
Transaction expenses		5,297			-			-			-

Operating income		31,703			3,985			24,389			24,163

Interest expense		15,525			7,105			32,718			33,673
Interest income		(151	)		(159	)		(267	)		(284	)
Accretion of preferred stock dividends of subsidiary		6,576			-			-			-

Income (loss) before provision (benefit) for income tax		9,753			(2,961	)		(8,062	)		(9,226	)

Provision (benefit) for income tax		1,335			(1,116	)		(2,221	)		(2,420	)

Net income (loss)	$	8,418		$	(1,845	)	$	(5,841	)		(6,806	)

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

F-3

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

	December 31, 2003		December 31, 2004
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	23,100	$	14,408
Trade accounts receivable, net of allowance for doubtful accounts of $1,365 in 2003 and $1,605 in 2004		54,005		56,639
Accrued revenue		3,137		2,115
Notes receivable		621		176
Other current assets		9,421		8,847

Total current assets		90,284		82,185

PROPERTY AND EQUIPMENT:
Land		1,237		1,283
Buildings and leasehold improvements		3,354		3,518
Vehicles and other equipment		25,736		29,090
Scaffolding equipment		188,489		195,356

Total property and equipment, at cost		218,816		229,247

Less- Accumulated depreciation and amortization		39,857		59,554

Total property and equipment, net		178,959		169,693


GOODWILL		248,347		247,325

CUSTOMER RELATIONSHIPS, NET		48,286		43,794

OTHER ASSETS AND INTANGIBLES, NET		24,783		24,578


Total assets	$	590,659	$	567,575

(Continued on following page)

F-4

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Continued)

(In thousands except share amounts)

	December 31, 2003			December 31, 2004

CURRENT LIABILITIES:

Current maturities of long-term debt	$	1,250		$	1,047
Current maturities of notes payable and capital lease obligations		660			350
Accounts payable and accrued expenses		33,302			37,264
Deferred revenue		1,448			1,514

Total current liabilities		36,660			40,175


LONG-TERM DEBT, LESS CURRENT MATURITIES		305,282			290,467


NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS, LESS CURRENT MATURITIES		165			427


DEFERRED INCOME TAXES		29,173			22,546


STOCKHOLDER’S EQUITY:
Common stock, $0.01 par value, 1,000 shares authorized, issued and outstanding, as of December 31, 2003 and 2004		-			-
Paid-in capital		224,212			224,445
Cumulative foreign currency translation adjustment		2,853			4,007
Accumulated deficit		(7,686	)		(14,492	)

Total stockholder’s equity		219,379			213,960

Total liabilities and stockholder’s equity	$	590,659		$	567,575

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

F-5

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Predecessor			Brand Intermediate Holdings, Inc.
	January 1, 2002 through October 16, 2002			October 17, 2002 through December 31, 2002			Year Ended December 31, 2003			Year Ended December 31, 2004
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)	$	8,418		$	(1,845	)	$	(5,841	)	$	(6,806	)
Adjustments to reconcile net income (loss) to net Cash provided by operating activities:
Deferred income tax benefit		(1,015	)		(662	)		(3,282	)		(5,672	)
Depreciation and amortization		18,303			9,130			38,503			28,935
Non-cash compensation		2,491			-			-			233
Non-cash interest expense		2,245			1,428			6,197			7,499
Gain on sale of scaffolding equipment		(1,176	)		(250	)		(828	)		(1,110	)
Contribution for completion bonuses		5,000			-			-			-
Tax benefit from exercise of stock options		1,444			-			-			-
Preferred stock dividends of subsidiary		6,576			-			-			-
Changes in operating assets and liabilities:
Trade accounts receivable, net		(1,166	)		(4,122	)		4,458			(2,486	)
Accrued revenue		(6,279	)		5,030			242			1,022
Notes receivable		(165	)		(187	)		(2	)		463
Other current assets		1,186			(5,656	)		3,020			574
Accounts payable and accrued expenses		806			3,721			(5,262	)		3,962
Deferred revenue		41			87			(20	)		66
Other		(490	)		1,775			(584	)		168

Net cash provided by operating activities		36,219			8,449			36,601			26,848

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(12,821	)		(3,708	)		(11,921	)		(14,092	)
Proceeds from sales of property and equipment		2,639			460			1,773			2,384
Payments for acquisitions		-			(524,400	)		-			(1,020	)

Net cash used for investing activities		(10,182	)		(527,648	)		(10,148	)		(12,728	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt		-			310,097			-			-
Payment of deferred financing fees		-			(12,659	)		-			(986	)
Payments of long-term debt		(33,475	)		-			(6,287	)		(21,098	)
Exercise of stock options		67			-			-			-
Payments on capital lease obligations		(1,405	)		(804	)		(1,883	)		(728	)
Capital contribution from LLC		-			223,498			-			-

Net cash provided by (used for) financing activities	$	(34,813	)	$	520,132		$	(8,170	)	$	(22,812	)

(Continued on following page)

F-6

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(In thousands)

	Predecessor			Brand Intermediate Holdings, Inc.
	January 1, 2002 through October 16, 2002			October 17, 2002 through December 31, 2002		Year Ended December 31, 2003		Year Ended December 31, 2004
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	$	(8,776	)	$	933	$	18,283	$	(8,692	)

CASH AND CASH EQUIVALENTS, beginning of period		12,660			3,884		4,817		23,100

CASH AND CASH EQUIVALENTS, end of period	$	3,884		$	4,817	$	23,100	$	14,408

SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid	$	18,497		$	2,558	$	26,745	$	26,074
Income taxes paid		786			61		1,453		2,433

NON-CASH TRANSACTIONS:
Notes payable, issued in connection with acquisitions		-			-		-		421
Capital lease obligations		-			-		-		259

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

F-7

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY (DEFICIT) (Continued)

(In thousands except share amounts)

DLJ Brand Holdings, Inc. (Predecessor)	Common Stock		Additional Paid In Capital		Receivables From Sale of Predecessor’s Common Stock			Predecessor Basis Adjustment			Cumulative Translation Adjustment			Accumulated Deficit			Total			Comprehensive Income (Loss)

