<PAGE>   1




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


                                  FORM 10-K/A


                               AMENDMENT NO. 1 TO

                 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2000

                              BRAND SERVICES, INC.
             (Exact Name of Registrant as Specified in Its Charter)

<Table>
<S>                                      <C>                                      <C>
             DELAWARE                                  735915                              133909681
 (State or Other Jurisdiction of              (Commission File Number)            (IRS Employer Identification
   Incorporation or Organization)                                                           Number)
</Table>

                       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)

State the aggregate market value of the voting stock held by non-affiliates of
the registrant.

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

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

<Table>
<Caption>
                    CLASS                             OUTSTANDING AT MARCH 15 , 2001
                    -----                             ------------------------------
<S>                                            <C>
            BRAND SERVICES, INC.
        COMMON STOCK, $0.01 PAR VALUE                           100 SHARES
</Table>




<PAGE>   2


This Form 10-K/A is filed with respect to the Annual Report on Form 10-K for
the year ended December 31, 2000 filed with the Securities and Exchange
Commission on March 20, 2001, in response to staff comments principally in
order to set forth the components of revenues and operating expenses in greater
detail and to provide certain pro forma financial data relating to acquisitions.



ITEM 1. BUSINESS

GENERAL

  Company History and Structure

     Brand Services, Inc. and its subsidiaries ("Brand") are 100% owned by DLJ
Brand Holdings, Inc. ("Holdings"). As of December 31, 2000, Holdings is owned
60.7% by Credit Suisse First Boston (USA), Inc. ("CSFB"), 8.7% by Carlisle
Enterprises, L.P. ("Carlisle"), 17.2% by Rust International Inc. ("Rust
International") through its wholly owned subsidiary Rust Industrial Services,
Inc. ("RIS") and 13.4% by the directors, officers and employees of Brand. Rust
International is a subsidiary of Waste Management Industrial Services, Inc.
("WMIS"). All references to "the Company," "we," "us" or "our" mean Brand
Services, Inc. and its subsidiaries.

     On September 30, 1996, Brand, a newly formed entity created by the merchant
banking group of Donaldson, Lufkin & Jenrette, Inc. ("DLJ"), purchased the
assets of Rust Scaffold Services, Inc. and its subsidiaries, which were direct
and indirect subsidiaries of Rust International ("the Acquisition"). The
Acquisition was financed by $190.0 million in debt and accounted for under the
purchase method of accounting.

     In September 1999, with unanimous consent of the Board of Directors, the
name of the corporation and the Certificate of Incorporation were changed from
Brand Scaffold Services, Inc. to Brand Services, Inc., effective January 1,
2000.

  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 years ended December 31, 2000, 1999 and 1998, are
as follows (in thousands):

<Table>
<Caption>
                                                      2000        1999        1998
                                                      ----        ----        ----
<S>                                                 <C>         <C>         <C>
Revenue.........................................    $264,066    $218,916    $205,304
Operating income................................      21,135      15,736      18,063
Total assets....................................     246,249     210,872     211,060
</Table>

  Description of Business

     We are the largest North American provider of industrial scaffolding
services. Our services facilitate access to tall structures for on-going
maintenance, turnarounds (major maintenance projects which require the complete
or partial shutdown of a facility) and capital projects, principally in the
refining, petrochemical, chemical, utility and pulp and paper industries. Our
turnkey services include equipment rental, labor for the erection and
dismantlement of scaffolding and scaffolding design services. We deliver our
services through an extensive field service organization of approximately 5,500
employees in 36 field offices located throughout the United States and two in
Canada. We also provide scaffolding services to the commercial market (primarily
nonresidential construction) and sell a small amount of scaffolding.

     Approximately 76%, 79% and 83%, of our 2000, 1999, and 1998, respective
revenues were attributable to ongoing maintenance, turnarounds and capital
projects of industrial facilities. We typically provide on-going maintenance
services under long-term contracts; the duration of these contracts ranges
between one and 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. We believe that the necessity
for on-going maintenance and turnarounds provides us with a stable, recurring
revenue base.



                                       2

<PAGE>   3

     Our main customers include major integrated oil companies, independent
refiners, large chemical companies, utilities and large engineering and
construction firms. The largest customer, Exxon/Mobil Corporation, accounted for
approximately 13%, 13% and 15% of our revenues in the years ended December 31,
2000, 1999 and 1998, respectively. The loss of this customer could have a
material adverse effect the Company. 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 well below the industry average and have enabled
       us to reduce insurance costs and accident-related expenses.

     Our size also enables us to maintain our own design department that
specializes in the custom design of industrial scaffolding, which we use to
minimize the amount of scaffolding used and to maximize labor efficiency,
thereby providing us with a competitive advantage.

  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
turnarounds during the spring and fall. Similar patterns are evidenced for
utilities.

     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;

     - an inability to 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 turnarounds. It does not appear that any areas of
our business exhibit a significant degree of counter-cyclicality that would
offset these effects. This cyclicality could have a material adverse effect on
the Company.

  The Industry and Competition

     The Company is the largest North American provider of industrial
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 services industry consists of 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



                                       3

<PAGE>   4

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 not as versatile as systems scaffolding
and requires a lower level of expertise.

  Industrial Market

     The North American industrial scaffolding market is approximately $850
million and is serviced predominantly by scaffolding specialists such as Brand.
We estimate that the top five scaffolding specialists service almost 58% of the
total industrial scaffolding market.

     Industrial customers use scaffolding for on-going maintenance, turnarounds
and capital projects. Among industrial applications, maintenance represents
approximately 45% and turnarounds represent approximately 35% of the market.
Since turnarounds may require the complete shutdown of a facility (which may
lose up to $1 million of revenues per day during a turnaround), 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 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.
These factors combine to make the commercial market highly fragmented with low
barriers to entry. We have longstanding customer relationships, extensive
equipment resources, significant labor capacity and an industry-leading safety
record. We believe these strengths have enabled us to gain current market share.
Competition is based primarily on the basis of quality, price, speed,
reliability, reputation and customer service. The Company continues to focus on
reducing operating costs, pursuing complementary acquisitions and expanding
commercial scaffolding operations.

  Employees and Dependence on Labor

     As of December 31, 2000, we employed approximately 5,500 employees, of
which 22% were represented by a labor union. 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 employees.

     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. In recent years, unemployment rates have reached unusually low levels
leading to lower availability of labor and to wage inflation. In particular, the
supply of labor has been low relative to demand in the Gulf Coast and West Coast
Regions, in which we have significant operations. While we have been successful
in hiring workers for our projects and we do not believe that the reduced
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 39 locations (38 field offices and 1 headquarters
location). We maintain a substantial inventory of scaffolding at the 38 field
offices as well as at customer sites throughout the United States and Canada.
Our facilities are concentrated near its customers to minimize transportation
costs, to shorten lead times and to strengthen oversight and project management
abilities. Brand owns two locations in Canada, two in Texas, one in Alabama and
one in Louisiana. We lease the remaining 32


                                       4

<PAGE>   5

facilities as well as one site used for our corporate headquarters located in
Chesterfield, Missouri. Our facilities typically include a small office,
warehouse and yard and range in size from 2,000 to 40,000 square feet under roof
with yards from half an acre to more than nine acres. Our headquarters are
located in a 9,500 square foot facility in Chesterfield, Missouri.

ITEM 3. LEGAL PROCEEDINGS

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

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

     No matters were submitted to a vote of security holders in the fourth
quarter of 2000.

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

     All of our outstanding common stock is held by Holdings 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 its indebtedness.



                                       5

<PAGE>   6

ITEM 6. SELECTED FINANCIAL DATA

     The following table presents (i) selected historical financial data of Rust
Scaffold Services, Inc. and subsidiaries ("Rust") as of and for the nine months
ended September 30, 1996, and (ii) selected historical financial data of Brand,
for the three months ended December 31, 1996, and the years ended December 31,
1997, 1998, 1999, and 2000. The selected historical financial data as of and for
the nine months ended September 30, 1996, has been derived from the audited
financial statements of Rust. The selected historical financial data as of and
for the three months ended December 31, 1996, and the years ended December 31,
1997, 1998, 1999 and 2000, has been derived from the audited financial
statements of Brand. 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.


<Table>
<Caption>
                                  RUST                                         BRAND
                              -------------   ------------------------------------------------------------------------
                               NINE MONTHS    THREE MONTHS
                                  ENDED          ENDED        YEAR ENDED     YEAR ENDED     YEAR ENDED     YEAR ENDED
                              SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
                                  1996            1996           1997           1998           1999           2000
                              -------------   ------------   ------------   ------------   ------------   ------------
                                                               (DOLLARS IN THOUSANDS)
<S>                           <C>             <C>            <C>            <C>            <C>            <C>
INCOME STATEMENT DATA:(1)
Revenue.....................    $124,769        $44,412        $160,660       $205,304       $218,916       $264,066
Operating expenses..........      89,073         34,170         122,638        157,673        171,630        203,689
                                --------        -------        --------       --------       --------       --------
     Gross profit...........      35,696         10,242          38,022         47,631         47,286         60,377
Selling and administrative
  expenses..................      15,825          4,743          25,840         29,568         31,550         39,242
Nonrecurring start-up
  expenses..................          --             --           2,498             --             --             --
                                --------        -------        --------       --------       --------       --------
Operating income............      19,871          5,499           9,684         18,063         15,736         21,135
Interest expense............       7,872          4,504          15,422         17,728         17,758         20,414
Interest income.............        (482)          (195)           (397)          (249)          (159)           (95)
Other expense, net(2).......         708             --              --             --             --             --
                                --------        -------        --------       --------       --------       --------
Income (loss) before
  provision or income tax...      11,773          1,190          (5,341)           584         (1,863)           816
Provision for income tax....       4,813            525              --             --             --             --
Extraordinary loss on debt
  extinguishment............          --             --              --          4,329             --             --
                                --------        -------        --------       --------       --------       --------
     Net income (loss)......       6,960            665          (5,341)        (3,745)        (1,863)           816
                                ========        =======        ========       ========       ========       ========
Less: Accretion of preferred
  stock dividends...........          --           (906)         (4,172)        (4,767)        (5,497)        (6,338)
                                --------        -------        --------       --------       --------       --------
Net income (loss) applicable
  to common stock...........    $  6,960        $  (241)       $ (9,513)      $ (8,512)      $ (7,360)      $ (5,522)
                                ========        =======        ========       ========       ========       ========
OTHER DATA:(1)
EBITDA(3)...................    $ 25,832        $ 8,398        $ 22,009       $ 34,572       $ 39,505       $ 46,554
Net cash provided by (used
  for)
  operating activities......      28,478          4,966          11,983         26,753         21,148         23,123
  investing activities......      (5,706)        (1,296)        (12,496)       (24,876)       (23,097)       (43,146)
  financing activities......     (26,962)        (2,000)         (2,151)          (969)          (932)        22,918
Depreciation and
  amortization..............       6,669          3,567          13,294         17,234         24,491         25,964
Cash interest expense(4)....       7,872          3,836          14,453         17,003         17,036         19,683
Capital expenditures........       1,810            208           9,720         14,831         19,642         29,122
Ratio of earnings to fixed
  charges and preferred
  stock dividends(5)........         2.4x           1.2x            0.5x           0.8x           0.7x           0.8x
</Table>




                                       6

<PAGE>   7

<Table>
<Caption>
                                                                         BRAND
                                                  ----------------------------------------------------
                                                                      DECEMBER 31
                                                  ----------------------------------------------------
                                                    1996       1997       1998       1999       2000
                                                    ----       ----       ----       ----       ----
                                                                 (DOLLARS IN THOUSANDS)
<S>                                               <C>        <C>        <C>        <C>        <C>
BALANCE SHEET DATA:(1)
Working capital.................................  $ 12,656   $  4,207   $ 12,080   $  5,553   $  9,757
Total assets....................................   204,266    197,543    211,060    210,872    246,249
Long-term debt (including current portion and
  revolving loan)...............................   158,000    154,250    158,500    157,460    181,450
Notes payable and capital lease obligation
  (including current portion)...................        --         --      5,007      4,402      6,276
14.5% senior exchangeable preferred stock.......    25,906     31,140     35,907     41,404     47,742
Stockholder's equity (deficit)..................     4,247     (5,176)   (14,483)   (20,968)   (27,199)
</Table>

-------------------------
(1) The Acquisition had a significant impact on our financial position and
    results of operations. Consequently, the financial data for and as of dates
    prior to the Acquisition may not be directly comparable to corresponding
    information for and as of dates after the Acquisition.

