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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

(Mark One)

|x                                                                 | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
|----------------------------------------------------------------- | ----------------------------------------------------------------------------------------
|                                                                  |                                                                                         
|For the fiscal year ended December 31, 2002                      
|                                                                  |                                                                                         
|OR                                                               
|                                                                  |                                                                                         
|o                                                                 | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|                                                                  |                                                                                         
|For the transition period from ________ to ________.             
|                                                                  |                                                                                         
|Commission file number 333-62635                                 
|                                                                  |                                                                                         
|CENTURY MAINTENANCE SUPPLY, INC.                                 
|(Exact name of registrant as specified in its charter)           
|                                                                 
|Delaware                                                          |                                                                                         
|(State or other jurisdiction of incorporation or organization)    |                                                                                         
|                                                                  |                                                                                         
|10050 Cash Road, Suite 1 Stafford, Texas                          |                                                                                         
|(Address of Principal Executive Offices)                          |                                                                                         
|                                                                  |                                                                                         
|(281) 208-2600                                                   
|(Registrants telephone number, including area code)             
|                                                                 
|Securities Registered Pursuant to Section 12(b) of the Act:  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 o | Not Applicable x
|----- | ----------------

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) 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 o.

The aggregate market value of the Common Stock of the registrant held by
non-affiliates of the registrant is $7,435,350, the assumed fair market value of the registrants Common Stock at June 30, 2002 as determined by the Board of Directors.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

|Yes o | No x
|----- | ----

As of March 28, 2003, the number of shares of the registrants Common Stock outstanding was 12,190,498.  The registrants Common Stock is not
traded in a public market.

DOCUMENTS INCORPORATED BY REFERENCE:

None.

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PART I

This Annual Report on
Form 10-K contains forward-looking statements within the meaning of Section 27-A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  These statements include
without limitation the words believes, anticipates, estimates, intends, expects, and words of similar import.  All statements other than statements of historical fact included in
statements under Item 1. Business, Item 2. Properties, Item 3. Legal Proceedings and Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operation include
forward-looking information and may reflect certain judgements by management. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the
Company or the maintenance, repair and operations industry to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  Certain potential risks and uncertainties that
may affect the Company are set forth in the Companys Registration Statement on Form S-4, as amended, effective January 21, 1999.  The Company disclaims any obligation to update any such factors or to publicly announce the
results of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.

Item
1.          Business.

General

Century Maintenance Supply, Inc., a Delaware corporation (Century or the Company), is a leading distributor of
maintenance, repair and operations (MRO) supplies to the $2 billion multifamily apartment market.  Century offers a broad selection of high quality MRO items, with prompt, free delivery provided through the Companys
extensive distribution network.  The Company currently supplies over 5,400 name brand and private label items, including plumbing, hardware, electrical, HVAC and lighting products, to over 35,700 active customers in the United
States.

The Company markets its products to individual apartment maintenance managers as well as to larger
property management companies which own and/or manage multiple apartment complexes.  Century provides free same-day or next-day delivery on virtually all orders by delivering its products via Company-operated trucks from 37 distribution centers
which are strategically located in major metropolitan markets throughout the United States.  Additionally, the company services 18 other markets out of these distribution centers by Line Haul.  Line Haul delivery is the delivery of the
product from a distribution center to another market by common carrier.  In many cases, the product is then delivered locally to the customer via Company-operated trucks.

Market
Overview

The Company operates in what it estimates to be the $10 billion MRO industry, which
includes such end-users as apartments, hotels/motels, nursing homes, prisons, military installations, and schools and universities.  The Company currently markets substantially all of its products to the $2 billion multifamily apartment
segment of this industry, focusing specifically on markets with at least 60,000 units and apartment complexes containing more than 50 units.  The Company services 37 such markets as of March 28, 2003.

The MRO market is highly fragmented and has been traditionally served by a variety of distribution channels, including numerous local or
regional broad-line suppliers, specialty and industrial suppliers, mail order catalog companies, retail home centers, and traditional hardware stores.  Over the past ten years, the apartment MRO market has shifted its purchasing from broad-line
suppliers and retailers serving a broad range of end-users and specialized suppliers serving a discrete product segment of this market, such as plumbing, HVAC or electrical products, to distributors focused on providing a high level of customer
service and a product mix tailored to meet the specific needs of the apartment MRO market.

The property
management industry is consolidating.  Over the past few years, the top 50 national apartment management companies have increased their share of apartment units managed.  In addition, property managers are joining national group purchasing
organizations (GPOs), such as Buyers Access Group, to gain the increased buying power that large volume purchasing offers.  As a result of these trends, property management companies and

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GPOs are increasingly purchasing MRO products from national suppliers who provide broad product selection, convenient ordering, reliable delivery and other value-added
services.

The apartment MRO market has historically been stable and non-cyclical, as maintenance work is
required regardless of  economic conditions.  Maintenance managers must keep their apartments in good repair to retain existing tenants and attract new ones (e.g., a leaky faucet must be repaired and a vacant apartment must be
refurbished).  The apartment MRO industry has been growing over the past few years, primarily due to increased construction of new apartment buildings and improved standard amenities in the typical apartment unit.  These new features
include microwave ovens, washers/dryers, miniblinds and individual water heaters.  In addition to these amenities, properties are upgrading the current inventory to compete with newer properties that include these amenities as well as replacing
outdated standard features, such as cabinets and lighting.  These trends provide increased opportunity for incremental sales for the apartment MRO suppliers.

Labor represents a significantly larger component than supplies of the MRO budget for a typical apartment complex.  Consequently,
while competitive pricing is an important criterion for selecting a distributor, maintenance managers value convenient ordering, reliable, prompt delivery, extensive product selection and other value-added services that allow them to use their
budgeted man-hours most efficiently.

Product Offerings

The Company currently offers over 5,400 cataloged stock-keeping units (SKUs), providing a full range of MRO supplies to its
customers, and continually monitors its product offering to ensure its customers needs are met.  The Company offers high quality name brand and private label products in the following core categories: (i) plumbing,
(ii) hardware, (iii) HVAC equipment and parts, (iv) lighting, (v) electrical, (vi) appliances and parts, (vii) janitorial and (viii) pool items.

Centurys product offering includes several private branded products which it believes provide it with a distinct competitive
advantage in terms of tailored products and favorable pricing.  These products, which include Boss® janitorial supplies, Rio® ceiling fans, ChampionTM blinds, DuroGuard® air conditioning units, Comfort Range® air
conditioning units, and Aspen® faucets accounted for 14.1% of sales in 2002.  The Company plans to continue to develop these products over the next few years.

The Company currently distributes user-friendly catalogs with approximately 5,400 cataloged items.  Historically, the Company has
added approximately 150 SKUs per year to its catalogs.  These products are usually recommended by local salespeople and then reviewed by a panel at Centurys headquarters.  Local distribution center managers have the flexibility to
offer selected non-catalog items at their individual distribution centers.  For example, Centurys Denver distribution center stocks snow shovels and ice melt.

The Company believes that its 5,400 catalogued SKUs represent those items that are most likely to meet the everyday and ongoing needs of
the apartment MRO manager in the Companys target market.  The Companys core products represent the basic continuing requirements of the apartment maintenance person which change little from year to year.  Consequently, the
Company attempts to minimize its exposure to product obsolescence.

Customers

Centurys customers include local and regional apartment properties as well as larger property management companies.  The
Company maintains over 35,700 active accounts, an increase of more than 19,000 over the past six years.  Century defines an active account as a property that generates two or more orders within a 12 month period.

Centurys management believes its customer satisfaction is illustrated by the recurring revenues generated from its major
accounts.  In 2002, sales to the Companys top five customers increased by approximately 24.4% over the prior year.

The consolidation of the large apartment management companies is changing the way business is conducted in the apartment MRO
market.  The large apartment management companies determine overall maintenance budgets and grant preferred provider status to suppliers with competitive pricing, exceptional quality, and a national

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presence.  Once a budget has been approved by a national management company, local maintenance managers are primarily responsible for making the actual MRO repair
decisions and purchases.

Many property management companies have joined GPOs such as Buyers Access to
replicate the purchasing advantages of the larger property managers.  Buyers Access requires vendors to have a national presence in addition to a broad product selection, competitive pricing, and a sophisticated billing system. Century is a
preferred provider to Buyers Access and nine out of the ten largest apartment management companies.

Sales and Marketing

Centurys marketing and sales strategy is based on providing the best possible quality service to its customers.  The
Companys combination of inside and outside salesforces provides it with what it believes to be a competitive advantage over competitors that take orders at a centralized location.

Outside Sales Staff.  Century employs 166 commission-based local outside sales personnel, who are based at the
Companys distribution centers and are responsible for maintaining close customer relationships and generating new business through regular visits.  Each local outside salesperson typically makes 15-20 sales visits per day.  The
outside sales force generally does not take customer orders, allowing it to focus on its core function.  In addition, the outside sales force provides customers with information on products and promotions, provides value-added services such as
assistance with inventory management and training issues, and serves as the focal point for customer feedback.

