`------------------------------------------------------------------------------------------------------------------------



                                        SECURITIES AND EXCHANGE COMMISSION
                                              Washington, D.C. 20549

                                                    Form 10-Q/A
                                                 (Amendment No. 1)

                                                    (Mark One)
                            |X|QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                                          SECURITIES EXCHANGE ACT OF 1934
                                 For the quarterly period ended December 31, 2002

                                                        OR

                            |_|TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                                          SECURITIES EXCHANGE ACT OF 1934
                         For the transition period from _____________ to _________________

                                         Commission file number: 333-31282


                                            O'Sullivan Industries, Inc.
                              (Exact name of registrant as specified in its charter)

                              Delaware                                                    43-0923022
   (State or other jurisdiction of incorporation or organization)            (I.R.S. Employer Identification No.)

                  1900 Gulf Street, Lamar, Missouri                                       64759-1899
              (Address of principal executive offices)                                    (ZIP Code)

                                                  (417) 682-3322
                               (Registrant's telephone number, including area code)


         Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13
or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days.  Yes      X      No

         Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the
Exchange Act). Yes          No     X


         As of February 10, 2003, 100 shares of common stock of O'Sullivan Industries Holdings, Inc., par value
$1.00 per share, were outstanding.

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


                                       The Index to Exhibits is on page 34.

                                                   Page 1 of 36

                                                         1




                                             Explanation of Amendment

         We are filing this amendment to our Quarterly Report on Form 10-Q for the quarter ended December 31,
2002 to restate the way we account for the tax sharing agreement between RadioShack Corporation and O'Sullivan
Holdings.

         In response to a comment letter from the Securities and Exchange Commission, we, after consulting with
our independent accountants, determined to revise our method of accounting for the tax sharing agreement.  Under
the revised method of accounting, we recorded the deferred tax asset created by the increased tax basis in our
assets as a result of elections under Sections 338(g) and 338(h) of the Internal Revenue Code by RadioShack and
O'Sullivan as of February 1994.  Simultaneously, we also recorded our total payable to O'Sullivan Holdings
related to the tax sharing agreement.  Each of these amounts was approximately $147.9 million as of February
1994.  These amounts were reduced as we realized benefits from the increased deductions from our increased
basis and made payments to O'Sullivan Holdings.  In March 2002, we placed a valuation allowance against our
net deferred tax assets, debiting tax expense for the amount of the valuation allowance.

         This report reflects the revised method of accounting.



                                                         2




                                                      PART  I
Item 1.  Financial Statements.


                                    O'SULLIVAN INDUSTRIES, INC. AND SUBSIDIARIES
                        (a wholly owned subsidiary of O'Sullivan Industries Holdings, Inc.)
                                       UNAUDITED CONSOLIDATED BALANCE SHEETS
                                       (in thousands, except for share data)
                                                                                       December 31,       June 30,
                                       Assets                                              2002             2002
                                                                                     ----------------   ------------
                                                                                        (Restated)       (Restated)
Current assets:
      Cash and cash equivalents                                                       $         8,968    $    15,777
      Trade receivables, net of allowance for doubtful accounts
           of $4,414 and $4,101, respectively                                                  37,762         37,035
      Inventories, net                                                                         49,028         52,397
      Prepaid expenses and other current assets                                                 3,280          2,765
                                                                                        -------------   ------------
                Total current assets                                                           99,038        107,974

Property, plant and equipment, net                                                             76,188         79,144
Other assets                                                                                   18,020         18,944
Goodwill, net of accumulated amortization                                                      38,088         38,088
                                                                                        -------------   ------------
                      Total assets                                                    $       231,334    $   244,150
                                                                                        =============   ============

                        Liabilities and Stockholder's Deficit
Current liabilities:
      Accounts payable                                                                $         8,076    $    10,887
      Current portion of long-term debt                                                         4,749          4,430
      Accrued advertising                                                                      15,763         11,680
      Accrued liabilities                                                                      10,513         18,388
      Payable to parent - tax sharing agreement                                                 9,654         11,020
                                                                                        -------------     ----------
                Total current liabilities                                                      48,755         56,405

Long-term debt, less current portion                                                          207,495        213,452
Other liabilities                                                                               2,590          2,570
Payable to parent - tax sharing agreement                                                      65,525         70,354
Other payable to parent                                                                           865            181
                                                                                        -------------     ----------
                      Total liabilities                                                       325,230        342,962

Commitments and contingent liabilities (Notes 2, 4, 8, 9 and 10)

Stockholder's deficit:
      Common stock, $1.00 par value; 100 shares authorized issued and outstanding                   -              -
      Retained deficit                                                                        (93,530)       (98,507)
      Accumulated other comprehensive loss                                                       (366)          (305)
                                                                                        -------------   ------------
                Total stockholder's deficit                                                   (93,896)       (98,812)
                                                                                        -------------   ------------
                      Total liabilities and stockholder's deficit                     $       231,334    $   244,150
                                                                                        =============   ============
              The accompanying notes are an integral part of these consolidated financial statements.
                                                                                        =============   ============


                                                         3





                                    O'SULLIVAN INDUSTRIES, INC. AND SUBSIDIARIES
                         (a wholly owned subsidiary of O'Sullivan Industries Holdings, Inc.)
                                   UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                   (in thousands)

                                                                 Three months ended              Six months ended
                                                                    December 31,                   December 31,
                                                             --------------------------       -----------------------
                                                                 2002          2001              2002         2001
                                                             ------------   -----------       -----------   ---------
                                                             (Restated)                       (Restated)
                                                             ------------
Net sales                                                  $       79,111 $      84,313     $     150,668 $   166,506
Cost of sales                                                      59,384        62,649           110,968     124,374
                                                             ------------   -----------       -----------   ---------

Gross profit                                                       19,727        21,664            39,700      42,132
                                                             ------------   -----------       -----------   ---------

Operating expenses:
      Selling, marketing and administrative                        11,538        13,130            23,536      27,238
                                                             ------------   -----------       -----------   ---------

Operating income                                                    8,189         8,534            16,164      14,894

Other income (expense):
      Interest expense                                             (5,506)       (6,184)          (11,281)    (14,200)
      Interest income                                                  42            69                94         154
                                                             ------------   -----------       -----------   ---------

Income before income tax provision                                  2,725         2,419             4,977         848
Income tax provision                                                    -           846                 -         296
                                                             ------------   -----------       -----------   ---------

Net income                                                 $        2,725 $       1,573     $       4,977 $       552
                                                             ============   ===========       ===========   =========

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


                                                         4





                                   O'SULLIVAN INDUSTRIES, INC. AND SUBSIDIARIES
                       (a wholly owned subsidiary of O'Sullivan Industries Holdings, Inc.)
                                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                  (in thousands)

                                                                                            Six months ended
                                                                                              December 31,
                                                                                      ----------------------------
                                                                                          2002            2001
                                                                                      ------------    ------------
                                                                                       (Restated)
Cash flows provided by operating activities:
      Net income                                                                     $       4,977   $         552
      Adjustments to reconcile net income (loss) to net cash provided by
        operating activities:
           Depreciation and amortization                                                     6,572           7,029
           Amortization of debt issuance cost                                                  786             786
           Amortization of debt discount                                                       181             161
           Interest rate collar                                                             (1,308)            927
           Bad debt expense                                                                    579           1,017
           Loss on disposal of assets                                                           25             166
           Accrual of special payment on options to purchase Series A
             junior preferred stock                                                            599             524
Changes in assets and liabilities:
           Trade receivables                                                                (1,306)          3,070
           Inventories                                                                       3,369           5,483
           Other assets                                                                       (434)            356
           Accounts payable, accrued liabilities and other liabilities                      (6,815)          5,719
           Payable to parent - tax sharing agreement                                        (6,195)              -
                                                                                      ------------    ------------
Net cash provided by operating activities                                                    1,030          25,790
                                                                                      ------------    ------------

Cash flows used for investing activities:
      Capital expenditures                                                                  (2,704)         (5,942)
                                                                                      ------------    ------------

Cash flows used for financing activities:
      Repayment of borrowings                                                               (5,819)         (6,772)
      Advances on intercompany loans                                                           684             464
                                                                                      ------------    ------------
Net cash flows used by financing activities                                                 (5,135)         (6,308)

Net increase (decrease) in cash and cash equivalents                                        (6,809)         13,540
Cash and cash equivalents, beginning of period                                              15,777           7,060
                                                                                      ------------    ------------
Cash and cash equivalents, end of period                                             $       8,968   $      20,600
                                                                                      ============    ============

Non-cash investing activities:
      Capital expenditures included in accounts payable                              $       1,077   $         321
             The accompanying notes are an integral part of these consolidated financial statements.


                                                         5





                                  O'SULLIVAN INDUSTRIES, INC. AND SUBSIDIARIES
                      (a wholly owned subsidiary of O'Sullivan Industries Holdings, Inc.)
                     UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S DEFICIT
                                   For the six months ended December 31, 2002
                                                 (in thousands)

                                                              Accumulated
                                                                 other               Total
                                              Retained       comprehensive       stockholder's    Comprehensive
                                               deficit            loss              deficit       income (loss)
                                           ---------------  ----------------    ---------------  ---------------

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

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

Balance, June 30, 2002 (Restated)        $         (98,507)$            (305) $         (98,812)
        Net income (Restated)                        4,977                                4,977 $          4,977
        Other comprehensive loss                                         (61)               (61)             (61)
                                           ---------------  ----------------    ---------------  ---------------
Balance, December 31, 2002 (Restated)    $         (93,530)$            (366) $         (93,896)$          4,916
                                           ===============  ================    ===============  ===============

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


                                                         6




                                           O'SULLIVAN  INDUSTRIES,  INC.
                        (A wholly owned subsidiary of O'Sullivan Industries Holdings, Inc.)
                               NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                                 December 31, 2002

Note 1--Basis of Presentation

         The unaudited consolidated financial statements of O'Sullivan Industries, Inc. and subsidiaries
("O'Sullivan"), a wholly owned subsidiary of O'Sullivan Industries Holdings, Inc. ("O'Sullivan Holdings"),
included herein have been prepared in accordance with generally accepted accounting principles for interim
financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X.  Certain information
and footnote disclosures normally included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and regulations.  In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation
have been included.  The financial statements should be read in conjunction with the audited financial statements
and notes thereto included in O'Sullivan's amended Annual Report on Form 10-K/A for the fiscal year ended
June 30, 2002.  The interim results are not necessarily indicative of the results that may be expected for a full
year.

Note 2--Revised Accounting for Tax Sharing Agreement with RadioShack.

         In 1994, RadioShack, then Tandy Corporation, completed an initial public offering of O'Sullivan
Holdings.  In connection with the offering, O'Sullivan Holdings entered into a tax sharing and tax benefit
reimbursement agreement with RadioShack.  O'Sullivan Holdings and RadioShack made elections under
Sections 338(g) and 338(h)(10) of the Internal Revenue Code with the effect that the tax basis of O'Sullivan's
assets was increased to the deemed purchase price of the assets, and an equal amount of such increase was
included as taxable income in the consolidated federal tax return of RadioShack.  The result was that the tax basis
of O'Sullivan's assets exceeded the historical book basis O'Sullivan used for financial reporting purposes.

