##### 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 March 31, 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 |  | (I.R.S. Employer Identification No.)
|Incorporation or Organization)  |  |                                     

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 May 14, 2003.

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TABLE OF CONTENTS



|               |                                                                                               |                                                 |  |  |  |  |  | 
|-------------- | --------------------------------------------------------------------------------------------- | ----------------------------------------------- |  |  |  |  |  | 
|               |                                                                                               | Consolidated Balance Sheets                    
|               |                                                                                               | Consolidated Statements of Operations          
|               |                                                                                               | Consolidated Statements of Shareholders Equity
|               |                                                                                               | Consolidated Statements of Cash Flows          
|               |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS     
|               | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|               | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|               | 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    
|CERTIFICATIONS



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AMTROL INC. AND SUBSIDIARIES

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2003

INDEX

|        |  |                                                                                       |  |                                                                                                                      |    |      |    | 
|------- |  | ------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|        |  |                                                                                       |  |                                                                                                                      |    | PAGE
|        |  |                                                                                       |  |                                                                                                                      |    |     
|PART I  |  | Financial Information                                                                 |  |                                                                                                                      |    |     
|Item 1. |  | Condensed Consolidated Balance Sheets -
March 31, 2003 and December 31, 2002          |  |                                                                                                                      | 3  |     
|        |  |                                                                                       |  | Condensed Consolidated Statements of Operations -
For the Quarters Ended March 31, 2003 and March 31, 2002           |    |      | 4  | 
|        |  |                                                                                       |  | Condensed Consolidated Statements of Shareholders Equity -
For the Quarters Ended March 31, 2003 and March 31, 2002 |    |      | 5  | 
|        |  |                                                                                       |  | Condensed Consolidated Statements of Cash Flows -
For the Quarters Ended March 31, 2003 and March 31, 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                            |  |                                                                                                                      | 20 |     
|Item 4. |  | Controls and Procedures                                                               |  |                                                                                                                      | 20 |     
|PART II |  | Other Information                                                                     |  |                                                                                                                      |    |     
|Item 1. |  | Legal Proceedings                                                                     |  |                                                                                                                      | 21 |     
|Item 2. |  | Changes in Securities and Use of Proceeds                                             |  |                                                                                                                      | 21 |     
|Item 3. |  | Defaults Upon Senior Securities                                                       |  |                                                                                                                      | 21 |     
|Item 4. |  | Submission of Matters to a Vote of Security Holders                                   |  |                                                                                                                      | 21 |     
|Item 5. |  | Other Information                                                                     |  |                                                                                                                      | 21 |     
|Item 6. |  | Exhibits and Reports on Form 8-K                                                      |  |                                                                                                                      | 21 |     
|        |  |                                                                                       |  | Signatures                                                                                                           |    |      | 22 | 
|        |  |                                                                                       |  | Certifications                                                                                                       |    |      | 23 | 

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AMTROL INC. AND SUBSIDIARIES




Condensed Consolidated Balance Sheets
(In thousands)