Inside Sales Force.  The Company employs 119 inside salespeople who are based locally or regionally and are primarily
responsible for receiving customer orders and providing technical support.  Additionally, the inside salespeople provide customers with information on pricing and promotions as well as installation procedures and other critical characteristics
which help them determine the products best suited to their specific needs.  The Company encourages customers to place all orders with the inside sales staff in order to allow the outside sales staff to focus on building customer
relationships.  Providing a local/regional inside salesforce reinforces customer relations as customers usually place orders with the same group of salespeople who are familiar with the customers needs and order history.

National Sales Force.  The Company employs nine salespeople who are responsible for fostering and maintaining
relationships with national property management companies and GPOs.  The national sales force negotiates contract terms, including pricing and minimum purchase requirements.

The Catalog.  The Century Maintenance Catalog includes over 5,400 SKUs and is annually distributed to over 60,000
active and prospective customers.  The catalogs are complete with drawings (of most products), specifications and pricing which facilitate the ordering process and help the customer select the appropriate product.

Educational Classes.  Century provides educational classes to its customers at most of its distribution centers. 
Classes are offered in the areas of basic electrical systems, A/C and heating, appliance repair, refrigeration control circuits, pool chemistry and EPA refrigerant recovery.  Century has tested and EPA certified over 20,000 technicians on
refrigerant recovery.  The Company charges a nominal fee to cover the cost of the EPA classes, and the other classes are offered free of charge.

Sales Terms.  Centurys sales terms are generally net 30 days for customers meeting its credit requirements.

Competition

The Company believes that the
principal competitive factors in the distribution of repair and maintenance products to the apartment housing market and similar markets are customer service, the quality of products offered, reliability of delivery, product pricing and sales
relationships.

The Company competes in each of its regional markets with a number of suppliers,
including such national firms as Wilmar Industries, a division of Interline Brands, Inc., or Wilmar, Maintenance Warehouse/America Corp., or Maintenance Warehouse, an affiliate of the Home Depot, Inc., and Chad Supply, a regional distributor
primarily

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in the Southeast United States.  Wilmar and Maintenance Warehouse are the Companys most direct competitors in terms of product line and method of distribution. 
The Company believes that it distinguishes itself from these national competitors with its local sales focus and direct delivery from its local distribution centers.  Management also believes that the Companys strategies build a high
degree of customer loyalty through its strong local market presence.  In addition, the Company competes with local or regional broad-line suppliers, specialty and industrial suppliers, other mail order catalog companies, retail home centers,
and traditional hardware stores.

Distribution

The Company delivers over 90% of its sales using its own fleet of trucks, the most of any major competitor.  Each truck is
driven by an employee who has a working knowledge of the distribution centers products and customers.  The Company operates its own fleet of trucks in order to maintain complete control of the delivery process, an approach that the
Companys management believes makes it the most reliable in the industry.  Management believes the additional cost Century spends on operating its trucks is minimal considering the value-added service it provides its customers. 
Delivery is free for orders of $50 or more.  Furthermore, the industry trend toward increased order size will benefit companies like Century which operate their own fleet of trucks since each delivery person can carry more items at little or no
additional cost.

Typically, orders are placed via toll free or local telephone calls to one of the
Companys inside salespeople located in the nearest call center.  The inside salespeople confirm the availability of the product ordered and then enter customer orders into the fully-computerized order processing system.  In many
locations, orders placed before 10:00 a.m. are delivered on the same day.  Orders placed before 5:00 p.m. are virtually always received by the customer on the following day.

Operations

In managing its inventory, Century seeks to maintain a
steady balance between providing the customer optimal service and limiting costs.  Century has several mechanisms in place to track, measure, replenish and optimize the use of inventory in all Company locations, including monthly tracking,
physical counts, and cycle counting.  In 2002, the Company estimates that it maintained an average fill rate of over 97%.

Centurys distribution centers are monitored monthly by the finance, operations, and purchasing departments at corporate
headquarters.  Each center is measured on deliveries, credits, expenses, customer contact, total sales, inventory and surplus inventory dollars, and the percentage of non-catalog and dead stock product.  In addition, locations
are graded on sales/inventory ratios and inventory turnover.  Furthermore, beginning in 1995, Century instituted a cycle count program.  Locations are required to physically count from 50 to 100 items four days per week, or approximately
200 days per year.

Suppliers and Purchasing

Century currently purchases products from approximately 1,200 vendors.  In 2002, no Company vendor accounted for more than
7.4% of purchases in 2002, and the top ten vendors accounted for approximately 41.8% of total purchases.

The Companys use of volume purchasing has enabled it to benefit from favorable pricing and payment terms in the past. 
The benefit the Company derives from volume-based terms is expected to increase as a result of increased sales volume and further realization of efficiencies.

The Companys management believes it has good relationships with its vendors and, to date, has not experienced any
difficulty obtaining products in sufficient quantities at competitive prices.

MIS System

Centurys management and information system is a comprehensive sales, order-entry, inventory and reporting system.

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The capabilities of the Century system allow the Company to analyze historical
customer buying patterns, in addition to managing the sales, credit and collections, order-entry and financial reporting functions.  Optimal inventory levels are calculated real-time on a per SKU basis.

Government Regulation and Environmental Matters

The Company and its
customers are subject to Federal and state regulation in the United States, and some of the Companys vendors are located overseas and are therefore subject to regulation by foreign governments.  The Company cannot predict the extent to
which future legislative and regulatory developments concerning its practices and products may affect the Company.  The Company is also subject to numerous Federal, state and local laws and regulations relating to such matters as safe working
conditions, fire hazard control and the handling and disposal of hazardous or infectious materials or substances and emissions of air pollutants.  The Company leases properties which are subject to environmental laws and regulations. 
There can be no assurance that the Company will not be required to incur significant costs to comply with such laws and regulations in the future or that such laws or regulations will not have a material adverse effect upon the Companys
business, financial condition or results of operations.  The Company believes it is currently in material compliance with all applicable laws and regulations.

Trademarks

The Company is not able to register the trademarks Century Maintenance Supply or Century
with the United States Patent and Trademark Office because a third party owns a federal registration for the mark Century.  The Company, at this time, is not prevented from using the Century name; however, it is possible that this
third party could bring an infringement action against the Company for the use of the name.  If an infringement action were successful, it is possible that the Company would be prohibited from using the Century name on a regional, or possibly
national, basis.

Employees

As of
March 28, 2003, the Company employed 956 full-time employees and 16 part-time employees.  None of the Companys employees are represented by unions and the Company considers its employee relations to be good.

Where you can find more information

Century files periodic
reports with the Securities and Exchange Commission although Century is not subject to the reporting requirements of the Securities and Exchange Act of 1934.  You may read and copy the periodic reports that Century has filed or may file in the
future at the SECs public reference facility in Room 1024, 450 Fifth Street, N.W., Washington, D.C.  20549.  Please call the SEC at 1-800-SEC-0330 for further information on the public reference room.  The SEC maintains a web
site that contains periodic reports and other information regarding the registrants that file electronically with the SEC at http://www.sec.gov.

Item
2.          Properties.

The Company currently
operates in 37 different geographic markets, each with a distribution center ranging in size from 12,000 to 114,000 square feet.  The Company leases all of its distribution centers, with lease expiration dates ranging from March 2003 to
November 2007.  Management believes significant additional capacity can be added at minimal cost to most of the locations utilizing available contiguous space.

Item
3.           Legal Proceedings.

The Company
is party to lawsuits and other proceedings incidental to its business.  While the results of such lawsuits and other proceedings cannot be predicted with certainty, management does not expect that ultimate liabilities, if any, will have a
material adverse effect on the financial position, results of operations, or cash flows of the Company.

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

None.

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PART II

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

There is no established public
trading market for the Companys Common Stock.  As of March 28, 2003, all of the Common Stock of the Company is held by 42 holders of record.

The following is a summary of the transactions engaged in by the Company during the past three fiscal years involving sales of
the Companys securities that were not registered under the Securities Act:

From
January 1, 2000 through December 31, 2000, the Company issued and sold 147,389 shares of Common Stock to employees upon the exercise of options to purchase Common Stock for an exercise price of $1.74 per share for an aggregate purchase
price of approximately $347,281, which was paid with proceeds of loans received from the Company in the principal amount of $297,242, bearing interest at the rate of 0% over a term of 9 months.  These employees paid the balance of the exercise
price of the options in cash.

The issuances described above were exempt from registration under the
Securities Act pursuant to Section 4(2) of the Securities Act as a transaction by an issuer not involving a public offering or Rule 701 promulgated under the Securities Act for securities sold by a company not subject to the reporting
requirements under the Securities Exchange Act of 1934 pursuant to certain compensatory benefit plans and contracts relating to compensation.  Appropriate legends were affixed to the stock certificates issued in these transactions and there was
no general solicitation or advertising.

