United States
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K

          (Mark one) [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
                       SECURITIES EXCHANGE ACT OF 1934 For
                     the fiscal year ended December 31, 1997
                                       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 33-75154
                           J.B. POINDEXTER & CO., INC.
             (Exact name of registrant as specified in its charter)

            Delaware                                    76-0312814
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
 incorporation or organization)

         1100 Louisiana
           Suite 5400
         Houston, Texas                                    77002
(Address of principal executive offices)                (Zip Code)


       (Registrant's telephone number, including area code) (713) 655-9800

        Securities registered pursuant to Section 12(b) of the Act: None
                  Name of each exchange where registered: None

        Securities registered pursuant to Section 12(g) of the Act: None


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No Indicate by check mark if disclosure
of delinquent  filers  pursuant to Item 405 of  Regulation  S-K is not contained
herein,  and will not be contained,  to the best of registrant's  knowledge,  in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [X]

State the aggregate market value of the voting stock held by  non-affiliates  of
the registrant: $ 0

The number of shares  outstanding of each of the registrants'  classes of common
stock as of March 7, 1998: 3059

Documents Incorporated by Reference:  None


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                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


PART I.
Item 1.  Business

J.B.  Poindexter & Co., Inc.  ("JBPCO")  operates a variety of manufacturing and
wholesale  distribution  businesses.  JBPCO's  subsidiaries  consist  of  Morgan
Trailer Mfg Co., ("Morgan"),  Truck Accessories Group, Inc. ("TAG"), Lowy Group,
Inc. ("Lowy" or "Lowy Group"), EFP Corporation ("EFP"), and MIC Group Corp. (MIC
Group).  Effective May 6, 1997, MIC Group filed an assumed name  certificate and
began doing business as MIC Group or Manufacturing Innovations Corp.

    Unless  the  context  otherwise  requires,  the  "Company"  refers  to JBPCO
together with its consolidated  subsidiaries.  The Company is controlled by John
B. Poindexter.  In May 1994 the Company  completed an initial public offering of
$100 million, 12 1/2% Senior Notes due 2004 (sometimes referred to herein as the
"Note Offering").  Concurrent with the Note Offering the Company acquired,  from
John B. Poindexter and various minority interests,  TAG, Lowy Group, EFP and MIC
Group.  The Company  manages its assets on a decentralized  basis,  with a small
corporate staff providing strategic direction and support.

    The Company has three industry segments:  Automotive (Morgan and TAG), Floor
Covering (Lowy Group), and Plastics and Precision Machining (EFP and MIC Group).
See Note 12 to the Consolidated Financial Statements of the Company.

Automotive - Morgan

    Morgan is the nation's  largest  manufacturer of commercial van bodies ("van
bodies") for medium-duty  trucks.  Morgan  products,  which are mounted on truck
chassis  manufactured  and supplied by others,  are used for general freight and
deliveries, moving and storage and distribution of refrigerated consumables. Its
eighty-four authorized distributors,  seven manufacturing plants and two service
facilities are positioned in strategic  locations to provide  nationwide service
to its customers,  which include rental  companies,  truck dealers and companies
that  operate  fleets  of  delivery   vehicles.   Formed  in  1952,   Morgan  is
headquartered in Morgantown, Pennsylvania and was acquired in 1990.

    Morgan's van bodies are manufactured  and installed on truck chassis,  which
are classified by hauling  capacity or gross vehicular  weight rating  ("GVWR").
There are eight  classes of GVWR.  Morgan  generally  manufactures  products for
Classes 3 through 7, those having a GVWR of between  10,001  pounds  (light duty
dry freight vans) and 33,000 pounds (medium-duty  trucks). It generally does not
manufacture  products  for  Classes  1 or 2  (pickup  trucks)  or  Class  8. The
principal products offered by Morgan are the following:

    Dry  Freight  Bodies  (Classes  3-7).  Dry  freight  bodies   typically  are
fabricated with pre-painted  aluminum or fiberglass  reinforced  plywood ("FRP")
panels,  aerodynamic  front-end  treatment,  hardwood  floors and  various  door
configurations to accommodate end-user loading and unloading requirements. These
products are used for diversified dry freight  transportation and represent more
than one-half of Morgan's sales.

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                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

     Refrigerated Van Bodies (Classes 3-7).  Refrigerated vans are equipped with
insulated  aluminum or FRP bodies that  accommodate  controlled  temperature and
refrigeration  needs of end-users.  These  products are used primarily on trucks
that transport dairy products, frozen food and meats.

    Cutaway Van Bodies (Classes 3-5).  Aluminum or FRP cutaway van bodies (which
differ from conventional vans generally by having different floor configurations
and shorter  lengths) are installed only on cutaway  chassis which are available
with or without  access to the cargo area from the cab.  Cutaway bodies are used
primarily for local delivery of parcels, freight and perishables.

    Stake Bodies and Flatbeds.  Morgan also manufactures stake bodies, which are
flatbeds with various  configurations of removable sides.  Stake bodies are used
for the movement of a variety of materials for the agricultural and construction
industries, among others.

    Gem Top Pick Up Truck Caps. Pickup truck caps are fabricated enclosures that
fit  over the beds of  pickup  trucks,  converting  the beds  into  weatherproof
storage areas. Effective June 30, 1997 Morgan acquired the operations of Gem Top
from TAG. Gem Top services primarily commercial  customers.  For a more detailed
discussion of the truck accessories business see TAG below.

    Some of the  components  of  Morgan's  products,  such as  certain  patented
methods for making curtained doors for vehicle bodies,  are proprietary.  Morgan
also offers certain products manufactured by others, including those distributed
by Morgan's  Advanced  Handling Systems Division that facilitate the loading and
unloading of cargo.  Morgan  distributes  spare parts through and offers limited
service  programs at some of its own  facilities  and  through  its  eighty-four
authorized distributors.

    Customers  and Sales.  The van body  industry  has two major  categories  of
customers:  (1)  customers  operating  their own fleets of vehicles or who lease
their vehicles to third parties (collectively,  "fleet/leasing customers");  and
(2) truck dealers and  distributors  who sell vehicles to others  (collectively,
"dealer/distributor customers"). Morgan's net sales constituted 40%, 34% and 42%
of the Company's total net sales in 1997, 1996 and 1995, respectively.

    Morgan's  revenue is  generated  by five  sources:  (1) sales to  commercial
divisions  of leasing  companies,  companies  with fleets of delivery  vehicles,
truck  dealers  and  distributors  ("Commercial  Sales");  (2) sales to consumer
rental companies  ("Consumer Rental Sales"); (3) parts; (4) service; and (5) the
Advanced Handling Systems Division.

    Consumer Rental Sales are composed of sales to companies that maintain large
fleets of one-way and local moving  vehicles  available  for rent to the general
public. Procurement contracts for Consumer Rental Sales are negotiated annually,
usually in late summer to early fall and tend to be the most  volatile and price
sensitive aspect of Morgan's business.

    Morgan's two largest customers have historically  represented  approximately
40-50% of  Morgan's  total net  sales.  Each has been a  customer  of Morgan for
approximately 20 years, and management considers relations with each to be good.
Sales  to  these  customers  represented  18%,  14%  and  21% of  the  Company's
consolidated net sales during the years 1997, 1996, and 1995, respectively.

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                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


    Morgan sells  products  through its own sales force and through  independent
distributors.  Most of the  distributors  sell a wide  variety of truck  related
equipment to truck dealers and end-users.

    Manufacturing and Supplies. Morgan operates manufacturing, body mounting and
service facilities in Pennsylvania,  Wisconsin,  Georgia, Texas, and Arizona. It
also has sales,  service and body mounting facilities in Florida and California.
Its Gem Top division is located in Oregon.

    Generally all van bodies  manufactured by Morgan are produced to order.  The
shipment of a unit is  dependent  upon  receipt of the  chassis  supplied by the
customer  and the  customer's  arrangements  for  delivery of  completed  units.
Revenue is  recognized  and the customer is billed upon final body  assembly and
quality inspection. Because contracts for Consumer Rental Sales are entered into
in the summer or fall but production does not begin until the following January,
Morgan  generally has a significant  backlog of Consumer  Rental Sales orders at
the end of each year that is processed  through May of the  following  year.  In
addition,  Morgan typically maintains a significant backlog of Commercial Sales.
At December  31, 1997 and 1996,  Morgan's  total  backlog was $55.2  million and
$50.2 million, respectively. All of the products under the orders outstanding at
December 31, 1997 are expected to be shipped during 1998.

    Morgan maintains an inventory of raw materials necessary to build van bodies
according to  customers'  orders.  Raw  materials are acquired from a variety of
sources,  and Morgan has not experienced  significant  shortages of materials in
recent years.  Fiberglass  reinforced panels,  which are important components of
Morgan's  products,  are acquired  principally  from two suppliers.  The loss of
either of those suppliers could disrupt Morgan's  operations until a replacement
source could be located.  Morgan's  customers  purchase their truck chassis from
major  truck  manufacturing  companies.  The  delivery of a chassis to Morgan is
dependent  upon  truck  manufacturers'  production  schedules  which are  beyond
Morgan's control.  Delays in chassis deliveries can disrupt Morgan's  operations
and can increase its working capital requirements.

    Industry.  Industry revenue and growth are dependent primarily on the demand
for  delivery  vehicles  in the  general  freight,  moving and  storage,  parcel
delivery and food  distribution  industries.  Replacement  of older  vehicles in
fleets represents an important revenue source,  with replacement  cycles varying
from  approximately  four to six  years,  depending  on  vehicle  types.  During
economic  downturns,  replacement  orders are often  deferred or, in some cases,
older vehicles are retired without replacement.

    Competition.  The van body  manufacturing  industry  is highly  competitive.
Morgan competes with a limited number of large  manufacturers and a large number
of smaller  manufacturers.  Some of Morgan's  competitors operate from more than
one location.  Certain  competitors are publicly-owned  with substantial capital
resources. Competitive factors in the industry include product quality, delivery
time,  geographic proximity of manufacturing  facilities to customers,  warranty
terms, service and price.

Automotive - TAG

     TAG has two operating divisions:  TAG Manufacturing Division which consists
of TAG West (Leer West and  Raider),TAG  Midwest  (Leer Midwest and 20th Century
Fiberglass) and TAG East (Leer East); and TAG Distribution  Division  consisting
of retail (Leer Retail and Radco) and the

                                      -4-
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                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

wholesale  distribution  businesses  (National Truck Accessories,  including MTA
which was acquired in October, 1997).

    TAG is the nation's  largest  manufacturer  and  distributor of pickup truck
caps and tonneau covers marketed under the brand names Leer, Raider, LoRider and
Century.  Caps and tonneau  covers are fabricated  enclosures  that fit over the
beds of pickup  trucks,  converting  the beds into  weatherproof  storage areas.
Sales of caps represented  approximately  20% of the Company's  consolidated net
sales in each of the prior three  years.  In  addition,  TAG  distributes  other
accessories  for light  trucks,  minivans  and sport  utility  vehicles  such as
running boards,  steps,  reinforced bumpers,  wind deflectors,  bedliners,  hood
shields,  visors,  bumper covers and roof-mounted luggage carriers.  TAG's eight
manufacturing   plants  and  network  of  over  600  independent   dealers,   36
company-owned  retail stores and six wholesale  distribution  centers  provide a
national  network through which its products are marketed to individuals,  small
businesses  and  fleet  operators.  Leer  Retail  has  increased  the  number of
company-owned  stores  from eight at the  beginning  of 1991 to 36 at the end of
1997. Leer Retail closed eight stores during 1997.  TAG's net sales  constituted
30%, 37% and 30% of the  Company's  total net sales during 1997,  1996 and 1995,
respectively.  Formed in 1971, TAG is headquartered in Elkhart,  Indiana and was
acquired in 1987.

    Customer and Sales.  Most  purchasers of TAG's products  (whether  purchased
from company-owned  stores or from dealers) are individuals.  TAG's products are
sold primarily  through its national  network of independent  dealers and though
its company-owned  stores.  TAG also sells its products in Canada and Europe. In
1997, foreign sales (primarily in Canada) represented approximately 10% of TAG's
total sales.  TAG has a sales and  marketing  staff which,  among other  things,
trains dealers and company-owned store personnel.

    Manufacturing and  Supplies.  TAG designs and manufactures caps and tonneaus
in seven  manufacturing  facilities located in California,  Indiana,  Minnesota,
Pennsylvania and Saskatchewan, Canada. Approximately 85% of the caps sold by TAG
are  fiberglass,  with  aluminum  representing  the  balance.  TAG  maintains an
inventory of raw materials necessary to manufacture its products.  Raw materials
are obtained from a variety of sources, and TAG has not experienced  significant
shortages of materials in recent years. TAG purchases a substantial  majority of
its windows for caps from a single supplier.  Although the loss of that supplier
would disrupt TAG's production  activities until a replacement supplier could be
located,  management  does not  believe  that such loss  would  have a  material
adverse effect on the Company.

    Industry.  Sales of caps and tonneaus tend to correspond to the level of new
pickup truck  sales.  Sales of  accessories  are affected by sales of new pickup
trucks, sport utility vehicles and minivans. Cap sales are seasonal,  with sales
typically being higher in the fall and spring than in the summer and winter.

    Competition.  The cap and truck  accessory  industry is highly  competitive.
Competitive   factors  include   product   availability,   quality,   price  and
installation  services.  Competitors in the distribution of accessories  include
other cap manufacturers,  auto parts stores,  and mass  merchandisers  which, in
certain  instances,  have the  purchasing  power to buy and sell  accessories at
deeply discounted prices.


                                      -5-
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                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


Floor Covering - Lowy Group

    Lowy  Group  which was  acquired  in 1991  operates  in the  floor  covering
business through three separate divisions:  Lowy Distribution (a wholesale floor
covering  distributor),  Blue Ridge (a carpet  manufacturer) and Courier (a dyer
and printer of carpeting).  Lowy Group's net sales  represented 16%, 17% and 17%
of  the  Company's  total  consolidated  net  sales  in  1997,  1996  and  1995,
respectively.

Lowy Distribution

    Lowy Distribution is a leading  wholesale floor covering  distributor in the
Midwest, serving twelve Midwestern states. It operates seven facilities, located
in Ankeny, Iowa near Des Moines; Lenexa, Kansas; New Brighton, Minnesota; Omaha,
Nebraska; and St. Louis (three locations).

     Products.  Lowy Distribution offers two broad categories of products,  each
of which includes multiple product lines and accessories:

     o    Hard Surface  Products.  Hard surface  products  include  sheet vinyl,
          vinyl, wood flooring, ceramic floor and wall tiles and accessories.

     o    Soft Surface Products.  This product line consists of carpet,  padding
          substrate  used in carpet  installation,  area rugs and sundry  items,
          such as carpet  cleaners and  installation  accessories.  Most of Lowy
          Distribution's carpet sales are for residential installation, with the
          balance  being  sales to the  commercial  market.  Its carpet  line is
          anchored  by carpet  manufactured  by  Peerless  Carpet of Canada  and
          Milliken and Co. Lowy Distribution also offers private label carpeting
          marketed   under  the   "Americana"   and  "Essex   House"  names  and
          manufactured by various  suppliers,  including the Blue Ridge division
          of Lowy Group.

         Customers and Sales. Lowy Distribution  sells its products primarily to
floor  covering  retailers,  most  of  which  are  privately  owned,  small-  to
medium-sized  dealers located away from major metropolitan  areas. These dealers
rely on  wholesalers,  such as Lowy  Distribution,  to  provide a broad  line of
products with  adequate  inventory  ready for immediate  delivery and to provide
sales and marketing support.

         Inventory and Supplies.  Lowy Distribution offers products manufactured
by a variety  of  suppliers.  Its  largest  supplier  is  Congoleum  Corporation
("Congoleum"),   whose   products   represented   approximately   30%  of   Lowy
Distribution's  total  revenue  during  each  of  the  last  three  years.  Lowy
Distribution  has purchased  products from Congoleum  since 1967, and management
considers its relations  with  Congoleum to be good.  Nonetheless,  Congoleum is
entitled  to  terminate  its  relationship  with Lowy  Distribution  at any time
subject to notice requirements. Lowy Distribution is an exclusive distributor of
Congoleum's  products  in certain  markets  and  competes  with other  Congoleum
distributors in other markets.  Congoleum may appoint additional distributors of
its products in Lowy  Distribution's  markets at any time. The loss of Congoleum
as a supplier,  or the  introduction of other Congoleum  distributors  into Lowy
Distribution's markets, could adversely affect Lowy Distribution's operations.


                                      -6-
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                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


         Industry.  The wholesale  distribution of floor covering is affected by
the level of new home and remodeling  construction  activity.  Lowy Distribution
believes  that  approximately  two-thirds  of its  sales are  generated  by home
remodeling activities. The industry is also affected by consumer taste and floor
covering fashion trends.  During the 1980s,  carpet  manufacturers  increasingly
began shipping  products  directly from their mills to the end users,  bypassing
wholesale  distribution,  such  that  management  believes  that  a  substantial
majority  of carpet  sales are now  direct  from the mill to end  users.  Excess
manufacturing  capacity in the carpet industry has resulted in relatively  level
pricing during the past several  years,  forcing  manufacturers  to reduce their
distribution costs in order to preserve their operating  margins.  Lower freight
costs  occasioned by the  deregulation of the freight industry and the emergence
of discount carpet retailers have bolstered this direct-to-customer distribution
trend.  The industry is somewhat  seasonal,  with the second and third  quarters
generally having higher sales than the other quarters.

         Competition.  The floor  covering  wholesale  distribution  business is
highly   competitive.   Lowy   Distribution   competes   with  other   wholesale
distributors,  and large carpet and tile manufacturing  companies who sell their
products directly to their customers. The growth of large retail building supply
concerns that compete with Lowy Distribution's  retail floor covering customers,
coupled with direct selling activities by carpet and tile  manufacturers,  could
adversely  affect the floor  covering  wholesale  distribution  industry  in the
future.  Management  believes  that  the  ability  of floor  covering  wholesale
distributors  to carry broader  product lines and to provide  prompt service are
competitive  advantages to the wholesale  distributors.  Lowy  Distribution also
competes with several regional distributors.

  Blue Ridge

         Blue  Ridge  designs,  manufactures  and  markets  distinctive  mid- to
high-end commercial carpet and, to a limited extent, residential carpet for sale
throughout the United States and abroad.
Formed in 1968, Blue Ridge is located in Ellijay, Georgia.

         Products and Design.  At present,  Blue Ridge offers  approximately  40
styles of  commercial  carpeting  with an average  of 15 colors  per style.  Its
residential  carpet line currently consists of approximately 12 printed patterns
with a total of 35 colors.  Blue Ridge also  manufactures  custom  carpet (e.g.,
imprinting a company's  logo in the carpet) and custom  colors  within  existing
styles. Blue Ridge manufactures  "tufted" carpeting,  which is made by inserting
yarn  into  the  carpet  backing,  forming  loops  that  may or may  not be cut,
depending on the particular  carpet style being made (e.g., cut pile, level loop
or textured level loop carpeting).  All of Blue Ridge's commercial  carpeting is
offered and sold under the "Blue Ridge" brand name. Its residential carpeting is
manufactured for third parties who sell it under their own private labels.  Blue
Ridge designs all of the carpet that it offers except for certain carpet that is
custom made or sold under private labels.

         Customers  and Sales.  Blue  Ridge's  commercial  carpeting  is used by
businesses  and  organizations  with high  traffic  areas,  such as health  care
facilities  (nursing homes,  clinics and hospitals),  schools and  universities,
hotels and motels, restaurants and office buildings.

         Sales and marketing  efforts for the  commercial  line are conducted by
Blue  Ridge's  sales  force.  Blue Ridge  markets  its  commercial  market  line
primarily through architects, designers and


                                      -7-
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                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


specifiers.  Management oversees marketing of the residential carpet line, which
is marketed and sold through  distributors  and dealers.  Blue Ridge maintains a
sales  office and  showroom  in Chicago  for use by  architects,  designers  and
specifiers in the central area of the nation.

         Manufacturing and Supplies. Blue Ridge owns and operates an integrated,
185,000  square foot mill that  performs  tufting,  backing and finishing of its
products.  Dyeing and  printing  of  carpeting  is  performed  for Blue Ridge by
Courier.  Blue Ridge  maintains a  significant  inventory of raw  materials  and
carpet because of its commitment to deliver  products  quickly after receiving a
customer's order.

         Blue  Ridge  acquires  its nylon and other  fibers  for yarn from large
companies, primarily Allied-Signal,  Inc., and B.A.S.F. Corporation. Pursuant to
their licensing  arrangements with Blue Ridge, these suppliers periodically test
Blue Ridge's carpeting to ensure that appropriate  manufacturing  procedures are
being  followed.  Favorable  test  results are  required to enable Blue Ridge to
market its products using the supplier's brand names and to offer the supplier's
warranties.

         Industry.  Sales of  broadloom  carpeting in the  industry's  two major
markets,  residential and  commercial,  represent  approximately  75% and 25% of
total sales,  respectively.  According to an industry  survey, a majority of the
sales in the  commercial  market  in which  Blue  Ridge  competes  relate to the
modernization and renovation of facilities, with the remaining sales relating to
installations in new construction.  Excess capacity in the industry has resulted
in relatively level pricing during the past several years, forcing manufacturers
to reduce  manufacturing  costs through a higher degree of vertical  integration
and distribution costs by implementing factory-direct sales in order to preserve
their operating  margins.  Installations in new construction are affected by the
prevailing new construction  activity.  The industry is somewhat seasonal,  with
the second  and third  quarters  generally  having  higher  sales than the other
quarters.

