##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q

|      |  |                                                                                          
|----- |  | -----------------------------------------------------------------------------------------
|[X]   |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 
|      |  |                                                                                          
|      |  | For the quarterly period ended September 30, 2003                                        
|      |  |                                                                                          
|      |  | OR                                                                                       
|      |  |                                                                                          
|[   ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|      |  |                                                                                          
|      |  | For the Transition period from _____________ to _____________                            

Commission file number 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  [X]  No  [   ].

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

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, 2003.





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TABLE OF CONTENTS



|                                                |                                                                                               |                                                           |  |  |  |  |  | 
|----------------------------------------------- | --------------------------------------------------------------------------------------------- | --------------------------------------------------------- |  |  |  |  |  | 
|                                                |                                                                                               | Condensed Consolidated Balance Sheets                    
|                                                |                                                                                               | Condensed Consolidated Statements of Operations          
|                                                |                                                                                               | Condensed Consolidated Statements of Shareholders Equity
|                                                |                                                                                               | Condensed Consolidated Statements of Cash Flows          
|                                                |                                                                                               | NOTES TO CONDENSED 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                           
|                                                | Item 4. Controls and Procedures                                                              
|PART II                                        
|                                                | 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-31.1 SECTION 302 CERTIFICATION OF THE C.E.O.
|EX-31.2 SECTION 302 CERTIFICATION OF THE C.F.O.
|EX-32.1 SECTION 906 CERTIFICATION OF THE C.E.O.
|EX-32.2 SECTION 906 CERTIFICATION OF THE C.F.O.



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##### Table of Contents



AMTROL INC. AND SUBSIDIARIES

FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2003

INDEX

|         |                       |                                                                                                                                   |  |      |    | 
|-------- | --------------------- | --------------------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|         |                       |                                                                                                                                   |  | PAGE
|         |                       |                                                                                                                                   |  |     
|PART I.  | Financial Information |                                                                                                                                   |  |      |   
|         | Item 1.               | Condensed Consolidated Balance Sheets -
September 30, 2003 and December 31, 2002                                                  |  |      | 3  | 
|         |                       | Condensed Consolidated Statements of Operations -
For the Quarter and Nine Months Ended September 30, 2003
and September 30, 2002 |  |      | 4  | 
|         |                       | Condensed Consolidated Statements of Shareholders Equity -
For the Nine Months Ended September 30, 2003 and
September 30, 2002   |  |      | 5  | 
|         |                       | Condensed Consolidated Statements of Cash Flows -
For the Nine Months Ended September 30, 2003 and
September 30, 2002             |  |      | 6  | 
|         |                       | Notes to Condensed 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                                                                        |  |      | 21 | 
|         | Item 4.               | Controls and Procedures                                                                                                           |  |      | 21 | 
|PART II. | Other Information     |                                                                                                                                   |  |      |   
|         | Item 1.               | Legal Proceedings                                                                                                                 |  |      | 22 | 
|         | Item 2.               | Changes in Securities and Use of Proceeds                                                                                         |  |      | 22 | 
|         | Item 3.               | Defaults Upon Senior Securities                                                                                                   |  |      | 22 | 
|         | Item 4.               | Submission of Matters to a Vote of Security Holders                                                                               |  |      | 22 | 
|         | Item 5.               | Other Information                                                                                                                 |  |      | 22 | 
|         | Item 6.               | Exhibits and Reports on Form 8-K                                                                                                  |  |      | 22 | 
|         |                       | Signatures                                                                                                                        |  |      | 23 | 
|         |                       | Certification                                                                                                                     |  |      | 24 | 

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##### Table of Contents






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

|                                        |                                                                           |                            |         |         |         |                    |         |                   |         |  |  | 
|--------------------------------------- | ------------------------------------------------------------------------- | -------------------------- | ------- | ------- | ------- | ------------------ | ------- | ----------------- | ------- |  |  | 
|                                        |                                                                           |                            |         |         |         | Unaudited          |         |                   |         | 
|                                        |                                                                           |                            |         |         |         | September 30, 2003 |         | December 31, 2002
|                                        |                                                                           |                            |         |         |         |                    |         |                  
|ASSETS                                  |                                                                           |                            |         |         |         |                    |         |                  
|Current Assets:                         |                                                                           |                            |         |         |         |                    |         |                  
|                                        | Cash and cash equivalents                                                 |                            | $       | 1,650   |         |                    | $       | 1,797             |        
|                                        | Accounts receivable, less allowance for doubtful
accounts                 |                            |         | 30,740  |         |                    |         | 29,765            |        
|                                        | Inventories                                                               |                            |         | 25,632  |         |                    |         | 22,445            |        
|                                        | Tax refund receivable                                                     |                            |         | 1,739   |         |                    |         | 2,233             |        
|                                        | Deferred income taxes - short-term                                        |                            |         | 1,681   |         |                    |         | 1,681             |        
|                                        | Prepaid expenses and other                                                |                            |         | 1,661   |         |                    |         | 1,357             |        
|                                        |                                                                           |                            |         |         |         |                    |         |                  
|                                        |                                                                           | Total current assets       |         |         | 63,103  |                    |         |                   | 59,278  | 
|                                        |                                                                           |                            |         |         |         |                    |         |                  
|Property, Plant and
Equipment, Net      |                                                                           |                            | 35,262  |         |         |                    | 38,501  |                  
|Other Assets:                           |                                                                           |                            |         |         |         |                    |         |                  
|                                        | Goodwill                                                                  |                            |         | 119,205 |         |                    |         | 119,205           |        
|                                        | Deferred financing costs                                                  |                            |         | 3,437   |         |                    |         | 4,186             |        
|                                        | Deferred income taxes - long-term                                         |                            |         | 7,267   |         |                    |         | 7,267             |        
|                                        | Other                                                                     |                            |         | 1,645   |         |                    |         | 1,227             |        
|                                        |                                                                           |                            |         |         |         |                    |         |                  
|                                        |                                                                           | Total other assets         |         |         | 131,554 |                    |         |                   | 131,885 | 
|                                        |                                                                           |                            |         |         |         |                    |         |                  
|                                        |                                                                           | $                          | 229,919 |         |         | $                  | 229,664 |                  
|                                        |                                                                           |                            |         |         |         |                    |         |                  
|LIABILITIES AND SHAREHOLDERS EQUITY    |                                                                           |                            |         |         |         |                    |         |                  
|Current Liabilities:                    |                                                                           |                            |         |         |         |                    |         |                  
|                                        | Current maturities of long-term debt                                      |                            | $       | 2,957   |         |                    | $       | 2,957             |        
|                                        | Notes payable to banks                                                    |                            |         | 9,907   |         |                    |         | 6,923             |        
|                                        | Accounts payable                                                          |                            |         | 24,693  |         |                    |         | 23,826            |        
|                                        | Accrued expenses                                                          |                            |         | 10,086  |         |                    |         | 16,773            |        
|                                        | Accrued interest                                                          |                            |         | 3,100   |         |                    |         | 203               |        
|                                        | Accrued income taxes                                                      |                            |         | 1,884   |         |                    |         | 719               |        
|                                        |                                                                           |                            |         |         |         |                    |         |                  
|                                        |                                                                           | Total current liabilities  |         |         | 52,627  |                    |         |                   | 51,401  | 
|                                        |                                                                           |                            |         |         |         |                    |         |                  
|Other Noncurrent Liabilities            |                                                                           |                            | 4,355   |         |         |                    | 4,023   |                  
|Long Term Debt, Less Current Maturities |                                                                           |                            | 159,021 |         |         |                    | 158,391 |                  
|Shareholders Equity:                   |                                                                           |                            |         |         |         |                    |         |                  
|                                        | Capital stock $.01 par value - authorized 1,000 shares,
100 shares issued |                            |         |        |         |                    |         |                  |        
|                                        | Additional paid-in capital                                                |                            |         | 99,273  |         |                    |         | 99,273            |        
|                                        | Accumulated deficit                                                       |                            |         | (85,157 | )       |                    |         | (81,393           | )      
|                                        | Accumulated other comprehensive loss                                      |                            |         | (200    | )       |                    |         | (2,031            | )      
|                                        |                                                                           |                            |         |         |         |                    |         |                  
|                                        |                                                                           | Total shareholders equity |         |         | 13,916  |                    |         |                   | 15,849  | 
|                                        |                                                                           |                            |         |         |         |                    |         |                  
|                                        |                                                                           | $                          | 229,919 |         |         | $                  | 229,664 |                  
|                                        |                                                                           |                            |         |         |         |                    |         |                  