From January 1, 2000 through December 31, 2000,
the Company granted non-qualified options to purchase an aggregate of 90,900 shares of Common Stock to its directors, officers and employees under the Companys 1998 Nonqualified Stock Option Plan.  The options have an exercise price of
$10.00 and vest over a three-year period.  The issuances were exempt from the registration requirements of the Securities Act either by virtue of (i) an exemption provided by Rule 701 promulgated under the Securities Act, or
(ii) a no-sale theory under Section 5 of the Securities Act, since none of the optionees provided any consideration for the grants (the sale of the underlying option shares occurs only when the option is exercised and the
purchase price for the shares is paid to the Company).

No underwriter was employed with respect to any
sales of securities of the Company in the transactions described above.  No commissions or fees were paid with respect to any such sales.

The Company did not issue or sell any shares of Common Stock nor grant any options in 2001.

From January 1, 2002 through December 31, 2002, the Company granted non-qualified options to purchase an aggregate of
124,500 shares of Common Stock to its directors, officers and employees under the Companys 1998 Nonqualified Stock Option Plan.  The options have an exercise price of $11.00 and vest over a three-year period.  Additionally, the
Company granted to Joseph Semmer in connection with his appointment as Chief Executive Officer in January 2002 a non-qualified option to purchase up to 190,000 shares of Common Stock.  40,000 shares subject to the option are immediately
exercisable at an exercise price of $10.00 per share.  The remaining shares subject to the option become exercisable over a three-year period at exercise prices between $10.00 and $15.00 per share. The issuances were exempt from the
registration requirements of the Securities Act, either by virtue of (i) an exemption provided by Rule 701 promulgated under the Securities Act, or (ii) a no-sale theory under Section 5 of the Securities Act, since
none of the optionees provided any consideration for the grants (the sale of the underlying option shares occurs only when the option is exercised and the purchase price for the shares is paid to the Company).

In January 2002, the Company sold 20,000 shares of its Common Stock to the Companys Chief Executive Officer pursuant
to its Stock Subscription Plan for an aggregate purchase price of $200,000, payable with a promissory note for $100,000 bearing interest at a rate of 2.75% with a fifteen month term and $100,000 in cash.  The sale was exempt from registration
pursuant to Section 4(2) of the Securities Act as a transaction by an issuer not involving a public offering.

The Company has not paid cash dividends to its stockholders and does not intend to pay cash dividends to its stockholders in the
foreseeable future.  See Item 7. Managements Discussion and Analysis of Financial

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Condition and Results OperationsLiquidity and Capital Resources for a discussion of restrictions on the Companys ability to pay cash dividends.

Item 6.          Selected Financial Data.

The following selected financial data should be read in conjunction with Managements Discussion and Analysis and Results of
Operations and the consolidated financial statements of the Company as of December 31, 2001 and 2002 and for the three years in the period ended December 31, 2002, included elsewhere in this Annual Report on Form 10-K.  The
Operating Data, Cash Flow Data and the Balance Sheet Data as of and for the years ended December 31, 1998, 1999, 2000, 2001 and 2002 are derived from audited consolidated financial statements of the Company.  In 1998, the Company completed
the Recapitalization (see Item 7. Managements Discussion and Analysis of Financial Condition and Results of OperationsThe Recapitalization), which significantly affected 1998 financial data.

|                                             |                                                      | Fiscal Year |        
|-------------------------------------------- | ---------------------------------------------------- | ----------- | -------
|                                             |                                                      |             |        
|                                             |                                                      | 1998        |        
|                                             |                                                      |             |        
|Operating Data:                              |                                                      |             |        
|Net sales                                    |                                                      | $           | 200,488
|Cost of goods sold                           |                                                      |             | 145,710
|                                             |                                                      |             |        
|Gross profit                                 |                                                      |             | 54,778 
|Operating expenses:                          |                                                      |             |        
|                                             | Selling, general and administrative expenses (SGA) |             |        
|                                             | Stock based compensation charges - SGA(a)            |             |        
|                                             | Recapitalization expenses(b)                         |             |        
|                                             |                                                      |             |        
|Total operating expenses                     |                                                      |             | 42,272 
|                                             |                                                      |             |        
|Operating income                             |                                                      |             | 12,506 
|Interest expense(c)                          |                                                      |             | 5,327  
|                                             |                                                      |             |        
|Income before income taxes                   |                                                      |             | 7,179  
|Provision for income taxes(d)                |                                                      |             | 5,380  
|                                             |                                                      |             |        
|Net income                                   |                                                      | $           | 1,799  
|                                             |                                                      |             |        
|Other Financial Data:                        |                                                      |             |        
|EBITDA(e)                                    |                                                      | $           | 13,569 
|Adjusted EBITDA(f)                           |                                                      | $           | 25,643 
|Adjusted EBITDA margin(g)                    |                                                      |             | 12.8   
|Depreciation & amortization                  |                                                      | $           | 1,063  
|Capital expenditures                         |                                                      | $           | 938    
|Ratio of Adjusted EBITDA to interest expense |                                                      |             | 4.8    
|Ratio of total debt to Adjusted EBITDA       |                                                      |             | 3.8    
|Other Data:                                  |                                                      |             |        
|Distribution centers                         |                                                      |             | 32     
|Comparable center sales growth(h)            |                                                      |             | 21.3   
|Active customers(i)                          |                                                      |             | 27,300 

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|                                                    |  | Fiscal Year |        
|--------------------------------------------------- |  | ----------- | -------
|                                                    |  |             |        
|                                                    |  | 1998        |        
|                                                    |  |             |        
|Cash Flow Data:                                     |  |             |        
|Net cash provided by (used in) operating activities |  | $           | (12,616
|Net cash used in investing activities               |  |             | (865   
|Net cash provided by (used in) financing activities |  |             | 10,525 
|Balance Sheet Data:                                 |  |             |        
|Working capital                                     |  | $           | 37,921 
|Operating working capital(j)                        |  |             | 38,877 
|Total assets                                        |  |             | 73,867 
|Redeemable preferred stock                          |  |             | 37,309 
|Total debt                                          |  |             | 98,700 
|Stockholders (deficit)                             |  |             | (81,816

|   
|---
|(a)
|(b)
|(c)
|(d)
|(e)
|(f)

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|    | funds available for managements discretionary use.  Adjusted EBITDA presented by the Company may not be comparable to Adjusted EBITDA defined and presented by other
companies.                   
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(g) | Represents ratio of Adjusted EBITDA to net sales.                                                                                                                                                  
|(h) | 1998 does not include centers acquired through the Nationwide Acquisition (as described below in Item 7.  Managements Discussion and Analysis of Financial
Condition and Results of Operations).
|(i) | Includes those customers who have placed at least two orders over the previous 12 month period.                                                                                                    
|(j) | Operating working capital represents current assets, excluding cash, less current liabilities, excluding the current  portion of long-term debt.                                                   

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

General

Century has grown through a combination of increasing sales at its
existing distribution centers, by opening new distribution centers and through the acquisition of Nationwide Apartment Supply, Inc. and Champion Blind and Drapery, Inc.  As part of its strategy of expanding into new geographic markets, the
Company opened 22 new distribution centers from 1994 through 2002.  Historically, a typical center breaks even within three years of opening, and operating margins continue to improve as the centers revenue grows.  In July 1997,
the Company acquired Nationwide, which added 11 distribution centers principally in the midwestern United States, three of which were consolidated into existing Century centers.  In April 1999, the Company acquired Champion Blind and
Drapery, Inc. for a cash price of $1,550,000.  Champion added three fabrication centers, allowing the company to add another value-added service.

Recent Developments

On March 17, 2003, the Company entered into an asset purchase agreement with Project Lighting Company, Inc. to acquire
certain operating assets including accounts receivables, inventory, and equipment and machinery.  The purchase price was approximately $3.51 million, which was paid in cash and resulted in approximately $1.15 million in goodwill to be recorded
in fiscal year 2003.  The historical operations of Project Lighting Company, Inc. for the periods prior to the asset purchase are not material to the operations of the Company.

The
Recapitalization

On July 8, 1998, the Company completed a recapitalization (the
Recapitalization) pursuant to which  affiliates of Freeman Spogli & Co. LLC (FS&Co.) invested $67.5 million, a director of the Company invested $750,000, and a third party, The Parthenon Group, invested
$125,000, in cash for common stock of the Company (the Common Stock Investment) and stockholders of the Company (the Continuing Stockholders) retained Common Stock with a value of $54.2 million (based on the valuation of
the Company used in the Recapitalization).  As part of the Recapitalization, shares of Series A 131⁄4% Senior Exchangeable PIK Preferred Stock due 2010 of the Company (the Initial Preferred Stock)  with an aggregate
liquidation preference of $28.0 million were sold in a private placement to institutional investors.  In addition, shares of Series B 131⁄4% Senior Exchangeable Preferred Stock of the Company with an aggregate liquidation preference of
$12.0 million were sold to FS&Co. and Dennis C. Bearden, the Companys Chief Executive Officer at the time of the Recapitalization, in a private placement that was consummated simultaneously with the sale of the Initial Preferred Stock
(the Private Placement and, together with the sale of the Initial Preferred Stock, the Sales of Preferred).  Immediately following consummation of the Recapitalization, FS&Co. and the Continuing Stockholders
beneficially owned approximately 55.1% and 44.2% of the outstanding Common Stock of the Company, respectively, and FS&Co. and Mr. Bearden beneficially owned 10.0% and 20.0%, respectively, of the outstanding preferred stock of the
Company.