(2) Since the Acquisition, we have not separately classified other income and
    expense and have included it in selling and administrative expenses because
    such amounts have been immaterial.

(3) EBITDA is defined as earnings before interest income, cash interest expense,
    income taxes, depreciation and amortization. EBITDA is commonly used to
    analyze companies on the basis of operating performance, leverage and
    liquidity. EBITDA is not intended to represent cash flows for the period,
    nor has it been presented as an alternative to operating income as an
    indicator of operating performance and should not be considered in isolation
    or as a substitute for measures of performance prepared in accordance with
    accounting principles generally accepted in the United States.

(4) Cash interest expense represents total interest expense less amortization of
    deferred financing fees of $731, $722, and $725, for the years ended
    December 31, 2000, 1999 and 1998, respectively.


(5) For the purposes of calculating the ratio of earnings to fixed charges and
    preferred stock dividends, earnings represent income (loss) before income
    taxes plus fixed charges. Fixed charges consist of interest expense on all
    indebtedness plus the interest portion of rental expense on noncancelable
    leases, amortization of debt issuance costs and accretion of preferred stock
    dividends. The deficiency of earnings to cover fixed charges for the years
    ended December 31, 2000, 1999, 1998 and 1997 were $5,522, $7,360, $4,183 and
    $9,513, respectively.




                                       7

<PAGE>   8

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 herewith.

  Overview

     The Company is the largest North American provider 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 sells a small amount of scaffolding.

  Acquisitions

     During 2000, the Company acquired four companies in four separate
transactions for an aggregate purchase price of $11.0 million in cash, $3.3
million in notes payable, and $3.0 million of possible future payments
conditioned upon the operating results of two of the acquired companies. The
purchase prices, allocated to assets and liabilities assumed, were based on
relative fair values. In connection with the acquisitions, the Company recorded
goodwill in the amount of $6.0 million based upon the allocation of the purchase
prices of the acquisitions. All of the above acquisitions were accounted for
using the purchase method of accounting, and accordingly have been included in
the financial statements from their respective dates of acquisition. The
allocation of the purchase price for the acquisitions acquired during 2000 are
based, in part, on preliminary information, which is subject to adjustment upon
obtaining complete valuation information. Management believes that finalization
of the purchase prices and allocation will not have a material impact on the
consolidated results of operations or financial position of the Company.

     In 1999, the Company acquired two companies in two separate transactions
for an aggregate purchase price of $1.9 million in cash and $200 in notes
payable. The purchase prices, allocated to assets and liabilities assumed, were
based on relative fair values. These acquisitions were accounted for using the
purchase method of accounting, and accordingly have been included in the
financial statements from their respective dates of acquisition.

     In 1998, the Company acquired two companies in two separate transactions
for an aggregate purchase price of $2.1 million in cash and $700 in notes
payable. The purchase prices, allocated to assets and liabilities assumed, were
based on relative fair values. These acquisitions were accounted for using the
purchase method of accounting, and accordingly have been included in the
financial statements from their respective dates of acquisition.

     Approximately 76%, 79%, and 83% of the Company's 2000, 1999 and 1998,
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, which represented approximately 12%, 11%
and 18% of 2000, 1999 and 1998 revenues, respectively, resulted from new plant
construction, plant expansions and modifications. Capital projects can and have
had material impacts on the Company's results of operations.

     Commercial scaffolding revenues, which represented approximately 24%, 21%
and 14% of 2000, 1999 and 1998 revenues, respectively, are related to the level
of nonresidential construction and renovation.



                                       8

<PAGE>   9

Demand for commercial scaffolding services has recently been high due to the
strength in the commercial construction industry.

     In connection with the Acquisition, WMIS agreed to pay the Company a
quarterly fee of $725 for transition services for three years beginning on
December 31, 1996. Such payments continued through September 30, 1999. In
addition, WMIS agreed to pay for all historical accident-related claims in which
the accident occurred prior to the Acquisition. Because cash expenditures
related to accidents are paid out over time but accident-related expenses are
accrued in the period in which the accident occurs, the Company has a
significant non-cash claims expense ($1.7 million in 2000, $2.6 million in 1999
and $2.6 million in 1998) which it anticipates will decline over time.

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

     The following discussion of results of operations is presented for the
years ended December 31, 2000, 1999 and 1998.

  Results of Operations

                    SUMMARY OF HISTORICAL FINANCIAL RESULTS
                                 (IN THOUSANDS)


<Table>
<Caption>
                                                                 YEAR ENDED      YEAR ENDED      YEAR ENDED
                                                                DECEMBER 31,    DECEMBER 31,    DECEMBER 31,
                                                                    2000            1999            1998
                                                                ------------    ------------    ------------
<S>                                                             <C>             <C>             <C>
Income Statement Data:
Revenue:
    Labor...................................................      $189,891        $158,532        $149,411
    Equipment rental........................................        67,060          54,653          50,137
    Equipment sales.........................................         7,115           5,731           5,756
                                                                  --------        --------        --------
         Total revenue......................................       264,066         218,916         205,304
Operating expenses:
    Labor...................................................       155,081         130,237         124,653
    Equipment rental........................................        27,412          25,190          18,773
    Equipment sales.........................................         4,827           4,140           4,264
    Divisional operating expenses...........................        16,369          12,063           9,983
                                                                  --------        --------        --------
         Total operating expenses...........................       203,689         171,630         157,673
                                                                  --------        --------        --------
    Gross profit............................................        60,377          47,286          47,631

Selling and administrative expenses.........................        39,242          31,550          29,568
                                                                  --------        --------        --------
    Operating income........................................        21,135          15,736          18,063
Interest expense............................................        20,414          17,758          17,728
Interest income.............................................           (95)           (159)           (249)
                                                                  --------        --------        --------
    Income (loss) before provision for income tax...........           816          (1,863)            584
Provision for income tax....................................            --              --              --
Extraordinary loss on debt extinguishment...................            --              --           4,329
                                                                  --------        --------        --------
    Net income (loss).......................................      $    816        $ (1,863)       $ (3,745)
                                                                  ========        ========        ========
Less -- Accretion of preferred stock dividends..............        (6,338)         (5,497)         (4,767)
                                                                  --------        --------        --------
    Net loss applicable to common stock.....................      $ (5,522)       $ (7,360)       $ (8,512)
Other Data:
EBITDA(1)...................................................      $ 46,554        $ 39,505        $ 34,572
                                                                  ========        ========        ========
Net cash provided by (used for):
    Operating activities....................................      $ 23,123        $ 21,148        $ 26,753
    Investing activities....................................       (43,146)        (23,097)        (24,876)
    Financing activities....................................        22,918            (932)           (969)
</Table>


-------------------------

(1)EBITDA is defined as earnings before interest income, cash interest expense,
   income taxes, depreciation and amortization. EBITDA is commonly used to
   analyze companies on the basis of operating performance, leverage and
   liquidity. EBITDA is not intended to represent cash flows for the period, nor
   has it been presented as an alternative to operating income as an indicator
   of operating performance and should not be considered in isolation or as a
   substitute for measures of performance prepared in accordance with accounting
   principles generally accepted in the United States.



                                       9

<PAGE>   10

YEAR ENDED DECEMBER 31, 2000, AS COMPARED TO YEAR ENDED DECEMBER 31, 1999

REVENUE

     Revenue for the year ended December 31, 2000, increased 20.6% to $264.1
million from $218.9 million for the same period in 1999. Labor revenue increased
19.8% to $189.9 million for the year ended December 31, 2000, as compared to the
same period in 1999. Rental revenue increased 22.7% to $67.1 million for the
year ended December 31, 2000, as compared to the same period in 1999. Revenue
from all sources (labor, rental, and sales) increased from 1999 to 2000.
Additional industrial work generated 51% of the increase, while 27% of the
increase was related to commercial work and 22% was added from acquired
companies.

  Gross Profit

     Gross profit for the year ended December 31, 2000, increased 27.7% to $60.4
million from $47.3 million for the same period in 1999. Labor gross profit
(labor revenue less labor cost) increased 23.0% to $34.8 million for the year
ended December 31, 2000, as compared to the same period in 1999. Gross profit as
a percentage of revenue for the year ended December 31, 2000, increased to 22.9%
from 21.6% for the same period in 1999. These increases can be attributed to
higher gross profit achieved on labor revenue as well as a higher percentage of
the total revenue being contributed by rental revenue, which is significantly
more profitable than labor revenue.

  Selling and Administrative Expenses


     Selling and administrative expenses for the year ended December 31, 2000,
increased 24.4% to $39.2 million from $31.6 million for the same period in 1999.
Selling and administrative expenses as a percentage of revenue for the year
ended December 31, 2000, increased to 14.9% from 14.4% for the same period in
1999. Selling and administrative expenses were higher in 2000 primarily due to
additional expenses incurred of $2.6 million related to acquired companies, $1.0
million related to an increase in our bad debt provision and $1.5 million
related to payroll expenses. We incrementally increased our bad debt provision
as our revenue from commercial work increased. We do not expect a similar
increase in bad debt expense in 2001.


  Operating Income

     Operating income for the year ended December 31, 2000, increased 34.3% to
$21.1 million from $15.7 million for the same period in 1999. This increase in
operating income is directly related to increases in gross profit exceeding
increases in selling and administrative expenses.

  Interest Expense

     Interest expense for the year ended December 31, 2000, increased 15.0% to
$20.4 million from $17.8 million for the same period in 1999. In March 2000, the
Company borrowed $5.0 million against the Term B Credit Facility and in
September 2000, the Company borrowed the remaining $25.0 million available on
the Term B Credit Facility. These additional borrowings, along with the weighted
average interest rate increasing from 9.9% in 1999 to 10.2% in 2000, have caused
interest expense to increase.

  Net Income (Loss)

     Net income (loss) (before accretion of preferred stock dividends) improved
to $.8 million from ($1.9) million loss for the same period in 1999.



                                       10

<PAGE>   11

YEAR ENDED DECEMBER 31, 1999, AS COMPARED TO YEAR ENDED DECEMBER 31, 1998

REVENUE

     Revenue for the year ended December 31, 1999, increased 6.6% to $218.9
million from $205.3 million for the same period in 1998. Labor revenue increased
6.1% to $158.5 million for the year ended December 31, 1999, as compared to the
same period in 1998. Rental revenue increased 9.0% to $54.7 million for the year
ended December 31, 1999, as compared to the same period in 1998. The increase in
revenues was primarily attributable to a full year of contributions from 1998
acquisitions, 1999 acquisition contributions, and to increased activity in our
commercial scaffolding divisions. The increase in rental revenue is also
attributable to a stronger move into the commercial market.

  Gross Profit

     Gross profit for the year ended December 31, 1999, decreased 0.7% to $47.3
million from $47.6 million for the same period in 1998. Labor gross profit
(labor revenue less labor cost) increased 14.3% to $28.3 million for the year
ended December 31, 1999, as compared to the same period in 1998. Gross profit as
a percentage of revenue for the year ended December 31, 1999, decreased to 21.6%
from 23.2% for the same period in 1998. This decrease was primarily due to a
$6.8 million increase in depreciation expense for scaffolding equipment from
1998 to 1999. Depreciable lives of steel scaffold were changed from 25 years to
20 years in January 1998 and wood plank was changed from seven years to two
years in July 1998. Increased capital purchases in 1999 and 1998 also
contributed to the increase in depreciation expense.

  Selling and Administrative Expenses

     Selling and administrative expenses for the year ended December 31, 1999,
increased 6.7% to $31.6 million from $29.6 million for the same period in 1998.
Selling and administrative expenses as a percentage of revenue for the year
ended December 31, 1999, remained constant at 14.4% as compared to the same
period in 1998. The increase in selling and administrative expenses resulted
from the additional expenses related to the acquired companies. Also, eight new
salespeople were added during 1999, increasing selling and administrative
expenses.

  Operating Income

     Operating income for the period ended December 31, 1999, decreased to $15.7
million from $18.1 million for the same period in 1998. The decrease in
operating income is directly related to the increase in depreciation expense and
overhead expenses from 1998 to 1999.

  Interest Expense

     Interest expense for the year ended December 31, 1999, increased 0.2% to
$17.8 million from $17.7 million for the same period in 1998. The increase was
mainly due to a higher weighted average interest rate on all outstanding debt.
For 1999 and 1998, the weighted average interest rate was 9.9% and 9.8%,
respectively.

  Net Loss

     Net loss (before accretion of preferred stock dividends) improved to $1.9
million loss from $3.7 million loss for the same period in 1998.