Balance, December 31, 2001	$	146	$	15,260	$	(1,477	)	$	(13,038	)	$	(1,768	)	$	(35,980	)	$	(36,857	)
Comprehensive income:
Net income		-		-		-			-			-			8,418			8,418		$	8,418
Translation adjustment		-		-		-			-			(176	)		-			(176	)		(176	)
Comprehensive income																				$	8,242
Exercise of Stock Options		-		67		-			-			-			-			67
Non-cash compensation expense		-		2,491		-			-			-			-			2,491
Equity contribution for completion bonuses		-		5,000		-			-			-			-			5,000
Tax benefit related to exercises of stock options		-		1,444		-			-			-			-			1,444
Balance, October 16, 2002	$	146	$	24,262	$	(1,477	)	$	(13,038	)	$	(1,944	)	$	(27,562	)	$	(19,613	)

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) (Continued)

(In thousands except share amounts)


Brand Intermediate Holdings, Inc.		Common Stock		Additional Paid In Capital		Cumulative Translation Adjustment		Accumulated Deficit		Total		Comprehensive Income (Loss)

Capital contribution from LLC	$	-	$	223,498	$	-	$	-	$	223,498	$
Comprehensive income (loss):
Net loss		-		-		-		(1,845)		(1,845)		(1,845)
Translation adjustment		-		-		140		-		140		140

Comprehensive loss											$	(1,705)

Balance, December 31, 2002	$	-	$	223,498	$	140	$	(1,845)	$	221,793

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

F-9

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY (DEFICIT) (Continued)

(In thousands except share amounts)


Brand Intermediate Holdings, Inc.		Common Stock		Additional Paid In Capital		Cumulative Translation Adjustment		Accumulated Deficit		Total		Comprehensive Income (Loss)

Balance, December 31, 2002	$	-	$	223,498	$	140	$	(1,845)	$	221,793	$
Comprehensive income (loss):
Net loss		-		-		-		(5,841)		(5,841)		(5,841)
Translation adjustment		-		-		2,713		-		2,713		2,713

Comprehensive loss											$	(3,128)
Accrued bonuses exchanged for LLC equity; subsequently contributed to additional paid in capital			714						714
Balance, December 31, 2003	$	-	$	224,212	$	2,853	$	(7,686)	$	219,379

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)


Brand Intermediate Holdings, Inc.		Common Stock		Additional Paid In Capital		Cumulative Translation Adjustment		Accumulated Deficit		Total		Comprehensive Income (Loss)

Balance, December 31, 2003	$	-	$	224,212	$	2,853	$	(7,686)	$	219,379	$
Comprehensive income (loss):
Net loss		-		-		-		(6,806)		(6,806)		(6,806)
Translation adjustment		-		-		1,154		-		1,154		1,154

Comprehensive loss											$	(5,652)
Non-cash compensation			233						233
Balance, December 31, 2003	$	-	$	224,445	$	4,007	$	(14,492)	$	213,960

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

F-11

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 March 1, 2005, the voting equity interests of the LLC are owned 73.0% by J.P. Morgan Partners and its affiliates ("JPMP"), and 27.0% 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 for the period from October 17, 2002 through December 31, 2002 and for the years ended December 31, 2003 and 2004, 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 $35.6 million (11%) and $37.6 million (11%), of our revenue for the years ended December 31, 2004 and 2003, respectively, another customer accounted for $34.6 million (10%) and $37.3 million (11%) of our revenue for the years ended December 31, 2004 and 2003, 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

F-12

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 used 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 periods from January 1, 2002 through October 16, 2002 and from October 17, 2002 through December 31, 2002, and for the years ended December 31, 2003 and 2004, depreciation expense was $17,906, $7,964, $33,838 and $24,384, respectively.

Impairment Review Policies

The Company accounts for its long-lived assets, excluding goodwill and tradenames, in accordance with 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 judgments 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.

F-13

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 period from January 1, 2002 through October 16, 2002, amortization expense related to deferred financing costs was $433.

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, and for the years ended December 31, 2003 and 2004, amortization expense relating to these deferred financing costs was $380, $1,109 and $1,419, respectively.

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 2004, the Company accounted for stock-based compensation under the recognition and measurement provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. For the period from October 17, 2002 through December 31 2002 and for the year ended December 31, 2003, no stock-based employee compensation expense was recorded. 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. The following table illustrates the effect on net income (loss) if the fair value based method had been applied to all outstanding and unvested awards in each period:

F-14

	Predecessor
	For the period from January 1, 2002 through October 16, 2002			For the period from October 17, 2002 through December 31, 2002			Year Ended December 31, 2003			Year Ended December 31, 2004
Net income (loss) as reported	$	8,418		$	(1,845	)	$	(5,841	)	$	(6,806	)
Add: stock based compensation expense included in reported net income (loss)		2,491			-			-			233
Less: stock based employee Compensation under the Requirements of SFAS 123		(2,491	)		(97	)		(802	)		(233	)
Pro forma net income (loss)	$	8,418		$	(1,942	)	$	(6,643	)	$	(6,806	)

The per unit weighted average fair value of awards granted was $1.76 in both the period from October 17, 2002 through December 31, 2002 and the year ended December 31, 2003 and $1.48 for the year ended December 31, 2004. The fair value of each award was estimated on the date of grant using the minimal value method of the Black-Scholes pricing model and the following assumptions:

	For the period from October 17, 2002 through December 31, 2002	Year Ended December 31, 2003	Year Ended December 31, 2004
Average risk-free interest rate	3.94%	3.96%	4.72%
Expected dividend yield	0.00%	0.00%	0.00%
Expected volatility	0.00	0.00	0.00
Expected Life (years)	5	5	5

No awards have been exercised or expired since inception. Expense for time-based awards is being recorded over a graded vesting schedule, while expense for performance based awards is being recorded over a straight-line vesting schedule. Based on the awards outstanding at December 31, 2004, estimated non-cash compensation expense for the next five years is as follows:

2005	$131
2006	95
2007	90
2008	75
2009	75

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 take into account incurred but not reported (IBNR) claims. These estimates are continually reviewed and adjustments, if necessary, are reflected in the period known.

F-15

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 foreign currency translation adjustment account included in stockholder’s equity. 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, 2003 and 2004, $682 and $218, respectively, of such notes were outstanding with interest rates ranging from 6.5% to 9.0%.

GOODWILL

Goodwill represents the amount paid in connection with the Transaction and the 2004 acquisition (see Note 19) in excess of the fair value of the identifiable net assets acquired. The Company completed its annual required impairment test as of October 1, 2004, and in doing so determined that goodwill was not impaired. The Company used the present value of expected future cash flows to estimate fair value. The Company must make significant judgements 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. Changes in the carrying amount of goodwill for the years ended December 31, 2003 and 2004 are as follows:


Balance, December 31, 2002	$	247,891
Goodwill Acquired		456
Balance, December 31, 2003		248,347
Goodwill Acquired		179
Reclassifications		(1,201	)
Balance, December 31, 2004	$	247,325

Reclassifications represent opening balance adjustments between goodwill and deferred taxes.

