##### Table of Contents



Form 10-Q     x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended June 30, 2004 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from  to Commission file number 333-102511 BRAND INTERMEDIATE HOLDINGS, INC.  Delaware
(State or other jurisdiction of incorporation or
organization)
    
    13-3909682
(I.R.S. employer
identification no.)
 15450 South Outer 40, #270, Chesterfield, MO
(Address of principal executive offices)
    
    63017
(Zip Code)
 Registrants telephone number, including area code: (636) 519-1000   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 such
filing requirements for the past 90 days. Yes:
x   No: o Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes:
o   No: x Indicate the number of shares outstanding of each of the Registrants classes
of Common Stock as of the latest practicable date. Class of Common Stock
$.01 Par Value
    
    Outstanding at July 31, 2004
1,000 shares




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INDEX PagePART I  FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Statements of Operations for the Three
Months and Six Months Ended June 30, 2003 and 2004
    
    
    3Consolidated Balance Sheets as of December 31, 2003 and
June 30, 2004
    
    
    4-5Consolidated Statements of Cash Flows for the Six
Months Ended June 30, 2003 and 2004
    
    
    6-7Notes to the Consolidated Financial Statements
    
    
    8-22Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    23-29Item 3. Quantitative and Qualitative Disclosures About Market
Risk
    
    
    29Item 4. Controls and Procedures
    
    
    29PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    30Item 2. Changes in Securities and Use of Proceeds
    
    
    30Item 3. Defaults Upon Senior Securities
    
    
    30Item 4. Submission of Matters to a Vote of Security Holders
    
    
    30Item 5. Other Information
    
    
    30Item 6. Exhibits and Reports on Form 8-K
    
    
    30SIGNATURES
    
    
    31EXHIBITS
    
    
    32-37302 Certification of Chief Executive Officer302 Certification of Chief Financial Officer906 Certification of Chief Executive Officer906 Certification of Chief Financial Officer
  Page -2-




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PART I. FINANCIAL INFORMATION 
 ITEM 1. FINANCIAL STATEMENTS BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES 
    For the Three Months Ended June 30
    
    For the Six Months Ended June 302003
    
    2004
    
    2003
    
    2004Revenues:Labor
    
    $
    68,244
    
    
    $
    57,948
    
    
    $
    145,320
    
    
    $
    138,584Equipment rental
    
    
    18,684
    
    
    
    15,433
    
    
    
    37,931
    
    
    
    33,526Equipment sales
    
    
    1,526
    
    
    
    1,408
    
    
    
    3,432
    
    
    
    3,014Total revenues
    
    $
    88,454
    
    
    $
    74,789
    
    
    
    186,683
    
    
    
    175,124Operating expenses:Labor
    
    
    55,915
    
    
    
    47,597
    
    
    
    119,296
    
    
    
    113,785Equipment rental
    
    
    10,037
    
    
    
    7,084
    
    
    
    20,021
    
    
    
    14,014Equipment sales
    
    
    1,081
    
    
    
    840
    
    
    
    2,324
    
    
    
    2,068Divisional operating expenses
    
    
    4,025
    
    
    
    4,186
    
    
    
    8,114
    
    
    
    8,344Total operating expenses
    
    
    71,058
    
    
    
    59,707
    
    
    
    149,755
    
    
    
    138,211Gross profit
    
    
    17,396
    
    
    
    15,082
    
    
    
    36,928
    
    
    
    36,913Selling and administrative
expenses
    
    
    11,638
    
    
    
    11,015
    
    
    
    23,069
    
    
    
    22,730Operating income
    
    
    5,758
    
    
    
    4,067
    
    
    
    13,859
    
    
    
    14,183Interest expense
    
    
    8,187
    
    
    
    8,124
    
    
    
    16,142
    
    
    
    16,405Interest income
    
    
    (62
    )
    
    
    (21
    )
    
    
    (105
    )
    
    
    (101
    )Loss before benefit for
income tax
    
    
    (2,367
    )
    
    
    (4,036
    )
    
    
    (2,178
    )
    
    
    (2,121
    )Income tax benefit

    
    
    (816
    )
    
    
    (1,302
    )
    
    
    (740
    )
    
    
    (162
    )Net loss
    
    $
    (1,551
    )
    
    $
    (2,734
    )
    
    $
    (1,438
    )
    
    $
    (1,959
    )
 The accompanying notes to the consolidated financial statements are an integral part of the consolidated financial statements. Page -3-




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BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES 
   December 31,
    
    June 30, 20042003
    
    (unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    23,100
    
    
    $
    14,254Trade accounts receivable, net of allowance for doubtful
accounts of $1,365 in 2003 and $1,703 in 2004
    
    
    54,005
    
    
    
    52,241Accrued revenue
    
    
    3,137
    
    
    
    3,466Notes receivable
    
    
    621
    
    
    
    116Other current assets
    
    
    9,421
    
    
    
    7,578Total current assets
    
    
    90,284
    
    
    
    77,655PROPERTY AND EQUIPMENT:Land
    
    
    1,237
    
    
    
    1,236Buildings and leasehold improvements
    
    
    3,354
    
    
    
    3,393Vehicles and other equipment
    
    
    25,736
    
    
    
    26,232Scaffolding equipment
    
    
    188,489
    
    
    
    193,367Total property and equipment, at cost
    
    
    218,816
    
    
    
    224,228LessAccumulated depreciation and amortization
    
    
    39,857
    
    
    
    50,733Total property and equipment, net
    
    
    178,959
    
    
    
    173,495GOODWILL
    
    
    248,347
    
    
    
    248,494CUSTOMER RELATIONSHIPS
    
    
    48,286
    
    
    
    46,040OTHER ASSETS AND INTANGIBLES
    
    
    24,783
    
    
    
    25,047TOTAL ASSETS
    
    $
    590,659
    
    
    $
    570,731
 (Continued on following page) Page -4-




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BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES   December 31,
    
    June 30, 20042003
    
    (unaudited)LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Current maturities of long-term debt  footnote #5
    
    $
    1,250
    
    
    $
    103,139Notes payable and capital lease obligations, current portion
    
    
    660
    
    
    
    580Accounts payable and accrued expenses
    
    
    33,302
    
    
    
    33,580Deferred revenue
    
    
    1,448
    
    
    
    1,205Total current liabilities
    
    
    36,660
    
    
    
    138,504LONG-TERM DEBT
    
    
    305,282
    
    
    
    185,812NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS
    
    
    165
    
    
    
    528DEFERRED INCOME TAXES
    
    
    29,173
    
    
    
    28,828STOCKHOLDERS EQUITY:Common stock, $0.01 par value, 1,000 shares authorized, issued and
Outstanding
    
    
    
    
    
    
    Paid-in capital
    
    
    224,212
    
    
    
    224,300Cumulative translation adjustment
    
    
    2,853
    
    
    
    2,404Accumulated deficit
    
    
    (7,686
    )
    
    
    (9,645
    )Total stockholders equity
    
    
    219,379
    
    
    
    217,059Total liabilities and stockholders equity
    
    $
    590,659
    
    
    $
    570,731
 The accompanying notes to the consolidated financial statements are an integral part of the consolidated balance sheets. Page -5-




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BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES 
    For the Six Months Ended June 302003
    
    2004CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (1,438
    )
    
    $
    (1,959
    )Adjustments to reconcile net loss to net
cash from operating activities:Depreciation and amortization
    
    
    21,297
    
    
    
    14,555Deferred income taxes
    
    
    (740
    )
    
    
    (345
    )Non-cash interest
    
    
    2,944
    
    
    
    3,678Non-cash compensation
    
    
    
    
    
    
    88Gain on sale of scaffolding equipment
    
    
    (368
    )
    
