##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

|      |  |                                                                                          
|----- |  | -----------------------------------------------------------------------------------------
|þ     |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 
|     
|     
|     
|     
|      |  |                                                                                          
|     
|     
|     
|     
|      |  | For the quarterly period ended September 30, 2001                                        
|     
|     
|     
|     
|      |  |                                                                                          
|     
|     
|     
|     
|      |  | OR                                                                                       
|     
|     
|     
|     
|      |  |                                                                                          
|     
|     
|     
|     
|(BOX) |  | 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 0-20328

|                                                                 
|-----------------------------------------------------------------
|AMTROL Inc.(Exact Name of Registrant as Specified in its Charter)

|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Rhode Island                                                   |  | 05-0246955                          
|                                                               |  |                                     
|(State or Other Jurisdiction of
Incorporation or Organization) |  | (I.R.S. Employer Identification No.)

|                                                                                       
|---------------------------------------------------------------------------------------
|1400 Division Road, West Warwick, RI 02893-1008(Address of principal executive offices)

Registrants telephone number, including area code: (401) 884-6300

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 þ No (BOX)

Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date: $.01 Par Value: 100 shares
of Common stock as of November 14, 2001.





---

TABLE OF CONTENTS



|                                       |                                                                                               |                                                 |  |  |  |  |  | 
|-------------------------------------- | --------------------------------------------------------------------------------------------- | ----------------------------------------------- |  |  |  |  |  | 
|PART 1. Financial Information         
|                                       | Item 1. Consolidated Balance Sheets                                                          
|                                       |                                                                                               | Consolidated Statements of Operations          
|                                       |                                                                                               | Consolidated Statements of Shareholders Equity
|                                       |                                                                                               | Consolidated Statements of Cash Flows          
|                                       |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS     
|                                       | Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                       | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|PART II. Other Information            
|                                       | Item 1. Legal Proceedings                                                                    
|                                       | Item 2. Changes in Securities and Use of Proceeds                                            
|                                       | Item 3. Defaults Upon Senior Securities                                                      
|                                       | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                                       | Item 5. Other Information                                                                    
|                                       | Item 6. Exhibits and Reports on Form 8-K                                                     
|                                       |                                                                                               | Signatures                                     
|EX-10.1.6 Waiver and Consent Agreement



---



##### Table of Contents



AMTROL INC. AND SUBSIDIARIES

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2001

INDEX

|         |  |                                                                                                                         |  |     
|-------- |  | ----------------------------------------------------------------------------------------------------------------------- |  | ----
|         |  |                                                                                                                         |  | PAGE
|         |  |                                                                                                                         |  |     
|PART I.  |  | Financial Information                                                                                                   |  |     
|        
|        
|        
|        
|         |  |                                                                                                                         |  |     
|        
|        
|        
|        
|Item 1.  |  | Consolidated Balance Sheets -  September 30,
2001 and December 31, 2000                                                 |  | 3   
|        
|        
|        
|        
|         |  |                                                                                                                         |  |     
|        
|        
|        
|        
|         |  | Consolidated Statements of Operations -
For the Quarter and Nine Months Ended September 30, 2001
and September 30, 2000 |  | 4   
|        
|        
|        
|        
|         |  |                                                                                                                         |  |     
|        
|        
|        
|        
|         |  | Consolidated Statements of Shareholders Equity -
For the Nine Months Ended September 30, 2001
and September 30, 2000   |  | 5   
|        
|        
|        
|        
|         |  |                                                                                                                         |  |     
|        
|        
|        
|        
|         |  | Consolidated Statements of Cash Flows -
For the Nine Months Ended September 30, 2001
and September 30, 2000             |  | 6   
|        
|        
|        
|        
|         |  |                                                                                                                         |  |     
|        
|        
|        
|        
|         |  | Notes to Consolidated Financial Statements                                                                              |  | 7   
|        
|        
|        
|        
|         |  |                                                                                                                         |  |     
|        
|        
|        
|        
|Item 2.  |  | Managements Discussion and Analysis of Financial
Condition and Results of Operations                                   |  | 15  
|        
|        
|        
|        
|         |  |                                                                                                                         |  |     
|        
|        
|        
|        
|Item 3.  |  | Quantitative and Qualitative Disclosures About Market Risk                                                              |  | 19  
|        
|        
|        
|        
|         |  |                                                                                                                         |  |     
|        
|        
|        
|        
|PART II. |  | Other Information                                                                                                       |  |     
|        
|        
|        
|        
|         |  |                                                                                                                         |  |     
|        
|        
|        
|        
|Item 1.  |  | Legal Proceedings                                                                                                       |  | 20  
|        
|        
|        
|        
|         |  |                                                                                                                         |  |     
|        
|        
|        
|        
|Item 2.  |  | Changes in Securities and Use of Proceeds                                                                               |  | 20  
|        
|        
|        
|        
|         |  |                                                                                                                         |  |     
|        
|        
|        
|        
|Item 3.  |  | Defaults Upon Senior Securities                                                                                         |  | 20  
|        
|        
|        
|        
|         |  |                                                                                                                         |  |     
|        
|        
|        
|        
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                                                     |  | 20  
|        
|        
|        
|        
|         |  |                                                                                                                         |  |     
|        
|        
|        
|        
|Item 5.  |  | Other Information                                                                                                       |  | 20  
|        
|        
|        
|        
|         |  |                                                                                                                         |  |     
|        
|        
|        
|        
|Item 6.  |  | Exhibits and Reports on Form 8-K                                                                                        |  | 20  
|        
|        
|        
|        
|         |  |                                                                                                                         |  |     
|        
|        
|        
|        
|         |  | Signatures                                                                                                              |  | 21  

2



---



##### Table of Contents









AMTROL INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands)