5.	OTHER ASSETS AND INTANGIBLES

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

	2003		2004

Customer relationships	$	48,286	$	43,794
Trade names		13,514		13,514
Deferred financing costs, net of Accumulated amortization of $1,489 in 2003 and $2,909 in 2004		11,170		10,736
Non-compete agreement		39		286
Notes receivable		60		42
	$	73,069	$	68,372

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 being amortized over twelve years. Amortization expense relating to customer relationships for the period from October 17, 2002 through December 31, 2002 and for the years ended December 31, 2003 and 2004, was $1,123, $4,492 and $4,492,

F-16

respectively. The trade names will not be amortized as this intangible asset has an indefinite life. Amortization expense related to the non-compete agreements was $198, $43, $174 and $60 for the periods from January 1, 2002 through October 16, 2002 and from October 17, 2002 through December 31, 2002, and for the years ended December 31, 2003 and 2004, respectively.

The following summarizes the balances of intangibles as of December 31, 2003 and 2004:

	December 31, 2003						December 31, 2004
	Gross Carrying Amount	Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount	Accumulated Amortization			Net Carrying Amount
Amortized intangible assets:
Customer relationships	$ 53,900	$	(5,614	)	$	48,286	$ 53,900	$	(10,106	)	$	43,794
Non-compete agreement	256		(217	)		39	563		(277	)		286
Unamortized intangible assets:
Trade names	13,514		-			13,514	13,514		-			13,514

Aggregate amortization expense for the period from October 17, 2002 through December 31, 2002, and for the years ended December 31, 2003 and 2004 was $1,166, $4,665 and $4,552, respectively. Estimated amortization expense for the next five years is as follows:

2005	$4,568
2006	4,553
2007	4,553
2008	4,553
2009	4,517

6. ALLOWANCE FOR DOUBTFUL ACCOUNTS

As of December 31, 2003 and 2004, the Company’s accounts receivable are recorded at the amounts invoiced to customers less an allowance for doubtful accounts. Management estimates the allowance based on a review of the portfolio taking into consideration historical collection patterns, the economic climate, and aging statistics based on contractual due dates. Accounts are written off once collection efforts are exhausted.

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

	Predecessor
	For the period from January 1, 2002 through October 16, 2002			For the period from October 17, 2002 through December 31, 2002			For the Year Ended December 31, 2003			For the Year Ended December 31, 2004

Balance at beginning of period	$	1,150		$	1,222		$	1,326		$	1,365
Additions charged to operating expenses		790			535			1,560			1,469
Net write-offs		(718	)		(431	)		(1,521	)		(1,229	)
Balance at end of period	$	1,222		$	1,326		$	1,365		$	1,605

F-17

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 periods from January 1, 2002 through October 16, 2002 and from October 17, 2002 through December 31, 2002, and for the years ended December 31, 2003 and 2004, the provision (benefit) for income taxes consisted of the following:

	Predecessor
	For the period from January 1, 2002 through October 16, 2002			For the period from October 17, 2002 through December 31, 2002			For the Year Ended December 31, 2003			For the Year Ended December 31, 2004
Current:
Current state tax	$	-		$	-		$	850		$	616
Current foreign tax (benefit)		906			(454	)		211			2,636
Total Current		906			(454	)		1,061			3,252
Deferred:
Deferred domestic tax (benefit)		878			(238	)		(2,613	)		(5,987	)
Deferred foreign tax (benefit)		(449	)		(424	)		(669	)		315
Total Deferred		429			(662	)		(3,282	)		(5,672	)
Provision (benefit) for income taxes	$	1,335		$	(1,116	)	$	(2,221	)	$	(2,420	)

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 follows:

	Predecessor
	For the period from January 1, 2002 through October 16, 2002			For the period from October 17, 2002 through December 31, 2002			For the Year Ended December 31, 2003			For the Year Ended December 31, 2004

Statutory federal income taxes	$	3,414		$	(1,037	)	$	(2,741	)	$	(3,137	)
State and local taxes, net of federal		459			(42	)		561			406
Foreign tax rate differential		92			(162	)		(314	)		(199)
Non-deductible preferred stock dividends of subsidiary		2,630			-			-			-
Interest expense disallowance		1,274			-			-			491
Valuation allowance		(7,602	)		-			-			-
Other		1,068			125			273			19
Provision (benefit) for income Taxes	$	1,335		$	(1,116	)	$	(2,221	)	$	(2,420	)

F-18

The components of the net deferred income tax liability as of December 31, 2003 and 2004 are as follows:

	2003			2004
Deferred tax assets:
Accrued liabilities	$	3,045		$	10,996
Net operating loss carryforward		43,413			38,998
Other		201			0
Deferred tax assets		46,659			49,994

Deferred tax liabilities:
Property and equipment		(53,051	)		(48,490	)
Intangibles		(22,781	)		(23,804	)
Other		0			(246	)
Deferred tax liabilities		(75,832	)		(72,540	)

Deferred income tax liability, net	$	(29,173	)	$	(22,546	)

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. 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 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, 2004, the Company had net operating loss carryforwards, for federal income tax purposes, of $107 million which expire in various years between 2012 and 2023. A majority of the net operating loss carryforwards are subject to an annual limitation under Internal Revenue Code Section 382.

8. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

The major components of accounts payable and accrued expenses as of December 31, 2003 and 2004, are as follows:

	2003		2004

Accounts payable	$	5,195	$	6,728
Payroll and related accruals		7,577		7,859
Workers’ compensation and health benefit liabilities		14,366		14,402
Accrued interest		3,858		3,957
Other		2,306		4,318
	$	33,302	$	37,264

9. NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS

Notes payable and capital lease obligations as of December 31, 2003 and 2004, are as follows:

	2003		2004

Notes payable	$	825	$	585
Capital lease obligations		-		192
		825		777

Less- Current portion		660		350

	$	165	$	427

Notes payable at December 31, 2004 consist of two promissory notes with interest rates ranging from 5.0% to 6.0%. Future principal payments total $247, for 2005 and $84 for each of 2006 through 2009. During 2004, the Company leased certain vehicles under capital leases. The net book value of the vehicles under capital lease was $224 as of December 31, 2004.