         Competition.  With approximately 200 carpet manufacturers in the United
States, the carpet  manufacturing  industry is highly competitive.  The industry
competes also with other floor  covering  industries,  such as hardwood and tile
flooring. Management believes that both the consolidation of the carpet industry
and the use of direct marketing of commercial carpet to end-users will continue.
Nonetheless,  management  believes that smaller  companies,  such as Blue Ridge,
will continue to satisfy market niches. The principal competitive factors in the
industry are style,  quality,  price and service,  although  management believes
that  the  commercial   market  in  which  it   principally   operates  is  less
price-sensitive than the residential market.

  Courier

         Courier, operated as a division of Blue Ridge, dyes and prints patterns
on commercial and  residential  carpeting that is manufactured by Blue Ridge and
other companies.  Management  believes that Courier's 66,000  square-foot dyeing
and printing plant is one of the most modern facilities of its kind operating in
the carpet industry.

         Services.  The plant, located in Ellijay, Georgia, is designed to print
and dye  carpeting  with  multi-color  patterns  and random color  effects.  Its
continuous  dyeing  line has the ability to place up to 14  different  colors on
carpet in a desired pattern.  Moreover,  in response to the industry's increased
use of  polyester  fibers in  residential  carpeting,  Courier  has  developed a
process to dye


                                      -8-
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                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


polyester fiber. Courier also owns two "Jet Beck" dyeing machines, each of which
is capable of dyeing in excess of 1,000  square  yards of carpet in a single dye
lot,  ensuring color  consistency  for large orders.  Most of Courier's 1997 net
sales are generated by services performed for unaffiliated  manufacturers,  with
the remaining being performed for Blue Ridge.

Plastic and Precision Machining  - EFP

         EFP molds and markets  expandable  foam plastics used  primarily by the
automotive,  electronics, furniture and appliance industries as packaging, shock
absorbing and materials handling products.  Management  believes that EFP is the
nation's third largest producer and marketer of custom-shaped, molded expandable
plastics.  Management  believes  that EFP's  competitive  strengths  include its
ability to  manufacture  high  quality  products  for  competitive  prices while
providing  excellent  service to its  customers,  including  timely  delivery of
products. EFP's net sales made up less than 10% of the Company's total net sales
during each of the last three years.  Founded in 1954, EFP is  headquartered  in
Elkhart, Indiana and was acquired in 1985.

         Products.  EFP's products are manufactured from expandable  polystyrene
("EPS"),  expandable  polypropylene  ("EPP"),  expanded  polyethylene ("EPE"), a
copolymer of polyethylene  and polystyrene  ("Copolymer")  and certain high heat
resistant resins ("Resins"). EPP, EPE, Copolymer and Resins are each tougher and
more resilient, or have higher temperature  tolerances,  than EPS. Products made
from expandable  foams are lightweight and durable,  capable of absorbing shocks
and impacts, provide thermal insulation and are chemically neutral.

         EFP manufactures and markets the following products:

     o    Packaging and Shock  Absorbing  Products.  EFP sells these products to
          other manufacturers who use them to package and ship a wide assortment
          of industrial  and consumer  products,  such as computers,  television
          sets, toys, furniture, appliances, and cameras. Virtually all of these
          products  are custom  made to fit the  "footprint"  of the  particular
          product or item for which EFP's product is being  manufactured.  These
          products are  manufactured  from EPS and EPP,  with EPP being used for
          more fragile products. Sales of packaging and shock absorbing products
          represent approximately 75% of EFP's total sales.

     o    Material Handling  Products.  These products include reusable trays or
          containers  that  are used for  transporting  components  to or from a
          customer's  manufacturing  facility. EFP also offers its Thin-Wall(TM)
          products  which are used as parts  positioning  trays for  robotic  or
          automatic  product assembly (such as camera  manufacturing).  Material
          handling products generally are produced from EPS, EPP or Copolymer.

     o    Components.  EFP provides  materials  manufactured  from EPP which are
          used as energy absorbing  components of automobile  bumpers.  EFP also
          offers  a line of its  Styro-Cast(R)  foam  foundry  patterns  used by
          foundries in the "lost foam" or  "evaporative  casting"  metal pouring
          process.  During 1996, EFP began the production of door cores,  with a
          molded-in  metal  frame,  for  use in the  mobile  home  manufacturing
          industry.


                                      -9-
<PAGE>


                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


     Customers  and  Sales.   EFP's   products  are  sold  to  the   automotive,
electronics,  furniture, appliance, and marine industries, among others. EFP has
a diversified customer base.

         EFP   utilizes  an  in-house   sales  force  and  engages   independent
representatives  from time to time to provide  supplemental sales support in the
marketing of EFP's packaging and shock absorbing  products.  EFP also employs an
engineering staff that assists  customers in the production,  design and testing
of products.  Because  expanded  foams are very bulky,  freight  charges  impose
geographical  limitations on sales of those products.  Generally,  EFP considers
its  target  market  to  be  limited  to  a  300-mile  radius  surrounding  each
manufacturing  facility. In certain circumstances,  however, EFP has shipped its
products greater distances.

         Manufacturing and Supplies. EFP manufactures its products at facilities
located in  Indiana,  Wisconsin,  Alabama,  Tennessee  and Texas.  The Texas and
Tennessee   facilities   manufacture  products  primarily  for  Compaq  Computer
Corporation  and  Toshiba  Corporation,  respectively,  although  EFP intends to
utilize both facilities to manufacture products for other customers as well.

         As is customary in the industry, EFP purchases its raw materials from a
variety  of  sources on a purchase  order  basis and not  pursuant  to long term
supply  contracts.  Raw material prices  fluctuate and EFP historically has been
affected  by price  increases  in the past but has not  experienced  significant
shortages of raw materials in recent years.

         Industry.  Because most of EFP's products are  manufactured  for use by
other  industries,  economic  conditions  which  affect  those other  industries
generally will affect EFP's operations.  In particular,  growth or a downturn in
the automotive,  electronics,  furniture or appliance industries generally would
be expected to have a  corresponding  effect on EFP's  business as those are the
principal industries served by its packaging and shock absorbing products. Sales
of EFP's products typically are not seasonal other than during a slight downturn
during the latter part of December and early January.

         Competition.   EFP  competes  with  other  molded,  expandable  plastic
producers  and  with   manufacturers  of  alternative   packaging  and  handling
materials,  including  paper,  corrugated boxes and other foam products (such as
soft urethane). Many of these competitors, particularly the paper companies, are
large  companies  having greater  financial  resources  than EFP.  Certain other
expandable  plastic  manufacturers have multiple  facilities.  EFP also competes
with other companies in the foundry patterns market. Competitive factors include
price, quality and timely delivery of products.

 Plastics and Precision Machining - MIC Group

         MIC Group is a  manufacturer,  caster and assembler of precision  metal
parts used in the worldwide oil and gas  exploration  industry.  Formed in 1963,
MIC Group is located in Brenham,  Texas and was  acquired in 1992.  During 1997,
MIC Group  opened a new  facility  in  Houston  in  addition  to the  electronic
assembly facility opened in 1994. The electronic  assembly facility is operating
under the name ElectroSpec.  MIC  Group's net sales made up less than 10% of the
Company's net sales during each of the last three years.



                                      -10-
<PAGE>


                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


         Products.  MIC Group  manufactures  various  precision  metal parts and
electro-mechanical  devices that are  utilized in a variety of  oilfield-related
applications.  Most of the precision parts  currently  manufactured by MIC Group
are utilized in connection with the exploration for oil and gas reserves.  Parts
produced  by MIC Group are  utilized  for complex  functions,  such as well bore
perforation and fracturing. Its products are also applicable to many seismic and
geophysical activities.  ElectroSpec assembles electronic printed circuit boards
and instrumentation  packages for the same or similar  applications.  Management
believes  that the addition of electronic  assembly  provides  additional  sales
opportunities by providing turnkey value-added assemblies to its customers which
incorporate machined parts and electronics in the manufacture of their products.

         Customers.  MIC Group sells its  products  primarily  to  international
oilfield  service  companies.  MIC Group's three largest  customers  represented
approximately  53% of its total net sales  during 1997.  All of these  customers
have been  customers  of MIC Group for more  than  five  years,  and  management
considers relations with them to be good.

         Manufacturing  and Supplies.  MIC Group  manufactures its products in a
75,500 square-foot manufacturing facility located in Brenham, Texas and a 27,000
square  foot  facility  in Houston,  Texas.  ElectroSpec  is located in Houston.
Management  believes that MIC Group's  manufacturing  capabilities are among the
most   sophisticated   in  the   industry.   It   performs  a  broad   range  of
computer-controlled  precision  machining and welding,  including  electrostatic
discharge  machining,  electron  beam  welding,  trepanning,  gun  drilling  and
investment casting.

         MIC Group is ISO 9000 certified.  ISO is an  internationally recognized
certification of production  practices and techniques  employed in manufacturing
processes.

         Products are manufactured  primarily from non-magnetic stainless steel,
alloy  steels,  nickel  based  alloys,  titanium,  brass and  beryllium  copper.
Materials  are  obtained  from a  variety  of  sources  and  MIC  Group  has not
experienced significant shortages in materials in recent years.

         Industry. Because MIC Group's products are sold to large, international
oilfield service companies,  MIC is not dependent solely on the domestic oil and
gas  industry.  Rather,  demand for  equipment  and  services  supplied by those
oilfield service companies and, in turn, sales of related parts  manufactured by
MIC Group and  ElectroSpec,  are directly  related to the level of worldwide oil
and gas drilling  activity.  Worldwide  drilling activity  increased during 1997
thereby  increasing  the demand for services  from  oilfield  service  companies
which, in turn, increased MIC Group's sales.

         Competition.  MIC Group competes with other  businesses  engaged in the
machining, casting, and manufacturing of parts and equipment utilized in the oil
and gas exploration industry. Technological know-how and production capacity are
the primary competitive factors in MIC Group's industry.

Trademarks and Patents

         The Company owns rights to certain  presentations  of Leer's name which
the Company  believes  is valuable  insofar as  management  believes  that it is
recognized  as being a leading  "brand  name." The  Company  also owns rights to
certain other trademarks and tradenames, including


                                      -11-
<PAGE>


                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


certain  presentations of Morgan's name. Although these and other trademarks and
tradenames  used by the Company help  customers  differentiate  Company  product
lines from those of  competitors,  the Company  believes that the  trademarks or
tradenames  themselves  are less  important to customers than the quality of the
products.  The Company also holds patents on certain  products  which,  although
valuable to the  Company,  are not  critical  to the  Company's  operations.  In
addition, Blue Ridge uses, with permission, certain of its suppliers' tradenames
and trademarks which are important to its business.

Employees

         At February 28, 1998,  the Company had  approximately  3,800  permanent
employees.  Personnel  are  unionized  in:  Lowy  Distribution's  New  Brighton,
Minnesota  (contract  expires May, 1999),  St. Louis (contract  expires December
1998) and Ankeny,  Iowa (contract expires December,  1999) warehouses  (covering
12, 13, and 8 persons, respectively);  EFP's Decatur, Alabama facility (covering
approximately  65 persons,  with a contract  expiring in August 2000); and TAG's
Raider Industries facility in Canada (covering approximately 160 persons, with a
contract  expiring in December 2000).  The Company  believes that relations with
its employees are good.

Environmental Matters

         The Company's operations are subject to numerous environmental statutes
and  regulations,  including  laws and  regulations  affecting  its products and
addressing materials used in manufacturing the Company's products.  In addition,
certain of the  Company's  operations  are subject to  federal,  state and local
environmental  laws and regulations that impose  limitations on the discharge of
pollutants  into the air and water.  The Company  also  generates  non-hazardous
wastes.  The Company has received  occasional notices of noncompliance from time
to  time  with  respect  to its  operations  which  are  typically  resolved  by
correcting  the  conditions  and the  payment  of  minor  fines,  none of  which
individually  or in the  aggregate  has had a  material  adverse  effect  on the
Company.  However,  the Company  expects that the nature of its operations  will
continue to make it subject to increasingly stringent  environmental  regulatory
standards.  Although  the  Company  believes  it  has  made  sufficient  capital
expenditures to maintain  compliance with existing laws and regulations,  future
expenditures  may be necessary as compliance  standards and  technology  change.
Unforeseen significant expenditures required to maintain such future compliance,
including  unforeseen  liabilities,  could limit  expansion or otherwise  have a
material adverse effect on the Company's business and financial condition.

        Morgan has been named as a  potentially  responsible  party ("PRP") with
respect to the generation of hazardous materials alleged to have been handled or
disposed of at two Federal  Superfund sites in  Pennsylvania  and one in Kansas.
Although a precise  estimate of liability  cannot currently be made with respect
to these sites,  based upon information  known to Morgan,  the Company currently
believes that it's proportionate share, if any, of the ultimate costs related to
any  necessary  investigation  and remedial  work at those sites will not have a
material adverse effect on the Company.

         Since the 1980s and early 1990s,  products manufactured from expandable
polystyrene,  such as some  of the  products  manufactured  by  EFP,  have  been
criticized as being allegedly harmful to


                                      -12-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

the  environment.  Although  management  believes  that more recent  information
suggest that  expandable  polystyrene  is not as harmful to the  environment  as
reported earlier,  negative  publicity  relating to the material has had, and in
the future  could  have,  an adverse  effect on EFP's  business,  although  this
publicity has not had a material adverse effect on EFP's results of operations.

Item 2.       Properties

         The Company owns or leases the following  manufacturing,  distribution,
office and sales facilities:
<TABLE>
<CAPTION>
                                                                                          Owned
                                                                            Approximate     or           Lease
        Location                            Principal Use                   Square Feet   Leased       Expiration(a)
<S>                                        <C>                              <C>           <C>            <C>
Morgan:
 Ehrenberg, Arizona                        Manufacturing                      125,000     Owned             --
 Rydal, Georgia                            Manufacturing                       85,000     Leased          1999
 Ephrata, Pennsylvania                     Manufacturing                       50,000     Owned             --
 Morgantown, Pennsylvania                  Manufacturing                       62,900     Leased          1999
 Morgantown, Pennsylvania                  Office & manufacturing             261,500     Owned             --
 Corsicana, Texas                          Manufacturing                       60,000     Owned             --
 Janesville, Wisconsin                     Manufacturing                       23,000     Leased          1998
 Janesville, Wisconsin                     Manufacturing                       32,000     Owned             --
 Clackamas, Oregon                         Manufacturing                       78,000     Leased          1998
TAG Manufacturing:
 Woodland, California                      Manufacturing                       92,000     Leased          2001
 Elkhart, Indiana                          Office & research                   17,500     Owned             --
 Elkhart, Indiana                          Manufacturing                      139,000     Leased          2001
 Milton, Pennsylvania                      Manufacturing                      102,000     Leased          2001
 Elkhart, Indiana                          Manufacturing                       91,900     Owned             --
 Elkhart, Indiana                          Manufacturing Office                18,400     Leased          2005
 Drinkwater, Saskatchewan, Canada          Office & manufacturing              72,000     Owned             --
 Moose Jaw, Saskatchewan, Canada           Manufacturing                       87,000     Leased          2005
 Leer Retail: (b)
 Brainerd, Minnesota                       Manufacturing & sales               11,900     Leased          1999
NTA:
 Woodland, California                      Office & warehouse                  21,000     Leased          1999
 Conyers, Georgia                          Office & warehouse                  13,000     Leased          1999
 Elkhart, Indiana                          Office & warehouse                  57,000     Leased          2000
 Milton, Pennsylvania                      Office & warehouse                  35,000     Leased          1998
 Tulsa, Olahoma                            Office & warehouse                  32,500     Leased          2002
 Tyler Texas                               Office & warehouse                  22,000     Leased          2002
Lowy Distribution:
 Ankeny, Iowa                              Warehouse, office & showroom        30,000     Leased          2007
 Lenexa, Kansas                            Warehouse, office & showroom        12,000     Leased          1997
 Fridley, Minnesota                        Warehouse, office & showroom        55,000     Leased          2002
 St. Louis, Missouri                       Warehouse, office & showroom        85,000     Owned             --
 St. Louis, Missouri                       Warehouse, office & showroom        45,000     Owned             --
 St. Louis, Missouri                       Warehouse, office & showroom        14,000     Leased          2000
 Omaha, Nebraska                           Warehouse, office & showroom         7,000     Leased          1998
Blue Ridge/Courier:
 Ellijay, Georgia                          Office & manufacturing             195,000     Owned             --
 Ellijay, Georgia                          Office & manufacturing              66,000     Owned             --
EFP:
 Decatur, Alabama                          Manufacturing                      175,000     Leased          1999
 Elkhart, Indiana                          Office & manufacturing             211,600     Owned             --
 Elkhart, Indiana                          Manufacturing                       24,900     Leased          1997
 Gordonsville, Tennessee                   Manufacturing                       40,000     Leased          2001
 Marlin, Texas                             Manufacturing                       73,000     Leased          1998
 Waukesha, Wisconsin                       Manufacturing                       13,850     Leased          1997
MIC Group:
 Brenham, Texas                            Office & manufacturing              75,500     Owned             --
 Houston, Texas                            Manufacturing                       26,550     Leased          2002
 Houston, Texas                            Manufacturing                        9,600     Leased          1998

<FN>
(a)      Including all renewal terms.
(b)      In addition,  TAG (Leer  Retail)  leases 36 retail  stores  aggregating
         approximately  100,000  square  feet  pursuant  to  leases  with  terms
         averaging approximately nine years (including renewal options).
</FN>
</TABLE>

                                      -13-
<PAGE>


                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


         The Company  utilizes  principally  all of its  facilities and believes
that its  facilities are adequate for its current needs and are capable of being
utilized at higher capacities to supply increased demand if necessary.

Item 3. Legal Proceedings

         The Company is involved in various lawsuits which arise in the ordinary
course of business. In the opinion of management,  the ultimate outcome of these
lawsuits will not have a material adverse effect on the Company.

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

         No matters  were  submitted  to a vote of security  holders  during the
fourth quarter of the fiscal year covered by this report.

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

         The  registrant's  common  equity is  privately  held and not  publicly
traded.  As of March 1998, one individual owned all of the  registrant's  issued
and outstanding common equity. During the last three fiscal years, JBPCO paid no
cash dividends.

         The  registrant's  ability to pay  dividends  on its  common  equity is
restricted to the extent  described in the Indenture,  dated as of May 23, 1994,
pertaining  to the  registrant's  12 1/2% Senior Notes due 2004 and the Loan and
Security  Agreement,  dated  as  of  June  28,  1996,  with  Congress  Financial
Corporation, as lender.

Item 6. Selected Financial Data

         The  historical  financial  data  presented  below for the years  ended
December  31,  1997,  1996,  1995,  1994 and 1993 are  derived  from the audited
Consolidated  Financial  Statements  of the Company.  The data  presented  below
should be read in  conjunction  with  Management's  Discussion  and  Analysis of
Results of Operations  and Financial  Condition and the  Consolidated  Financial
Statements of the Company and notes  thereto.  The financial  information is not
directly  comparable due to the acquisitions of Gem-Top Mfg., Inc. (March 1993),
Radco (December 1994), 20th Century Fiberglass,  Century Distributing and Raider
Industries (June 1995) and MTA(October 1997).



                                      -14-
<PAGE>


                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>

                                                                            Year Ended December 31,
                                                            (Dollars in Millions, Except Per Share Amounts)
                                                     1997           1996           1995           1994           1993
<S>                                              <C>            <C>            <C>            <C>            <C>
Operating Data:
     Net sales ...........................       $   447.5      $   432.4      $   450.7      $   386.6      $   327.4
     Cost of sales .......................           351.6          338.0          365.3          301.3          254.9
     Selling, general and
       administrative expense.............            86.1           84.0           82.0           64.9           56.0
     Closed and excess facility costs ....             2.3            1.4            --             --             --
     Other (income) expense ..............            (3.2)          (0.1)          (1.2)           0.4            1.2
                                                  --------       --------       --------       --------       --------
     Operating income ....................            10.7            9.1            4.6           20.0           15.3
     Interest expense ....................            16.9           16.2           15.9           11.5            6.4
     Income tax provision (benefit) ......             1.4           (1.0)          (2.8)           3.0            2.3
     Minority interests ..................             --             --             --             --            (0.1)
                                                  --------       --------       --------       --------       --------
     Income (loss) before
       extraordinary loss ................             7.6           (6.1)          (8.5)           5.5            6.7
     Extraordinary loss ..................             --             0.3            --             2.1            --
                                                  --------       --------       --------       --------       --------
     Net income (loss) ...................       $     7.6      $    (6.4)     $    (8.5)     $     3.4      $     6.7
                                                  ========       ========       ========       ========       ========

     Earnings (loss) per share ...........       $   2,466      $  (2,097)     $  (2,790)     $   1,503      $   6,656
                                                  ========       ========       ========       ========       ========
     Cash dividends per share ............       $     --       $     --       $     --       $   2,910      $   1,136
                                                  ========       ========       ========       ========       ========

Pro Forma for Taxes (a):
     Income (loss) before income
       taxes, minority interests and
       extraordinary loss ................       $    (6.2)     $    (7.1)     $   (11.2)     $     8.5      $     8.9
     Income tax provision (benefit) ......             1.4           (1.0)          (2.8)           3.5            3.7
     Minority interests ..................             --             --             --             --            (0.1)
     Extraordinary loss ..................             --             0.3            --             2.1            --
                                                  --------       --------       --------       --------       --------
     Net income (loss) ...................       $     7.6      $    (6.4)     $    (8.5)     $     2.9      $     5.3
                                                  ========       ========       ========       ========       ========

Balance Sheet Data
     (at period end):
         Working capital .................       $    19.4      $    22.4      $    29.4      $    56.6      $    19.6
         Total assets ....................           175.3          173.5          180.8          173.2          139.8
         Total long-term obligations .....           105.6          105.6          107.6          106.9           75.9
         Stockholder's equity (deficit) ..       $    (4.7)     $     3.0      $     9.5      $    17.8      $    15.2

Other Data:
         EBITDA (b)(c) ...................       $    22.3      $    20.9      $    15.1      $    28.2      $    23.1
         Capital expenditures ............             7.3            8.1           11.9            9.2            9.0
         Depreciation and amortization (c)            11.6           11.2           10.5            8.2            7.0
         Consolidated EBITDA
         Coverage Ratio (d) ..............            1.3x           1.3x           1.0x           2.5x           3.6x

</TABLE>



                                      -15-
<PAGE>


                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


(a)  Pro Forma for Taxes data  reflect the  Company's  income  taxes  (benefits)
     assuming  that Lowy  Group and MIC Group,  which had been "S"  corporations
     prior to May 16, 1994,  were taxable "C"  corporations  during the relevant
     periods.