  Liquidity and Capital Resources

     The Company has historically utilized internal cash flow from operations
and borrowings under the Bank Facility (see below) to fund its operations,
capital expenditures and working capital requirements. As of December 31, 2000,
the Company had working capital of $9.8 million, including cash and cash
equivalents of $3.1 million.



                                       11


<PAGE>   12

     Historically, the principal uses of cash have been capital expenditures
(primarily scaffolding) and working capital. In February 1998, $119.8 million of
the term loans were repaid with proceeds from the offering of the 10 1/4% Senior
Notes ("Senior Notes") and $500 in payments were made in June 1998. The Company
paid $13.2 million, $13.2 million, and $6.3 million in interest relating to the
Senior Notes in 2000, 1999 and 1998, respectively.

     For the years ended December 31, 2000, 1999 and 1998, cash provided by
operating activities was $23.1 million, $21.1 million, and $26.8 million,
respectively.

     The Company's capital expenditure requirements are comprised of maintenance
and expansion expenditures. Net capital expenditures for the Company were $29.1
million, $19.6 million and $14.8 million, for the years ended December 31, 2000,
1999, and 1998, respectively.

     Borrowings under the revolving loan facility are governed by a borrowing
base equal to 85% of eligible accounts receivable. A $15.0 million sub-facility
is available for the issuance of letters of credit. In addition, in March 1999,
the Company amended the Credit Agreement to allow additional borrowings of $10.0
million for ongoing working capital and general corporate needs. As of December
31, 2000, the Company had $12.3 million in unused senior secured borrowing
capacity under the Bank Facility, of which $7.9 million remains unused as of
March 2, 2001.

     The interest rate on each loan facility under the Bank Facility is
variable. During the year ended December 31, 2000, the interest rate on loans
outstanding under the term loan facility was an annual dollar-weighted rate of
10.2%. For the year ended December 31, 2000, 1999 and 1998, total payments for
interest were $18.1 million, $16.2 million, and $11.5 million, respectively.
During the year ended December 31, 2000 and 1999, $6.0 million and $5.0 million
of the term loans were repaid. During the year ended December 31, 1998, $121.3
million of the term loans were repaid of which $119.8 million was from the
proceeds of the Senior Note offering.

     The Bank Facility requires financial and operating covenants, including
among other things, that the Company maintain certain financial ratios and
satisfy certain financial tests, and imposes limitations on the Company's
ability to make capital expenditures, to incur indebtedness and to pay
dividends. The Company was in compliance with the loan covenants at December 31,
2000.

     In March 2000, the Company secured a $30.0 million Term B Loan commitment
to enable it to make future acquisitions. Certain provisions contained in the
Credit Agreement governing the Bank Facility were amended to eliminate a
requirement that revolving loans be periodically reduced. Also, certain of the
covenants contained in the Credit Agreement were amended to permit the Company
to incur certain additional indebtedness, engage in a broader range of business,
make certain additional investments and capital expenditures and reinvest asset
disposition proceeds within 180 days, rather than prepay the term loan
facilities with such proceeds. During the year ended December 31, 2000, the
total borrowings under the Term B Loan were $30.0 million and $0.2 million of
the term loans were repaid.

  Net Operating Losses

     At December 31, 2000, the Company had net operating loss carryforwards,
resulting primarily from depreciation timing differences of $96.4 million, for
federal income tax purposes. As a result of such loss carryforwards, cash paid
for income taxes in 2000 was minimal. The Company does not expect to expend cash
for taxes in the next several years.

  Effect of Inflation; Seasonality

     Inflation has not generally been a material factor affecting the Company's
business. In recent years, the cost of scaffolding equipment has remained
relatively stable due to competitive pressures within the industry. The
Company's general operating expenses, such as salaries, employee benefits and
facilities costs are subject to normal inflationary pressures.



                                       12

<PAGE>   13
     The operations of the Company are generally subject to seasonal
fluctuations coinciding with the spring and fall turnaround schedules of its
major customers.

  Recent Accounting Pronouncement

     The Company intends to adopt SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities," ("SFAS 133") which establishes accounting
and reporting standards for derivative instruments and hedging activities in
2001. The Company believes that SFAS 133 will not have a material impact on its
results of operations or financial position.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company is exposed to market risk related to changes in interest rates
and had used derivative financial instruments to manage these risks. The value
of market risk sensitive derivatives and other finance instruments is subject to
change as a result of movements in market rates and prices. Sensitivity analysis
is one technique used to evaluate these impacts. Based upon a hypothetical ten
percent change in interest rates, the potential losses in future earnings, fair
value and cash flows are not material.

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.

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

<Table>
<Caption>
                  NAME                      AGE                   POSITION AND OFFICES
                  ----                      ---                   --------------------
<S>                                         <C>    <C>
David L. Jaffe..........................    42     Chairman of the Board
John M. Monter..........................    53     Chief Executive Officer, President and Director
Ian R. Alexander........................    54     Chief Financial Officer and Vice President, Finance
Raymond L. Edwards......................    47     Vice President, Administration and Secretary
Guy S. Huelat...........................    39     Vice President, Resource Management
James "Marty" McGee.....................    44     Vice President, Operations -- Southeast Region
Scott M. Robinson.......................    53     Vice President, Operations -- Southwest Region
David R. Cichy..........................    50     Vice President, Operations -- Northern Region
Robert Bonczek..........................    55     Director
James S. Carlisle.......................    58     Director
William L. Trubeck......................    54     Director
Vincent P. Langone......................    57     Director
Karl R. Wyss............................    60     Director
</Table>

     David L. Jaffe, Chairman of the Board: David Jaffe joined CSFB in 1984 and
became a Managing Director in 1995. He has 15 years experience in investing
private equity capital, in mergers and acquisitions and in structuring and
arranging financing for leveraged transactions. He received a BA cum laude from
Harvard College in 1980 and an MBA from The Wharton School of the University of
Pennsylvania in 1984. Mr. Jaffe serves on the board of directors of Brand
Services, Inc., Duane Reade, Inc. (NYSE:DRD), Shoppers Drug Mart Inc., Target
Media Partners and Wilson Greatbatch Ltd. Mr. Jaffe previously served on the
board of Cambridge Industries Group, Inc., Terra Nova Group


                                       13

<PAGE>   14

(NYSE:TNA), Pharmaceutical Fine Chemicals S.A and several other companies. He
also serves as a director and a member of the Executive Committee of Project
A.L.S., a non-profit organization funding directed research for treatments of
Amyotrophic Lateral Sclerosis (Lou Gehrig's disease).

     John M. Monter, Chief Executive Officer, President and Director: Mr. Monter
has served as a director, Chief Executive Officer and President since the
Acquisition. Prior to joining the Company at the time of the Acquisition, Mr.
Monter held a variety of corporate and operating assignments at Cooper
Industries, Inc. ("Cooper") 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.

     Ian R. Alexander, Chief Financial Officer and Vice President, Finance:
Prior to joining the Company as Chief Financial Officer and Vice President,
Finance in April 1998, Mr. Alexander had a variety of assignments with BP Oil
Company from 1973 until 1993 in Europe, Africa and the U.S.A. He then became
Chief Financial Officer and Executive Vice President of Purina Mills, Inc. until
it was sold to Koch Industries in March 1998.

     Raymond L. Edwards, Vice President, Administration and Secretary: Mr.
Edwards joined the Company in his current role in November 1996. Prior to
joining the Company, he held a variety of management positions, most recently,
with Cooper from 1984 to 1996, including Vice President, Human Resources from
1990 to 1996.

     Guy S. Huelat, Vice President, Resource Management: Mr. Huelat joined the
Company in January 1997 in his current position. Prior to joining the Company,
Mr. Huelat was a Plant Manager from 1989 to 1994 and a Materials Manager from
1994 to 1996 at Cooper. From 1996 to 1997, he was Director of Logistics for
Planning and Customer Service for Kimble Glass, Inc.

     James "Marty" McGee, Vice President, Operations -- Southeast Region: Mr.
McGee has held his current position since the Acquisition. From 1993 until the
Acquisition, Mr. McGee held various region management positions with RIS and
Waste Management Technologies ("WMX"). Mr. McGee has been with the Company 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.

     Scott M. Robinson, Vice President, Operations -- Southwest Region: Mr.
Robinson joined the Company as Vice President, Marketing in March 1997 and in
December of 1997 he assumed the position of Vice President,
Operations -- Central Region. In January 1998 he began his current assignment
over the Southwest Region. Prior to joining the Company, Mr. Robinson held
various positions at Cooper, including Vice President, Sales from 1993 to 1997
and Vice President, Marketing from 1987 to 1993.

     David R. Cichy, Vice President, Operations -- Northern Region: Mr. Cichy
was appointed Vice President, Operations -- Northern Region in 1996. Beginning
in 1978, Mr. Cichy served in various construction management functions with RIS
including Vice President, Resource Management from 1993 to 1996.

     Robert Bonczek, Director: Mr. Bonczek has been President and a director of
ApsenTree Capital, a private money management firm since 1991, and has been a
director of the Company since the Acquisition. He is a legal consultant to
Wilmer, Cutler and Pickering. Mr. Bonczek is a director of DCV, Inc. He is also
the Chief Financial Officer and General Counsel for Trimeris, Inc., a NASDAQ
listed biotech company.

     James S. Carlisle, Director: Mr. Carlisle has been Chief Executive Officer
of Carlisle Enterprises LLC, a private equity investment firm engaged in the
acquisition and management of leveraged buyout companies since 1989, and has
been a director of the Company since the Acquisition.

     William L. Trubeck, Director: Mr. Trubeck is the Senior Vice President,
Finance and Chief Financial Officer of Waste Management, Inc. In his career, Mr.
Trubeck has held similar positions with International Multifoods, SPX
Corporation, Honeywell, Inc., and Northwest Airlines. Mr. Trubeck is a member of
the boards of directors of Yellow Corporation and Bush Brothers & Company.


                                       14

<PAGE>   15

     Vincent P. Langone, Director: Mr. Langone has been the director of the
Company since the Acquisition. He has been Chairman, President and Chief
Executive Officer of Formica Corporation since May 1998. From 1995 to 1997, Mr.
Langone served as President of Interbuild International, Inc. which provides
operational management and general consulting services. Mr. Langone is a
director of United Retail Group and Summit Bank. From 1989 to 1995, Mr. Langone
served as Chairman, President and Chief Executive Officer of Formica
Corporation.

     Karl R. Wyss, Director: Mr. Wyss is the Chairman and Chief Executive
Officer of Thermadyne Holding Corporation. Prior to joining Thermadyne, Mr. Wyss
held the position of Managing Director and Operating Partner with DLJ's Merchant
Banking Group ("DLJMB"). Prior to joining DLJMB in 1993, he was Chairman and
Chief Executive Officer of Lear Siegler Inc. from 1989 to 1993. He serves on the
boards of CommVault Systems, Inc., EZ Buy & EZ Sell Recycler Corp., Localiza
Rent A Car S.A., OSF, Inc., Manufacturer's Services Limited, Pharmaceutical Fine
Chemicals, S.A. and Von Hoffman Press, Inc.

ITEM 11. EXECUTIVE COMPENSATION

  Compensation of Directors

     Directors of the Company do not receive cash compensation for serving as
directors; however, in March 1997, pursuant to Holdings' Stock Option Plan for
Outside Directors, directors who were not employees of Holdings, the Company or
any of their institutional shareholders, were each awarded options (the
"Director Options") to purchase 40,000 shares of the common stock of Holdings.
The options vested in March 1999.

  Compensation Committee and Insider Interlocks

     Compensation of the Company's management is determined by a committee
comprised of Messrs. Jaffe, Monter and Wyss. Mr. Monter is the Chief Executive
Officer and President of the Company. In March 1997, Mr. Monter purchased
386,406 newly-issued shares of the common stock of Holdings and 17,500
newly-issued shares of preferred stock for an aggregate purchase price of
$823,905. In connection with such purchase, Holdings extended Mr. Monter a
recourse loan of $167,000, which matures in March 2002 (subject to prepayment in
the event any shares are disposed of prior to such time) and bears interest at a
rate of 7.03% per annum. The loan is secured by a pledge of the shares
purchased.