On July 8, 1998, the Company entered into a credit agreement (the Credit
Facility) providing for a $100.0 million secured term loan facility (the Term Loan Facility), which was funded in connection with the consummation of the Recapitalization, and a $25.0 million revolving loan facility (the
Revolving Credit Facility).  The Revolving Credit Facility will be available to the Company and its subsidiaries (i) for future working capital

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and general corporate purposes, (ii) to finance certain permitted acquisitions, and (iii) for issuing commercial and standby letters of credit.

The sale of the Initial Preferred Stock and the Private Placement and the application of the net proceeds from each, the
payments to the Continuing Stockholders and to option holders under the Recapitalization Agreement, the Common Stock Investment and the related borrowings under the Credit Facility are collectively referred to herein as the
Recapitalization.

On February 19, 1999, the Initial Preferred Stock was exchanged for
Centurys Series C 131⁄4% Senior Exchangeable PIK Preferred Stock (the Exchange Preferred Stock), which was registered under the Securities Act pursuant to Centurys Registration Statement on Form S-4, as amended,
effective January 21, 1999.

Results of Operations

The following tables set forth, for the periods indicated, certain income and expense items expressed in dollars and as a percentage of
the Companys net sales.

|                                                     |                          | Fiscal Year |        
|---------------------------------------------------- | ------------------------ | ----------- | -------
|                                                     |                          |             |        
|                                                     |                          | 2000        |        
|                                                     |                          |             |        
|Net sales                                            |                          | $           | 257,262
|Cost of goods sold                                   |                          |             | 185,829
|                                                     |                          |             |        
|                                                     | Gross profit             |             |        
|Selling, general and administrative expenses (SGA) |                          |             | 41,316 
|Stock compensation charges - SGA                     |                          |             | 56     
|                                                     |                          |             |        
|                                                     | Total operating expenses |             |        
|Operating income                                     |                          |             | 30,061 
|Interest expense                                     |                          |             | 9,681  
|                                                     |                          |             |        
|Income before income taxes                           |                          |             | 20,380 
|Provision for income taxes                           |                          |             | 7,928  
|                                                     |                          |             |        
|Net income                                           |                          | $           | 12,452 
|                                                     |                          |             |        

|                                                     |                          | Fiscal Year |      
|---------------------------------------------------- | ------------------------ | ----------- | -----
|                                                     |                          |             |      
|                                                     |                          | 2000        |      
|                                                     |                          |             |      
|Net sales                                            |                          |             | 100.0
|Cost of goods sold                                   |                          |             | 72.2 
|                                                     |                          |             |      
|                                                     | Gross profit             |             |      
|Selling, general and administrative expenses (SGA) |                          |             | 16.1 
|Stock compensation charges - SGA                     |                          |             | 0.0  
|                                                     |                          |             |      
|                                                     | Total operating expenses |             |      
|Operating income                                     |                          |             | 11.7 
|Interest expense                                     |                          |             | 3.8  
|                                                     |                          |             |      
|Income before income taxes                           |                          |             | 7.9  
|Provision for income taxes                           |                          |             | 3.1  
|                                                     |                          |             |      
|Net income                                           |                          |             | 4.8  
|                                                     |                          |             |      

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Year Ended December 31, 2002 Compared to Year Ended December 31,
2001

Net sales for fiscal 2002 were $293.7 million, an increase of $16.2 million or 5.9%
over fiscal 2001.  This increase in net sales was primarily due to comparable center growth, a deeper penetration of management companies and increased sales from sales initiatives introduced in prior periods.

The Companys gross profit for fiscal 2002 was $80.6 million, an increase of $6.6 million or 9.0% over
fiscal 2001.  This increase in gross profit was primarily due to the increase in net sales as discussed above.  As a percentage of net sales, the Companys gross profit increased to 27.4% in fiscal 2002 from 26.6% in fiscal
2001.  This increase was primarily due to product mix and lower procurement cost.

Selling, general
and administrative expense, consisting primarily of payroll, occupancy and vehicle expenses totaled $48.5 million in fiscal 2002, an increase of $2.8 million or 6.2% over fiscal 2001.  As a percentage of net sales, selling, general
and administrative expense remained unchanged at 16.5% in fiscal 2002 and fiscal 2001.  This increase was primarily due to an increase in payroll and payroll related expenses attributable to an increase in wage levels and an increase in
employee related insurance cost.

Interest expense for fiscal 2002 was $4.8 million, a decrease of
$2.8 million or 37.3% from fiscal 2001, due to a decrease in market interest rates and average outstanding balance owed on the Companys credit facility.

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

Net sales for fiscal 2001 were $277.5 million, an increase of $20.2 million or 7.9% over fiscal 2000.  This increase in
net sales was primarily due to comparable center growth and the opening of a new distribution center in Salt Lake City.

The Companys gross profit for fiscal 2001 was $73.9 million, an increase of $2.5 million or 3.5% over fiscal
2000.  This increase in gross profit was primarily due to the increase in net sales as discussed above.  As a percentage of net sales, the Companys gross profit decreased to 26.6% in fiscal 2001 from 27.8% in fiscal 2000.  The
decrease in gross profit percentage was primarily due to a $1.0 million charge to inventory obsolescence in the fourth quarter of 2001 related to the Companys efforts to customize inventory at individual locations.

Selling, general and administrative expenses consisting primarily of payroll, occupancy and vehicle expenses totaled
$45.7 million in fiscal 2001, an increase of $4.3 million or 10.5% over fiscal 2000.  As a percentage of net sales, selling, general and administrative expense increased to 16.5% in fiscal 2001 from 16.1% in fiscal 2000.  This
increase was primarily due to the new center opening and expansion of the blind business.

Interest expense
for fiscal 2001 was $7.6 million, a decrease of $2.1 million or 21.6% from fiscal 2000, primarily due to a decrease in market interest rates and average outstanding balances owed on the Companys credit facility.

Liquidity and Capital Resources

The Companys primary capital
requirements have been the funding of its continued distribution center expansion program, inventory requirements and the development and implementation of customized information systems.  The Company has financed its growth through a
combination of internally generated funds and borrowings.

In fiscal 2002, net cash provided by operating
activities was $14.8 million due primarily to increasing sales volume.  Net cash used in investing activities in fiscal 2002 was $1.4 million and was comprised of capital expenditures.  Net cash used in financing activities in
fiscal 2002 was $14.0 million, comprised primarily of repayments of long-term debt and the repurchase of preferred stock offset by net borrowings under our revolving line of credit.

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In fiscal 2001, net cash provided by operating activities was $14.3 million due
primarily to increasing sales volume.  Net cash used in investing activities in fiscal 2001 was $.9 million and was comprised of capital expenditures.  Net cash used in financing activities in fiscal 2001 was $12.6 million,
comprised of repayments of our credit facility long-term debt and the purchase of treasury stock.

In
fiscal 2000, net cash provided by operating activities was $6.1 million due primarily to increasing sales volume. Net cash used in investing activities in fiscal 2000 was $1.8 million and was comprised of capital expenditures.  Net
cash used in financing activities in fiscal 2000 was $7.8 million, comprised primarily of repayments of long-term debt, the purchase of preferred stock and the exercise of stock options.

The Company currently anticipates that its capital expenditures, excluding potential acquisitions, for 2003 and 2004 will be
approximately $2.0 million in each year.  Inventories, net of allowances, were $39.6 million as of December 31, 2002 and $35.9 million at December 31, 2001.  In order to meet the needs of its customers, the Company
must maintain inventories sufficient to permit same day or next day filling of most orders.  The Company anticipates that its inventory levels will continue to increase primarily to support higher sales volumes and new center openings. 
Trade accounts receivable, net of allowances were $29.2 million at December 31, 2002 and $26.6 million at December 31, 2001.  The Company generally offers 30-day credit terms to its customers.  The Companys
working capital requirements are typically higher in the second and third quarters to meet seasonal demand.  This is due primarily to the fact that more people move during the summer months when school is out, causing apartment managers to
purchase more supplies to make apartments ready for new occupants.  Also, hot summer months translate into a higher volume of HVAC sales due to the need for air conditioning parts.