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

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

|                                                                  |  |                    |        |                    |  |                    |        |                    |  |   |         |   |  |   |         |  
|----------------------------------------------------------------- |  | ------------------ | ------ | ------------------ |  | ------------------ | ------ | ------------------ |  | - | ------- | - |  | - | ------- | -
|                                                                  |  | QUARTER ENDED      |        | NINE MONTHS ENDED 
|                                                                  |  |                    |        |                   
|                                                                  |  | September 30, 2003 |        | September 30, 2002 |  | September 30, 2003 |        | September 30, 2002
|                                                                  |  |                    |        |                    |  |                    |        |                   
|Net sales                                                         |  | $                  | 46,370 |                    |  | $                  | 47,381 |                    |  | $ | 147,647 |   |  | $ | 141,046 |  
|Cost of goods sold                                                |  |                    | 36,236 |                    |  |                    | 35,881 |                    |  |   | 116,039 |   |  |   | 107,967 |  
|                                                                  |  |                    |        |                    |  |                    |        |                    |  |   |         |   |  |   |         |  
|Gross profit                                                      |  |                    | 10,134 |                    |  |                    | 11,500 |                    |  |   | 31,608  |   |  |   | 33,079  |  
|Operating expenses:                                               |  |                    |        |                    |  |                    |        |                    |  |   |         |   |  |   |         |  
|Selling, general and administrative                               |  |                    | 7,258  |                    |  |                    | 7,043  |                    |  |   | 21,079  |   |  |   | 21,077  |  
|                                                                  |  |                    |        |                    |  |                    |        |                    |  |   |         |   |  |   |         |  
|Income from operations                                            |  |                    | 2,876  |                    |  |                    | 4,457  |                    |  |   | 10,529  |   |  |   | 12,002  |  
|Other income (expense):                                           |  |                    |        |                    |  |                    |        |                    |  |   |         |   |  |   |         |  
|Interest expense                                                  |  |                    | (5,012 | )                  |  |                    | (4,983 | )                  |  |   | (14,698 | ) |  |   | (14,906 | )
|Interest income                                                   |  |                    | 6      |                    |  |                    | 14     |                    |  |   | 40      |   |  |   | 43      |  
|Other, net                                                        |  |                    | 7      |                    |  |                    | 8      |                    |  |   | 1,449   |   |  |   | (628    | )
|                                                                  |  |                    |        |                    |  |                    |        |                    |  |   |         |   |  |   |         |  
|Loss before provision
for income taxes                            |  |                    | (2,123 | )                  |  |                    | (504   | )                  |  |   | (2,680  | ) |  |   | (3,489  | )
|Provision for income taxes                                        |  |                    | 144    |                    |  |                    | 526    |                    |  |   | 1,084   |   |  |   | 1,335   |  
|                                                                  |  |                    |        |                    |  |                    |        |                    |  |   |         |   |  |   |         |  
|Loss before cumulative effect of a
change in accounting principle |  |                    | (2,267 | )                  |  |                    | (1,030 | )                  |  |   | (3,764  | ) |  |   | (4,824  | )
|Cumulative effect of a change in
accounting principle             |  |                    | 0      |                    |  |                    | 0      |                    |  |   | 0       |   |  |   | (38,087 | )
|                                                                  |  |                    |        |                    |  |                    |        |                    |  |   |         |   |  |   |         |  
|Net loss                                                          |  | $                  | (2,267 | )                  |  | $                  | (1,030 | )                  |  | $ | (3,764  | ) |  | $ | (42,911 | )
|                                                                  |  |                    |        |                    |  |                    |        |                    |  |   |         |   |  |   |         |  

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

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

Nine Months Ended September 30, 2003

|                            |                                            |   |              |   |         |   |                    |   |               |   |               |        |               |   |                   |       |  |   |        |        |  
|--------------------------- | ------------------------------------------ | - | ------------ | - | ------- | - | ------------------ | - | ------------- | - | ------------- | ------ | ------------- | - | ----------------- | ----- |  | - | ------ | ------ | -
|                            |                                            |   |              |   |         |   |                    |   |               |   |               |        |               |   | Accumulated Other |       |  |   |       
|                            |                                            |   |              |   |         |   | Additional Paid-in |   | Accumulated   |   | Comprehensive |        | Comprehensive
|                            |                                            |   | Common Stock |   | Capital |   | Deficit            |   | Income (Loss) |   | Income (Loss)
|                            |                                            |   |              |   |         |   |                    |   |               |   |              
|Balance, December 31, 2002  |                                            | $ |             |   |         | $ | 99,273             |   |               | $ | (81,393       | )      |               | $ | (2,031            | )     |  | $ |       |       
|                            | Net loss                                   |   |              |  |         |   |                    |  |               |   |               | (782   | )             |   |                   |      |  |   |        | (782   | )
|                            | Derivative instrument valuation adjustment |   |              |  |         |   |                    |  |               |   |               |       |               |   |                   | 73    |  |   |        | 73     |  
|                            | Currency translation adjustment            |   |              |  |         |   |                    |  |               |   |               |       |               |   |                   | 185   |  |   |        | 185    |  
|                            |                                            |   |              |   |         |   |                    |   |               |   |               |        |               |   |                   |       |  |   |        |       
|Balance, March 31, 2003     |                                            |   |             |   |         |   | 99,273             |   |               |   | (82,175       | )      |               |   | (1,773            | )     |  |   | (524   | )     
|                            | Net loss                                   |   |              |  |         |   |                    |  |               |   |               | (715   | )             |   |                   |      |  |   |        | (715   | )
|                            | Derivative instrument valuation adjustment |   |              |  |         |   |                    |  |               |   |               |       |               |   |                   | 78    |  |   |        | 78     |  
|                            | Currency translation adjustment            |   |              |  |         |   |                    |  |               |   |               |       |               |   |                   | 1,279 |  |   |        | 1,279  |  
|                            |                                            |   |              |   |         |   |                    |   |               |   |               |        |               |   |                   |       |  |   |        |       
|Balance, June 30, 2003      |                                            |   |             |   |         |   | 99,273             |   |               |   | (82,890       | )      |               |   | (416              | )     |  |   | 118    |       
|                            | Net loss                                   |   |              |  |         |   |                    |  |               |   |               | (2,267 | )             |   |                   |      |  |   |        | (2,267 | )
|                            | Derivative instrument valuation adjustment |   |              |  |         |   |                    |  |               |   |               |       |               |   |                   | 85    |  |   |        | 85     |  
|                            | Currency translation adjustment            |   |              |  |         |   |                    |  |               |   |               |       |               |   |                   | 131   |  |   |        | 131    |  
|                            |                                            |   |              |   |         |   |                    |   |               |   |               |        |               |   |                   |       |  |   |        |       
|Balance, September 30, 2003 |                                            | $ |             |   |         | $ | 99,273             |   |               | $ | (85,157       | )      |               | $ | (200              | )     |  | $ | (1,933 | )     
|                            |                                            |   |              |   |         |   |                    |   |               |   |               |        |               |   |                   |       |  |   |        |       