     Mr. Jaffe is a Managing Director of DLJMB, Inc., the general partner of
DLJMB. Pursuant to a shareholders agreement dated as of September 30, 1996,
between DLJMB, Carlisle, Rust, the Company, Holdings and certain other
individuals, Holdings' board consists of seven members, five of whom are
nominated by DLJMB. In addition, the shareholders agreement provides for certain
rights of first refusal in favor of DLJMB, certain rights and obligations on the
part of shareholders to participate in transfers of shares by DLJMB and
preemptive rights for DLJMB under certain circumstances. The shareholders
agreement further provides that DLJMB has the right, subject to certain
conditions, to request that Holdings register securities that they own under the
Securities Act of 1933, as amended (the "Securities Act"), and to participate in
other registrations of Holdings' and the Company's securities, in each case at
Holdings' expense.

     In addition, the shareholders agreement provides for certain advisory
relationships and the payment of management advisory fees. For five years after
the date of the shareholders agreement, Donaldson, Lufkin & Jenrette Securities
Corporation ("CSFB"), an affiliate of DLJMB, Inc., is engaged as the exclusive
financial and investment banking advisor for Holdings, on customary terms.
Pursuant to the shareholders agreement, DLJMB, Inc. receives an annual advisory
fee of $250,000 from Holdings. CSFB received customary fees in connection with
the underwriting, purchase and placement of the Senior Notes.

     DLJ Capital, the Syndication Agent and a lender under the Bank Facility is
an affiliate of DLJMB. The proceeds from the sale of the Senior Notes were used
to repay indebtedness under the Bank Facility, $1.6 million of which was owed to
DLJ Capital on the date of the Senior Note offering. In connection with an
amendment to the existing Bank Facility, the Company will pay customary fees to
DLJ Capital, as the Syndication Agent and as a lender under the Bank Facility.


                                       15

<PAGE>   16

  Executive Compensation

     The following table sets forth the compensation earned by the Chief
Executive Officer and the most highly paid executive officers for services
rendered in 2000, 1999 and 1998:

  Summary Compensation Table

<Table>
<Caption>
                                                                                         LONG-TERM
                                                 ANNUAL COMPENSATION                COMPENSATION AWARDS
                                          ----------------------------------    ----------------------------
                                                                                 SECURITIES
                                                                   OTHER         UNDERLYING      ALL OTHER
                                          SALARY      BONUS     COMPENSATION    OPTIONS/SARS    COMPENSATION
 NAME AND PRINCIPAL POSITION                ($)        ($)          ($)             (#)             ($)
 ---------------------------              ------      -----     ------------    ------------    ------------
<S>                               <C>     <C>        <C>        <C>             <C>             <C>
John M. Monter,...............    2000    388,270    417,690       15,361             --           1,700(1)
Chief Executive Officer           1999    375,000    283,263       14,452             --           1,600(1)
                                  1998    350,000    365,000        8,723             --           1,800(1)
Ian R. Alexander,.............    2000    187,470    203,585           --             --           1,700(1)
Chief Financial Officer           1999    180,253    136,157           --             --           1,600(1)
Gerald B. Curran,(2)..........    1998     86,544     63,085      115,392             --           1,800(1)
Chief Financial Officer
Raymond L. Edwards,...........    2000    155,376    171,077           --             --           1,700(1)
Vice President, Administration    1999    149,406    112,856           --             --           1,600(1)
                                  1998    140,208    155,250           --          2,000           1,491(1)
Guy S. Huelat,................    2000    144,165    160,898           --             --           1,700(1)
Vice President, Resource          1999    133,494    102,172           --             --           1,600(1)
Management                        1998    124,617    138,000        2,469          2,000           1,186(1)
Scott M. Robinson,............    2000    153,608    174,837           --             --           1,700(1)
Vice President Operations --      1999    148,408     40,000        1,454             --           1,600(1)
Southwest Region                  1998    145,368    160,792       23,233             --           1,292(1)
David R. Cichy,...............    2000    145,018    160,889        6,300             --           1,700(1)
Vice President Operations --      1999    127,213    133,269        6,058             --           1,600(1)
Northern Region
Otto K. Knoll.................    1998    145,389    166,718        6,542          2,000           1,800(1)
Vice President Operations --
Western Region
James "Marty" McGee,..........    2000    147,014    136,241           --             --           1,700(1)
Vice President Operations --      1999    140,005    106,567           --             --           1,600(1)
Southeast Region                  1998    129,816    168,641           --          1,000           1,800(1)
</Table>

-------------------------

(1) Represents the Company's matching 401(k) contributions.

(2) Mr. Curran resigned from his position as Chief Financial Officer, Vice
    President, Finance and Secretary on May 1, 1998. Mr. Curran's severance
    agreement included additional 1998 bonus payments of $32,946, one year at
    continued base salary of $150,000 and one year's continued coverage under
    the Company's medical and dental plan.


                                       16

<PAGE>   17

     The following table summarizes options exercised under the Restricted Stock
Purchase Agreement and the value of options for applicable persons named in the
Summary Compensation Table as of December 31, 2000.

<Table>
<Caption>
                                                         RSO        RSO         RSO
                                                       GRANTED    VESTED     EXERCISED
                                                       -------    ------     ---------
<S>                                                    <C>        <C>        <C>
John M. Monter.....................................    437,500    262,500     87,500
Raymond L. Edwards.................................     42,000     25,200      8,400
Guy S. Huelat......................................     42,000     25,200      8,400
Scott M. Robinson..................................     40,000     24,000      8,000
David R. Cichy.....................................     40,000     24,000      8,000
James "Marty" McGee................................     42,000     25,200      8,400
</Table>

     For each one-year period ending on December 31, the annual vesting
opportunity will be the achievement of the annual operating budget and/or
financial targets as approved by the Board of Directors.

  Employment Agreement

     Mr. Monter entered into an employment agreement with the Company on June 1,
1999, pursuant to which he serves as President and Chief Executive Officer. The
employment agreement was amended on June 30, 2000. The employment agreement
terminates on March 31, 2004, and provides for an annual salary of not less than
$390,000. Mr. Monter is also eligible for a bonus of up to 120% of his base
salary. The Company is obligated to remit the first five annual scheduled
payments of premiums in the amount of $200,000 each, on an insurance policy
pursuant to a Split-Dollar agreement entered into between the Company and Mr.
Monter. In the event the Company terminates Mr. Monter's employment without
cause or he becomes disabled, he is entitled to his (i) base salary through the
date of termination, earned bonus for prior fiscal year but not yet paid, and
any unreimbursed business expenses; (ii) base salary through the last day of the
24th month following the date of termination ("the Severance Period"); (iii)
continued coverage under the Company's welfare benefits for up to the end of the
Severance Period or such time as Mr. Monter is eligible to receive comparable
welfare benefits; and (iv) in the case of termination without cause, a bonus
equal to $39,000 multiplied by the number of months remaining in the Severance
Period. Any unvested stock options held by Mr. Monter shall vest upon a change
in control of the Company. As a part of the employment agreement, Mr. Monter 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
twelve-month period following his departure from the Company.


                                       17

<PAGE>   18

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

  Principal Stockholders

     All of the issued and outstanding common stock of the Company is held by
Holdings (and pledged to secure the Bank Facility). The following table sets
forth certain information with respect to the beneficial ownership of the common
stock of Holdings as of December 31, 2000, by (i) each person or group known to
the Company who beneficially owns more than five percent of the common stock of
Holdings and (ii) all directors and executive officers of the Company as a
group:

<Table>
<Caption>
                                                       NUMBER OF
                                                       SHARES OF           PERCENTAGE
       NAME AND ADDRESS OF BENEFICIAL OWNER           COMMON STOCK          OF CLASS
       ------------------------------------           ------------         ----------
<S>                                                   <C>                  <C>
DLJ Merchant Banking Inc. and affiliates(1).......     8,762,500              60.7%
Rust Industrial Services, Inc.(2) ("RIS").........     2,487,500              17.2%
3003 Butterfield Road
Oakbrook, Illinois 60521
Carlisle-Brand Investors, L.P.(3).................     1,250,000(4)            8.7%
7777 Fay Avenue
La Jolla, California 92037
David L. Jaffe(5).................................            --                --
DLJ Merchant Banking Inc.
277 Park Avenue
New York, New York 10172
Karl R. Wyss(5)...................................            --                --
DLJ Merchant Banking Inc.
277 Park Avenue
New York, New York 10172
James S. Carlisle(6)..............................            --                --
Carlisle Enterprises LLC
7777 Fay Avenue
La Jolla, California 92037
All directors and officers as a group(5)(6).......     1,937,803(7)           13.4%
</Table>

-------------------------
(1) Consists of shares held by DLJMB, DLJ Offshore Partners, C.V. ("Offshore"),
    DLJ Merchant Banking Funding, Inc. ("Funding") and DLJ International
    Partners, C.V. ("International"), each of which is affiliated with CSFB. See
    "Certain Relationships and Related Transactions." The address of each of
    DLJMB and Funding is 277 Park Avenue, New York, New York 10172. The address
    of each of Offshore and International is John B. Gorsivaweg, 6 Willemstad,
    Curacao, Netherlands Antilles. As a general partner of DLJMB, Offshore and
    International, DLJMB, Inc. may be deemed to beneficially own indirectly all
    of the shares held by DLJMB, Offshore and International, and as the parent
    of each of DLJMB, Inc. and Funding, Donaldson, Lufkin & Jenrette, Inc. may
    be deemed to beneficially own indirectly all of the shares held by DLJMB,
    Offshore, International and Funding.

(2) RIS is a wholly owned subsidiary of Rust International, which is majority
    owned by WMIS. As a result, WMIS and Rust International may be deemed to
    beneficially own all of the shares held by RIS. The address for each of WMIS
    and Rust International is 1001 Fannin, Houston, Texas 77002.

(3) As the general partner of Carlisle, Carlisle Group, L.P. ("Carlisle Group")
    may be deemed to beneficially own indirectly all of the shares held by
    Carlisle. As the general partner of Carlisle Group, Carlisle Enterprises,
    LLC may be deemed to beneficially own indirectly all of the shares held by
    Carlisle. The address of Carlisle Group and Carlisle Enterprises, LLC is
    7777 Fay Avenue, La Jolla, California 92037.


                                       18

<PAGE>   19

(4) Does not include (i) 47,500 shares issuable upon the exercise of currently
    exercisable options held by Carlisle Group and (ii) up to 871,250 shares
    issuable upon exercise of options held by Carlisle Group. These options are
    not currently exercisable and will not be exercisable within 60 days of the
    date of this prospectus.

(5) Mr. Jaffe is an officer of DLJMB, Inc., an affiliate of DLJMB and CSFB.
    Share data shown for Mr. Jaffe excludes shares shown as held by DLJMB and
    related investors, as to which Mr. Jaffe disclaims beneficial ownership.

(6) Mr. Carlisle is a managing partner of Carlisle Enterprises LLC, the sole
    general partner of Carlisle. Share data shown for Mr. Carlisle excludes
    shares shown as held by Carlisle, as to which Mr. Carlisle disclaims
    beneficial ownership.

(7) Does not include shares which may be purchased upon exercise of Director
    Options or options awarded pursuant to the Company's employee benefit plans,
    none of which are vested or will be exercisable within 60 days of the date
    of the prospectus.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Pursuant to the shareholders agreement dated as of September 30, 1996,
between DLJMB, Carlisle, Rust, the Company, Holdings and certain other
individuals, Holdings' board consists of seven members: five nominated by DLJMB,
one nominated by Carlisle and one nominated by RIS. The shareholders agreement
also provides for certain restrictions on transfers of Holdings' common stock.
In addition, the shareholders agreement provides for certain rights of first
refusal in favor of DLJMB, certain rights and obligations on the part of
shareholders to participate in transfers of shares by DLJMB and preemptive
rights for DLJMB, Carlisle and Rust Industrial under certain circumstances. The
shareholders agreement further provides that DLJMB, Carlisle and Rust Industrial
each have the right, subject to certain conditions, to request that Holdings
register securities that they own under the Securities Act and to participate in
other registrations of Holdings' and the Company's securities, in each case at
Holdings' expense.

     The shareholders agreement provides for certain advisory relationships and
the payment of management advisory fees. For five years after the date of the
agreement, CSFB is engaged as the exclusive financial and investment banking
advisor for Holdings, on customary terms. Pursuant to the shareholders
agreement, DLJMB, Inc., the sole general partner of DLJMB, and Carlisle Group,
the sole general partner of Carlisle, each receive an annual advisory fee of
$250 from Holdings. CSFB received customary fees in connection with the
underwriting, purchase and placement of the Senior Notes.