|                                        |                                                                           |                            |                                      |         |         |                    |         |                   |         |  |  | 
|--------------------------------------- | ------------------------------------------------------------------------- | -------------------------- | ------------------------------------ | ------- | ------- | ------------------ | ------- | ----------------- | ------- |  |  | 
|                                        |                                                                           |                            |                                      |         |         | Unaudited          |         | Audited          
|                                        |                                                                           |                            |                                      |         |         | September 30, 2001 |         | December 31, 2000
|                                        |                                                                           |                            |                                      |         |         |                    |         |                  
|                                        |                                                                           |                            |                                      | ASSETS 
|                                       
|                                       
|                                       
|                                       
|Current Assets:                         |                                                                           |                            |                                      |         |         |                    |         |                  
|                                       
|                                       
|                                       
|                                       
|                                        | Cash and cash equivalents                                                 |                            | $                                    | 158     |         |                    | $       | 704               |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accounts receivable, less allowance for doubtful accounts                 |                            |                                      | 32,954  |         |                    |         | 27,591            |        
|                                       
|                                       
|                                       
|                                       
|                                        | Inventories                                                               |                            |                                      | 21,646  |         |                    |         | 20,461            |        
|                                       
|                                       
|                                       
|                                       
|                                        | Deferred income taxes  Short-term                                        |                            |                                      | 1,329   |         |                    |         | 1,031             |        
|                                       
|                                       
|                                       
|                                       
|                                        | Prepaid expenses and other                                                |                            |                                      | 2,837   |         |                    |         | 2,638             |        
|                                        |                                                                           |                            |                                      |         |         |                    |         |                  
|                                        |                                                                           | Total current assets       |                                      |         | 58,924  |                    |         |                   | 52,425  | 
|                                        |                                                                           |                            |                                      |         |         |                    |         |                  
|Property, Plant and Equipment, Net      |                                                                           |                            | 42,256                               |         |         |                    | 46,326  |                  
|                                       
|                                       
|                                       
|                                       
|Other Assets:                           |                                                                           |                            |                                      |         |         |                    |         |                  
|                                       
|                                       
|                                       
|                                       
|                                        | Goodwill                                                                  |                            |                                      | 158,457 |         |                    |         | 161,880           |        
|                                       
|                                       
|                                       
|                                       
|                                        | Deferred financing costs                                                  |                            |                                      | 3,716   |         |                    |         | 4,572             |        
|                                       
|                                       
|                                       
|                                       
|                                        | Deferred income taxes  Long-term                                         |                            |                                      | 5,095   |         |                    |         | 4,755             |        
|                                       
|                                       
|                                       
|                                       
|                                        | Other                                                                     |                            |                                      | 1,710   |         |                    |         | 1,146             |        
|                                        |                                                                           |                            |                                      |         |         |                    |         |                  
|                                        |                                                                           | Total other assets         |                                      |         | 168,978 |                    |         |                   | 172,353 | 
|                                        |                                                                           |                            |                                      |         |         |                    |         |                  
|                                        |                                                                           | $                          | 270,158                              |         |         | $                  | 271,104 |                  
|                                        |                                                                           |                            |                                      |         |         |                    |         |                  
|                                        |                                                                           |                            | LIABILITIES AND SHAREHOLDERS EQUITY |         |         |                    |         |                   |         |  | 
|                                       
|                                       
|                                       
|                                       
|Current Liabilities:                    |                                                                           |                            |                                      |         |         |                    |         |                  
|                                       
|                                       
|                                       
|                                       
|                                        | Current maturities of long-term debt                                      |                            | $                                    | 3,574   |         |                    | $       | 3,873             |        
|                                       
|                                       
|                                       
|                                       
|                                        | Notes payable to banks                                                    |                            |                                      | 7,883   |         |                    |         | 7,010             |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accounts payable                                                          |                            |                                      | 22,991  |         |                    |         | 23,869            |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accrued expenses                                                          |                            |                                      | 10,062  |         |                    |         | 10,538            |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accrued interest                                                          |                            |                                      | 3,457   |         |                    |         | 741               |        
|                                       
|                                       
|                                       
|                                       
|                                        | Accrued income taxes                                                      |                            |                                      | 297     |         |                    |         | 1,293             |        
|                                        |                                                                           |                            |                                      |         |         |                    |         |                  
|                                        |                                                                           | Total current liabilities  |                                      |         | 48,264  |                    |         |                   | 47,324  | 
|                                        |                                                                           |                            |                                      |         |         |                    |         |                  
|Other Noncurrent Liabilities            |                                                                           |                            | 4,427                                |         |         |                    | 4,439   |                  
|                                       
|                                       
|                                       
|                                       
|Long Term Debt, Less Current Maturities |                                                                           |                            | 158,436                              |         |         |                    | 159,469 |                  
|                                       
|                                       
|                                       
|                                       
|Shareholders Equity:                   |                                                                           |                            |                                      |         |         |                    |         |                  
|                                       
|                                       
|                                       
|                                       
|                                        | Capital stock $.01 par value  authorized 1,000 shares,
100 shares issued |                            |                                      |        |         |                    |         |                  |        
|                                       
|                                       
|                                       
|                                       
|                                        | Additional paid-in capital                                                |                            |                                      | 95,629  |         |                    |         | 89,903            |        
|                                       
|                                       
|                                       
|                                       
|                                        | Retained deficit                                                          |                            |                                      | (31,987 | )       |                    |         | (26,649           | )      
|                                       
|                                       
|                                       
|                                       
|                                        | Accumulated other comprehensive loss                                      |                            |                                      | (4,611  | )       |                    |         | (3,382            | )      
|                                        |                                                                           |                            |                                      |         |         |                    |         |                  
|                                        |                                                                           | Total shareholders equity |                                      |         | 59,031  |                    |         |                   | 59,872  | 
|                                        |                                                                           |                            |                                      |         |         |                    |         |                  
|                                        |                                                                           | $                          | 270,158                              |         |         | $                  | 271,104 |                  
|                                        |                                                                           |                            |                                      |         |         |                    |         |                  

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

3



---



##### Table of Contents






AMTROL INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited  in thousands)

|                                                          |  |                |        |                   |  |                |        |                |  |   |         |   |  |   |         |  
|--------------------------------------------------------- |  | -------------- | ------ | ----------------- |  | -------------- | ------ | -------------- |  | - | ------- | - |  | - | ------- | -
|                                                          |  | QUARTER ENDED  |        | NINE MONTHS ENDED
|                                                          |  |                |        |                  
|                                                          |  | Sept. 30, 2001 |        | Sept. 30, 2000    |  | Sept. 30, 2001 |        | Sept. 30, 2000
|                                                          |  |                |        |                   |  |                |        |               
|Net Sales                                                 |  | $              | 45,417 |                   |  | $              | 46,512 |                |  | $ | 140,636 |   |  | $ | 152,117 |  
|                                                         
|                                                         
|                                                         
|                                                         
|Cost of Goods Sold                                        |  |                | 34,418 |                   |  |                | 35,766 |                |  |   | 108,770 |   |  |   | 115,840 |  
|                                                          |  |                |        |                   |  |                |        |                |  |   |         |   |  |   |         |  
|Gross Profit                                              |  |                | 10,999 |                   |  |                | 10,746 |                |  |   | 31,866  |   |  |   | 36,277  |  
|                                                         
|                                                         
|                                                         
|                                                         
|Operating Expenses:                                       |  |                |        |                   |  |                |        |                |  |   |         |   |  |   |         |  
|                                                         
|                                                         
|                                                         
|                                                         
|Selling, general and administrative                       |  |                | 6,715  |                   |  |                | 6,407  |                |  |   | 20,391  |   |  |   | 19,873  |  
|                                                         
|                                                         
|                                                         
|                                                         
|Amortization of goodwill                                  |  |                | 1,112  |                   |  |                | 1,115  |                |  |   | 3,338   |   |  |   | 3,348   |  
|                                                          |  |                |        |                   |  |                |        |                |  |   |         |   |  |   |         |  
|Income from Operations                                    |  |                | 3,172  |                   |  |                | 3,224  |                |  |   | 8,137   |   |  |   | 13,056  |  
|                                                         
|                                                         
|                                                         
|                                                         
|Other Income (Expense):                                   |  |                |        |                   |  |                |        |                |  |   |         |   |  |   |         |  
|                                                         
|                                                         
|                                                         
|                                                         
|Interest expense                                          |  |                | (4,911 | )                 |  |                | (4,867 | )              |  |   | (14,737 | ) |  |   | (14,538 | )
|                                                         
|                                                         
|                                                         
|                                                         
|Interest income                                           |  |                | 22     |                   |  |                | 80     |                |  |   | 96      |   |  |   | 161     |  
|                                                         
|                                                         
|                                                         
|                                                         
|License and distributorship fees                          |  |                | 73     |                   |  |                | 52     |                |  |   | 219     |   |  |   | 157     |  
|                                                         
|                                                         
|                                                         
|                                                         
|Other Income (Expense), net                               |  |                | (255   | )                 |  |                | 498    |                |  |   | 352     |   |  |   | 732     |  
|                                                          |  |                |        |                   |  |                |        |                |  |   |         |   |  |   |         |  
|Income (Loss) before Provision
(Benefit) for Income Taxes |  |                | (1,899 | )                 |  |                | (1,013 | )              |  |   | (5,933  | ) |  |   | (432    | )
|                                                          |  |                |        |                   |  |                |        |                |  |   |         |   |  |   |         |  
|                                                         
|                                                         
|                                                         
|                                                         
|Provision (Benefit) for Income Taxes                      |  |                | (311   | )                 |  |                | 382    |                |  |   | (595    | ) |  |   | 1,878   |  
|                                                          |  |                |        |                   |  |                |        |                |  |   |         |   |  |   |         |  
|Net Loss                                                  |  | $              | (1,588 | )                 |  | $              | (1,395 | )              |  | $ | (5,338  | ) |  | $ | (2,310  | )
|                                                          |  |                |        |                   |  |                |        |                |  |   |         |   |  |   |         |  

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

4



---



##### Table of Contents






AMTROL INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders Equity
(Unaudited  in thousands)