         The increased tax basis of O'Sullivan's assets results in increased tax deductions and, accordingly,
reduced O'Sullivan's taxable income or increased its net operating loss.  Under the tax sharing agreement,
O'Sullivan Holdings is contractually obligated to pay RadioShack nearly all of the federal tax benefit expected to
be realized with respect to such additional basis.  The payments under the agreement represent additional
consideration for the stock of O'Sullivan Industries, Inc. and further increase the tax basis of O'Sullivan's assets
from the 1994 initial public offering when payments are made to RadioShack.

         To the extent the benefit of these basis step-up deductions caused O'Sullivan to have a federal taxable
loss, O'Sullivan Holdings was only obligated to pay RadioShack to the extent that the benefits were used to reduce
taxable income to zero.  Any additional tax deductions resulting from the step-up create a net operating loss
("NOL") carryforward on O'Sullivan's federal income tax return.  Under the terms of the tax sharing agreement,
if O'Sullivan utilized this NOL carryforward to generate future tax savings, O'Sullivan Holdings was also
obligated to remit that benefit received to RadioShack.

         Since 1994, O'Sullivan has treated the amount due to RadioShack by O'Sullivan Holdings as income tax
expense when such amounts become payable and to the extent that O'Sullivan Holdings had sufficient consolidated
taxable income.  Thus, O'Sullivan's tax expense approximated what it would have been in the absence of the
Section 338(h)(10) step-up in basis and the tax sharing agreement.

         Under this accounting method, the deferred tax asset from the step-up in basis, the obligation to
RadioShack and O'Sullivan Holdings' payments to RadioShack were not recorded on O'Sullivan's consolidated
balance sheets because O'Sullivan deemed the benefits to be an asset of RadioShack.  When the tax benefits were

                                                         7




received and paid to RadioShack, O'Sullivan recorded the payment as tax expense since this amount would have
been paid as federal income taxes in the absence of the step-up in basis and the tax sharing agreement.

         In November 1999, O'Sullivan Holdings completed a leveraged recapitalization transaction which
significantly increased the debt of O'Sullivan.  As a result of the higher debt levels, O'Sullivan also experienced
increased interest expense, which reduced the taxable income of O'Sullivan and also reduced the tax benefits used
from the deductions arising from the step-up in basis.  O'Sullivan Holdings reduced its payments to RadioShack
accordingly.  RadioShack claimed that the deductions arising from the increased interest payments should not
impact tax benefit payments due RadioShack under the tax agreement.  RadioShack pursued this matter and
prevailed in an arbitration ruling in March 2002.  O'Sullivan Holdings reached a settlement agreement with
RadioShack in May 2002.  Pursuant to the settlement agreement, O'Sullivan Holdings paid RadioShack
$24.6 million in May 2002 and an additional $3.1 million in June 2002.  The sum of these two payments
($27.7 million) represented the amount due RadioShack under the settlement agreement through June 30, 2002.
These amounts represent the calculation of what benefits O'Sullivan would have realized had it not had the
additional interest expense from the recapitalization and merger.  The settlement agreement requires calculations
into the future and quarterly payments to RadioShack if O'Sullivan's taxable income adjusted for the additional
interest expense shows that it would have realized the benefits had it not incurred the additional interest expense.
If on this basis, O'Sullivan could have used the deductions from the step-up in basis, O'Sullivan Holdings is
required to make a payment to RadioShack even though O'Sullivan may not be receiving any current tax benefit
from these deductions on its federal income tax return.

         Following the decision in the arbitration and the settlement agreement with RadioShack, O'Sullivan
recorded the $24.6 million paid by O'Sullivan Holdings to RadioShack as a deferred tax asset at March 31, 2002.
O'Sullivan believed that this was appropriate as the payment represented the tax benefit O'Sullivan could realize
from future use of net operating losses on its consolidated federal income tax return if it had sufficient taxable
income in the future.  After recording a tax provision of $3.4 million for the quarter ended March 31, 2002 and
offsetting its deferred tax liabilities of $10.2 million, O'Sullivan had a net deferred tax asset of $11.0 million at
March 31, 2002.

         Under Statement of Financial Accounting Standards ("SFAS") 109, Accounting for Income Taxes,
O'Sullivan must determine if it is more likely than not that its net deferred tax asset will be realized as a reduction
in tax liabilities in the future.   SFAS 109 requires objective evidence to support the more likely than not
conclusion.  The arbitration decision dramatically affected O'Sullivan's liquidity, which reduced the amounts it
could invest in sales efforts or cost improvements, as most free cash flow would now be used for O'Sullivan
Holdings' payments to RadioShack or repay O'Sullivan's indebtedness.  In addition, it became evident to
O'Sullivan by March 2002 that the prolonged economic slowdown that started prior to September 11, 2001 was
continuing.  This, coupled with the adverse effect on O'Sullivan's liquidity of the settlement, caused O'Sullivan to
lower its projections of future taxable income.  Accordingly, management projected O'Sullivan's expected future
taxable income utilizing operating performance it achieved in fiscal 2002 assuming O'Sullivan's performance
would be no better or worse over an extended period of time.  Such projections indicate that O'Sullivan would not
have taxable income until 2009 when substantially all the tax benefit deductions had been taken.  At that point, the
projections indicated that the net operating losses existing at that time would be utilized before they expire.
However, O'Sullivan currently has and is expected to have taxable losses for a number of years in the future.
Projections over a long time are inherently uncertain, and O'Sullivan cannot provide objective evidence that its
operations in 2009 and beyond will produce sufficient taxable income.  As a result, O'Sullivan provided a
valuation allowance in its March 2002 quarter of $11.0 million against all of its net deferred tax assets with a
corresponding charge to income tax expense.  Consistent with O'Sullivan's prior accounting, both before and after
the recapitalization and merger, O'Sullivan did not record any deferred tax assets related to future deductions from
the step-up in basis or any future obligations to RadioShack as they were still contingent upon its taxable income in
the future.


                                                         8




         Similarly, in O'Sullivan's June, September and December 2002 financial statements, it accounted for
each of O'Sullivan Holdings' payments to RadioShack in the same manner as the initial $24.6 million payment
under the settlement agreement by recording a deferred tax asset to the extent that O'Sullivan could not benefit
currently from the increased deductions.  O'Sullivan then provided a valuation allowance against the additional
deferred tax asset with a corresponding charge to income tax expense on a quarter by quarter basis.  O'Sullivan
believed this method was in conformity with accounting principles generally accepted in the United States and
consistent with its accounting for the tax sharing agreement since 1994.

         In the third quarter of fiscal 2003, O'Sullivan received a comment letter from the staff of the Securities
and Exchange Commission ("SEC") on the accounting for the tax sharing agreement.  In the course of preparing
the response to the SEC staff's comment letter, O'Sullivan, in consultation with its independent accountants,
reassessed the accounting for the tax sharing agreement in light of the arbitration settlement between O'Sullivan
Holdings and RadioShack and concluded that the method of accounting for the tax sharing agreement should be
changed.  O'Sullivan determined that the deferred tax asset created by the step-up in basis and the additional basis
from the probable future payments should be recorded as of February 1994.  At the same time, O'Sullivan
recorded its obligation to O'Sullivan Holdings under the tax sharing agreement.  The amounts of the deferred tax
asset and the obligation to O'Sullivan Holdings  were each $147.9 million at February 1994.  From 1994 through
December 2001, the amounts of the deferred tax asset and the obligation to O'Sullivan Holdings were reduced as
O'Sullivan realized the benefits of the deferred tax asset and O'Sullivan Holdings paid RadioShack amounts due
under the tax sharing agreement.

         At March 31, 2002, a full valuation allowance was provided against the $95.5 million net deferred tax
asset, which consists of the $11.0 million valuation allowance originally recorded in the March 2002 quarter plus
an additional $84.5 million representing the balance of the deferred tax asset at that time.  The valuation allowance
at June 30, 2002 of $94.3 million, together with the $4.4 million tax provision for the fiscal year, represent the
$98.7 million recorded as tax expense for the year ended June 30, 2002.  O'Sullivan recorded the valuation
allowance because it was unable to determine, based on objective evidence, that it is more likely than not that
O'Sullivan would be able to utilize its net operating losses prior to their expiration.  If at a future date O'Sullivan
determines that some or all of the deferred tax asset will more likely than not be realized, O'Sullivan will reverse
the appropriate portion of the valuation allowance and credit income tax expense.

         O'Sullivan Holdings' remaining maximum obligation to RadioShack was $109.1 million at March 31,
2002.  The obligation was reduced by subsequent payments and was $75.2 million and $81.4 million at December
31, 2002 and June 30, 2002, respectively.  O'Sullivan Holdings currently believes that it is probable that future
payments to RadioShack will be made.

         In summary, instead of accounting for O'Sullivan's deferred tax assets resulting from the step-up in basis
as tax expense through a valuation allowance on a quarter by quarter basis as O'Sullivan Holdings makes
payments to RadioShack under the tax sharing agreement, O'Sullivan revised its accounting to record the
aggregate deferred tax asset and the obligation to O'Sullivan Holdings in February 1994.  The deferred tax asset
has been reduced as O'Sullivan realized the benefits from 1994 to March 2002 and was fully offset by the March
2002 valuation allowance.  Therefore, this revised method of accounting will increase O'Sullivan's net income (or
reduce O'Sullivan's net loss) by the amount O'Sullivan Holdings pays RadioShack for each quarterly period after
March 31, 2002 through the quarter ending March 31, 2009 or until O'Sullivan can determine, based on objective
evidence, that it is more likely than not that O'Sullivan will be able to utilize its net operating losses prior to their
expiration and reverses all or a portion of the valuation allowance on its deferred tax assets.

         The expected timing or amounts of O'Sullivan Holdings' payments to RadioShack are not affected by the
revised method of accounting, although the future payments to RadioShack are contingent upon O'Sullivan
Holdings achieving consolidated taxable income calculated on the basis stipulated in the settlement agreement.


                                                         9




         The impact of the restatement on the consolidated statements of operations and consolidated balance
sheets is presented below.  The amounts previously reported are derived from O'Sullivan's original quarterly
report on Form 10-Q for the quarter ended December 31, 2002 filed February 14, 2003.


                                           For the three months ended       For the six months ended
                                               December 31, 2002                December 31, 2002
                                          ----------------------------   -------------------------------
                                             Amounts                        Amounts
                                           previously                      previously
                                            reported     As restated        reported       As restated
                                          ------------- --------------   --------------  ---------------
                                                 (in thousands)                  (in thousands)
                                                        ---                              ---
Consolidated statement of operations:


     Income before income tax provision   $       2,725  $       2,725   $        4,977   $        4,977
     Income tax provision                         3,098              -            6,195                -
     Net income (loss)                             (373)         2,725           (1,218)           4,977



                                                December 31, 2002                 June 30, 2002
                                          -----------------------------  -------------------------------
                                             Amounts                        Amounts
                                           previously                      previously
                                            reported       As restated      reported       As restated
                                          -------------   -------------  --------------  ---------------
                                                 (in thousands)                  (in thousands)
                                                          --                             ---
Consolidated balance sheets:

     Total assets                         $     231,334    $    231,334   $     244,150    $     244,150
     Payable to parent-tax sharing
         agreement                                    -          75,179               -           81,374
     Total liabilities                          250,051         325,230         261,588          342,962
     Retained deficit                            18,351          93,530          17,133           98,507
     Total stockholder's deficit                 18,717          93,896          17,438           98,812


Note 3--Derivative Financial Instruments

         As required under O'Sullivan's senior credit facility, O'Sullivan hedged one-half of its term loans with an
initial notional amount of $67.5 million with a three-year, costless interest rate collar.  The collar, which expires
in March 2003, is based on three-month LIBOR and has a floor of 6.43% and a ceiling of 8.75%.  O'Sullivan
recorded a reduction of interest expense of $724,000 and $274,000 for the quarters ended December 31, 2002 and
December 31, 2001, respectively.  These amounts represent the changes in fair value of the interest rate collar.
For the six months ended December 31, 2002 and December 31, 2001, O'Sullivan recognized additional (reduced)
interest expense associated with the interest rate collar of $(1.3 million) and $927,000, respectively.  To terminate
this contract at December 31, 2002 and June 30, 2002, O'Sullivan would have been required to pay the counter-
party approximately $783,000 and $2.1 million, respectively.  The fair value of the interest rate collar is included
in accrued liabilities in the accompanying consolidated balance sheets.