(b)  "EBITDA"  means  earnings  before  deducting   interest   expense,   taxes,
     depreciation  and  amortization  and  minority  interests as defined in the
     Indenture  pertaining to the Senior Notes. EBITDA is not included herein as
     operating  data and should not be construed as an  alternative to operating
     income  (determined  in  accordance  with  generally  accepted   accounting
     principles)  as an indicator of the Company's  operating  performance.  The
     Company  has  included  EBITDA  because  it  is  relevant  for  determining
     compliance under the Indenture and because the Company  understands that it
     is one measure used by certain investors to analyze the Company's operating
     cash flow and historical ability to service its indebtedness.

(c)  Depreciation and amortization  excludes  amortization of debt issuance cost
     of $0.8  million,  $0.7  million and $0.7  million in 1997,  1996 and 1995,
     respectively.

(d)  "Consolidated  EBITDA  Coverage  Ratio" is the ratio of EBITDA of JBPCO and
     its  Guarantor  Subsidiaries  to  interest  expense  that  is  used  in the
     Indenture to limit the amount of indebtedness that the Company may incur.


Item 7.       Management's Discussion and Analysis of
              Financial Condition and Results of Operations

         The  following  discussion  of the  Company's  financial  condition and
results  of  operations  should  be read in  conjunction  with the  Consolidated
Financial Statements of the Company and the notes thereto.

Basis of Financial Statements

         Concurrently  with the initial public  offering of $100.0  million,  12
1/2% Senior Notes due 2004,  (the "Senior  Notes"),  effective May 23, 1994, the
Company  acquired  TAG,  Lowy,  EFP and MIC Group  from John B.  Poindexter  and
certain minority interests.  The historical,  Consolidated  Financial Statements
reflect the  acquisition  of the  Subsidiaries  as an exchange of  interests  in
companies  under common  control in a manner  similar to a pooling of interests,
except that each  subsidiary is included only from the date of Mr.  Poindexter's
purchase of his interest therein.

Overview

         The Company  has grown from 1993  through  1997,  both  internally  and
through acquisitions (MIC Group and Gem-Top were acquired in June 1992 and March
1993,  respectively).  During 1994, the Company  acquired Radco, a pick up truck
accessory retailer,  and Tile by Design, a wholesale floor covering distributor.
TAG acquired the  businesses and assets of three  companies,  effective June 30,
1995: 20th Century  Fiberglass,  a manufacturer  of pick up truck caps,  Century
Distributing,  a wholesaler of light truck  accessories,  both based in Elkhart,
Indiana, and Raider Industries,  a manufacturer of pickup truck caps and tonneau
covers based in Drinkwater,


                                      -16-
<PAGE>


                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


Saskatchewan,  Canada.  Effective October 31,1997, TAG acquired the business and
assets of Midwest Truck  Aftermarket,  a wholesaler  of light truck  accessories
based in Tulsa,  Oklahoma.  Net sales  increased  from $327.4 million in 1993 to
$447.5 million in 1997. Operating income increased from $15.3 million in 1993 to
$20.0  million  in 1994,  however,  during  1995,  1996  and  1997 TAG  incurred
operating losses of $12.1 million,  $6.9 million and $10.1 million respectively,
which reduced the Company's  consolidated operating income to $4.6 million, $9.1
million and $10.7 million, respectively.

         The following  table  represents  the net sales,  operating  income and
operating margins for each Subsidiary and on a consolidated basis.
<TABLE>
<CAPTION>
                                                              Years Ended December 31,
                                                              ------------------------
                                                     1997              1996              1995
                                                     ----              ----              ----
                                                               (Dollars in Millions)
<S>                                           <C>               <C>               <C>
Net Sales:
                  Morgan ...............      $      178.3      $      145.5      $      187.7
                  TAG ..................             138.9             158.6             137.5
                  Lowy .................              69.7              71.3              75.0
                  EFP ..................              33.0              31.5              30.2
                  MIC Group ............              28.6              25.5              20.3
                  Eliminations .........              (1.0)              --                --
                                                ----------        ----------        ----------
                  Consolidated .........      $      447.5      $      432.4      $      450.7
                                                ==========        ==========        ==========

Operating Income (Loss):
                  Morgan ...............      $        8.7      $        7.1      $        9.9
                  TAG ..................             (10.1)             (6.9)            (12.1)
                  Lowy .................               7.2               3.9               4.9
                  EFP ..................               3.0               2.7               1.7
                  MIC Group ............               4.7               4.8               2.9
                  JBPCO ................              (2.8)             (2.5)             (2.7)
                                                ----------        ----------        ----------
                  Consolidated .........      $       10.7      $        9.1      $        4.6
                                                ==========        ==========        ==========

Operating Margins:
                  Morgan ...............               5.0%              4.9%              5.2%
                  TAG ..................              (7.0)             (4.4)             (8.8)
                  Lowy .................              10.0               5.5               6.6
                  EFP ..................               9.0               8.6               5.7
                  MIC Group ............              17.0              18.8              14.4
                                                ----------        ----------        ----------
                  Consolidated .........               2.0%              2.0%              1.0%
                                                ==========        ==========        ==========
</TABLE>




                                      -17-
<PAGE>


                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


Results of Operations

Consolidated Operating Results

Comparison of 1997 to 1996

         Net sales  increased  4% to $447.5  million in 1997  compared to $432.4
million in 1996. The increase was due primarily to Morgan whose sales  increased
23% or $32.8  million  partially  offset by a decrease of $19.7 million (12%) at
TAG. MIC Group and EFP recorded sales increases of 12% or $3.1 million and 5% or
$1.5 million respectively.

         Cost of sales  increased  4% to  $351.6  million  in 1997  from  $338.0
million in 1996,  and gross  profit  increased  2% to $96.0  million (21% of net
sales) in 1997 compared to $94.4 million (22% of net sales) in 1996.

         Selling,  general  and  administrative  expense  increased  2% to $86.1
million (19% of net sales) in 1997  compared to $84.1 million (19% of net sales)
in 1996.

         The Company  recorded  Closed and Excess Facility Costs of $2.3 million
and  $1.4  million   during  the  years  ended   December  31,  1997  and  1996,
respectively.  During 1997 Morgan  committed to a plan to sell its idle facility
in Mexico.  Accordingly,  Morgan began  marketing the property and,  based on an
estimate  of the fair value less the cost to sell the  property,  wrote down the
carrying  value  by  $0.6  million.   In  1997  TAG  Distribution  closed  eight
unprofitable  stores  and  its  administrative  office,  and  TAG  Manufacturing
incurred additional unexpected expenses with respect to manufacturing facilities
closed during 1996. The closure of these excess facilities  resulted in a charge
of $1.7 million for the year ended December 31, 1997. In 1996, TAG  Distribution
closed four unprofitable  stores and TAG Manufacturing  closed two manufacturing
facilities,  resulting in a charge of $1.4  million for the year ended  December
31,1996.

         Operating  income  increased  18% to $10.7  million in 1997 compared to
$9.1 million in 1996.  Operating  income increased 23% or $1.6 million at Morgan
and 85% or $3.3  million at Lowy.  The  increase at Lowy  included a gain on the
sale of certain real estate of $2.7 million.  Operating  losses at TAG increased
46% to $10.1 million compared to $6.9 million during 1996.

         Interest  expense  increased  4% to $16.9  million in 1997  compared to
$16.2 million in 1996,  average total debt increased 3% to $138.8 million during
1997 compared to $134.6 million during 1996.

         The Company recorded an income tax expense of $1.4 million for the year
ended  December 31, 1997  compared to a $1.0 million  benefit  during 1996.  The
income tax expense of $1.4 million in 1997  represents  state and foreign income
taxes  payable.  The  Company's  income tax  provision  differs from the federal
statutory  rate  principally  due to an increase in the deferred  tax  valuation
allowance relating to net operating losses that may not be realizable.  See Note
11 of Notes to the Consolidated Financial Statements.



                                      -18-
<PAGE>


                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


Comparison of 1996 to 1995

         Net sales  decreased  4% to $432.4  million in 1996  compared to $450.7
million in 1995. The decrease was due primarily to Morgan whose sales  decreased
22% or $42.2  million,  partially  offset by increases of $21.1 million (15%) at
TAG and $5.2 million (26%) at MIC Group.

         Cost of sales  decreased  8% to  $338.0  million  in 1996  from  $365.3
million in 1995,  and gross profit  increased  11% to $94.4  million (22% of net
sales) in 1996  compared to $85.4  million (19% of net sales) in 1995.  EFP, MIC
Group and TAG recorded 47%, 38% and 37% increases in gross profit, respectively.

         Selling,  general  and  administrative  expense  increased  3% to $84.1
million (19% of net sales) in 1996  compared to $82.0 million (18% of net sales)
in 1995.

         Operating income increased 95% to $9.1 million in 1996 compared to $4.6
million in 1995.  Operating losses at TAG decreased 43% to $6.9 million compared
to $12.1 million during 1995.

         Interest  expense  increased  2% to $16.2  million in 1996  compared to
$15.9 million in 1995,  average total debt increased 9% to $134.6 million during
1996 compared to $123.2 million during 1995.

         The Company  recorded an  aggregate  income tax benefit of $1.1 million
for the year ended  December 31, 1996 compared to a $2.7 million  benefit during
1995. See Note 11 of Notes to the Consolidated Financial Statements.


Morgan

         Morgan  acquired  Gem-Top  from TAG  effective  June  30,1997.  Gem-Top
manufactures  pickup  truck  caps  primarily  for  commercial   customers  which
compliments the Morgan business. Morgan's operating results include Gem-Top from
the date of acquisition  only.  For the six months ended  December  31,1997 Gem-
Top's net sales were $2.6 million and its operating  loss was $0.2 million.  Gem
Top's operating results are not considered  material to the results of Morgan or
TAG and, therefore,  the operating results presented for Morgan and TAG were not
restated.

Comparison of 1997 to 1996

         Net sales  increased  23% to $178.3  million in 1997 compared to $145.5
million in 1996.  Shipments of van body units  increased  26% to 23,575 units in
1997  compared to 18,647 units during  1996.  Consumer  Rental Sales (as defined
under  Business)  increased 65% to $22.9 million and Commercial  Sales increased
10% to $131.3 million in 1997 compared to 1996. Backlog at December 31, 1997 was
$55.2  million  compared to $50.2  million at the end of 1996.  Gem-Top sales of
$2.7 million for the six months  ended  December 31 are included in Morgan sales
during 1997

         Cost of sales  increased  22% to $153.3  million  in 1997  compared  to
$126.1  million in 1996 as a result of the  increase  in units  produced.  Gross
profit increased 29% or $5.6 million to $25.0


                                      -19-
<PAGE>


                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


million (14% of net sales) compared to $19.4 million (13% of net sales) in 1996.
Gross profit margins increased  slightly as a result of the improved  absorption
of overhead costs.

         Selling,  general and  administrative  expense  increased  28% to $15.7
million (9% of net sales) in 1997 compared to $12.3 million (8% of net sales) in
1996.  Selling  expense  increased 8% to $7.6  million  primarily as a result of
including the selling  expenses of Gem Top for the six months ended December 31,
1997.  General  and  Administrative  expense  increased  49%  due  to  increased
personnel and related costs

         Morgan's  operating  income  increased  23% to  $8.7  million  in  1997
compared to $7.1 million in 1996 due to its increased net sales. As a percentage
of net sales, operating income remained at 5% in 1997 the same as in 1996.

Comparison of 1996 to 1995

         Net sales  decreased  22% to $145.5  million in 1996 compared to $187.7
million in 1995.  Shipments of van body units  decreased  25% to 18,647 units in
1996  compared to 25,016 units during  1995.  Consumer  Rental Sales (as defined
under  Business)  decreased 60% to $13.9 million and Commercial  Sales decreased
12% to $117.7 million in 1996 compared to 1995. Backlog at December 31, 1996 was
$50.2  million  compared to $41.8  million at the end of 1995.  The  increase in
backlog  reflects an increase in consumer  rental orders  following the cyclical
downturn in that business during 1995.

         Cost of sales  decreased  23% to $126.1  million  in 1996  compared  to
$163.4  million in 1995 as a result of the  decrease  in units  produced.  Gross
profit  decreased  $4.9  million or 20% compared to 1995.  Gross profit  margins
increased  slightly as a result of  slightly  lower raw  material  costs and the
implementation of selling price increases.

         Selling,  general and  administrative  expense  decreased  14% to $12.3
million (9% of net sales) in 1996 compared to $14.4 million (8% of net sales) in
1995.  Selling  expense  decreased  11% and General and  Administrative  expense
decreased 18%.

         Due to decreased net sales Morgan's  operating  income decreased 28% to
$7.1 million in 1996  compared to $9.9 million in 1995.  As a percentage  of net
sales, operating income remained at 5% in 1996 the same as in 1995.

TAG

         During the years ended  December 31, 1997,  1996 and 1995, TAG incurred
operating losses of $10.1 million, $6.9 million and $12.1 million, respectively.
The  continued  losses at TAG have  resulted  in  management  reviewing  various
options related to the TAG business.  The events and circumstances  resulting in
the  operating  performance  indicated  that assets of certain  TAG  operations,
amounting  to  $24.3  million,   may  be  impaired.   However,  an  estimate  of
undiscounted  cash flows from these assets indicated that the carrying values of
the assets would be expected to be recovered over the useful life of the assets.
Management's  options  related to the TAG business  include the possible sale of
all or part of the business, however, management has not committed to


                                      -20-
<PAGE>


                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


a formal plan to dispose of all or part of the TAG  business.  The  accompanying
financial  statements have,  therefore,  been prepared assuming that the Company
continues to operate TAG.  However,  should the Company  decide in the future to
dispose of all or part of TAG,  the Company  could incur a loss on sale of up to
$20.0  million.  Similarly,  it is  reasonably  possible  that the  estimate  of
undiscounted  future  cash  flows  could  change  in the  future  requiring  the
recognition of an impairment loss.

         TAG  transferred  the  operations of Gem Top to Morgan  effective  June
30,1997. The following  comparisons include the operating results of Gem Top for
the period until the date of transfer.


Comparison of 1997 to 1996

         Total  net  sales  for TAG  decreased  12% to  $138.9  million  in 1997
compared to $158.6 million in 19965. TAG Manufacturing  Division net third party
sales decreased 8% to $84.0 million during 1997 compared to $91.5 million during
1996.  Total  shipments  of  caps  and  tonneaus,  including  shipments  to  TAG
Distribution  were 161,571 units during 1997 compared  to173,884  units in 1996.
The decline in units shipped is primarily due to Leer  Manufacturing as a result
of  closing  the Leer  plant in the  Southeastern  United  States  and a decline
national  market  share.  Raider  recorded  an  8,900  unit or 44%  increase  in
shipments and Century's shipments were consistent with the prior year.

        TAG  Distribution  Division  net sales  decreased  18% to $55.0  million
during  1997  compared to $67.1  million  during  1996.  At Leer  Retail,  sales
decreased 14% to $37.2 million as same store sales decreased  approximately  6%,
primarily  due to lower cap sales.  Leer Retail  closed six stores  between July
1996 and December 1997,  which reduced sales  approximately  $2.8 million during
1997, compared to 1996.  Wholesale sales decreased 33% or $6.6 million primarily
due to softness in regional  markets and the loss of customers  resulting from a
reorganization  of service  areas late in 1996.  Effective  October 31, 1997 TAG
acquired the assets of Midwest Truck After Market Inc., a wholesale  distributor
of light truck  accessories  based in Tulsa  Oklahoma,  for  approximately  $2.7
million.  The acquisition  provides the wholesale operations of TAG Distribution
with a presence in a geographical market not previously served.

        Cost of sales  decreased  $14.6 million (12%) to $103.1  million in 1997
compared to $117.7 million in 1996.  Gross profit decreased 12% to $35.8 million
(26% of net sales)  during  1997  compared to $40.9  million  (26% of net sales)
during 1996.  The decrease in gross profits was due primarily to a $12.1 million
decline in the sales at the TAG Distribution  Division.  TAG Manufacturing gross
profit decreased $1.8 million or 9% during 1997 compared to 1996. A $1.7 million
or 84%  increase at Raider was  reduced by a decrease of $3.1  million or 29% at
Leer Manufacturing.

         Selling,  general  and  administrative  expense  decreased  4% to $44.5
million  (32% of net sales)  during 1997  compared to $46.4  million (29% of net
sales) during 1996. Selling expense decreased 12% or $2.2 million primarily as a
result of a $1.7  million  (16%)  decrease  in selling  expense  at Leer  Retail
resulting from the closure of six stores during 1997 and reduced delivery


                                      -21-
<PAGE>


                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


costs at TAG Distribution.  General and  administrative  expense increased 5% or
$1.7  million,   primarily  as  a  result  of  costs  associated  with  the  TAG
Distribution headquarters office in Houston.

         During  the  year  ended   December  31,  1997,   TAG  closed  the  TAG
Distribution  headquarters in Houston,  closed eight unprofitable  retail stores
and incurred  additional costs associated with the closure of two  manufacturing
plants during 1996. The associated costs of $1.8 million were included in Closed
and Excess Facility Costs during 1997.

         TAG incurred an operating  loss for the year ended December 31, 1997 of
$10.1 million compared to an operating loss of $6.9 million in 1996. The decline
in  operating  performance  was  primarily  the  result  of lower  sales at Leer
Manufacturing and TAG Distribution and the costs associated with the closing and
consolidation of various stores and administrative activities late in the year.

         The  Company  continued  to respond in a number of ways to improve  the
performance of TAG including the  elimination  of certain  overhead  costs,  the
closure of  unprofitable  stores and by addressing  the  manufacturing  problems
including  redesigning  certain  products and  implementing  additional  quality
control procedures. Other improvement measures are being evaluated.


Comparison of 1996 to 1995

         Total  net  sales  for TAG  increased  15% to  $158.6  million  in 1996
compared  to  $137.5  million  in 1995.  TAG  Manufacturing  Division  net sales
increased  21% to $91.5 million  during 1996  compared to $75.9  million  during
1995. Net sales during 1995 include sales of 20th Century  Fiberglass and Raider
Industries for the six months subsequent to their acquisition  during June 1995.
Combined net sales for 20th Century  Fiberglass and Raider Industries were $36.0
million for the year ended  December 31, 1996  compared to $17.6 million for the
six months ended December 31, 1995.

         TAG  Distribution  Division  net sales  increased  9% to $67.1  million
during 1996 compared to $61.6 million during 1995.  Operations  acquired  during
June 1995 increased sales approximately $3.2 million for the year ended December
31, 1996  compared to 1995.  Leer Retail sales  increased  $2.9 million (7%) and
wholesale sales, excluding Century Distribution,  remained flat. TAG closed four
unprofitable  stores during 1996,  resulting in closure  costs of  approximately
$0.3 million.

         Cost of sales  increased  $10.1 million (9%) to $117.7  million in 1996
compared to $107.6 million in 1995.  Gross profit increased 37% to $40.9 million
(26% of net sales)  during  1996  compared to $29.9  million  (22% of net sales)
during  1995.  The  increase was due  primarily  to TAG  Manufacturing  Division
product mix changes and efforts to improve  product  quality and delivery  times
were  reflected  in lower cost of sales . Also during  1996,  TAG  Manufacturing
Division eliminated the production of plastic caps.

         Selling,  general and  administrative  expense  increased  10% to $46.4
million  (29% of net sales)  during 1996  compared to $42.1  million (31% of net
sales) during 1995. Selling expense increased 5% or $0.9 million and general and
administrative expense increased 14% or $3.4 million,


                                      -22-
<PAGE>


                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


primarily as a result of the inclusion of operations, acquired during June 1995,
for twelve months of 1996.

         TAG incurred an operating  loss for the year ended December 31, 1996 of
$6.9  million  compared  to an  operating  loss of $12.1  million  in 1995.  The
improvement  in operating  performance  was  primarily  the result of efforts to
remedy  manufacturing  problems  associated with the introduction of new product
lines, product design changes and paint finishing processes.

         The Leer  Manufacturing  plant in the  Southeastern  United  States was
closed during the last quarter of 1996 due to inefficient operations. Production
was  transferred  to the remaining TAG  Manufacturing  plants with an associated
reduction  in  overhead  costs.  Including  costs  of  closing  the Gem Top East
facility,  total  closure  costs of  approximately  $1.1 million were charged to
expense during 1996 as Closed and Excess Facility Cost.

Lowy Group

Comparison of 1997 to 1996

         Net sales  decreased  2% to $69.7  million  in 1997  compared  to $71.3
million in 1996. Sales from the floor covering  distribution  business  declined
$3.6 million (9%) and sales from carpet  manufacturing  activity  increased $1.5
million (5%).