Nine Months Ended September 30, 2002

|                            |                                            |   |              |   |         |   |                    |   |               |   |               |        |               |   |                   |       |   |   |        |        |  
|--------------------------- | ------------------------------------------ | - | ------------ | - | ------- | - | ------------------ | - | ------------- | - | ------------- | ------ | ------------- | - | ----------------- | ----- | - | - | ------ | ------ | -
|                            |                                            |   |              |   |         |   |                    |   |               |   |               |        |               |   | Accumulated Other |       |   |   |       
|                            |                                            |   |              |   |         |   | Additional Paid-in |   | Accumulated   |   | Comprehensive |        | Comprehensive
|                            |                                            |   | Common Stock |   | Capital |   | Deficit            |   | Income (Loss) |   | Income (Loss)
|                            |                                            |   |              |   |         |   |                    |   |               |   |              
|Balance, December 31, 2001  |                                            | $ |             |   |         | $ | 99,273             |   |               | $ | (36,064       | )      |               | $ | (4,990            | )     |   | $ |       |       
|                            | Net loss                                   |   |              |   |         |   |                    |   |               |   |               | (2,040 | )             |   |                   |       |   |   |        | (2,040 | )
|                            | Derivative instrument valuation adjustment |   |              |  |         |   |                    |  |               |   |               |       |               |   |                   | 304   |   |   |        | 304    |  
|                            | Currency translation adjustment            |   |              |  |         |   |                    |  |               |   |               |       |               |   |                   | (262  | ) |   |        | (262   | )
|                            |                                            |   |              |   |         |   |                    |   |               |   |               |        |               |   |                   |       |   |   |        |       
|Balance, March 31, 2002     |                                            |   |             |   |         |   | 99,273             |   |               |   | (38,104       | )      |               |   | (4,948            | )     |   |   | (1,998 | )     
|                            | Net loss                                   |   |              |  |         |   |                    |  |               |   |               | (1,754 | )             |   |                   |      |   |   |        | (1,754 | )
|                            | Derivative instrument valuation adjustment |   |              |  |         |   |                    |  |               |   |               |       |               |   |                   | 204   |   |   |        | 204    |  
|                            | Currency translation adjustment            |   |              |  |         |   |                    |  |               |   |               |       |               |   |                   | 2,394 |   |   |        | 2,394  |  
|                            |                                            |   |              |   |         |   |                    |   |               |   |               |        |               |   |                   |       |   |   |        |       
|Balance, June 30, 2002      |                                            |   |             |   |         |   | 99,273             |   |               |   | (39,858       | )      |               |   | (2,350            | )     |   |   | (1,154 | )     
|                            | Net loss                                   |   |              |  |         |   |                    |  |               |   |               | (1,030 | )             |   |                   |      |   |   |        | (1,030 | )
|                            | Derivative instrument valuation adjustment |   |              |  |         |   |                    |  |               |   |               |       |               |   |                   | (407  | ) |   |        | (407   | )
|                            | Currency translation adjustment            |   |              |  |         |   |                    |  |               |   |               |       |               |   |                   | (316  | ) |   |        | (316   | )
|                            |                                            |   |              |   |         |   |                    |   |               |   |               |        |               |   |                   |       |   |   |        |       
|Balance, September 30, 2002 |                                            | $ |             |   |         | $ | 99,273             |   |               | $ | (40,888       | )      |               | $ | (3,073            | )     |   | $ | (2,907 | )     
|                            |                                            |   |              |   |         |   |                    |   |               |   |               |        |               |   |                   |       |   |   |        |       

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

5



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##### Table of Contents






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

|                                                             |                                                                                            |                                                     |       |                    |        |                    |        |          |        |   |  |  |  | 
|------------------------------------------------------------ | ------------------------------------------------------------------------------------------ | --------------------------------------------------- | ----- | ------------------ | ------ | ------------------ | ------ | -------- | ------ | - |  |  |  | 
|                                                             |                                                                                            |                                                     |       | NINE MONTHS ENDED 
|                                                             |                                                                                            |                                                     |       |                   
|                                                             |                                                                                            |                                                     |       | September 30, 2003 |        | September 30, 2002
|                                                             |                                                                                            |                                                     |       |                    |        |                   
|Cash Flows Provided by (Used in) Operating Activities:       |                                                                                            |                                                     |       |                    |        |                    |        |         
|                                                             | Net loss                                                                                   |                                                     | $     | (3,764             | )      |                    | $      | (42,911  | )     
|                                                             | Cumulative effect of a change in accounting principle                                      |                                                     |       |                   |        |                    |        | 38,087   |       
|                                                             | Adjustments to reconcile net loss to net cash
provided by (used in) operating activities - |                                                     |       |                    |        |                    |        |          |       
|                                                             |                                                                                            | Depreciation and amortization                       |       |                    | 6,883  |                    |        |          | 6,622  |  
|                                                             |                                                                                            | Provision for losses on accounts receivable         |       |                    | 55     |                    |        |          | 95     |  
|                                                             |                                                                                            | Gain on purchase of senior subordinated notes       |       |                    | (1,513 | )                  |        |          |       |  
|                                                             |                                                                                            | Changes in operating assets and liabilities         |       |                    | (2,698 | )                  |        |          | 320    |  
|                                                             |                                                                                            |                                                     |       |                    |        |                    |        |         
|                                                             |                                                                                            | Net cash provided by (used in) operating activities |       |                    | (1,037 | )                  |        |          | 2,213  |  
|                                                             |                                                                                            |                                                     |       |                    |        |                    |        |         
|Cash Flows Used in Investing Activities:                     |                                                                                            |                                                     |       |                    |        |                    |        |         
|                                                             | Capital expenditures                                                                       |                                                     |       | (1,678             | )      |                    |        | (1,924   | )     
|                                                             |                                                                                            |                                                     |       |                    |        |                    |        |         
|                                                             |                                                                                            | Net cash used in investing activities               |       |                    | (1,678 | )                  |        |          | (1,924 | )
|                                                             |                                                                                            |                                                     |       |                    |        |                    |        |         
|Cash Flows Provided by (Used in) Financing Activities:       |                                                                                            |                                                     |       |                    |        |                    |        |         
|                                                             | Repayment of debt                                                                          |                                                     |       | (109,234           | )      |                    |        | (113,505 | )     
|                                                             | Issuance of debt                                                                           |                                                     |       | 111,605            |        |                    |        | 112,193  |       
|                                                             |                                                                                            |                                                     |       |                    |        |                    |        |         
|                                                             |                                                                                            | Net cash provided by (used in) financing activities |       |                    | 2,371  |                    |        |          | (1,312 | )
|                                                             |                                                                                            |                                                     |       |                    |        |                    |        |         
|Net Decrease in Cash and Cash Equivalents                    |                                                                                            |                                                     | (344  | )                  |        |                    | (1,023 | )       
|Effect of exchange rate changes on cash and cash equivalents |                                                                                            |                                                     | 197   |                    |        |                    | 40     |         
|Cash and Cash Equivalents, beginning of period               |                                                                                            |                                                     | 1,797 |                    |        |                    | 983    |         
|                                                             |                                                                                            |                                                     |       |                    |        |                    |        |         
|Cash and Cash Equivalents, end of period                     |                                                                                            | $                                                   | 1,650 |                    |        | $                  |       |         
|                                                             |                                                                                            |                                                     |       |                    |        |                    |        |         

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

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AMTROL INC. AND SUBSIDIARIES




NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. Basis of Presentation

In the opinion of management, the accompanying unaudited condensed 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 condensed 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 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

Revenue Recognition and Related Costs

In accordance with Staff Accounting Bulletin (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 Company generally recognizes revenue upon shipment of its products to
customers net of applicable provisions for discounts and allowances.
Allowances for cash discounts and volume rebates, among others, are recorded as
a reduction to revenue at the time of sale based upon the estimated future
outcome. Cash discounts and volume rebates are based upon certain percentages
and sales targets agreed to with the Companys customers, which are typically
earned by the customers over an annual period. At September 30, 2003 and 2002,
the Company had accrued $3.0 million for such volume allowances. These amounts
are included in accrued expenses in the accompanying condensed consolidated
balance sheets.