Note 4--New Accounting Standards

         In April 2001, the Emerging Issues Task Force ("EITF") reached a consensus on EITF No. 00-25,
Vendor Income Statement Characterization of Consideration Paid to a Reseller of the Vendor's Products.  This
issue addresses the income statement classification of slotting fees, cooperative advertising arrangements and
buydowns.  The consensus requires that certain customer promotional payments that O'Sullivan previously

                                                        10




classified as selling expenses be classified as a reduction of revenue.  O'Sullivan adopted EITF 00-25 effective
January 1, 2002 and reclassified certain selling, marketing and administrative expenses as a reduction of net sales.
Its adoption by O'Sullivan had no impact on operating income or net income.  As a result of the adoption of
EITF 00-25, for the quarter and six months ended December 31, 2001, $3.6 million and $7.7 million,
respectively, was reclassified as a reduction in revenue rather than as selling, marketing and administrative
expense.

         In August 2001, the Financial Accounting Standards Board ("FASB") issued SFAS 144, Accounting for
the Impairment or Disposal of Long-Lived Assets.  This pronouncement, which is effective for fiscal years
beginning after December 15, 2001, addresses financial accounting and reporting for the impairment of long-lived
assets and for long-lived assets to be disposed of.  O'Sullivan adopted this pronouncement effective July 1, 2002.
The adoption of SFAS 144 had no effect on O'Sullivan's results of operations but did impact its balance sheet
presentation as described below.

         In January 2001, O'Sullivan closed its Cedar City, Utah production facility.  O'Sullivan is actively
attempting to sell the Utah land, building and excess equipment as soon as practicable.  Certain equipment has
been relocated to the Missouri and Virginia plants.  Fixed assets with a net book value of $20.3 million were
valued at the lower of their carrying amount or fair value less cost to sell, resulting in an impairment charge of
approximately $8.7 million in the second quarter of fiscal 2001.  The costs of the long-lived assets held for sale
and the associated accumulated depreciation have been reclassified from property, plant and equipment to other
assets on the accompanying consolidated balance sheets.  There are no other significant assets or liabilities relating
to the discontinued Utah operation.  The fair value less cost to sell is an estimate and the impairment may be
adjusted in the future.

         In June 2002, the FASB issued SFAS 146, Accounting for Costs Associated with Exit or Disposal
Activities.  This pronouncement addresses financial accounting and reporting for costs associated with exit or
disposal activities and nullifies EITF 94-3, Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).  SFAS 146 requires that a
liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred rather
than the date of an entity's commitment to an exit plan and establishes that fair value is the objective for initial
measurement of the liability.  The provisions of this pronouncement are effective for exit or disposal activities that
are initiated after December 31, 2002.  O'Sullivan does not believe SFAS 146 will have a material impact on its
financial position or results of operations.

Note 5--Shipping and Handling Costs

         O'Sullivan reports amounts billed to customers as revenue, the cost for warehousing operations in cost of
sales and freight out costs as part of selling, marketing and administrative expenses.  Freight out costs included in
selling, marketing and administrative expenses in the second quarters of fiscal 2003 and fiscal 2002 were
approximately $1.5 million and $2.2 million, respectively.  Freight out costs in the six months ended
December 31, 2002 and 2001 were $3.6 million and $4.5 million, respectively.

Note 6--Inventory

         Inventory, net, consists of the following:

                      December 31, 2002     June 30, 2002
                     -------------------- ------------------
                                  (in thousands)
                                          --
Finished goods       $             34,219 $           39,199
Work in process                     5,211              5,158
Raw materials                       9,598              8,040
                       ------------------   ----------------
                     $             49,028 $           52,397
                       ==================   ================


                                                            11




Note 7-Condensed Consolidating Financial Information

             In November 1999 O'Sullivan issued $100 million of 13.375% Senior Subordinated Notes due 2009.  These
notes were unsecured obligations of O'Sullivan; however, they were guaranteed on an unsecured basis by its subsidiary
O'Sullivan Industries - Virginia, Inc.  ("O'Sullivan Industries - Virginia").  In fiscal 2000, O'Sullivan exchanged the
notes issued in November 1999 for notes with substantially identical terms and associated guarantees.  The exchange
notes have been registered under the Securities Act of 1933, as amended.

             O'Sullivan also is the obligor under a senior secured credit facility totaling $175 million.  This facility is
secured by substantially all the assets of O'Sullivan and its guarantor subsidiary O'Sullivan Industries - Virginia.  The
credit facility is also guaranteed by O'Sullivan Holdings, O'Sullivan's parent.  Security for the credit facility includes
first priority liens and security interests in the stock of O'Sullivan and O'Sullivan Industries - Virginia.

             The accompanying condensed consolidating financial information has been prepared and presented pursuant
to SEC rules and regulations.  This information is not intended to present the financial position, results of operations and
cash flows of the individual companies in accordance with generally accepted accounting principles.

             The financial information for O'Sullivan Furniture Factory Outlet, Inc. is included in the consolidated results
of O'Sullivan Industries.  O'Sullivan Furniture Factory Outlet, Inc. commenced operations in April 2002.  Net sales and
net income for the three months ended December 31, 2002 were $268,000 and $22,000, respectively.  Net sales and net
income for the six months ended December 31, 2002 were $472,000 and $35,000, respectively.  At December 31, 2002
and June 30, 2002, total assets were $220,000 and $191,000, respectively.  Total liabilities, excluding payables to
affiliates, at December 31, 2002 and June 30, 2002 were $32,000 and $20,000, respectively.

             As discussed in Note 2, O'Sullivan has revised its accounting for the tax sharing agreement with RadioShack
and restated the amounts below accordingly.

Condensed Consolidating Statements of Operations


                                                            Three months ended December 31, 2002
                                                                       (in thousands)
                                              ----------------------------------------------------------------
                                                             O'Sullivan
                                               O'Sullivan    ndustries -     Consolidating
                                               Industries   I Virginia        Adjustments      Consolidated
                                              ------------  -------------   ---------------  -----------------
                                               (Restated)    (Restated)       (Restated)        (Restated)
Net sales                                   $       56,265$        22,846 $               -$            79,111
Cost of sales                                       41,027         18,357                 -             59,384
                                              ------------  -------------   ---------------  -----------------

Gross profit                                        15,238          4,489                 -             19,727

Operating expenses:
        Selling, marketing and administrative        9,459          2,079                 -             11,538
                                              ------------  -------------   ---------------  -----------------

Op
Operating income                                     5,779          2,410                 -              8,189
Other income (expense):
        Interest expense                            (5,378)          (128)                -             (5,506)
        Interest income                                 42              -                 -                 42
                                              ------------  -------------   ---------------  -----------------

Income before income tax provision                     443          2,282                 -              2,725
Income tax provision                                     -              -                 -                  -
                                              ------------  -------------   ---------------  -----------------

Net income                                  $          443$         2,282 $               -$             2,725
                                              ============  =============   ===============  =================


                                                              Three months ended December 31, 2001
                                                                         (in thousands)
                                                ----------------------------------------------------------------
                                                                O'Sullivan
                                                 O'Sullivan    Industries -    Consolidating
                                                 Industries      Virginia       Adjustments       Consolidated
                                                ------------  --------------  ---------------   ----------------

Net sales                                     $       58,087 $        26,226 $              -  $          84,313
Cost of sales                                         42,940          19,709                -             62,649
                                                ------------  --------------  ---------------   ----------------

Gross profit                                          15,147           6,517                -             21,664

Operating expenses:


        Selling, marketing and administrative          9,566           3,564                -             13,130
                                                ------------  --------------  ---------------   ----------------

Op
Operating income                                       5,581           2,953                -              8,534
Other income (expense):
        Interest expense                              (6,035)           (149)               -             (6,184)
        Interest income                                   69               -                -                 69
                                                ------------  --------------  ---------------   ----------------

Income (loss) before income tax provision               (385)          2,804                -              2,419
Income tax provision (benefit)                          (135)            981                -                846
                                                ------------  --------------  ---------------   ----------------
Net income (loss)                             $         (250)$         1,823 $              -  $           1,573

                                                ============  ==============  ===============   ================


                                                             Six months ended December 31,2002
                                                                       (in thousands)
                                              ----------------------------------------------------------------
                                                             O'Sullivan
                                               O'Sullivan    ndustries -    Consolidating
                                               Industries   I Virginia       Adjustments       Consolidated
                                              ------------  -------------  ----------------  -----------------
                                               (Restated)    (Restated)       (Restated)        (Restated)
Net sales                                   $ 108,613     $        42,055$                -$           150,668
Cost of sales                                       78,038         32,930                 -            110,968
                                              ------------  -------------  ----------------  -----------------

Gross profit                                        30,575          9,125                 -             39,700

Operating expenses:
        Selling, marketing and administrative       19,498          4,038                 -             23,536
                                              ------------  -------------  ----------------  -----------------

Operating income                                    11,077          5,087                               16,164
Other income (expense):
        Interest expense                           (11,022)          (259)                -            (11,281)
        Interest income                                 94              -                 -                 94
                                              ------------  -------------  ----------------  -----------------

Income before income tax provision                     149          4,828                 -              4,977
Income tax provision                                     -              -                 -                  -
                                              ------------  -------------  ----------------  -----------------
Net income                                  $          149$         4,828$                -$             4,977

                                              ============  =============  ================  =================


                                                            12





                                                                  Six months ended December 31, 2001
                                                                             (in thousands)
                                                    ---------------------------------------------------------------
                                                                    O'Sullivan
                                                     O'Sullivan    Industries -    Consolidating
                                                     Industries      Virginia       Adjustments      Consolidated
                                                    ------------  --------------  ---------------  ----------------

Net sales                                         $      117,425$         49,081$               -$          166,506
Cost of sales                                             88,175          36,199                -           124,374
                                                    ------------  --------------  ---------------  ----------------
Gross profit                                              29,250          12,882                -            42,132

Operating expenses:
        Selling, marketing and administrative             19,763           7,475                -            27,238
                                                    ------------  --------------  ---------------  ----------------

Op
Operating income                                           9,487           5,407                -            14,894

Other income (expense):
        Interest expense                                 (13,885)           (315)               -           (14,200)
        Interest income                                      154               -                -               154
                                                    ------------  --------------  ---------------  ----------------

Income (loss) before income tax provision                 (4,244)          5,092                -               848
Income tax provision (benefit)                            (1,484)          1,780                -               296
                                                    ------------  --------------  ---------------  ----------------

Net income (loss)                                 $       (2,760$          3,312$               -$              552
                                                    ============  ==============  ===============  ================