Assets

|                                        |                                                                           |                            |         |         |           |   |              |         |         |  | 
|--------------------------------------- | ------------------------------------------------------------------------- | -------------------------- | ------- | ------- | --------- | - | ------------ | ------- | ------- |  | 
|                                        |                                                                           |                            |         |         | Unaudited |   | Audited     
|                                        |                                                                           |                            |         |         | March 31, |   | December 31,
|                                        |                                                                           |                            |         |         | 2003      |   | 2002        
|                                        |                                                                           |                            |         |         |           |   |             
|Current Assets:                         |                                                                           |                            |         |         |           |   |              |        
|                                        | Cash and cash equivalents                                                 |                            | $       | 951     |           |   | $            | 1,797   |        
|                                        | Accounts receivable, less allowance for doubtful accounts                 |                            |         | 32,860  |           |   |              | 29,765  |        
|                                        | Inventories                                                               |                            |         | 23,786  |           |   |              | 22,445  |        
|                                        | Tax refund receivable                                                     |                            |         | 2,640   |           |   |              | 2,233   |        
|                                        | Deferred income taxes - short-term                                        |                            |         | 1,681   |           |   |              | 1,681   |        
|                                        | Prepaid expenses and other                                                |                            |         | 1,985   |           |   |              | 1,357   |        
|                                        |                                                                           |                            |         |         |           |   |              |         |        
|                                        |                                                                           | Total current assets       |         |         | 63,903    |   |              |         | 59,278  | 
|                                        |                                                                           |                            |         |         |           |   |              |        
|Property, Plant and Equipment, Net      |                                                                           |                            | 37,018  |         |           |   | 38,501       |        
|Other Assets:                           |                                                                           |                            |         |         |           |   |              |        
|                                        | Goodwill                                                                  |                            |         | 119,205 |           |   |              | 119,205 |        
|                                        | Deferred financing costs                                                  |                            |         | 3,937   |           |   |              | 4,186   |        
|                                        | Deferred
income taxes - long-term                                         |                            |         | 7,267   |           |   |              | 7,267   |        
|                                        | Other                                                                     |                            |         | 1,392   |           |   |              | 1,227   |        
|                                        |                                                                           |                            |         |         |           |   |              |         |        
|                                        |                                                                           | Total other assets         |         |         | 131,801   |   |              |         | 131,885 | 
|                                        |                                                                           |                            |         |         |           |   |              |        
|                                        |                                                                           | $                          | 232,722 |         |           | $ | 229,664      |        
|                                        |                                                                           |                            |         |         |           |   |              |        
|Liabilities and Shareholders Equity   
|Current Liabilities:                    |                                                                           |                            |         |         |           |   |              |        
|                                        | Current maturities of long-term debt                                      |                            | $       | 2,957   |           |   | $            | 2,957   |        
|                                        | Notes payable to banks                                                    |                            |         | 8,374   |           |   |              | 6,923   |        
|                                        | Accounts payable                                                          |                            |         | 28,280  |           |   |              | 23,826  |        
|                                        | Accrued expenses                                                          |                            |         | 11,356  |           |   |              | 16,773  |        
|                                        | Accrued interest                                                          |                            |         | 3,069   |           |   |              | 203     |        
|                                        | Accrued income taxes                                                      |                            |         | 1,443   |           |   |              | 719     |        
|                                        |                                                                           |                            |         |         |           |   |              |         |        
|                                        |                                                                           | Total current liabilities  |         |         | 55,479    |   |              |         | 51,401  | 
|                                        |                                                                           |                            |         |         |           |   |              |         |        
|Other Noncurrent Liabilities            |                                                                           |                            | 3,854   |         |           |   | 4,023        |        
|Long Term Debt, Less Current Maturities |                                                                           |                            | 158,064 |         |           |   | 158,391      |        
|Shareholders Equity:                   |                                                                           |                            |         |         |           |   |              |        
|                                        | Capital stock $.01 par value - authorized 1,000 shares,
100 shares issued |                            |         |        |           |   |              |        |        
|                                        | Additional paid-in capital                                                |                            |         | 99,273  |           |   |              | 99,273  |        
|                                        | Retained deficit                                                          |                            |         | (82,175 | )         |   |              | (81,393 | )      
|                                        | Accumulated other comprehensive loss                                      |                            |         | (1,773  | )         |   |              | (2,031  | )      
|                                        |                                                                           |                            |         |         |           |   |              |         |        
|                                        |                                                                           | Total shareholders equity |         |         | 15,325    |   |              |         | 15,849  | 
|                                        |                                                                           |                            |         |         |           |   |              |        
|                                        |                                                                           | $                          | 232,722 |         |           | $ | 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
|                                                                  |  |              
|                                                                  |  | March 31,     |        | March 31,
|                                                                  |  | 2003          |        | 2002     
|                                                                  |  |               |        |          
|Net sales                                                         |  | $             | 51,115 |           |  | $ | 42,542  |  
|Cost of goods sold                                                |  |               | 40,850 |           |  |   | 32,622  |  
|                                                                  |  |               |        |           |  |   |         |  
|Gross profit                                                      |  |               | 10,265 |           |  |   | 9,920   |  
|Operating expenses:                                               |  |               |        |           |  |   |         |  
|Selling, general and administrative                               |  |               | 7,135  |           |  |   | 6,725   |  
|                                                                  |  |               |        |           |  |   |         |  
|Income from operations                                            |  |               | 3,130  |           |  |   | 3,195   |  
|Other income (expense):                                           |  |               |        |           |  |   |         |  
|Interest expense                                                  |  |               | (4,726 | )         |  |   | (4,808  | )
|Interest income                                                   |  |               | 27     |           |  |   | 21      |  
|Other, net                                                        |  |               | 1,450  |           |  |   | 13      |  
|                                                                  |  |               |        |           |  |   |         |  
|Loss before provision for income taxes                            |  |               | (119   | )         |  |   | (1,579  | )
|Provision for income taxes                                        |  |               | 663    |           |  |   | 461     |  
|                                                                  |  |               |        |           |  |   |         |  
|Loss before cumulative effect of a change in accounting principle |  |               | (782   | )         |  |   | (2,040  | )
|Cumulative effect of a change in accounting principle             |  |               |       |           |  |   | (38,087 | )
|                                                                  |  |               |        |           |  |   |         |  
|Net loss                                                          |  | $             | (782   | )         |  | $ | (40,127 | )
|                                                                  |  |               |        |           |  |   |         |  