F-19

10. LONG-TERM DEBT

At December 31, 2003 and 2004, long-term debt consisted of the following:

	2003		2004
Credit Facility, due 2009	$	123,713	$	102,615
12% Senior Subordinated Notes, due 2012		150,000		150,000
13% Intermediate Subordinated Notes, due 2013		40,638		46,249
	$	314,351	$	298,864

Less -
Current portion		1,250		1,047
Unamortized discount		7,819		7,350
	$	305,282	$	290,467

In connection with the Transaction, Brand issued $150.0 million of 12%, Senior Subordinated Notes (the "Senior Notes") due in 2012, with interest payable semi-annually. 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 and for the years ended December 31, 2003 and 2004 was $50, $241 and $271, respectively. The Credit Facility provides for $130.0 million in term loans, a $50.0 million revolving credit facility and $35.0 million letter of credit facilities. As of December 31, 2004, scheduled principal payments of $262, plus accrued interest, are due quarterly on the term loans. Up to $20 million of the $50 million revolving credit facility may be used for letters of credit. As of December 31, 2004, the Company had no borrowings outstanding under the revolving credit facility and had total outstanding letters of credit of $34.5 million. Brand also issued $35.0 million of 13%, pay-in-kind notes (the "Intermediate Notes") that are subordinated to the Credit Facility and rank equally with the Senior 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 and for the years ended December 31, 2003 and 2004, was $35, $171 and $197, respectively. 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 and for the years ended December 31, 2003 and 2004, was $962, $4,675 and $5,611, respectively.

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 1.75% to 3.25%. As of December 31, 2004, our term borrowings were LIBOR loans at rates ranging from 5.64% to 5.67%. The average interest rate under term loans for the period from October 17, 2002 through December 31, 2002 and for the years ended December 31, 2003 and 2004 was 5.6%, 5.2% and 4.8%, respectively. Interest expense on the term loans and the Senior Notes for the period from October 17, 2002 through December 31, 2002 and for the years ended December 31, 2003 and 2004, was $5,357, $24,845 and $23,261, respectively. 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, $276 and $344 for the period from October 17, 2002 through December 31, 2002, and for the years ended December 31, 2003 and 2004, respectively. Interest on the revolver is typically due at the end of each LIBOR contract which can range from one to twelve months. As of December 31, 2004, $50.0 million was available under the revolver at interest rates of base rate or LIBOR rate plus applicable margins.

F-20

Maturities of long-term debt as of December 31, 2004, are as follows:

Year

2005	$1,047
2006	1,047
2007	1,047
2008	1,047
2009	98,427
Thereafter	196,249
	$298,864

Substantially all of the assets of the Company are pledged as collateral for the Credit Facility. In addition, the Company is required under the Credit Facility to comply with various covenants. These covenants include, among other restrictions, that the Company maintain certain financial ratios, and impose limitations on the Company’s ability to make capital expenditures, to incur indebtedness, and to pay dividends. The Company obtained a waiver from the lenders under the Credit Facility from compliance with the minimum interest coverage ratio and the maximum leverage ratio covenants for the periods ended June 30 and September 30, 2004; absent such waiver, the Company would have violated the covenants for these periods. The Credit Facility was amended effective November 9, 2004, to reset the minimum interest coverage ratio and maximum leverage ratio covenants through December 31, 2006, and to allow the Company to borrow an additional $25 million in term debt to be used to finance a potential acquisition, if necessary. The Company was in compliance with all loan covenants at December 31, 2004.

As a result of the Transaction, the loans outstanding under the old $190.0 million Credit Agreement (the "Old Credit Agreement"), the old 10 ¼%, $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 9.21%, for the period from January 1, 2002 through October 16, 2002. Interest expense under the Old Credit Agreement and the Old Senior Notes for the period from January 1, 2002 through October 16, 2002 was $12,433. Under the Old Credit Agreement, the Company incurred administrative and commitment fees, included in interest expense, of $158 for the period from January 1, 2002 through October 16, 2002.

11. LEASE OBLIGATIONS

The Company leases a portion of its operating and office facilities under operating leases. For the periods from January 1, 2002 through October 16, 2002 and from October 17, 2002 through December 31, 2002, and for the years ended December 31, 2003 and 2004, rent expense was $2,368, $791, $3,066 and $3,173, respectively.

The future minimum lease payments under noncancelable operating leases as of December 31, 2004 are as follows:

Year

2005	$2,857
2006	2,417
2007	1,832
2008	1,144
2009	536
Thereafter	76

Total minimum lease payments	$ 8,862

F-21

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 period from January 1, 2002 through October 16, 2002, dividends of $6,576 were accreted. All of the Old Senior Preferred Stock was redeemed and paid in full in connection with the Transaction.

14. STOCKHOLDER’S EQUITY

Subsequent to the Transaction, the LLC 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 acquire 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 termination or 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 December 31, 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 outstanding, respectively. As of December 31, 2003, 289,642 and 1,749,634 time-based and performance-based Class C units were outstanding, respectively. As of December 31, 2004, 293,857 and 1,777,249 time-based and performance-based Class C units were outstanding, respectively.

Beginning in April 2003, certain members of the Company’s management team were offered the opportunity to purchase Class B units of the LLC and receive Class C units of the LLC. The Class B units could be purchased for cash, through a leveraged co-investment loan, or through receipt of a bonus award earned and accrued by Brand as of December 31, 2002. The Class C units were awarded to management team members based on the decisions of the board of directors. In 2003 management team members obtained leveraged co-investment loans in the amount of $2.9 million for 287,145 Class B units. In 2004 management team members obtained leveraged co-investment loans in the amount of $38 for 3,750 Class B units. Additionally, 6,750 Class B units were redeemed via loan forgiveness due to employee terminations. These co-investment loans are limited recourse loans, bear interest at the rate of 3.27%, and mature on April 15, 2011. For financial reporting purposes, these management loans are recorded in the LLC financial statements; however, the related stock compensation expense is recorded on the Company’s books and records, as applicable. During 2003, management team members obtained 71,383 Class B units through the receipt of bonus awards resulting in additional capital contributions of $714 to the LLC, and subsequently by the LLC to the Company. Management team members were awarded 673,280 and 107,110 class C units during 2003 and 2004, respectively In the year ended December 31, 2004, 75,280 Class C units were forfeited due to employee terminations.

See footnote 2 for the discussion of the Company’s stock based employee compensation.

F-22

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

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 period from January 1, 2002 through October 16, 2002, such fees totaled $375.