    
    (408
    )Changes in operating assets and liabilities:Trade accounts receivable, net
    
    
    6,667
    
    
    
    1,911Accrued revenue
    
    
    926
    
    
    
    (329
    )Notes receivable
    
    
    (152
    )
    
    
    523Other current assets
    
    
    2,386
    
    
    
    1,843Accounts payable and accrued expenses
    
    
    (6,672
    )
    
    
    278Deferred revenue
    
    
    412
    
    
    
    (243
    )Other
    
    
    156
    
    
    
    (98
    )Net cash flows from operating activities
    
    
    25,418
    
    
    
    19,494CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property and equipment
    
    
    (6,018
    )
    
    
    (6,708
    )Proceeds from sale of property and
equipment
    
    
    796
    
    
    
    912Payments for acquisitions
    
    
    
    
    
    
    (924
    )Net cash flows from investing activities
    
    
    (5,222
    )
    
    
    (6,720
    )CASH FLOWS FROM FINANCING ACTIVITIES:Repayments of long-term debt
    
    
    (650
    )
    
    
    (20,574
    )Payments of deferred financing fees
    
    
    
    
    
    
    (677
    )Payments on capital lease obligations
    
    
    (1,043
    )
    
    
    (369
    )Net cash flows from financing activities
    
    
    (1,693
    )
    
    
    (21,620
    )NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS
    
    
    18,503
    
    
    
    (8,846
    )CASH AND CASH EQUIVALENTS,
beginning of period
    
    
    4,817
    
    
    
    23,100CASH AND CASH EQUIVALENTS, end of
period
    
    $
    23,320
    
    
    $
    14,254
 (Continued on following page) Page -6-




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BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES    For the Six Months Ended June 302003
    
    2004SUPPLEMENTAL CASH FLOW DISCLOSURES:Interest paid
    
    $
    13,492
    
    
    $
    12,783Income taxes paid
    
    $
    1,028
    
    
    $
    1,367NON-CASH TRANSACTIONS:Capital Lease obligations
    
    
    
    
    
    
    259Note payable issued for acquisition
    
    
    
    
    
    
    393
 The accompanying notes to the consolidated financial statements are an integral part of the consolidated financial statements. Page -7-




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BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES 
 Notes to the Consolidated Financial Statements
(Unaudited) The financial statements included herein for the periods ended June 30, 2003
and 2004 have been prepared by the Company without audit. In the opinion of
management, all adjustments have been made which are of a normal recurring
nature necessary to present fairly the Companys financial position as of June
30, 2004, and the results of operations and cash flows for the three months and
six months ended June 30, 2003 and 2004. Certain information and footnote
disclosures have been condensed or omitted for these periods. The results for
interim periods are not necessarily indicative of results for the entire year.
Reference is made to the notes to the consolidated financial statements
contained in the Companys Annual Report on Form 10-K for the year ended
December 31, 2003, filed with the Securities and Exchange Commission. 1. Organization and Business Brand Intermediate Holdings, Inc. and its subsidiaries (Brand) are 100% owned
by Brand Holdings LLC (the LLC). As of June 30, 2004, the voting equity
interests of the LLC are owned 74.2% by J.P. Morgan Partners and its affiliates
(JPMP) and 25.8% 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. 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 maintenance of
refineries, chemical plants and utilities, as well as for new construction and
renovation 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. 2. Summary of Significant Accounting Policies 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 Page -8-




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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. 3. Stock Based Employee Compensation 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 $46,000 and $88,000, respectively, for the three and six-month
periods ended June 30, 2004, recorded in the caption Selling and Administrative
expenses. 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. No stock-based employee compensation expense was reflected in
2003, 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. The following table illustrates the effect on net loss if the fair value based
method had been applied to all outstanding and unvested awards in each period
(in thousands): Three Months Ended
    
    Three Months Ended
    
    Six Months Ended
    
    Six Months EndedJune 30, 2003
    
    June 30, 2004
    
    June 30, 2003
    
    June 30, 2004(unaudited)
    
    (unaudited)
    
    (unaudited)
    
    (unaudited)Net loss as reported
    
    $
    (1,551
    )
    
    $
    (2,734
    )
    
    $
    (1,438
    )
    
    $
    (1,959
    )Add: stock based compensation
expense included in
reported net loss
    
    
    
    
    
    
    46
    
    
    
    
    
    
    
    88Less: stock-based compensation
expense determined under
fair value method for all
awards
    
    
    590
    
    
    
    46
    
    
    
    633
    
    
    
    88Pro forma net loss
    
    $
    (2,141
    )
    
    $
    (2,734
    )
    
    $
    (2,071
    )
    
    $
    (1,959
    )
 4. Accrued Revenue Accrued revenue represents work performed which either due to billing cycles,
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. Page -9-




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5. Debt and Borrowing Arrangements At December 31, 2003 and June 30, 2004, long-term debt consisted of the
following (in thousands): December 31,
    
    June 30, 20042003
    
    (unaudited)Credit Facility, due 2009
    
    $
    123,713
    
    
    $
    103,13912% Senior Subordinated Notes, due 2012
    
    
    150,000
    
    
    
    150,00013% Intermediate Subordinated Notes,
due 2013
    
    
    40,638
    
    
    
    43,405314,351
    
    
    
    296,544LessCurrent portion
    
    
    1,250
    
    
    
    103,139Unamortized discount
    
    
    7,819
    
    
    
    7,593$
    305,282
    
    
    $
    185,812
 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 financial ratios become more
restrictive over time. The Company violated the minimum interest coverage
ratio and maximum leverage ratio for the period ended June 30, 2004; however,
the Company obtained a waiver at June 30, 2004. The Company projects
non-compliance with the aforementioned covenants for the period ended September
30, 2004. In accordance with EITF 86-30, Classification of Obligations When a
Violation is Waived by the Creditor, the Company classified the entire
balance of the Credit Facility as current as of June 30, 2004. Because the
Company has been able to generate significant cash flow, has paid down more
than $25 million on the term loans in the past year, and has $14.3 million in
cash at June 30, 2004, we believe we will be able to negotiate further waivers
or amendments to the Credit Facility. For the three months and six months ended June 30, 2003, the weighted-average
interest rate of loans outstanding under the Credit Facility was 5.3% and 5.4%,
respectively. For the three months and six months ended June 30, 2004, the
weighted-average interest rate of loans outstanding under the Credit Facility
was 4.4% and 4.5%, respectively. The Credit Facility was amended on February
3, 2004. The amendment added an additional $15 million letter of credit
facility to total $35 million and lowered the interest rate margin on the term
debt by 0.75%. As of June 30, 2004, JPMP holds $18.6 million of the $43.4 million Intermediate
Subordinated Notes. 6. Deferred Revenue Page -10-




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Deferred revenue represents amounts collected from customers at a faster rate
than work was performed on these contracts. Substantially all of the costs
related to these amounts will be incurred within one year. 7. 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. 8. Comprehensive Income For the three months ended June 30, 2003 and 2004, comprehensive income (loss)
was $(0.3) million and $(3.0) million, respectively. For the six months ended
June 30, 2003 and 2004, comprehensive income (loss) was $0.7 million and $(2.4)
million, respectively. The difference between comprehensive income and net
income is entirely related to currency translation. 9. 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. For the six months ended June
30, 2004, the effective tax rate benefit of 8% is less than the federal
statutory rate of 35% primarily due to permanent tax items, the largest of
which is a portion of the interest expense on the 13% Intermediate Notes which
is not deductible for tax purposes. For the three months ended June 30, 2004,
the Company adjusted its effective tax rate from an annualized expense of 60%
to a benefit of 8% due to a revision in the its 2004 forecast from a net income
position to a net loss position. This resulted in additional benefit of
approximately $0.9 million for the three month period ended June 30, 2004.
For the six months ended June 30, 2004, the benefit for income taxes is
primarily attributable to deferred income taxes. 10. Acquisitions On June 1, 2004, the Company purchased the assets of Levitator, Inc., a
commercial scaffolding company, for an aggregate purchase price of
approximately $0.9 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
approximately $0.1 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. 11. Supplemental Consolidating Information Page -11-




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




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BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIRIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Brand Intermediate Holdings, Inc.
Condensed Consolidating Balance Sheet
December 31, 2003 Brand
    
    
    
    
    
    BrandIntermediate
    
    Adjustments
    
    IntermediateBrand
    
    Guarantor
    
    Non-Guarantor
    
    Holdings,
    
    and
    
    Holdings, Inc.Assets
    
    Services, Inc.
    