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)

|                           |                                            |   |                              |   |            |   |                  |   |                    |   |         |      |                   |   |               |     |  |   |      |      |  
|-------------------------- | ------------------------------------------ | - | ---------------------------- | - | ---------- | - | ---------------- | - | ------------------ | - | ------- | ---- | ----------------- | - | ------------- | --- |  | - | ---- | ---- | -
|                           |                                            |   | Quarter Ended March 31, 2003
|                           |                                            |   |                             
|                           |                                            |   |                              |   |            |   | Additional Paid- |   |                    |   |         |      | Accumulated Other |   | Comprehensive
|                           |                                            |   | Common Stock                 |   | in Capital |   | Retained Deficit |   | Comprehensive Loss |   | 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 | )   
|                           |                                            |   |                              |   |            |   |                  |   |                    |   |         |      |                   |   |               |     |  |   |      |     

|                           |                                            |   |                              |   |            |   |                  |   |                    |   |         |         |                   |   |               |      |   |   |         |         |  
|-------------------------- | ------------------------------------------ | - | ---------------------------- | - | ---------- | - | ---------------- | - | ------------------ | - | ------- | ------- | ----------------- | - | ------------- | ---- | - | - | ------- | ------- | -
|                           |                                            |   | Quarter Ended March 31, 2002
|                           |                                            |   |                             
|                           |                                            |   |                              |   |            |   | Additional Paid- |   |                    |   |         |         | Accumulated Other |   | Comprehensive
|                           |                                            |   | Common Stock                 |   | in Capital |   | Retained Deficit |   | Comprehensive Loss |   | Loss   
|                           |                                            |   |                              |   |            |   |                  |   |                    |   |        
|Balance, December 31, 2001 |                                            | $ |                             |   |            | $ | 99,273           |   |                    | $ | (36,064 | )       |                   | $ | (4,990        | )    |   | $ |        |        
|                           | Net loss                                   |   |                              |  |            |   |                  |  |                    |   |         | (40,127 | )                 |   |               |     |   |   |         | (40,127 | )
|                           | Derivative instrument valuation adjustment |   |                              |  |            |   |                  |  |                    |   |         |        |                   |   |               | 304  |   |   |         | 304     |  
|                           | Currency translation adjustment            |   |                              |  |            |   |                  |  |                    |   |         |        |                   |   |               | (262 | ) |   |         | (262    | )
|                           |                                            |   |                              |   |            |   |                  |   |                    |   |         |         |                   |   |               |      |   |   |         |        
|Balance, March 31, 2002    |                                            | $ |                             |   |            | $ | 99,273           |   |                    | $ | (76,191 | )       |                   | $ | (4,948        | )    |   | $ | (40,085 | )      
|                           |                                            |   |                              |   |            |   |                  |   |                    |   |         |         |                   |   |               |      |   |   |         |        