Condensed Consolidating Balance Sheets

                                                                      December 31, 2002
                                                                        (in thousands)
                                               ----------------------------------------------------------------
                                                               O'Sullivan
                                                O'Sullivan     ndustries -   Consolidating
                                                Industries    I Virginia      Adjustments        Consolidated
                                               -------------  ------------- ----------------   ----------------
                                                (Restated)     (Restated)      (Restated)         (Restated)
ASSETS:
        Current assets                        $       85,421 $       13,617$               -  $          99,038
        Property, plant and equipment, net            43,064         33,124                -             76,188
        Other assets                                  17,920            100                -             18,020
        Investment in subsidiaries                    28,684              -          (28,684)                 -
        Goodwill                                      38,088              -                -             38,088
        Receivable from parent                             -         27,884          (27,884)                 -
                                               -------------  ------------- ----------------   ----------------
           Total assets                       $      213,177 $       74,725$         (56,568) $         231,334
                                               =============  ============= ================   ================

LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT):
        Current liabilities                   $       27,509 $       21,246$               -  $          48,755
        Long-term debt                               197,495         10,000                -            207,495
        Other liabilities                              2,590              -                -              2,590
        Payable to parent - tax sharing agreement     50,730         14,795                -             65,525
        Other payable to parent                       28,749              -          (27,884)               865
        Stockholder's equity (deficit)               (93,896)        28,684          (28,684)           (93,896)
                                               -------------  ------------- ----------------   ----------------
           Total liabilities and stockholder's$      213,177 $       74,725$         (56,568) $         231,334
               equity (deficit)
                                               =============  ============= ================   ================


                                                            13






                                                                         June 30, 2002
                                                                         (in thousands)
                                                ----------------------------------------------------------------
                                                                O'Sullivan
                                                 O'Sullivan    Industries -    Consolidating
                                                 Industries      Virginia       Adjustments      Consolidated
                                                ------------- --------------  ---------------  -----------------
                                                 (Restated)     (Restated)      (Restated)        (Restated)
ASSETS:
        Current assets                         $       92,556$        15,418 $              - $          107,974
        Property, plant and equipment, net             45,049         34,095                -             79,144
        Other assets                                   18,842            102                -             18,944
        Investment in subsidiaries                     23,856              -          (23,856)                 -
        Goodwill                                       38,088              -                -             38,088
        Receivable from parent                              -         19,948          (19,948)                 -
                                                ------------- --------------  ---------------  -----------------
           Total assets                        $      218,391$        69,563 $        (43,804)$          244,150
                                                ============= ==============  ===============  =================

LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT):
        Current liabilities                    $       35,493$        20,912 $              - $           56,405
        Long-term debt                                203,452         10,000                -            213,452
        Other liabilities                               2,570              -                -              2,570
        Payable to parent - tax sharing agreement      55,559         14,795                -             70,354
        Other payable to parent                        20,129              -          (19,948)               181
        Stockholder's equity (deficit)                (98,812)        23,856          (23,856)           (98,812)
                                                ------------- --------------  ---------------  -----------------
           Total liabilities and stockholder's $      218,391$        69,563 $        (43,804)$          244,150
                equity (deficit)
                                                ============= ==============  ===============  =================

Condensed Consolidating Statements of Cash Flows

                                                                  Six months ended December 31, 2002
                                                                             (in thousands)
                                                    ---------------------------------------------------------------
                                                                    O'Sullivan     onsolidating
                                                     O'Sullivan     ndustries -    Adjustments
                                                     Industries    I Virginia     C                 Consolidated
                                                    -------------  -------------  --------------  -----------------
                                                     (Restated)     (Restated)      (Restated)       (Restated)
Net cash flows provided (used) by operating
        activities                                $        (7,877$         8,907$              -$             1,030
                                                    -------------  -------------  --------------  -----------------
Investing activities:
        Capital expenditures                               (1,733)          (971)              -             (2,704)
        Repayment of intercompany payable                   7,936              -          (7,936)                 -
                                                    -------------  -------------  --------------  -----------------
           Net                                              6,203           (971)         (7,936)            (2,704)
                                                    -------------  -------------  --------------  -----------------
Financing activities:
        Advances on intercompany payable                      684         (7,936)          7,936                684
        Repayment of borrowings                            (5,819)             -               -             (5,819)
                                                    -------------  -------------  --------------  -----------------
           Net                                             (5,135)        (7,936)          7,936             (5,135)
                                                    -------------  -------------  --------------  -----------------

Cash and cash equivalents:
        Net decrease in cash and cash equivalents          (6,809)             -               -             (6,809)
        Cash and cash equivalents, beginning of
           period                                          15,773              4               -             15,777
                                                    -------------  -------------  --------------  -----------------
        Cash and cash equivalents, end of period  $         8,964$             4$              -$             8,968
                                                    =============  =============  ==============  =================


                                                                  Six months ended December 31, 2001
                                                                            (in thousands)
                                                   ----------------------------------------------------------------
                                                                  O'Sullivan
                                                    O'Sullivan    ndustries -    Consolidating
                                                    Industries   I Virginia       Adjustments       Consolidated
                                                   ------------  ------------   ---------------  ------------------
Net cash flows provided by operating activities   $      17,400$        8,390 $               -$             25,790
                                                   ------------  ------------   ---------------  ------------------
Investing activities:
        Capital expenditures                             (3,446)       (2,496)                -              (5,942)
        Repayment of intercompany payable                 5,894             -            (5,894)                  -
                                                   ------------  ------------   ---------------  ------------------
           Net                                            2,448        (2,496)           (5,894)             (5,942)
                                                   ------------  ------------   ---------------  ------------------

Op
Financing activities:
        Advances on intercompany payable                    464        (5,894)            5,894                 464
        Repayment of borrowings                          (6,772)            -                 -              (6,772)
                                                   ------------  ------------   ---------------  ------------------
           Net                                           (6,308)       (5,894)            5,894              (6,308)
                                                   ------------  ------------   ---------------  ------------------

Cash and cash equivalents:
        Net increase in cash and cash
           equivalents                                   13,540             -                 -              13,540
        Cash and cash equivalents, beginning of
           period                                         7,056             4                 -               7,060
                                                   ------------  ------------   ---------------  ------------------
        Cash and cash equivalents, end of  period $      20,596$            4 $               -$             20,600
                                                   ============  ============   ===============  ==================

Note 8--Income Taxes

         O'Sullivan is included in the consolidated federal income tax return filed by O'Sullivan Holdings.  In accordance
with the intercompany tax allocation policy between O'Sullivan and O'Sullivan Holdings, O'Sullivan remits to O'Sullivan
Holdings an amount equal to its current tax liability calculated as if O'Sullivan filed a separate tax return.

         O'Sullivan recorded no tax expense for the three months and six months ended December 31, 2002 because of
the valuation allowance recorded in the quarter ended March 31, 2002.  See Note 2.

Note 9--Related Party Transactions

         O'Sullivan entered into a management services agreement with Bruckmann, Rosser, Sherrill & Co., LLC
("BRS") for strategic and financial advisory services on November 30, 1999.  The fee for these services is the greater of
(a) 1% of O'Sullivan's consolidated cash flow (as defined in the indenture related to the O'Sullivan Industries senior
subordinated notes) or (b) $300,000 per year.  Under the management services agreement, BRS can also receive
reimbursement for expenses which are limited to $50,000 a year by the senior credit facility.

         The senior credit facility and the management services agreement both contain certain restrictions on the
payment of the management fee.  The management services agreement provides that no cash payment for the management
fee can be made unless the fixed charge coverage ratio (as defined in the indenture relating to the O'Sullivan senior
subordinated notes) for O'Sullivan's most recently ended four full fiscal quarters would have been at least 2.0 to 1.0.  All
fees and expenses under the management services agreement are subordinated to the senior subordinated notes.

         The management fees and reimbursable expenses of $116,000 and $122,000 recognized in the second quarter of
fiscal years 2003 and 2002, respectively, are included in selling, marketing and administrative expense in the
accompanying consolidated statements of operations.  Management fees and expenses for the six months ending

                                                            14




December 31, 2002 and 2001 were $233,000 and $220,000, respectively.  O'Sullivan paid BRS $713,000 in the first
quarter of fiscal 2003 for the balance owed through June 30, 2002 and an additional $305,000 as a prepayment of the
fiscal 2003 management fee.  The prepaid balance at December 31, 2002 was $66,000 and is included in prepaid
expenses and other current assets on the consolidated balance sheet.  The amount due BRS at June 30, 2002 approximated
$719,000 and is included in accrued liabilities on the consolidated balance sheet.

Note 10--Commitments and Contingencies

         Tax Sharing Agreement with RadioShack.  Future tax sharing agreement payments are contingent on taxable
income.  See Note 7.  The maximum payments are fiscal 2003, including $6.2 million paid to O'Sullivan Holdings
pursuant to the tax sharing agreement in the six months ended December 31, 2002-- $11.0 million; fiscal 2004-- $9.9
million; fiscal 2005-- $10.5 million; fiscal 2006-- $11.3 million; and thereafter-- $41.4 million.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.

Overview

         We are a leading ready-to-assemble furniture manufacturer in North America with over 45 years of experience.
We design, manufacture and distribute a broad range of RTA furniture products--computer workcenters, desks,
entertainment centers, audio stands, bookcases and cabinets--with retail prices ranging from $20 to $999.  We have
committed substantial resources to the development and implementation of a diversified sales, marketing and product
strategy in order to capitalize on opportunities presented by large retail channels of distribution and changes in consumer
demographics and preferences.  We have structured our business to offer a wide variety of RTA furniture products
through popular retail distribution channels, including office superstores, discount mass merchants, electronic
superstores, home improvement centers and home furnishings retailers.  We continue to strive towards building long-term
relationships with quality retailers in existing and emerging high growth distribution channels to develop and grow our
business.

         Our sales declined 6.2% in the second quarter of fiscal 2003 and 9.5% for the first six months of fiscal 2003.
This decline continued the sales decreases experienced by us in fiscal 2001 and fiscal 2002.  Our sales declined for
several reasons:

        o         the lack of growth in sales of personal computers, which reduced the need for computer desks and
                  workcenters;

        o         increasing competition from imported furniture, particularly from China;

        o         the slowdown of economic growth and consumer spending in the United States;

        o         liquidations and bankruptcies by a number of customers, including Montgomery Ward, Ames and
                  Kmart;

        o         inventory reductions by our customers;

        o         the decline in price of the average unit sold, reflecting a trend toward more promotional merchandise
                  and increased competition; and

        o         the retrenchment in business capital outlays, which reduced purchases of office furniture.

These factors will continue to affect our business throughout the remainder of fiscal 2003.

         As a result of the lower sales levels, coupled with the revised accounting for the tax sharing agreement, our net
income was $2.7 million for the second quarter of fiscal 2003 compared with net income of $1.6 million for the second

                                                            15




quarter of fiscal 2002.  For the first half of fiscal 2003, our net income was $5.0 million compared to a net income of
$552,000 for the first half of fiscal 2002.  Operating income declined to $8.2 million in the second quarter for fiscal 2003
from $8.5 million in fiscal 2002. For the first half of fiscal 2003, our operating income was $16.2 million, compared
with $14.9 million in the first half of fiscal 2002.

          We purchase large quantities of raw materials, including particleboard and fiberboard.  We are dependent on
our outside suppliers for all of our raw materials.  Therefore, we are subject to changes in the prices charged by our
suppliers.  In fiscal 2000, our operating income was reduced by price increases for these commodities.  In fiscal 2001,
particleboard and fiberboard prices declined, increasing our operating income in the latter portion of the year.  Industry
pricing for particleboard was flat to slightly lower in fiscal 2002, and prices  declined in the first half of fiscal 2003 from
the fourth quarter of fiscal 2002.  Prices for fiberboard increased in the fourth quarter of fiscal 2002, but remained flat
for the first half of fiscal 2003.  We did, however, experience a price increase from several suppliers of another
commodity in the second quarter of fiscal 2003.  We cannot assure you that raw material prices will not increase in the
future.  If the demand for particleboard increases, prices may also increase.