    Subsidiaries
    
    Subsidiary
    
    Inc.
    
    Eliminations
    
    ConsolidatedCurrent Assets:Cash and cash equivalents
    
    $
    21,154
    
    
    $
    
    
    
    $
    2,236
    
    
    $
    
    
    
    $
    (290
    )
    
    $
    23,100Trade accounts receivable
    
    
    
    
    
    
    52,383
    
    
    
    1,622
    
    
    
    
    
    
    
    
    
    
    
    54,005Accrued revenue
    
    
    
    
    
    
    3,102
    
    
    
    35
    
    
    
    
    
    
    
    
    
    
    
    3,137Notes receivable, current portion
    
    
    27
    
    
    
    594
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    621Other current assets
    
    
    2,491
    
    
    
    6,672
    
    
    
    608
    
    
    
    
    
    
    
    (350
    )
    
    
    9,421Due from affiliates
    
    
    44,139
    
    
    
    1,409
    
    
    
    207
    
    
    
    
    
    
    
    (45,755
    )
    
    
    Total current assets
    
    
    67,811
    
    
    
    64,160
    
    
    
    4,708
    
    
    
    
    
    
    
    (46,395
    )
    
    
    90,284Property and Equipment:Land
    
    
    
    
    
    
    855
    
    
    
    382
    
    
    
    
    
    
    
    
    
    
    
    1,237Buildings and leasehold improvements
    
    
    11
    
    
    
    2,953
    
    
    
    390
    
    
    
    
    
    
    
    
    
    
    
    3,354Vehicles and other equipment
    
    
    6,202
    
    
    
    15,618
    
    
    
    3,916
    
    
    
    
    
    
    
    
    
    
    
    25,736Scaffolding equipment
    
    
    174,752
    
    
    
    
    
    
    
    13,737
    
    
    
    
    
    
    
    
    
    
    
    188,489Total property and equipment, at cost
    
    
    180,965
    
    
    
    19,426
    
    
    
    18,425
    
    
    
    
    
    
    
    
    
    
    
    218,816Less accumulated depreciation and amortization
    
    
    26,066
    
    
    
    8,681
    
    
    
    5,110
    
    
    
    
    
    
    
    
    
    
    
    39,857Total property and equipment, net
    
    
    154,899
    
    
    
    10,745
    
    
    
    13,315
    
    
    
    
    
    
    
    
    
    
    
    178,959Due 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    248,347Customer relationships
    
    
    48,286
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48,286Intangibles and other assets
    
    
    23,828
    
    
    
    
    
    
    
    
    
    
    
    955
    
    
    
    
    
    
    
    24,783Total assets
    
    $
    552,921
    
    
    $
    74,905
    
    
    $
    18,023
    
    
    $
    256,124
    
    
    $
    (311,314
    )
    
    $
    590,659
 Page -13-




---



##### Table of Contents



BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Brand Intermediate Holdings, Inc.
Condensed Consolidating Balance Sheet
December 31, 2003 (continued) BrandNon-
    
    Brand
    
    Adjustments
    
    IntermediateBrand
    
    Guarantor
    
    Guarantor
    
    Intermediate
    
    and
    
    Holdings, Inc.Liabilities and Stockholders Equity (Deficit)
    
    Services, Inc.
    
    Subsidiaries
    
    Subsidiary
    
    Holdings, Inc.
    
    Eliminations
    
    ConsolidatedCurrent Liabilities:Current maturities of long-term debt
    
    $
    1,250
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,250Notes payable and capital lease obligations, current portion
    
    
    660
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    660Accounts payable and accrued expenses
    
    
    26,075
    
    
    
    7,553
    
    
    
    314
    
    
    
    
    
    
    
    (640
    )
    
    
    33,302Deferred revenue
    
    
    
    
    
    
    1,448
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,448Due to affiliates
    
    
    1,409
    
    
    
    37,519
    
    
    
    6,827
    
    
    
    
    
    
    
    (45,755
    )
    
    
    Total current liabilities
    
    
    29,394
    
    
    
    46,520
    
    
    
    7,141
    
    
    
    
    
    
    
    (46,395
    )
    
    
    36,660Long-term debt
    
    
    268,537
    
    
    
    
    
    
    
    
    
    
    
    36,745
    
    
    
    
    
    
    
    305,282Notes payable and capital lease obligations
    
    
    165
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    165Deferred income taxes
    
    
    29,076
    
    
    
    
    
    
    
    2,472
    
    
    
    
    
    
    
    (2,375
    )
    
    
    29,173Due to affiliates
    
    
    40,894
    
    
    
    
    
    
    
    9,750
    
    
    
    
    
    
    
    (50,644
    )
    
    
    Total stockholders equity (deficit)
    
    
    184,855
    
    
    
    28,385
    
    
    
    (1,340
    )
    
    
    219,379
    
    
    
    (211,900
    )
    
    
    219,379Total liabilities and stockholders equity (deficit)
    
    $
    552,921
    
    
    $
    74,905
    
    
    $
    18,023
    
    
    $
    256,124
    
    
    $
    (311,314
    )
    
    
    590,659
 Page -14-




---



##### Table of Contents



BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Brand Intermediate Holdings, Inc.
Condensed Consolidating Balance Sheet
June 30, 2004 Brand
    
    
    
    
    
    BrandNon-
    
    Intermediate
    
    Adjustments
    
    IntermediateBrand
    
    Guarantor
    
    Guarantor
    
    Holdings,
    
    and
    
    Holdings, Inc.Assets
    
    Services, Inc.
    
    Subsidiaries
    
    Subsidiary
    
    Inc.
    
    Eliminations
    
    ConsolidatedCurrent Assets:Cash and cash equivalents
    
    $
    13,752
    
    
    $
    
    
    
    $
    571
    
    
    $
    
    
    
    $
    (69
    )
    
    $
    14,254Trade accounts receivable
    
    
    
    
    
    
    47,301
    
    
    
    4,940
    
    
    
    
    
    
    
    
    
    
    
    52,241Accrued revenue
    
    
    
    
    
    
    3,312
    
    
    
    154
    
    
    
    
    
    
    
    
    
    
    
    3,466Notes receivable, current portion
    
    
    15
    
    
    
    101
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    116Other current assets
    
    
    2,062
    
    
    
    5,321
    
    
    
    556
    
    
    
    
    
    
    
    (361
    )
    
    
    7,578Due from affiliates
    
    
    30,784
    
    
    
    1,747
    
    
    
    
    
    
    
    
    
    
    
    (32,531
    )
    
    
    Total current assets
    
    
    46,613
    
    
    
    57,782
    
    
    
    6,221
    
    
    
    
    
    
    
    (32,961
    )
    
    
    77,655Property and Equipment:Land
    
    
    
    
    
    
    866
    
    
    
    370
    
    
    
    
    
    
    
    
    
    
    
    1,236Buildings and leasehold improvements
    
    
    11
    
    
    
    3,005
    
    
    