Inventories

The Companys inventories are stated at the lower of cost or market including
material, labor and manufacturing overhead (see Note 6). The Company records
provisions, as appropriate, to write-down obsolete and excess inventory to
estimated net realizable value. The process for evaluating

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obsolete and excess inventory often requires the Company to make subjective
judgments and estimates concerning future sales levels, quantities and prices
at which such inventory will be able to be sold in the normal course of
business. Accelerating the disposal process or incorrect estimates of future
sales potential may cause the actual results to differ from the estimates at
the time such inventory is disposed or sold. The Company believes that its
procedures for estimating such amounts are reasonable and historically have not
resulted in material adjustments in subsequent periods when the estimates are
adjusted to the actual amounts.

Warranty

The Company extends various warranties covering most of its products ranging
from a limited one-year warranty to a limited lifetime warranty against defects
in materials and workmanship. The specific terms and conditions of the
warranties depend on the type of product that is sold. The Companys
warranties are generally limited to the replacement of the defective parts or
products at the Companys option. The Company estimates the costs that may be
incurred under its warranty program and records a liability at the time of
sale. Factors that influence the Companys warranty liability include the
amount of production, manufactured cost of the product, historical warranty
returns and anticipated returns based upon engineering and material
improvements. The Company periodically assesses the adequacy of its warranty
reserve through a detailed analysis and adjusts the reserve accordingly.

As part of the Company's regular review
of its warranty reserve at September 30, 2003, the Company increased
its warranty reserve by $0.7 million. This was due to higher than
anticipated level of warranty returns associated with its limited
lifetime products during the current period.

The following chart illustrates the changes in the Companys warranty reserve
during the latest nine month period:

|                              |  |              |        |  
|----------------------------- |  | ------------ | ------ | -
|(in thousands)                |  | Consolidated
|                              |  |             
|Balance, December 31, 2002    |  | $            | 2,367  |  
|Warranties issued during 2003 |  |              | 1,420  |  
|Claims                        |  |              | (1,420 | )
|Change in estimate            |  |              | 719    |  
|                              |  |              |        |  
|Balance, September 30, 2003   |  | $            | 3,086  |  
|                              |  |              |        |  

Goodwill

Goodwill represents the excess of acquisition costs over the estimated fair
value of the net assets acquired. In June 2001, the Financial Accounting
Standards Board (FASB) issued Statement

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of Financial Accounting Standards
(SFAS) No. 142, Goodwill and Other Intangible Assets. SFAS No. 142 requires
that amortization of goodwill cease and that the Company evaluate the
recoverability of goodwill and other intangible assets annually, or more
frequently if events or changes in circumstances, such as a decline in sales,
earnings or cash flows, or material adverse changes in the business climate,
indicate that the carrying value of an asset might be impaired. Goodwill is
considered to be impaired when the net book value of a reporting unit exceeds
its estimated fair value. Fair values are established using a discounted cash
flow methodology (specifically, the income approach). The determination of
discounted cash flows is based on the Companys strategic plans and long-range
forecasts. The revenue growth rates included in the forecasts are the
Companys best estimates based on current and anticipated market conditions,
and the profit margin assumptions are projected based on the current and
anticipated costs structures. In accordance with the SFAS No. 142 transition
procedures, the Company recorded a goodwill impairment charge in the first
quarter of 2002 for the cumulative effect of a change in accounting principle
of $38.1 million upon adoption of SFAS No. 142, as further described in Note 5.

Deferred Financing Costs

Deferred financing costs are stated at cost as a component of other assets and
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 quarter-end rate of exchange. Shareholders equity has
been converted using historical 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 was reflected as a separate
component of shareholders equity.

Recent Accounting Pronouncements

As of January 1, 2003, the Company adopted the provisions of SFAS No. 145
Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement
No. 13 and Technical

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Corrections (SFAS No. 145), issued in April 2002. SFAS No. 145
addresses the reporting of gains and losses resulting from the extinguishment
of debt, accounting for sale-leaseback transactions and rescinds or amends
other existing authoritative pronouncements. SFAS No. 145 requires that any
gain or loss on extinguishment of debt that does not meet the criteria of APB
30 for classification as an extraordinary item shall not be classified as
extraordinary and shall be included in earnings from continuing operations.

In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities, an Interpretation of ARB No. 51 (FIN 46). FIN
46 clarifies the application of ARB No. 51, Consolidated Financial
Statements, to certain entities in which equity investors do not have the
characteristics of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support from other parties. The consolidation
requirements of FIN 46 apply immediately to variable interest entities created
after January 31, 2003 and to existing variable interest entities no later than
the end of the first reporting period ending after December 15, 2003. The
Company believes the impact of adopting FIN 46 will not have a material effect
on its consolidated financial statements.

4.     Long-Term Debt

Revolving Credit and Term Loans

The Company is a party to two credit facilities: a $42.5 million senior
first-priority secured credit facility arranged by Foothill Capital Corporation
(the Foothill Facility) and a senior second-priority secured
credit facility with affiliates of The Cypress Group L.L.C. (the Cypress
Facility).

The Foothill Facility provides the Company with (i) a term loan facility
consisting of a five-year Term A loan, $7.7 million at September 30, 2003,
bearing interest at LIBOR plus 3.5%, and a three-year Term B loan, $5.6 million
as of September 30, 2003, bearing interest at the greater of the Wells Fargo
Reference Rate (approximates the prime rate) plus 3.5% or 9.25%, (collectively
the Term Loans) and (ii) a five-year Revolving Credit Facility, bearing
interest at LIBOR plus 2.5% or the Wells Fargo Reference Rate plus 0.5%,
providing the lesser of (a) $35.0 million less the aggregate outstanding
principal amount of the Term A loan less letter of credit usage and (b)
borrowing base less letter of credit usage. At September 30, 2003, total
availability and aggregate borrowings under the Revolving Credit Facility were
$12.4 million and $6.5 million, respectively.

The Cypress Facility consists of an original issue term loan of $25.0
million with additional issuances representing accreted interest and
one additional issuance described below (collectively, Term Loan
C). The Term Loan C has a maturity date of December 26, 2006
and bears Payment-In-Kind
(PIK) interest fixed at 12% per annum paid quarterly, which at the lenders
option can be paid in common stock of the Company. In addition, 60,000
warrants with an exercise price of $0.01 were issued under the Cypress
facility. The Company expects that the effective interest rate will be
greater than 12% given the additional interest expense associated with the
warrants. At September 30, 2003, the aggregate borrowings under the
Cypress Facility, net of original issue discount, were $29.8 million.

Under the terms of the Foothill Facility and Cypress Facility, the Company, as
of September 30, 2003, was required to comply, and was in compliance, with the
affirmative and negative covenants and restrictions.