The Company has outstanding indebtedness consisting of borrowings of $64.3 million under the Term Loan Facility.  The Company
has access to a total of $25.0 million through the Revolving Credit Facility.  As of March 28, 2003, the Company had $6.5 million in outstanding borrowings under the Revolving Credit Facility.  The Tranche A Term Facility
will mature on July 8, 2003 and the Tranche B Term Facility will mature on July 8, 2005.  Annual required principal payments on the Term Loan Facility are$18.8 million, $28.5 million and $17.0 million over the next
three years.  The Revolving Credit Facility will mature on September 30, 2003.  The interest rate under the Credit Facility is variable and based, at the option of the Company, upon either a Eurodollar rate plus 2.5% (for the
Revolving Credit Facility and the Tranche A Term Facility) and 2.75% (for the Tranche B Term Facility) per annum or a base rate plus 1.5% (for the Revolving Credit Facility and the Tranche A Term Facility) and 1.75% (for the Tranche B Term
Facility) per annum.  Pursuant to the terms of the credit facility, because the Company achieved certain performance goals, rates under the Tranche A Term Facility and the Revolving Credit Facility and the commitment fee have been reduced in
increments as agreed.  At March 28, 2003 the interest rate for the Revolving Credit Facility was 5.25%, the Tranche A Facility was 3.4375% and the Tranche B Facility ranges from 4.125% to 4.1875%.  A commitment fee of 0.375%
per annum will be charged on the unused portion of the Credit Facility.  The loans under the Credit Facility are collateralized by a first priority security interest in substantially all tangible and intangible assets of the Company and its
subsidiaries (including the capital stock of the Companys subsidiaries).  We are currently in the process of negotiating the refinancing of both the Term Loan Facility and the Revolving Credit Facility.

Borrowings under the Credit Facility are required to be prepaid with (a) 75% (or 50% upon satisfaction of a debt to adjusted
EBITDA ratio) of the Companys Excess Cash Flow, (b) 100% of the net proceeds of issuances of debt obligations of the Company and its subsidiaries, (c) 100% of the net cash proceeds from asset dispositions of the Company and its
subsidiaries, (d) 50% of the net proceeds of issuances of equity of the Company and its subsidiaries, except that if an equity issuance occurs other than as part of a Public Equity Offering (as defined) of the Companys Common Stock, then
100% of the net proceeds of such offering are required to be applied to prepay the Credit Facility, and (e) 100% of the net proceeds from insurance recoveries over $1.0 million and condemnations, after application of such insurance
recoveries or condemnation proceeds to repair the property involved.  Excess Cash Flow, for any period, means EBITDA (as defined) for such period, less the sum of (a)(i) permitted capital expenditures, (ii) taxes,
(iii) consolidated interest expense, (iv) increases in Adjusted Working Capital (as defined) for such period, (v) scheduled and mandatory payments of debts, (vi) voluntary prepayments of the Term Loan Facility,
(vii) payments in connection with purchases of the Companys Capital Stock; (viii) cash consideration paid for certain permitted acquisitions (but excluding cash consideration funded by a borrowing under the Revolving Credit
Facility), and (ix) cash dividends paid on the Exchange Preferred Stock to the

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extent permitted by the Credit Facility, plus the sum of:  (b)(i)  decreases in adjusted working capital for such period, (ii) refunds of taxes paid in prior
periods, and (iii) proceeds of certain indebtedness.

The Credit Facility contains covenants
restricting the ability of the Company and the Companys subsidiaries to, among other things, (i) incur additional debt, (ii) declare dividends or redeem or repurchase capital stock, (iii) prepay, redeem or purchase debt,
(iv) incur liens, (v) make loans and investments, (vi) make capital expenditures, (vii) engage in mergers, acquisitions and asset sales and (viii) engage in transactions with affiliates.  The Company is also required to
comply with financial covenants with respect to (a) limits on annual aggregate capital expenditures, (b) a fixed charge coverage ratio, (c) a maximum leverage ratio, (d) a minimum EBITDA and (e) an interest coverage
ratio.  The Credit Facility has been subsequently amended to provide the Company more flexibility in meeting the maximum leverage ratio, interest coverage ratio, fixed charge ratio, and minimum EBITDA covenants thereunder.  The Company is
in compliance, as of March 28, 2003, with the provisions of the Credit Facility.

In 1998, the Company
issued 280,000 shares of its Initial Preferred Stock with an aggregate liquidation preference of $28.0 million, and 120,000 shares of preferred stock issued pursuant to the Private Placement, with an aggregate liquidation preference of
$12.0 million.  On February 19, 1999, the Initial Preferred Stock was exchanged for the Companys Series C 131⁄4% Senior Exchangeable PIK Preferred Stock due 2010 which has been registered under the Securities Act pursuant to
the Companys Registration Statement on Form S-4, as amended, effective January 21, 1999 (File Number 333-62635).  At the election of the Company, dividends on the Exchange Preferred Stock may be paid in kind until July 1,
2003 and thereafter must be paid in cash.  Since January 1, 1999, the Company has issued 287,282 shares of additional preferred stock as payment-in-kind for dividends on the Exchange Preferred Stock.  The Credit Facility currently
prohibits the payment of cash dividends on the Exchange Preferred Stock.  The Exchange Preferred Stock is mandatorily redeemable upon a change of control and on July 1, 2010.  In September 2000 and August 2002, the Company
repurchased 51,573 and 60,001 shares of its redeemable exchangeable preferred stock for $3,906,655 and $5,700,095, respectively.

Under the terms of the Exchange Preferred Stock, at the election of the Company, dividends may be paid in kind until July 1, 2003
and thereafter must be paid in cash commencing in January 2004.  Under the Credit Agreement, the Company may only pay cash dividends if its meets specified financial ratios.  Based on current projections, the Company believes that it
is likely that it will not be permitted by the Credit Agreement to pay cash dividends to the holders of the Exchange Preferred Stock when required by the terms of the Exchange Preferred Stock.  In the event that the Company is unable to pay
cash dividends to the holders of Exchange Preferred Stock for six or more periods (whether or not consecutive), the sole remedy of the holders is the ability to elect two members to the Companys Board of Directors.

The Company is a holding company and relies on dividends and other distributions from its subsidiaries as its primary source of
liquidity.  The Company does not have and in the future may not have any assets other than the capital stock of its subsidiaries.  The ability of subsidiaries of the Company to make payments to the Company when required may be restricted
by law and restricted or prohibited under the terms of the Credit Facility and future indebtedness of the Company.  No assurance can be made that subsidiaries of the Company will be able to pay cash dividends or make other distributions to the
Company.

The Company believes that, based on current levels of operations and anticipated growth, its
cash from operations, together with other available sources of liquidity, including borrowings under the Revolving Credit Facility, will be sufficient to fund its debt service obligations and implement its growth strategy over the next 12
months.  The Company or its affiliates may, from time to time depending on market conditions, purchase, refinance or otherwise retire certain of the Companys outstanding debt and/or equity securities in the open market or by other means
through open market purchases, privately negotiated purchases or exchanges, redemptions or otherwise, in each case, without public announcement or prior notice to the holders thereof, and if initiated or commenced, such purchases or offers to
purchase may be discontinued at any time.

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New Accounting Standards

In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards
(SFAS) No. 141, Business Combinations and SFAS No. 142, Goodwill and Other Intangible Assets.  SFAS No. 141 establishes new standards for accounting and reporting requirements for business
combinations and requires the purchase method of accounting be used for all business combinations initiated after June 30, 2001.  Use of the pooling-of-interests method is prohibited.  SFAS No. 142, Goodwill and Other Intangible
Assets, supersedes Accounting Principles Board (APB) opinion No. 17, Intangible Assets.

SFAS No. 142 establishes new standards for goodwill acquired in a business combination and eliminates amortization of goodwill and
instead sets forth methods to periodically evaluate goodwill for impairment.  The Company adopted this statement during the first quarter of 2002.  Upon adoption of SFAS No. 142, the Company ceased amortization of goodwill. 
Amortization expense related to goodwill was $192,231 and $229,214 for 2000 and 2001, respectively.

In
August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.  SFAS No. 144 addresses financial accounting and reporting for the impairment and disposal of long-lived
assets.  The Company adopted this statement during the first quarter of 2002.  The adoption of this statement had no significant effect on our consolidated financial position or results of operations.

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB
Statement No. 13, and Technical Corrections.  SFAS No. 145, among other things, amends SFAS No. 4 and SFAS No. 64 to require that gains and losses from the extinguishment of debt generally be classified within
continuing operations.  The provisions of SFAS No. 145 are effective for fiscal years beginning after May 15, 2002.  Management does not believe the adoption will have a significant impact on the Companys financial
statements.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities.  SFAS No. 146 replaces Emerging Issues Task Force (EITF) Issue 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit and Activity.  This standard
requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at a date of a commitment to an exit or disposal plan.  This statement is effective for exit or disposal activities that are
initiated after December 31, 2002.  Management does not believe that the adoption of SFAS 146 will have a significant impact on the Companys financial statements.

In December 2002, FASB issued SFAS No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure.  This
statement amends SFAS No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based compensation.  In addition, this
Statement amends the disclosure requirements of SFAS No. 123 to require revised disclosures in both annual and interim financial statements about the method of accounting for stock-based compensation and the effect of the method used on
reported results.  The Company has adopted the new disclosure requirements for its fiscal year ended December 31, 2002.