Nine Months Ended September 30, 2001

|                            |                                            |   |              |   |                 |   |                  |       |               |   |               |        |               |   |                   |        |   |   |        |        |  
|--------------------------- | ------------------------------------------ | - | ------------ | - | --------------- | - | ---------------- | ----- | ------------- | - | ------------- | ------ | ------------- | - | ----------------- | ------ | - | - | ------ | ------ | -
|                            |                                            |   |              |   |                 |   |                  |       |               |   |               |        |               |   | Accumulated Other |        |   |   |       
|                            |                                            |   |              |   |                 |   | Additional       |       |               |   |               |        | Comprehensive |   | Comprehensive    
|                            |                                            |   | Common Stock |   | Paid-in Capital |   | Retained Deficit |       | Income (Loss) |   | Income (Loss)
|                            |                                            |   |              |   |                 |   |                  |       |               |   |              
|Balance, December 31, 2000  |                                            | $ |             |   |                 | $ | 89,903           |       |               | $ | (26,649       | )      |               | $ | (3,382            | )      |   | $ |       |       
|                           
|                           
|                           
|                           
|                            | Net loss                                   |   |              |   |                 |   |                  |       |               |   |               | (2,455 | )             |   |                   |        |   |   |        | (2,455 | )
|                           
|                           
|                           
|                           
|                            | Currency translation adjustment            |   |              |  |                 |   |                  |      |               |   |               |       |               |   |                   | (1,194 | ) |   |        | (1,194 | )
|                           
|                           
|                           
|                           
|                            | Derivative instrument valuation            |   |              |  |                 |   |                  |      |               |   |               |       |               |   |                   | (372   | ) |   |        | (372   | )
|                           
|                           
|                           
|                           
|                            | Repurchase of options and common stock     |   |              |  |                 |   |                  | (141  | )             |   |               |       |               |   |                   |       |   |   |        |       |  
|                            |                                            |   |              |   |                 |   |                  |       |               |   |               |        |               |   |                   |        |   |   |        |       
|Balance, March 31, 2001     |                                            |   |             |   |                 |   | 89,762           |       |               |   | (29,104       | )      |               |   | (4,948            | )      |   |   | (4,021 | )     
|                           
|                           
|                           
|                           
|                            | Net loss                                   |   |              |  |                 |   |                  |      |               |   |               | (1,295 | )             |   |                   |       |   |   |        | (1,295 | )
|                           
|                           
|                           
|                           
|                            | Currency translation adjustment            |   |              |  |                 |   |                  |      |               |   |               |       |               |   |                   | (440   | ) |   |        | (440   | )
|                           
|                           
|                           
|                           
|                            | Derivative instrument valuation adjustment |   |              |  |                 |   |                  |      |               |   |               |       |               |   |                   | 31     |   |   |        | 31     |  
|                           
|                           
|                           
|                           
|                            | Repurchase of common stock                 |   |              |  |                 |   |                  | (100  | )             |   |               |       |               |   |                   |       |   |   |        |       |  
|                            |                                            |   |              |   |                 |   |                  |       |               |   |               |        |               |   |                   |        |   |   |        |       
|Balance, June 30, 2001      |                                            |   |             |   |                 |   | 89,662           |       |               |   | (30,399       | )      |               |   | (5,357            | )      |   |   | (5,725 | )     
|                           
|                           
|                           
|                           
|                            | Net loss                                   |   |              |  |                 |   |                  |      |               |   |               | (1,588 | )             |   |                   |       |   |   |        | (1,588 | )
|                           
|                           
|                           
|                           
|                            | Currency translation adjustment            |   |              |  |                 |   |                  |      |               |   |               |       |               |   |                   | 1,011  |   |   |        | 1,011  |  
|                           
|                           
|                           
|                           
|                            | Derivative instrument valuation adjustment |   |              |  |                 |   |                  |      |               |   |               |       |               |   |                   | (265   | ) |   |        | (265   | )
|                           
|                           
|                           
|                           
|                            | Repurchase of common stock                 |   |              |  |                 |   |                  | (33   | )             |   |               |       |               |   |                   |       |   |   |        |       |  
|                           
|                           
|                           
|                           
|                            | Issuance of common stock                   |   |              |  |                 |   |                  | 6,000 |               |   |               |       |               |   |                   |       |   |   |        |       |  
|                            |                                            |   |              |   |                 |   |                  |       |               |   |               |        |               |   |                   |        |   |   |        |       
|Balance, September 30, 2001 |                                            | $ |             |   |                 | $ | 95,629           |       |               | $ | (31,987       | )      |               | $ | (4,611            | )      |   | $ | (6,567 | )     
|                            |                                            |   |              |   |                 |   |                  |       |               |   |               |        |               |   |                   |        |   |   |        |       

Nine Months Ended September 30, 2000

|                            |                                 |   |              |   |                 |   |                  |      |               |   |               |        |               |   |                   |        |   |   |        |        |  
|--------------------------- | ------------------------------- | - | ------------ | - | --------------- | - | ---------------- | ---- | ------------- | - | ------------- | ------ | ------------- | - | ----------------- | ------ | - | - | ------ | ------ | -
|                            |                                 |   |              |   |                 |   |                  |      |               |   |               |        |               |   | Accumulated Other |        |   |   |       
|                            |                                 |   |              |   |                 |   | Additional       |      |               |   |               |        | Comprehensive |   | Comprehensive    
|                            |                                 |   | Common Stock |   | Paid-in Capital |   | Retained Deficit |      | Income (Loss) |   | Income (Loss)
|                            |                                 |   |              |   |                 |   |                  |      |               |   |              
|Balance, December 31, 1999  |                                 | $ |             |   |                 | $ | 90,156           |      |               | $ | (22,503       | )      |               | $ | (2,350            | )      |   | $ |       |       
|                           
|                           
|                           
|                           
|                            | Net income                      |   |              |  |                 |   |                  |     |               |   |               | 311    |               |   |                   |       |   |   |        | 311    |  
|                           
|                           
|                           
|                           
|                            | Currency translation adjustment |   |              |  |                 |   |                  |     |               |   |               |       |               |   |                   | (931   | ) |   |        | (931   | )
|                            |                                 |   |              |   |                 |   |                  |      |               |   |               |        |               |   |                   |        |   |   |        |       
|Balance, April 1, 2000      |                                 |   |             |   |                 |   | 90,156           |      |               |   | (22,192       | )      |               |   | (3,281            | )      |   |   | (620   | )     
|                           
|                           
|                           
|                           
|                            | Net loss                        |   |              |  |                 |   |                  |     |               |   |               | (1,226 | )             |   |                   |       |   |   |        | (1,226 | )
|                           
|                           
|                           
|                           
|                            | Currency translation adjustment |   |              |  |                 |   |                  |     |               |   |               |       |               |   |                   | 132    |   |   |        | 132    |  
|                           
|                           
|                           
|                           
|                            | Issuance
of common stock        |   |              |  |                 |   |                  | 250  |               |   |               |       |               |   |                   |       |   |   |        |       |  
|                            |                                 |   |              |   |                 |   |                  |      |               |   |               |        |               |   |                   |        |   |   |        |       
|Balance, July 1, 2000       |                                 |   |             |   |                 |   | 90,406           |      |               |   | (23,418       | )      |               |   | (3,149            | )      |   |   | (1,714 | )     
|                           
|                           
|                           
|                           
|                            | Net loss                        |   |              |  |                 |   |                  |     |               |   |               | (1,395 | )             |   |                   |       |   |   |        | (1,395 | )
|                           
|                           
|                           
|                           
|                            | Currency translation adjustment |   |              |  |                 |   |                  |     |               |   |               |       |               |   |                   | (1,524 | ) |   |        | (1,524 | )
|                           
|                           
|                           
|                           
|                            | Repurchase of common stock      |   |              |  |                 |   |                  | (564 | )             |   |               |       |               |   |                   |       |   |   |        |       |  
|                            |                                 |   |              |   |                 |   |                  |      |               |   |               |        |               |   |                   |        |   |   |        |       
|Balance, September 30, 2000 |                                 | $ |             |   |                 | $ | 89,842           |      |               | $ | (24,813       | )      |               | $ | (4,673            | )      |   | $ | (4,633 | )     
|                            |                                 |   |              |   |                 |   |                  |      |               |   |               |        |               |   |                   |        |   |   |        |       