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Senior Subordinated Notes

The Company issued $115.0 million of Senior Subordinated Notes due 2006 (the
Notes) of which $112.4 million was outstanding as of September 30, 2003. The
Notes are unsecured obligations of the Company issued pursuant to the Note
Indenture Agreement (the Indenture). The Notes bear interest at a rate of
10.625% per annum that is payable semi-annually on each June 30 and December
31.

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.

In March 2003, the Company purchased a portion of the Notes with a face value
of $2.6 million. The purchase was financed through the issuance of additional
Term Loan C debt of $1.1 million. The extinguishment resulted in a gain of $1.5
million that was included in Other, net on the Companys Condensed Consolidated
Statement of Operations. The Company and/or affiliates of the Company,
including entities related to Cypress may continue, from time to time, to
purchase the Notes previously issued by the Company in the open market or by
other means. As of September 30, 2003, Cypress held Notes with a face value
of $11.7 million.

The Indenture contains certain affirmative and negative covenants and
restrictions. As of September 30, 2003, the Company was in compliance with the
various covenants.

5.     Cumulative Effect of Change in Accounting Principle

Effective January 1, 2002, the Company adopted SFAS No. 142, Goodwill and Other
Intangible Assets. SFAS No. 142 requires that amortization of goodwill cease
and that the Company evaluate the recoverability of goodwill and other
intangible assets annually, or more frequently if events or changes in
circumstances indicate that the carrying value of an asset might be impaired.

Under SFAS No. 142, the Company was required to test all existing goodwill for
impairment (using a two-step method) as of January 1, 2002, on a reporting
unit basis. The Company determined the reporting units to be AMTROL North
America, AMTROL ALFA, AMTROL NOVA and AMTROL Poland. In step 1, goodwill is
considered to be impaired when the net book value of a reporting unit exceeds
its estimated fair value. The fair values of the reporting units were
determined utilizing a discounted cash flow methodology and considered such
assumptions as weighted average cost of capital, revenue growth, profitability,
capital expenditures and premium for control. For reporting units that failed
step 1, the Company proceeded to step 2. In step 2, the Company calculated the
implied fair value of goodwill by
deducting the fair value of all tangible and intangible net assets of the
reporting unit from the fair

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value of the reporting unit as determined in step
1. The Company then compared the implied fair value of goodwill as determined
in step 2 above to the carrying value of goodwill.

As a result of the impairment review, the Company recorded an after-tax
goodwill impairment charge of $38.1 million, which was recorded as a cumulative
effect of a change in accounting principle in the first quarter of 2002. This
charge consists of $34.5 million at the AMTROL North America unit and $3.6
million at AMTROL NOVA. The impairment charge was principally due to the
change in the methodology from the undiscounted cash flow method used earlier
under the Companys previous accounting policy, to the discounted cash flow
method used in accordance with SFAS No. 142.

6.     Inventories

Inventories are stated at the lower of cost or market and were as follows (in
thousands):

|                                  |  |               |        |              |  |   |        | 
|--------------------------------- |  | ------------- | ------ | ------------ |  | - | ------ | 
|                                  |  | September 30, |        | December 31,
|                                  |  | 2003          |        | 2002        
|                                  |  |               |        |             
|Raw materials and work in process |  | $             | 15,725 |              |  | $ | 12,860 | 
|Finished goods                    |  |               | 9,907  |              |  |   | 9,585  | 
|                                  |  |               |        |              |  |   |        | 
|                                  |  | $             | 25,632 |              |  | $ | 22,445 | 
|                                  |  |               |        |              |  |   |        | 

7.     Accounting for Derivative Instruments and Hedging Activities

The Company has an interest rate swap contract and an interest rate cap (the
Contract) outstanding as of September 30, 2003, with an initial notional
amount of $15 million. Under this arrangement, which will mature on June 30,
2004, the Company receives the 90-day LIBOR rate and pays a fixed rate of 4.60%
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 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. The Contract was designated as a cash flow hedge of
variable future cash flows associated with the Foothill Facility Term Loan A
and B Debt.

As of September 30, 2003, the fair value of the instrument ($0.1 million) was
recorded in other noncurrent 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 through net
income). The Company does not currently anticipate any material
ineffectiveness under the hedge for 2003.

During the nine months ended September 30, 2003, the Company purchased forward
contracts to hedge its foreign currency exposures, which relate primarily to
its operations in Portugal. A portion of revenues from the Companys
Portuguese operations were denominated in non-Euro based currencies so as the
Euro strengthened, the non-Euro denominated receivables lost value. In order
to mitigate any currency exchange losses against future receivables, the
Companys Portuguese operations expanded its use of forward contracts, which
are generally three months in duration, to hedge against the currency movements
of U.S. Dollar and British Pound currencies. At September 30, 2003, the
Companys Portuguese operations had forward contracts for the purchase of 1.3
million U.S. Dollars and 0.4 million British Pounds with due dates ranging from
October 2003 through December 2003. The value of these forward contracts was
immaterial.

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8.     Provision for Income Taxes

The effective income tax rates used in the interim consolidated financial
statements are estimates of the full years rates. The Company has recorded a
provision on its Portugese operations. Net deferred tax assets recognized on the
Companys balance sheet continue to require managements evaluation as to their
realization. Although realization is not assured, management believes it is
more likely than not that the net deferred tax assets will be realized. The
amount expected to be realized is based upon estimates derived from tax
planning strategies which the Company believes are currently prudent and
feasible. A valuation allowance has been provided for certain net operating
loss carryforwards, as it is more likely than not that the related deferred tax
assets for these carryforwards will not be realized. Additions to the
valuation allowance may be required in the event that estimates are changed.

9.     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 in
the water system and HVAC markets. These products are marketed throughout the
world but primarily in North America, Western Europe and Asia.

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 worldwide. 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 income from operations. The following is a
summary of key financial data by segment:

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|                                |               |   |        |               |  |                   |        |               |  |               |         |        |  |   |         |        |  | 
|------------------------------- | ------------- | - | ------ | ------------- |  | ----------------- | ------ | ------------- |  | ------------- | ------- | ------ |  | - | ------- | ------ |  | 
|                                |               |   |        | Quarter Ended |  | Nine Months Ended
|                                |               |   |        |               |  |                  
|                                |               |   |        | Sept 30, 2003 |  | Sept 30, 2002     |        | Sept 30, 2003 |  | Sept 30, 2002
|                                |               |   |        |               |  |                   |        |               |  |              
|Net Sales to external customers |               |   |        |               |  |                   |        |               |  |               |         |        |  |   |         |       
|                                | North America |   |        |               |  |                   |        |               |  |               |         |        |  |   |         |        | 
|                                | US            |   | $      | 26,475        |  |                   | $      | 30,315        |  |               | $       | 83,670 |  |   | $       | 90,318 | 
|                                | Other         |   |        | 2,102         |  |                   |        | 1,451         |  |               |         | 4,952  |  |   |         | 4,026  | 
|Europe                          |               |   |        |               |  |                   |        |               |  |               |         |        |  |   |         |       
|                                | Portugal      |   |        | 13,926        |  |                   |        | 13,084        |  |               |         | 49,243 |  |   |         | 39,946 | 
|                                | Other         |   |        | 3,867         |  |                   |        | 2,531         |  |               |         | 9,782  |  |   |         | 6,756  | 
|                                |               |   |        |               |  |                   |        |               |  |               |         |        |  |   |         |        | 
|Consolidated                    |               | $ | 46,370 |               |  | $                 | 47,381 |               |  | $             | 147,647 |        |  | $ | 141,046 |       
|                                |               |   |        |               |  |                   |        |               |  |               |         |        |  |   |         |        | 
|Income from operations          |               |   |        |               |  |                   |        |               |  |               |         |        |  |   |         |       
|                                | North America |   | $      | 2,690         |  |                   | $      | 3,310         |  |               | $       | 8,051  |  |   | $       | 8,724  | 
|                                | Europe        |   |        | 186           |  |                   |        | 1,147         |  |               |         | 2,478  |  |   |         | 3,278  | 
|                                |               |   |        |               |  |                   |        |               |  |               |         |        |  |   |         |        | 
|                                | Consolidated  |   | $      | 2,876         |  |                   | $      | 4,457         |  |               | $       | 10,529 |  |   | $       | 12,002 | 
|                                |               |   |        |               |  |                   |        |               |  |               |         |        |  |   |         |        | 
|EBITDA                          |               |   |        |               |  |                   |        |               |  |               |         |        |  |   |         |       
|                                | North America |   | $      | 3,936         |  |                   | $      | 4,528         |  |               | $       | 13,381 |  |   | $       | 12,497 | 
|                                | Europe        |   |        | 951           |  |                   |        | 1,895         |  |               |         | 4,772  |  |   |         | 4,864  | 
|                                |               |   |        |               |  |                   |        |               |  |               |         |        |  |   |         |        | 
|                                | Consolidated  |   | $      | 4,887         |  |                   | $      | 6,423         |  |               | $       | 18,153 |  |   | $       | 17,361 | 
|                                |               |   |        |               |  |                   |        |               |  |               |         |        |  |   |         |        | 