At December 31, 2002, the company has two stock-based employee compensation plans, which are described more fully in
Note 7.  The company accounts for those plans under the recognition and measurement principles of APB Opinion No. 25 Accounting for Stock Issued to Employees, and related Interpretations.  No stock-based employee compensation
cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant.  The following table illustrates the effect on net income and
earnings per share if the Company had applied the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation.

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Critical Accounting Policies

Revenue Recognition

Inherent in the Companys revenue recognition policy is the determination of the collectibility of amounts due from its customers,
which requires the Company to use estimates and exercise judgment.  The Company generally provides for allowance for doubtful accounts as a percentage of sales based on the managements projection of uncollectible accounts and current
market conditions.  The Company routinely monitors its customers payment history and current credit worthiness to determine that collectibility is reasonably assured and to evaluate adequacy of the balance of its allowance for doubtful
accounts.  Changes in the financial condition of the Companys customers, either adverse or positive, could impact the amount and timing of any additional provisions for doubtful accounts that may be required.

Inventories

The Companys inventory is a significant component of
current assets and is stated at the lower of cost or market.  The Company periodically reviews inventory quantities on hand and records provisions for excess or obsolete inventory based primarily on its estimated forecast of product demand and
market conditions in the multifamily apartment market.  Generally, the Companys products are durable goods that are not overly sensitive to technological developments.  However, significant or unanticipated changes to the
Companys forecasts of these items such as efforts to customize inventory at individual locations, either adverse or positive, could impact the amount and timing of any additional provisions for excess or obsolete inventory that may be
required.

Item 7A.          Quantitative and Qualitative Disclosures About Market Risks.

Quantitative Disclosures.  The Company is exposed to certain market risks inherent in its financial instruments.  These
instruments arise from transactions entered into in the normal course of business and, in some cases, relate to the Companys acquisitions of related businesses.  Certain of the Companys financial instruments are fixed rate,
short-term investments which are held to maturity.  The Company is subject to interest rate risk on its existing long-term debt and any future financing requirements.  The Companys variable rate debt relates to borrowings under the
Credit Facility (see Item 7. Managements Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital Resources).

The following table presents the future principal cash flows and weighted-average interest rates expected on Centurys existing
long-term debt instruments.

Principal (Notional) Amount by Expected Maturity Date (as of December 31, 2002) (in Thousands)

|                                          |                    | Fiscal 2003 |   | Fiscal 2004 |   | Fiscal 2005 |            | Fiscal 2006 |   | Fiscal 2007 |   | Thereafter |   | Total |   | Fair Value at Dec 31, 2002 | 
|----------------------------------------- | ------------------ | ----------- | - | ----------- | - | ----------- | ---------- | ----------- | - | ----------- | - | ---------- | - | ----- | - | -------------------------- | 
|                                          |                    |             |   |             |   |             |            |             |   |             |   |            |   |       |   |                            | 
|Long-term Debt, including current portion |                    |             |   |             |   |             |            |             |   |             |   |            |   |       |   |                            | 
|                                          | Variable Rate Debt |             | $ | 7,000       |   | $           |           |             | $ |            |   | $          |  |       | $ |                           | 
|                                          | Interest Rate      |             |   | LIBOR+2.50  | % |             |            |             |   |             |   |            |   |       |   |                            | 
|Long-term Debt, including current portion |                    |             |   |             |   |             |            |             |   |             |   |            |   |       |   |                            | 
|                                          | Variable Rate Debt |             | $ | 11,800      |   | $           | 28,500     |             | $ | 17,000      |   | $          |  |       | $ |                           | 
|                                          | Interest Rate      |             |   | LIBOR+2.75  | % |             | LIBOR+2.75 | %           |   | LIBOR+2.75  | % |            |   |       |   |                            | 
|                                          |                    |             |   |             |   |             |            |             |   |             |   |            |   |       |   |                            | 

Qualitative Disclosures.  The Companys primary exposure relates to
(1) interest rate risk on long-term and short-term borrowings, (2) the Companys ability to pay or refinance long-term borrowings at maturity at market rates, (3) the impact of interest rate movements on the Companys
ability to meet interest expense requirements and

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exceed financial covenants and (4) the impact of interest rate movements on the Companys ability to obtain adequate financing to fund future acquisitions.  The
Company manages interest rate risk on its outstanding long-term and short-term debt through the use of variable rate debt.  While the Company cannot predict or manage its ability to refinance existing debt or the impact interest rate movements
will have on its existing debt, management evaluates the Companys financial position on an ongoing basis.

Item 8.          Financial
Statements and Supplementary Data.

See the Index included at Item 15. Exhibits, Financial
Statement Schedules and Reports on Form 8-K.

Item 9.          Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

None.

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PART III

Item 10.          Directors and
Executive Officers of the Registrant.

The following table sets forth information regarding the
executive officers and directors of the Company as of March 28, 2003:

|Name                 |  | Age |  | Position with the Company           
|-------------------- |  | --- |  | ------------------------------------
|                     |  |     |  |                                     
|Dennis C. Bearden    |  | 52  |  | Chairman of the Board and Director  
|Joseph Semmer        |  | 66  |  | Chief Executive Officer and Director
|Richard E. Penick    |  | 46  |  | Chief Financial Officer and Director
|Mark J. Doran        |  | 39  |  | Director                            
|William C. Johnson   |  | 63  |  | Director                            
|Jon D. Ralph         |  | 38  |  | Director                            
|J. Frederick Simmons |  | 48  |  | Director                            
|Ronald P. Spogli     |  | 55  |  | Director                            

Dennis C. Bearden has served as a director of the Company since the Companys inception in 1988.  Mr. Bearden also
served as the Chief Executive Officer of the Company from 1988 to January 2002.  Mr. Bearden entered the multifamily apartment market in 1973 by forming Century Airconditioning Supply, Inc., which sold air conditioning components to
apartment communities in the Houston area.

Joseph Semmer is Chief Executive Officer and director of
the Company.  Mr Semmer assumed these roles in January 2002 when he joined the Company.  Prior to joining the Company, Mr. Semmer was the Chief Executive Officer of Hall-Mark Electronics, an $800 million Dallas-based
distributor of electronic components and systems, where he spent over 25 years.

Richard E. Penick
is Chief Financial Officer, a position he has held since joining the Company in September 1992, and became a director in July 1998.  Prior to joining the Company, Mr. Penick was a principal for the accounting firm of Penick and
Penick.  He has provided accounting and other professional services to  Mr. Bearden and the Company since 1977.  Mr. Penick is a Certified Public Accountant.

Mark J. Doran has served as a director of the Company since July 1998.  Mr. Doran joined an affiliate of
FS&Co. in 1988 and became a general partner in 1998, where his responsibilities include analyzing potential investments and participating in strategic and financial initiatives as they relate to portfolio companies.  Prior to joining
FS&Co., Mr. Doran spent two years at Kidder, Peabody & Co. Incorporated where he served as a Corporate Finance Analyst in the High Yield Bond Department.  Mr. Doran is also a director of Advance Auto Parts, Inc.

William C. Johnson has served as a director of the Company since July 1998.  Mr. Johnson served as
Chief Executive Officer of Grolier Incorporated, a publishing and printing company, from March 1990 to December 1994, and served as Chairman of the Board and Chief Executive Officer of Fingerhut Corporation, a retail catalog company, from
1982 to 1989.  Mr. Johnson was a director of Brylane Inc., a retail catalog company, from 1994 to 1999 and served as its Vice Chairman from June 1995 to April 1998.

Jon D. Ralph has served as a director of the Company since July 1998.  Mr. Ralph joined an affiliate of FS&Co.
in 1989 and became a general partner in January 1998, where his responsibilities include analyzing potential investments and participating in strategic and financial initiatives as they relate to portfolio companies.  Prior to joining
FS&Co., Mr. Ralph spent three years at Morgan Stanley & Co. Incorporated where he served as an Analyst in the Investment Banking Division.  Mr. Ralph is also a director of The Pantry, Inc., River Holding Corp. and Hudson
Respiratory Care Inc.

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J. Frederick Simmons has served as a director of the Company since
July 1998.  Mr. Simmons joined an affiliate of FS&Co. in 1986 and became a general partner in 1991, where his responsibilities include analyzing potential investments and participating in strategic and financial initiatives as
they relate to portfolio companies.

Ronald P. Spogli has served as a director of the Company
since July 1998.  Mr. Spogli is a founding partner  of an affiliate of FS&Co., which he founded in 1983, where his responsibilities include analyzing potential investments and participating in strategic and financial
initiatives as they relate to portfolio companies.  Mr. Spogli also serves on the Boards of Directors of AFC Enterprises, Inc., Galyans Trading Company, Inc., Hudson Respiratory Care Inc. and Advance Auto Parts, Inc.