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

5



---



##### Table of Contents






AMTROL INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited  in thousands)

|                                                             |                                                        |                                              |                                             |                                           |        |                   |        |               |        |   |        |  
|------------------------------------------------------------ | ------------------------------------------------------ | -------------------------------------------- | ------------------------------------------- | ----------------------------------------- | ------ | ----------------- | ------ | ------------- | ------ | - | ------ | -
|                                                             |                                                        |                                              |                                             |                                           |        | NINE MONTHS ENDED
|                                                             |                                                        |                                              |                                             |                                           |        |                  
|                                                             |                                                        |                                              |                                             |                                           |        | September 30,     |        | September 30,
|                                                             |                                                        |                                              |                                             |                                           |        | 2001              |        | 2000         
|                                                             |                                                        |                                              |                                             |                                           |        |                   |        |              
|Cash Flows Provided by (Used in) Operating Activities:       |                                                        |                                              |                                             |                                           |        |                   |        |              
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Net loss                                               |                                              | $                                           | (5,338                                    | )      |                   | $      | (2,310        | )     
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Adjustments to reconcile net income (loss) to net cash |                                              |                                             |                                           |        |                   |        |               |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                        | provided by (used in) operating activities - |                                             |                                           |        |                   |        |               |        |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                        | Depreciation and amortization                |                                             |                                           | 10,388 |                   |        |               | 10,730 |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                        | Provision for losses on accounts receivable  |                                             |                                           | 116    |                   |        |               | 13     |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                        |                                              | Changes in operating assets and liabilities |                                           | (8,504 | )                 |        |               | (9,471 | )
|                                                             |                                                        |                                              |                                             |                                           |        |                   |        |               |       
|                                                             |                                                        |                                              |                                             | Net cash (used in) operating activities   |        |                   | (3,338 | )             |        |   | (1,038 | )
|                                                             |                                                        |                                              |                                             |                                           |        |                   |        |               |       
|Cash Flows Provided by (Used in) Investing Activities:       |                                                        |                                              |                                             |                                           |        |                   |        |              
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Proceeds from sale of property, plant and equipment    |                                              |                                             | 70                                        |        |                   |        | 31            |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Capital expenditures                                   |                                              |                                             | (2,767                                    | )      |                   |        | (4,545        | )     
|                                                             |                                                        |                                              |                                             |                                           |        |                   |        |               |       
|                                                             |                                                        |                                              |                                             | Net cash (used in) investing activities   |        |                   | (2,697 | )             |        |   | (4,514 | )
|                                                             |                                                        |                                              |                                             |                                           |        |                   |        |               |       
|Cash Flows Provided by (Used in) Financing Activities:       |                                                        |                                              |                                             |                                           |        |                   |        |              
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Repayment of debt                                      |                                              |                                             | (54,669                                   | )      |                   |        | (29,459       | )     
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Issuance of debt                                       |                                              |                                             | 54,452                                    |        |                   |        | 35,627        |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Proceeds from issuance of common stock                 |                                              |                                             | 6,000                                     |        |                   |        | 250           |       
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Repurchase of options and common stock                 |                                              |                                             | (274                                      | )      |                   |        | (564          | )     
|                                                             |                                                        |                                              |                                             |                                           |        |                   |        |               |       
|                                                             |                                                        |                                              |                                             | Net cash provided by financing activities |        |                   | 5,509  |               |        |   | 5,854  |  
|                                                             |                                                        |                                              |                                             |                                           |        |                   |        |               |       
|Net Increase (Decrease) in Cash and Cash Equivalents         |                                                        |                                              | (526                                        | )                                         |        |                   | 302    |              
|                                                            
|                                                            
|                                                            
|                                                            
|Effect of exchange rate changes on cash and cash equivalents |                                                        |                                              | (20                                         | )                                         |        |                   | (33    | )            
|                                                            
|                                                            
|                                                            
|                                                            
|Cash and Cash Equivalents, beginning of period               |                                                        |                                              | 704                                         |                                           |        |                   | 674    |              
|                                                             |                                                        |                                              |                                             |                                           |        |                   |        |               |       
|Cash and Cash Equivalents, end of period                     |                                                        | $                                            | 158                                         |                                           |        | $                 | 943    |              
|                                                             |                                                        |                                              |                                             |                                           |        |                   |        |               |       

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

6



---



##### Table of Contents



AMTROL INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



|1. |  | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments necessary to present fairly,
in accordance with generally accepted accounting principles, the
financial position, results of operations and cash flows of AMTROL Inc.
and its subsidiaries (the Company) for the interim periods presented.
Such adjustments consisted of only normal recurring items. The results
of operations for the interim periods shown in this report are not
necessarily indicative of results for any future interim period or for
the entire year. These consolidated financial statements do not include
all disclosures associated with annual consolidated financial statements
and accordingly should be read in conjunction with the consolidated
financial statements and notes thereto included in the Companys Annual
Report on Form 10-K.                                                                                
|  
|2. |  | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   |  | The preparation of the consolidated financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|3. |  | Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|   |  | Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   |  | The excess of purchase price over the fair value of net assets acquired
is allocated to goodwill and is included in other assets. Goodwill is
being amortized over 40 years. The Company accounts for long-lived and
intangible assets in accordance with Statement of Financing Accounting
Standards (SFAS) No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of.The Company
continually reviews its intangible assets for events or changes in
circumstances that might indicate the carrying amount of the assets may
not be recoverable. The Company assesses the recoverability of the
assets by determining whether the amortization of such intangibles over
their remaining lives can be recovered through projected undiscounted
future cash flows. The amount of impairment, if any, is measured based
on the fair value of the impaired asset. At September 30, 2001, no such
impairment of assets was indicated.

7



---



##### Table of Contents





| |  | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Company adopted Staff Accounting Bulletin (SAB) No. 101, Revenue
Recognition in Financial Statements,as of January 1, 2001. In
accordance with SAB No. 101, the Company recognizes revenue only when
there is a valid contract or purchase order, which includes a fixed
price; the goods have been delivered in accordance with the shipping
terms; and there is an expectation that the collection of the revenue is
reasonably assured. The cumulative effect of this adoption had no net
effect on the accompanying consolidated statements of operations.                                                                                    
|
| |  | The Company has reclassified shipping and handling costs as revenue
consistent with the presentation required by Emerging Issues Task Force
(EITF) 00-10. These amounts were $2.2 million and $7.5 million for the
three and nine months ended September 30, 2000, respectively.                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | Volume Rebates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | The Company adopted EITF 00-22, Accounting for Points and Certain
Other Time-Based or Volume-Based Sales Incentive Offers, and Offers for
Free Products or Services to Be Delivered in the Futureas of January,
2001. EITF 00-22 requires the Company to recognize volume rebate program
obligations as a reduction of revenue based on a systematic and rational
allocation of the cost of honoring rebates earned and claimed by each
customer. The Company historically has recorded an accrual for volume
rebates and the cost in the program is recorded against revenue.
Accordingly, there was no impact to the Company in adopting EITF 00-22.
|
| |  | Deferred Financing Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Deferred financing costs are stated at cost as a component of other
assets and are amortized over the life of the related debt using the
effective interest method. Amortization of deferred financing costs is
included in interest expense.                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | Foreign Currency Translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Assets and liabilities of non-U.S. operations have been translated into
United States dollars using the rate of exchange existing at the end of
the quarter. Shareholders equity has been converted using historical
exchange rates, and revenues and expenses at the average exchange rates
prevailing during the three and nine month periods. The cumulative
effect of the resulting translation is reflected as a separate component
of shareholders equity.                                                                                                                                                                                        
|
| |  | Reclassifications                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | Certain amounts in prior periods have been reclassified to permit
comparison to the current year presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