|                  |          |   |               |         |              |   |         |         | 
|----------------- | -------- | - | ------------- | ------- | ------------ | - | ------- | ------- | 
|                  |          |   | September 30, |         | December 31,
|                  |          |   | 2003          |         | 2002        
|                  |          |   |               |         |             
|Long-lived assets |          |   |               |         |              |   |         |        
|North America     |          |   |               |         |              |   |         |        
|                  | US       |   | $             | 116,514 |              |   | $       | 119,266 | 
|                  | Other    |   |               | 9       |              |   |         | 4       | 
|Europe            |          |   |               |         |              |   |         |        
|                  | Portugal |   |               | 31,841  |              |   |         | 32,441  | 
|                  | Other    |   |               | 6,103   |              |   |         | 5,995   | 
|                  |          |   |               |         |              |   |         |         | 
|Consolidated      |          | $ | 154,467       |         |              | $ | 157,706 |        
|                  |          |   |               |         |              |   |         |         | 

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 Foothill Facility and the Indenture. 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 of other assets or liabilities
that may generate or require cash. EBITDA is not a generally accepted
accounting measure. See Managements Discussion and Analysis of Financial
Condition and Results of Operations for reconciliation of a GAAP financial
measure to EBITDA per the requirements of Regulation G. Long-Lived assets
include property, plant and equipment and goodwill.

10.     Commitments and Contingencies

At September 30, 2003, the Foothill Facility contained a sublimit to support
the issuance of letters of credit in the amount of $3.0 million. At September
30, 2003, letters of credit outstanding amounted to $0.4 million.

The Company is involved in various legal proceedings that, in the opinion of
management, will not result in a material adverse effect on its financial
condition or results of operations.

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AMTROL INC. AND SUBSIDIARIES




Item 2.

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

Overview

This section should be read in conjunction with the Condensed Consolidated
Financial Statements of the Company included elsewhere herein and the Companys
Form 10-K for 2002.

The Company and its 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,
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 fact included in this Form
10-Q and elsewhere relating to 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. Forward-looking
statements include those containing these phrases but also any other statements
that are not references to historical fact. 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 gases or cylinders and building and energy efficiency requirements
or restrictions or limitations or general reduction in the use of domestic
wells; significant weather conditions adverse to the Companys business;
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; the rate of growth of developing
economies and demand for the Companys products; the ultimate cost of future
warranty and other claims relating to the Companys products and business;
whether the Company succeeds in acquiring new businesses; availability of
capital; foreign exchange rates; increases in interest rates; the business
abilities and judgment of personnel; and general economic, financial and
business conditions, both domestically and internationally.

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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 Condensed Consolidated Statements of Operations.

|                                                                  |  |               |       |                   |  |               |       |               |  |  |       |    |  |  |       |   
|----------------------------------------------------------------- |  | ------------- | ----- | ----------------- |  | ------------- | ----- | ------------- |  |  | ----- | -- |  |  | ----- | --
|                                                                  |  | QUARTER ENDED |       | NINE MONTHS ENDED
|                                                                  |  |               |       |                  
|                                                                  |  | September 30, |       | September 30,     |  | September 30, |       | September 30,
|                                                                  |  | 2003          |       | 2002              |  | 2003          |       | 2002         
|                                                                  |  |               |       |                   |  |               |       |              
|Net sales                                                         |  |               | 100.0 | %                 |  |               | 100.0 | %             |  |  | 100.0 | %  |  |  | 100.0 | % 
|Cost of goods sold                                                |  |               | 78.1  |                   |  |               | 75.7  |               |  |  | 78.6  |    |  |  | 76.5  |   
|                                                                  |  |               |       |                   |  |               |       |               |  |  |       |    |  |  |       |   
|Gross profit                                                      |  |               | 21.9  |                   |  |               | 24.3  |               |  |  | 21.4  |    |  |  | 23.5  |   
|Selling, general and
administrative expenses                      |  |               | 15.7  |                   |  |               | 14.9  |               |  |  | 14.3  |    |  |  | 14.9  |   
|                                                                  |  |               |       |                   |  |               |       |               |  |  |       |    |  |  |       |   
|Income from operations                                            |  |               | 6.2   |                   |  |               | 9.4   |               |  |  | 7.1   |    |  |  | 8.6   |   
|Interest expense                                                  |  |               | (10.8 | )                 |  |               | (10.5 | )             |  |  | (10.0 | )  |  |  | (10.6 | ) 
|Interest income                                                   |  |               |       |                   |  |               |      |               |  |  |      |    |  |  |      |   
|Other income (expense), net                                       |  |               |      |                   |  |               |      |               |  |  | 1.0   |    |  |  | (0.4  | ) 
|                                                                  |  |               |       |                   |  |               |       |               |  |  |       |    |  |  |       |   
|Loss before provision
for income taxes                            |  |               | (4.6  | )                 |  |               | (1.1  | )             |  |  | (1.9  | )  |  |  | (2.4  | ) 
|Provision for income taxes                                        |  |               | 0.3   |                   |  |               | 1.1   |               |  |  | 0.7   |    |  |  | 1.0   |   
|                                                                  |  |               |       |                   |  |               |       |               |  |  |       |    |  |  |       |   
|Loss before cumulative effect of a
change in accounting principle |  |               | (4.9  | )                 |  |               | (2.2  | )             |  |  | (2.6  | )  |  |  | (3.4  | ) 
|Cumulative effect of a change in
accounting principle             |  |               |      |                   |  |               |      |               |  |  |      |    |  |  | (27.0 | ) 
|                                                                  |  |               |       |                   |  |               |       |               |  |  |       |    |  |  |       |   
|Net loss                                                          |  |               | (4.9  | )%                |  |               | (2.2  | )%            |  |  | (2.6  | )% |  |  | (30.4 | )%
|                                                                  |  |               |       |                   |  |               |       |               |  |  |       |    |  |  |       |   

Three Months Ended September 30, 2003

Net sales for the third quarter of 2003 decreased $1.0 million or 2.1% compared
to the same period in 2002. In North America, net sales decreased $3.2 million
or 10.0% compared to the net sales in the third quarter of 2002 due principally
to declines in sales of well tanks and disposable cylinders. The
decline in well tank sales is attributable primarily to well drilling
delays caused by heavy rainfall and flooding in portions of the
Southeast, Mid-Atlantic and upper-Midwest states. The decline in
disposable cylinder sales is attributable to a temporary production
disruption during the third quarter at a major customers facility.
Production resumed at the customers facility early in the fourth
quarter. Net sales in Europe increased $2.2 million or 13.9%
due principally to the strengthening of the Euro against the U.S. dollar. If
the value of the Euro had remained at the average level of the third quarter of
2002, reported net sales in Europe for the third quarter of 2003 would be
substantially unchanged as compared to the third quarter of 2002.