     Holdings has entered into a stock option agreement with Carlisle Group. The
stock option agreement gives Carlisle Group the right to acquire up to 918,750
shares of the common stock of Holdings for $1.00 per share. The exact number of
shares that may be acquired pursuant to the stock option agreement depends upon
Holdings' financial performance, equity financings by Holdings and other
factors. Carlisle Group's rights under the stock option agreement vest
progressively throughout the term of the agreement. The stock option agreement
will terminate on or, under certain circumstances, before September 30, 2006.

     DLJ Capital, the Syndication Agent and a lender under the Bank Facility, is
an affiliate of DLJMB and CSFB. The proceeds from the sale of the Senior Notes
were used to repay indebtedness under the Bank Facility, $1.6 million of which
was owed to DLJ Capital. In connection with an amendment to the existing Bank
Facility, the Company paid customary fees to DLJ Capital, as the Syndication
Agent and as a lender under the Bank Facility.

     In connection with the Acquisition, WMIS and the Company entered into a
transition services agreement. The Company provides computer support to WMIS,
and received payments of $900, $900 and $750 in 2000, 1999 and 1998,
respectively.

     In March 1997, certain officers and employees of the Company purchased a
total of 878,364 newly-issued shares of Holdings' common stock for $1.00 per
share and 42,832 shares of preferred stock for $25.00 per share. In connection
with such purchases, Holdings extended recourse loans to executive


                                       19

<PAGE>   20
officers in the aggregate amount of $341. In July 1999, Holdings extended
recourse loans to the members of the Brand Advisory Team in the amount of $515,
and received cash in the amount of $129, both of which were used as
consideration for the exercise of certain stock options of Holdings' common
stock. The 1997 and 1999 recourse loans earn interest at 7.03% and 5.22%,
respectively, and mature in 2002 and 2006, respectively. These notes are secured
by 643,500 shares owned by such officers and employees.

     In June 2000, in consideration for the purchase of stock under the Brand
2000 Incentive Stock Plan, Holdings extended loans to the members of the Brand
Advisory Team in the amount of $295 and received cash in the amount of $136. The
notes earn interest at 6.40% and mature in 2005. They are secured by 194,000
shares owned by the members of the Brand Advisory Team.


ITEM 14. 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 and Financial Statement Schedules

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

(1) Exhibits

See Index on Page E-1 of this report.

Reports filed with Form 8-K

None filed.



                                       20

<PAGE>   21
                                   SIGNATURES

         Pursuant to the requirements Section 13 or 15(d) 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 SCAFFOLD SERVICES, INC.

                                        By:  /s/ JEFFREY W. PETERSON
                                           -------------------------------
                                           Jeffrey W. Peterson
                                              Chief Financial Officer,
                                              Vice President, Finance

          Date:   August 15, 2001


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

<TABLE>
<CAPTION>


         Signature                                              Title                                      Date
         ---------                                              -----                                      ----

<S>                                       <C>                                                       <C>

   /s/  JOHN M. MONTER                     Director, Chief Executive Officer, President               August 15, 2001
------------------------------------       (Principal Executive Officer) and Chairman of
         John M. Monter                    the Board


   /S/  JEFFREY W. PETERSON                Chief Financial Officer, Vice President, Finance           August 15, 2001
------------------------------------       (Principal Financial Officer and Principal
         Jeffrey W. Peterson               Accounting Officer)


                                           Director
------------------------------------
         Ari Benacerraf

             *                             Director                                                   August 15, 2001
------------------------------------
         Robert Bonczek

             *                             Director                                                   August 15, 2001
------------------------------------
         James S. Carlisle

                                           Director
------------------------------------
         Jeffrey Draper

             *                             Director                                                   August 15, 2001
------------------------------------
         Vincent Langone

                                           Director
------------------------------------
         Karl R. Wyss


*By:  /s/  IAN R. ALEXANDER                                                                           August 15, 2001
     -------------------------------
         Ian R. Alexander
         as Attorney-in-Fact

</TABLE>
<PAGE>   22
                            EXHIBIT INDEX FOR 10-K/A


EXHIBIT INDEX



    Exhibit
    Number                         Description
    ------                         -----------

      3.1 - Certificate of Incorporation of the Registrant(1)
      3.2 - Certificate of Amendment of Certificate of Incorporation of the
            Registrant(1)
      3.3 - Amended and Restated By-Laws of Brand Services, Inc.(1)
      4.1 - Amended and Restated Certificate of Designations, Preferences and
            Rights of 14.5% Senior Exchangeable Preferred Stock due 2008 (the
            "Senior Preferred Stock")(1)
      4.2 - Amended and Restated Shareholders Agreement dated as of
            September 30, 1996, among DLJ Merchant Banking Partners, L.P., DLJ
            International Partners, C.V., DLJ Offshore Partners, C.V., DLJ
            Merchant Banking Funding, Inc., Carlisle-Brand Investors, L.P., Rust
            Industrial Services Inc., DLJ Brand Holdings, Inc. ("Holdings"),
            Brand Services, Inc. and Certain Individuals(1)
      4.3 - Stock Option Agreement dated as of March 4, 1997, between Holdings
            and Carlisle Group, L.P.(1)
      4.4 - Indenture dated as of February 25, 1998, between the Company, and
            U.S. Trust Company of Texas, N.A., as Trustee, relating to the
            Company's 10-1/4% Senior Notes due 2008 ("Senior Notes")(1)
      4.5 - Registration Rights Agreement, dated as of February 25, 1998,
            between the Company and Donaldson Lufkin & Jenrette Securities
            Corporation ("DLJSC"), as initial purchaser, relating to the
            Notes(1) 4.6 - Registration Rights Agreement dated as of March 2,
            1998, by and between the Company and DLJSC, relating to the Senior
            Preferred Stock(1)
      4.7 - Form of Indenture relating to the Company's 14.5% Senior
            Subordinated Exchange Debentures due 2008 (2)
     10.1 - Credit Agreement dated as of September 30, 1996, among Brand
            Services, Inc., the banks party thereto, DLJ Capital, as Syndication
            Agent, and Bank of America, as Administrative Agent(1)
     10.2 - Purchase Agreement dated as of February 25, 1998, by and between the
            Company and DLJSC, as initial purchaser, relating to the Senior
            Notes(1)
     10.3 - The Amended and Restated Transaction Agreement dated as of September
            18, 1996 among DLJ Merchant Banking Partners, L.P., DLJ
            International Partners, C.V., DLJ Offshore Partners, C.V., DLJ
            Merchant Banking Funding, Inc., Carlisle Enterprises, L.P.,
            Holdings, the Company, Brand Scaffold Builders, Inc., Brand Scaffold
            Rental & Erection, Inc. 702569 Alberta Ltd., Rust International
            Inc., Rust Industrial Services Inc., Rust Scaffold Services Inc.,
            Rust Scaffold Builders Inc., and Rust Scaffold & Erection Inc.(1)
     10.4 - Employment Agreement dated as of October 1, 1996, between the
            Company and John M. Monter(1)
     10.5 - Employment Agreement dated as of July 29, 1996, between the Company
            and James "Marty" McGee(1)
     10.6 - Employment Agreement dated as of July 29, 1996, between the Company
            and Ronald W. Moore(1)
     10.8 - Offer Letter dated as of March 30, 1998, between the Company and Ian
            R. Alexander(1)
       12 - Statement of Computation of Ratio of Earnings to Fixed Charges and
            Preferred Stock Dividends(3)

       21 - Subsidiaries of the Registrant(1)

       24 - Powers of Attorney(2)


(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)  Previously filed with the SEC
(3)  Filed herewith



                                        E-1

<PAGE>   23

                         INDEX TO FINANCIAL STATEMENTS


<Table>
<S>                                                             <C>
Brand Services, Inc. and Subsidiaries:
  Report of Independent Public Accountants..................    F-2
  Consolidated Statements of Operations for the years ended
     December 31, 2000, 1999, and 1998......................    F-3
  Consolidated Balance Sheets as of December 31, 2000 and
     1999...................................................    F-4
  Consolidated Statements of Cash Flows for the years ended
     December 31, 2000, 1999, and 1998......................    F-5
  Consolidated Statements of Stockholder's Equity (Deficit)
     for the years ended December 31, 2000, 1999, and
     1998...................................................    F-6
  Notes to Consolidated Financial Statements................    F-7
Financial Statement Schedules
  Schedule II - Valuation and Qualifying Accounts...........    F-18
</Table>






                                      F-1

<PAGE>   24

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Brand Services, Inc.:

     We have audited the accompanying consolidated balance sheets of Brand
Services, Inc. (a Delaware corporation) and subsidiaries as of December 31, 2000
and 1999, and the related consolidated statements of operations, stockholder's
equity (deficit) and cash flows for each of the three years in the period ended
December 31, 2000. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Brand
Services, Inc. and subsidiaries as of December 31, 2000 and 1999, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2000, in conformity with accounting principles
generally accepted in the United States.

/s/ ARTHUR ANDERSEN LLP

St. Louis, Missouri
March 2, 2001


                                      F-2

<PAGE>   25
                     BRAND SERVICES, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)


<Table>
<Caption>
                                                                    YEAR ENDED DECEMBER 31,
                                                                --------------------------------
                                                                  2000        1999        1998
                                                                  ----        ----        ----
<S>                                                             <C>         <C>         <C>
Revenues
Labor.......................................................    $189,891    $158,532    $149,411
Equipment rental............................................      67,060      54,653      50,137
Equipment sales.............................................       7,115       5,731       5,756
                                                                --------    --------    --------
     Total revenues.........................................     264,066     218,916     205,304
Operating expenses
Labor.......................................................     155,081     130,237     124,653
Equipment rental............................................      27,412      25,190      18,773
Equipment sales.............................................       4,827       4,140       4,264
Divisional operating expenses...............................      16,369      12,063       9,983
                                                                --------    --------    --------
     Total expenses.........................................     203,689     171,630     157,673
                                                                --------    --------    --------
     Gross profit...........................................      60,377      47,286      47,631
Selling and administrative expenses.........................      39,242      31,550      29,568
                                                                --------    --------    --------
     Operating income.......................................      21,135      15,736      18,063
Interest expense............................................      20,414      17,758      17,728
Interest income.............................................         (95)       (159)       (249)
                                                                --------    --------    --------
     Income (loss) before provision for income tax..........         816      (1,863)        584
Provision for income tax....................................          --          --          --
                                                                --------    --------    --------
     Income (loss) before extraordinary loss................         816      (1,863)        584
Extraordinary loss on debt extinguishment...................          --          --       4,329
                                                                --------    --------    --------
  Net income (loss).........................................         816      (1,863)     (3,745)
Less -- Accretion of preferred stock dividends..............      (6,338)     (5,497)     (4,767)
                                                                --------    --------    --------
  Net loss applicable to common stock.......................    $ (5,522)   $ (7,360)   $ (8,512)
                                                                ========    ========    ========
</Table>


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




                                      F-3

<PAGE>   26
                     BRAND SERVICES, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                    (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

<Table>
<Caption>
                                                              DECEMBER 31,    DECEMBER 31,
                                                                  2000            1999
                                                              ------------    ------------
<S>                                                           <C>             <C>
                           ASSETS
CURRENT ASSETS:
  Cash and cash equivalents.................................    $  3,139        $    244
  Trade accounts receivable, net of allowance for doubtful
     accounts of $913 in 2000, and $770 in 1999.............      46,016          37,346
  Costs and estimated earnings in excess of billings on
     uncompleted contracts..................................       3,218           1,786
  Notes receivable, current portion.........................         218             194
  Other current assets......................................       7,554           3,225
                                                                --------        --------
       Total current assets.................................      60,145          42,795
                                                                --------        --------
PROPERTY AND EQUIPMENT:
  Land......................................................       1,716           1,652
  Buildings.................................................       3,227           2,829
  Vehicles and other equipment..............................      33,076          17,634
  Scaffolding equipment.....................................     201,825         184,152
  Leasehold improvements....................................         893             704
                                                                --------        --------
       Total property and equipment, at cost................     240,737         206,971
  Less -- Accumulated depreciation and amortization.........      65,170          45,118
                                                                --------        --------
       Total property and equipment, net....................     175,567         161,853
                                                                --------        --------
OTHER ASSETS................................................      10,537           6,224
                                                                --------        --------
       Total assets.........................................    $246,249        $210,872
                                                                ========        ========
       LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
CURRENT LIABILITIES:
  Revolving loan............................................    $  4,125        $  3,960
  Current maturities of long-term debt......................       8,800           6,000
  Notes payable and capital lease obligations, current
     portion................................................       1,145             903
  Accounts payable and accrued expenses.....................      34,473          25,648
  Billings in excess of costs and estimated earnings on
     uncompleted contracts..................................       1,845             731
                                                                --------        --------
       Total current liabilities............................      50,388          37,242
                                                                --------        --------
LONG-TERM DEBT..............................................     168,525         147,500
                                                                --------        --------
NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS.................       5,131           3,499
                                                                --------        --------
DEFERRED INCOME TAXES.......................................       1,662           2,195
                                                                --------        --------
14.5% SENIOR EXCHANGEABLE PREFERRED STOCK, $0.01 par value,
  1,250,000 shares authorized, 1,042,460 issued and
  outstanding...............................................      47,742          41,404
                                                                --------        --------
STOCKHOLDER'S EQUITY (DEFICIT):
  Common stock, $0.01 par value, 100 shares authorized,
     issued and outstanding.................................          --              --
  Paid-in capital...........................................      19,723          19,369
  Receivables from sale of Holdings' common stock...........      (1,097)           (822)
  Predecessor basis adjustment..............................     (13,038)        (13,038)
  Cumulative translation adjustment.........................      (1,639)           (851)
  Accumulated deficit.......................................     (31,148)        (25,626)
                                                                --------        --------
       Total stockholder's deficit..........................     (27,199)        (20,968)
                                                                --------        --------
       Total liabilities and stockholder's deficit..........    $246,249        $210,872
                                                                ========        ========
</Table>