         Several manufacturers, including O'Sullivan, have excess manufacturing capacity due to the current decline in
sales in the RTA furniture segment and increasing imports.  This excess capacity is causing increased competition that is
expected to continue, and perhaps to intensify, through the remainder of fiscal 2003.  This adversely affected our margins
and results of operations in fiscal 2002, and is continuing to affect sales, margins and results of operations in fiscal 2003.

         While we have confidence in the long-term future of the RTA furniture industry, given our current sales trends
in this economic environment, we expect gross sales in the third quarter of fiscal 2003 will be about 15% lower than sales
in the third quarter of fiscal 2002.  We anticipate our fiscal 2003 third quarter operating income will decline
approximately 20% to 30% from the fiscal 2002 third quarter.  We cannot yet predict when our sales will return to a
pattern of sales growth.

RadioShack Arbitration and Revised Accounting for Tax Sharing Agreement with RadioShack

         In 1994, RadioShack, then Tandy Corporation, completed an initial public offering of O'Sullivan Holdings.  In
connection with the offering, O'Sullivan Holdings entered into a tax sharing and tax benefit reimbursement agreement
with RadioShack.  RadioShack and O'Sullivan Holdings made elections under Sections 338(g) and 338(h)(10) of the
Internal Revenue Code with the effect that the tax basis of our assets was increased to the deemed purchase price of the
assets, and an equal amount of such increase was included as taxable income in the consolidated federal tax return of
RadioShack.  The result was that the tax basis of our assets exceeded the historical book basis we used for financial
reporting purposes.

         The increased tax basis of our assets results in increased tax deductions and, accordingly, reduced our taxable
income or increased our net operating loss.  Under the tax sharing agreement, O'Sullivan Holdings is contractually
obligated to pay RadioShack nearly all of the federal tax benefit expected to be realized with respect to such additional
basis.  The payments under the agreement represent additional consideration for the stock of O'Sullivan Industries, Inc.
and further increase the tax basis of our assets from the 1994 initial public offering when payments are made to
RadioShack.

         To the extent the benefit of these basis step-up deductions caused us to have a federal taxable loss, O'Sullivan
Holdings was only obligated to pay RadioShack to the extent that the benefits were used to reduce taxable income to zero.
Any additional tax deductions resulting from the step-up create a net operating loss ("NOL") carryforward on our federal
income tax return.  Under the terms of the tax sharing agreement, if we utilized this NOL carryforward to generate future
tax savings, O'Sullivan Holdings was also obligated to remit that benefit received to RadioShack.

         Since 1994, we have treated the amount due to RadioShack by O'Sullivan Holdings as income tax expense when
such amounts become payable and to the extent that O'Sullivan Holdings had sufficient consolidated taxable income.

                                                            16




Thus, our tax expense approximated what it would have been in the absence of the Section 338(h)(10) step-up in basis
and the tax sharing agreement.

         Under this accounting method, the deferred tax asset from both the step-up in basis and the future liability of
O'Sullivan Holdings to RadioShack were not recorded on our consolidated balance sheets because we deemed the benefits
to be an asset of RadioShack.  When the tax benefits were received and paid by O'Sullivan Holdings to RadioShack, we
funded the payment and recorded it as tax expense since this amount would have been paid as federal income taxes in the
absence of the step-up in basis and the tax sharing agreement.

         In November 1999, O'Sullivan Holdings completed a leveraged recapitalization transaction which significantly
increased our debt.  As a result of the higher debt levels, we also experienced increased interest expense, which reduced
our taxable income and also reduced the tax benefits used from the deductions arising from the step-up in basis.
O'Sullivan Holdings reduced its payments to RadioShack accordingly.  RadioShack claimed that the deductions arising
from the increased interest payments should not impact tax benefit payments due RadioShack under the tax agreement.
RadioShack pursued this matter and prevailed in an arbitration ruling in March 2002.  O'Sullivan Holdings reached a
settlement agreement with RadioShack in May 2002.  Pursuant to the settlement agreement, O'Sullivan Holdings paid
RadioShack $24.6 million in May 2002 and an additional $3.1 million in June 2002.  The sum of these two payments
($27.7 million) represented the amount due RadioShack under the settlement agreement through June 30, 2002.  These
amounts represent the calculation of what benefits we would have realized had we not had the additional interest expense
from the recapitalization and merger.  The settlement agreement requires calculations into the future and quarterly
payments to RadioShack if our taxable income adjusted for the additional interest expense shows that we would have
realized the benefits had we not incurred the additional interest expense.  If on this basis, we could have used the
deductions from the step-up in basis, O'Sullivan Holdings is required to make a payment to RadioShack even though we
may not be receiving any current tax benefit from these deductions on our federal income tax return.

         Following the decision in the arbitration and the settlement agreement with RadioShack, we recorded the $24.6
million paid by O'Sullivan Holdings to RadioShack as a deferred tax asset at March 31, 2002.  We believed that this was
appropriate as the payment by O'Sullivan Holdings represented the tax benefit we could realize from future use of net
operating losses on our federal income tax return if we had sufficient taxable income in the future.  After recording a tax
provision of $3.4 million for the quarter ended March 31, 2002 and offsetting our deferred tax liabilities of
$10.2 million, we had a net deferred tax asset of $11.0 million.

         Under SFAS 109, we must determine if it is more likely than not that we will realize the net deferred tax asset as
a reduction in our tax liabilities in the future.  SFAS 109 requires objective evidence to support the more likely than not
conclusion.  The arbitration decision dramatically affected our liquidity, which reduced the amounts we could invest in
sales efforts or cost improvements, as most free cash flow would now be used for O'Sullivan Holdings' payments to
RadioShack or to repay our indebtedness.  In addition, it became evident to us by March 2002 that the prolonged
economic slowdown that started prior to September 11, 2001 was continuing.  This, coupled with the adverse effect on
our liquidity of the settlement, caused us to lower our projections of future taxable income.  Accordingly, we projected
our expected future taxable income utilizing operating performance we achieved in fiscal 2002 assuming our performance
would be no better or worse over an extended period of time.  Such projections indicate that we would not have taxable
income until 2009 when substantially all the tax benefit deductions had been taken.  At that point, the projections
indicated that our net operating losses existing at that time would be utilized before they expire.  However, we currently
have and expect to have taxable losses for a number of years in the future.  Projections over a long time are inherently
uncertain, and we cannot provide objective evidence that our operations in 2009 and beyond will produce sufficient
taxable income.  As a result, we provided a valuation allowance in our March 2002 quarter of $11.0 million against all of
our net deferred tax assets with a corresponding charge to income tax expense.  Consistent with our prior accounting,
both before and after the recapitalization and merger, we did not record any deferred tax assets related to future
deductions from the step-up in basis or any future obligations to O'Sullivan Holdings related to the tax sharing agreement
as they were still contingent upon our taxable income in the future.


                                                            17




         Similarly, in our June, September and December 2002 financial statements, we accounted for each of O'Sullivan
Holdings' payments to RadioShack in the same manner as the initial $24.6 million payment under the settlement
agreement by recording a deferred tax asset to the extent that we could not benefit currently from the increased
deductions.  We then provided a valuation allowance against the additional deferred tax asset with a corresponding charge
to income tax expense on a quarter by quarter basis.  We believed this method was in conformity with accounting
principles generally accepted in the United States and consistent with our accounting for the tax sharing agreement since
1994.

         In the third quarter of fiscal 2003, O'Sullivan received a comment letter from the staff of the SEC on the
accounting for the tax sharing agreement.  In the course of preparing our response to the SEC staff's comment letter, we,
in consultation with our independent accountants, reassessed our accounting for the tax sharing agreement in light of the
arbitration settlement between O'Sullivan Holdings and RadioShack and concluded that our method of accounting for the
tax sharing agreement should be changed.  O'Sullivan determined that the deferred tax asset created by the step-up in
basis and the additional basis from the probable future payments should be recorded as of February 1994.  At the same
time, we recorded a payable to parent equal to O'Sullivan Holdings' obligation to RadioShack.  The amounts of the
deferred tax asset and obligation to O'Sullivan Holdings were each $147.9 million at February 1994.  From 1994 through
2001, we reduced the amount of the deferred tax asset and our payable to O'Sullivan Holdings as we realized the benefits
of the deferred tax asset and O'Sullivan Holdings paid RadioShack amounts due under the tax sharing agreement.

         At March 31, 2002, a full valuation allowance was provided against the $95.5 million net deferred tax asset,
which consists of the $11.0 million valuation allowance originally recorded in the March 2002 quarter plus an additional
$84.5 million representing the balance of the deferred tax asset at that time. The valuation allowance at June 30, 2002 of
$94.3 million together with the $4.4 million tax provision for the fiscal year represent the $98.7 million recorded as tax
expense for the year ended June 30, 2002.  We recorded the valuation allowance because we were unable to determine,
based on objective evidence, that it was more likely than not we would be able to utilize our net operating losses prior to
their expiration.   If at a future date we determine that some or all of the deferred tax asset will more likely than not be
realized, we will reverse the appropriate portion of the valuation allowance and credit income tax expense.

         O'Sullivan Holdings' remaining maximum obligation to RadioShack was $109.1 million at March 31, 2002.
The obligation was reduced by subsequent payments and was $75.2 million and $81.4 million at December 31, 2002 and
June 30, 2002, respectively.  O'Sullivan Holdings currently believes that it is probable that future payments to
RadioShack will be made.

         In summary, instead of accounting for our deferred tax asset resulting from the step-up in basis as tax expense
through a valuation allowance on a quarter by quarter basis as O'Sullivan Holdings makes payments to RadioShack under
the tax sharing agreement, we revised our accounting to record the aggregate deferred tax asset and the obligation to
O'Sullivan Holdings in February 1994.  Our deferred tax asset has been reduced as we realized the benefits from 1994 to
March 2002 and was fully offset by the March 2002 valuation allowance.  Therefore, this revised method of accounting
will increase our net income (or reduce our net loss) by the amount O'Sullivan Holdings pays RadioShack for each
quarterly period after March 31, 2002 through the quarter ending March 31, 2009 or until we can determine, based on
objective evidence, that it is more likely than not that we will be able to utilize our net operating losses prior to their
expiration and reverse all or a portion of the valuation allowance on our deferred tax assets.

         The expected timing or amounts of O'Sullivan Holdings' payments to RadioShack will not be affected by the
revised method of accounting, although the future payments to RadioShack are contingent upon O'Sullivan Holdings
achieving consolidated  taxable income calculated on the basis stipulated in the settlement agreement.

         We funded the back payment to O'Sullivan Holdings and subsequent payments from cash on hand.  We expect to
fund future payments from cash flows from operating activities, cash on hand or borrowings under our senior credit
facility.   Payments under the tax sharing agreement for fiscal 2003 are expected to be about $11.0 million.


                                                            18




         We have amended our senior credit facility as a result of the arbitration settlement.  The amendment excludes
from the definition of consolidated fixed charges $27.0 million of the total paid by us pursuant to the tax sharing
agreement through the period ended June 30, 2002.

         See "Cautionary Statement Regarding Forward Looking Information."