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

17. EMPLOYEE BENEFIT PLAN

The Company sponsors 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 periods from January 1, 2002 through October 16, 2002 and from October 17, 2002 through December 31, 2002, and for the years ended December 31, 2003 and 2004, the Company expensed $402, $119, $555 and $547, 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.

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

F-23

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, 2003 and 2004, are as follows:

	2003				2004
	Carrying Amount		Fair Value		Carrying Amount		Fair Value

Notes receivable	$	681	$	681	$	218	$	218
Term loans		123,713		123,713		102,615		102,615
Notes payable and capital lease obligations		825		825		777		777
12% Senior Subordinated Notes (a)		150,000		172,500		150,000		168,000
13% Intermediate Notes (a)		40,638		40,638		46,249		46,249
(a) Excludes discount.

19. ACQUISITIONS

20. NEW ACCOUNTING STANDARDS

The Company plans to adopt Statement 123(R) using the modified-prospective method.

The Company adopted the fair-value-based method of accounting for share-based payments effective January 1, 2004 using the "modified prospective method" described in FASB Statement No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure. Currently, the Company uses the minimal value method of the Black-Scholes formula to estimate the value of stock options granted to employees and expects to continue to use this acceptable option valuation model upon the required adoption of Statement 123(R) on July 1, 2005. The Company does not anticipate that adoption of Statement 123(R) will have a material impact on its results of operations or its financial position.

21. SUBSEQUENT EVENTS

On January 1, 2005, the Company entered into an employment agreement with its new Chief Executive Officer that provides for an equity investment plan. The details of the plan are outlined below:

a.	The CEO is being offered the opportunity to purchase 9,219 Class A units for $125,000 and be issued 1,938 Class B units in connection with such purchase of Class A units.

b.	The CEO is being granted 7,375 Class A units, and being issued 1,550 class B units in connection with such grant of Class A units.

c.	The CEO is being granted 150,000 fully vested Class B units.

d.	The CEO is being offered the opportunity to purchase 150,000 unvested Class B units for $108,000 to be funded in full with a 40% recourse loan. The unvested Class B units will vest only upon a "distribution event" as defined in the LLC agreement.

e.	The CEO is being granted 75,000 time-based Class C units and 450,000 performance based Class C-1 units.

The impact these awards on non-cash compensation expense in future periods has not yet been determined.

22. 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 subsidiary 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-24

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Brand Intermediate Holdings, Inc.
Condensed Consolidating Balance Sheet
December 31, 2003

Assets		Brand Services, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiary		Brand Intermediate Holdings, Inc.		Adjustments and Eliminations			Brand Intermediate Holdings, Inc. Consolidated
Current Assets:
Cash and cash equivalents	$	21,154	$	—	$	2,236	$	—	$	(290	)	$	23,100
Trade accounts receivable		—		52,383		1,622		—		—			54,005
Accrued revenue		—		3,102		35		—		—			3,137
Notes receivable, current portion		27		594		—		—		—			621
Other current assets		2,491		6,672		608		—		(350	)		9,421
Due from affiliates		44,139		1,409		207		—		(45,755	)		—
Total current assets		67,811		64,160		4,708		—		(46,395	)		90,284
Property and Equipment:
Land		—		855		382		—		—			1,237
Buildings and leasehold improvements		11		2,953		390		—		—			3,354
Vehicles and other equipment		6,202		15,618		3,916		—		—			25,736
Scaffolding equipment		174,752		—		13,737		—		—			188,489
Total property and equipment, at cost		180,965		19,426		18,425		—		—			218,816
Less accumulated depreciation and amortization		26,066		8,681		5,110		—		—			39,857
Total property and equipment, net		154,899		10,745		13,315		—		—			178,959
Due from affiliates		9,750		—		—		40,894		(50,644	)		—
Deferred tax asset		—		—		—		2,375		(2,375	)		—
Investment in subsidiaries		—		—		—		211,900		(211,900	)		—
Goodwill		248,347		—		—		—		—			248,347
Customer Relationships		48,286		—		—		—		—			48,286
Intangibles and other assets		23,828		—		—		955		—			24,783
Total assets	$	552,921	$	74,905	$	18,023	$	256,124	$	(311,314	)	$	590,659

F-25

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Brand Intermediate Holdings, Inc.
Condensed Consolidating Balance Sheet
December 31, 2003 (continued)
Liabilities and Stockholder’s Equity (Deficit)	Brand Services, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiary			Brand Intermediate Holdings, Inc.		Adjustments and Eliminations			Brand Intermediate Holdings, Inc. Consolidated
Current Liabilities:
Revolving loan	$	—	$	—	$	—		$	—	$	—		$	—
Current maturities of long-term debt		1,250		—		—			—		—			1,250
Notes payable and capital lease obligations, current portion		660		—		—			—		—			660
Accounts payable and accrued expenses		26,075		7,553		314			—		(640	)		33,302
Deferred revenue		—		1,448		—			—		—			1,448
Due to affiliates		1,409		37,519		6,827			—		(45,755	)		—
Total current liabilities		29,394		46,520		7,141			—		(46,395	)		36,660
Long-term debt		268,537		—		—			36,745		—			305,282
Notes payable and capital lease obligations		165		—		—			—		—			165
Deferred income taxes		29,076		—		2,472			—		(2,375	)		29,173
Due to affiliates		40,894		—		9,750			—		(50,644	)		—
Total stockholder’s equity (deficit)		184,855		28,385		(1,340	)		219,379		(211,900	)		219,379
Total liabilities and stockholder’s equity (deficit)	$	552,921	$	74,905	$	18,023		$	256,124	$	(311,314	)	$	590,659

F-26

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Brand Intermediate Holdings, Inc.
Condensed Consolidating Balance Sheet
December 31, 2004