8



---



##### Table of Contents





|   |  | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | In August 2001, the Financial Accounting Standards Board (FASB) issued
SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets.This statement supersedes FASB Statement No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed of, and the accounting and reporting provisions of APB Opinion
No. 30, Reporting the Results of Operations  Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions.This statement provides
for use of one accounting model for long-lived assets to be disposed of
by sale, whether previously held and used or newly acquired, and broadens
the presentation of discontinued operations to include more disposal
transactions. The provisions of this statement are effective for
financial statements issued for fiscal years beginning after December 15,
2001, and interim periods within those fiscal years. The Company is
currently evaluating what the impact of adopting SFAS No. 144 may have
and has not yet determined the effect, if any, on its results of
operations or financial condition.
|  
|   |  | In July 2001, the FASB released SFAS No. 141, Business Combinations and
SFAS No. 142, Goodwill and Other Intangible Assets.SFAS No. 141
requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001. SFAS No. 142 changes the
accounting for goodwill from an amortization method to an impairment-only
approach. As a result of SFAS No. 142, amortization of goodwill to
earnings will cease and instead, the carrying value of goodwill will be
evaluated for impairment on at least an annual basis. The Company will
comply with SFAS No. 141 for any future business combinations and will
adopt SFAS No. 142 effective January 1, 2002. The Company is evaluating
the impact of adoption of SFAS No. 142 and has not yet determined the
effect on its consolidated financial statements. Amortization of
goodwill for the three and nine month periods ended September 30, 2001
was $1.1 million and $3.3 million, respectively.                                                                                                                                                                                                        
|  
|4. |  | Accounting for Derivative Instruments and Hedging Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   |  | Effective January 1, 2001, the Company adopted SFAS No. 133, Accounting
for Derivative Instruments and Hedging Activities,SFAS No. 137,
Accounting for Derivative Instruments and Hedging Activities  Deferral
of the Effective Date of FASB Statement No. 133  an Amendment of FASB
Statement No. 133and SFAS No. 138, Accounting for Certain Derivative
Instruments and Certain Hedging Activities  an Amendment of FASB
Statement No. 133(collectively SFAS No. 133 as amended). These standards
were adopted as a change in accounting principle and do not apply
retroactively to financial statements of prior periods.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   |  | The Company has one derivative contract consisting of an interest rate
swap contract and an interest rate cap (the Contract) outstanding as of
September 30, 2001, with an initial notional amount of $15 million,
decreasing on a consistent basis with repayment terms of the underlying
debt. Under this arrangement, which will mature on June 30, 2004, the
Company receives the 90-day LIBOR rate and pays a fixed rate of 5.85% for
the period from January 1, 2001 through maturity, unless LIBOR increases
to 7.1%. If LIBOR increases to 7.1%, then the Company continues to
receive the 90-day LIBOR rate but                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

9



---



##### Table of Contents





|   |  | now pays the 90-day LIBOR rate for all subsequent periods capped at a
maximum of 7.1%. The LIBOR rate has not exceeded 7.1% since inception of
the Contract and it was treated, prior to adoption of SFAS No. 133, as a
hedge agreement and accounted for as such. The Contract has been
designated as a cash flow hedge of variable future cash flows associated
with the interest on the Bank Credit Agreement, Tranche B Long Term Debt,
through May 13, 2004 (the maturity date of the debt).
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | As of September 30, 2001, the fair value of the instrument ($0.6 million)
was recorded in other non-current liabilities with a corresponding entry
to accumulated other comprehensive loss. Subsequent changes in the fair
value of the swap will be recorded through accumulated other
comprehensive loss (except for changes related to ineffectiveness, which
will be recorded currently through net income). The Company does not
currently anticipate any ineffectiveness under the hedge.  
|  
|5. |  | Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|   |  | Inventories are stated at the lower of cost or market and were as follows
(in thousands):                                                                                                                                                                                                                                                                                                                                                                                                        

|                                  |  |               |        |              |  |   |        | 
|--------------------------------- |  | ------------- | ------ | ------------ |  | - | ------ | 
|                                  |  | September 30, |        | December 31,
|                                  |  | 2001          |        | 2000        
|                                  |  |               |        |             
|Raw materials and work in process |  | $             | 12,247 |              |  | $ | 10,322 | 
|                                 
|                                 
|                                 
|                                 
|Finished goods                    |  |               | 9,399  |              |  |   | 10,139 | 
|                                  |  |               |        |              |  |   |        | 
|                                  |  | $             | 21,646 |              |  | $ | 20,461 | 
|                                  |  |               |        |              |  |   |        | 



|6. |  | Long-Term Debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Revolving Credit and Term Loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |  | The Company is party to a Bank Credit Agreement dated as of November 13,
1996 (as amended, the Credit Agreement), which provides for secured borrowings from
a syndicate of lenders. The Companys obligations under the Credit
Agreement are guaranteed by AMTROL Holdings Inc. and each direct and
indirect domestic subsidiary of the Company. The Companys obligations
under the Credit Agreement are secured by substantially all assets of the
Company and its subsidiaries. The Credit Agreement has been amended on
several occasions, most recently on March 30, 2001 (the March 30
Amendment). The March 30 Amendment modifies certain covenants and
provides for a capital contribution to the Company and purchase of shares
by Cypress Merchant Banking Partners L.P. and/or its affiliates
(Cypress) if necessary to ensure compliance with the financial covenant
terms of the Credit Agreement. In addition, on November 13, 2001 the
Company entered into a Waiver and Consent to Credit Agreement and Capital
Contribution Agreement (the Waiver).
|  
|   |  | Under the Credit Agreement, a portion of the term loans
($2.3 million bearing an interest rate of LIBOR plus
350 basis points) (the Tranche A Term Loans) matures on May 13, 2002,
with quarterly amortization payments during the term of the loans. The
weighted average interest rate on the Tranche A loans for the current
nine-month period was 7.98 percent. The Credit Agreement provides for a Revolving Credit Facility,
with an available amount of $15.0 million for working capital needs, which                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

10



---



##### Table of Contents





| |  | also
matures on May 13, 2002. The remainder ($38.2 million bearing an
interest rate of LIBOR plus 400 basis points) of the Term Loans (the
Tranche B Term Loans) will mature on May 13, 2004, with nominal
quarterly amortization prior to the maturity of the Tranche A Term Loans
and with the remaining amounts amortizing on a quarterly
basis thereafter. The weighted average interest rate on the Tranche B
loans for the current nine month period was 8.48 percent.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Pursuant to the March 30 Amendment, the loans under the Credit Agreement
bear interest, at the Companys option, at either (A) a base rate equal
to the higher of (i) the federal funds rate plus 0.5% or (ii) the banks
prime lending rate plus (x) in the case of Tranche A Term Loans and loans
under the Revolving Credit Facility, an applicable spread ranging from
1.75% to 2.50% (determined based on the Companys leverage ratio) or (y)
in the case of Tranche B Term Loans, 3.00%; or (B) a Eurodollar rate
plus (x) in the case of Tranche A Term Loans and loans under the
Revolving Credit Facility, an applicable spread ranging from 2.75% to
3.50% (determined based on the Companys leverage ratio), or (y) in the
case of Tranche B Term Loans, 4.00%.                                                                                                                                                                               
|
| |  | Commitments under the Revolving Credit Facility were reduced to $15.0
million on March 30, 2001. The Revolving Credit Facility will mature on
May 13, 2002. As of September 30, 2001, the amount outstanding under the
Revolving Credit Facility was $6.2 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | The Revolving Credit Facility requires the Company to pay a commitment
fee on the average daily aggregate unutilized portion of the Revolving
Credit Facility at a rate of 0.5% per annum, payable quarterly in
arrears, as well as a commission on trade and standby letters of credit
of 1.25% per annum of the amount to be drawn under the Credit Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | The Credit Agreement contains a number of covenants that, among other
things, restrict the ability of the Company and its subsidiaries to
dispose of assets, incur additional indebtedness, incur guaranty
obligations, repay other indebtedness or amend other debt instruments,
pay dividends, create liens on assets, enter into leases, make
investments, make acquisitions, engage in mergers or consolidations, make
capital expenditures, engage in certain transactions with subsidiaries
and affiliates and otherwise restrict corporate activities. In addition,
the Credit Agreement requires compliance with certain financial
covenants, including requiring the Company to maintain a minimum level of
earnings before income taxes, depreciation and amortization (EBITDA), a
minimum ratio of EBITDA to interest expense and a maximum ratio of
Indebtedness to EBITDA, in each case tested at the end of each fiscal
quarter of the Company.
|
| |  | Pursuant to the March 30 Amendment, certain Cypress affiliates
contributed equity to the Company in order to ensure compliance with
certain covenants of the Credit Agreement. On August 14, 2001, Cypress
paid $6.0 million in exchange for shares of common stock. These funds
were used by the Company to pay down its Tranche A, Tranche B and
revolver debt of $0.4 million, $4.9 million and $0.7 million,
respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