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 Cash Flows
(Unaudited - in thousands)

|                                                             |                                                                                            |                                               |                                           |         |               |        |           |         |       |      |  
|------------------------------------------------------------ | ------------------------------------------------------------------------------------------ | --------------------------------------------- | ----------------------------------------- | ------- | ------------- | ------ | --------- | ------- | ----- | ---- | -
|                                                             |                                                                                            |                                               |                                           |         | Quarter Ended
|                                                             |                                                                                            |                                               |                                           |         |              
|                                                             |                                                                                            |                                               |                                           |         | March 31,     |        | March 31,
|                                                             |                                                                                            |                                               |                                           |         | 2003          |        | 2002     
|                                                             |                                                                                            |                                               |                                           |         |               |        |          
|Cash Flows Provided by (Used in) Operating Activities:       |                                                                                            |                                               |                                           |         |               |        |           |        
|                                                             | Net loss                                                                                   |                                               | $                                         | (782    | )             |        | $         | (40,127 | )    
|                                                             | 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                 |                                           |         | 2,338         |        |           |         | 2,209 |     
|                                                             |                                                                                            | Provision for losses on accounts receivable   |                                           |         | 18            |        |           |         | 32    |     
|                                                             |                                                                                            | Gain on purchase of senior subordinated notes |                                           |         | (1,513        | )      |           |         |      |     
|                                                             |                                                                                            | Changes in operating assets and liabilities   |                                           |         | (1,348        | )      |           |         | (570  | )   
|                                                             |                                                                                            |                                               |                                           |         |               |        |           |        
|                                                             |                                                                                            |                                               | Net cash used in operating activities     |         |               | (1,287 | )         |         |       | (369 | )
|                                                             |                                                                                            |                                               |                                           |         |               |        |           |        
|Cash Flows Provided by (Used in) Investing Activities:       |                                                                                            |                                               |                                           |         |               |        |           |        
|                                                             | Capital expenditures                                                                       |                                               |                                           | (422    | )             |        |           | (512    | )    
|                                                             |                                                                                            |                                               |                                           |         |               |        |           |        
|                                                             |                                                                                            |                                               | Net cash used in investing activities     |         |               | (422   | )         |         |       | (512 | )
|                                                             |                                                                                            |                                               |                                           |         |               |        |           |        
|Cash Flows Provided by (Used in) Financing Activities:       |                                                                                            |                                               |                                           |         |               |        |           |        
|                                                             | Repayment of debt                                                                          |                                               |                                           | (37,424 | )             |        |           | (33,085 | )    
|                                                             | Issuance of debt                                                                           |                                               |                                           | 38,243  |               |        |           | 33,264  |      
|                                                             |                                                                                            |                                               |                                           |         |               |        |           |         |      
|                                                             |                                                                                            |                                               | Net cash provided by financing activities |         |               | 819    |           |         |       | 179  |  
|                                                             |                                                                                            |                                               |                                           |         |               |        |           |        
|Net Decrease in Cash and Cash Equivalents                    |                                                                                            |                                               | (890                                      | )       |               |        | (702      | )      
|Effect of exchange rate changes on cash and cash
equivalents |                                                                                            |                                               | 44                                        |         |               |        | (8        | )      
|Cash and cash equivalents, beginning of period               |                                                                                            |                                               | 1,797                                     |         |               |        | 983       |        
|                                                             |                                                                                            |                                               |                                           |         |               |        |           |         |      
|Cash and cash equivalents, end of period                     |                                                                                            | $                                             | 951                                       |         |               | $      | 273       |        
|                                                             |                                                                                            |                                               |                                           |         |               |        |           |        

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

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AMTROL INC. AND SUBSIDIARIES




NOTES TO 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 it
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

The Company adopted Staff Accounting Bulletin (SAB) No. 101, Revenue
Recognition in Financial Statements,as of January 1, 2001. In accordance with
SAB No. 101, the Company recognizes revenue only when there is a valid contract
or purchase order, which includes a fixed price; the goods have been delivered
in accordance with the shipping terms; and there is an expectation that the
collection of the revenue is reasonably assured. The Company has reclassed
shipping/handling fees and costs to revenue consistent with the presentation
required by Emerging Issues Task Force (EITF) 00-10.

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

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earned by the customers over an annual period. At March 31, 2003 and 2002, the
Company had accrued $1.2 million and $1.0 million, respectively, 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 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 period when the estimates are adjusted to the actual
amounts.

Warranty

The Company extends various warranties covering all of its products ranging
from a 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 generally
provide for the replacement of 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.