         Cost of sales  decreased 3% to $49.7 million in 1997 from $51.5 million
in 1996.  Accordingly,  gross profit  increased 2% to $20.1  million (29% of net
sales) in 1997  compared  to $19.8  million  (28% of net  sales) in 1996.  Gross
profit increased $0.9 million or 9% at the carpet manufacturing  operations as a
result of lower labor and material costs

         Selling,  general  and  administrative  expense  decreased  1% to $15.7
million (23% of net sales) in 1997  compared to $15.9 million (22% of net sales)
in 1996.

        Lowy sold two  locations  during the period  recognizing  a gain of $2.7
million,  which was included in Other Income,  net, for the year ended  December
31, 1997. A warehouse  facility near  Minneapolis,  Minnesota was sold effective
March 31, 1997 and the operations moved to new location during the quarter ended
June 30, 1997. Effective June 30, 1997, Lowy distribution sold and leased back a
warehouse facility in Ankeny, Iowa.

         Lowy Group's  operating  income,  excluding  the gains from the sale of
real estate, increased 15% to $4.5 million (6% of net sales) in 1997 compared to
$3.9 million (5% of net sales) in 1996 due to  increased  sales and gross profit
at the carpet manufacturing operation.

Comparison of 1996 to 1995

         Net sales  decreased  5% to $71.3  million  in 1996  compared  to $75.0
million in 1995. Sales from the floor covering  distribution  business  declined
$4.3 million (9%) and carpet manufacturing activity sales increased $0.6 million
(2%).



                                      -23-
<PAGE>


                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


         Cost of sales  decreased 5% to $51.5 million in 1996 from $54.0 million
in 1995.  Accordingly,  gross profit  decreased 6% to $19.8  million (28% of net
sales) in 1996 compared to $21.0 million (28% of net sales) in 1995.

         Selling,  general  and  administrative  expense  decreased  2% to $15.9
million (22% of net sales) in 1996  compared to $16.2 million (21% of net sales)
in 1995.  The decrease was due  primarily to lower  expenses  associated  with a
reduction in personnel  partially  offset by higher sample expense and increased
fixed selling costs.

         Lowy Group's  operating income decreased 21% to $3.9 million (6% of net
sales) in 1996 compared to $4.9 million (7% of net sales) in 1995.

EFP

Comparison of 1997 to 1996

         Net sales  increased  5% to $33.0  million  in 1997  compared  to $31.5
million in 1996.  EFP's  Components (as defined under  Business) sales increased
$1.9 million,  on the strength of new business  including the door core business
started in 1996.

         Cost of sales  increased 4% to $25.9 million in 1997 from $25.0 million
in 1996.  Accordingly,  gross  profit  increased  9% to $7.1 million (22% of net
sales) in 1997 compared to $6.5 million (21% of net sales) in 1996. The increase
in gross  profit was due to a decrease  in  material  costs  which was offset by
higher labor costs resulting from changes in product mix.

         Selling,  general  and  administrative  expense  increased  5% to  $4.0
million  (12% of net sales) in 1997  compared to $3.8 million (12% of net sales)
in 1996.

         EFP's operating  income increased 11% to $3.0 million (9% of net sales)
in 1997 compared to $2.7 million (9% of net sales) in 1996.

Comparison of 1996 to 1995

         Net sales  increased  4% to $31.5  million  in 1996  compared  to $30.2
million in 1995.  EFP's  Components (as defined under  Business) sales increased
$3.9  million,  on the strength of new business,  offset by decreased  Styrocast
business and the absence of revenue from the beverage  cooler  business  sold in
1995.

         Cost of sales  decreased 3% to $25.0 million in 1996 from $25.8 million
in 1995.  Accordingly,  gross profit  increased  47% to $6.5 million (21% of net
sales) in 1996 compared to $4.4 million (15% of net sales) in 1995. The decrease
in cost of sales was due to a decrease in labor costs as a result of the sale of
the beverage cooler product line.

         Selling,  general and administrative expense remained $3.8 million (12%
of net sales) in 1996  compared to $3.8 million (13% of net sales) in 1995.  The
decrease  in  expense  as a  percentage  of net  sales is  primarily  due to the
elimination of the beverage product line.


                                      -24-
<PAGE>


                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


         EFP's operating  income increased 58% to $2.7 million (9% of net sales)
in 1996 compared to $1.7 million (6% of net sales) in 1995.

MIC Group

Comparison of 1997 to 1996

         Net sales  increased  12% to $28.6  million in 1997  compared  to $25.5
million in 1996. The increase was  attributable to an increased demand for MIC's
products  and  services  due to  increased  levels  of  activity  in the  energy
exploration and production business.

         Cost of sales  increased 17% to $20.6 million in 1997 compared to $17.6
million in 1996. Gross profit increased 3% to $8.0 million (28% of net sales) in
1997 compared to $7.9 million (31% of net sales) in 1996.  Labor costs increased
$1.4 million or 18% primarily due to increased training costs.

         Selling,  general  and  administrative  expense  increased  6% to  $3.3
million (12% of net sales)  compared to $3.1 million (12% of net sales) in 1996,
principally because of increased sales personnel and related costs.

         Operating  income  decreased 2% to $4.7 million  during 1997, or 16% of
net sales, compared to $4.8 million or 19% of net sales in 1996.

Comparison of 1996 to 1995

         Net sales  increased  26% to $25.5  million in 1996  compared  to $20.3
million in 1995.  The  increase  was  attributable  to an  increased  demand for
Magnetic's  products and  services  due to  increased  levels of activity in the
energy exploration and production business.

         Cost of sales  increased 21% to $17.6 million in 1996 compared to $14.5
million in 1995. Accordingly, gross profit increased 38% to $7.8 million (31% of
net  sales) in 1996  compared  to $5.7  million  (28% of net  sales) in 1995 due
primarily to a higher volume of sales in 1996.

         Selling,  general  and  administrative  expense  increased  18% to $3.0
million (12% of net sales)  compared to $2.6 million (12% of net sales) in 1995,
principally  because  of  increased  sales  commission  payments  and  increased
personnel costs.

         Operating  income  increased 65% to $4.8 million during 1996, or 19% of
net sales, compared to $2.9 million or 14% of net sales in 1995.

Liquidity and Capital Resources

         During 1997 net cash used by  operations  was $2.5 million  compared to
net cash provided by operations of $10.7 million during 1996. Overall changes in
working  capital used cash of $7.2 million  during 1997 primarily due to a build
up in working  capital at Morgan as the result of a large  shipment  during late
December and increased inventory in response to a $5.0 million increase in


                                      -25-
<PAGE>


                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


backlog at December 31,  1997.  Cash used by  operations  was funded by revolver
borrowings  which increased $11.5 million during 1997.  Capital  expenditures of
$7.3  million  were  partially  funded  by the  proceeds  from  the sale of real
properties by Lowy and the remainder funded by revolver borrowings.

         The  Company's  ability to borrow under its  Revolving  Loan  Agreement
depends on the  amount of  eligible  collateral  which is  dependant  on certain
advance rates applied to the value of accounts  receivables  and  inventory.  At
March 13,  1998 the  Company  had unused  available  borrowing  capacity of $5.7
million under the terms of the Revolving  Loan  Agreement.  At December 31, 1997
the Company had total borrowing capacity of $50.0 million, of which $4.6 million
was used to secure  letters of credit and $0.7  million was used to secure trade
finance  borrowings.  Additionally,  $38.2  million  had been  borrowed  to fund
operations resulting in unused available borrowing capacity of $6.5 million. The
decline in unused available  borrowing capacity is primarily due to the build up
in  working  capital  at Morgan  in  advance  of the  seasonal  consumer  rental
business.

         The Company's  Radco  subsidiary,  which is a non-guarantor  subsidiary
under the terms of the bond  indenture,  concurrently  with the  acquisition  of
substantially  all the assets of MTA, entered into a three-year revolving credit
agreement with the Company's revolving credit lender. The agreement provides for
borrowings of up to the lesser of $5,000,000 or an amount based on advance rates
applied to the total amounts of eligible accounts  receivable and inventories of
Radco. The revolving loan agreement provides for borrowing at a variable rate of
interest,  based on the U.S. prime rate (8.5 percent at December 31, 1997),  and
expires  October 31,  2000.  The  arrangement  allows  Radco to borrow funds and
provides  for the  guarantee  of  letters  of credit.  Radco  used  proceeds  of
approximately  $1.7  million to finance the  acquisition  of the MTA assets.  At
December 31, 1997,  Radco had total  borrowing  capacity of  approximately  $1.8
million  and unused net  available  borrowing  capacity  of  approximately  $0.2
million.

         As discussed in Notes 8 and 9 to the Consolidated Financial Statements,
the Company's  Revolving Loan Agreement and Senior Notes Indenture  restrict the
ability of the  Company to dispose of assets,  incur  debt,  pay  dividends  and
restrict certain corporate activities.

        The Company has signed a letter of intent to sell the assets of the Lowy
Distribution  business  and has  retained  investment  bankers to  evaluate  the
possible  sale of the Blue Ridge  carpet  manufacturing  business of Lowy Group.
Proceeds from the possible sale of these  business  units would be used to repay
revolver  borrowings.  Any  remaining  proceeds,  under  the  terms  of the bond
indenture,  would be required to be re-invested in the business within one year.
There are no assurances  that the sales will occur.  See "Safe Harbor  Statement
under the Private Securities Litigation Reform Act of 1995" below.

         The Company believes that it has adequate resources to meet its working
capital and capital  expenditure  requirements  consistent  with past trends and
practices,  and that its cash balances and the borrowing  availability under the
Revolving Credit Agreement will satisfy the Company's cash  requirements for the
foreseeable  future given its  anticipated  additional  capital  expenditure and
working capital requirements and its known obligations. The Company's management
believes  that its options  related to TAG include the  resolution  of operating
problems or the possible sale of the


                                      -26-
<PAGE>


                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


operations,  both  resulting  in  improved  liquidity,  however,  there  are  no
assurances  that these events will occur.  See "Safe Harbor  Statement under the
Private Securities Litigation Reform Act of 1995" below.

Other Matters

         The  Company  is  significantly   leveraged  and  has  a  $4.2  million
stockholder's  deficit at December 31, 1997. Through its floating rate debt, the
Company is subject to  interest  rate  fluctuations.  The  Company  operates  in
cyclical businesses and the markets for its products are highly competitive.  In
addition,  the Company places significant reliance on a relatively few number of
customers with two customers  accounting for 18% of 1997 consolidated net sales.
The combination of these factors, which are outside the Company's control, cause
it to be subject to changes in economic trends and new business developments.

       The Company has net operating loss  carryforwards of approximately  $28.3
million for U.S.  federal income tax purposes at December 31, 1997, which if not
utilized,  will begin to expire in 2002.  The Company  has  recorded a valuation
allowance  of $2.1  million and $.7  million,  during the years  ended  December
31,1997 and 1996, respectively,  against the net operating loss carryforwards as
the  Company  believes  that the  corresponding  deferred  tax  asset may not be
realizable.  The  Company  has  considered  prudent and  feasible  tax  planning
strategies in assessing the need for the  valuation  allowance.  The Company has
assumed  approximately $8.3 million ($10.6 million net of a valuation  allowance
of $2.3 million) of benefits  attributable to such tax planning strategies.  The
Company  believes  that  after  consideration  of  its  options  concerning  the
operations of TAG,  which  incurred  significant  losses  during 1997,  1996 and
1995,and other tax planning  strategies,  that sufficient  future taxable income
will be generated  to utilize the  deferred tax asset.  In the event the Company
were to determine in the future that any such tax planning  strategies would not
be  implemented,  an  adjustment  to the  deferred tax asset would be charged to
income in the period such determination was made.

         Inflation  historically  has  not  materially  affected  the  Company's
business,  although  raw  materials  and  general  operating  expenses,  such as
salaries and employee benefits,  are subject to normal  inflationary  pressures.
The Company  believes  that  generally  it has been able to increase its selling
prices to offset increases in costs due to inflation.

        Morgan has been named as a  potentially  responsible  party ("PRP") with
respect to the generation of hazardous materials alleged to have been handled or
disposed of at two Federal  Superfund sites in  Pennsylvania  and one in Kansas.
Although a precise  estimate of liability  cannot currently be made with respect
to these sites,  based upon information  known to Morgan,  the Company currently
believes that it's proportionate share, if any, of the ultimate costs related to
any  necessary  investigation  and remedial  work at those sites will not have a
material adverse effect on the Company.

         The  Company's  subsidiaries  are  evaluating  plans  to  modify  their
information technology systems to recognize the year 2000. The modifications are
expected  to be  substantially  complete  by mid-1999 and to cost  between  $1.0
million  and $2.0  million.  This  estimate  excludes  the costs to upgrade  and
replace systems in the normal course of business. The project is not expected to
significantly


                                      -27-
<PAGE>


                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


affect  operations.  See "Safe  Harbor  Statement  under the Private  Securities
Litigation Reform Act of 1995" below.

         Although  all of the  Subsidiaries  have  reviewed  the benefits of the
adoption of ISO 9000,  an  internationally  recognized  certification  regarding
production  practices and techniques employed in manufacturing  processes,  only
MIC Group and EFP, at its facility in Indiana, have obtained certification.  The
implementation of this standard is in recognition of the international nature of
a  number  of MIC  Group's  customers  as well as being  reflective  of the high
precision nature of the services of both companies.  EFP and the Raider division
of TAG have plans to implement the standard, EFP at its other locations,  within
the next two years.  The Company  believes  that,  except for MIC Group and EFP,
none of the  customers of the Company  have  requested or expect the adoption by
the Company of ISO 9000.

         The Subsidiaries have historically made payments to a partnership and a
corporation  controlled  by Mr.  Poindexter  in the form of  allocated  overhead
expenses, consulting services and management fees. Since the consummation of the
Note Offering,  the Company has paid fees to that  corporation  for, among other
things,  services provided by Messrs.  Poindexter and Magee. The Company charges
the Subsidiaries for their use of funds and for stewardship services provided to
them by the Company.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

         Forward-looking   statements   in  this   report,   including   without
limitation, statements relating to the Company's plans, strategies,  objectives,
expectations,  intentions  and adequacy of  resources,  are made pursuant to the
safe harbor provisions of the Private Securities  Litigation Reform Act of 1995.
Investors are cautioned that such  forward-looking  statements involve risks and
uncertainties  including  without  limitation the  following:  (1) the Company's
plans, strategies, objectives, expectations and intentions are subject to change
at any time at the discretion of the Company; (2) any sale of a business unit is
subject  to  many  factors  including  terms  considered   satisfactory  to  the
management of the Company; and (3) other risks and uncertainties  indicated from
time  to  time  in the  Company's  filings  with  the  Securities  and  Exchange
Commission.

Item 8.           Financial Statements and Supplementary Data

Index to Financial Statements:                                             Page

Report of Independent Auditors (Ernst & Young LLP) ...................      29
Report of Independent Public Accountants (Arthur Andersen LLP) .......      30
Consolidated Balance Sheets as of December 31, 1997 and 1996 .........      31
Consolidated Statements of Operations for the years ended
     December 31, 1997, 1996 and 1995 ................................      32
Consolidated Statements of Cash Flows for the years ended
     December 31, 1997, 1996 and 1995 ................................      33
Consolidated Statements of Stockholder's Equity (Deficit)
     for the years ended December 31, 1997, 1996 and 1995 ............      34
Notes to Consolidated Financial Statements ...........................      35


                                      -28-
<PAGE>




                         REPORT OF INDEPENDENT AUDITORS



Board of Directors and Stockholder
J.B. Poindexter & Co., Inc.

We have audited the accompanying  consolidated balance sheets of J.B. Poindexter
& Co.,  Inc. and  subsidiaries  as of December 31, 1997 and 1996 and the related
consolidated  statements of operations,  stockholder's equity (deficit) and cash
flows for each of the two years in the period ended  December  31,  1997.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial position of J.B.
Poindexter & Co.,  Inc. and  subsidiaries  at December 31, 1997 and 1996 and the
consolidated  results of their  operations  and their cash flows for each of the
two years in the period ended  December 31, 1997, in conformity  with  generally
accepted accounting principles.

                                                 ERNST & YOUNG LLP

Houston, Texas
March 6, 1998






                                      -29-
<PAGE>




                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To J.B. Poindexter & Co., Inc.:

We have audited the  accompanying  consolidated  statement of  operations,  cash
flows and  stockholder's  equity of J.B.  Poindexter  & Co.,  Inc.  (a  Delaware
Corporation)  and  subsidiaries,  for the year ended  December 31,  1995.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance  about  whether  the  consolidated  financial  statements  are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting  principles used and significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audit provides a reasonable  basis
for our opinion.

As  discussed  in  Note 8,  the  Company  incurred  a  significant  loss in 1995
attributable to losses by one of its subsidiaries.  As a result,  JBPCO violated
certain financial covenants of its revolving credit agreement.  The lenders have
agreed to waive the covenant  violations  and amended  financial  covenants have
been established through expiration of the facility in May 1997. The steps taken
by Company  management to address certain  operational  issues of the subsidiary
are also discussed in Note 8.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the results of operations and cash flows of
J.B.  Poindexter & Co., Inc. and  subsidiaries  for the year ended  December 31,
1995 in conformity with generally accepted accounting principles.


ARTHUR ANDERSEN LLP

Houston, Texas
March 29, 1996




                                      -30-
<PAGE>


                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             (Dollars in thousands)
<TABLE>
<CAPTION>

                                     ASSETS
                                                                                          December 31,
                                                                                          ------------
                                                                                        1997         1996
                                                                                    ---------     --------
<S>                                                                                 <C>          <C>
Current assets
     Restricted cash ............................................................   $   3,191    $   2,607
     Accounts receivable, net of allowance for doubtful accounts of
              $1,900 and $1,863, respectively ...................................      36,546       31,258
     Inventories, net ...........................................................      50,305       48,612
     Deferred income taxes ......................................................       2,277        2,588
     Prepaid expenses and other .................................................       1,660        2,139
                                                                                    ---------    ---------
              Total current assets ..............................................      93,979       87,204
Property, plant and equipment, net ..............................................      46,329       51,097
Goodwill, net ...................................................................      21,919       21,773
Deferred income taxes ...........................................................       5,259        5,174
Other assets ....................................................................       7,873        8,233
                                                                                    ---------    ---------
Total assets ....................................................................   $ 175,359    $ 173,481
                                                                                    =========    =========

                    LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)

Current liabilities
     Short-term debt ............................................................   $     428    $     917
     Current portion of long-term debt ..........................................       1,376        1,885
     Borrowings under revolving credit facilities ...............................      39,763       28,238
     Accounts payable ...........................................................      14,473       14,624
     Accrued compensation and benefits ..........................................       5,887        7,427
     Accrued income taxes .......................................................         196          372
     Accrued warranty liabilities ...............................................       2,682        2,799
     Other accrued liabilities ..................................................       9,735        8,576
                                                                                    ---------    ---------
              Total current liabilities .........................................      74,540       64,838
                                                                                    ---------    ---------
Noncurrent liabilities
     Long-term debt, less current portion .......................................     102,291      102,767
     Employee benefit obligations and other .....................................       3,269        2,846
                                                                                    ---------    ---------
              Total noncurrent liabilities ......................................     105,560      105,613
                                                                                    ---------    ---------
Commitments and contingencies
Stockholder's equity (deficit)
     Common stock and paid-in capital ...........................................      16,486       16,486
     Cumulative translation adjustment ..........................................        (186)          39
     Accumulated deficit ........................................................     (21,041)     (13,495)
                                                                                    ---------    ---------
              Total stockholder's equity (deficit) ..............................      (4,741)       3,030
                                                                                    ---------    ---------
              Total liabilities and stockholder's equity (deficit) ..............   $ 175,359    $ 173,481
                                                                                    =========    =========

<FN>

              The accompanying notes are an integral part of these
                       consolidated financial statements.
</FN>
</TABLE>

                                      -31-
<PAGE>


                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 (Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>

                                                        Year Ended December 31,
                                                        -----------------------
                                                     1997         1996         1995
                                                  ---------    ---------    ---------
<S>                                               <C>          <C>          <C>
Net sales .....................................   $ 447,536    $ 432,387    $ 450,716
Cost of sales .................................     351,580      337,957      365,313
                                                  ---------    ---------    ---------
Gross profit ..................................      95,956       94,430       85,403
Selling, general and administrative expense ...      86,106       84,062       81,971
Closed and excess facility costs ..............       2,306        1,375         --
Other income, net .............................      (3,197)         (76)      (1,211)
                                                  ---------    ---------    ---------
Operating income ..............................      10,741        9,069        4,643
Interest expense ..............................      16,894       16,214       15,901
                                                  ---------    ---------    ---------
Loss before income taxes and extraordinary loss      (6,153)      (7,145)     (11,258)
Income tax provision (benefit) ................       1,393         (991)      (2,722)
                                                  ---------    ---------    ---------
Loss before extraordinary loss ................      (7,546)      (6,154)      (8,536)
Extraordinary loss on early extinguishment of
    debt, net of income tax benefit of $135 ...        --            260         --
                                                  ---------    ---------    ---------
 Net loss .....................................   $  (7,546)   $  (6,414)   $  (8,536)
                                                  =========    =========    =========

Basic and diluted loss per share:
    Loss before extraordinary loss ............   $  (2,467)   $  (2,012)   $  (2,790)
    Extraordinary loss ........................        --            (85)        --
                                                  ---------    ---------    ---------
    Net income (loss) .........................   $  (2,467)   $  (2,097)   $  (2,790)
                                                  =========    =========    =========