    377
    
    
    
    
    
    
    
    
    
    
    
    3,393Vehicles and other equipment
    
    
    6,369
    
    
    
    15,993
    
    
    
    3,870
    
    
    
    
    
    
    
    
    
    
    
    26,232Scaffolding equipment
    
    
    179,620
    
    
    
    
    
    
    
    13,747
    
    
    
    
    
    
    
    
    
    
    
    193,367Total property and equipment, at cost
    
    
    186,000
    
    
    
    19,864
    
    
    
    18,364
    
    
    
    
    
    
    
    
    
    
    
    224,228Less accumulated depreciation and amortization
    
    
    35,299
    
    
    
    9,986
    
    
    
    5,448
    
    
    
    
    
    
    
    
    
    
    
    50,733Total property and equipment, net
    
    
    150,701
    
    
    
    9,878
    
    
    
    12,916
    
    
    
    
    
    
    
    
    
    
    
    173,495Due from affiliates
    
    
    9,750
    
    
    
    
    
    
    
    
    
    
    
    43,780
    
    
    
    (53,530
    )
    
    
    Deferred tax asset
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,375
    
    
    
    (2,375
    )
    
    
    Investment in subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    209,580
    
    
    
    (209,580
    )
    
    
    Goodwill
    
    
    248,494
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    248,494Customer relationships
    
    
    46,040
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,040Intangibles and other assets
    
    
    24,115
    
    
    
    
    
    
    
    
    
    
    
    932
    
    
    
    
    
    
    
    25,047Total assets
    
    $
    525,713
    
    
    $
    67,660
    
    
    $
    19,137
    
    
    $
    256,667
    
    
    $
    (298,446
    )
    
    $
    570,731
 Page -15-




---



##### Table of Contents



BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Brand Intermediate Holdings, Inc.
Condensed Consolidating Balance Sheet
June 30, 2004 (Continued) BrandNon-
    
    Brand
    
    Adjustments
    
    IntermediateBrand
    
    Guarantor
    
    Guarantor
    
    Intermediate
    
    and
    
    Holdings, Inc.Liabilities and Stockholders Equity (Deficit)
    
    Services, Inc.
    
    Subsidiaries
    
    Subsidiary
    
    Holdings, Inc.
    
    Eliminations
    
    ConsolidatedCurrent Liabilities:Current maturities of long-term debt
    
    $
    103,139
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    103,139Notes payable and capital lease obligations, current portion
    
    
    497
    
    
    
    83
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    580Accounts payable and accrued expenses
    
    
    26,732
    
    
    
    6,023
    
    
    
    1,255
    
    
    
    
    
    
    
    (430
    )
    
    
    33,580Deferred revenue
    
    
    
    
    
    
    1,205
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,205Due to affiliates
    
    
    1,747
    
    
    
    23,810
    
    
    
    6,974
    
    
    
    
    
    
    
    (32,531
    )
    
    
    Total current liabilities
    
    
    132,115
    
    
    
    31,121
    
    
    
    8,229
    
    
    
    
    
    
    
    (32,961
    )
    
    
    138,504Long-term debt
    
    
    146,204
    
    
    
    
    
    
    
    
    
    
    
    39,608
    
    
    
    
    
    
    
    185,812Notes payable and capital lease obligations
    
    
    393
    
    
    
    135
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    528Deferred income taxes
    
    
    28,565
    
    
    
    4
    
    
    
    2,634
    
    
    
    
    
    
    
    (2,375
    )
    
    
    28,828Due to affiliates
    
    
    43,780
    
    
    
    
    
    
    
    9,750
    
    
    
    
    
    
    
    (53,530
    )
    
    
    Total stockholders equity (deficit)
    
    
    174,656
    
    
    
    36,400
    
    
    
    (1,476
    )
    
    
    217,059
    
    
    
    (209,580
    )
    
    
    217,059Total liabilities and stockholders equity (deficit)
    
    $
    525,713
    
    
    $
    67,660
    
    
    $
    19,137
    
    
    $
    256,667
    
    
    $
    (298,446
    )
    
    $
    570,731
 Page -16-




---



##### Table of Contents



BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Brand Intermediate Holdings, Inc.
Condensed Consolidating Statement of Operations
For the Three Months Ended June 30, 2003 BrandNon-
    
    Brand
    
    Adjustments
    
    IntermediateBrand
    
    Guarantor
    
    Guarantor
    
    Intermediate
    
    and
    
    Holdings, Inc.Services, Inc.
    
    Subsidiaries
    
    Subsidiary
    
    Holdings, Inc.
    
    Eliminations
    
    ConsolidatedRevenue:Labor
    
    $
    
    
    
    $
    65,103
    
    
    $
    3,141
    
    
    $
    
    
    
    $
    
    
    
    $
    68,244Equipment rental
    
    
    
    
    
    
    18,041
    
    
    
    643
    
    
    
    
    
    
    
    
    
    
    
    18,684Equipment sales
    
    
    
    
    
    
    2,026
    
    
    
    30
    
    
    
    
    
    
    
    (530
    )
    
    
    1,526Intercompany revenue
    
    
    1,947
    
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    (1,961
    )
    
    
    Total revenues
    
    
    1,947
    
    
    
    85,184
    
    
    
    3,814
    
    
    
    
    
    
    
    (2,491
    )
    
    
    88,454Operating expenses:Labor
    
    
    
    
    
    
    53,470
    
    
    
    2,871
    
    
    
    
    
    
    
    (426
    )
    
    
    55,915Equipment rental
    
    
    7,479
    
    
    
    1,027
    
    
    
    1,531
    
    
    
    
    
    
    
    
    
    
    
    10,037Equipment sales
    
    
    
    
    
    
    1,667
    
    
    
    33
    
    
    
    
    
    
    
    (619
    )
    
    
    1,081Divisional operating expenses
    
    
    134
    
    
    
    3,774
    
    
    
    117
    
    
    
    
    
    
    
    
    
    
    
    4,025Intercompany operating expenses
    
    
    
    
    
    
    1,947
    
    
    
    14
    
    
    
    
    
    
    
    (1,961
    )
    
    
    Total operating expenses
    
    
    7,613
    
    
    
    61,885
    
    
    
    4,566
    
    
    
    
    
    
    
    (3,006
    )
    
    
    71,058Gross profit (loss)
    
    
    (5,666
    )
    
    
    23,299
    
    
    
    (752
    )
    
    
    
    
    
    
    515
    
    
    
    17,396Selling and administrative expenses
    
    
    4,078
    
    
    
    7,221
    
    
    
    339
    
    
    
    
    
    
    
    
    
    
    
    11,638Operating income (loss)
    
    
    (9,744
    )
    
    
    16,078
    
    
    
    (1,091
    )
    
    
    
    
    
    
    515
    
    
    
    5,758Interest expense
    
    
    7,025
    
    
    
    1
    
    
    
    
    
    
    
    1,161
    
    
    
    
    
    
    
    8,187Interest income
    
    
    (53
    )
    
    
    (2
    )
    
    
    (7
    )
    
    
    
    
    
    
    
    
    
    
    (62
    )Intercompany interest
    
    
    1,161
    
    
    
    
    
    
    
    
    
    
    
    (1,161
    )
    
    
    
    
    
    
    Equity in loss (income) of subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,551
    
    
    
    (1,551
    )
    
    
    Income (loss) before provision for
income tax
    
    
    (17,877
    )
    
    
    16,079
    
    
    
    (1,084
    )
    
    
    (1,551
    )
    
    
    2,066
    
    
    
    (2,367
    )Provision (benefit) for income tax
    
    
    (6,782
    )
    
    
    6,432
    
    
    
    (466
    )
    
    
    
    
    
    
    
    
    
    
    (816
    )Net income (loss)
    
    $
    (11,095
    )
    
    $
    9,647
    
    
    $
    (618
    )
    
    $
    (1,551
    )
    
    $
    2,066
    
    
    $
    (1,551
    )
 Page -17-




---



##### Table of Contents



BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Brand Intermediate Holdings, Inc.
Condensed Consolidating Statement of Operations
For the Three Months Ended June 30, 2004 BrandNon-
    
    Brand
    
    Adjustments
    
    IntermediateBrand
    
    Guarantor
    
    Guarantor
    
    Intermediate
    
    and
    
    Holdings, Inc.Services, Inc.
    
