<PAGE>   1

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


                                    FORM 10-K
                            ANNUAL REPORT PURSUANT TO
                           SECTION 13 OR 15(D) OF THE
                               SECURITIES EXCHANGE
                                   ACT OF 1934
                            FOR THE FISCAL YEAR ENDED
                                December 31, 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
Incorporation or Organization)                                        Identification 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 nonaffiliates 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>
                                                    OUTSTANDING AT
                CLASS                               MARCH 15 , 2001
                -----                               ---------------

<S>                                                 <C>
         BRAND SERVICES, INC.
    COMMON STOCK, $0.01 PAR VALUE                     100 SHARES
</TABLE>



<PAGE>   2

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.

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.



                                       2
<PAGE>   3

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 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



                                       3
<PAGE>   4

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 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.



                                       4
<PAGE>   5

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.

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.



                                       5
<PAGE>   6







<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 for 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
                                  =========      ========      =========      =========      =========      =========

EBITDA (3)                        $  25,832      $  8,398      $  22,009      $  34,572      $  39,505      $  46,554

Net cash provided by
   operating activities              28,478         4,966         11,983         26,753         21,148         23,123
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:

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.

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,



                                       7
<PAGE>   8

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. 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.



                                       8
<PAGE>   9

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                                                    $ 264,066      $ 218,916      $ 205,304
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)
                                                           =========      =========      =========
Other Data:
EBITDA                                                     $  46,554      $  39,505      $  34,572
                                                           =========      =========      =========
</TABLE>


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



                                       9
<PAGE>   10

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 selling and administrative expenses related to acquired companies
and, to a lesser extent, increases in bad debt and payroll related expenses.

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.

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.



                                       10
<PAGE>   11

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.

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.




                                       11
<PAGE>   12

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.

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.



                                       12
<PAGE>   13

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 (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



                                       13
<PAGE>   14

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.

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

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

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



                                       14
<PAGE>   15

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 ("DLJSC"), 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. DLJSC 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.

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:



                                       15
<PAGE>   16

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 Management              1999    133,494     102,172           -                -            1,600(1)
                                                 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")
     3003 Butterfield Road
     Oakbrook, Illinois 60521                                                      2,487,500           17.2%
     Carlisle-Brand Investors, L.P.(3)
     7777 Fay Avenue
     La Jolla, California 92037                                                    1,250,000(4)         8.7%
     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
     DLJSC. 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.
(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 DLJSC.
     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.



                                       18
<PAGE>   19

(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, DLJSC 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. DLJSC 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 DLJSC. 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 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.



                                       19
<PAGE>   20

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


         INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES




<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-6
   Consolidated Statements of Stockholder's Equity (Deficit) for the years ended December 31,
   2000, 1999, and 1998                                                                                        F-8
   Notes to Consolidated Financial Statements                                                                  F-11

Financial Statement Schedules:
   Schedule II - Valuation and Qualifying Accounts
</TABLE>



                                      F-1
<PAGE>   22

                    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.



ARTHUR ANDERSEN LLP



St. Louis, Missouri
March 2, 2001



                                      F-2
<PAGE>   23


                      BRAND SERVICES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (In thousands)


<TABLE>
<CAPTION>
                                                                     Year Ended December 31,
                                                             ---------------------------------------
                                                               2000           1999           1998
                                                             ---------      ---------      ---------

<S>                                                          <C>            <C>            <C>
Revenue                                                      $ 264,066      $ 218,916      $ 205,304
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                                           -              -              -
                                                             ---------      ---------      ---------
           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>   24


                      BRAND SERVICES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                     (In thousands except per share amounts)


<TABLE>
<CAPTION>
                                                                                       December 31,  December 31,
                                                                                           2000          1999
                                                                                       ------------  ------------
                                                    ASSETS
                                                    ------
<S>                                                                                       <C>          <C>
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
                                                                                          ========     ========
</TABLE>



                          (Continued on following page)



                                      F-4
<PAGE>   25


                      BRAND SERVICES, INC. AND SUBSIDIARIES

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


<TABLE>
<CAPTION>
                                                                                  December 31,   December 31,
                                                                                      2000           1999
                                                                                  ------------   ------------

                               LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
                               ----------------------------------------------

<S>                                                                               <C>            <C>
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-5
<PAGE>   26


                      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)
                                                                       --------      --------      ---------
</TABLE>


                          (Continued on following page)




                                      F-6
<PAGE>   27


                      BRAND SERVICES, INC. AND SUBSIDIARIES

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


<TABLE>
<CAPTION>
                                                                  Year Ended December 31,
                                                             ---------------------------------
                                                              2000         1999         1998
                                                             -------     ---------     -------