The following chart illustrates the changes in the Companys warranty reserve
during the latest quarter:

|                              |  |              |       |  
|----------------------------- |  | ------------ | ----- | -
|(in thousands)                |  |              |       |  
|                              |  | Consolidated
|                              |  |             
|Balance, December 31, 2002    |  | $            | 2,367 |  
|Warranties issued during 2003 |  |              | 321   |  
|Claims                        |  |              | (321  | )
|                              |  |              |       |  
|Balance, March 31, 2003       |  | $            | 2,367 |  
|                              |  |              |       |  

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Goodwill

Goodwill represents the excess of acquisition costs over the estimated fair
value of the net assets acquired and was amortized through year-end 2001 using
the straight-line method principally over 40 years. In June 2001, the
Financial Accounting Standards Board (FASB) issued SFAS No. 142, Goodwill and
Other Intangible Assets. The Company adopted SFAS No. 142 effective December
31, 2001. 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 for
the cumulative effect of 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 quarter. The cumulative effect of the
resulting translation was reflected as a separate component of shareholders
equity.

During the quarter ended March 31, 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 March 31, 2003, the Companys Portuguese operations had
forward contracts for the purchase of $5.2 million with due dates ranging from
early April 2003 through July 2003. The value of these forward contracts was
immaterial to the balance sheet of the Company.

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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 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.
Accordingly, the Companys $0.4 million extraordinary loss from debt retirement
recorded in 2001 will be reclassified to earnings from continuing operations.

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 $25.0 million 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, $8.5 million at March 31, 2003, bearing
interest at LIBOR plus 3.5%, and a three-year Term B loan, $6.2 million as of
March 31, 2003, bearing interest at the greater of the Wells Fargo Reference
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 (approximates the prime 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 March 31, 2003, total availability and aggregate borrowings
under the Revolving Credit Facility were $11.6 million and $6.3 million,
respectively.

The Cypress Facility consists of a
single original issue term loan of $25 million (the Term
Loan C). The Term Loan C, $27.6 million as of
March 31, 2003, has a five-year maturity and bears Pay-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.

Under the terms of the Foothill and Cypress facilities, the Company, as of
March 31, 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 March 31, 2003. The
Notes are unsecured obligations of the Company. The Notes bear interest at a
rate of 10.625% per annum that is payable semi-annually on each June 30 and
December 31.

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.

During the current quarter, 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 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 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.

The Notes Indenture contains certain affirmative and negative covenants and
restrictions. As of March 31, 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 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.

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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 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):

|                                  |  |           |        |              |  |   |        | 
|--------------------------------- |  | --------- | ------ | ------------ |  | - | ------ | 
|                                  |  | March 31, |        | December 31,
|                                  |  | 2003      |        | 2002        
|                                  |  |           |        |             
|Raw materials and work in process |  | $         | 14,475 |              |  | $ | 12,860 | 
|Finished goods                    |  |           | 9,311  |              |  |   | 9,585  | 
|                                  |  |           |        |              |  |   |        | 
|                                  |  | $         | 23,786 |              |  | $ | 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 March 31, 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 Agreement Term Loan A and B Debt.

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As of March 31, 2003, the fair value of the instrument ($0.3 million) was
recorded in other non-current liabilities with a corresponding entry to
accumulated other comprehensive loss. Subsequent changes in the fair value of
the swap will be recorded through accumulated other comprehensive loss (except
for changes related to ineffectiveness, which will be recorded currently
through net income). The Company does not currently anticipate any material
ineffectiveness under the hedge for 2003.

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. 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, Asia and Mexico.