                                                            19




Results of Operations

         Net Sales.  Net sales for the quarter ended December 31, 2002 decreased by $5.2 million, or 6.2%, to
$79.1 million from $84.3 million for the quarter ended December 31, 2001.  Net sales for the six months ended
December 31, 2002 decreased by $15.8 million, or 9.5%, to $150.7 million from $166.5 million for the six months
ended December 31, 2001.  Our sales declined in every major channel due to the economic uncertainties in the United
States and the other reasons cited above.  Most of the decline for the quarter and six months was due to a decline in unit
volume, although the average price per unit declined slightly.

         In January 2002, Kmart Corporation, which accounted for around 9% of our gross sales in fiscal 2002, filed for
Chapter 11 bankruptcy court protection.  As part of its reorganization, Kmart has closed 283 stores and has announced
that it plans to close an additional 316 stores.  Kmart has secured financing of $2 billion to help the company's cash flow
while it restructures.  Kmart has filed a plan of reorganization to emerge from Chapter 11 in 2003.  We resumed
shipments to Kmart on a post-petition basis after the filing and anticipate significant sales to Kmart in the future.
However, there can be no assurance that we will ship as much to Kmart as we did in prior periods or that Kmart will be
successful in its restructuring efforts.

         In August 2002, Ames Department Stores, Inc. decided to close all of its stores and liquidate.  We had
anticipated sales to Ames would be less than 2% of our gross sales in fiscal 2003.

         Gross Profit.  Gross profit decreased to $19.7 million, or 24.9% of sales, for the three month period ended
December 31, 2002, from $21.7 million, or 25.7% of sales, for the comparable prior year quarter.  The gross margin
percentage for the second quarter of fiscal 2003 declined primarily because of lower sales and operating levels, partially
offset by lower material costs, particularly for particleboard.  For the six months ended December 31, 2002, gross profit
declined to $39.7 million, or 26.3% of sales, from $42.1 million, or 25.3% of sales.  The gross profit percentage
increased for the first half of fiscal 2003 compared to the prior year period as lower material prices offset the effects of
lower sales and operating volumes.

         Selling, Marketing and Administrative Expenses.  Selling, marketing and administrative expenses decreased to
$11.5 million, or 14.6% of sales, for the three month period ended December 31, 2002, from $13.1 million, or 15.6% of
sales, for the quarter ended December 31, 2001.  Freight out expense declined because of lower sales and a change in a
major customer's program.  Sales commissions were also lower in fiscal 2003 due to lower sales levels and changes in
the commission structure.  Legal fees were higher in fiscal 2002 due to the RadioShack arbitration.  Bad debt expense
was also higher in fiscal 2002 because of the Kmart bankruptcy.

         For the six months ended December 31, 2002, selling, marketing and administrative expenses decreased
$3.7 million from $27.2 million in fiscal 2002 to $23.5 million in fiscal 2003.  The major factors were a decrease in
freight out expense and sales commission due to the reasons stated above and lower incentive compensation and profit
sharing expenses because of our lower sales and financial performance.  Legal fees and bad debt expense were higher in
fiscal 2002 because of the RadioShack arbitration and Kmart bankruptcy, respectively.

         Depreciation and Amortization.  Depreciation and amortization expenses decreased to $3.3 million for the
second quarter of fiscal 2003 compared to $3.6 million for the second quarter of fiscal 2002.  For the six month periods
ended December 31, 2002 and 2001, depreciation and amortization expenses were $6.6 million and $7.0 million,
respectively.  Depreciation and amortization declined because equipment placed into service during the twelve months
ended December 31, 2002 was less than the amount of equipment that became fully depreciated during the same time
period.

         Operating Income.  Operating income decreased $345,000 to $8.2 million for the quarter ended December 31,
2002 from $8.5 million in the quarter ended December 31, 2001.  Lower sales and operating levels were partially offset
by lower material costs and lower selling, marketing and administrative expenses in the three months ended December
31, 2002.  For the six months ended December 31, 2002, operating income increased $1.3 million over the six months

                                                            20




ended December 31, 2001.  Reduced raw material prices, incentive compensation and profit sharing expense and lower
freight out expense, commission costs, legal fees and bad debt expense contributed to the increased operating income
during the first six months in fiscal 2003, partially offset by lower sales and operating levels.

         Net Interest Expense.  Net interest expense decreased from $6.1 million in the second quarter of fiscal 2002 to
$5.5 million in the second quarter of fiscal 2003.  Net interest expense declined $2.9 million from $14.0 million for the
first half of fiscal 2002 to $11.2 million for the first half of fiscal 2003.  Interest expense decreased due to the change in
fair value of our interest rate collar as well as our repayment of debt and lower variable interest rates on a portion of our
debt.  The following table describes the components of net interest expense.


                                            Three months ended            Six months ended
                                               December 31,                 December 31,
                                        --------------------------   --------------------------
                                              (in thousands)               (in thousands)
                                             2002          2001           2002          2001
                                          ----------    ----------     ----------    ----------
Interest expense on senior credit
        facility, industrial revenue bon $
        and senior subordinated notes   ds     5,746  $      5,983   $     11,622  $     12,326
Interest income                                  (42)          (69)           (94)         (154)
           Non-cash items:
Interest rate collar                            (724)         (274)        (1,308)          927
Amortization of debt discount                     91            82            181           161
Amortization of loan fees                        393           393            786           786
                                          ----------    ----------     ----------    ----------
Net interest expense                     $     5,464  $      6,115   $     11,187  $     14,046
                                          ==========    ==========     ==========    ==========

             Income Tax Provision. We recorded no tax expense for the first or second quarters of fiscal 2003 because of
the valuation allowance recorded in the quarter ended March 31, 2002.  See "RadioShack Arbitration and Revised
Accounting for Tax Sharing Agreement with RadioShack".

             Net Income (Loss).  Our net income increased from $1.6 million in the second quarter of fiscal 2002 to $2.7
million in fiscal 2003 due to decreased tax expense, lower material prices, lower selling, marketing and administrative
expenses and lower interest expense.  Our net income of $5.0 million was up $4.5 million from income of $552,000 in
the first half of fiscal 2003 due to decreased tax expense, lower raw material costs, decreased selling and administrative
expenses and lower interest expense.

             EBITDA.  EBITDA, which we define as earnings before interest income and interest expense, income taxes,
depreciation and amortization, decreased by $645,000 to $11.5 million for the quarter ended December 31, 2002 from
$12.1 million for the prior year quarter.  EBITDA for the fiscal 2003 second quarter decreased primarily due to lower
sales and operating levels, partially offset by lower material costs and selling and administrative expenses.  For the six
months ended December 31, 2002, EBITDA was $22.7 million, up $813,000 from the six months ended December 31,
2001.  The increase was due primarily to lower material costs and lower selling and administrative expenses, partially
offset by lower sales and operating levels.

             EBITDA is presented to provide additional information about our operations.  This item should be considered
in addition to, but not as a substitute for or superior to, operating income, net income, operating cash flow and other
measures of financial performance prepared in accordance with generally accepted accounting principles.  EBITDA may
differ in the method of calculation from similarly titled measures used by other companies.  EBITDA provides another
measure of the operations of our business prior to the impact of interest, taxes and depreciation and of our liquidity.
Further, EBITDA is a common method of valuing companies such as O'Sullivan, and EBITDA, with adjustments, is a
component of each of the financial covenants in our senior credit facility.



                                                            21




             The following table reconciles net income to EBITDA for the three months and six months ended
December 31, 2002 and 2001.


                                                  Three months ended                Six months ended
                                                     December 31,                     December 31,
                                             -----------------------------     ---------------------------
                                                    (in thousands)                   (in thousands)
                                                    2002           2001             2002           2001
                                                 -----------    ----------       ----------     ----------
Net income                                      $      2,725   $     1,573     $      4,977   $        552
Income tax provision                                       -           846                -            296
Interest expense, net                                  5,464         6,115           11,187         14,046
                                                 -----------    ----------     ------------     ----------
Operating income                                       8,189         8,534           16,164         14,894
Depreciation and amortization                          3,308         3,608            6,572          7,029
                                                 -----------    ----------       -------------------------
EBITDA                                          $     11,497   $    12,142     $     22,736   $     21,923
                                                 ===========    ==========       ==========     ==========

Liquidity and Capital Resources

             Our primary sources of liquidity are cash flows from operations and borrowings under our senior secured
credit facility, which is discussed below.  Our liquidity requirements will be to pay our debt, including interest expense
under the senior credit facility and notes, to pay RadioShack amounts due under the tax sharing agreement and to provide
for working capital and capital expenditures.  Decreased demand for our products could decrease our cash flow from
operations and the availability of borrowings under our credit facility.

             Working Capital.  As of December 31, 2002, cash and cash equivalents totaled $9.0 million.  Net working
capital was $50.3 million at December 31, 2002 compared to $51.6 million at June 30, 2002.

             Operating Activities.  Net cash provided by operating activities for the six months ended December 31, 2002
was $1.0 million compared to net cash provided of $25.8 million for the six months ended December 31, 2001.  Cash
flow from operations decreased year-over-year for the following reasons.

        o      Accounts payable increased $1.2 million during the first half of fiscal 2002 and declined $2.8 million
               during the first half of fiscal 2003.  The change was due to differences in the timing of plant shutdowns in
               the two years and to lower operating levels in fiscal 2003.

        o      Profit sharing and incentive compensation payments during the first half of fiscal 2003 were approximately
               $3.0 million higher than in the first half of fiscal 2002 because of the respective prior year financial results.
               Changes in the accrued balances for profit sharing and incentive compensation decreased the cash provided
               by operations an additional $730,000 in fiscal 2002 compared to fiscal 2003.

        o      Trade receivables increased in fiscal 2003, reducing cash by $1.3 million, compared with a decrease of
               $3.1 million that provided cash in fiscal 2002.  The fiscal 2003 receivables increase was due to higher sales
               levels in December 2002 compared to June 2002 sales.

        o      Increases in accrued advertising provided net cash of $4.1 million in fiscal 2003 compared to $5.7 million
               during fiscal 2002.  The decrease this year was due to lower sales and associated decreases in vendor
               incentive programs.  In addition, a particular customer changed its pattern of claiming certain incentives,
               lowering accrued advertising.

        o      In fiscal 2003, decreases in inventories provided $3.4 million of cash, compared with  $5.5 million in fiscal
               2002.

        o      During the first half of fiscal 2003, we provided O'Sullivan Holdings $6.2 million to enable it to satisfy its
               obligation under the tax sharing agreement.

                                                            22




        o      In fiscal 2003, the liability associated with the interest rate collar declined by $1.3 million as opposed to a
               $927,000 increase in fiscal 2002.

             Investing Activities.  We invested $2.7 million for capital expenditures for the six months ended December
31, 2002 compared to $5.9 million for the prior year six month period.  We currently estimate that the total capital
expenditure requirements for the remainder of the fiscal year will be approximately $3.0 million to $5.0 million, which
we expect to fund from cash flow from operations or cash on hand.  Our ability to make future capital expenditures is
subject to certain restrictions under our senior credit facility.