<S>                                                          <C>         <C>           <C>
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-7
<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            Comprehensive
                   Shares  Dollars    Capital        Stock        Adjustment      Deficit      Adjustment     Total   Income (Loss)
                   ------  -------   ---------    ------------    -----------   -----------    -----------    -----   -------------

<S>                <C>     <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)     $ (3,745)
   Translation
     adjustment       -        -            -            -               -             -            (843)       (843)         (843)
                                                                                                                          --------
Comprehensive
   loss                                                                                                                   $ (4,588)
                                                                                                                          ========
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)
                     ===    ======     ========       ======       =========     =========      ========    ========
</TABLE>



                          (Continued on following page)



                                      F-8
<PAGE>   29


                      BRAND SERVICES, INC. AND SUBSIDIARIES

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


<TABLE>
<CAPTION>
                                                   Receivables
                                                   from Sale of
                     Common Stock     Additional     Holding's     Predecessor                Cumulative
                    ---------------    Paid In        Common          Basis      Accumulated  Translation             Comprehensive
                    Shares  Dollars    Capital        Stock        Adjustment     Deficit     Adjustment     Total    Income (Loss)
                    ------  -------   ---------    ------------    -----------   -----------  -----------    -----    -------------

<S>                 <C>     <C>       <C>          <C>             <C>           <C>          <C>          <C>         <C>


Balance,
   December 31,
   1998              100    $  -       $ 18,525       $ (336)        $ (13,038)   $ (18,266)   $ (1,368)   $ (14,483)
Comprehensive
   loss
   Net loss           -        -            -            -                 -         (1,863)        -         (1,863)     $ (1,863)
   Translation
     adjustment       -        -            -            -                 -            -           517          517           517
                                                                                                                          --------
Comprehensive
   loss                                                                                                                   $ (1,346)
                                                                                                                          ========
Paid-in-capital
   from exercise
   of stock           -        -            131          -                 -            -           -            131
   options
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)
                     ===    ======     ========       ======         =========    =========    ========    =========
</TABLE>




                          (Continued on following page)


                                      F-9
<PAGE>   30


                      BRAND SERVICES, INC. AND SUBSIDIARIES


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


<TABLE>
<CAPTION>
                                                   Receivables
                                                   from Sale of
                     Common Stock     Additional     Holding's   Predecessor                Cumulative
                    ---------------    Paid In        Common        Basis      Accumulated  Translation               Comprehensive
                    Shares  Dollars    Capital        Stock      Adjustment     Deficit     Adjustment     Total      Income (Loss)
                    ------  -------   ---------    ------------  -----------   -----------  -----------    -----      -------------

<S>                 <C>     <C>       <C>          <C>           <C>           <C>          <C>          <C>          <C>
Balance,
   December 31,
   1999              100    $  -       $ 19,369     $   (822)     $ (13,038)    $ (25,626)    $  (851)   $  (20,968)
Comprehensive
   income
   Net income         -        -            -            -              -             816         -            816        $  816
   Translation
     adjustment       -        -            -            -              -             -          (788)        (788)         (788)
                                                                                                                          ------
Comprehensive
   income                                                                                                                 $   28
                                                                                                                          ======
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)
                     ===    ======     ========     ========      =========     =========    ========    =========
</TABLE>



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


                                      F-10
<PAGE>   31




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



                                      F-11
<PAGE>   32

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.

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.



                                      F-12
<PAGE>   33

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.

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.



                                      F-13
<PAGE>   34

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-14
<PAGE>   35

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


                                      F-15
<PAGE>   36

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.

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



                                      F-16
<PAGE>   37

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-17
<PAGE>   38

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 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>



                                      F-18
<PAGE>   39

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.

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.



                                      F-19
<PAGE>   40

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.

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.

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-20
<PAGE>   41

<TABLE>
<CAPTION>

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

<S>       <C>  <C>
     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)
       5  -    Opinion of Davis Polk & Wardwell, Counsel of the Registrant, regarding the validity of the securities
               being registered(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
</TABLE>

(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>   42

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To Brand Services, Inc.:


We have audited in accordance with auditing standards generally accepted in the
United States, the consolidated financial statements of Brand Services, Inc. and
subsidiaries ("the Company") included in this Form 10-K, and have issued our
report thereon dated March 2, 2001. Our audits were made for the purpose of
forming an opinion on the basic financial statements taken as a whole. Schedule
II included in this Form 10-K is the responsibility of the Company's management
and is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in our audits of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.



ARTHUR ANDERSEN LLP



St. Louis, Missouri
March 2, 2001



<PAGE>   43






                      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>