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


                                      F-4

<PAGE>   27
                     BRAND SERVICES, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                     YEAR ENDED DECEMBER 31,
                                                                ---------------------------------
                                                                  2000        1999        1998
                                                                  ----        ----        ----
<S>                                                             <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss).........................................    $    816    $ (1,863)   $  (3,745)
  Adjustments to reconcile net income (loss) to net cash
    provided by operating activities --
       Deferred income tax provision (benefit)..............        (339)         29          (42)
       Depreciation and amortization........................      25,964      24,491       17,234
       Extraordinary loss on debt extinguishment............          --          --        4,329
       Changes in operating assets and liabilities --
         Trade accounts receivable, net.....................      (8,134)     (5,861)      (7,813)
         Costs and estimated earnings in excess of billings
           on uncompleted contracts.........................      (1,432)        270           89
         Notes receivable...................................         190         220          253
         Other current assets...............................      (4,110)        (33)        (818)
         Scaffolding equipment..............................       4,827       4,140        4,264
         Accounts payable and accrued expenses..............       8,230       2,194        7,940
         Billings in excess of costs and estimated earnings
           on uncompleted contracts.........................       1,114         (69)          54
       Other................................................      (4,003)     (2,370)       5,008
                                                                --------    --------    ---------
              Net cash provided by operating activities.....      23,123      21,148       26,753
                                                                --------    --------    ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property and equipment.......................     (32,234)    (23,452)     (25,519)
  Receipts on note receivable from WMIS.....................          --       2,175        2,700
  Proceeds from sales of property and equipment other than
    scaffolding.............................................          43          55           43
  Payments for acquisitions.................................     (10,955)     (1,875)      (2,100)
                                                                --------    --------    ---------
              Net cash used for investing activities........     (43,146)    (23,097)     (24,876)
                                                                --------    --------    ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from long-term debt..............................      30,000          --      130,000
  Payments of long-term debt................................      (6,175)     (5,000)    (121,250)
  Borrowings (payments) of revolving loans..................         165       3,960       (4,500)
  Payments on notes payable and capital lease obligations...      (1,426)       (605)        (438)
  Debt issuance financing costs.............................          --          --       (4,829)
  Capital contribution from Holdings........................         354         713           48
                                                                --------    --------    ---------
              Net cash provided by (used for) financing
                activities..................................      22,918        (932)        (969)
                                                                --------    --------    ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............    $  2,895    $ (2,881)   $     908
CASH AND CASH EQUIVALENTS, beginning of period..............         244       3,125        2,217
                                                                --------    --------    ---------
CASH AND CASH EQUIVALENTS, end of period....................       3,139    $    244    $   3,125
                                                                ========    ========    =========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
  Interest paid.............................................    $ 17,904    $ 16,008    $  11,469
  Income taxes paid.........................................          --          --           --
NONCASH TRANSACTIONS:
  Paid in-kind accretion of preferred stock dividends.......    $  6,338    $  5,497    $   4,767
  Notes payable, issued in connection with acquisitions.....       3,300         200          700
  Purchase of equipment with capital lease..................         289          --        4,400
</Table>

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


                                      F-5

<PAGE>   28

                     BRAND SERVICES, INC. AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)
                      (IN THOUSANDS EXCEPT SHARE AMOUNTS)
<Table>
<Caption>
                                                                 RECEIVABLES
                                                                 FROM SALE OF
                                   COMMON STOCK     ADDITIONAL    HOLDING'S     PREDECESSOR                 CUMULATIVE
                                 ----------------    PAID IN        COMMON         BASIS      ACCUMULATED   TRANSLATION
                                 SHARES   DOLLARS    CAPITAL        STOCK       ADJUSTMENT      DEFICIT     ADJUSTMENT     TOTAL
                                 ------   -------   ----------   ------------   -----------   -----------   -----------    -----
<S>                              <C>      <C>       <C>          <C>            <C>           <C>           <C>           <C>
Balance, December 31, 1997....    100       $--      $18,477       $  (336)      $(13,038)     $ (9,754)      $  (525)    $ (5,176)
Comprehensive loss
  Net loss....................     --        --           --            --             --        (3,745)           --       (3,745)
  Translation adjustment......     --        --           --            --             --            --          (843)        (843)
Comprehensive loss............
Capital contribution from DLJ
  Brand Holdings, Inc.........     --        --           48            --             --            --            --           48
Paid-in-kind accretion of
  preferred dividends.........     --        --           --            --             --        (4,767)           --       (4,767)
                                  ---       ---      -------       -------       --------      --------       -------     --------
Balance, December 31, 1998....    100       $--      $18,525       $  (336)      $(13,038)     $(18,266)      $(1,368)    $(14,483)
                                  ===       ===      =======       =======       ========      ========       =======     ========

Balance, December 31, 1998....    100       $--      $18,525       $  (336)      $(13,038)     $(18,266)      $(1,368)    $(14,483)
Comprehensive loss
  Net loss....................     --        --           --            --             --        (1,863)           --       (1,863)
  Translation adjustment......     --        --           --            --             --            --           517          517
Comprehensive loss............
Paid-in-capital from exercise
  of stock options............     --        --          131            --             --            --            --          131
Issuance of promissory notes
  from officers and
  employees...................     --        --           --          (486)            --            --            --         (486)
Capital contribution from DLJ
  Brand Holdings, Inc.........     --        --          713            --             --            --            --          713
Paid-in-kind accretion of
  preferred dividends.........     --        --           --            --             --        (5,497)           --       (5,497)
                                  ---       ---      -------       -------       --------      --------       -------     --------
Balance, December 31, 1999....    100       $--      $19,369       $  (822)      $(13,038)     $(25,626)      $  (851)    $(20,968)
                                  ===       ===      =======       =======       ========      ========       =======     ========

Balance, December 31, 1999....    100       $--      $19,369       $  (822)      $(13,038)     $(25,626)      $  (851)    $(20,968)
Comprehensive income
  Net income..................     --        --           --            --             --           816            --          816
  Translation adjustment......     --        --           --            --             --            --          (788)        (788)
Comprehensive income..........
Issuance of promissory notes
  from officers and
  employees...................     --        --           --          (275)            --            --            --         (275)
Capital contribution from DLJ
  Brand Holdings, Inc.........     --        --          354            --             --            --            --          354
Paid-in-kind accretion of
  preferred dividends.........     --        --           --            --             --        (6,338)           --       (6,338)
                                  ---       ---      -------       -------       --------      --------       -------     --------
Balance, December 31, 2000....    100       $--      $19,723       $(1,097)      $(13,038)     $(31,148)      $(1,639)    $(27,199)
                                  ===       ===      =======       =======       ========      ========       =======     ========

<Caption>

                                COMPREHENSIVE
                                   INCOME
                                   (LOSS)
                                -------------
<S>                             <C>
Balance, December 31, 1997....
Comprehensive loss
  Net loss....................     $(3,745)
  Translation adjustment......        (843)
                                   -------
Comprehensive loss............     $(4,588)
                                   =======
Capital contribution from DLJ
  Brand Holdings, Inc.........
Paid-in-kind accretion of
  preferred dividends.........
Balance, December 31, 1998....
Balance, December 31, 1998....
Comprehensive loss
  Net loss....................     $(1,863)
  Translation adjustment......         517
                                   -------
Comprehensive loss............     $(1,346)
                                   =======
Paid-in-capital from exercise
  of stock options............
Issuance of promissory notes
  from officers and
  employees...................
Capital contribution from DLJ
  Brand Holdings, Inc.........
Paid-in-kind accretion of
  preferred dividends.........
Balance, December 31, 1999....
Balance, December 31, 1999....
Comprehensive income
  Net income..................     $   816
  Translation adjustment......        (788)
                                   -------
Comprehensive income..........     $    28
                                   =======
Issuance of promissory notes
  from officers and
  employees...................
Capital contribution from DLJ
  Brand Holdings, Inc.........
Paid-in-kind accretion of
  preferred dividends.........
Balance, December 31, 2000....
</Table>

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


                                      F-6

<PAGE>   29

                     BRAND SERVICES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        (IN THOUSANDS EXCEPT SHARE DATA)

1. ORGANIZATION AND BUSINESS:

     Brand Services, Inc. (a Delaware corporation) and its subsidiaries (the
"Company" or "Brand") are 100% owned by DLJ Brand Holdings, Inc. ("Holdings").
Holdings is owned 60.7% by Credit Suisse First Boston (USA) Inc. ("CSFB"), 8.7%
by Carlisle Enterprises, L.P. ("Carlisle"), 17.2% by Rust International Inc.
("Rust International") through its wholly owned subsidiary, Rust Industrial
Services Inc. ("RIS"), and 13.4% by the directors, officers and employees of the
Company. Rust International is a subsidiary of Waste Management Industrial
Services, Inc. ("WMIS").

     On September 30, 1996, Brand, a newly formed entity created by the merchant
banking group of Donaldson, Lufkin and Jenrette, Inc. ("DLJ"), purchased the
assets of Rust Scaffold Services, Inc. and its subsidiaries, which were direct
and indirect subsidiaries of Rust International ("the Acquisition"). The
Acquisition was financed by $190.0 million in debt and accounted for under the
purchase method of accounting.

     In September 1999, with unanimous consent of the Board of Directors, the
name of the corporation and the Certificate of Incorporation were changed from
Brand Scaffold Services, Inc. to Brand Services, Inc., effective January 1,
2000.

     The Company operates in one segment and provides scaffolding services
primarily to refining, chemical, petrochemical, 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 13%, 13%, and 15% of revenue for the years ended
December 31, 2000, 1999, and 1998, respectively.

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

     The Company recognizes contract revenue using the percentage-of-completion
method, with losses recognized in full when identified. Changes in project
performance and conditions, estimated profitability and final contract
settlements may result in future revisions to costs and income. Substantially
all of the


                                      F-7

<PAGE>   30

Company's contracts are completed in less than six months. Other revenues are
recognized when the services are performed.

  Rental and Sales of Scaffolding

     For the years ended December 31, 2000, 1999 and 1998, revenues from the
rental of scaffolding were $67,060, $54,653, and $50,137, respectively.

     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. Revenues and gross
profit from sales of scaffolding were $7,115 and $2,288, respectively, for the
year ended December 31, 2000, $5,731 and $1,591, respectively, for the year
ended December 31, 1999, and $5,757 and $1,493, respectively, for the year ended
December 31, 1998.

  Cash and Cash Equivalents

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

  Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts

     Costs and estimated earnings in excess of billings represent work performed
which either due to contract stipulations or lacking contractual documentation
needed, 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 the estimated useful lives on the
straight-line method as follows:

<Table>
<S>                                       <C>
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
</Table>

     For the years ended December 31, 2000, 1999, and 1998, depreciation expense
was $24,502, $23,488, and $16,449, respectively.

  Deferred Financing Costs

     The Company deferred financing costs of $6.6 million in connection with the
Acquisition. In 1998, the Company recorded an extraordinary loss of $4.3 million
to write off all but $1.4 million of these deferred financing costs. These
remaining deferred financing costs are being amortized over 10 years. In
connection with the February 1998 issuance of 10 1/4% Senior Notes, ("Senior
Notes") the Company incurred financing fees and expenses of $5.0 million, which
were deferred and are being amortized over 10 years. For the years ended
December 31, 2000, 1999, and 1998, amortization expense related to deferred
financing costs was $731, $722, and $725, respectively. Accumulated amortization
related to the deferred financing costs associated with the Senior Notes was
$2,387 and $1,656 as of December 31, 2000 and 1999, respectively.