Gross profit for the third quarter of
2003 decreased $1.4 million or 11.9% from
the third quarter of 2002. As a percentage of net sales, the gross profit
percentage decreased to 21.9% in 2003 from 24.3% in 2002. This decrease was due
principally to the higher proportion of lower margin sales from the Companys European
operations and increased steel costs in Europe.

Selling, general and administrative expenses for the third quarter of 2003
increased by $0.2 million or 3.1% compared to 2002. The increase is
principally attributable to the strengthening of the Euro against the U.S.
dollar.

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Other, net was substantially unchanged when compared to 2002.

Income taxes during the third quarter of 2003 decreased $0.4 million as
compared to 2002 reflecting decreased operating profits in the Companys
European operations. During 2002, management decided to discontinue the
recognition of tax benefits associated with pre-tax losses from the Companys
U.S. operations. Net deferred tax assets recognized on the Companys balance
sheet continue to require managements evaluation as to their realization.
Although realization is not assured, management believes it is more likely than
not that the net deferred tax
assets will be realized. The amount expected to be realized is based upon
estimates derived from tax planning strategies which the Company believes are
currently prudent and feasible. A valuation allowance has been provided for
certain net operating loss carryforwards, as it is more likely than not that
the related deferred tax assets for these carryforwards will not be realized.

The net loss for the third quarter of
2003 of $2.3 million compares to a net
loss in the third quarter of 2002 of $1.0 million. The change was principally
due to the higher proportion of lower margin sales from the Companys European
operations and increased steel costs in Europe.

Earnings before interest expense, taxes, depreciation and amortization (EBITDA)
for the third quarter of 2003 were $4.9 million, a decrease of
$1.5 million
compared to the third quarter of 2002. As a percentage of net sales, EBITDA
decreased to 10.5% in 2003 from 13.6% in 2002. The method of calculating
EBITDA is consistent with the definition contained in the Foothill Facility and
the Indenture. 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
of other assets or liabilities that may generate or require cash. EBITDA is
not a generally accepted accounting measure. The following table illustrates
the calculation of EBITDA (in thousands):

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|                                                      |  |               |        |                   |  |          |        |   |  |   |        |          |  |  |    |   |  |   |         |  
|----------------------------------------------------- |  | ------------- | ------ | ----------------- |  | -------- | ------ | - |  | - | ------ | -------- |  |  | -- | - |  | - | ------- | -
|                                                      |  | Quarter Ended |        | Nine Months Ended
|                                                      |  |               |        |                  
|                                                      |  | Sept 30,      |        | Sept 30,          |  | Sept 30, |        |   |  |   |        | Sept 30,
|                                                      |  | 2003          |        | 2002              |  | 2003     |        |   |  |   |        | 2002    
|                                                      |  |               |        |                   |  |          |        |   |  |   |        |         
|                                                      |  |               |        |                   |  |          |        |   |  |   |        |          |  | 
|Net loss                                              |  | $             | (2,267 | )                 |  | $        | (1,030 | ) |  | $ | (3,764 | )        |  |  | (B | ) |  | $ | (42,911 | )
|Cumulative effect of a change in
accounting principle |  |               |       |                   |  |          |       |   |  |   |       |          |  |  |    |   |  |   | 38,087  |  
|Interest expense                                      |  |               | 5,012  |                   |  |          | 4,983  |   |  |   | 14,698 |          |  |  |    |   |  |   | 14,906  |  
|Depreciation and amortization (A)                     |  |               | 1,998  |                   |  |          | 1,944  |   |  |   | 6,135  |          |  |  |    |   |  |   | 5,944   |  
|Provision for income taxes                            |  |               | 144    |                   |  |          | 526    |   |  |   | 1,084  |          |  |  |    |   |  |   | 1,335   |  
|                                                      |  |               |        |                   |  |          |        |   |  |   |        |          |  |  |    |   |  |   |         |  
|EBITDA                                                |  | $             | 4,887  |                   |  | $        | 6,423  |   |  | $ | 18,153 |          |  |  |    |   |  | $ | 17,361  |  
|                                                      |  |               |        |                   |  |          |        |   |  |   |        |          |  |  |    |   |  |   |         |  



|(A) |  | Cash flow statement denotes $6,883
and $6,622 for the nine months ending September 30, 2003 and 2002, respectively.
These amounts include amortization of deferred finance costs which are presented
as part of interest expense on the Companys Condensed Consolidated Statement of Operations.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(B) |  | Includes gain on purchase of senior subordinated notes of $1,513.                                                                                                                                                                                                                                

Nine Months Ended September 30, 2003

Net sales for the first nine months of 2003 increased $6.6 million or 4.7% as
compared to the first nine months of 2002. In North America, net sales
declined $5.7 million or 6.1% due principally to declines in
sales of well tanks and disposable cylinders described earlier. Net sales in Europe
increased $12.3 million or 26.4% compared to the first nine months of 2002 due
to stronger sales performance and the strengthening of the Euro. If the value
of the Euro had remained at the average level of 2002, reported net sales in
Europe for the nine month period of 2003 would have increased $2.6 million or
5.6%.

Gross profit for the first nine months
of 2003 decreased by $1.5 million or
4.5% as compared to the same period in 2002. Gross profit as a percentage to
net sales decreased to 21.4% in 2003 from 23.5% in 2002. This decrease was due
principally to the higher proportion of lower margin sales from the Companys European
operations and increased steel costs in North America and Europe.

Selling, General and Administrative expenses for the first nine months of 2003
of $21.1 million was substantially unchanged as compared to the first nine
months of 2002. The strengthening of the Euro versus the U.S. dollar in 2003
largely offset certain one-time compensation costs incurred during the second
quarter of 2002.

Other income, net increased $2.1 million in comparison to 2002. The increase
was principally due to the gain of $1.5 million in 2003 recorded on the extinguishment
of a portion of the Companys senior subordinated notes and the currency
exchange losses ($0.6 million) incurred in 2002 that did not occur in 2003.

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Income taxes during the first nine months of 2003 decreased $0.3 million as
compared to 2002 reflecting estimated full year effective tax rates in the
Companys European operations. During 2002, management decided to discontinue
the recognition of tax benefits associated with pre-tax losses from the
Companys U.S. operations. Net deferred tax assets recognized on the Companys
balance sheet continue to require managements evaluation as to their
realization. Although realization is not assured, management believes it is
more likely than not that the net deferred tax assets will be realized. The
amount expected to be realized is based upon estimates derived from tax
planning strategies which the Company believes are currently prudent and
feasible. A valuation allowance has been provided for certain net operating
loss carryforwards, as it is more likely than not that the related deferred tax
assets for these carryforwards will not be realized.

The net loss for the first nine months
of 2003 of $3.8 million compares to a
net loss in the first nine months of 2002 of $42.9 million. The change was
principally due to the goodwill impairment charge of $38.1 million recorded in
the first quarter of 2002.