    Subsidiaries
    
    Subsidiary
    
    Holdings, Inc.
    
    Eliminations
    
    ConsolidatedRevenue:Labor
    
    $
    
    
    
    $
    52,113
    
    
    $
    5,835
    
    
    $
    
    
    
    $
    
    
    
    $
    57,948Equipment rental
    
    
    
    
    
    
    14,511
    
    
    
    922
    
    
    
    
    
    
    
    
    
    
    
    15,433Equipment sales
    
    
    
    
    
    
    1,244
    
    
    
    297
    
    
    
    
    
    
    
    (133
    )
    
    
    1,408Intercompany revenue
    
    
    5,150
    
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    (5,174
    )
    
    
    Total revenues
    
    
    5,150
    
    
    
    67,892
    
    
    
    7,054
    
    
    
    
    
    
    
    (5,307
    )
    
    
    74,789Operating expenses:Labor
    
    
    
    
    
    
    43,601
    
    
    
    5,226
    
    
    
    
    
    
    
    (1,230
    )
    
    
    47,597Equipment rental
    
    
    5,737
    
    
    
    984
    
    
    
    363
    
    
    
    
    
    
    
    
    
    
    
    7,084Equipment sales
    
    
    
    
    
    
    962
    
    
    
    168
    
    
    
    
    
    
    
    (290
    )
    
    
    840Divisional operating expenses
    
    
    28
    
    
    
    4,025
    
    
    
    133
    
    
    
    
    
    
    
    
    
    
    
    4,186Intercompany operating expenses
    
    
    
    
    
    
    5,150
    
    
    
    24
    
    
    
    
    
    
    
    (5,174
    )
    
    
    Total operating expenses
    
    
    5,765
    
    
    
    54,722
    
    
    
    5,914
    
    
    
    
    
    
    
    (6,694
    )
    
    
    59,707Gross profit (loss)
    
    
    (615
    )
    
    
    13,170
    
    
    
    1,140
    
    
    
    
    
    
    
    1,387
    
    
    
    15,082Selling and administrative expenses
    
    
    3,801
    
    
    
    6,845
    
    
    
    369
    
    
    
    
    
    
    
    
    
    
    
    11,015Operating income (loss)
    
    
    (4,416
    )
    
    
    6,325
    
    
    
    771
    
    
    
    
    
    
    
    1,387
    
    
    
    4,067Interest expense
    
    
    6,654
    
    
    
    57
    
    
    
    
    
    
    
    1,413
    
    
    
    
    
    
    
    8,124Interest income
    
    
    (18
    )
    
    
    0
    
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    (21
    )Intercompany interest
    
    
    1,413
    
    
    
    
    
    
    
    
    
    
    
    (1,413
    )
    
    
    
    
    
    
    Equity in loss (income) of subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,734
    
    
    
    (2,734
    )
    
    
    Income (loss) before provision for
income tax
    
    
    (12,465
    )
    
    
    6,268
    
    
    
    774
    
    
    
    (2,734
    )
    
    
    4,121
    
    
    
    (4,036
    )Provision (benefit) for income tax
    
    
    (1,460
    )
    
    
    (210
    )
    
    
    368
    
    
    
    
    
    
    
    
    
    
    
    (1,302
    )Net income (loss)
    
    $
    (11,005
    )
    
    $
    6,478
    
    
    $
    406
    
    
    $
    (2,734
    )
    
    $
    4,121
    
    
    $
    (2,734
    )
 Page -18-




---



##### Table of Contents



BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Brand Intermediate Holdings, Inc.
Condensed Consolidating Statement of Operations
For the Six Months Ended June 30, 2003 BrandNon-
    
    Brand
    
    Adjustments
    
    IntermediateBrand
    
    Guarantor
    
    Guarantor
    
    Intermediate
    
    and
    
    Holdings, Inc.Services, Inc.
    
    Subsidiaries
    
    Subsidiary
    
    Holdings, Inc.
    
    Eliminations
    
    ConsolidatedRevenue:Labor
    
    $
    
    
    
    $
    140,628
    
    
    $
    4,692
    
    
    $
    
    
    
    $
    
    
    
    $
    145,320Equipment rental
    
    
    
    
    
    
    36,822
    
    
    
    1,109
    
    
    
    
    
    
    
    
    
    
    
    37,931Equipment sales
    
    
    
    
    
    
    4,396
    
    
    
    63
    
    
    
    
    
    
    
    (1,027
    )
    
    
    3,432Intercompany revenue
    
    
    4,013
    
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    (4,034
    )
    
    
    Total revenues
    
    
    4,013
    
    
    
    181,867
    
    
    
    5,864
    
    
    
    
    
    
    
    (5,061
    )
    
    
    186,683Operating expenses:Labor
    
    
    
    
    
    
    115,261
    
    
    
    4,337
    
    
    
    
    
    
    
    (302
    )
    
    
    119,296Equipment rental
    
    
    14,943
    
    
    
    2,039
    
    
    
    3,039
    
    
    
    
    
    
    
    
    
    
    
    20,021Equipment sales
    
    
    
    
    
    
    3,470
    
    
    
    58
    
    
    
    
    
    
    
    (1,204
    )
    
    
    2,324Divisional operating expenses
    
    
    152
    
    
    
    7,736
    
    
    
    226
    
    
    
    
    
    
    
    
    
    
    
    8,114Intercompany operating expenses
    
    
    
    
    
    
    4,013
    
    
    
    21
    
    
    
    
    
    
    
    (4,034
    )
    
    
    Total operating expenses
    
    
    15,095
    
    
    
    132,519
    
    
    
    7,681
    
    
    
    
    
    
    
    (5,540
    )
    
    
    149,755Gross profit (loss)
    
    
    (11,082
    )
    
    
    49,348
    
    
    
    (1,817
    )
    
    
    
    
    
    
    479
    
    
    
    36,928Selling and administrative expenses
    
    
    8,516
    
    
    
    13,967
    
    
    
    586
    
    
    
    
    
    
    
    
    
    
    
    23,069Operating income (loss)
    
    
    (19,598
    )
    
    
    35,381
    
    
    
    (2,403
    )
    
    
    
    
    
    
    479
    
    
    
    13,859Interest expense
    
    
    13,795
    
    
    
    1
    
    
    
    
    
    
    
    2,346
    
    
    
    
    
    
    
    16,142Interest income
    
    
    (89
    )
    
    
    (2
    )
    
    
    (14
    )
    
    
    
    
    
    
    
    
    
    
    (105
    )Intercompany interest
    
    
    2,346
    
    
    
    
    
    
    
    
    
    
    
    (2,346
    )
    
    
    
    
    
    
    Equity in loss (income) of subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,438
    
    
    
    (1,438
    )
    
    
    Income (loss) before provision for
income tax
    
    
    (35,650
    )
    
    
    35,382
    
    
    
    (2,389
    )
    
    
    (1,438
    )
    
    
    1,917
    
    
    
    (2,178
    )Provision (benefit) for income tax
    
    
    (13,866
    )
    
    
    14,153
    
    
    
    (1,027
    )
    
    
    
    
    
    
    
    
    
    
    (740
    )Net income (loss)
    
    $
    (21,784
    )
    
    $
    21,229
    
    
    $
    (1,362
    )
    
    $
    (1,438
    )
    
    $
    1,917
    
    
    $
    (1,438
    )
 Page -19-




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##### Table of Contents



BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Brand Intermediate Holdings, Inc.
Condensed Consolidating Statement of Operations
For the Six Months Ended June 30, 2004 BrandNon-
    
    Brand
    
    Adjustments
    
    IntermediateBrand
    
    Guarantor
    
    Guarantor
    
    Intermediate
    
    and
    
    Holdings, Inc.Services, Inc.
    