The Companys European segment includes its 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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|                                |               |          |      |           |         |              |   |         |         | 
|------------------------------- | ------------- | -------- | ---- | --------- | ------- | ------------ | - | ------- | ------- | 
|                                |               |          |      | March 31, |         | March 31,   
|                                |               |          |      | 2003      |         | 2002        
|                                |               |          |      |           |         |             
|Net Sales to external customers |               |          |      |           |         |              |   |        
|                                | North America |          |      |           |         |              |   |         |        
|                                |               | US       |      | $         | 27,874  |              |   | $       | 28,210  | 
|                                |               | Other    |      |           | 1,720   |              |   |         | 1,235   | 
|                                | Europe        |          |      |           |         |              |   |         |        
|                                |               | Portugal |      |           | 18,878  |              |   |         | 11,031  | 
|                                |               | Other    |      |           | 2,643   |              |   |         | 2,066   | 
|                                |               |          |      |           |         |              |   |        
|                                | Consolidated  |          | $    | 51,115    |         |              | $ | 42,542  |        
|                                |               |          |      |           |         |              |   |        
|Income from operations          |               |          |      |           |         |              |   |        
|                                | North America |          | $    | 2,112     |         |              | $ | 2,335   |        
|                                | Europe        |          |      | 1,018     |         |              |   | 860     |        
|                                |               |          |      |           |         |              |   |        
|                                | Consolidated  |          | $    | 3,130     |         |              | $ | 3,195   |        
|                                |               |          |      |           |         |              |   |        
|EBITDA                          |               |          |      |           |         |              |   |        
|                                | North America |          | $    | 4,934     |         |              | $ | 3,604   |        
|                                | Europe        |          |      | 1,763     |         |              |   | 1,620   |        
|                                |               |          |      |           |         |              |   |        
|                                | Consolidated  |          | $    | 6,697     |         |              | $ | 5,224   |        
|                                |               |          |      |           |         |              |   |        
|                                |               |          |      |           |         |              |   |        
|                                |               |          |      | March 31, |         | December 31,
|                                |               |          | 2003 |           | 2002   
|                                |               |          |      |           |        
|Long-Lived assets               |               |          |      |          
|                                | North America |          |      |           |         |              |   |         |        
|                                |               | US       |      | $         | 118,289 |              |   | $       | 119,266 | 
|                                |               | Other    |      |           | 4       |              |   |         | 4       | 
|                                | Europe        |          |      |           |         |              |   |         |        
|                                |               | Portugal |      |           | 32,054  |              |   |         | 32,441  | 
|                                |               | Other    |      |           | 5,876   |              |   |         | 5,995   | 
|                                |               |          |      |           |         |              |   |         |        
|                                | Consolidated  |          | $    | 156,223   |         |              | $ | 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 Agreement 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.

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10.     Commitments and Contingencies

At March 31, 2003, the Foothill Facility contained a sublimit to support the
issuance of letters of credit in the amount of $3.0 million. At March 31,
2003, letters of credit outstanding amounted to $0.4 million.

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




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 subsidiaries and their representatives may from time to
time make written or oral statements, including statements contained in the
Companys filings with the Securities and Exchange Commission (SEC) and in
its reporting to customers, 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;

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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.

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.

|                                                                  |  |                       |       |           |  |  |       |   
|----------------------------------------------------------------- |  | --------------------- | ----- | --------- |  |  | ----- | --
|                                                                  |  | For the Quarter Ended
|                                                                  |  |                      
|                                                                  |  | March 31,             |       | March 31,
|                                                                  |  | 2003                  |       | 2002     
|                                                                  |  |                       |       |          
|Net sales                                                         |  |                       | 100.0 | %         |  |  | 100.0 | % 
|Cost of goods sold                                                |  |                       | 79.9  |           |  |  | 76.7  |   
|                                                                  |  |                       |       |           |  |  |       |   
|Gross profit                                                      |  |                       | 20.1  |           |  |  | 23.3  |   
|Selling, general and administrative expenses                      |  |                       | 14.0  |           |  |  | 15.8  |   
|                                                                  |  |                       |       |           |  |  |       |   
|Income from operations                                            |  |                       | 6.1   |           |  |  | 7.5   |   
|Interest expense                                                  |  |                       | (9.2  | )         |  |  | (11.3 | ) 
|Interest income                                                   |  |                       | 0.1   |           |  |  |      |   
|Other income, net                                                 |  |                       | 2.8   |           |  |  |      |   
|                                                                  |  |                       |       |           |  |  |       |   
|Loss before provision for income taxes                            |  |                       | (0.2  | )         |  |  | (3.8  | ) 
|Provision for income taxes                                        |  |                       | 1.3   |           |  |  | 1.1   |   
|                                                                  |  |                       |       |           |  |  |       |   
|Loss before cumulative effect of a change in
accounting principle |  |                       | (1.5  | )         |  |  | (4.9  | ) 
|Cumulative effect of a change in accounting principle             |  |                       |      |           |  |  | (89.4 | ) 
|                                                                  |  |                       |       |           |  |  |       |   
|Net loss                                                          |  |                       | (1.5  | )%        |  |  | (94.3 | )%
|                                                                  |  |                       |       |           |  |  |       |   

Net sales for the first quarter of 2003 increased $8.6 million or 20.2%
compared to the same period in 2002. In North America, net sales in the first
quarter of 2003 were comparable to the net sales in the first quarter of 2002.
Net sales in Europe increased $8.4 million or 64.3% due principally to
increased sales of LPG cylinders and the strengthening of the Euro against the
U.S. dollar. If the value of the Euro had remained at the average level of the
first quarter of 2002, reported net sales in Europe for the first quarter of
2003 would have increased $4.6 million or 35.1% from the first quarter of 2002.