Earnings before interest expense, taxes, depreciation and amortization (EBITDA)
for the first nine months of 2003 increased $0.8 million to $18.2 million
compared to $17.4 million for the first nine months of 2002. The increase was
principally the result of the gain of $1.5 million recorded on the
extinguishment of a portion of the Companys senior subordinated
notes and $0.6
million of currency exchange losses incurred by the Companys European
operations in 2002 offset by a higher proportion of lower margin sales from the
Companys European operations and increased steel costs in Europe.

Liquidity and Capital Resources

As of September 30, 2003, the Companys operating capital (defined as accounts
receivable and inventory, less accounts payable) increased $3.3 million from
$28.4 million at December 31, 2002 to $31.7 at September 30, 2003. Accounts
receivable and inventories increased $1.0 million and $3.2 million,
respectively while accounts payable increased $0.9 million consistent with
seasonal operating levels principally in the Companys water
systems and HVAC products as well as
the impact of the strengthening Euro on the translation of results at the
Companys European operations.

For the nine months of 2003, net cash used in operations of $1.0 million was
$3.3 million greater than the first nine months of 2002 due principally to a
greater net loss as well as the impact of an increased working
capital position (defined
as current assets less current liabilities). Cash provided by
financing activities during the nine months ended September 2003 increased
approximately $3.7 million due to higher aggregate borrowings
under the revolving credit facility and additional issuances under
the Cypress Facility as discussed below.

The Company is a party to two credit facilities: a $42.5 million senior
first-priority secured credit facility arranged by Foothill Capital Corporation
(the Foothill Facility) and a senior second-priority secured
credit facility with affiliates of The Cypress Group L.L.C. (the Cypress
Facility).

The Foothill Facility provides the Company (i) a term loan facility consisting
of a five-year Term Loan A, $7.7 million at September 30, 2003, bearing
interest at LIBOR plus 3.5%, and a three-year Term Loan B, $5.6 million as of
September 30, 2003, bearing interest at the greater of the

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Wells Fargo
Reference Rate (approximates the prime rate) plus 3.5% or 9.25%, (collectively
the Term Loans) and (ii) a five-year Revolving Credit Facility, bearing
interest at LIBOR plus
2.5% or the Wells Fargo Reference Rate plus 0.5%, providing the lesser of (a)
$35.0 million less the aggregate outstanding principal amount of
the Term Loan A
loan less letter of credit usage and (b) borrowing base less letter of credit
usage. At September 30, 2003, total availability and aggregate borrowings under
the Revolving Credit Facility were $12.4 million and $6.5 million,
respectively.

The Cypress Facility consists of an original issue term loan of $25.0
million with additional issuances representing accreted interest and
one additional issuance described below (collectively the Term
Loan C). The Term Loan C has a maturity date of December 26,
2006, and bears Payment-In-Kind
(PIK) interest fixed at 12% per annum paid quarterly, which at the lenders
option can be paid in common stock of the Company. In addition, 60,000
warrants with an exercise price of $0.01 were issued under the Cypress
facility. The Company expects that the effective interest rate will be
greater than 12% given the additional interest expense associated with the
warrants. At September 30, 2003, aggregate borrowings under the
Cypress Facility, net of original issue discount, were $29.8 million.

Under the terms of the Foothill Facility and Cypress Facility, the Company, as
of September 30, 2003, was required to comply, and was in compliance, with the
affirmative and negative covenants and restrictions.

In November 1996, the Company issued, under a Note Indenture Agreement (the
Agreement), $115.0 million of Senior Subordinated Notes due 2006 (the
Notes) of which $112.4 million was outstanding as of September 30, 2003. 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. 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. 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 Notes Indenture contains certain affirmative and
negative covenants and restrictions. As of September 30, 2003,
the Company was
in compliance with the various covenants.

In March 2003, the Company purchased a portion of the Notes with a face value
of $2.6 million. The purchase was financed through the issuance of additional
Term Loan C debt of $1.1 million. The extinguishment resulted in a gain of $1.5
million that was included in Other, net on the Companys Condensed Consolidated
Statement of Operations. The Company and/or affiliates of the Company,
including entities related to Cypress may continue, from time to time, to
purchase the Notes previously issued by the Company in the open market or by
other means. As of September 30, 2003 Cypress held Notes with a face value of
$11.7 million.

The Company intends to fund its future working capital, capital expenditures
and debt service requirements through cash flows generated from operations and
borrowings under the Foothill Facility. Management believes that cash
generated from operations, together with borrowings available under the
Foothill 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 the issuance of additional debt and
equity securities.

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The Company will continue to selectively pursue strategic acquisitions. The
Company believes that strategic acquisitions, 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 be price competitive.

Inflation

The Company believes that anticipated inflation rates will not have a
materially adverse effect on its results of operations or its financial
condition in 2003. However, there can be no assurance that sharply increasing
raw material or fuel 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 Form 10-K as filed with
the Securities and Exchange Commission on March 28, 2003.




Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

On September 30, 2003, the Company, under the supervision and with the
participation of its management, including its principal executive officer and
principal financial officer, performed an evaluation of the Companys
disclosure controls and procedures, as required by Securities Exchange Act Rule
13a-15. Based on that evaluation, the Companys principal executive officer
and principal financial officer concluded that such disclosure controls and
procedures are effective to ensure that material information relating to the
Company, including its consolidated subsidiaries, is made known to them,
particularly during the period for which the periodic reports are being
prepared.

Changes in Internal Controls

No significant changes were made in the Companys internal controls or in other
factors that could significantly affect these controls subsequent to the date
of the evaluation performed pursuant to Securities Exchange Act Rule 13a-15.

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##### Table of Contents



AMTROL INC. AND SUBSIDIARIES




PART II




Item 1. Legal Proceedings

No material legal proceedings were terminated or filed against the Company
during the period covered by this report.




Item 2. Changes in Securities and Use of Proceeds

None.




Item 3. Defaults Upon Senior Securities

None.




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

None.




Item 5. Other Information

None.




Item 6. Exhibits and Reports on Form 8-K



| | (a) |  | Exhibits:
| | --- |  | ---------

| |  |  |      |  |  |                                                                                                                                                    
| |  |  | ---- |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | 31.1 |  |  | Certification of Chief Executive
Officer pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934.                                     
| |  |  |      |  |  |                                                                                                                                                    
| |  |  | 31.2 |  |  | Certification of Chief Financial
Officer pursuant to Rule 13a-14 (a) under the Securities
Exchange Act of 1934.                                    
| |  |  |      |  |  |                                                                                                                                                    
| |  |  | 32.1 |  |  | Certification of Chief Executive
Officer pursuant to 18 U.S.C., Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
| |  |  |      |  |  |                                                                                                                                                    
| |  |  | 32.2 |  |  | Certification of Chief Financial
Officer pursuant to 18 U.S.C., Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



| | (b) |  | Reports on Form 8-K:
| | --- |  | --------------------



| |  |  | No reports on Form 8-K were filed during the period
covered by this report.
| |  |  | ---------------------------------------------------------------------------

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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, 2003 |  | By:         |  | /s/ALBERT D. INDELICATO             
|                        |  |             |  |                                     
|                        |  |             |  | Albert D. Indelicato,               
|                        |  |             |  | President, Chairman of the Board,   
|                        |  |             |  | Chief Executive Officer and Director
|                        |  |             |  |                                     
|Date: November 14, 2003 |  | By:         |  | /s/LARRY T. GUILLEMETTE             
|                        |  |             |  |                                     
|                        |  |             |  | Larry T. Guillemette,               
|                        |  |             |  | Executive Vice President,           
|                        |  |             |  | Chief Financial Officer and         
|                        |  |             |  | Treasurer                           

23