Directors of the Company are elected annually and hold office until the next annual meeting of stockholders and
until their successors are duly elected and qualified.  The Board of Directors has no current or proposed committees.

Executive Officers are elected by, and serve at the discretion of the Board of Directors.  The Company has entered into
employment agreements with certain of its executive officers.  See Employment Agreements with Messrs. Bearden and Penick.  There are no family relationships among any of our directors or executive officers.

Item 11.          Executive Compensation.

The following table sets forth the compensation earned by the Companys Chief Executive Officer and the two other most
highly compensated executive officers who earned salary and bonus in excess of $100,000 for services rendered in all capacities to the Company and its subsidiaries for the fiscal years ended December 31, 2000, 2001 and 2002 (collectively, the
Named Executive Officers).

Summary Compensation Table

|                            |                         |             |      |        | Annual Compensation |         | Long-Term Compensation Awards |                              |       |                                    |  
|--------------------------- | ----------------------- | ----------- | ---- | ------ | ------------------- | ------- | ----------------------------- | ---------------------------- | ----- | ---------------------------------- | -
|                            |                         |             |      |        |                     |         |                               |                              |       |                                    |  
|Name and Principal Position |                         | Fiscal Year |      | Salary |                     | Bonus   |                               | Other Annual Compensation(1) |       | Securities Underlying Options/SARs |  
|                            |                         |             |      |        |                     |         |                               |                              |       |                                    |  
|Joseph Semmer (3)           |                         |             | 2002 |        | $                   | 184,615 |                               | $                            |      |                                    | $
|                            | Chief Executive Officer |             |      | 2001   |                     |         |                              |                              |       |                                   |  
|                            |                         |             | 2000 |        |                     |        |                               |                              |      |                                    |  
|Richard E. Penick           |                         |             | 2002 |        | $                   | 125,000 |                               | $                            | 5,000 |                                    | $
|                            | Chief Financial Officer |             |      | 2001   |                     |         | 115,000                       |                              |       |                                   |  
|                            |                         |             | 2000 |        |                     | 115,000 |                               |                              |      |                                    |  
|Don R. Hodina (5)           |                         |             | 2002 |        | $                   | 48,881  |                               | $                            |      |                                    | $
|                            | Chief Operating Officer |             |      | 2001   |                     |         | 150,000                       |                              |       |                                   |  
|                            |                         |             | 2000 |        |                     | 146,344 |                               |                              |      |                                    |  

|   
|---
|(1)
|(2)

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|    | Incentive Plan that were exercised by Mr. Penick in July 2000 in the amount of $216,033.  See Stock Option Plan1997 Stock Incentive
Plan.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------
|(3) | Mr. Semmer was hired as the Chief Executive Officer of the Company on January 21, 2002.                                                      
|(4) | Represents Options granted under the 1998 Nonqualified Stock Option Plan in 2000 and 2002.                                                   
|(5) | Mr. Hodina resigned as Chief Operating Officer of the Company in June 2002.                                                                  

Option Grants in
the Last Fiscal Year

The following table sets forth information concerning options granted to each of
the named executive officers during the year ended December 31, 2002:

|                  |  | OPTION GRANTS IN LAST FISCAL YEAR               |         |                                                        | 
|----------------- |  | ----------------------------------------------- | ------- | ------------------------------------------------------ | 
|                  |  |                                                 |         |                                                        | 
|                  |  | Individual Grants                               |         | Grant Date Value                                       | 
|                  |  |                                                 |         |                                                        | 
|Name              |  | Number of Securities Underlying Options Granted |         | % of Total Options Granted to Employees in Fiscal Year | 
|                  |  |                                                 |         |                                                        | 
|Joseph Semmer     |  |                                                 | 190,000 |                                                        | 
|Richard E. Penick |  |                                                 | 8,000   |                                                        | 

Aggregated Option Exercises and Fiscal Year-End Option Values

The following table sets forth information with respect to option exercises during the year ended December 31, 2002 and
the number and value of exercisable and unexercisable options held as of December 31, 2002 by each of the Named Executive Officers.

Aggregated Option Exercises in Last
Fiscal Year and Fiscal Year-End Option Values

|Name              |             | Shares Acquired on Exercise |               | Value Realized |             | Number of Securities Underlying Unexercised Options at December 31, 2002 |               | Value of Unexercised In-the-Money Options at December 31, 2002(1) |       
|----------------- | ----------- | --------------------------- | ------------- | -------------- | ----------- | ------------------------------------------------------------------------ | ------------- | ----------------------------------------------------------------- | ------
|                  |             |                             |               |               
|                  | Exercisable |                             | Unexercisable |                | Exercisable |                                                                          | Unexercisable |                                                                  
|                  |             |                             |               |                |             |                                                                          |               |                                                                   |       
|Joseph Semmer     |             |                             |              |                |             |                                                                         |               |                                                                   | 40,000
|Richard E. Penick |             |                             |              |                |             |                                                                         |               |                                                                   | 10,800

|   
|---
|(1)

Employment Agreements with Messrs. Bearden and Penick

On July 8, 1998, the Company entered into employment agreements with Dennis C. Bearden and Richard E. Penick, and a noncompete
agreement with Mr. Bearden (which noncompete agreement  also binds Century Airconditioning Supply, Inc. and Air Management Supply, Inc.  See Item 13.  Certain Relationships and Related TransactionsNoncompete
Agreement).  Mr. Bearden and Mr. Penick receive an annual base salary in the amount of $23,654 and $135,000, respectively, as well as an annual cash bonus (either pursuant to a bonus or incentive plan of the Company or
otherwise) in an amount to be determined by the Board (or a committee thereof) in its sole discretion.  Pursuant to the employment agreements, in the event that employment is terminated by the Company without cause (as defined
therein), or if the employee resigns

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for good reason (as defined therein), the Company will be required to pay such employees base salary (and to continue certain benefits) for 24 months, and to
pay a portion of the employees annual bonus, based on the previous years bonus, accrued up to the date of termination.  In addition, in the event that employment is terminated by the Company without cause or if the
employee resigns for good reason, and a Change in Control (as defined therein) of the Company has occurred within the two year period preceding such date of termination, then, in addition to the obligations of the Company to continue
such employees benefits and to pay the portion of the employees annual bonus as described above, but in lieu of the Companys obligation to continue to pay such employees base salary for the 24-month period following such date
of termination, the Company shall be required to pay to the employee, in a lump sum in cash within 30 days after the date of such termination, an amount equal to two times the sum of the employees base salary (as in effect on the date of
termination or such higher rate as may have been in effect at any time during the 90 day period preceding the date of termination) and the annual bonus paid to such employee for the Companys last full fiscal year.  The employment
agreements also impose restrictions relating to the disclosure of confidential information and prohibit the employee from knowingly becoming involved in a conflict of interest with the Company.

Compensation of Directors

Directors of the Company receive no compensation
as directors.  Directors are reimbursed for their reasonable expenses in attending meetings.

Retirement Plan

Employees of the Company may contribute to a 401(k) plan.  Employees must have 12 months of service and must have attained age
21 to be eligible to participate in the 401(k) plan and may contribute a minimum of 2.0%, up to a maximum of 15.0% of their annual compensation.  The Company matches contributions at a rate of 50.0% for contributions by the employee, up to 8.0%
of such employees compensation.  The Company contributed approximately, $382,000, $492,000 and $528,000 in 2000, 2001 and 2002 respectively, as matching funds to the plan.  No discretionary, lump-sum contributions were made in 2000,
2001 and 2002.

Compensation Committee Interlocks and Insider Participation

The Board of Directors of the Company determines the compensation of the executive officers.

Stock Option Plan

1997 Incentive Stock Plan

In July 1997, the Company established the 1997 Incentive Stock Plan (the Stock Option Plan), pursuant to which
options may be granted to eligible employees of the Company or its subsidiaries for the purchase of an aggregate of 1,000,000 shares of Common Stock of the Company.  The Stock Option Plan is administered by the Board of Directors (the
Board).  The Board has the power to determine which eligible employees will receive stock option rights, the timing and manner of the grant of such rights, the exercise price, the number of shares to be covered by the option, and
the type and terms of the options.  The Board may, at any time, terminate or amend the Stock Option Plan, provided that no such amendment may adversely affect the rights of optionees with regard to outstanding options.  All outstanding
options under the Stock Option Plan were exercised on July 1, 2000.  See Item 13. Transactions with Management.