Weighted average shares outstanding ...........       3,059        3,059        3,059
                                                  =========    =========    =========













<FN>

              The accompanying notes are an integral part of these
                       consolidated financial statements.
</FN>
</TABLE>

                                      -32-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
<TABLE>
<CAPTION>

                                                                                        Year Ended December 31,
                                                                                        -----------------------
                                                                                      1997        1996        1995
                                                                                      ----        ----        ----
<S>                                                                                <C>         <C>         <C>
Net loss .......................................................................   $ (7,546)   $ (6,414)   $ (8,536)
Adjustments to reconcile net loss to net
         cash provided by (used in) operating activities:
     Depreciation and amortization .............................................     12,382      11,862      11,155
     Extraordinary loss on early extinguishment of debt,
         net of tax ............................................................       --           260        --
     Closed and excess facility costs ..........................................      1,834        --          --
     (Gain) loss on sale of facilities and equipment ...........................     (2,545)         19      (1,144)
     Deferred federal income tax provision (benefit) ...........................        229      (1,875)     (3,875)
     Other .....................................................................        344         453          96
Increase (decrease) in assets and liabilities net of the effect of acquisitions:
     Accounts receivable .......................................................     (4,903)      2,590         923
     Inventories ...............................................................     (1,077)      3,325       5,126
     Prepaid expenses and other ................................................        485         160          71
     Accounts payable ..........................................................       (151)        798     (13,430)
     Accrued income taxes ......................................................       (378)          9         224
     Other accrued liabilities .................................................     (1,189)       (500)      1,229
                                                                                   --------    --------    --------
         Net cash provided by (used in) operating activities ...................     (2,515)     10,687      (8,161)
                                                                                   --------    --------    --------
Cash flows used in investing activities:
     Purchase of businesses, net of cash acquired ..............................     (2,700)       --       (10,277)
     Proceeds from disposition of facilities and equipment .....................      3,674         416       2,988
     Proceeds from sale of short-term investments ..............................       --          --           180
     Acquisition of property, plant and equipment ..............................     (7,262)     (8,091)    (11,870)
     Other .....................................................................       (145)        178         (34)
                                                                                   --------    --------    --------
         Net cash used in investing activities .................................     (6,433)     (7,497)    (19,013)
                                                                                   --------    --------    --------
Cash flows provided by financing activities:
     Net proceeds of revolving lines of credit .................................     11,037         683      21,615
     Payments of long-term debt and capital leases .............................     (1,298)     (2,228)     (1,848)
     Debt issuance costs .......................................................       (207)       (752)       --
                                                                                   --------    --------    --------
         Net cash provided (used in) financing activities ......................      9,532      (2,297)     19,767
                                                                                   --------    --------    --------
              Increase (decrease) in restricted cash ...........................        584         893      (7,407)
Restricted cash beginning of period ............................................      2,607       1,714       9,121
                                                                                   --------    --------    --------
Restricted cash end of period ..................................................   $  3,191    $  2,607    $  1,714
                                                                                   ========    ========    ========
Supplemental information:
     Cash paid for income taxes ................................................   $  1,526    $  1,010    $    937
                                                                                   ========    ========    ========
     Cash paid for interest cost ...............................................   $ 15,029    $ 16,211    $ 14,873
                                                                                   ========    ========    ========

<FN>

              The accompanying notes are an integral part of these
                       consolidated financial statements.
</FN>
</TABLE>

                                      -33-
<PAGE>



                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 and 1997
                  (Dollars in thousands, except share amounts)


<TABLE>
<CAPTION>

                                           Shares of      Common        Retained      Currency
                                            Common      Stock and       Earnings    Translation
                                             Stock   Paid-in Capital    (Deficit)    Adjustment        Total
                                             -----   ---------------    ---------    ----------        -----
<S>                                        <C>           <C>           <C>            <C>            <C>

December 31, 1994 ...................         3,059      $ 16,486      $  1,326       $   --         $ 17,812
         Net loss ...................          --            --          (8,536)          --           (8,536)
         Pension liability adjustment          --            --             129           --              129
         Translation adjustment .....          --            --            --               46             46
                                           --------      --------      --------       --------       --------
December 31, 1995 ...................         3,059        16,486         1,326           --            9,451
         Net loss ...................          --            --          (6,414)          --           (6,414)
         Translation adjustment .....          --            --            --               (7)            (7)
                                           --------      --------      --------       --------       --------
December 31, 1996 ...................         3,059        16,486       (13,495)            39          3,030
         Net loss ...................          --            --          (7,546)          --           (7,546)
         Translation adjustment .....          --            --            --             (225)          (225)
                                           --------      --------      --------       --------       --------
December 31, 1997 ...................         3,059      $ 16,486      ($21,041)      $   (186)      ($ 4,741)
                                           ========      ========      ========       ========       ========














<FN>

              The accompanying notes are an integral part of these
                       consolidated financial statements.
</FN>
</TABLE>




                                      -34-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.  Organization & Business:

     J. B.  Poindexter  &  Co.,  Inc.   ("JBPCO")  and  its  subsidiaries   (the
"Subsidiaries",  and  together  with JBPCO,  the  "Company")  operate  primarily
manufacturing and wholesale distribution businesses.  JBPCO and the Subsidiaries
are controlled by John B. Poindexter.

    Morgan  Trailer  Manufacturing  Co.  ("Morgan")  Acquired  January 12, 1990,
Morgan   manufactures  truck  bodies  for  dry  freight  and  refrigerated  vans
(excluding  those  made for pickup  trucks  and  tractor  trailer  trucks).  Its
customers  include  rental  companies,  truck dealers and companies that operate
fleets of delivery vehicles.

    Effective July 1,1997 Morgan  acquired the assets of Gem-Top  Manufacturing,
Inc. ("Gem-Top") from the Truck Accessories Group, Inc. Gem-Top manufactures and
distributes  light  truck  caps  primarily  to  commercial   customers  and  was
originally  acquired on March 16, 1993.  Since both  companies  are under common
control the  acquisition  was accounted for in a manner  similar to a pooling of
interests.

    Truck Accessories Group, Inc., ("TAG") Acquired on August 14, 1987, TAG is a
manufacturer and distributor of pickup truck "caps" and tonneau covers which are
fabricated  enclosures that fit over the open beds of pickup trucks,  converting
the beds into  weatherproof  storage areas. In addition,  TAG distributes  other
accessories  for  light  trucks,  minivans  and  sports  utility  vehicles.  TAG
operations are organized into two separate and distinct operating divisions: TAG
Manufacturing  Division,  manufactures caps and tonneau covers and certain other
accessories;  TAG  Distribution  Division,  operates  as a retail and  wholesale
distributor of products manufactured by TAG divisions and other suppliers.

     The TAG Manufacturing  Division includes Leer, which was acquired on August
14, 1987, 20th Century  Fiberglass  which was acquired June 29, 1995, and Raider
Industries  Ltd.,  a  Saskatchewan,  Canada  corporation  that  acquired the cap
manufacturing businesses of Raider and Lo Rider on June 30, 1995.

    The TAG Distribution  Division  includes Radco Industries,  Inc.,  ("Radco")
which was acquired on December 28, 1994. Century Distributing which was acquired
June 29, 1995, and Midwest Truck After Market ("MTA") which was acquired October
31, 1997.

    Lowy  Group,  Inc.  ("Lowy  Group")  Acquired  August 30,  1991,  Lowy Group
operates  in  the  floor  covering   business  through  three  divisions.   Lowy
Distribution  is a wholesale  floor  covering  distributor  that serves all or a
portion of twelve  Midwestern  states through six company  operated  facilities.
Blue Ridge  Carpet  Mills  designs,  manufactures  and markets  mid- to high-end
commercial  carpeting for sale throughout the United States and abroad.  Courier
Division uses state of the art equipment to dye and print patterns on commercial
and residential carpeting that is manufactured by Blue Ridge and other unrelated
companies.

    EFP  Corporation  ("EFP")  Acquired on August 2, 1985, EFP molds and markets
expandable foam products which are used as casting  patterns,  packaging,  shock
absorbing  and  materials   handling  products   primarily  by  the  automotive,
electronics,  furniture,  appliance and other  industries.  It also manufactures
products  used as thermal  insulators.  On August 31, 1992,  EFP acquired  Astro
Pattern  Corporation's  ("Astro")  assets.  Astro's  assets  are used to produce
machine tooling and wood patterns primarily for the foundry industry.

                                      -35-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


    On  September  8,  1995,  EFP sold  certain  assets  related  to its line of
beverage cooler products and recognized a net gain of $1,040,000.

     MIC Group Corp.  ("MIC  Group")  Acquired on June 19, 1992,  MIC Group is a
manufacturer,  investment  caster and assembler of precision metal parts for use
in the worldwide oil and gas exploration industry.

2. Summary of Significant Accounting Policies:

    Principles of Consolidation. The consolidated financial statements have been
prepared in  accordance  with  generally  accepted  accounting  principles.  All
intercompany accounts and transactions have been eliminated in consolidation.

    Restricted  Cash.  At December 31, 1997 and 1996,  substantially  all of the
Company's  cash is  restricted  pursuant  to the terms of the  revolving  credit
facility (See Note 8).

    Cash and Cash Equivalents.  For the purposes of the statement of cash flows,
the Company  considers all highly liquid  investments  with  maturities of three
months or less when purchased to be cash equivalents.

    Accounts Receivable.  Accounts receivable are stated net of an allowance for
doubtful accounts.  During the years ended December 31, 1997, 1996 and 1995, the
Company charged to expense $779,000, $723,000, and $2,079,000,  respectively, as
a provision  for doubtful  accounts and deducted  from the  allowance  $758,000,
$1,486,000, and $714,000, respectively, for write-offs of bad debts.

    Inventories.  Inventories are stated at the lower of cost or market. Cost is
determined  by the  last-in,  first-out  (LIFO)  method  for  certain  operating
companies  and by the  first-in,  first-out  (FIFO)  method  by other  operating
companies.

    Property,  Plant and Equipment.  Property,  plant and  equipment,  including
property  under capital  leases,  are stated at cost. The cost of property under
capital leases represents the present value of the future minimum lease payments
at the  inception of the lease.  Depreciation  and  amortization  is computed by
using the straight-line method over the estimated useful lives of the applicable
assets for financial  reporting purposes and accelerated  methods for income tax
purposes.

     The cost of  maintenance  and  repairs is charged to  operating  expense as
incurred and the cost of major  replacements  and  significant  improvements  is
capitalized.

    Warranty.  Certain Subsidiaries (Morgan, TAG and Lowy Group) provide product
warranties  for  periods  up to ten  years,  except  for TAG in  which  case the
warranty  period,  exclusive to the original truck owner, is in general but with
exclusions one year for parts,  five years for paint and lifetime for structure.
A provision for warranty  costs is included in cost of sales when goods are sold
based on historical  experience and the estimated warranty liability is adjusted
based on current performance.  Actual warranty costs could differ from estimates
made.

    Income Taxes.  The Company accounts for income taxes under the provisions of
Statement of Financial  Accounting Standards (SFAS) No. 109. Under SFAS No. 109,
deferred tax assets and liabilities are computed

                                      -36-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

based on the difference between the financial  statement and income tax bases of
assets and liabilities using the enacted tax rates. Deferred income tax expenses
or credits are based on the changes in the deferred tax asset or liability  from
period to period.

    Net Sales Recognition. Net sales are recognized upon shipment of the product
to customers,  except for Morgan where revenue is recognized and the customer is
billed upon final body assembly and quality inspection. Adjustments to arrive at
net sales are estimated allowances for discounts and returns.

    Earnings per Share.  Earnings per share is calculated by dividing net income
by the  weighted  average  number of shares  outstanding  during the period.  No
common stock equivalents exist.

    Use of Estimates. The preparation of 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 financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

    Foreign Currency Translation. The functional currency of a subsidiary of one
of the Company's  Subsidiaries is the applicable local currency. The translation
of the  foreign  currency  into U.S.  Dollars is  performed  for  balance  sheet
accounts  using the  exchange  rate in effect at the balance  sheet date and for
income statement accounts using a weighted average exchange rate for the period.
The gains or losses  resulting from such  translation are included as a separate
component of stockholder's equity (deficit).

     Recently  Issued  Accounting   Standards.   In  June  1997,  the  Financial
Accounting  Standards  Board ("FASB") issued  Statement of Financial  Accounting
Standards No. 130 - "Reporting  Comprehensive  Income" ("SFAS130") and Statement
of Financial  Accounting  Standards No. 131 - "Disclosure  About  Segments of an
Enterprise  and Related  Information"  ("SFAS 131").  Both SFAS 130 and SFAS 131
will be adopted in 1998.

        SFAS  130  establishes  standards  for  the  reporting  and  display  of
comprehensive  income  in the  financial  statements.  Comprehensive  income  is
defined  as the change in equity  during a period  from  transactions  and other
events and  circumstances  from non- owner sources.  SFAS 130 is not expected to
have a significant  impact on the  Company's  results of operations or financial
position.

        SFAS 131  changes  the way  segment  information  is  presented  from an
industry  segment  approach to a management  approach,  segments are  determined
based on the operations regularly reviewed by the chief operating decision maker
to make decisions  about resources to be allocated to the segment and assess its
performance.  The Company has not completed its evaluation of the impact of SFAS
131 on its financial statements.

        In February  1998,  the FASB issued  Statement of  Financial  Accounting
Standards  No.  132  -  "Employers'   Disclosures   about   Pensions  and  Other
Postretirement   Benefits"  ("SFAS  132")  that  revises   existing   disclosure
requirements  of SFAS 87  "Employers'  Accounting  for  Pensions"  and  SFAS 106
"Employers'  Accounting for  Postretirement  Benefits other than Pensions".  The
Company will adopt SFAS

                                      -37-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


132 in 1998 and does not expect it to have an impact on the Company's results of
operations or financial position.

3.  Acquisitions:

        Effective  October  31,  1997  Radco,  a  subsidiary  of  TAG,  acquired
substantially  all of the assets of MTA. MTA,  based in Tulsa,  Oklahoma,  was a
wholesale  distributor  of light  truck  and  vehicle  accessories.  Radco  paid
approximately  $2.5  million  of which  $2.1  million  was paid in cash and $0.5
million  evidenced by a 9% promissory  note payable in 20 consecutive  quarterly
installments of principal and interest.  Radco also assumed  $100,000 in closing
fees

        Concurrently  with  the  acquisition,  Radco  entered  into a five  year
non-compete agreement and a six month consulting agreement with the owner of MTA
pursuant  to which  the  owner  will be  compensated  for  providing  continuing
services  to,  and not  competing  with,  Radco.  Radco  will  pay the  owner an
aggregate of $100,000 each year under the terms of the non-compete agreement.

    The Company's  consolidated  results of operations on an unaudited pro forma
basis,  as though  MTA,  had been  acquired  on  January  1, 1996 are as follows
(Dollars in thousands, except per share amounts):
                                                           1997           1996
                                                           ----           ----
                                                               (Unaudited)
Net sales .............................................$ 454,513      $ 440,850
Operating income ......................................   11,043          9,832
Loss before extraordinary loss ........................   (7,507)        (5,875)
Net loss ..............................................   (7,507)        (6,135)

Net loss per common share before extraordinary loss ...   (2,454)        (1,921)
Net loss per common share .............................   (2,454)     $  (2,005)

        These pro forma results are presented  for  informational  purposes only
and do not purport to show the actual  results which would have occurred had the
business combinations been consummated on January 1, 1996.

    During June 1995, the Company's TAG subsidiary acquired substantially all of
the  assets  of  five  companies:   20th  Century   Fiberglass,   Inc.,  Century
Distributing,  Inc.,  Brown Industries  Ltd.,  Pro-More  Industries Ltd., and Lo
Rider Industries Inc. The aggregate purchase price approximated $10.3 million in
cash and TAG assumed  liabilities  of  approximately  $8.5 million of which $1.6
million was repaid in full at closing.  The results of all  businesses  acquired
during the year ended December 31, 1995, have been included in the  consolidated
financial statements from the dates of acquisition.


                                      -38-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4.  Inventories:

   Consolidated net inventories consist of the following (dollars in thousands):
       December 31,
                                                1997         1996
                                                ----         ----
FIFO Basis Inventory:
        Raw Materials ..................      $14,580      $13,231
        Work in Process ................       13,450       12,052
        Finished Goods .................       11,327       12,436
                                              -------      -------
                                               39,357       37,719

LIFO Basis Inventory:
        Raw Materials ..................        2,160        2,041
        Work in Process ................        1,658        1,595
        Finished Goods .................        7,130        7,257
                                              -------      -------
                                               10,948       10,893
Total Inventory ........................      $50,305      $48,612
                                              =======      =======

        If the FIFO method had been used for all inventory, inventory would have
approximated  inventory  valued  on a LIFO  basis at  December  31,  1997 and at
December 31, 1996.

        Inventories  are stated  net of an  allowance  for  excess and  obsolete
inventory  of  $1,270,000   and  $1,754,000  at  December  31,  1997  and  1996,
respectively.  During the years ended  December  31,  1997,  1996 and 1995,  the
Company  charged  to  expense  and other  accounts  $2,243,000,  $2,453,000  and
$1,795,000,  respectively,  as a provision for excess and obsolete inventory and
deducted from the allowance $2,727,000, $1,727,000 and $1,341,000, respectively,
for write-offs of excess and obsolete inventory.

5. Closed and Excess Facilities and Assets Held for Sale

        During 1997 Morgan  committed to a plan to dispose of its idle  facility
in Mexico in 1998.  Accordingly,  Morgan began marketing the property and, based
on an estimate of the fair value less the cost to sell the property,  wrote down
the carrying value by $558,000 which was included in Closed and Excess  Facility
Cost in the accompanying consolidated statement of operations for the year ended
December 31, 1997.  The Mexico  facility has a net book value of  $1,200,000  at
December 31, 1997, which is included in Property, Plant and Equipment.

        In 1997  TAG  Distribution  closed  eight  unprofitable  stores  and its
administrative  office,  and TAG Manufacturing  incurred  additional  unexpected
expenses  with respect to  manufacturing  facilities  closed  during  1996.  The
closure of these excess  facilities  resulted in a charge of $1,748,000  for the
year ended December 31, 1997. In 1996, TAG Distribution closed four unprofitable
stores and TAG Manufacturing closed two manufacturing facilities, resulting in a
charge of $1,375,000 for the year ended December 31, 1996. Both such charges are
included in Closed and Excess  Facility  Cost in the  accompanying  consolidated
statements of  operations.  Of these charges  $1,111,000 in 1997 and $453,000 in
1996 were  non-cash  expenses  related to the  write-down  or disposal of assets
during those years. At December 31, 1997 accrued expenses included $547,000 with
respect to severance costs and lease obligations which run through

                                      -39-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


September 1999.  Approximately $271,000 of this accrual will be paid in 1998 and
the remainder will be paid in 1999.

       The Company received a letter of intent, dated December 23, 1997, to sell

the assets of the Lowy Distribution  division of Lowy Group Inc. At December 31,
1997 Lowy  Distribution  assets subject to sale were $9,547,000 less liabilities
of approximately $3,406,000.  During the years ended December 31, 1997, 1996 and
1995 Lowy Distribution  sales were $37,902,000,  $41,501,000 and $45,785,000 and
operating  income  was  $3,039,000,   $628,000  and  $1,521,000,   respectively.
Operating  profit during the year ended  December 31, 1997 included gains on the
sales of certain real estate of $2,738,000.  The anticipated sales proceeds from
the disposal of Lowy  Distribution's  assets approximate their carrying value at
December  31,  1997.  Any  sale is  subject  to  many  factors  including  terms
considered  satisfactory  to the management of the Company and no assurances can
be made that these transactions will occur.

       During the year ended  December 31, 1997,  Lowy Group sold two  warehouse
facilities  and realized a gain of  $3,233,000.  Operations in New Brighton were
moved to a new leased location. The facility in Ankenny was sold and leased back
for a term of 10 years. The deferred gain on sale of $622,000 will be recognized
over the period of the lease. The gain recognized  during 1997 of $2,738,000 has
been included in Other Income, net.

6.  Long Lived Assets

        Property,  plant  and  equipment  as of  December  31,  1997  and  1996,
consisted of the following (Dollars in thousands):

<TABLE>
<CAPTION>
                                       Range of Useful Lives        1997           1996
                                       ---------------------      -------        -------
<S>                                               <C>            <C>            <C>
Land ....................................            --          $  4,065       $  4,122
Buildings and improvements ..............           5-32           20,722         21,012
Machinery and equipment .................           3-10           54,981         50,332
Furniture and fixtures ..................           2-10            7,959          7,385
Transportation equipment ................           2-10            3,867          4,129
Leasehold improvements ..................           3-10            5,244          5,449
Construction in progress ................            --             2,795          3,647
                                                                 --------       --------
                                                                   99,633         96,076
Accumulated depreciation and amortization                         (53,304)       (44,979)
                                                                 --------       --------
Property, plant and equipment, net ......                        $ 46,329       $ 51,097
                                                                 ========       ========
</TABLE>

     Depreciation  expense was  $9,701,000,  $9,191,000  and  $8,364,000 for the
years ended December 31, 1997, 1996 and 1995, respectively.