11



---



##### Table of Contents





|   |  | Under the terms of the March 30 Amendment, an additional contribution of
approximately $12.6 million would have been required no later than
November 14, 2001. However, pursuant to the terms of the waiver, various
lenders which are parties to the Credit Agreement agreed to waive for the
fiscal quarter ending September 30, 2001, the compliance requirements of
Section 8.12 of the Credit Agreement, which contain
financial covenants including required leverage ratios. The Waiver
expires on December 27, 2001. For the time period covered by the Waiver,
Cypress is not required to make any capital contribution which would have
otherwise been required under the March 30 Amendment. The Company agreed
to pay the relevant financial institutions delivering executed copies of
the Waiver a consent fee consisting of 0.1 percent of the total loan
amounts outstanding with respect to such institutions as of the date of
the Waiver.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | There can be no assurance that the Company will be able to comply with
the financial covenants contained in the Credit Agreement after the
Waiver expires on December 27, 2001. The Company is currently in negotiations with two
financial institutions
to obtain alternative financing to the Bank
Credit facility with more favorable credit terms. In addition, even if
the Company were able to comply with (or obtain further waivers to) the
terms of the Credit Agreement, the Company would need to obtain
alternative financing during 2002 in order to refinance those provisions
of the Credit Agreement which come due, as described above, during 2002.                                                                                                                                                                                                                                                                                       
|  
|   |  | Senior Subordinated Notes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   |  | The Company issued $115.0 million of Senior Subordinated Notes due 2006
(the Notes) under an Indenture dated November 1, 1996
(the Indenture). The Notes are unsecured senior
subordinated obligations of the Company. The
Notes bear interest at a rate of 10.625% per annum that is payable
semi-annually on each June 30 and December 31 commencing on June 30,
1997.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   |  | The Notes are redeemable at the option of the Company on or after
December 31, 2001. The Notes will be subject to redemption, in whole or
in part, at various redemption prices, declining from 105.313% of the
principal amount to par on and after December 31, 2003. Upon a Change
of Control (as defined in the Indenture), each Note holder has the right
to require the Company to repurchase such holders Notes at a purchase
price of 101% of the principal amount plus accrued interest.                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   |  | The Indenture contains certain affirmative and negative covenants
and restrictions. As of September 30, 2001, the Company was in
compliance with the various covenants of the Credit Agreement and the
Indenture.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   |  | The Company and/or affiliates of the Company, including entities related
to Cypress may, from time to time, purchase the Notes
previously issued by the Company in the open market or by other means.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|7. |  | Provision for Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   |  | The effective income tax rates used in the interim consolidated financial
statements are estimates of the full years rates. For 2001, the
difference between the provision computed using the statutory U.S.
Federal income tax rate and the provision for income taxes in the
accompanying consolidated financial statements is primarily the result of
goodwill amortization and foreign operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

12



---



##### Table of Contents





|8. |  | Business Segment Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The Companys reportable segments are delineated geographically. In
addition to the geographic delineation, the segments are managed
separately because of their different product offerings, markets served
and cost structures.                                                                                                                                                                                                                                                                                                                                   
|  
|   |  | The Companys North American segment operates manufacturing facilities in
Rhode Island, Kentucky, Maryland and Ohio, and operates a distribution
facility in Ontario, Canada. This segment manufactures and markets
products used principally in flow control, storage, heating, and other
treatment of fluids. These products
are marketed throughout the world but primarily in North America, Western
Europe, Asia and Mexico.                                                                                                                                   
|  
|   |  | The Companys European segment includes the Companys facilities in
Guimaraes, Portugal, Donaueschingen, Germany and Swarzedz, Poland. The
Guimaraes facility manufactures returnable and non-returnable steel gas
cylinders for storing cooking, heating and refrigerant gases that are
marketed throughout Europe, the Middle East and Africa, as well as the
Far East. The Donaueschingen facility manufactures residential and
commercial water heaters marketed primarily in Switzerland, Austria and
Germany. The Swarzedz facility refurbishes gas cylinders.
|  
|   |  | The primary criteria by which financial performance is evaluated and
resources are allocated include net sales and EBITDA. The following is a
summary of key financial data by segment:                                                                                                                                                                                                                                                                                                                                                                             

13



---



##### Table of Contents



|                       |               |               |   |               |                   |          |   |          |        |          |   |         |         |  |   |         |         | 
|---------------------- | ------------- | ------------- | - | ------------- | ----------------- | -------- | - | -------- | ------ | -------- | - | ------- | ------- |  | - | ------- | ------- | 
|                       |               |               |   | Quarter Ended | Nine Months Ended
|                       |               |               |   |               |                  
|                       |               |               |   | Sept 30,      |                   | Sept 30, |   | Sept 30, |        | Sept 30,
|                       |               |               |   | 2001          |                   | 2000     |   | 2001     |        | 2000    
|                       |               |               |   |               |                   |          |   |          |        |         
|Net
Sales              |               |               |   |               |                   |          |   |          |        |          |   |         |         |  |   |        
|                      
|                      
|                      
|                      
|                       | North America |               |   |               |                   |          |   |          |        |          |   |         |         |  |   |         |        
|                      
|                      
|                      
|                      
|                       |               | United States |   | $             | 30,488            |          |   | $        | 31,602 |          |   | $       | 91,101  |  |   | $       | 99,881  | 
|                      
|                      
|                      
|                      
|                       |               | Other         |   |               | 1,448             |          |   |          | 1,524  |          |   |         | 4,153   |  |   |         | 4,263   | 
|                      
|                      
|                      
|                      
|                       | Europe        |               |   |               |                   |          |   |          |        |          |   |         |         |  |   |         |        
|                      
|                      
|                      
|                      
|                       |               | Portugal      |   |               | 11,019            |          |   |          | 10,353 |          |   |         | 37,274  |  |   |         | 39,006  | 
|                      
|                      
|                      
|                      
|                       |               | Other         |   |               | 2,462             |          |   |          | 3,033  |          |   |         | 8,108   |  |   |         | 8,967   | 
|                       |               |               |   |               |                   |          |   |          |        |          |   |         |         |  |   |         |         | 
|                       | Consolidated  |               | $ | 45,417        |                   |          | $ | 46,512   |        |          | $ | 140,636 |         |  | $ | 152,117 |        
|                       |               |               |   |               |                   |          |   |          |        |          |   |         |         |  |   |         |         | 
|Income from Operations |               |               |   |               |                   |          |   |          |        |          |   |         |         |  |   |        
|                      
|                      
|                      
|                      
|                       | North America |               | $ | 2,319         |                   |          | $ | 2,706    |        |          | $ | 5,051   |         |  | $ | 10,171  |        
|                      
|                      
|                      
|                      
|                       | Europe        |               |   | 853           |                   |          |   | 518      |        |          |   | 3,086   |         |  |   | 2,885   |        
|                       |               |               |   |               |                   |          |   |          |        |          |   |         |         |  |   |         |         | 
|                       | Consolidated  |               | $ | 3,172         |                   |          | $ | 3,224    |        |          | $ | 8,137   |         |  | $ | 13,056  |        
|                       |               |               |   |               |                   |          |   |          |        |          |   |         |         |  |   |         |         | 
|EBITDA                 |               |               |   |               |                   |          |   |          |        |          |   |         |         |  |   |        
|                      
|                      
|                      
|                      
|                       | North America |               | $ | 4,845         |                   |          | $ | 5,263    |        |          | $ | 12,715  |         |  | $ | 17,828  |        
|                      
|                      
|                      
|                      
|                       | Europe        |               |   | 1,290         |                   |          |   | 1,786    |        |          |   | 5,620   |         |  |   | 6,271   |        
|                       |               |               |   |               |                   |          |   |          |        |          |   |         |         |  |   |         |         | 
|                       | Consolidated  |               | $ | 6,135         |                   |          | $ | 7,049    |        |          | $ | 18,335  |         |  | $ | 24,099  |        
|                       |               |               |   |               |                   |          |   |          |        |          |   |         |         |  |   |         |         | 
|Long-lived assets      |               |               |   |               |                   |          |   |          |        |          |   |         |         |  |   |        
|                      
|                      
|                      
|                      
|                       | North America |               |   |               |                   |          |   |          |        |          |   |         |         |  |   |         |        
|                      
|                      
|                      
|                      
|                       |               | United States |   |               |                   |          |   |          |        |          |   | $       | 158,152 |  |   | $       | 165,634 | 
|                      
|                      
|                      
|                      
|                       |               | Other         |   |               |                   |          |   |          |        |          |   |         | 10      |  |   |         | 16      | 
|                      
|                      
|                      
|                      
|                       | Europe        |               |   |               |                   |          |   |          |        |          |   |         |         |  |   |         |        
|                      
|                      
|                      
|                      
|                       |               | Portugal      |   |               |                   |          |   |          |        |          |   |         | 33,220  |  |   |         | 33,368  | 
|                      
|                      
|                      
|                      
|                       |               | Other         |   |               |                   |          |   |          |        |          |   |         | 9,331   |  |   |         | 7,454   | 
|                       |               |               |   |               |                   |          |   |          |        |          |   |         |         |  |   |        
|                       | Consolidated  |               |   |               |                   |          |   |          |        |          | $ | 200,713 |         |  | $ | 206,472 |        
|                       |               |               |   |               |                   |          |   |          |        |          |   |         |         |  |   |        