    Subsidiaries
    
    Subsidiary
    
    Holdings, Inc.
    
    Eliminations
    
    ConsolidatedRevenue:Labor
    
    $
    
    
    
    $
    130,929
    
    
    $
    7,655
    
    
    $
    
    
    
    $
    
    
    
    $
    138,584Equipment rental
    
    
    
    
    
    
    32,159
    
    
    
    1,367
    
    
    
    
    
    
    
    
    
    
    
    33,526Equipment sales
    
    
    
    
    
    
    3,244
    
    
    
    341
    
    
    
    
    
    
    
    (571
    )
    
    
    3,014Intercompany revenue
    
    
    10,080
    
    
    
    39
    
    
    
    
    
    
    
    
    
    
    
    (10,119
    )
    
    
    Total revenues
    
    
    10,080
    
    
    
    166,371
    
    
    
    9,363
    
    
    
    
    
    
    
    (10,690
    )
    
    
    175,124Operating expenses:Labor
    
    
    
    
    
    
    109,565
    
    
    
    6,925
    
    
    
    
    
    
    
    (2,705
    )
    
    
    113,785Equipment rental
    
    
    11,233
    
    
    
    2,096
    
    
    
    685
    
    
    
    
    
    
    
    
    
    
    
    14,014Equipment sales
    
    
    
    
    
    
    2,680
    
    
    
    186
    
    
    
    
    
    
    
    (798
    )
    
    
    2,068Divisional operating expenses
    
    
    56
    
    
    
    8,015
    
    
    
    273
    
    
    
    
    
    
    
    
    
    
    
    8,344Intercompany operating expenses
    
    
    
    
    
    
    10,080
    
    
    
    39
    
    
    
    
    
    
    
    (10,119
    )
    
    
    Total operating expenses
    
    
    11,289
    
    
    
    132,436
    
    
    
    8,108
    
    
    
    
    
    
    
    (13,622
    )
    
    
    138,211Gross profit (loss)
    
    
    (1,209
    )
    
    
    33,935
    
    
    
    1,255
    
    
    
    
    
    
    
    2,932
    
    
    
    36,913Selling and administrative expenses
    
    
    8,343
    
    
    
    13,677
    
    
    
    710
    
    
    
    
    
    
    
    
    
    
    
    22,730Operating income (loss)
    
    
    (9,552
    )
    
    
    20,258
    
    
    
    545
    
    
    
    
    
    
    
    2,932
    
    
    
    14,183Interest expense
    
    
    13,462
    
    
    
    57
    
    
    
    
    
    
    
    2,886
    
    
    
    
    
    
    
    16,405Interest income
    
    
    (88
    )
    
    
    0
    
    
    
    (13
    )
    
    
    
    
    
    
    
    
    
    
    (101
    )Intercompany interest
    
    
    2,886
    
    
    
    
    
    
    
    
    
    
    
    (2,886
    )
    
    
    
    
    
    
    Equity in loss (income) of subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,959
    
    
    
    (1,959
    )
    
    
    Income (loss) before provision for
income tax
    
    
    (25,812
    )
    
    
    20,201
    
    
    
    558
    
    
    
    (1,959
    )
    
    
    4,891
    
    
    
    (2,121
    )Provision (benefit) for income tax
    
    
    (8,487
    )
    
    
    8,080
    
    
    
    245
    
    
    
    
    
    
    
    
    
    
    
    (162
    )Net income (loss)
    
    $
    (17,325
    )
    
    $
    12,121
    
    
    $
    313
    
    
    $
    (1,959
    )
    
    $
    4,891
    
    
    $
    (1,959
    )
 Page -20-




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##### Table of Contents



BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Brand Intermediate Holdings, Inc.
Condensed Consolidating Statement of Cash Flows
For the Six Months Ended June 30, 2003 Brand
    
    Adjustments
    
    Brand IntermediateBrand Services,
    
    Guarantor
    
    Non-Guarantor
    
    Intermediate
    
    and
    
    Holdings, Inc.Inc.
    
    Subsidiaries
    
    Subsidiary
    
    Holdings, Inc..
    
    Eliminations
    
    ConsolidatedCASH FLOWS FROM OPERATING ACTIVITIES:Net cash provided by (used for) operating activities
    
    $
    24,098
    
    
    $
    1,488
    
    
    $
    (709
    )
    
    
    
    
    
    $
    541
    
    
    $
    25,418CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (4,403
    )
    
    
    (1,488
    )
    
    
    (127
    )
    
    
    
    
    
    
    
    
    
    
    (6,018
    )Proceeds from sales of property and equipment
    
    
    796
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    796Net cash used for investing activities
    
    
    (3,607
    )
    
    
    (1,488
    )
    
    
    (127
    )
    
    
    
    
    
    
    
    
    
    
    (5,222
    )CASH FLOWS FROM FINANCING ACTIVITIES:Payments of long-term debt
    
    
    (650
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (650
    )Payments on capital lease obligations
    
    
    (1,043
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,043
    )Net cash used for financing activities
    
    
    (1,693
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,693
    )INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
    
    
    18,798
    
    
    
    
    
    
    
    (836
    )
    
    
    
    
    
    
    541
    
    
    
    18,503CASH AND CASH EQUIVALENTS, beginning of period
    
    
    3,931
    
    
    
    
    
    
    
    1,480
    
    
    
    
    
    
    
    (594
    )
    
    
    4,817CASH AND CASH EQUIVALENTS, end of period
    
    $
    22,729
    
    
    $
    
    
    
    $
    644
    
    
    
    
    
    
    $
    (53
    )
    
    $
    23,320
 Page -21-




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##### Table of Contents



BRAND INTERMEDIATE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Brand Intermediate Holdings, Inc.
Condensed Consolidating Statement of Cash Flows
For the Six Months Ended June 30, 2004 Brand
    
    Adjustments
    
    Brand IntermediateBrand Services,
    
    Guarantor
    
    Non-Guarantor
    
    Intermediate
    
    and
    
    Holdings, Inc.Inc.
    
    Subsidiaries
    
    Subsidiary
    
    Holdings, Inc..
    