Assets	Brand Services, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiary		Brand Intermediate Holdings, Inc.		Adjustments and Eliminations			Brand Intermediate Holdings, Inc. Consolidated
Current Assets:
Cash and cash equivalents	$	13,336	$	—	$	1,525	$	—	$	(453	)	$	14,408
Trade accounts receivable		—		52,626		4,013		—		—			56,639
Accrued revenue		—		1,967		148		—		—			2,115
Notes receivable, current portion		15		161		—		—		—			176
Other current assets		2,865		5,614		368		—		—			8,847
Due from affiliates		31,648		1,649		-		—		(33,297	)		—
Total current assets		47,864		62,017		6,054		—		(33,750	)		82,185
Property and Equipment:
Land		—		866		417		—		—			1,283
Buildings and leasehold improvements		13		3,080		425		—		—			3,518
Vehicles and other equipment		6,726		17,866		4,498		—		—			29,090
Scaffolding equipment		179,859		—		15,497		—		—			195,356
Total property and equipment, at cost		186,598		21,812		20,837		—		—			229,247
Less accumulated depreciation and amortization		41,650		11,292		6,612		—		—			59,554
Total property and equipment, net		144,948		10,520		14,225		—		—			169,693
Due from affiliates		9,750		—		—		46,752		(56,502	)		—
Deferred tax asset		—		—		—		2,375		(2,375	)		—
Investment in subsidiaries		—		—		—		206,481		(206,481	)		—
Goodwill		247,325		—		—		—		—			247,325
Customer Relationships		43,794		—		—		—		—			43,794
Intangibles and other assets		23,671		—		—		907		—			24,578
Total assets	$	517,352	$	72,537	$	20,279	$	256,515	$	(299,108	)	$	567,575

F-27

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Brand Intermediate Holdings, Inc.
Condensed Consolidating Balance Sheet
December 31, 2004 (continued)
Liabilities and Stockholder’s Equity (Deficit)	Brand Services, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiary			Brand Intermediate Holdings, Inc.		Adjustments and Eliminations			Brand Intermediate Holdings, Inc. Consolidated
Current Liabilities:
Revolving loan	$	—	$	—	$	—		$	—	$	—		$	—
Current maturities of long-term debt		1,047		—		—			—		—			1,047
Notes payable and capital lease obligations, current portion		265		85		—			—		—			350
Accounts payable and accrued expenses		27,532		6,397		3,788			—		(453	)		37,264
Deferred revenue		—		1,514		—			—		—			1,514
Due to affiliates		1,649		25,109		6,539			—		(33,297	)		—
Total current liabilities		30,493		33,105		10,327			—		(33,750	)		40,175
Long-term debt		247,912		—		—			42,555		—			290,467
Notes payable and capital lease obligations		336		91		—			—		—			427
Deferred income taxes		21,882		4		3,035			—		(2,375	)		22,546
Due to affiliates		46,752		—		9,750			—		(56,502	)		—
Total stockholder’s equity (deficit)		169,977		39,337		(2,833	)		213,960		(206,481	)		213,960
Total liabilities and stockholder’s equity (deficit)	$	517,352	$	72,537	$	20,279		$	256,515	$	(299,108	)	$	567,575

F-28

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

	Brand Services, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiary			DLJ Brand Holdings, Inc.			Adjustments and Eliminations			DLJ Brand Holdings, Inc. Consolidated
Revenue:
Labor	$	453		$	212,715		$	9,597			-		$	(453	)	$	222,312
Equipment rental		-			56,741			3,210			-			-			59,951
Equipment sales		-			10,131			175			-			(2,096	)		8,210
Intercompany revenue		14,728			33			-			-			(14,761	)		-
Total revenues		15,181			279,620			12,982			-			(17,310	)		290,473
Operating expenses:
Labor		-			171,624			8,408			-			(453	)		179,579
Equipment rental		14,972			3,167			2,271			-			-			20,410
Equipment sales		-			8,071			131			-			(2,747	)		5,455
Divisional operating expenses		30			12,671			335			-			-			13,036
Intercompany operating expenses		-			14,728			33			-			(14,761	)		-
Total operating expenses		15,002			210,261			11,178			-			(17,961	)		218,480
Gross profit		179			69,359			1,804			-			651			71,993
Selling and administrative expenses		11,284			20,441			777			-			-			32,502
Non-cash compensation		2,479			-			-			12			-			2,491
Transaction expenses		5,297			-			-			-			-			5,297
Operating income		(18,881	)		48,918			1,027			(12	)		651			31,703
Interest expense		13,727			1			-			1,812			(15	)		15,525
Interest income		(148	)		(1	)		(17	)		-			15			(151	)
Equity in loss (income) of subsidiaries		-			-			-			(7,867	)		7,867			-
Accretion of preferred stock dividends of subsidiary		6,576			-			-			-			-			6,576

Income (loss) before provision for
income tax		(39,036	)		48,918			1,044			6,043			(7,216	)		9,753

Provision (benefit) for income tax		(16,314	)		19,567			457			(2,375	)		-			1,335

Net income (loss)	$	(22,722	)	$	29,351		$	587		$	8,418		$	(7,216	)	$	8,418

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
	Brand Services, Inc.			Guarantor Subsidiaries		Non-Guarantor Subsidiary			Brand Intermediate Holdings, Inc.			Adjustments and Eliminations			Brand Intermediate Holdings, Inc. Consolidated
Revenue:
Labor	$	-		$	60,975	$	1,848		$	-		$	-		$	62,823
Equipment rental		-			14,399		487			-			-			14,886
Equipment sales		-			1,908		12			-			(333	)		1,587
Intercompany revenue		3,182			11		-			-			(3,193	)		-
Total revenues		3,182			77,293		2,347			-			(3,526	)		79,296
Operating expenses:
Labor		290			50,638		1,647			-			-			52,575
Equipment rental		6,498			669		1,093			-			-			8,260
Equipment sales		-			1,526		5			-			(464	)		1,067
Divisional operating expenses		2			3,351		48			-			-			3,401
Intercompany operating expenses		-			3,182		11			-			(3,193	)		-
Total operating expenses		6,790			59,366		2,804			-			(3,657	)		65,303
Gross profit		(3,608	)		17,927		(457	)		-			131			13,993
Selling and administrative expenses		2,573			5,844		1,591			-			-			10,008
Operating income		(6,181	)		12,083		(2,048	)		-			131			3,985
Interest expense		6,070			-		-			1,020			15			7,105
Interest income		(142	)		-		(2	)		-			(15	)		(159	)
Intercompany interest		1,020			-		-			(1,020	)		-			-
Equity in loss of subsidiaries		-			-		-			1,845			(1,845	)		-

Income (loss) before provision for
income tax		(13,129	)		12,083		(2,046	)		(1,845	)		1,976			(2,961	)
Provision (benefit) for income tax		(5,071	)		4,833		(878	)		-			-			(1,116	)

Net income (loss)	$	(8,058	)	$	7,250	$	(1,168	)	$	(1,845	)	$	1,976		$	(1,845	)

F-30

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Brand Intermediate Holdings, Inc.
Condensed Consolidating Statement of Operations
For the Year Ended December 31, 2003