                                      F-8

<PAGE>   31

  Derivative Financial Instruments

     The Company had used an interest rate collar to hedge its exposure to
interest rate fluctuations. The collar had the effect of establishing a maximum
and a minimum interest rate on a portion of the Company's underlying variable
rate debt obligations. The maximum and minimum interest rates associated with
the interest rate collar were 8.50% and 5.69%, respectively. In 1998, the
Company recorded an expense of $599 related to this interest rate collar. The
interest rate collar expired on March 31, 2000 and no other hedge agreements
have been entered into since that time.

  Asset Impairment

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

  Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts

     Billings in excess of costs and estimated earnings on uncompleted contracts
represent amounts collected from customers at a faster rate than the work is
performed on these contracts. Substantially all of the costs related to these
amounts will be incurred within one year.

  Foreign Operations

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

3. NOTES RECEIVABLE:

     Notes receivable result from scaffolding sales. As of December 31, 2000 and
1999, $481 and $671, respectively, of such notes maturing in two to four years
were outstanding with interest rates ranging from 8.5% to 9.0%, and 8.5% to
9.0%, respectively.

4. OTHER ASSETS:

     Other assets consists of the following at December 31:

<Table>
<Caption>
                                                                 2000       1999
                                                                 ----       ----
<S>                                                             <C>        <C>
Deferred financing costs, net...............................    $ 4,048    $4,779
Notes receivable, net of current portion....................        263       477
Goodwill, net of accumulated amortization of $626 in 2000,
  and $84 in 1999...........................................      5,716       276
Non-compete agreement.......................................        510       692
                                                                -------    ------
                                                                $10,537    $6,224
                                                                =======    ======
</Table>

     Goodwill is amortized using the straight-line method over five years.
Amortization expense related to goodwill was $542, $96 and $12 for the years
ended December 31, 2000, 1999 and 1998, respectively. Amortization expense
related to the non-compete agreement was $182, $185 and $48 for the years ended
December 31, 2000, 1999 and 1998, respectively.


                                      F-9

<PAGE>   32

5. INCOME TAXES:

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

     For the years ended December 31, 2000, 1999, and 1998, such provision
consisted of a deferred domestic tax (benefit) of ($666), ($29), and ($238),
current foreign tax expense (benefit) of $339, ($29), and $42, and deferred
foreign tax expense of $327, $58, and $196, respectively.

     The reconciliation of the statutory federal income tax expense (benefit) on
the Company's pretax income (loss) to the actual provision for income taxes for
the years ended December 31, 2000, 1999, and 1998 are as follows:

<Table>
<Caption>
                                                           2000    1999      1998
                                                           ----    ----      ----
<S>                                                        <C>     <C>      <C>
Statutory federal income taxes.........................    $278    $(633)   $(1,333)
State and local taxes, net of federal..................     (33)     (95)      (251)
Foreign taxes..........................................     151        7         54
Valuation allowance....................................    (541)     604      1,240
Other..................................................     145      117        290
                                                           ----    -----    -------
     Provision for income tax..........................    $ --    $  --    $    --
                                                           ====    =====    =======
</Table>

     The components of the net deferred income tax liability as of December 31,
2000, and 1999, are as follows:

<Table>
<Caption>
                                                               2000        1999
                                                               ----        ----
<S>                                                          <C>         <C>
Deferred tax assets:
  Accrued liabilities....................................    $  4,271    $  3,567
  Property and equipment.................................       1,791       2,638
  Net operating loss carryforward........................      38,569      35,491
  Valuation allowance....................................      (8,726)     (9,267)
                                                             --------    --------
       Deferred tax assets...............................      35,905      32,429
                                                             --------    --------
Deferred tax liabilities:
  Property and equipment.................................     (37,567)    (34,624)
                                                             --------    --------
       Deferred tax liabilities..........................     (37,567)    (34,624)
                                                             --------    --------
Deferred income tax liability............................    $ (1,662)   $ (2,195)
                                                             ========    ========
</Table>

     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.
As of December 31, 2000, the valuation allowance of $8,726 was recorded, which
decreased $541 for the year ended December 31, 2000. As of December 31, 1999, a
valuation allowance of $9,267 was recorded, which increased $604 for the year
ended December 31, 1999.

     At December 31, 2000, the Company had net operating loss carryforwards, for
federal income tax purposes, of $96,425 which expire in various years between
2011 and 2020.


                                      F-10

<PAGE>   33

6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

     The major components of accounts payable and accrued expenses as of
December 31, 2000 and 1999, are as follows:

<Table>
<Caption>
                                                               2000        1999
                                                               ----        ----
<S>                                                          <C>         <C>
Accounts payable.........................................    $  6,732    $  3,896
Payroll and related accruals.............................       9,776       6,137
Workers compensation and health benefit liabilities......      10,675       8,947
Accrued interest.........................................       5,143       5,230
Other....................................................       2,147       1,438
                                                             --------    --------
                                                             $ 34,473    $ 25,648
                                                             ========    ========
</Table>

7. NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS:

     Notes payable and capital lease obligations as of December 31, 2000 and
1999, are as follows:

<Table>
<Caption>
                                                               2000        1999
                                                               ----        ----
<S>                                                          <C>         <C>
Notes payable............................................       3,607    $    935
Capital lease obligations................................       2,669       3,467
                                                             --------    --------
                                                                6,276       4,402
Less- Current portion....................................       1,145         903
                                                             --------    --------
                                                             $  5,131    $  3,499
                                                             ========    ========
</Table>

     Notes payable consist of several promissory notes with interest rates of
8.5%. Future principal payments total $1,014 for 2001, $814 for 2002, $789 for
2003, $660 for 2004 and $330 for 2005.

8. DEBT AND BORROWING ARRANGEMENTS:

     At December 31, 2000 and 1999, long-term debt consisted of the following:

<Table>
<Caption>
                                                               2000        1999
                                                               ----        ----
<S>                                                          <C>         <C>
Term loans...............................................    $ 51,450    $ 27,460
Senior Notes.............................................     130,000     130,000
                                                             --------    --------
                                                              181,450     157,460
Less- Current portion....................................      12,925       9,960
                                                             --------    --------
  Long-term debt.........................................    $168,525    $147,500
                                                             ========    ========
</Table>

     In 1996, in connection with the Acquisition, the Company entered into a
Credit Agreement ("Credit Agreement") which provided for Term Loan Commitments,
including Revolving Loans, ("Term Loans") under Senior Secured Credit facilities
totaling $160.0 million, and a Revolving Loan Commitment totaling $30.0 million.
In February 1998, the Company issued $130.0 million of Senior Notes due February
2008. The offering was underwritten by DLJ. The proceeds of this offering were
used to repay $120.0 million of the Term Loans outstanding under the Credit
Agreement. In addition, in February 1998, the Company amended the Credit
Agreement to reduce the total facility to $60.0 million. In March 2000, the
Company also secured a $30.0 million Term B Loan commitment to enable the
Company to make further acquisitions. This amendment included revisions to
certain covenant requirements. As of December 31, 2000, the Company had borrowed
$30.0 million under the Term B loan commitment. In connection with the Credit
Agreement, the Company incurred administrative and commitment fees, included in
interest expense, of $154, $183, and $208 for the years ended December 31, 2000,
1999, and 1998, respectively.


                                      F-11

<PAGE>   34

     Maturities of debt as of December 31, 2000, are as follows:

<Table>
<Caption>
YEAR
----
<S>                                                             <C>
2001........................................................    $ 12,925
2002........................................................       9,300
2003........................................................      29,225
2004........................................................          --
2005........................................................          --
Thereafter..................................................     130,000
                                                                --------
                                                                $181,450
                                                                ========
</Table>

     Interest rates are determinable under the Credit Agreement based upon
certain market "Base Rates" or LIBOR, plus an "Applicable Margin" between 1.75%
to 3.50%. The Applicable Margins for Tranche B and Tranche C loans are fixed
while those for Tranche A loans ($17,500, $23,500, and $28,500, as of December
31, 2000, 1999, and 1998, respectively), vary, based generally on earnings
performance. The average interest rate under Term Loans in effect during the
years ended December 31, 2000, 1999, and 1998 was 10.20%, 9.87%, and 9.80%,
respectively. The interest rate at December 31, 2000 was 11.25%. Interest
expense on the Term Loans and the Senior Notes for the years ended December 31,
2000, 1999, and 1998 was $16,691, $15,499, and $17,060, respectively.

     Revolving loan commitments equal an amount based upon an eligible borrowing
base, as defined, with a maximum available limit of $30.0 million. The loan
expires September 30, 2002, and interest rates are based on certain market "Base
Rates" or LIBOR plus a margin of between 1.75% and 3.50% (generally based on
earnings performance). At December 31, 2000 and 1999, the available borrowing
base (which is net of outstanding borrowings) was $12,345 and $12,654,
respectively. As of December 31, 2000 and 1999, amounts borrowed under the
revolving loan were $4,125 and $3,960, respectively. Interest expense on the
revolving loan for the years ended December 31, 2000, 1999 and 1998 was $1,213,
$509 and $100, respectively.

     Substantially all assets of the Company are pledged as collateral for the
Credit Agreement. In addition, the Company is required to comply with various
affirmative and negative covenants in the Credit Agreement, including financial
covenants requiring certain levels of net worth to be maintained and the
achievement of certain financial ratios. The Company was in compliance with the
various affirmative and negative covenants at December 31, 2000.

     As part of the Acquisition, the Company issued a Subordinated Note
("Subordinated Note") to Rust International totaling $14.5 million due 2008. The
Subordinated Note was recorded at its fair value of $4.8 million, assuming an
effective interest rate of 18.00% per annum. On September 30, 1996, Holdings
assumed all obligations under the Subordinated Note by making a capital
contribution to the Company of $4.8 million, which is included in paid-in
capital of the Company. Because Holdings has no revenue generating activities,
other than its ownership of the Company, it is likely that the Company's cash
flows will service all or part of Holding's obligation under the Subordinated
Note. Subject to certain conditions, Holdings has the option of paying interest,
calculated annually, through the issuance of additional subordinated notes in
lieu of cash. Additionally, based on Holdings' financial performance, the
Subordinated Note's interest and principal payments may be delayed or
accelerated. The fair market value of the Subordinated Note is approximately
$3.2 million and $6.2 million as of December 31, 2000 and 1999, respectively. No
principal or interest cash payments were made during 2000 or 1999.

9. LEASE OBLIGATIONS:

     The Company leases a portion of its operating and office facilities under
operating leases. For the years ended December 31, 2000, 1999 and 1998, rent
expense was $2,564, $1,735, and $1,538, respectively. The Company leases certain
scaffolding equipment under capital leases. The net book value of the


                                       F-12

<PAGE>   35

scaffolding equipment under capital lease was $2,746 and $3,398, as of December
31, 2000 and 1999, respectively.

     The future minimum lease payments under noncancelable leases as of December
31, 2000, are as follows:

<Table>
<Caption>
                                                                CAPITAL    OPERATING
YEAR                                                             LEASES      LEASES
----                                                            -------    ---------
<S>                                                             <C>        <C>
2001........................................................    $1,069      $2,623
2002........................................................     1,069       2,149
2003........................................................       858       1,498
2004........................................................        --       1,067
2005........................................................        --         832
Thereafter..................................................        --       1,190
                                                                ------      ------
Total minimum lease payments................................    $2,996      $9,359
                                                                            ======
Less -- Imputed interest component..........................       327
                                                                ------
Present value of net minimum lease payments.................    $2,669
                                                                ======
</Table>

10. 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.

     The Company has available Letter of Credit Commitments in an amount not to
exceed $15.0 million, of which $13.5 million, $9.5 million, and $8.0 million was
outstanding with a bank at December 31, 2000, 1999 and 1998, respectively. For
the years ended December 31, 2000, 1999 and 1998, the Company paid fees related
to such commitments (included in interest expense) of $315, $285, and $216,
respectively.