    Eliminations
    
    ConsolidatedCASH FLOWS FROM OPERATING ACTIVITIES:Net cash provided by (used for) operating activities
    
    $
    19,750
    
    
    $
    805
    
    
    $
    (1,282
    )
    
    
    
    
    
    $
    221
    
    
    $
    19,494CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (5,559
    )
    
    
    (766
    )
    
    
    (383
    )
    
    
    
    
    
    
    
    
    
    
    (6,708
    )Proceeds from sales of property and equipment
    
    
    912
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    912Payments for acquisitions
    
    
    (924
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (924
    )Net cash used for investing activities
    
    
    (5,571
    )
    
    
    (766
    )
    
    
    (383
    )
    
    
    
    
    
    
    
    
    
    
    (6,720
    )CASH FLOWS FROM FINANCING ACTIVITIES:Payments of long-term debt
    
    
    (20,574
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,574
    )Payments of deferred financing fees
    
    
    (677
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (677
    )Payments on capital lease obligations
    
    
    (330
    )
    
    
    (39
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (369
    )Net cash used for financing activities
    
    
    (21,581
    )
    
    
    (39
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,620
    )INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
    
    
    (7,402
    )
    
    
    
    
    
    
    (1,665
    )
    
    
    
    
    
    
    221
    
    
    
    (8,846
    )CASH AND CASH EQUIVALENTS, beginning of period
    
    
    21,154
    
    
    
    
    
    
    
    2,236
    
    
    
    
    
    
    
    (290
    )
    
    
    23,100CASH AND CASH EQUIVALENTS, end of period
    
    $
    13,752
    
    
    $
    
    
    
    $
    571
    
    
    
    
    
    
    $
    (69
    )
    
    $
    14,254
 Page -22-




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS The matters discussed in this Form 10-Q of Brand Intermediate Holdings, Inc.
and subsidiaries (the Company) contain forward looking statements that
involve a number of risks and uncertainties. A number of factors could cause
actual results, performance, achievements of the Company, or industry results,
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. These factors
include, but are not limited to, the competitive environment in the industrial
and commercial scaffolding industry in general and in the Companys specific
market areas; changes in prevailing interest rates and the availability of and
terms of financing to fund the anticipated growth of the Companys business;
inflation; changes in costs of goods and services; economic conditions in
general and in the Companys specific market areas; demographic changes;
changes in or failure to comply with federal, state and/or local government
regulations; liability and other claims asserted against the Company; changes
in operating strategy or development plans; the ability to attract and retain
qualified personnel; the significant indebtedness of the Company; labor
disturbances; changes in the Companys acquisition and capital expenditure
plans; and other factors referenced herein. The forward looking statements
contained herein reflect the Companys current beliefs and specific assumptions
with respect to future business decisions and are based on information
currently available. Accordingly, the statements are subject to significant
risks, uncertainties and contingencies, which could cause the Companys actual
operating results, performance or business prospects to differ from those
expressed in, or implied by, these statements. The following discussion and analysis should be read in conjunction with the
attached condensed consolidated financial statements and notes thereto. Overview The Company is one of the largest North American providers of industrial
scaffolding services which facilitate access to tall structures for
maintenance, turnarounds and capital projects, principally in the refining,
petrochemical, chemical, utility and pulp and paper industries. The Company
provides turnkey services, which include equipment rental, labor for the
erection and dismantlement of the scaffolding and scaffolding design services.
The Company also provides scaffolding services to the commercial market
(primarily nonresidential construction and renovation) and sells a small amount
of scaffolding. 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 Page -23-




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##### Table of Contents



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. 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. Brand Intermediate Holdings, Inc. and its subsidiaries (Brand) are 100% owned
by Brand Holdings LLC (the LLC). As of June 30, 2004, the voting equity
interests of the LLC are owned 74.2% by J.P. Morgan Partners and its affiliates
(JPMP) and 25.8% by other equity investors on a fully diluted basis. Brand
Services, Inc. is a wholly owned subsidiary of Brand Intermediate Holdings,
Inc. and its subsidiaries. Results of Operations Revenue  Total revenue for the three months ended June 30, 2004 decreased by
$13.7 million or 15.4% as compared to the similar prior year period. Revenue
in the utility capital sector decreased $9.8 million, much of which was
anticipated, due to large projects in the Northeast and West Coast that were
completed in 2003. Revenue in the Refinery and Chemical sector decreased $5.7
million. This decrease is primarily due to some refineries delaying
maintenance work to take advantage of high gasoline prices in the marketplace
as well as some work being pulled into the first quarter from the second
quarter. First quarter revenues in the refinery sector were very high for this
reason as well as some fourth quarter 2003 turnarounds being delayed until the
first quarter 2004. Revenues in the commercial and other industrial sectors
increased slightly. Total revenue for the six months ended June 30, 2004
decreased by $11.6 million or 6.2% compared to the six months ended June 30,
2003. The biggest factor in the decrease was a $26.7 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 an increase in the refinery and chemical sector, primarily
due to a large number of turnarounds that were completed in the first quarter
of 2004. Gross profit  Gross profit decreased by $2.3 million, or 13.3% in the three
months ended June 30, 2004 as compared to the three months ended June 30, 2003.
Labor gross profit declined $2.0 million primarily due to a $10.3 million
decrease in labor revenues. The percentage of labor gross profit to labor
revenues remained relatively flat at 17.9% compared to 18.1%. Equipment rental
gross profit declined only $0.3 million, despite a $3.3 million decrease in
rental revenue. The primary reason for this is a $3.0 million decrease in
depreciation expense that resulted from groups of assets that became fully
depreciated at the end of 2003. For the six months ended June 30, 2004, gross
profit of $36.9 million was flat with the six months ended June 30, 2003.
Labor gross profit declined $1.2 million primarily due to a $6.7 million
decrease in labor revenues. The percentage of labor gross profit to labor
revenues remained flat at 17.9% for both the six months ended June 30, 2004 and
2003. Equipment rental gross profit increased $1.6 million despite a Page -24-




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##### Table of Contents



$4.4 million decrease in rental revenue. The primary reason for the increase
is due to a $6.0 million decrease in depreciation expense that resulted from
groups of assets that became fully depreciated at the end of 2003. A slight
increase in divisional operating expenses of $0.2 million and a slight decrease
in equipment sales gross profit of $0.2 million account for the remainder of
the decrease in gross profit. Selling and administrative expenses  Selling and administrative expenses
decreased by $0.6 million and $0.3 million, respectively, in the three- and
six-month periods ended June 30, 2004 as compared to the similar prior year
periods. For the three-month period the decrease is primarily due to $0.3 of
lower depreciation expense and $0.2 million of lower bad debt expense. For the
six-month period, the decrease is primarily due to $0.6 million of lower
depreciation expense, partially offset by smaller increases in a number of
miscellaneous accounts. Operating income  As a result of the above events, operating income decreased
by $1.7 million, or 29.4%, when comparing the three-month period ended June 30,
2004 with the similar prior year period. Operating income increased by $0.3
million, or 2.3%, comparing the six-month period ended June 30, 2004 the
similar prior year period. Interest expense  Interest expense decreased by $0.1 million in the three
months ended June 30, 2004 as compared to the three months ended June 30, 2003.
This was primarily due to impact of lower senior debt under the credit
facility resulting from a $20 million prepayment made on March 31, 2004,
partially offset by the compounding effect of interest on the 13% pay-in-kind
notes. Interest expense increased by 0.3 million in the six months ended June
30, 2004 as compared to the six months ended June 30, 2003. This was primarily
due to the compounding effect of interest on the pay-in-kind notes, partially
offset by the lower senior debt level in the second quarter of 2004. Income tax provision  The income tax benefit of $162 for the six months ended
June 30, 2004, represents an effective rate of 8%. This effective rate is the
result of the blended net losses at our domestic subsidiaries and net income at
our foreign subsidiary. The rate is less than the federal statutory rate of
35% primarily due to permanent tax items, the largest of which is a portion of
the interest expense on the 13% Intermediate Notes which is not deductible for
tax purposes. For the three months ended June 30, 2004, the Company adjusted
its effective tax rate from an expense of 60% to a benefit of 8% due to a
revision in the its 2004 forecast from a net income position to a net loss
position. This resulted in additional benefit of approximately $0.9 million
for the three month period ended June 30, 2004. Liquidity and Capital Resources The Company has historically utilized internal cash flow from operations and
borrowings under its Credit Facility to fund its operations, capital
expenditures and working capital requirements. As of December 31, 2003 and June
30, 2004, the Company had cash of $23.1 million and $14.3 million,
respectively. Page -25-