	Brand Services, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiary			Brand Intermediate Holdings, Inc.			Adjustments and Eliminations			Brand Intermediate Holdings, Inc. Consolidated
Revenue:
Labor	$	—		$	257,776		$	10,188					$	$ —		$	267,964
Equipment rental		—			69,941			2,167			—			300			72,408
Equipment sales		—			9,129			103			—			(1,867	)		7,365
Intercompany revenue		11,063			61			—			—			(11,124	)		—
Total revenues		11,063			336,907			12,458			—			(12,691	)		347,737
Operating expenses:
Labor		—			213,651			9,179			—			(825	)		222,005
Equipment rental		28,229			4,337			3,829			—			—			36,395
Equipment sales		—			7,330			87			—			(2,412	)		5,005
Divisional operating expenses		333			15,021			464			—			—			15,818
Intercompany operating expenses		—			11,063			61			—			(11,124	)		—
Total operating expenses		28,562			251,402			13,620			—			(14,361	)		279,223
Gross profit		(17,499	)		85,505			(1,162	)		—			1,670			68,514
Selling and administrative expenses		14,194			27,583			2,348			—			—			44,125
Operating income		(31,693	)		57,922			(3,510	)		—			1,670			24,389
Interest expense		27,816			28			—			4,874						32,718
Interest income		(239	)		(3	)		(25	)		—			—			(267	)
Intercompany interest		4,874			—			—			(4,874	)		—			—
Equity in loss of subsidiaries		—			—			—			5,841			(5,841	)		—


Income (loss) before provision for
income tax		(64,144	)		57,897			(3,485	)		(5,841	)		7,511			(8,062	)

Provision (benefit) for income tax		(24,053	)		22,290			(458	)		—			—			(2,221	)

Net income (loss)	$	(40,091	)	$	35,607		$	(3,027	)	$	(5,841	)	$	7,511		$	(5,841	)

F-31

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Brand Intermediate Holdings, Inc.
Condensed Consolidating Statement of Operations
For the Year Ended December 31, 2004

	Brand Services, Inc.			Guarantor Subsidiaries		Non-Guarantor Subsidiary			Brand Intermediate Holdings, Inc.			Adjustments and Eliminations			Brand Intermediate Holdings, Inc. Consolidated
Revenue:
Labor	$	—		$	244,881	$	15,944		$			$	—		$	260,825
Equipment rental		—			63,388		2,947			—			—			66,335
Equipment sales		—			6,852		739			—			(797	)		6,794
Intercompany revenue		19,083			95		—			—			(19,178	)		—
Total revenues		19,083			315,216		19,630			—			(19,975	)		333,954
Operating expenses:
Labor		—			205,524		14,449			—			(5,488	)		214,485
Equipment rental		22,271			4,406		1,505			—			—			28,182
Equipment sales		—			5,512		635			—			(1,427	)		4,720
Divisional operating expenses		137			16,327		562			—			—			17,026
Intercompany operating expenses		—			19,083		95			—			(19,178	)		—
Total operating expenses		22,408			250,852		17,246			—			(26,093	)		264,413
Gross profit		(3,325	)		64,364		2,384			—			6,118			69,541
Selling and administrative expenses		14,106			28,940		2,099									45,145
Non-cash compensation		233			—		—			—			—			233
Operating income		(17,664	)		35,424		285			—			6,118			24,163
Interest expense		27,778			37		—			5,858						33,673
Interest income		(263	)		—		(21	)		—			—			(284	)
Intercompany interest		5,858			—		—			(5,858	)		—			—
Equity in loss of subsidiaries		—			—		—			6,806			(6,806	)		—


Income (loss) before provision for
income tax		(51,037	)		35,387		306			(6,806	)		12,924			(9,226	)

Provision (benefit) for income tax		(15,934	)		10,562		2,952			—			—			(2,420	)

Net income (loss)	$	(35,103	)	$	24,825	$	(2,646	)	$	(6,806	)	$	12,924		$	(6,806	)

F-32

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

	Brand Services, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiary			DLJ Brand Holdings, Inc.			Adjustments and Eliminations			DLJ Brand Holdings, Inc. Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:

Net cash provided by (used for) operating activities	$	36,576		$	787		$	(574	)	$	-		$	(570	)	$	36,219

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment		(11,176	)		(787	)		(858	)		-			-			(12,821	)
Proceeds from sale of property and equipment		2,639			-			-			-			-			2,639
Investment in subsidiaries		67			-			-			(67	)		-			-

Net cash used for investing activities		(8,470	)		(787	)		(858	)		(67	)		-			(10,182	)

CASH FLOWS FROM FINANCING ACTIVITIES:

Payments of long-term debt		(33,475	)		-			-			-			-			(33,475	)
Payments on capital lease obligations		(1,405	)		-			-			-			-			(1,405	)
Exercise of stock options		-			-			-			67			-			67

Net cash provided by (used for) financing activities		(34,880	)		-			-			67			-			(34,813	)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(6,774	)		-			(1,432	)		-			(570	)		(8,776	)

CASH AND CASH EQUIVALENTS, beginning of period		10,788			-			2,057			-			(185	)		12,660

CASH AND CASH EQUIVALENTS, end of period	$	4,014		$	-		$	625		$	-		$	(755	)	$	3,884

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

	Brand Services, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiary			Brand Intermediate Holdings, Inc.		Adjustments and Eliminations			Brand Intermediate Holdings, Inc. Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:

Net cash provided by operating activities	$	6,103		$	1,238		$	947		$	-	$	161		$	8,449

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment		(2,378	)		(1,238	)		(92	)		-		-			(3,708	)
Proceeds from sales of property and equipment		460			-			-			-		-			460
Payments for acquisitions		(524,400	)		-			-			-		-			(524,400	)
Net cash used for investing activities		(526,318	)		(1,238	)		(92	)		-		-			(527,648	)

CASH FLOWS FROM FINANCING ACTIVITIES:

Payments on capital lease obligations		(804	)		-			-			-		-			(804	)
Proceeds from long-term debt		310,097			-			-			-		-			310,097
Payment of deferred financing fees		(12,659	)		-			-			-		-			(12,659	)
Capital contribution from the LLC		223,498			-			-			-		-			223,498
Net cash provided by (used for) financing activities		520,132			-			-			-		-			520,132

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(83	)		-			855			-		161			933

CASH AND CASH EQUIVALENTS, beginning of period		4,014			-			625			-		(755	)		3,884

CASH AND CASH EQUIVALENTS, end of period	$	3,931		$	-		$	1,480		$	-	$	(594	)	$	4,817