11. SENIOR EXCHANGEABLE PREFERRED STOCK:

     The Company has authorized 1,250,000 shares and has issued and outstanding
1,042,460 of Senior Exchangeable Preferred Stock (the "Senior Preferred Stock").
The Senior Preferred Stock is mandatorily redeemable on March 31, 2008, at a
redemption price equal to aggregate liquidation value plus unpaid dividends. The
liquidation value of each share of Senior Preferred Stock is $25.00 at issuance.
Dividends are calculated quarterly on the liquidation value of such shares at
14.5% annually. For the five-year period ended September 30, 2001, such
dividends accrete on a compounded basis and increase the liquidation value. For
the years ended December 31, 2000, 1999, and 1998, dividends of $6,338, $5,497,
and $4,767, respectively, were accreted. As a result, the loss attributable to
common stockholders for the years ended December 31, 2000, 1999, and 1998, was
$5,522, $7,360 and $8,512, respectively.

     The Senior Preferred Stock carries no voting rights, but its holders have
certain defined rights upon certain events occurring. In the event of a change
in control of the Company, each holder of Senior Preferred Stock will have the
right to require the Company to repurchase its shares at 101% of the liquidation
value. The Company may redeem the Senior Preferred Stock at certain premiums to
the liquidation value at any time after September 30, 2001. Additionally, at the
option of the Company, the Senior Preferred Stock is exchangeable into 14.5%
Subordinated Exchange Debentures due 2008.

12. STOCKHOLDER'S EQUITY (DEFICIT):

     The Company has authorized, issued and outstanding 100 shares of $.01 par
value common stock. All of the common stock of the Company is owned by Holdings.


                                       F-13

<PAGE>   36

13. PARENT COMPANY TRANSACTIONS:

     Holdings has authorized 15,000,000 shares and issued and outstanding
14,437,803 shares of $.01 par value common stock.

     As part of the Acquisition, on September 30, 1996, Holdings and Carlisle
agreed upon a grant of options to Carlisle ("Carlisle Options") to acquire
918,750 shares of Holdings' common stock. The Carlisle Options fall into three
categories, each with different vesting terms: time based, performance based,
and path dependent (for which vesting is contingent upon certain measurements of
the value of the Company). Substantially all of the value of the Carlisle
Options was considered a cost of the Acquisition and pushed down to the
Company's financial statements.

     In 2000, 1999, and 1998, Holdings made capital contributions to the Company
of $354, $713 and $48, respectively, representing cash and notes received by the
Company from the sale of Holdings' common stock to certain directors, officers
and employees of the Company. At December 31, 2000 and 1999, certain officers
and employees of the Company have outstanding promissory recourse notes in the
aggregate amount of $1,097 and $822, respectively, which were issued to the
Company as consideration for a portion of the above Holdings' common stock.
These notes earn interest at a rate between 5.22% and 7.03% and mature between
2002 and 2006. As of December 31, 2000 and 1999, these notes are secured by
837,500 and 643,500 shares owned by such officers and employees, respectively.

     In 1997, the Board of Directors of Holdings approved a stock option plan
("the Plan") for key employees of the Company. During 1998 and 1997, Holdings
granted certain employees options to acquire 109,000 and 963,500 shares of
Holding's common stock, respectively. These options were granted with an
exercise price of $1.00 per share, which management believes approximated the
fair value of Holdings' common stock at the date of grant. During 2000, Holdings
granted certain members of the Board of Directors options to acquire 25,000
shares of Holdings common stock. The options vest over a maximum of ten years
and a minimum of five years provided certain performance criteria are met.
Unvested options are subject to forfeiture, upon employee termination, as
defined in the Plan. Additionally, any shares acquired upon exercise are subject
to repurchase rights of the Company upon termination of employment, as defined
in the Plan. Upon a change of control, as defined in the Plan, all unvested
options will vest. The weighted average exercise price for the options
outstanding in 2000, 1999, and 1998 is $1.03, $1.00 and $1.00, respectively.

     Stock option transactions under the Plan for 2000, 1999, and 1998 are
summarized below:

<Table>
<Caption>
                                                     2000         1999         1998
                                                   NUMBER OF    NUMBER OF    NUMBER OF
                                                    SHARES       SHARES       SHARES
                                                   ---------    ---------    ---------
<S>                                                <C>          <C>          <C>
Options outstanding at beginning of year.......     269,800     1,013,500      963,500
Options granted................................      25,000            --      109,000
Options canceled...............................       9,750        98,000       59,000
Options exercised..............................       1,000       645,700           --
                                                    -------     ---------    ---------
Options outstanding at end of year.............     284,050       269,800    1,013,500
                                                    -------     ---------    ---------
Exercisable at end of year.....................     201,500       160,020      364,300
                                                    =======     =========    =========
</Table>

     The Company adopted the disclosure-only provisions under SFAS 123
"Accounting for Stock Based Compensation" ("SFAS 123"). The Company accounts for
employee stock options under APB Opinion 25, as permitted under generally
accepted accounting principles. Accordingly, no compensation cost has been
recognized in the accompanying financial statements related to these options.
Had


                                       F-14

<PAGE>   37

compensation cost for these options been determined consistent with SFAS 123,
the Company's net income (loss) would reflect the following for the year ended
December 31:

<Table>
<Caption>
NET INCOME (LOSS)                                        2000     1999       1998
-----------------                                        ----     ----       ----
<S>                                                      <C>     <C>        <C>
As reported..........................................    $816    $(1,863)   $(3,745)
Pro forma............................................     787     (1,916)    (3,786)
</Table>

     The fair value of each option is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions for the 2000 stock options: dividend yield of 0%, expected
volatility of 0%, risk-free interest rate of 6.1% and an expected life of ten
years. For the 1998 stock option grant, the following weighted-average
assumptions were used: dividend yield of 0%, expected volatility of 0%,
risk-free interest rate of 6.5% and an expected life of seven years. The fair
value of the options granted in 2000 and 1998 were $0.87 and $0.44 per option,
respectively.

     In accordance with the Shareholder's Agreement of Holdings, in the event
any shareholder desires to transfer any shares of Holdings to a third party
prior to September 30, 2001, such shareholders must first offer such shares to
the other shareholders. Also, certain shareholders engaged in a transfer of
shares to a third party have the right to compel the other shareholders to sell
a proportionate share of their holdings to the third party, as defined.

14. RELATED-PARTY TRANSACTIONS:

     Certain shareholders of Holdings receive a quarterly Management Advisory
Fee in return for management, advisory and other services rendered. Such fees
totaled $500, $500 and $500, for the years ended December 31, 2000, 1999, and
1998, respectively.

     In connection with the Acquisition, the Company entered into a Transitional
Services Agreement with WMIS and Rust International. In consideration of certain
services to be rendered by the Company and the licenses and preferred customer
status granted by the Company, WMIS paid to the Company $725 per quarter through
September 30, 1999 ($8.7 million in total). The Company recorded $7,438 as a
note receivable from WMIS in purchase accounting. The payments were being
accounted for as a reduction to the Company's operating expenses in the period
the aforementioned services were provided. For the year ended December 31, 1999,
the Company received $2,175. In addition, the Company provides computer support
to WMIS and received payments of $900, $900 and $750, for the years ended
December 31, 2000, 1999 and 1998, respectively, for such services.

15. EMPLOYEE BENEFIT PLAN:

     In 1997, the Company established the Brandshare 401(k) Savings Plan and
Profit Sharing Plan ("401(k) Plan"). Substantially all employees are eligible to
participate in the Plan. Participants may elect to defer 2% to 15% of their
salary. The Company, at its sole discretion, may make matching contributions to
the 401(k) Plan. For the years ended December 31, 2000, 1999, and 1998, the
Company expensed $383, $359, and $345 respectively, for contributions to the
401(k) Plan.

16. FAIR VALUES OF FINANCIAL INSTRUMENTS:

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

     Cash and Cash Equivalents -- The carrying amounts approximate fair value.

     Notes Receivable -- The fair value of notes receivable are based on
discounted future cash flows at current interest rates.

     Revolving Loan -- The carrying amounts of the borrowings under the Credit
Agreement approximate their fair value because such borrowings carry variable
interest rates.


                                      F-15

<PAGE>   38
     Term Loans -- The carrying amounts of the term loans approximate their fair
value because such loans carry variable interest rates.

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

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

     14.5% Senior Exchangeable Preferred Stock -- The liquidation value
approximates fair value.

     The carrying amounts and fair values of the Company's financial instruments
at December 31, 2000 and 1999, are as follows:

<Table>
<Caption>
                                                 2000                  1999
                                          -------------------   -------------------
                                          CARRYING     FAIR     CARRYING     FAIR
                                           AMOUNT     VALUE      AMOUNT     VALUE
                                          --------    -----     --------   --------
<S>                                       <C>        <C>        <C>        <C>
Cash and cash equivalents...............  $  3,139   $  3,139   $    244   $    244
Notes receivable........................       481        481        671        671
Revolving loan..........................     4,125      4,125      3,960      3,960
Term loans..............................    47,325     47,325     23,500     23,500
Senior notes............................   130,000    117,650    130,000    118,300
Notes payable and capital lease
  obligations...........................     6,276      6,276      4,402      4,402
14.5% senior exchangeable preferred
  stock.................................    47,742     31,274     41,404     29,189
</Table>

17. ACQUISITIONS:

     During 2000, the Company acquired four companies in four separate
transactions for an aggregate purchase price of $11.0 million in cash, $3.3
million in notes payable, and $3.0 million of possible future payments
conditioned upon the operating results of two of the acquired companies. The
purchase prices, allocated to assets and liabilities assumed, were based on
relative fair values. In connection with the acquisitions, the Company recorded
goodwill in the amount of $6.0 million based upon the allocation of the purchase
prices of the acquisitions. All of the above acquisitions were accounted for
using the purchase method of accounting, and accordingly have been included in
the financial statements from their respective dates of acquisition. The
allocation of the purchase price for the acquisitions acquired during 2000 are
based, in part, on preliminary information, which is subject to adjustment upon
obtaining complete valuation information. Management believes that finalization
of the purchase prices and allocation will not have a material impact on the
consolidated results of operations or financial position of the Company.


     Summarized pro forma consolidated results of operations as if the
acquisitions made during 2000 had occurred as of January 1, 1999 follows. Pro
forma adjustments include only the effects of events directly attributable to
the transactions that are expected to have a continuing impact and that are
factually supportable. The pro forma amounts contained in the table below
include adjustments for amortization, interest expense, and certain other
adjustments (in thousands):



<Table>
<Caption>
                                                     YEAR ENDED           YEAR ENDED
                                                    DECEMBER 31,         DECEMBER 31,
                                                        2000                 1999
                                                    ------------         ------------
                                                     (UNAUDITED)          (UNAUDITED)
<S>                                               <C>                  <C>
Revenue.......................................        $268,594             $232,241
Net income (loss).............................        $    768             $ (2,889)
</Table>



The unaudited pro forma financial information does not purport to be indicative
of the consolidated results of operations had these transactions been completed
as of the assumed date or which may be obtained in the future.


     In 1999, the Company acquired two companies in two separate transactions
for an aggregate purchase price of $1.9 million in cash and $200 in notes
payable. The purchase prices, allocated to assets and liabilities assumed, were
based on relative fair values. These acquisitions were accounted for using the


                                      F-16

<PAGE>   39
purchase method of accounting, and accordingly have been included in the
financial statements from their respective dates of acquisition.

     In 1998, the Company acquired two companies in two separate transactions
for an aggregate purchase price of $2.1 million in cash and $700 in notes
payable. The purchase prices, allocated to assets and liabilities assumed, were
based on relative fair values. These acquisitions were accounted for using the
purchase method of accounting, and accordingly have been included in the
financial statements from their respective dates of acquisition.

18. RECENT ACCOUNTING PRONOUNCEMENT:

     The Company intends to adopt SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities," ("SFAS 133") which establishes accounting
and reporting standards for derivative instruments and hedging activities in
2001. The Company believes that SFAS 133 will not have a material impact on its
results of operations or financial position.


                                      F-17

<PAGE>   40
                      BRAND SERVICES, INC. AND SUBSIDIARIES


                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                FOR YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                               Additions and
                                                                Balance at      Charges to                   Balance at
                                                                Beginning        Costs and                     End of
           Description                                          Of Period        Expenses       Write-offs     Period
           -----------                                          ---------        --------       ----------     ------
<S>                                                             <C>            <C>              <C>          <C>
December 31, 2000:
Allowance for doubtful accounts                                 $ 770           $ 1,560          $ (1,417)       $ 913

December 31, 1999:
Allowance for doubtful accounts                                   812               540              (582)         770

December 31, 1998:
Allowance for doubtful accounts                                 1,000               423              (611)         812
</TABLE>


                                      F-18