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##### Table of Contents



One of the Companys major uses of cash is capital expenditures. The Companys
capital expenditure requirements are comprised of maintenance and expansion
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 managements growth expectations. During the
six months ended June 30, 2003 and 2004, capital expenditures were $6.0 million
and $6.7 million, respectively. Our Credit Facility (the Credit Facility) provides for $130.0 million of term
loans, a $50.0 million revolving loan facility and $35.0 million letter of
credit facilities. Up to $20.0 million of the $50.0 million revolving loan
facility may be used for letters of credit. The Credit Facility was amended on
February 3, 2004. The amendment increased the letter of credit facilities from
$20 million to $35 million and lowered the interest rate margin on the term
loans by 0.75%. As of June 30, 2004, the Company had no borrowings outstanding
under the revolving credit facility and had total outstanding letters of credit
of $35.1 million. The interest rate on the $103.1 million of term loans currently outstanding
under the Credit Facility is variable. For the three months and six months
ended June 30, 2003, the weighted average interest rate on the term loans was
4.4% and 4.5%, respectively. We are required to make semi-annual interest payments on our 12%, $150.0
million Senior Subordinated Notes in the amount of $9.0 million in April and
October of every year until the Senior Notes mature in October 2012. We are
also required to make quarterly interest payments on loans under our Credit
Facility, which bears interest at a floating rate based upon either the base
rate (as defined in our credit agreement, for base rate loans) or the LIBOR
rate (for LIBOR loans) plus a spread of 2.5% to 4.0%, depending on the ratio of
our consolidated debt to EBITDA. As of June 30, 2004, the interest rate on our
term loans was 4.9%. We are not required to make interest payments on our 13%,
$35.0 million Intermediate Notes until 2008, as these notes are pay-in-kind
notes. 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 financial ratios become more
restrictive over time. The Company received a waiver from compliance for the
minimum interest coverage ratio and maximum leverage ratio for the period ended
June 30, 2004. The Company projects non-compliance with the aforementioned
ratios for the period ended September 30, 2004; however, because the Company
has been able to generate significant cash flow, has paid down more than $25
million on the term loans in the past year, and has $14.3 million in cash at
June 30, 2004, we believe we will be able to negotiate further waivers or
amendments to the Credit Facility, as necessary. Page -26-




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A summary of the sources and uses of cash for the six months ended June 30,
2003 and 2004, follows: Six Months Ended June 30,2003
    
    2004Net cash provided by (used for):Operating activities
    
    $
    25,418
    
    
    $
    19,494Investing activities
    
    
    (5,222
    )
    
    
    (6,720
    )Financing activities
    
    
    (1,693
    )
    
    
    (21,620
    )
 Contractual Obligations The following is a summary of contractual cash obligations as of June 30, 2004
(dollars in thousands): Payments due in:Total
    
    2004
    
    2005
    
    2006
    
    2007
    
    2008
    
    After 2008Term Loan (1)
    
    $
    103,139
    
    
    $
    103,139
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Expected Interest
Payments on Term
Loan (1)
    
    
    24,634
    
    
    
    2,520
    
    
    
    5,002
    
    
    
    4,951
    
    
    
    4,900
    
    
    
    4,849
    
    
    
    2,412Senior Notes
    
    
    150,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150,000Expected Interest
Payments
on Senior Notes
    
    
    153,000
    
    
    
    9,000
    
    
    
    18,000
    
    
    
    18,000
    
    
    
    18,000
    
    
    
    18,000
    
    
    
    72,000Intermediate Notes
    
    
    43,405
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,405Expected Interest
Payments on
Intermediate Notes
    
    
    74,237
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,657
    
    
    
    65,580Capital Leases
    
    
    250
    
    
    
    58
    
    
    
    95
    
    
    
    92
    
    
    
    5
    
    
    
    
    
    
    
    Operating Leases
    
    
    8,064
    
    
    
    1,499
    
    
    
    2,340
    
    
    
    1,910
    
    
    
    1,326
    
    
    
    676
    
    
    
    313Notes Payable
    
    
    890
    
    
    
    330
    
    
    
    244
    
    
    
    79
    
    
    
    79
    
    
    
    79
    
    
    
    79Total Contractual
Cash Obligations
    
    $
    557,619
    
    
    $
    116,546
    
    
    $
    25,681
    
    
    $
    25,032
    
    
    $
    24,310
    
    
    $
    32,261
    
    
    $
    333,789
  (1)
    
    The Company received a waiver from compliance for two financial ratio
covenants for the period ended June 30, 2004. In accordance with EITF
86-30, the Company is classifying the entire term balance as current;
however, it is the Companys intention to seek additional waivers or
amendments, as necessary. The amounts shown in the Expected Interest
Payments on Term Loan row represent the expected interest payments to be
made, at current prevailing interest rates, assuming the Company is able
to negotiate additional waivers or amendments, as necessary. Critical Accounting Policies Certain of our accounting policies as discussed below require the application
of significant judgement by management in selecting the appropriate assumptions
for calculating amounts to record in our financial statements. By their nature,
these judgements are subject to an inherent degree of uncertainty. 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 Page -27-




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revenue upon shipment and records as operating expense, the average cost of the
scaffolding sold. The Company periodically sells scaffolding to third parties,
primarily to its rental customers. The Company recognizes revenue for the
proceeds of such sales and records as operating expense, the net book value of
the scaffolding. Net book value is determined assuming the oldest scaffolding
is sold first, as the Company maintains inventory records on a group basis. 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 estimates
take into account incurred but not reported (IBNR) claims. While we believe
our liabilities for workers compensation, general liability, automobile, and
health benefit claims of $14.5 million as of June 30, 2004, are adequate and
that the judgement applied is appropriate, such estimated liabilities could
differ materially from what will actually transpire in the future. The Company accounts for its long-lived assets excluding goodwill and
tradenames, in accordance with Statement of Financial Accounting Standards
(SFAS) No. 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
No. 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. 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 Page -28-




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expensed $46,000 and $88,000, respectively, for the three- and six-month
periods ended June 30, 2004, recorded in the caption Selling and Administrative
expenses. 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. No stock-based employee compensation expense was reflected in
2003, 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. Acquisitions On June 1, 2004, the company purchased the assets of Levitator, Inc., a
commercial scaffolding company, for an aggregate purchase price of $0.9 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 $0.1 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. 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is exposed to market risk from changes in interest rates and
foreign exchange rates. The Companys net exposure to interest rate risk
consists of variable-rate instruments based on LIBOR. 
 ITEM 4. CONTROLS AND PROCEDURES An evaluation was carried out under the supervision and with the participation
of our management, including our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of our disclosure controls and procedures (as
defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act
of 1934) as of the end of the quarter covered by this report. Based on their
evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that the companys disclosure controls and procedures are effective
to ensure that information required to be disclosed by our company in reports
that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in Securities and
Exchange Commission rules and forms. There were no changes in the internal
control over financial reporting that occurred during the second quarter of
2004 that have materially affected, or are likely to materially affect, our
internal control over financial reporting. Page -29-




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PART II  OTHER INFORMATION 
 ITEM 1. LEGAL PROCEEDINGS From time to time, the Company is subject to legal proceedings and other claims
arising in the ordinary course of its business. There are no material pending
legal proceedings, other than routine litigation incidental to the business, to
which the Company is a party or of which any of the Companys property is the
subject. 
 ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None. 
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. 
 ITEM 5. OTHER INFORMATION None. 
 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits  31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1
    
    Certification of Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 200232.2
    
    Certification of Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (b) Reports on Form 8-K None. Page -30-




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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: August 16, 2004
    /s/ John M. MonterJohn M. MonterChief Executive Officer, President Date: August 16, 2004
    /s/ Jeffrey W. PetersonJeffrey W. PetersonChief Financial Officer,
Vice President, Finance Page -31-