| |  | Income from operations for the North American business segment is reduced
by goodwill amortization for each year presented. EBITDA is earnings (net
income/loss) before interest, taxes, depreciation and amortization. The
method of calculating EBITDA is consistent with the definition contained in
the Bank Credit Agreement and Senior Subordinated Debt Agreement. Readers
of financial statements frequently consider EBITDA a useful tool in
evaluating a companys performance. Therefore, the Company believes that
inclusion of EBITDA is useful supplemental information. However, EBITDA is
not a measure of true cash flow since it does not incorporate changes in
other assets or liabilities that may generate or require cash. EBITDA is
not a generally accepted accounting measure. Long-lived assets include
property, plant and equipment and goodwill.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

14



---



##### Table of Contents



AMTROL INC. AND SUBSIDIARIES




Item 2.

MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

The discussion in this section should be read in conjunction with the Notes to
Consolidated Financial Statements of the Company included elsewhere.

The Company and its subsidiaries and their representatives may from time to
time make written or oral statements, including statements contained in the
Companys filings with the Securities and Exchange Commission (SEC) and in its
reporting to customers or vendors, which constitute or contain
forward-looking statements as that term is defined in the Private Securities
Litigation Reform Act of 1995 or the SEC in its rules, regulations and
releases.

All statements other than statements of historical facts included in this Form
10-Q regarding the Companys financial position, strategic initiatives and
statements addressing industry developments are forward-looking statements.
When incorporated in this discussion, the words expect(s), feel(s),
believe(s), anticipate(s) and similar expressions are intended to identify
some of these forward-looking statements. Although the Company believes that
the expectations reflected in such forward-looking statements are expressed in
good faith and are believed to have a reasonable basis, there can be no
assurance that such expectations or beliefs will result or be achieved or
accomplished. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The
following are some of the important factors that can vary or change or involve
substantial risk and cause actual results to differ materially from such
expectations: the Companys ability to successfully implement its business
strategy; the availability and cost of raw materials; changes in domestic or
foreign government regulation or enforcement policies, particularly related to
refrigerant gas and building and energy efficiency requirements; development of
competing technologies; acceptance of the Companys existing and planned new
products in international markets; competition in the Companys markets,
particularly price competition and competition from abroad; the rate of growth
of developing economies and demand for the Companys products; the ultimate
cost of future warranty claims; whether the Company succeeds in acquiring new
businesses; availability of capital; the business abilities and judgment of
personnel; and general economic, financial and business conditions, both
domestic and international.

Results of Operations

The following table sets forth, for the periods indicated, the percentages of
the Companys net sales represented by certain income and expense items in the
Companys Consolidated Statements of Operations:

15



---



##### Table of Contents



|                                                |  |               |       |                   |  |               |       |               |  |  |       |    |  |  |       |   
|----------------------------------------------- |  | ------------- | ----- | ----------------- |  | ------------- | ----- | ------------- |  |  | ----- | -- |  |  | ----- | --
|                                                |  | QUARTER ENDED |       | NINE MONTHS ENDED
|                                                |  |               |       |                  
|                                                |  | September 30, |       | September 30,     |  | September 30, |       | September 30,
|                                                |  | 2001          |       | 2000              |  | 2001          |       | 2000         
|                                                |  |               |       |                   |  |               |       |              
|Net sales                                       |  |               | 100.0 | %                 |  |               | 100.0 | %             |  |  | 100.0 | %  |  |  | 100.0 | % 
|                                               
|                                               
|                                               
|                                               
|Cost of goods sold                              |  |               | 75.8  |                   |  |               | 76.9  |               |  |  | 77.3  |    |  |  | 76.2  |   
|                                                |  |               |       |                   |  |               |       |               |  |  |       |    |  |  |       |   
|Gross profit                                    |  |               | 24.2  |                   |  |               | 23.1  |               |  |  | 22.7  |    |  |  | 23.8  |   
|                                               
|                                               
|                                               
|                                               
|Selling, general and
administrative expenses    |  |               | 14.8  |                   |  |               | 13.8  |               |  |  | 14.5  |    |  |  | 13.1  |   
|                                               
|                                               
|                                               
|                                               
|Amortization of goodwill                        |  |               | 2.4   |                   |  |               | 2.4   |               |  |  | 2.4   |    |  |  | 2.2   |   
|                                                |  |               |       |                   |  |               |       |               |  |  |       |    |  |  |       |   
|Income from operations                          |  |               | 7.0   |                   |  |               | 6.9   |               |  |  | 5.8   |    |  |  | 8.5   |   
|                                               
|                                               
|                                               
|                                               
|Interest expense                                |  |               | (10.8 | )                 |  |               | (10.5 | )             |  |  | (10.5 | )  |  |  | (9.5  | ) 
|                                               
|                                               
|                                               
|                                               
|Interest income                                 |  |               | 0.0   |                   |  |               | 0.2   |               |  |  | 0.1   |    |  |  | 0.1   |   
|                                               
|                                               
|                                               
|                                               
|Other income (expense), net                     |  |               | (0.4  | )                 |  |               | 1.2   |               |  |  | 0.4   |    |  |  | 0.6   |   
|                                                |  |               |       |                   |  |               |       |               |  |  |       |    |  |  |       |   
|Income (loss) before provision
for income taxes |  |               | (4.2  | )                 |  |               | (2.2  | )             |  |  | (4.2  | )  |  |  | (0.3  | ) 
|                                               
|                                               
|                                               
|                                               
|Provision for income taxes                      |  |               | (0.7  | )                 |  |               | 0.8   |               |  |  | (0.4  | )  |  |  | 1.2   |   
|                                                |  |               |       |                   |  |               |       |               |  |  |       |    |  |  |       |   
|Net income (loss)                               |  |               | (3.5  | )%                |  |               | (3.0  | )%            |  |  | (3.8  | )% |  |  | (1.5  | )%
|                                                |  |               |       |                   |  |               |       |               |  |  |       |    |  |  |       |   

Three Months Ended September 30, 2001

Net sales for the current quarter decreased $1.1 million or 2.4% compared to
the third quarter of 2000. In North America, net sales in the third quarter
declined $1.2 million or 3.6% due to a decline in volume attributable to
continuing weakness in the North American economy, pricing
pressures and shifts in product mix. In Europe, third quarter sales increased
$0.1 million or 0.1%.

Gross profit for the current quarter increased $0.2 million or 2.4% compared to
the third quarter of 2000. Gross profit as a percentage of net sales improved
to 24.2% in 2001 from 23.1% in 2000. The percentage change is attributable to
continuing cost reduction efforts and improvements in labor productivity at all
of the Companys manufacturing locations, offset in part, by lower production
volumes.

Selling, general and administrative expenses for the current quarter of $6.7
million were higher than the expenses of $6.4 million for the third quarter of
2000. The increase is principally due to specific marketing initiatives.

Other income (expense), net for the current quarter was a $0.3 million expense
compared to income of $0.5 million last year. This decrease is principally
the result of exchange losses on non-escudo based receivables recorded by the
Companys Portuguese subsidiary this year.

Earnings before interest expense, taxes, depreciation and amortization (EBITDA)
for the current quarter of 2001 decreased $0.9 million to $6.1 million from
$7.0 million in the third quarter of 2000 principally as a result of the
decline in net sales, higher selling, general and administrative expenses and
exchange losses, mitigated by the favorable impacts of cost reduction efforts
and

16



---



##### Table of Contents



improved labor productivity. As a percentage of net sales, EBITDA
decreased to 13.5% in 2001 from 15.2% in 2000.