Gross profit for the first quarter of 2003 increased $0.3 million or 3.5% from
the first quarter of 2002. As a percentage of net sales, the gross profit
percentage decreased to 20.1% in 2003 from 23.3% in 2002. This decrease was due
principally to the higher proportion of net sales from the Companys European
operations and increased steel costs in both North America and Europe.

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Selling, general and administrative expenses for the first quarter of 2003
increased by $0.4 million or 6.1% compared to 2002. The change was principally
due to increases in the European operations as a result of the strengthening
Euro.

Other, net increased $1.4 million when compared to 2002. The increase was
principally due to the gain of $1.5 million recorded on the extinguishment of a portion
of the Companys senior subordinated notes.

Income taxes during the first quarter of 2003 increased $0.2 million as
compared to 2002. The increase was principally the result of increased
operating profits in the Companys European operations.

The net loss for the first quarter of 2003 of $0.8 million compares to a net
loss in the first quarter of 2002 of $40.1 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 quarter of 2003 were $6.7 million, an increase of
$1.5 million compared to the first quarter of 2002. As a percentage of
net sales, EBITDA increased to 13.1% in 2003 from 12.3% in 2002. The method
of calculating EBITDA is consistent with the definition contained in the
Foothill Agreement 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):

|                                  |  |           |       |           |  |   |       | 
|--------------------------------- |  | --------- | ----- | --------- |  | - | ----- | 
|                                  |  | March 31, |       | March 31,
|                                  |  | 2003      |       | 2002     
|                                  |  |           |       |          
|Income from operations            |  | $         | 3,130 |           |  | $ | 3,195 | 
|Depreciation and amortization (1) |  |           | 2,090 |           |  |   | 1,981 | 
|Interest income                   |  |           | 27    |           |  |   | 21    | 
|Other income (loss), net (2)      |  |           | 1,450 |           |  |   | 27    | 
|                                  |  |           |       |           |  |   |       | 
|EBITDA                            |  | $         | 6,697 |           |  | $ | 5,224 | 
|                                  |  |           |       |           |  |   |       | 

|(1) |  | Cash flow statement denotes $2,338 and $2,209 for 2003 and 2002, respectively.
These amounts include amortization of deferred finance costs which are presented
as part of interest expense on the Companys Statement of Operations.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Includes gain on purchase of senior subordinated notes of $1,513.                                                                                                                                                                    

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Liquidity and Capital Resources

As of March 31, 2003, the Companys operating capital (defined as accounts
receivable and inventory, less accounts payable) was comparable to the
operating capital as of December 31, 2002. Accounts receivable and inventories
increased $3.1 million and $1.3 million, respectively while accounts payable
increased $4.4 million consistent with seasonal operating levels principally in
the Companys water systems and cylinder businesses.

For the first three months of 2003, net cash used in operations of $1.3 million
was $0.9 million more than the first three months of 2002 due principally to
increased working capital requirements attributable to the higher sales and the
strengthening of the Euro. Cash provided by financing activities during the
quarter ended March 2003 increased approximately $0.6 million in order to fund
these increased working capital (defined as current assets less
current liabilities) requirements. Capital expenditures of $0.4
million were $0.1 million lower than in the first three months of 2002.

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 $25.0 million 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 A loan, $8.5 million at March 31, 2003, bearing interest at
LIBOR plus 3.5%, and a three-year Term B loan, $6.2 million as of March 31,
2003, bearing interest at the greater of the Wells Fargo Reference 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 (approximates the prime 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 March 31, 2003, total availability and aggregate borrowings under the
Revolving Credit Facility were $11.6 million and $6.3 million, respectively.

The Cypress Facility consists of a
single original issue term loan of $25 million (the Term
Loan C). The Term Loan C, $27.6 million as of
March 31, 2003, has a five-year maturity and bears Pay-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.
     .

Under the terms of the Foothill and Cypress facilities, the Company, as of
March 31, 2003, was required to comply, and was in compliance, with the
affirmative and negative covenants and restrictions.