                                      -40-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



     Other assets and goodwill as of December 31, 1997 and 1996,  consist of the
following (Dollars in thousands):
<TABLE>
<CAPTION>

                                                                1997                             1996
                                                    --------------------------      ---------------------------
                                Amortization        Accumulated       Net Book      Accumulated       Net Book
                                    Period          Amortization        Value       Amortization        Value
                                    ------          ------------        -----       ------------        -----
<S>                                <C>               <C>             <C>             <C>             <C>
Other Assets:
  Cash surrender value of
    life insurance ............       --             $     --        $    2,345      $     --        $    2,077
  Agreements not-to-compete ...      3-6                    901           1,275           3,467           1,581
  Debt issuance costs and other      3-10                 2,229           4,253           1,426           4,575
                                                     ----------      ----------      ----------      ----------
Total .........................                      $    3,130      $    7,873      $    4,893      $    8,233
                                                     ==========      ==========      ==========      ==========
Goodwill ......................      25-40           $    7,900      $   21,919      $    6,727      $   21,773
                                                     ==========      ==========      ==========      ==========
</TABLE>

       Goodwill is being amortized on a straight-line basis over forty years for
Morgan and twenty-five years for TAG.

        In accordance with FASB Statement No. 121, Accounting for the Impairment
of Long-Lived  Assets and for  Long-Lived  Assets to be Disposed of, the Company
records  impairment  losses on long-lived assets used in operations  when events
and circumstances  indicate that the assets may be impaired and the undiscounted
cash flows  estimated to be generated by those assets are less than the carrying
amounts of those  assets.  During the years ended  December 31,  1997,  1996 and
1995, TAG incurred  operating  losses of $10.1  million,  $6.9 million and $12.1
million,  respectively.  The continued losses at TAG have resulted in management
reviewing  various  options  related  to  the  TAG  business.   The  events  and
circumstances  resulting in the operating  performance  indicated that assets of
certain TAG operations, amounting to $24.3 million, may be impaired. However, an
estimate  of  undiscounted  cash  flows  from these  assets  indicated  that the
carrying  values of the assets would be expected to be recovered over the useful
life of the assets. Management's options related to the TAG business include the
possible  sale of all or  part  of the  business,  however,  management  has not
committed  to a formal plan to dispose of all or part of the TAG  business.  The
financial  statements have,  therefore,  been prepared assuming that the Company
continues to operate TAG.  However,  should the Company  decide in the future to
dispose  of all or part of TAG the Company  could  incur a loss on sale of up to
$20.0  million.  Similarly,  it is  reasonably  possible  that the  estimate  of
undiscounted  future  cash  flows  could  change  in the  future  requiring  the
recognition of an impairment loss.


7.     Short-term debt:

           Short-term  debt as of December  31,  1997 and 1996,  consists of the
following (Dollars in thousands):
<TABLE>
<CAPTION>
                                                                              1997      1996
                                                                              ----      ----
<S>                                                                           <C>       <C>
   Morgan:
   Bankers' acceptances generally 180 day terms with interest rates ranging
   from 4.9% to 7.7% ...................................................      $428      $917
                                                                              ====      ====
</TABLE>

                                      -41-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


8. Revolving Credit Agreements:

        Amounts  outstanding under the Revolving Credit Agreement as of December
31, 1997 and 1996 were (in thousands):
<TABLE>
<CAPTION>
                                                                    1997         1996
                                                                    ----         ----

<S>                                                               <C>          <C>
$50,000,000 revolving loan due June 1999 ...................      $38,154      $28,238
 $5,000,000 revolving loan due October 2000 ................        1,609         --
                                                                  -------      -------
                Total ......................................      $39,763      $28,238
                                                                  =======      =======
</TABLE>

        On June 28, 1996, the Company  entered into a senior  secured  revolving
loan  agreement  (Revolving  Loan  Agreement)  providing  for  borrowing  by its
Subsidiaries  of up to $50.0  million.  The  arrangement  allows the  Company to
borrow  funds and  provides  for the  guarantee of letters of credit and certain
foreign exchange  contracts,  issued by the Company's banks, up to the lesser of
$50,000,000  or an amount based on advance rates applied to the total amounts of
eligible accounts  receivable and inventories of the  Subsidiaries.  The advance
rates  vary by  subsidiary  and range  between 75  percent  and 85  percent  for
receivables  and between 40 percent and 60 percent for inventory.  The Revolving
Loan Agreement  provides for borrowing at variable  rates of interest,  based on
either LIBOR (London  Interbank  Offered Rate, 5.6 percent at December 31, 1997)
or U.S.  prime rate (8.5  percent at December  31,  1997),  and expires June 28,
1999.  Interest is payable monthly including a fee of one-half of one percent on
the  amount  of unused  borrowings.  The  Subsidiaries  are  guarantors  of this
indebtedness, and inventory and receivables are pledged under the Revolving Loan
Agreement.   At  December  31,  1997,  the  Company  had  total   borrowings  of
$38,154,000,  bank  acceptances  of  $428,000  and letters of credit and foreign
exchange accommodations of $4,931,000 outstanding pursuant to the Revolving Loan
Agreement.  At December 31, 1997, the Company's unused available borrowing under
the Revolving Loan Agreement totaled approximately $6,487,000.

        During the year ended  December  31,1996 the  Company  wrote off certain
capitalized financing costs and recorded an extraordinary loss of $260,000,  net
of tax benefits, as a result of refinancing the revolver debt.

        The Revolving Loan Agreement contains  provisions allowing the lender to
accelerate debt repayment upon the occurrence of an event the lender  determines
to represent a material adverse change. Accordingly,  balances outstanding under
the  Revolving  Loan  Agreement  are  classified  as a  current  liability.  The
Revolving Loan Agreement also contains  restrictive  covenants which among other
things restrict the ability of the Company to dispose of assets,  incur debt and
restrict  certain  corporate  activities.  At December 31, 1997, the Company was
prohibited  from  paying  dividends  under  the  terms  of  the  Revolving  Loan
Agreement.  Additionally,  the Company's  cash balance is  restricted  under the
terms of the Revolving Loan Agreement.

        Radco is a non-guarantor of the Company's  Senior Notes (See Note 9) and
is not a Subsidiary  Guarantor  under the terms of the Company's  Revolving Loan
Agreement.  Concurrent with the acquisition of  substantially  all the assets of
MTA, Radco entered into a three-year  revolving credit  agreement  providing for
borrowings of up to the lesser of $5,000,000 or an amount based on advance rates
applied to the total amounts of eligible accounts  receivable and inventories of
Radco.  The  advance  rates are 80 percent  for  receivables  and 60 percent for
inventory. The revolving loan agreement provides for borrowing at a

                                      -42-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

variable rate of interest, based on the U.S. prime rate (8.5 percent at December
31, 1997), and expires October 31, 2000. Interest is payable monthly including a
fee of one  quarter  percent  on the  amount of unused  borrowings.  Radco  used
proceeds of  approximately  $1.7 million to finance the  acquisition  of the MTA
assets.  The  arrangement  allows  Radco to borrow  funds and  provides  for the
guarantee of letters of credit.

        At December 31, 1997,  Radco had total  borrowings  of  $1,609,000,  and
unused available borrowing capacity totaling approximately $.2 million.

        The Company used  proceeds from the Revolving  Loan  Agreement,  entered
into on June  28,  1996 to repay  all  borrowings  under  the  Revolving  Credit
Agreement entered into on May 23, 1994. The Revolving Credit Agreement contained
numerous  restrictive  covenants,  which,  among other  things,  restricted  the
ability of the Company to dispose of assets and incur debt and restrict  certain
corporate  activities.  In  addition,  the  Company  was  required  to  maintain
specified  financial  covenants  including a minimum net worth and debt coverage
ratio.  At December 31, 1995, the Company was not in compliance with the minimum
net worth  requirements or the debt coverage ratio as specified by the Revolving
Credit  Agreement and  borrowings  by certain  subsidiaries  had exceeded  their
borrowing base.

       The covenant  violations as of December 31, 1995 primarily  resulted from
the  Company  incurring  a net  loss of $8.5  million  in 1995,  which  included
significant losses at TAG, as a result of manufacturing problems associated with
new product  development,  design changes and paint finishing  processes.  These
problems  contributed  to higher than  normal  product  returns  and  production
delays.  Management of JBPCO and TAG,  began taking steps during 1995 to address
these  problems  including,  among  others,  redesigning  certain  products  and
implementing  additional  quality  control  procedures  and closing  inefficient
operations.

        Subsequent  to December 31, 1995,  upon  determination  of the available
borrowing  base,  the  Company  took  action to conform  the  borrowings  of the
subsidiaries to the limits of the then available  borrowing  bases. In addition,
the lenders  agreed to waive the covenant  violations and to amend the financial
covenants of the  Revolving  Credit  Agreement  through its May 1997  expiration
subject to completion of certain documentation requirements.

9.  Long-term debt and Note Offering:

        Long-term  debt  as of  December  31,  1997  and  1996  consists  of the
following (Dollars in the table in thousands):
<TABLE>
<CAPTION>
                                                                                  1997            1996
                                                                                  ----            ----
<S>                                                                           <C>             <C>
JBPCO:
        12 1/2% Senior Notes due 2004 ..................................      $ 100,000       $ 100,000
                                                                              ---------       ---------
</TABLE>

                                      -43-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S>                                                                           <C>             <C>
TAG:
        Note payable, due October 1, 2002, quarterly principal payments
           of $25,000 plus interest at 9% ..............................            500            --
        Note payable, due June 15, 2000, monthly principal payments
           of $26,666 plus interest at U.S. prime, (8.5% at
            December 31, 1997) .........................................            800           1,120
        Obligations under various non-compete agreements ...............          1,384           1,490
        Obligations under capital leases ...............................            196             589
                                                                              ---------       ---------
                                                                                  2,880           3,199
                                                                              ---------       ---------
Morgan:
        Capital lease obligation due in monthly installments of $17,704
           including interest at 8.2%, through May 10, 1998 ............             90             284
        Other ..........................................................           --                28
                                                                              ---------       ---------
                                                                                     90             312
                                                                              ---------       ---------
Lowy Group:
        Life insurance policy loans, secured by the cash surrender value
           accumulated on each policy, balances are payable at the
           termination of the policy. Interest rates range from 5%
           to 8.6% .....................................................            190             184
        Other ..........................................................           --                 3
                                                                              ---------       ---------
                                                                                    190             187
                                                                              ---------       ---------
EFP:
        Various equipment notes, due in monthly or annual installments,
        interest from 8.12% to 10%, with maturities from May 1997 to
        September 1999, each collateralized by specific assets .........            478             678
        Other ..........................................................           --                83
                                                                              ---------       ---------
                                                                                    478             761
                                                                              ---------       ---------

MIC Group:
        Covenant not-to-compete.........................................             29             193
                                                                              ---------       ---------

Total long-term debt ...................................................        103,667         104,652
Less current portion ...................................................          1,376           1,885
                                                                              ---------       ---------
Long-term debt, less current portion ...................................      $ 102,291       $ 102,767
                                                                              =========       =========
</TABLE>


        The Senior Notes Indenture contains  restrictive  covenants which, among
other  things,  restrict the ability of the Company to dispose of assets,  incur
debt and restrict  certain  corporate  activities.  At December  31,  1997,  the
Company was prohibited from paying dividends under the terms of the Senior Notes
Indenture.

        The Company's  obligations under the Senior Notes are guaranteed by each
directly wholly-owned  Subsidiary of JBPCO (the "Subsidiary  Guarantors").  Each
guarantee is a senior  unsecured  obligation of the  Subsidiary  providing  such
Guarantee and ranks pari passu with all other senior  unsecured  indebtedness of
such  subsidiary.   In  addition,   the  Subsidiary   Guarantors  guarantee  the
indebtedness  outstanding  under the Revolving  Loan  Agreement and have pledged
substantially  all  of  their  assets.  Separate  financial

                                      -44-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


statements of the  Subsidiary  Guarantors  are not included  because (a) all the
Subsidiary Guarantors provide the Guarantees,  and (b) the Subsidiary Guarantors
are jointly and severally liable on a full and  unconditional  basis.  Condensed
financial   information   for  the  Subsidiary   Guarantors  and   non-guarantor
subsidiaries, as a group, is included in Note 17.

        The  Company  estimates  the fair value of the 12 1/2%  Senior  Notes at
December 31, 1997 to be  $110,000,000  based on their  publicly  traded value at
that date compared to a recorded amount of $100,000,000 as of December 31, 1997.

     Maturities.  Aggregate  principal  payments on long-term  debt for the next
five years subsequent to December 31, 1997, are as follows (In thousands):

1998 ...................................      $  1,376
1999 ...................................         1,181
2000 ...................................           623
2001 ...................................           200
2002 ...................................           100
Thereafter .............................       100,187
                                              --------
                                              $103,667
                                              ========

10. Operating Leases:

         The Company leases certain manufacturing facilities and equipment under
noncancelable  operating  leases certain of which contain renewal  options.  The
future minimum lease payments for the next five years subsequent to December 31,
1997 are as follows (Dollars in thousands):

1998 ...................................      $ 8,242
1999 ...................................        6,075
2000 ...................................        3,654
2001 ...................................        2,556
2002 ...................................        2,086
                                              -------
                                              $22,613
                                              =======

     Total rental expense under all operating leases was $8,417,000,  $7,694,000
and  $7,617,000  for  the  years  ended  December  31,  1997,   1996  and  1995,
respectively.


                                      -45-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


11. Income Taxes:

     The income tax provision  (benefit) consists of the following for the years
ended December 31, 1997, 1996 and 1995 (Dollars in thousands):

                                       1997          1996          1995
                                       ----          ----          ----
Current:
 Federal .....................      $  --         $  --         $  --
 State .......................        1,166           884         1,172
 Foreign .....................         --            --            --
Deferred:
 Federal .....................          525        (1,945)       (3,666)
 State .......................         (299)           70          (146)
 Foreign .....................         --            --             (82)
                                    -------       -------       -------
Income tax provision (benefit)      $ 1,393       $  (991)      $(2,722)
                                    =======       =======       =======

         The following table  reconciles the  differences  between the statutory
Federal  income tax rate and the effective tax rate for the years ended December
31, 1997, 1996 and 1995 (Dollars in thousands):

<TABLE>
<CAPTION>
                                                             1997                      1996                    1995
                                                      ------------------       -----------------        ------------------
                                                       Amount        %          Amount        %          Amount        %

<S>                                                   <C>           <C>        <C>           <C>        <C>           <C>
Tax provision (benefit) at statutory
   Federal income tax rate .....................      $(2,093)       34%       $(2,430)       34%       $(3,828)       34%
Valuation allowance ............................        1,277       (21)           --         --            --         --
Goodwill amortization ..........................          239        (4)           335        (5)           268        (2)
Non deductible expenses ........................          196        (3)           --         --            --         --
Federal income tax provision on foreign earnings          225        (4)           --         --            --         --
Expiration of ITC ..............................          663       (11)           --         --            --         --
State income taxes, net of Federal income
 tax benefit ...................................          474        (8)           517        (7)           980        (9)
Losses (profit) from foreign corporations ......          (52)        1            368        (5)           --         --
Other ..........................................          464        (7)           219        (3)          (142)        1
                                                      -------       ---        -------       ---        -------       ---
Provision (benefit) for income taxes
  and effective tax rates ......................      $ 1,393       (23%)      $  (991)       14%       $(2,722)       24%
                                                      =======       ===        =======       ===        =======       ===

</TABLE>


         Deferred  taxes  are  based on the  estimated  future  tax  effects  of
differences  between  the  financial  statements  and tax  basis of  assets  and
liabilities  given the  provisions of the enacted tax laws. The net deferred tax
assets and  liabilities  as of December  31, 1997 and 1996 are  comprised of the
following (Dollars in thousands):

                                      -46-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                                    1997             1996
                                                    ----             ----
Current deferred tax (assets):
Allowance for doubtful accounts ........      $     (994)      $     (764)
Employee benefit accruals and reserves .          (1,031)            (997)
Warranty liabilities ...................            --               (118)
Excess facility costs ..................            (252)            (328)
Other ..................................            --               (381)
                                              ----------       ----------
   Total current deferred tax (assets) .          (2,277)          (2,588)
Long term deferred tax (assets):
Tax benefit carryforwards ..............         (10,635)         (10,343)
Warranty liabilities ...................          (1,235)            (932)
Non-compete agreements .................            (579)            --
Other ..................................            (198)            --
Valuation allowance ....................           2,312            1,035
                                              ----------       ----------
   Total long term deferred tax (asset)          (10,335)         (10,240)
Long term deferred tax liabilities:
Depreciation and amortization ..........           3,645            4,603
Other ..................................           1,431              463
                                              ----------       ----------
   Net long term deferred tax (asset) ..          (5,259)          (5,174)
                                              ----------       ----------
           Net deferred tax assets .....      $   (7,536)      $   (7,762)
                                              ==========       ==========

       Tax Carryforwards. The Company has investment tax credit carryforwards of
approximately  $189,000 for U.S.  federal  income tax purposes which will expire
between  1998 and 2001 if not  previously  utilized.  The company has recorded a
valuation  allowance of $189,000 against the investment tax credit  carryforward
as the Company  believes  that the  corresponding  deferred tax asset may not be
realizable.  The Company has  alternative  minimum tax credit  carryforwards  of
approximately $817,000 for U.S. federal income tax purposes which may be carried
forward  indefinitely.  The  utilization of the  alternative  minimum tax credit
carryforward is restricted to the taxable income of one Subsidiary. In addition,
the Company has net operating loss carryforwards of approximately  $28.3 million
for U.S.  federal  income  tax  purposes  at  December  31,  1997,  which if not
utilized,  will begin to expire in 2002.  The Company  has  recorded a valuation
allowance of $2.1 million and $708,000, during the years ended December 31, 1997
and 1996,  respectively,  against the net operating  loss  carryforwards  as the
Company  believes  that  the  corresponding   deferred  tax  asset  may  not  be
realizable.

       The Company has considered  prudent and feasible tax planning  strategies
in  assessing  the need for the  valuation  allowance.  The  Company has assumed
approximately  $8.3 million ($10.6 million net of a valuation  allowance of $2.3
million) of benefits attributable to such tax planning strategies.  In the event
the  Company  were to  determine  in the  future  that  any  such  tax  planning
strategies  would not be  implemented,  an  adjustment to the deferred tax asset
would be charged to income in the period such determination was made.

12. Segment Data:

         The Company  operates in three  industry  segments:  Automotive,  Floor
Covering and Plastics and Other. The Automotive segment includes Morgan and TAG,
the Floor  Covering  segment  includes  Lowy

                                      -47-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Group,  and the  Plastics  and Other  segment  includes  EFP and MIC Group.  The
Company operates principally in only one geographic segment (the United States).
The  following  is a summary of the  industry  segment  data for the years ended
December 31, 1997, 1996 and 1995 (Dollars in thousands):

<TABLE>
<CAPTION>

                                                  Operating      Identifiable    Depreciation/     Capital
                                Net Sales           Income          Assets       Amortization    Expenditures
<S>                            <C>              <C>              <C>             <C>             <C>
1997:
Automotive* .............      $  317,211       $   (1,389)      $  122,415      $    7,970      $    5,778
Floor Covering ..........          69,724            7,150           23,813             384             155
Plastics and Other ......          61,516            7,763           24,753           3,083           1,228
  JBPCO .................            (915)          (2,783)           4,378             945             101
                               ----------       ----------       ----------      ----------      ----------
    Consolidated ........      $  447,536       $   10,741       $  175,359      $   12,382      $    7,262
                               ==========       ==========       ==========      ==========      ==========

1996:
 Automotive* ............      $  304,119       $      138       $  115,594      $    7,207      $    6,093
 Floor Covering .........          71,343            3,927           23,815             617             304
 Plastics and Other .....          56,925            7,539           25,074           3,363           1,650
  JBPCO .................            --             (2,535)           8,998             675              32
                               ----------       ----------       ----------      ----------      ----------
    Consolidated ........      $  432,387       $    9,069       $  173,481      $   11,862      $    8,079
                               ==========       ==========       ==========      ==========      ==========

1995:
 Automotive .............      $  325,249       $   (2,227)      $  121,196      $    6,400      $    8,128
 Floor Covering .........          74,955            4,944           24,018             678             875
 Plastics and Other .....          50,512            4,644           26,024           3,308           2,704
 JBPCO ..................            --             (2,718)           9,556             769             163
                               ----------       ----------       ----------      ----------      ----------
    Consolidated ........      $  450,716       $    4,643       $  180,794      $   11,155      $   11,870
                               ==========       ==========       ==========      ==========      ==========
</TABLE>

         *Includes a $2,306,000 and a $1,375,000 charge,  during the years ended
December 31, 1997 and 1996,  respectively,  associated with the closure or write
down in carrying value of certain excess facilities.

13.  Stockholder's Equity:

         As of December 31, 1997 and 1996, there were 100,000 shares  authorized
and 3,059 shares  outstanding of JBPCO common stock with a par value of $.01 per
share.  JBPCO was  incorporated  in Delaware.  No other classes of common stock,
preferred stock or common stock equivalents exist.

14.  Employee Benefit Plans:

Defined Contribution Plans

         JBPCO  401(k)  Plan.  Effective  January  1,  1996,  substantially  all
employees of the Company became  eligible to participate in the  JBPCO-sponsored
401(k)  savings  plan.  This plan allows  participating  employees to contribute
through salary deductions up to 15 percent of gross pay and provides for Company
matching  contributions  up to two  percent  of gross  pay as well as an  annual
discretionary  contribution.  Vesting in the Company matching contribution is 20
percent per year over the first five years.  The

                                      -48-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Company  incurred  expenses of $1,355,000 and $1,426,000  during the years ended
December  31,  1997 and 1996,  respectively,  including  administrative  fees of
approximately $75,000 in each year.

         The  Subsidiaries  (except MIC Group) had various defined  contribution
plans for their  employees prior to January 1, 1996.  Effective  January 1, 1996
certain of these plans were merged into the JBPCO 401 (k) plan.  Total  employer
contributions to remaining defined  contribution plans for all Subsidiaries were
$68,000,  $40,000 and $932,000 for the years ended  December 31, 1997,  1996 and
1995, respectively. Each Subsidiary's plan is summarized below.