             Financing Activities.  On November 30, 1999 we completed our merger and recapitalization.  Our
consolidated indebtedness at December 31, 2002 was $216.7 million consisting of:

        o    $106.7 million in a senior secured credit facility consisting of a five year $20.9 million term loan A, a seven
             and one-half year $85.8 million term loan B and a $40.0 million revolving line of credit, with no borrowings
             at December 31, 2002.  The current portion of these term loans was approximately $4.7 million at December
             31, 2002.  The revolving line of credit has a $15.0 million sub-limit for letters of credit, of which we are
             currently utilizing approximately $13.8 million.

        o    $100.0 million in 13-3/8% senior subordinated notes due 2009 issued with warrants to purchase 6.0% of our
             common and Series B junior preferred stock on a fully diluted basis.  These warrants were assigned a value
             of $3.5 million.  These notes were issued at a price of 98.046% providing $98.0 million in cash proceeds
             before expenses related to the issuance.

        o    $10.0 million in variable rate industrial revenue bonds.

The reconciliation of consolidated indebtedness to recorded book value at December 31, 2002 is as follows:


                               onsolidated                    Original
                               ndebtedness                     Issue
                                                              Discount       Warrants
                              C                Current         Net of          Net of        Recorded
                              I                Portion       Accretion       Accretion      Book Value
                              -------------  -----------   --------------  -------------   ------------
                                                           (in thousands)
                                             ---           ---             --              --

                                             ---           ---             --              --
Term loan A                   $      20,917    $ (3,874)     $          -   $          -    $    17,043
Term loan B                          85,796        (875)                -              -         84,921
                                -----------     --------      -----------    -----------     ----------
Senior secured credit               106,713      (4,749)                -              -        101,964
Senior subordinated note            100,000            -          (1,601)        (2,868)         95,531
Industrial revenue bonds             10,000            -                -              -         10,000
                                -----------     --------      -----------    -----------     ----------
Total                         $     216,713    $ (4,749)     $    (1,601)   $    (2,868)    $   207,495
                                ===========     ========      ===========    ===========     ==========

             During the six months ended December 31, 2002, we made regularly scheduled principal payments of $1.7
million against the term loans included in our senior secured credit facility.  We expect to fund principal and interest
payments on our debt from cash flow from operations, cash on hand or borrowings under our revolver.  Our borrowing
availability under our credit facility was approximately $23.9 million at December 31, 2002.  Decreased demand for our
products could decrease our cash flow from operations and the availability of borrowings under our credit facility.  In
October 2002, we paid an additional $4.1 million of principal on the amounts outstanding under the senior credit facility
and increased the revolving credit line borrowings by $4.1 million.  We repaid the revolving credit line borrowings in
November 2002.


                                                            23




             The credit facility and notes are subject to certain financial and operational covenants and other restrictions,
including among others, requirements to maintain certain financial ratios and restrictions on our ability to incur additional
indebtedness.  The financial covenants contained in the credit facility, as amended, are as follows:

        o    Our consolidated leverage ratio must be less than 4.25.  The ratio at December 31, 2002 was 3.83.  At June
             30, 2003, our consolidated leverage ratio must be less than 4.00.

        o    Our consolidated interest coverage ratio must be greater than 2.00.  The ratio at December 31, 2002 was
             2.26.  At June 30, 2003, our consolidated interest coverage ratio must be greater than 2.00.

        o    Our consolidated fixed charge coverage ratio must be greater than 1.10.  The  ratio at December 31, 2002
             was 1.45.  At June 30, 2003, our consolidated fixed charge coverage ratio must be greater than 1.10.

        o    Our senior debt coverage ratio must be less than 2.50.  The ratio at December 31, 2002 was 2.06.  At June
             30, 2003, our senior debt coverage ratio must be less than 2.35.

        o    Our consolidated EBITDA must be at least $53 million for the fiscal year ending June 30, 2003.

EBITDA and consolidated interest expense as defined in the credit facility for the twelve and six months ended
December 31, 2002 were $56.6 million and $23.3 million, respectively. O'Sullivan Industries is the borrower under the
credit facility, so the covenants do not include the $21.0 million senior note of O'Sullivan Holdings or interest on the
note.  Pursuant to an amendment to our senior credit facility, $27.0 million of payments to RadioShack under the tax
sharing agreement through the period ending June 30, 2002 are excluded from the definition of consolidated fixed
charges and thus from calculations of the consolidated fixed charge coverage ratio.

             In addition, the agreements effectively prohibit the payment of dividends on our stock.

             At December 31, 2002, we were in compliance with all applicable debt covenants.  However, if our sales
and earnings do not improve from the current outlook, we may be in violation of certain of our covenants under the
senior credit facility at June 30, 2003.  We are currently working with our lenders to obtain a waiver or amendment of
these covenants.

             As required under the senior credit facility, we hedged one-half of our term loans with an initial notional
amount of $67.5 million with a costless interest rate collar.  The collar is based on three-month LIBOR with a floor of
6.43% and a ceiling of 8.75%.  To terminate this contract at December 31, 2002, we would have been required to pay
the counter-party approximately $783,000.  The counter-party to our interest rate collar provides us with the payment
amount that would be required to terminate the collar as of the end of each quarter.  We recorded the change in fair value
of the collar as increased or decreased interest expense in the consolidated statements of operations and included the
resulting liability in accrued liabilities on the consolidated balance sheets.

             See the overview section of this Management's Discussion and Analysis of Financial Condition and Results
of Operations for a discussion of the impact of the Settlement Agreement with RadioShack on our liquidity and financial
condition.


                                                            24




             The following table illustrates our contractual obligations due in the future:


                                                                           Payments Due by Period
                                                       ---------------------------------------------------------------
                                                                               (in thousands)
                                                           Less
                                                          than 12           12-36            36-60           After
       Contractual Obligations            Total           months            months          months          60 months
-------------------------------------  -----------     ------------      ------------     -----------     ------------
Long-term debt                       $     216,713   $        4,749    $       18,794   $      83,170   $      110,000
Tax benefit payments to
RadioShack(1)                               75,179            9,654            21,073          24,632           19,820
Capital lease obligations                        -                -                 -               -                -
Operating leases--unconditional               4,224            1,830             2,273             121                -
Other long-term obligations                    558              200               358               -                -
                                       -----------     ------------      ------------     -----------     ------------
Total contractual cash obligations   $     296,674   $       16,433    $       42,498   $     107,293   $      129,820
                                       ===========     ============      ============     ===========     ============

(1) The timing and amounts of payments to RadioShack are contingent on actual taxable income adjusted to
exclude the increased interest expense arising from the recapitalization and merger.  The amounts in the table
above represent the maximum amounts payable to RadioShack.
                                       ===========     ============      ============     ===========     ============

Critical Accounting Policies and Estimates

             Our discussion and analysis of our financial condition and results of operations are based upon our
consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted
in the United States.  The preparation of these financial statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and
liabilities.

             On an on-going basis, we evaluate our estimates, including those related to customer programs and
incentives, bad debts, inventories, intangible assets, income taxes, restructuring, asset impairments, contingencies and
litigation.  We base our estimates on historical experience and on various other assumptions that we believe are
reasonable under the circumstances.  The results of these estimates form the basis for making judgments about the
carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from
these estimates under different assumptions or conditions.

             We believe the following critical accounting policies affect our more significant judgments and estimates used
in the preparation of our consolidated financial statements.

        o       We derive our revenue from product sales.  We recognize revenue from the sale of products when
                persuasive evidence of an arrangement exists, the product has been delivered, the price is fixed and
                determinable and collection of the resulting receivable is reasonably assured.  For all sales, we use
                purchase orders from the customer, whether oral, written or electronically transmitted, as evidence that a
                sales arrangement exists.  Generally, delivery occurs when product is delivered to a common carrier or
                private carrier, with standard terms being FOB shipping point.  We assess whether the price is fixed and
                determinable based upon the payment terms associated with the transaction.  We assess collection based
                on a number of factors, including past transaction history with the customer and the creditworthiness of
                the customer.  Collateral is not requested from the customers.

        o       We record estimated reductions to revenue for customer programs and incentive offerings including
                special pricing agreements, price protection, promotions and other volume-based incentives.  Market
                conditions could require us to take actions to increase customer incentive offerings.  These offerings
                could result in our estimates being too small and reduce our revenues when the incentive is offered.

                                                            25




        o       We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our
                customers to make required payments.  If the financial condition of our customers were to deteriorate,
                resulting in an impairment of their ability to make payments, additional allowances may be required.

        o       We write down our inventory for estimated obsolescence or unmarketable inventory equal to the
                difference between the cost of inventory and its estimated market value based upon assumptions about
                future demand and market conditions.  If actual market conditions are less favorable than those projected
                by us, additional inventory write-downs may be required.  Obsolete and slow-moving inventory reserves
                were approximately $5.4 million and $4.9 million at December 31, 2002 and 2001, respectively.

        o       We record our deferred tax assets at the amount that the asset is more likely than not to be realized.
                While we have considered future taxable income and ongoing prudent and feasible tax planning strategies
                in assessing the need for a valuation allowance, our determinations can change.  If we objectively
                determine it was more likely than not we would be able to realize our deferred tax assets in the future in
                excess of our recorded amount, we would reduce our valuation allowance, increasing income in the
                period such determination was made.  Likewise, should we determine that we would not be able to realize
                all or part of our recorded gross deferred tax assets in the future, we would increase our valuation
                allowance, decreasing income in the period such determination was made.

        o       We periodically review our long-lived assets, including property and equipment, for impairment and
                determine whether an event or change in facts and circumstances indicates their carrying amount may not
                be recoverable.  We determine recoverability of the assets by comparing the carrying amount of the assets
                to the net future undiscounted cash flows expected to be generated by those assets.  If the sum of the
                undiscounted cash flows is less than the carrying value of the assets, an impairment charge is recognized.
                Adverse economic conditions could cause us to record impairment charges in the future.

        o       We assess goodwill regularly for impairment by applying a fair-value-based test, using the enterprise as
                the reporting unit.  If the book value of the reporting unit is below the fair value of the reporting unit,
                there is no impairment loss.  Adverse economic conditions could cause us to record impairment charges
                in the future.

        o       In the second quarter of fiscal 2001, we recorded asset impairment charges, employee termination
                benefits and other exit costs totaling $10.5 million related to a business restructuring plan to reduce
                production capacity and operating expenses.  The restructuring plan included closing our Cedar City,
                Utah facility and a reduction in our staff at our Lamar, Missouri facility.  The asset impairment charges
                related to land, building and equipment located in Cedar City, Utah.  The land and building and a limited
                amount of equipment are still for sale.  If market conditions deteriorate further, additional write-downs on
                the land, building and equipment may be necessary.

Cautionary Statement Regarding Forward Looking Information.

             Certain portions of this Report, and particularly the Notes to the Consolidated Financial Statements and the
Management's Discussion and Analysis of Financial Condition and Results of Operations, contain forward-looking
statements.  These statements can be identified by the use of future tense or dates or terms such as "believe," "would,"
"expect,"  "anticipate" or "plan."  These forward-looking statements involve risks and uncertainties.  Actual results may
differ materially from those predicted by the forward-looking statements.  Factors and possible events which could cause
results to differ include:

            o    loss of liquidity due to the arbitration panel's opinion in RadioShack Corporation v. O'Sullivan
                 Industries Holdings, Inc.;
            o    significant indebtedness that may limit our financial and operational flexibility;

                                                            26




            o    changes from anticipated levels of sales, whether due to future national or regional economic and
                 competitive conditions, including new domestic or foreign entrants into the industry, customer
                 acceptance of existing and new products, terrorist attacks or otherwise, as we are experiencing now;
            o    pricing pressures due to excess capacity in the ready-to-assemble furniture industry, as occurred in 1995
                 and is occurring again now, or customer demand in excess of our ability to supply product;
            o    raw material cost increases, particularly in particleboard and fiberboard, as occurred in 1994 and 1995
                 and to a lesser extent in fiscal 2000;
            o    transportation cost increases, due to higher fuel costs or otherwise;
            o    loss of or reduced sales to significant customers as a result of bankruptcy, liquidation, merger,
                 acquisition or any other reason, as occurred with the liquidation of Montgomery Ward in fiscal 2001, the
                 liquidation of Ames in 2002 and with the reorganization of Service Merchandise Co., Inc. in 2000;
            o    actions of current or new competitors, foreign or domestic, that increase competition with our products
                 or prices;
            o    the consolidation of manufacturers in the ready-to-assemble furniture industry;
            o    increased advertising costs associated with promotional efforts;
            o    increased interest rates;
            o    pending or new litigation or governmental regulations such as the recently settled arbitration involving
                 RadioShack;
            o    other uncertainties which are difficult to predict or beyond our control; and
            o    the risk that we incorrectly analyze these risks and forces, or that the strategies we develop to address
                 them could be unsuccessful.