The net loss for the current quarter of $1.6 million compares to a net loss in
the third quarter of 2000 of $1.4 million.

Nine Months Ended September 30, 2001

Net sales for the first nine months of 2001 decreased $11.5 million or 7.5% as
compared to the first nine months of 2000. In North America, net sales
declined $8.9 million or 8.5% due principally to a decline in volume
attributable to a continuing weakness in the North American economy, pricing
pressures and shifts in product mix. Net sales in Europe decreased $2.6
million or 5.4% compared to the first nine months of 2000 due principally to
the weakening of the Euro and Euro linked currencies. If the value of the Euro
and Euro linked currencies had remained at the average level of the first nine
months of 2000, the decline in net sales would have been only $0.3 million.

Gross profit for the first nine months of 2001 decreased by $4.4 million or
12.2% as compared to the same period in 2000. Gross profit as a percentage of
net sales decreased to 22.7% in 2001 from 23.9% in 2000. The lower percentage
is attributable to both lower production volumes and lower selling prices
offset by continuing cost reduction efforts and improvements in labor
productivity at all of the Companys manufacturing locations.

Selling, general and administrative expenses for the first nine months of 2001
of $20.4 million were higher than expenses of $19.9 million for the first nine
months of 2000. The increase is attributable principally to specific marketing
initiatives.

Other income (expense), net for the current nine months was income of $0.4
million compared to income of $0.7 million last year. This decrease is due
principally to exchange losses on non-escudo based receivables recorded by the
Companys Portuguese subsidiary this year.

Earnings before interest expense, taxes, depreciation and amortization (EBITDA)
for the first nine months of 2001 decreased $5.8 million to $18.3 million,
compared to $24.1 million for the first nine months of 2000 principally as a
result of the decline in net sales, higher selling, general and administrative
expenses and exchange losses, mitigated by the favorable impacts of cost
reduction efforts and improved labor productivity. As a percentage of net
sales, EBITDA decreased to 13.0% in 2001 from 15.8% in 2000.

Net loss for the first nine months of 2001 was $5.3 million compared to a net
loss of $2.3 million in the comparable 2000 period.

Liquidity and Capital Resources

The Companys operating capital (defined as accounts receivable and inventory,
less accounts payable) increased $7.4 million from $24.2 million at December
31, 2000 to $31.6 million at September 30, 2001, consistent with seasonal
operating levels.

17



---



##### Table of Contents



For the current three month period, the Company generated $1.1 million in cash
from operating activities, representing an increase of $0.5 million from the
comparable quarter last year. The increase principally was due to lower
working capital requirements.

The Companys investing and financing activities during the current three month
period included retiring $5.5 million of debt and investing $1.2 million in
capital expenditures. These transactions were funded by the proceeds received
from the purchase of common stock by Cypress in August 2001 and cash flow
generated from operating activities.

The Company has obtained financing under a Bank Credit Agreement (the Credit
Agreement), which has been amended on several occasions, most recently on
March 30, 2001, consisting of $40.5 million of senior term loans (the Term
Loans) and a $15.0 million revolving credit facility (the Revolving Credit
Facility). A portion, $2.3 million bearing an interest rate of LIBOR plus 350
basis points of the Term Loans (the Tranche A Term Loans) that requires
quarterly amortization payments during the term of the loan and the Revolving
Credit Facility will mature on May 13, 2002. In November 1996, the Company
issued, under an Indenture, $115.0 million of Senior Subordinated Notes due
2006 (the Notes). The Notes are unsecured obligations of the Company. The
Notes bear interest at the rate of 10.625% per annum payable semi-annually on
each June 30 and December 31 commencing on June 30, 1997. The Notes are
redeemable at the option of the Company on or after December 31, 2001. From
and after December 31, 2001, the Notes will be subject to redemption at the
option of the Company, in whole or in part, at various redemption prices,
declining from 105.313% of the principal amount to par on and after December
31, 2003. The terms of the Indenture and the Credit Agreement and recent
amendments, including the Waiver through December 26, 2001 of compliance with
certain financial covenants, are further described in Note 6 to the Financial
Statements titled Long-Term Debt.

There can be no assurance that the Company will be able to comply with the
financial covenants contained in the Credit Agreement after the Waiver expires
on December 27, 2001. The Company is currently in negotiation
with two financial institutions to
obtain alternative financing to the Bank
Credit Facility with more favorable credit terms. In addition, even if the
Company were able to comply with (or obtain further waivers to) the terms of
the Credit Agreement, the Company would need to obtain alternative financing
during 2002 in order to refinance those provisions of the Credit Agreement
which come due, as described above, during 2002.

The Companys total capital expenditures for 2001 are projected to be
approximately $4.0 million. The planned 2001 expenditures will be used for
repair and replacement of existing equipment along with various cost reduction
and new product development opportunities.

The Company intends to fund its future working capital, capital expenditures
and debt service requirements through cash flow generated from operations and
borrowings under the Revolving Credit Facility provided under the Credit Agreement and
through the use of available cash balances. Management believes that cash
generated from operations, together with borrowings available under the
Revolving Credit Facility, will be sufficient to meet the Companys working
capital and capital expenditure needs in the foreseeable future. The Company
may consider other options available to it in connection with funding future
working capital and capital expenditure needs, including bank refinancing.

The Company will continue selectively to pursue strategic acquisitions, such as
the acquisitions of AMTROL ALFA and AMTROL NOVA. The Company believes that
strategic acquisitions,

18



---



##### Table of Contents



both domestic and international, provide an effective
means of increasing or establishing a market presence in targeted markets and a
means of identifying and introducing new products and technologies in markets
where it already has a strong presence. The Company also believes that
establishing local manufacturing and distribution facilities in international
markets significantly enhances its ability to build strong customer
relationships, understand local product preferences and to be price
competitive.

Inflation

The Company believes that inflation does not have a material adverse effect on
its financial condition or results of operations. However, there can be no
assurance that sharply increasing raw material, fuel or other costs will not
adversely affect the Companys financial condition or results of operations.




Item 3.    Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in information relating to market risk
since the Companys disclosure included in Item 7A of SEC Form 10-K as filed on
April 2, 2001.

19



---



##### Table of Contents



AMTROL INC. AND SUBSIDIARIES




PART II




Item 1.    Legal Proceedings

From time to time, including the period covered by this report, the Company is
named as a defendant in legal actions. These include commercial disputes,
agency proceedings and product liability and other claims. Management
believes, after review of insurance coverage and consultations with legal
counsel, that the ultimate resolution of the pending legal actions as to which
it is a party, or can reasonably be expected to be a party, will not have a
material adverse effect on the Companys results of operations or financial
condition.




Item 2.    Changes in Securities and Use of Proceeds

None.




Item 3.    Defaults Upon Senior Securities

None.




Item 4.    Submission of Matters to a Vote of Security Holders

None.




Item 5.    Other Information

None.




Item 6.    Exhibits and Reports on Form 8-K



|(a) |  | Exhibits:                                                                       
|--- |  | --------------------------------------------------------------------------------
|   
|    |  | 10.1.6 Waiver and Consent to Credit Agreement and Capital Contribution Agreement
|   
|(b) |  | Reports on Form 8-K:                                                            
|   
|    |  | No reports on Form 8-K were filed during the period covered by this report.     

20



---



##### Table of Contents



AMTROL INC. AND SUBSIDIARIES




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.

|                        |  |             |  |                                                                                             
|----------------------- |  | ----------- |  | --------------------------------------------------------------------------------------------
|                        |  | AMTROL INC.
|                       
|                       
|                       
|                       
|                        |  |             |  |                                                                                             
|                       
|                       
|                       
|                       
|Date: November 14, 2001 |  | By:         |  | /s/ ALBERT D. INDELICATO                                                                    
|                        |  |             |  |                                                                                             
|                        |  |             |  | Albert D. Indelicato,
President, Chairman of the Board,
Chief Executive Officer and Director
|                       
|                       
|                       
|                       
|                        |  |             |  |                                                                                             
|                       
|                       
|                       
|                       
|Date: November 14, 2001 |  | By:         |  | /s/ LARRY T. GUILLEMETTE                                                                    
|                        |  |             |  |                                                                                             
|                        |  |             |  | Larry T. Guillemette,
Executive Vice President,
Chief Financial Officer and
Treasurer       

21