In November 1996, the Company issued, under an Indenture, $115.0 million of
Senior Subordinated Notes due 2006 (the Notes) of which $112.4 million was
outstanding as of March 31, 2003. The Notes are unsecured obligations of the
Company. The Notes bear interest

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at the rate of 10.625% per annum payable semi-annually on each June 30 and
December 31 commencing on June 30, 1997. The Notes are redeemable at the
option of the Company on or after December 31, 2001. From and after December
31, 2001, the Notes will be subject to redemption at the option of the Company,
in whole or in part, at various redemption prices, declining from 105.313% of
the principal amount to par on and after December 31, 2003. 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
March 31, 2003, the Company is in compliance with the various covenants.

During the current quarter, 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 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 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.

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 Revolving Credit Facility. Management believes that cash
generated from operations, together with borrowings available under the
Revolving Credit Facility, will be sufficient to meet the Companys working
capital and capital expenditure needs in the foreseeable future. The Company
may consider other options available to it in connection with funding future
working capital and capital expenditure needs, including the issuance of
additional debt and equity securities.

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.

19



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##### Table of Contents






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

Within the 90 day period prior to the filing date of this Quarterly Report on
Form 10-Q, 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.

20



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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

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

21



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##### Table of Contents



AMTROL INC. AND SUBSIDIARIES




SIGNATURES

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

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

22



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##### Table of Contents






CERTIFICATIONS

I, Albert D. Indelicato, certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of AMTROL Inc;                                                                                                                                                                                                                                                             
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
|
| | 3. |  | Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present
in all material respects the financial condition, results of operations
and cash flows of the Registrant as of, and for, the periods presented
in this quarterly report;                   
|
| | 4. |  | The Registrants other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and
we have:                                                                                                     



| | a. |  | Designed such disclosure controls and procedures to
ensure that material information relating to the Registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | Evaluated the effectiveness of the Registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the
Evaluation Date); and                                                                                                  
|
| | c. |  | Presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;                                                                                                                        



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



| | a. |  | All significant deficiencies in the design or operation
of internals controls which could adversely affect the
Registrants ability to record, process, summarize and report
financial data and have identified for the Registrants auditors
any material weaknesses in internal controls; and
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | Any fraud, whether or not material, that involves
management or other employees who have a significant role in the
Registrants internal controls; and                                                                                                                                         



| | 6. |  | The Registrants other certifying officers and I have indicated in
this quarterly report whether there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                   |  |     |  |                                 
|------------------ |  | --- |  | --------------------------------
|Date: May 14, 2003 |  | By: |  | /s/ALBERT D. INDELICATO         
|                   |  |     |  |                                 
|                   |  |     |  | Albert D. Indelicato            
|                   |  |     |  | President, Chairman of the Board
|                   |  |     |  | Chief Executive Officer and     
|                   |  |     |  | Director                        

23



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##### Table of Contents



CERTIFICATIONS

I, Larry T. Guillemette, certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of AMTROL Inc;                                                                                                                                                                                                                                                             
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
|
| | 3. |  | Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present
in all material respects the financial condition, results of operations
and cash flows of the Registrant as of, and for, the periods presented
in this quarterly report;                   
|
| | 4. |  | The Registrants other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and
we have:                                                                                                     



| | a. |  | Designed such disclosure controls and procedures to
ensure that material information relating to the Registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | Evaluated the effectiveness of the Registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the
Evaluation Date); and                                                                                                  
|
| | c. |  | Presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;                                                                                                                        



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



| | a. |  | All significant deficiencies in the design or operation of
internals controls which
could adversely affect the Registrants ability to record,
process, summarize and
report financial data and have identified for the Registrants
auditors any material weaknesses in internal controls; and
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | Any fraud, whether or not material, that involves management or
other employees
who have a significant role in the Registrants internal
controls; and                                                                                                                                         



| | 6. |  | The Registrants other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                   |  |     |  |                            
|------------------ |  | --- |  | ---------------------------
|Date: May 14, 2003 |  | By: |  | /s/LARRY T. GUILLEMETTE    
|                   |  |     |  |                            
|                   |  |     |  | Larry T. Guillemette       
|                   |  |     |  | Executive Vice President,  
|                   |  |     |  | Chief Financial Officer and
|                   |  |     |  | Treasurer                  

24