See also the Risk Factors section in our amended annual report on Form 10-K/A for the year ended June 30, 2002.

             Because these forward-looking statements involve risks and uncertainties, actual results may differ
significantly from those predicted in these forward-looking statements.  You should not place a lot of weight on these
statements.  These statements speak only as of the date of this document or, in the case of any document incorporated by
reference, the date of that document.

             All subsequent written and oral forward-looking statements attributable to O'Sullivan or any person acting on
our behalf are qualified by the cautionary statements in this section.  We will have no obligation to revise these forward-
looking statements.

ITEM 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

             Our market risk is impacted by changes in interest rates, foreign currency exchange rates and certain
commodity prices.  Pursuant to our policies, we may use natural hedging techniques and derivative financial instruments
to reduce the impact of adverse changes in market prices.  We do not hold or issue derivative instruments for trading
purposes.  A change in interest rates of one percentage point would affect our cash interest expense by about $1.1 million
per year.

             We have market risk in interest rate exposure, primarily in the United States.  We manage interest rate
exposure through our mix of fixed and floating rate debt.  Interest rate swaps or collars may be used to adjust interest rate
exposures when appropriate based on market conditions.  For qualifying hedges, the interest differential of swaps is
included in interest expense.  We believe that our foreign exchange risk is not material.

             Due to the nature of our product lines, we have material sensitivity to some commodities, including
particleboard, fiberboard, corrugated cardboard and hardware.  We manage commodity price exposures primarily
through the duration and terms of our vendor contracts.  A one percent change in our raw material prices would affect
our cost of sales by approximately $1.5 million annually.


                                                            27




             As noted above, in fiscal 2000 we encountered price increases in certain commodities, which reduced our
gross margin.  During fiscal 2001, prices for these products declined, which helped gross margins.  Prices for these and
other commodities will continue to fluctuate.

Item 4.      CONTROLS AND PROCEDURES.

             O'Sullivan maintains disclosure controls and procedures (as defined in Rule 13a-14(c) of the Securities
Exchange Act of 1934) that are designed to ensure that information required to be disclosed in O'Sullivan's Exchange Act
reports is recorded, processed, summarized and reported accurately within the time periods specified in the SEC's rules
and forms, and that such information is accumulated and communicated to O'Sullivan's Chief Executive Officer and
Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.  In designing and
evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and
management was necessarily required to apply its judgment in evaluating the cost-benefit relationship of possible controls
and procedures.

             Within 90 days prior to the date of this report, O'Sullivan carried out an evaluation, under the supervision
and with the participation of O'Sullivan's management, including O'Sullivan's Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of O'Sullivan's disclosure controls and procedures.
Based on the foregoing, O'Sullivan's Chief Executive Officer and Chief Financial Officer concluded that O'Sullivan's
disclosure controls and procedures were effective.

             There have been no significant changes in O'Sullivan's internal controls or in other factors that could
significantly affect the internal controls subsequent to the date O'Sullivan completed its evaluation.  Therefore, no
corrective actions were taken.




                                                            28




                                              PART II --  OTHER  INFORMATION

ITEM 1.           LEGAL PROCEEDINGS.

         On September 24, 2002, Montgomery Ward, LLC, et al., Debtor in Possession, filed suit against O'Sullivan in
the United States Bankruptcy Court, District of Delaware, alleging that payments made by Montgomery Ward within 90
days prior to its bankruptcy constituted preferential transfers under the Bankruptcy Code that should be recovered from
O'Sullivan by Montgomery Ward, together with interest.  The alleged payments aggregate $3.7 million.  We received the
summons in this action on October 29, 2002.

         We responded to the suit denying we received any preferential payments.  We plan to contest this litigation
vigorously.

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

         Messrs. Charles A. Carroll, Richard D. Davidson, Daniel F. O'Sullivan and Harold O. Rosser were re-elected
as directors as of November 14, 2002.  We did not solicit proxies.  Each director received 100 votes; no votes were
withheld.

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K.

         (a)      Exhibits:

         A list of exhibits required to be filed as part of this Report is set forth in the Index to Exhibits, which
immediately precedes such exhibits, and is incorporated herein by reference.

         (b)      Reports on Form 8-K:

                  none

                                                            29




                                                        SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.




                                                                         O'SULLIVAN INDUSTRIES, INC.



Date:   September 9, 2003                                 By:                  /s/ Richard D. Davidson
                                                                 --------------------------------------------------

                                                                                 Richard D. Davidson
                                                                                    President and
                                                                               Chief Executive Officer


                                                            30




                                                       CERTIFICATION

         I, Richard D. Davidson, certify that:

1.       I have reviewed this amended quarterly report on Form 10-Q/A (Amendment No. 1) of O'Sullivan Industries,
Inc.;

2.       Based on my knowledge, this quarterly report, as amended, does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this quarterly report;

3.       Based on my knowledge, the financial statements, and other financial information included in this quarterly
report, as amended, fairly present in all material respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this quarterly report;

4.       The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

         a)   designed such disclosure controls and procedures to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
         particularly during the period in which this quarterly report is being prepared;

         b)   evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days
         prior to the filing date of this quarterly report (the "Evaluation Date"); and

         c)   presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and
         procedures based on our evaluation as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent
function):

         a)   all significant deficiencies in the design or operation of internal controls which could adversely affect the
         registrant's ability to record, process, summarize and report financial data and have identified for the registrant's
         auditors any material weaknesses in internal controls; and

         b)   any fraud, whether or not material, that involves management or other employees who have a significant
         role in the registrant's internal controls; and

6.       The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the
date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material
weaknesses.




Date:        September 9, 2003                                                   /s/ Richard D. Davidson
                                                                                -----------------------------------------------------

                                                                                   Richard D. Davidson
                                                                          President and Chief Executive Officer

                                                            31




                                                       CERTIFICATION

         I, Phillip J. Pacey, certify that:

1.       I have reviewed this amended quarterly report on Form 10-Q/A (Amendment No. 1) of O'Sullivan Industries,
Inc.;

2.       Based on my knowledge, this quarterly report, as amended, does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this quarterly report;

3.       Based on my knowledge, the financial statements, and other financial information included in this quarterly
report, as amended, fairly present in all material respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this quarterly report;

4.       The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

         a)   designed such disclosure controls and procedures to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
         particularly during the period in which this quarterly report is being prepared;

         b)   evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days
         prior to the filing date of this quarterly report (the "Evaluation Date"); and

         c)   presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and
         procedures based on our evaluation as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent
function):

         a)   all significant deficiencies in the design or operation of internal controls which could adversely affect the
         registrant's ability to record, process, summarize and report financial data and have identified for the registrant's
         auditors any material weaknesses in internal controls; and

         b)   any fraud, whether or not material, that involves management or other employees who have a significant
         role in the registrant's internal controls; and

6.       The registrant's other certifying officers and I have indicated in this report whether or not there were significant
changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions with regard to significant deficiencies and material
weaknesses.




Date:        September 9, 2003                                                    /s/ Phillip J. Pacey
                                                                               -----------------------------------------------------
             Phillip J. Pacey
                                                                               Senior Vice President and
                                                                                 Chief Financial Officer

                                                            32



                                                     INDEX TO EXHIBITS


                                                                                                           Page
 Exhibit No.                                         Description                                            No.
  3.1 & 4.1   Amended and Restated Certificate of Incorporation of O'Sullivan (incorporated by
              reference from Exhibit 2.4(a) to Appendix A to Proxy Statement/Prospectus included in
              Registration Statement on Form S-4 (File No. 333-81631))

  3.2 & 4.2   Bylaws of O'Sullivan (incorporated by reference from Exhibit 3.2 to Registration
              Statement on Form S-1 (File No. 33-72120))

     4.3      Specimen Senior Preferred Stock Certificate of O'Sullivan (incorporated by reference
              from Exhibit 3 to Registration Statement on Form 8-A (File No. 0-28493))

     4.4      Indenture dated as of November 30, 1999, by O'Sullivan Industries, Inc., as Issuer,
              O'Sullivan Industries - Virginia, Inc., as Guarantor, and Norwest Bank Minnesota,
              National Association, as Trustee, relating to O'Sullivan Industries, Inc.'s $100,000,000
              principal amount of 13.375% senior subordinated notes (incorporated by reference to
              Exhibit 4.4 to Quarterly Report on Form 10-Q for the quarter ended December 31, 1999
               (File No. 0-28493))

     4.5      Warrant Agreement dated as of November 30, 1999 between O'Sullivan Industries
              Holdings, Inc. and Norwest Bank Minnesota, National Association, as Warrant Agent,
              relating to warrants to purchase 39,273 shares of O'Sullivan Industries Holdings, Inc.
              Series B junior preferred stock, including form of warrant certificate (incorporated by
              reference to Exhibit 4.5 to Quarterly Report on Form 10-Q for the quarter ended
              December 31, 1999 (File No. 0-28493))

     4.6      Warrant Agreement dated as of November 30, 1999 between O'Sullivan Industries
              Holdings, Inc. and Norwest Bank Minnesota, National Association, as Warrant Agent,
              relating to warrants to purchase 93,273 shares of O'Sullivan Industries Holdings, Inc.
              common stock, including form of warrant certificate (incorporated by reference to
              Exhibit 4.6 to Quarterly Report on Form 10-Q for the quarter ended December 31, 1999
              (File No. 0-28493))

     4.7      Amended and Restated Warrant Agreement dated as of January 31, 2000 between
              O'Sullivan Industries Holdings, Inc. and the holder thereof relating to warrants to
              purchase 39,273 shares of O'Sullivan Industries Holdings, Inc. Series B junior preferred
              stock, including form of warrant certificate (incorporated by reference to Exhibit 4.7 to
              Quarterly Report on Form 10-Q for the quarter ended December 31, 1999
              (File No. 0-28493))

     4.8      Amended and Restated Warrant Agreement dated as of January 31, 2000 between
              O'Sullivan Industries Holdings, Inc. and the holder thereof relating to warrants to
              purchase 93,273 shares of O'Sullivan Industries Holdings, Inc. common stock, including
              form of warrant certificate (incorporated by reference to Exhibit 4.8 to Quarterly Report
              on Form 10-Q for the quarter ended December 31, 1999 (File No. 0-28493))
     99.1     Certificate of chief executive officer under Section 906 of the Sarbanes-Oxley Act of
              2002                                                                                          35
     99.2     Certificate of chief financial officer under Section 906 of the Sarbanes-Oxley Act of 2002    36






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