F-34

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Brand Intermediate Holdings, Inc.
Condensed Consolidating Statement of Cash Flows
For the Year Ended December 31, 2003
	Brand Services, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiary			Brand Intermediate Holdings, Inc.		Adjustments and Eliminations			Brand Intermediate Holdings, Inc. Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:

Net cash provided by operating activities	$	33,301		$	1,995		$	1,001		$	—	$	304		$	36,601

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment		(9,681	)		(1,995	)		(245	)		—		—			(11,921	)
Proceeds from sales of property and equipment		1,773			—			—			—		—			1,773
Payments for acquisitions		—			—			—			—		—			—

Net cash used for investing activities		(7,908	)		(1,995	)		(245	)		—		—			(10,148	)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from long-term debt		—			—			—			—		—			—
Payments of long-term debt		(6,287	)		—			—			—		—			(6,287	)
Exercise of stock options		—			—			—			—		—			—
(Payments) borrowings on revolving loans		—			—			—			—		—			—
Payments on capital lease obligations		(1,883	)		—			—			—		—			(1,883	)

Net cash provided by (used for) financing activities		(8,170	)		—			—			—		—			(8,170	)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		17,223			—			756			—		304			18,283

CASH AND CASH EQUIVALENTS, beginning of period		3,931			—			1,480			—		(594	)		4,817

CASH AND CASH EQUIVALENTS, end of period	$	21,154		$	—		$	2,236		$	—	$	(290	)	$	23,100

F-35

BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Brand Intermediate Holdings, Inc.
Condensed Consolidating Statement of Cash Flows
For the Year Ended December 31, 2004
	Brand Services, Inc.			Guarantor Subsidiaries			Non-Guarantor Subsidiary			Brand Intermediate Holdings, Inc.		Adjustments and Eliminations			Brand Intermediate Holdings, Inc. Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:

Net cash provided by operating activities	$	23,759		$	3,165		$	87		$	—	$	(163	)	$	26,848

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment		(10,197	)		(3,097	)		(798	)		—		—			(14,092	)
Proceeds from sales of property and equipment		2,384			—			—			—		—			2,384
Payments for acquisitions		(1,020	)		—			—			—		—			(1,020	)

Net cash used for investing activities		(8,833	)		(3,097	)		(798	)		—		—			(12,728	)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from long-term debt		—			—			—			—		—			—
Payments of long-term debt		(21,098	)		—			—			—		—			(21,098	)
Payments of deferred financing fees		(986	)		—			—			—		—			(986	)
(Payments) borrowings on revolving loans		—			—			—			—		—			—
Payments on capital lease obligations		(660	)		(68	)		—			—		—			(728	)

Net cash provided by (used for) financing activities		(22,744	)		(68	)		—			—		—			(22,812	)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(7,818	)		—			(711	)		—		(163	)		(8,692	)

CASH AND CASH EQUIVALENTS, beginning of period		21,154			—			2,236			—		(290	)		23,100

CASH AND CASH EQUIVALENTS, end of period	$	13,336		$	—		$	1,525		$	—	$	(453	)	$	14,408

F-36

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 15, 2005	By:	/s/
		Paul T. Wood
		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 15, 2004.


	By:	/s/
		Paul T. Wood
		Chief Executive Officer and President (Principal Executive Officer)


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

By: /s/

John M. Monter

Chairman


	By:	/s/
		Christopher C. Behrens
		Director

By: /s/

Sean E. Epps

Director


	By:	/s/
		John W. Breckenridge
		Director

By: /s/

Gary W. Edwards

Director

INDEX TO EXHIBITS

Exhibit Number	Description
3.1	Certificate of Incorporation of Brand Services, Inc. (1)
3.2	Certificate of Amendment of Certificate of Incorporation of Brand Services, Inc. (1)
3.3	Amended and Restated By-Laws of Brand Services, Inc. (1)
3.4	Certification of Incorporation of Brand Intermediate Holdings, Inc. (2)
3.5	By-Laws of Brand Intermediate Holdings, Inc. (2)
4.1	Indenture dated as of October16, 2002, between Brand Services, Inc. and Bank of New York Trust Company of Texas, N.A., as Trustee. (2)
4.2	Registration Rights Agreement, dated as of October 16, 2002, between the Company and Credit Suisse First Boston Corporation and J.P. Morgan Securities, Inc., as initial purchasers. (2)
10.1	Indenture dated as of October 16, 2002, between Brand Intermediate Holdings and Bank of New York Trust Company of Texas, N.A., as Trustee. (2)
10.2	Credit Agreement dated as of October 16, 2002, among Brand Services, Inc., the lenders party thereto, and Credit Suisse First Boston Corporation, as Administrative Agent. (2)
10.3	Amendment No. 1 to Credit Agreement dated as of February 3, 2004, among Brand Services, Inc., the lenders party thereto, and Credit Suisse First Boston Corporation, as Administrative Agent. (3)
10.3	Amendment No. 2 to Credit Agreement dated as of November 9, 2004, among Brand Services, Inc., the lenders party thereto, and Credit Suisse First Boston Corporation, as Administrative Agent. (4)
10.4	Amendment No. 3 to Credit Agreement dated as of January 14, 2005, among Brand Services, Inc., the lenders party thereto, and Credit Suisse First Boston Corporation, as Administrative Agent. (3)
10.5	Security Agreement dated as of October 16, 2002, among Brand Services, Inc., the lenders party thereto, and Credit Suisse First Boston Corporation, as Administrative Agent. (2)
10.6	Employment Agreement dated as of January 1, 2005, between the Company and Paul Wood (5)
10.7	Amended Employment Agreement dated as of October 16, 2002, between the Company and John M. Monter. (2)
10.8	Employment Agreements dated as of October 16, 2004, between the Company and members of the Brand Advisory Team. (3)
12.1	Statement re Computation of Earnings to Fixed Charges. (3)
16.1	Letter Regarding Change in Certifying Accountant. (2)
21.1	Subsidiaries of Brand Services, Inc. (2)
31.1	Certification of Chief Executive Officer, pursuant to Rule 13a-14 (a) or Rule 15d-14 (a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (3)
31.2	Certification of Chief Financial Officer, pursuant to Rule 13a-14 (a) or Rule 15d-14 (a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (3)
32.1	Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (3)
32.2	Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (3)

(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.
(4)	Incorporated herein by reference to exhibit 10.1 to Quarterly Report on Form 10-Q filed November 15, 2004.
(5)	Incorporated herein by reference to exhibit 10.1 to Current Report on Form 8-K filed January 6, 2005.