         Morgan.  Morgan had a profit participation  program for certain members
of management which provided for payments to participants in 1995. This plan was
terminated in 1995.  Morgan  maintains a separate all employee,  noncontributory
profit sharing plan which provides for an annual  contribution at the discretion
of the board of directors.  This plan and the JBPCO 401(k) plan are administered
under a  master  trust  agreement,  which  became  effective  January  1,  1996.
Contributions  to the  noncontributory  profit  sharing  plan  are  based on the
earnings  of  Morgan  as  defined  under  the  plan  agreement.  Morgan  made no
contributions  to the plan  during the years  ended  December  31, 1997 and 1996
respectively.

         TAG.  TAG had a profit  sharing  plan that  covered  substantially  all
full-time  employees  which was  merged  into the JBPCO  401(k)  plan  effective
January 1, 1996.

         Lowy   Group.   Certain   warehouse   employees    participate   in   a
collectively-bargained,  multi-employer  defined  contribution  pension  plan to
which the Lowy Group makes required  payments.  The basis for  contributions and
the amount contributed is set forth in the collectively-bargained contract. Lowy
Group  makes  discretionary  contributions  to  individual  retirement  accounts
established by and for the benefit of certain  non-union  employees.  During the
year ended December 31, 1997 Lowy contributed $29,000 to the plan.

         EFP.  Certain  employees  of  EFP  who  are  covered  by  a  collective
bargaining  agreement,  participate in a defined  contribution  retirement  plan
whereby EFP's  contribution  is based on the number of hours worked.  During the
year ended December 31, 1997 EFP  contributed  $5,000 to the plan.  Employees of
EFP who were not covered by the collective bargaining agreement were eligible to
participate  in the  employer-sponsored  401(k) profit  sharing plan,  which was
merged into the JBPCO 401(k) plan effective January 1,1996.

         Substantially  all  employees of EFP's Astro  division are covered by a
defined  contribution  plan.  The Money  Purchase  Pension Plan  requires EFP to
contribute  four and one half  percent  of each  participant's  compensation  as
defined in the plan agreement.  Vesting is based on years of service. During the
year ended  December  31,1997  EFP  contributed  $34,000 to the plan.  Effective
January 1, 1996, the EFP Astro division's  401(k) profit sharing plan was merged
into the JBPCO 401(k) plan.  Also,  effective  January 1, 1996, the contribution
percentage  to the money  purchase  pension plan was reduced to two and one half
percent.

                                      -49-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


  Defined Benefit Plans

         Morgan, Lowy Group, TAG and EFP have defined benefit plans as discussed
below. The other Subsidiaries do not have defined benefit plans.

         Morgan.  Morgan  assumed  future  sponsorship  of the NSSC  (Morgan was
merged into NSSC during 1993) pension plan and  continues to make  contributions
to the plan in accordance with the funding  requirements of the Internal Revenue
Service.  No further benefits have accrued subsequent to February 12, 1992. Plan
assets  consist  primarily  of  investments  in two bank  funds  and the plan is
overfunded by approximately $493,000.

         Lowy Group.  Lowy Group has an unfunded  executive defined benefit plan
whereby deferred  compensation  agreements  provide a fixed amount of retirement
benefits  to  key  corporate  and  sales  employees.   The  accumulated  benefit
obligation  related to this plan is  approximately  $1.8 million at December 31,
1997 and 1996. Lowy Group makes no  contributions to the plan, and no assets are
held in trust to secure  benefits  accumulating  in the plan.  Lowy Group  does,
however,  maintain  life  insurance  policies to fund the plan  obligations  and
accumulate  cash surrender  values.  The cash surrender  value of life insurance
policies of which Lowy Group was beneficiary  totaled  $1,647,000 and $1,560,000
at  December  31,  1997  and  1996,  respectively,  and  is  included  in  other
non-current  assets in the accompanying  consolidated  balance sheets.  Payments
made to retired individuals in the plan were $142,000,  $136,000 and $147,000 in
1997, 1996 and 1995, respectively.  The benefits are based on the employee's age
at retirement and the fixed monthly benefit amount  specified in each individual
deferred compensation agreement. The actuarial present value of projected future
benefits attributed to employee service to date represents the projected benefit
obligation in the following table.

         EFP.  EFP  had  a  defined  benefit  plan  covering  substantially  all
full-time employees of one of its divisions.  Benefits under the plan were based
on years of service and a percentage of the employee's average monthly earnings.
This plan was  terminated  effective  April 15, 1996 and the assets  distributed
effective  October 10, 1996. The Company realized a gain,  during the year ended
December 31, 1996,  of  approximately  $200,000  upon  termination  of the plan.
Participants of this plan became eligible to participate in the J.B.  Poindexter
& Co., Inc. 401(k) plan effective January 1, 1996.

         TAG. TAG had a defined  benefit plan covering  hourly  employees of Gem
Top  working at least  1,000 hours per year.  The normal  retirement  benefit is
equal to $20 per month for each year of service.  Normal  retirement  date is 65
years of age. The plan was frozen  effective March 31, 1996, and at December 31,
1997 and 1996 plan assets approximated projected benefit obligations.

                                      -50-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         The  components  of net periodic  pension cost for the defined  benefit
plans of the Company are as follows (Dollars in thousands):
<TABLE>
<CAPTION>
                                                         1997        1996          1995
                                                         ----        ----          ----
<S>                                                     <C>         <C>         <C>
Service costs benefits earned during the year ....      $  72       $  75       $   254
Interest costs on projected benefit obligation ...        340         342           575
Actual return on plan assets .....................       (659)       (338)       (1,031)
Net amortization & deferral and other costs ......        461        (216)          544
                                                        -----       -----       -------
Net pension expense (income) .....................      $ 214       $(137)      $   342
                                                        =====       =====       =======
</TABLE>

         The following table sets forth the funded status and amounts recognized
in the Company's  consolidated  balance sheets as of December 31, 1997 and 1996,
and the significant assumptions used in accounting for the defined benefit plans
(Dollars in table in thousands):
<TABLE>
<CAPTION>

                                                                          1997          1996
                                                                          ----          ----
<S>                                                                     <C>           <C>
Accumulated benefit obligations ..................................      $ 4,817       $ 5,137
                                                                        =======       =======
Projected benefit obligations for services
  rendered to date, including vested benefits
  of $3,050,000 and $3,367,000 ...................................      $ 4,817       $ 5,137
Plan assets at fair value ........................................        3,543         3,511
                                                                        -------       -------
Projected benefit obligation in excess of plan assets ............       (1,274)       (1,626)
Unrecognized net (gain) loss from past experience
  different from that assumed and effects
  of changes in assumptions ......................................         (359)          (27)
Prior service cost not yet recognized in net periodic pension cost         --            --
Unrecognized transition cost .....................................         --            --
                                                                        -------       -------
Accrued pension liabilities ......................................      $(1,633)      $(1,653)
                                                                        =======       =======
Cash surrender value of Lowy Group's life insurance policies .....      $ 1,647       $ 1,560
                                                                        =======       =======
Major assumptions at measurement dates:
 Discount rate....................................................                    7.25% to 7.5%
 Expected long-term rate of return on plan assets.................                    8.0%

</TABLE>

       In accordance with SFAS No. 87, "Employers' Accounting for Pensions," the
Company recorded an increase in equity of $129,000,  to recognize a reduction in
the minimum liability in 1995.

15.  Commitments and Contingencies:

        Claims and  Lawsuits.  The  Company is  involved  in certain  claims and
lawsuits arising in the normal course of business. In the opinion of management,
the ultimate resolution of these matters will not have a material adverse effect
on the financial position or results of operations of the Company.

        Concentration  of Credit  Risk.  Concentration  of credit risk exists in
three  Subsidiaries.   Morgan  has  two  customers  (truck  leasing  and  rental
companies)  accounting for, on a combined basis,  approximately 46%, 40% and 50%
of Morgan's net sales during 1997, 1996 and 1995,  respectively and 18%, 14% and
21% of  consolidated  net sales,  respectively.  EFP has three  customers in the
electronics industry accounting for approximately 25% and 21% of EFP's net sales
in 1997 and 1996,  respectively and 2% of consolidated

                                      -51-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

net sales,  respectively.  MIC Group has an industry concentration pertaining to
international  oil field service companies with three customers in 1997 and four
customers in 1996 and 1995  representing  approximately  53%, 69% and 79% of MIC
Group's net sales and 3%, 4% and 3% of consolidated  net sales in 1997, 1996 and
1995, respectively.

        Letters  of  Credit  and Other  Commitments.  Morgan  had  approximately
$773,000 and $1,628,000 in letters of credit outstanding as of December 31, 1997
and 1996. The Company had $3,950,000 and $4,250,000 in standby letters of credit
outstanding at December 31, 1997 and 1996, respectively,  primarily securing the
Company's insurance programs.

        Environmental   Matters.   Morgan  has  been  named  as  a   potentially
responsible party ("PRP") with respect to the generation of hazardous  materials
alleged to have been  handled or disposed of at two Federal  Superfund  sites in
Pennsylvania and one in Kansas.  Although a precise estimate of liability cannot
currently be made with respect to these sites,  based upon information  known to
Morgan, the Company currently believes that it's proportionate share, if any, of
the ultimate costs related to any necessary  investigation  and remedial work at
those sites will not have a material adverse effect on the Company.

        Certain of the Company's operations utilize paints and solvents in their
businesses. Also, raw materials used by EFP contain pentane, which is a volatile
organic  compound  subject to regulation  under the Clean Air Act.  Although the
Company  believes that it has made sufficient  capital  expenditures to maintain
compliance  with  existing  laws and  regulations,  future  expenditures  may be
necessary if and when compliance standards and technology change.

        Self-Insured Risks. The Subsidiaries  utilize a combination of insurance
coverage and self-insurance  programs for health care and workers  compensation.
The portion of certain risks not covered by insurance are summarized as follows:
workers compensation  individual deductibles range from $100,000 to $250,000 and
health care  individual  deductibles  range from $25,000 to $75,000 with certain
Subsidiaries  self-insuring  up to $1,000,000  (aggregate  stop-loss) under both
workers compensation and health care coverage.

        The Company has reserves  recorded to cover the self-insured  portion of
these risks based on known facts and historical  trends and management  believes
that such  reserves are adequate and the ultimate  resolution  of these  matters
will not have a material adverse effect on the financial  position or results of
operations of the Company.

16. Related Party Transactions:

        Concurrently with the Note Offering on May 23, 1994, the Company entered
into  a  Management  Services  Agreement  with  Southwestern  Holdings,  Inc.  a
corporation ("Southwestern") owned by Mr. Poindexter. Pursuant to the Management
Services  Agreement,  Southwestern  provides services to the Company,  including
those of Mr. Poindexter and Mr. Magee its Chief Financial  Officer.  The Company
pays to Southwestern approximately $600,000 per year for these services, subject
to annual  automatic  increases based upon the consumer price index. The Company
may also pay a  discretionary  annual bonus to  Southwestern  subject to certain
limitations,  $63,000  was paid in 1995  and none was paid in 1997 or 1996.  The
Company and  Subsidiaries  use certain  facilities  provided by Southwestern for
meetings and conferences. The Company did not use the facilities during 1997 and
1996 and paid  Southwestern  $23,000 during 1995 for the use of the  facilities.
The Company  paid  Southwestern  approximately  $613,000,

                                      -52-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

$600,000 and $653,000 during 1997, 1996 and 1995, respectively. During 1995, the
Company paid approximately  $16,000 to a company owned by Mr. Poindexter for the
use of a private plane to transport company employees to the facilities provided
by  Southwestern.  A  subsidiary  of the  Company,  which  is  not a  restricted
subsidiary  under the terms of the Bond Indenture or a guarantor under the terms
of the Company's  Revolving Loan Agreement,  paid Southwestern  Holdings $60,000
and $50,000 during 1997 and 1996, respectively, for certain services.

     Mr.  Poindexter,  Mr.  Magee of  JBPCO  and  certain  members  of  Morgan's
management  are  partners in a  partnership  that leases to Morgan  certain real
property in Georgia.  Morgan paid $222,000 in rent to the  partnership  in 1997,
and approximately $200,000 during 1996 and 1995 pursuant to such lease.

        TAG leases certain real estate in Canada from an entity controlled by an
executive  vice  president  of TAG.  Total lease  expense for that  facility was
$117,000 and $114,000 in 1997 and 1996, respectively.

17. Supplemental Guarantor Information:

        The Company's  obligations under the Senior Notes are guaranteed by each
directly  wholly-owned   Subsidiary  of  JBPCO.  In  addition,   the  Subsidiary
Guarantors  guarantee the  indebtedness  outstanding  under the  Revolving  Loan
Agreement.  The  Indenture and Revolving  Loan  Agreement  provides for acquired
subsidiaries  subsequent to the issuance of the Senior Notes to be designated as
guarantors of the Senior Notes, provided certain financial ratio tests are met.

        The  following  consolidating  financial  information  is presented  for
purposes of complying with the reporting  requirements of the parent company and
the Guarantor Subsidiaries. The financial information includes condensed balance
sheet  information as of December 31, 1997 and 1996 and condensed  operating and
cash flow statement  information  for each of the three years ended December 31,
1997. The Company's non-guarantor subsidiaries are Radco Industries (acquired by
TAG in December  1994  including MTA acquired in October  1997),  Tile by Design
(acquired  by Lowy in November  1994),  and  Acero-Tec,  S.A. de C.V.  (Morgan's
Mexico subsidiary).  The Company believes that separate financial  statements or
other disclosures of the guarantors are not material to the investors.

<TABLE>
<CAPTION>
Consolidating Condensed Balance Sheet Information:
                                                                   December 31, 1997
                                               Guarantor      Non-guarantor     JBPCO and
                                             Subsidiaries     Subsidiaries    Eliminations    Consolidated
<S>                                           <C>              <C>             <C>             <C>
Assets
        Current assets .................      $   90,629       $    3,340      $       10      $   93,979
        Noncurrent assets ..............          71,945            4,961           4,474          81,380
                                              ----------       ----------      ----------      ----------
        Total assets ...................      $  162,574       $    8,301      $    4,484      $  175,359
                                              ==========       ==========      ==========      ==========
Liabilities and Equity
        Current liabilities ............      $   69,786       $    3,865      $      889      $   74,540
        Noncurrent liabilities .........          99,170            4,150           2,240         105,560
        Stockholder's equity ...........          (6,382)             286           1,355          (4,741)
                                              ----------       ----------      ----------      ----------
        Total liabilities and equity ...      $  162,574       $    8,301      $    4,484      $  175,359
                                              ==========       ==========      ==========      ==========
</TABLE>

                                      -53-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                   December 31, 1996
                                               Guarantor      Non-guarantor     JBPCO and
                                             Subsidiaries     Subsidiaries    Eliminations    Consolidated
<S>                                           <C>              <C>             <C>             <C>
Assets
        Current assets .................      $   86,220       $    1,336      $     (352)     $   87,204
        Noncurrent assets ..............          75,724            3,961           6,592          86,277
                                              ----------       ----------      ----------      ----------
        Total assets ...................      $  161,944       $    5,297      $    6,240      $  173,481
                                              ==========       ==========      ==========      ==========
Liabilities and Equity
        Current liabilities ............      $   62,641       $      569      $    1,628      $   64,838
        Noncurrent liabilities .........           1,903            3,710         100,000         105,613
        Stockholder's equity ...........          97,400            1,018         (95,388)          3,030
                                              ----------       ----------      ----------      ----------
        Total liabilities and equity ...      $  161,944       $    5,297      $    6,240      $  173,481
                                              ==========       ==========      ==========      ==========
</TABLE>

<TABLE>
<CAPTION>
Consolidating Condensed Income Statement Information for the Year ended:

                                                                   December 31, 1997
                                               Guarantor      Non-guarantor     JBPCO and
                                             Subsidiaries     Subsidiaries    Eliminations    Consolidated

<S>                                           <C>              <C>             <C>             <C>
Net sales ..............................      $  436,694       $   11,756      $     (914)     $  447,536
Cost of sales ..........................         344,223            8,271            (914)        351,580
Income (loss) before
   extraordinary item ..................          (2,906)            (845)         (3,795)         (7,546)
Net loss ...............................      $   (2,906)      $     (845)     $   (3,795)     $   (7,546)
</TABLE>

<TABLE>
<CAPTION>
                                                                   December 31, 1996
                                               Guarantor      Non-guarantor     JBPCO and
                                             Subsidiaries     Subsidiaries    Eliminations    Consolidated
<S>                                           <C>              <C>             <C>             <C>
Net sales ..............................      $  421,275       $   11,112      $     --        $  432,387
Cost of sales ..........................         330,206            7,751            --           337,957
Income (loss) before
   extraordinary item ..................          (7,099)            (437)          1,382          (6,154)
Net loss ...............................      $   (7,099)      $     (437)     $    1,122      $   (6,414)
</TABLE>

<TABLE>
<CAPTION>
                                                                   December 31, 1995
                                               Guarantor      Non-guarantor     JBPCO and
                                             Subsidiaries     Subsidiaries    Eliminations    Consolidated
<S>                                           <C>              <C>             <C>             <C>
Net sales ..............................      $  440,104       $   10,612      $     --        $  450,716
Cost of sales ..........................         357,628            7,685            --           365,313
Income (loss) before
   extraordinary item ..................         (10,884)            (586)          2,934          (8,536)
Net income (loss) ......................      $  (10,884)      $     (586)     $    2,934      $   (8,536)
</TABLE>

                                      -54-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Consolidating Condensed Statement of Cash Flows Information for the Year ended:


                                                                   December 31, 1997
                                               Guarantor      Non-guarantor     JBPCO and
                                             Subsidiaries     Subsidiaries    Eliminations    Consolidated
<S>                                           <C>              <C>             <C>             <C>
Net cash provided (used) by
     operating activities ..............      $   (4,128)      $      748      $      865      $   (2.515)
                                              ----------       ----------      ----------      ----------
Capital expenditures ...................          (7,122)             (39)           (101)         (7,262)
Purchase of business ...................            --             (2,700)           --            (2,700)
Proceeds from sale of assets ...........           3,674             --              --             3,674
Other ..................................             (95)            --               (50)           (145)
                                              ----------       ----------      ----------      ----------
Net cash used in investing activities ..          (3,543)          (2,739)           (151)         (6,433)
                                              ----------       ----------      ----------      ----------
Net proceeds of
     revolving lines of credit .........           9,113            1,609             315          11,037
Net payments long-term
     debt and capital leases ...........          (1,772)             474            --            (1,298)
Other ..................................             --              (207)           --              (207)
                                              ----------       ----------      ----------      ----------
Net cash provided (used ) by
     financing activities ..............           7,341            1,876             315           9,532
                                              ----------       ----------      ----------      ----------
Increase (decrease) in restricted cash
      and cash equivalents .............      $     (330)      $     (115)     $    1,029      $      584
                                              ==========       ==========      ==========      ==========
</TABLE>

<TABLE>
<CAPTION>

                                                                   December 31, 1996
                                               Guarantor      Non-guarantor     JBPCO and
                                             Subsidiaries     Subsidiaries     Eliminations   Consolidated
<S>                                           <C>              <C>             <C>             <C>
Net cash provided (used) by
     operating activities ..............      $   10,326       $     (416)     $      777      $   10,687
                                              ----------       ----------      ----------      ----------
Capital expenditures ...................          (8,048)             (11)            (32)         (8,091)
Other ..................................             594             --              --               594
                                              ----------       ----------      ----------      ----------
Net cash used in investing activities ..          (7,454)             (11)            (32)         (7,497)
                                              ----------       ----------      ----------      ----------
Net proceeds of
     revolving lines of credit .........             683             --              --               683
Net payments long-term
     debt and capital leases ...........          (2,106)            (122)           --            (2,228)
Other ..................................            (156)             156            (752)           (752)
                                              ----------       ----------      ----------      ----------
Net cash provided (used ) by
     financing activities ..............          (1,579)              34            (752)         (2,297)
                                              ----------       ----------      ----------      ----------
Increase (decrease) in restricted cash
      and cash equivalents .............      $    1,293       $     (393)     $       (7)     $      893
                                              ==========       ==========      ==========      ==========
</TABLE>

                                      -55-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                   December 31, 1995
                                               Guarantor      Non-guarantor     JBPCO and
                                             Subsidiaries     Subsidiaries    Eliminations    Consolidated
<S>                                           <C>              <C>             <C>             <C>
Net cash provided (used) by
     operating activities ..............      $   (8,245)      $     (507)     $      591      $   (8,161)
                                              ----------       ----------      ----------      ----------
Capital expenditures ...................         (11,045)            (662)           (163)        (11,870)
Purchase of business ...................         (10,277)            --              --           (10,277)
Proceeds from sale of assets ...........           2,988             --              --             2,988
Other ..................................              19             --               127             146
                                              ----------       ----------      ----------      ----------
Net cash used in investing activities ..         (18,315)            (662)            (36)        (19,013)
                                              ----------       ----------      ----------      ----------
Net proceeds of
     revolving lines of credit .........          21,615             --              --            21,615
Net payments of long-term
     debt and capital leases ...........          (1,473)            (375)           --            (1,848)
Intercompany transfers .................           5,663              838          (6,501)           --
                                              ----------       ----------      ----------      ----------
Net cash provided (used ) by
     financing activities ..............          25,805              463          (6,501)         19,767
                                              ----------       ----------      ----------      ----------
Decrease in restricted cash and cash
     equivalents .......................      $     (755)      $     (706)     $   (5,946)     $   (7,407)
                                              ==========       ==========      ==========      ==========
</TABLE>


Item 9.  Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
         Financial Disclosure as discussed in Form 8K filed on October 11, 1996.

         As discussed in Form 8K filed on October 11, 1996, during October 1996,
the Company engaged Ernst & Young LLP as the Company's  independent  auditors to
audit the Company's  consolidated financial statements for the fiscal year ended
December  31,  1996.  The Company  chose not to renew the  engagement  of Arthur
Andersen LLP, who previously served as the Company's independent  auditors.  The
change of independent auditors was approved by the Company's Board of Directors.

         In  connection  with the  audits  of the  Company  for the  year  ended
December 31, 1995 and since such time, there were no  disagreements  with Arthur
Andersen LLP on any matter of  accounting  principles  or  practices,  financial
statement disclosure, or auditing scope or procedure,  which, if not resolved to
the  satisfaction  of Arthur Andersen LLP, would have caused Arthur Andersen LLP
to make reference to the subject matter of the  disagreement  in connection with
its report.

                                      -56-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES

PART III

Item 10. Directors and Executive Officers of the Registrant

         The  directors  and  executive  officers  of the  Company are set forth
below.  All directors hold office until the next annual meeting of  stockholders
of the  Company  or until  their  successors  are duly  elected  and  qualified.
Executive  officers  of the  Company  are  appointed  by the Board of  Directors
annually and serve at the discretion of the Board of Directors.


      Name                 Age              Position
John B. Poindexter         53               Chairman of the Board, President
                                               and Chief Executive Officer
W.J. Bowen                 76               Director
Stephen P. Magee           50               Chief Financial Officer, Treasurer
                                               and Director
R.S. Whatley               46               Vice President, Controller
L.T. Wolfe                 49               Vice President Administration

     John B.  Poindexter has served as Chairman of the Board and Director of the
Company since 1988 and Chief  Executive  Officer  since 1994.  From 1985 through
1996, Mr. Poindexter was the majority limited partner of J.B.  Poindexter & Co.,
L.P., a privately held,  long-term equity  investment and management firm formed
by Mr.  Poindexter.  From 1983 through 1985, he was co-managing  partner of KD/P
Equities, a privately held equity investment firm that he co-founded.  From 1976
through 1985, Mr. Poindexter  worked for Smith Barney,  Harris Upham & Co. While
with  Smith  Barney,  he became a senior  vice  president  for its Smith  Barney
Venture Corporation and Smith Barney Capital Corporation ("SBCC") affiliates and
a partner in First Century Partnership II, an investment fund managed by SBCC.

     Stephen P. Magee has served as Treasurer  and Director of the Company since
the Company was formed in 1988 and Chief Financial Officer since 1994.

     W.J.  Bowen retired in 1992 as the Chairman of the Board of Transco  Energy
Company ("Transco"),  a diversified energy company based in Houston,  Texas. Mr.
Bowen  served  as Chief  Executive  Officer  of  Transco  from  1974  until  his
retirement from that position in 1987.

     R.S.  Whatley has served as Vice President,  Controller  since June,  1994.
Previously Mr.  Whatley held senior  financial  positions  with Vinmar,  Inc., a
chemical  trading company and Weatherford  International,  an oilfield  services
company.

     Larry T. Wolfe has served as Vice President of Administration  since May of
1995.   Previously  Mr.  Wolfe  was  Vice  President  of  Human   Resources  and
Administrative Services of Transco Energy Services, Inc.

     Directors  who are officers or employees of the Company do not receive fees
for serving as directors.  The Company pays $20,000 per year as director's  fees
to each outside director.

Other Significant Persons

     Although not an executive  officer of the  Company,  each of the  following
persons is an officer of the referenced Subsidiary or division thereof and is an
important contributor to the Company's operations:

         Name              Age              Position
James R. Chandler          62               President of EFP
Norman E. Gibbs, Jr.       58               President of Blue Ridge and Courier
Mike Hart                  51               President of Lowy Distribution
Jack Rhine                 64               President of MIC Group

                                      -57-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


     James R. Chandler has served as President of EFP since 1978. Prior to 1978,
Mr. Chandler worked in various  marketing and executive  positions with the Ames
Division of Miles Laboratories, Inc. and in the management consulting section of
Price Waterhouse & Co.

     Norman E. Gibbs,  Jr. has served as President of Blue Ridge & Courier since
the  Company's  acquisition  of Lowy Group in 1991 and has more than 25 years of
experience in the carpet manufacturing  industry.  From 1973 until the Company's
acquisition of Lowy Group,  Mr. Gibbs served  successively  as an Executive Vice
President and President of Blue Ridge and, since 1981,  Courier for their former
owners.

     J. Michael  Hart,  was named  President of Lowy Group Inc. on June 2, 1995.
Mr. Hart has held a variety of positions  during his thirty year career with the
company  and  served as  Executive  Vice  President  immediately  preceding  his
appointment to this current position.

     Jack  Rhine has  served as  President  of MIC Group  since  April  1996 and
previously served as Chief Financial Officer from August 1993.

Item 11.  Executive Compensation

         The  following  table  sets forth  certain  information  regarding  the
compensation  paid to the  Company's  Chief  Executive  Officer  and  the  other
executive officers whose total annual salary and bonus are anticipated to exceed
$100,000 for the fiscal years ended December 31, 1997, 1996 and 1995:

<TABLE>
<CAPTION>
                                                                       Summary Compensation Table

                                                               Annual Compensation          All Other
         Name and Principal Position                      Year      Salary      Bonus      Compensation
         ---------------------------                      ----      ------      -----      ------------
<S>                                                       <C>      <C>          <C>           <C>
         John B. Poindexter                               1997     $  (a)       $   -         $     -
              Chairman of the Board and                   1996        (a)
              Chief Executive Officer                     1995        (a)

         Stephen P. Magee                                 1997     $  (a)       $  (b)        $      -
              Chief Financial Officer                     1996        (a)
                                                          1995        (a)
         R.S. Whatley Controller                          1997     $105,000     $   -         $     -
         L.T. Wolfe Vice President
               Administration                             1997     $165,000     $   -         $     -
                                                          1996     $160,000     $ 27,500      $     -
<FN>

(a)  Messrs.  Poindexter  and Magee do not receive  salaries  from the  Company.
     Rather, their services are provided to the Company pursuant to a Management
     Services Agreement. See "Management Services Agreement."

(b)  It is anticipated  that Mr. Magee will be eligible to receive in the future
     an annual bonus pursuant to the incentive plan described below.
</FN>
</TABLE>

                                      -58-
<PAGE>

                   J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


         The Company  implemented  an  incentive  plan  covering  certain of its
executive  officers.  Although  the  precise  terms of that  plan  have not been
established,  the Company  anticipates that it will be similar to the Subsidiary
Incentive Plans described below. Messrs. Poindexter and Magee are covered by the
various insurance programs provided by Morgan to its employees.

Management Services Agreement

         Concurrently  with  the  Note  Offering,  the  Company  entered  into a
Management Services Agreement with a corporation  ("Southwestern")  owned by Mr.
Poindexter. Pursuant to the Management Services Agreement, Southwestern provides
services to the Company,  including  those of Mr.  Poindexter  who serves as the
Company's Chairman of the Board and Chief Executive Officer and of Mr. Magee who
serves  as its  Chief  Financial  Officer.  The  Company  pays  to  Southwestern
approximately $600,000 per year for these services,  subject to annual automatic
increases  based  upon  the  consumer  price  index.   The  Company  may  pay  a
discretionary annual bonus to Southwestern for the provision of Mr. Poindexter's
and Mr.  Magee's  services  and may  increase  the annual fee payable  above the
automatic annual increase, in each case subject to certain limitations, if after
giving effect to such payment and/or increase the Company's  Consolidated EBITDA
Coverage Ratio is 2.00 to 1 or higher.  Pursuant to this agreement,  the Company
paid Southwestern $63,000 and in 1995 and none in 1997 and 1996.

Subsidiary Incentive Plans

         The Company has adopted an incentive  compensation  plan for members of
upper  management  of  each of its  Subsidiaries  (collectively  the  "Incentive
Plans") to provide for the payments of annual  bonuses based upon the attainment
of  performance-based  goals.  Eligible  employees will be entitled to receive a
bonus if the Subsidiary  attains or surpasses a stated  percentage (which varies
by Subsidiary) of that Subsidiary's  budgeted pre-tax profit, with the amount of
bonus being tied to the Subsidiary's actual pre-tax profits.  Individual bonuses
are then  allocated  among the eligible  employees  based upon their  individual
achievement of stated  performance  objectives.  The Subsidiaries  also maintain
certain other benefit plans for their  respective  officers and  employees.  See
Note 15 to the Consolidated Financial Statements for the Company.

Compensation Committee Interlocks and Insider Participation

         The Company does not have a compensation committee.  Instead, executive
compensation review decisions are made by the entire board of directors.

                                      -59-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


Item 12.  Security of Ownership of Certain Beneficial Owners and Management

                                                           Beneficial  Ownership
                                                            Number      Percent
Directors, Officers and 5% Stockholders                    of Shares    of Class
---------------------------------------                    ---------    --------
John B. Poindexter                                           3,059         100%
     c/o J.B. Poindexter & Co., Inc.
     1100 Louisiana, Suite 5400
     Houston, Texas  77002

Stephen P. Magee                                              --            --
     c/o J.B. Poindexter & Co., Inc.
     1100 Louisiana, Suite 5400
     Houston, Texas  77002

W.J. Bowen                                                    --            --
     c/o J.B. Poindexter & Co., Inc.
     1100 Louisiana, Suite 5400
     Houston, Texas  77002

All directors and officers as a
group (6 persons)                                            3,059         100%

     Mr.  Poindexter  has sole voting and  investment  power with respect to all
shares that he beneficially owns.

Item 13.  Certain Relationships and Related Transactions

     Messrs. Poindexter and Magee and certain members of Morgan's management are
members of a partnership ("Bartow") that leases certain real property in Georgia
to  Morgan.  During  each of 1997,  1996 and  1995,  Morgan  paid  approximately
$200,000 as rent to Bartow,  and it will  continue to pay such rent to Bartow in
the  future.  The Company  believes  that the rent paid by Morgan to Bartow is a
competitive market rate for the location.

     The  Company  has  entered  into  a  Management   Services  Agreement  with
Southwestern  Holdings,  Inc.  a  corporation   ("Southwestern")  owned  by  Mr.
Poindexter. Pursuant to the Management Services Agreement, Southwestern provides
services to the Company,  including  those of Mr.  Poindexter  and Mr. Magee its
Chief Financial Officer. The Company pays to Southwestern approximately $600,000
per year for these services,  subject to annual  automatic  increases based upon
the consumer price index. The Company may also pay a discretionary  annual bonus
to  Southwestern  subject to certain  limitations.  $63,000 was paid in 1995 and
none  was  paid in 1997 or  1996.  The  Company  and  Subsidiaries  use  certain
facilities  provided by Southwestern for meetings and conferences.  Although the
Company  did not use the  facilities  during  1996 or  1997,  the  Company  paid
Southwestern $23,000 during 1995 for the use of the facilities. For all services
and facility use, the Company paid Southwestern approximately $613,000, $600,000
and

                                      -60-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


$653,000 during 1997, 1996 and 1995, respectively.

     The Company  believes that the amounts paid by it to  Southwestern  for the
use of these facilities is a market rate. A subsidiary of the Company,  which is
not a restricted  subsidiary  under the terms of the Senior Notes Indenture or a
guarantor  under the  terms of the  Company's  Revolving  Loan  Agreement,  paid
Southwestern Holdings $60,000 and $50,000 during 1997 and 1996, respectively for
certain services.

     A corporation owned by Mr. Poindexter had an airplane that the Company used
from time to time. During 1995, the Company paid  approximately  $16,000 for the
use of the airplane. The Company believes that the amount it paid for the use of
the airplane was a market rate.

     TAG leases  certain real estate in Canada from an entity  controlled  by an
executive  vice president of TAG. Total lease expenses was $117,000 and $114,000
in 1997 and 1996,  respectively,  the Company considers this to be a market rate
for the property.

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

     (a)(1)       Financial Statements - None, other than as previously listed
                  in response to Item 8.
     (a)(2)       Financial Statement Schedules -  None
     (a)(3)       Exhibits
     3.1(a)       Second Restated Certificate of Incorporation
     3.1.1(e)     Certificate of First Amendment to Second Restated Certificate
                  of Incorporation.
     3.2(a)       Amended and Restated Bylaws
     4.1(e)       Form of 12 1/2% Senior Note due 2004 (included in Exhibit 4.2)
     4.2(e)       Indenture dated as of May 23, 1994
     4.2.1(f)     First Supplemental  Indenture dated as of May 11, 1995.
                  Incorporated by reference to Exhibit 4.1 to the Form
                  10-Q for the  quarterly  period ended June 30, 1995,  as filed
                  with the  Commission  on  August  15,  1995
     4.2.2(f)     Second  Supplemental Indenture  dated as of June 26, 1995.
                  Incorporated by reference to Exhibit 4.2 to the Form 10-Q for
                  the quarterly period ended June 30, 1995, as filed with the
                  Commission on August 15, 1995.
     4.3(a)       List of certain promissory notes
     10.1.5(h)    Loan and Security Agreement by and among Congress Financial
                  Corporation and J.B.Poindexter & Co.,Inc., dated June 28,1996.
     10.23(a)     Lease  Agreement, dated as of March 29, 1990,  between  Bartow
                  Partners, L.P. and Morgan Trailer Manufacturing Co., d/b/a
                  Morgan Corporation, as amended by the First Amendment to Lease
                  Agreement, dated June 13, 1991
     10.24(a)     Form of Salary Continuance Agreement for director level
                  employees of Morgan Trailer Mfg. Co.
     10.25(a)     Form of Salary Continuance Agreement for officers of Morgan
                  Trailer Mfg. Co.
     10.26(a)     Form of Incentive Plan for certain employees of the
                  Subsidiaries
     10.27(a)     Morgan Trailer Mfg. Co. Long-Term Management Equity
                  Appreciation Program
     10.32(a)     Lease  Agreement,  dated August 14,  1987,  between C&D Realty
                  Partnership and Leer, Inc., as amended by the Lease Option and
                  Amendment Agreement , dated as of August 14, 1992
     10.33(a)     Lease Agreement, dated August 14, 1987, between J&R Realty
                  Company and Leer, Inc.

                                      -61-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


     10.34(a)     Lease  Agreement,  dated August 14,  1987,  between BCD Realty
                  Partnership  with Leer,  Inc.,  as amended by the Lease Option
                  and Amendment Agreement,  dated as of August 14, 1992 (missing
                  page 2 of Amendment)
     10.35(a)     Lease  Agreement,  dated  August  14,  1987,  between  John M.
                  Collins  and Leer,  Inc.,  as amended by the Lease  Option and
                  Amendment  Agreement,  dated as of August  14,  1992,  and the
                  Addendum to Lease Agreement, dated as of August 1, 1993
     10.36(a)     Lease  agreement,  dated August 14,  1987,  between PCD Realty
                  Partnership and Leer, Inc., as amended by the Lease Option and
                  Amendment Agreement, dated as of August 14, 1992
     10.44(a)     Employment Agreement, dated January 1, 1994, between Lowy
                  Group, Inc. and Norman E. Gibbs, Jr.
     10.46(a)     Non-competition Agreement, dated as of August 30,1991, between
                  Lowy Group, Inc. and Norman E. Gibbs, Jr.
     10.86(e)     Management Services Agreement dated as of May 23,1994, between
                  J.B. Poindexter & Co., Inc. and Southwestern Holdings, Inc.
     10.102(f)    Asset  Purchase  Agreement,  dated as of June 15, 1995,  among
                  Leer Inc., 20th Century  Fiberglass,  Inc., Steven E. Robinson
                  and Ronald E.  Hickman.  Incorporated  by reference to Exhibit
                  10.1 to the current  report on Form 8-K,  dated June 29, 1995,
                  as filed with the Commission on September 11, 1995
     10.103(f)    Promissory Note,  dated June 29, 1995,  executed by Leer, Inc.
                  Incorporated  by  reference  to  Exhibit  10.2 to the  current
                  report on Form 8-K,  dated  June 29,  1995,  as filed with the
                  Commission on September 11, 1995
     10.104(f)    Asset Purchase Agreement, dated as of June 15, 1995 among Leer
                  Inc.,  Century  Distributing,  Inc.,  Steven E.  Robinson  and
                  Ronald E. Hickman.  Incorporated  by reference to Exhibit 10.3
                  to the current  report on Form 8-K,  dated June 29,  1995,  as
                  filed   with   the    Commission   on   September   11,   1995
                  10.105(f)Consulting  Agreement,  dated  as of June  29,  1995,
                  between Leer,  Inc. and Steven E.  Robinson.  Incorporated  by
                  reference to Exhibit  10.4 to the current  report on Form 8-K,
                  dated June 29, 1995, as filed with the Commission on September
                  11, 1995
     10.106(f)    Consulting Agreement, dated as of June 29, 1995, between Leer,
                  Inc.  and Ronald E.  Hickman.  Incorporated  by  reference  to
                  Exhibit 10.5 to the current report on Form 8-K, dated June 29,
                  1995, as filed with the Commission on September 11, 1995.
     10.107(f)    Non-Competition  Agreement, dated as of June 29, 1995, between
                  Leer,  Inc. and Steven E. Robinson.  Incorporated by reference
                  to Exhibit 10.6 to the current  report on Form 8-K, dated June
                  29, 1995, as filed with the Commission on September 11, 1995.
     10.108(f)    Non-Competition  Agreement, dated as of June 29, 1995, between
                  Leer, Inc. and Ronald E. Hickman. Incorporated by reference to
                  Exhibit 10.7 to the current report on Form 8-K, dated June 29,
                  1995, as filed with the Commission on September 11, 1995.
     10.109(f)    Share Purchase Agreement dated as of June 30, 1995, between
                  Raider Industries, Inc. and Martin Brown
     10.110(f)    Asset Purchase Agreement dated as of June 30, 1995, by and
                  between Raider Industries Inc.,Pro-More Industries Ltd., Brown
                  Industries (1976) Ltd. and Martin Brown
     10.111       Loan and Security Agreement by and between Congress Financial
                  Corporation and Radco  Industries Inc., dated October 31,1997
     10.112       Asset Purchase  Agreement by and among Radco  Industries Inc.,
                  and Midwest Truck After Market and William J. Avery, Sr. and
                  Sarah A. Avery, dated October 31.1997.

                                      -62-
<PAGE>

                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


     21.1         Subsidiaries of the Registrant
     27.1         Financial data schedule


(a)  Incorporated by reference to the Company's  Registration  Statement on Form
     S-1 (No.  33-75154) as filed with the  Commission  on February 10, 1994
(b)  Incorporated by reference to the Company's  Amendment No. 1 to Registration
     Statement (No.  33-75154) as filed with the Commission on February 24, 1994
(c)  Incorporated by reference to the Company's  Amendment No. 2 to Registration
     Statement (No. 33-75154) as filed with the Commission on March 23, 1994
(d)  Incorporated by reference to the Company's  Amendment No. 3 to Registration
     Statement  (No.  33-75154) as filed with the Commission on May 16, 1994
(e)  Incorporated  by reference to the Company's  Annual Report on Form 10-K for
     the year ended December 31, 1994, as filed with the Commission on March 31,
     1995.
(f)  Incorporated  by reference to the Company's  Annual Report on form 10-K for
     the year ended December 31, 1995, as filed with the Commission on March 29,
     1996.
(g)  Incorporated  by reference to the Company's  Quarterly  Report on Form 10-Q
     for the quarter ended March 31, 1996,  as filed with the  Commission on May
     10, 1996.
(h)  Incorporated  by reference to the Company's  Quarterly  Report on Form 10-Q
     for the quarter ended June 30, 1996, as filed with the Commission on August
     13, 1996.
-----------------------

(b) Reports of Form 8-K.  The Company  filed the  following  reports on Form 8-K
during the year:
         None


Supplemental  Information to Be Furnished With Reports Filed Pursuant to Section
15 (d) of the Act by Registrants Which Have Not Registered  Securities  Pursuant
to Section 12 of the Act.

The  registrant  has not delivered to its security  holders any annual report to
security holders  covering the last fiscal year, proxy statement,  form of proxy
or other proxy soliciting material (as described under this caption in Form 10-K
as promulgated by the Securities and Exchange  Commission).  A copy of this Form
10-K will be sent to each registered  holder of the  registrant's 12 1/2% Senior
Notes due 2004.



                                      -63-
<PAGE>


                  J.B. POINDEXTER & CO., INC. AND SUBSIDIARIES


                                   SIGNATURES

       Pursuant  to the  requirements  of  Section  13 or 15(d)  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.

                                            J.B. POINDEXTER & CO., INC.


Date: March 27, 1998                        By: John B. Poindexter
                                            ----------------------
                                            John B. Poindexter, Chairman of the
                                            Board and Chief Executive Officer


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.



Date: March 27, 1998                        John B. Poindexter
                                            ------------------
                                            John B. Poindexter
                                            Chairman and Chief Executive Officer
                                            and Director
                                            (Principal Executive Officer)

Date: March 27, 1998                        Stephen P. Magee
                                            ----------------
                                            Stephen P. Magee
                                            Chief Financial Officer and Director
                                            (Principal Financial Officer)

Date: March 27, 1998                        W.J. Bowen
                                            ----------
                                            W.J. Bowen
                                            Director

Date: March 27, 1998                        Robert S. Whatley
                                            -----------------
                                            Robert S. Whatley
                                            Chief Accounting Officer
                                            (Principal Accounting Officer)







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