1998 Nonqualified Stock Option Plan

In July 1998, the Company adopted the 1998 Nonqualified Stock Option Plan, (the Nonqualified Stock Option Plan),
pursuant to which options may be granted to eligible employees of the Company for the purchase of an aggregate of 1,642,500 shares or 13% of Common Stock of the Company.  The Nonqualified Stock Option Plan is administered by the Board. 
The Nonqualified Stock Option Plan and each outstanding option thereunder are subject to termination in the event of a change in control of Century, as more particularly described in the Nonqualified Stock Option Plan.  In addition, all options
granted pursuant to the Nonqualified Stock Option Plan terminate 30 days after termination of employment (unless termination was for cause, in which event an option terminates immediately) or 180 days in the event of termination due to death or
disability.  The sale of shares received upon the exercise of options are subject to rights of refusal first in favor of the Company and then in favor of Mr. Bearden and FS&Co., on a pro rata basis.  In addition, any shares
received upon exercise of an option are

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subject to a repurchase right in favor of the Company at the greater of cost or book value for a period of six months after termination of the optionees employment
(provided, that if employment is terminated due to death or disability, such shares shall be repurchased for fair market value as determined in good faith by the Board).  Shares received upon the exercise of options are subject to certain
obligations to sell at the request of FS&Co., should FS&Co. propose to sell all or a substantial portion of its interest in the Company to a third-party buyer (with the purchase terms for the optionee and FS&Co. to be identical), or
should the optionees employment or other relationship with the Company terminate.  Such shares also possess certain co-sale rights in favor of the optionee should FS&Co. propose to sell all or any portion of its interest in the
Company to a third-party buyer, upon the same terms as those offered by such buyer to FS&Co.  The rights of first refusal, repurchase rights and co-sale rights will terminate upon the Companys initial public offering.

Options to purchase 5.0% of the initial outstanding shares of Centurys Common Stock (Time Vesting
Options), which can be granted in 1.0% annual increments, would vest over a three-year period from date of grant in equal annual installments or, alternatively, granted options will vest in full upon a sale of the Company.  Time Vesting
Options will terminate on the seven-year anniversary of the grant date.  These options will be granted at an exercise price equal to the then estimated fair market value of the Companys Common Stock (as determined by the Board).  As
discussed below, the Company granted a portion of these Time Vesting Options on June 15, 2000 to certain employees to purchase 90,900 shares of Common Stock of the Company at an exercise price of $10.00 per share with an expiration date of seven
years after the date of grant.  These Time Vesting Options vest over a three-year period, with the first vesting date occurring on July 9, 2000 and all options vesting in full on July 9, 2002.  No compensation expense was
recorded at the date of grant of these Time Vesting Options.  In addition, options to purchase 50,000 shares of the Companys Common Stock at an exercise price of $10.00 per share were granted to Mr. Johnson, who became a director of
the Company in July 1998, which options were fully vested on the date of grant.

Options to purchase
approximately 6.5% of the initial outstanding shares of the Companys Common Stock at an exercise price of $10.00 per share (Performance Options) are earned in installments based upon satisfaction of financial performance targets
over a four-year period.  The Performance Options will terminate on the seven-year anniversary of the grant date.

In addition, options to purchase approximately 1.5% of the initial outstanding shares of the Companys Common Stock at an exercise
price of $10.00 per share (Bearden Performance Options) have been granted to Mr. Bearden and are earned in installments based upon satisfaction of financial performance targets over a three-year period.  However, the Bearden
Performance Options will not become exercisable until one year after the vesting date, which is the same date such options are earned (except in the event of a sale of the Company, in which case the one year delay will become inapplicable), and will
terminate on the seven-year anniversary of the grant date.

On January 21, 2002, the Company granted to
Joseph Semmer, Centurys newly appointed Chief Executive Officer, a non-qualified option to purchase up to 190,000 shares of Common Stock.  40,000 shares subject to the option are immediately exercisable at an exercise price of $10.00 per
share.  The remaining shares subject to the option become exercisable over the next three years on the anniversary of the date of grant at exercise prices between $10.00 and $15.00 per share.  The option will terminate on the seven-year
anniversary of the grant date.

In October 2002, the Company granted non-qualified options to purchase an
aggregate of 124,500 shares of Common Stock to its directors, officers and employees under the Companys 1998 Nonqualified Stock Option Plan.  The options have an exercise price of $11.00 and vest over a three-year period.

As of December 31, 2002, options representing the right to purchase an aggregate of 723,700 shares of the
Companys Common Stock have been granted under the Option Plan to individuals other than the Named Executive Officers set forth in the table above.  433,000 of these options are Performance Options and 290,700 of these options are Time
Vested Options, as described above.

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

The following table sets forth certain information, as of March 28, 2003, with respect to the beneficial ownership of capital stock
of the Company by (i) each person who beneficially owns more than 5% of such shares, (ii) each of the Named Executive Officers, (iii) each director of the Company and (iv) all of the Named Executive Officers and directors of the
Company as a group.

Beneficial ownership is determined in accordance with the rules of the SEC.  In
computing the number of shares beneficially owned by a person and the percentage of ownership held by that person, the shares of Common Stock subject to options and warrants held by that person that are currently exercisable or will become
exercisable within 60 days after March 28, 2003 are deemed outstanding, while these shares are not deemed outstanding for computing percentage ownership of any other person.  Unless otherwise indicated in the footnotes below, the persons
and entities named in the table have sole voting and investment power with respect to all shares beneficially owned, subject to community property laws where applicable.  The address for those individuals for which an address is not otherwise
indicated is c/o Century Maintenance Supply, Inc., 10050 Cash Road, Suite 1, Stafford, Texas 77477.

The percentages of Common Stock and Series B Preferred Stock beneficially owned are based on 12,190,498 shares of Common Stock and
213,236.78 shares of Series B Preferred Stock outstanding as of March 28, 2003.

|Name of Beneficial Owner                                                                |                         | Shares of Common Stock |            | Percent of Class |  | Shares of Series B Preferred Stock |   | Percent of all Preferred Stock Outstanding |           
|--------------------------------------------------------------------------------------- | ----------------------- | ---------------------- | ---------- | ---------------- |  | ---------------------------------- | - | ------------------------------------------ | ----------
|                                                                                        |                         |                        |            |                  |  |                                    |   |                                            |           
|Freeman Spogli & Co. LLC(1)                                                             |                         |                        | 6,912,501  |                  |  | 55.8                               | % |                                            | 71,078.93 
|                                                                                        | Ronald P. Spogli(1)     |                        |            |                  |  |                                    |   |                                            |           
|                                                                                        | J. Frederick Simmons(1) |                        |            |                  |  |                                    |   |                                            |           
|                                                                                        | Mark J. Doran(1)        |                        |            |                  |  |                                    |   |                                            |           
|                                                                                        | Jon D. Ralph(1)         |                        |            |                  |  |                                    |   |                                            |           
|Dennis C. Bearden(2)                                                                    |                         |                        | 3,749,999  |                  |  | 30.3                               | % |                                            | 142,157.85
|Joseph Semmer(3)                                                                        |                         |                        | 110,004    |                  |  | 0.9                                | % |                                            |          
|Don R. Hodina                                                                           |                         |                        |           |                  |  |                                   |   |                                            |          
|Richard E. Penick(4)                                                                    |                         |                        | 61,165     |                  |  | 0.5                                | % |                                            |          
|William C. Johnson(5)                                                                   |                         |                        | 127,083    |                  |  | 1.0                                | % |                                            |          
|All Named Executive Officers and directors of the Company as a group
(8 individuals)(6) |                         |                        | 10,960,752 |                  |  | 88.4                               | % |                                            | 213,236.78

|   
|---
|(1)
|(2)
|(3)

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|(4) | Includes 10,800 shares of Common Stock issuable upon the exercise of options which are exercisable within 60 days of March 28, 2003.                                                                                                                                                                            
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(5) | Includes 52,083 shares of Common Stock issuable upon the exercise of options which are exercisable within 60 days of March 28, 2003.                                                                                                                                                                            
|(6) | Includes 6,912,501 shares of Common Stock and 71,078.93 shares of Series B Preferred Stock held by affiliates of Freeman Spogli & Co. LLC and 205,383 shares of Common
Stock issuable with respect to options granted to executive officers and directors that are exercisable within 60 days of March 28, 2003.
|(7) | Stockholders of Series B Preferred Stock received payment in kind dividends that are issued in fractional shares semi-annually.  The number of shares listed in the chart
was rounded to two decimal places.                                                                                                    

Equity Compensation Plan Information

The following table provides information as of March 28, 2003 with respect to the shares of our common stock that may be issued
under our existing equity compensation plans.  All of our existing plans have been approved by our stockholders.

|                                                      |  | A                                                                      |         | B                                                      |   | C                                                                                                                                         | 
|----------------------------------------------------- |  | ---------------------------------------------------------------------- | ------- | ------------------------------------------------------ | - | ----------------------------------------------------------------------------------------------------------------------------------------- | 
|                                                      |  |                                                                        |         |                                                        |   |                                                                                                                                           | 
|                                                      |  | Number of Securities to be Issued Upon Exercise of Outstanding Options |         | Weighted Average Exercise Price of Outstanding Options |   | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected
in Column A) | 
|                                                      |  |                                                                        |         |                                                        |   |                                                                                                                                           | 
|Equity Compensation Plans Approved by Stockholders(1) |  |                                                                        | 919,000 |                                                        | $ | 10.54                                                                                                                                     | 

|   
|---
|(1)
|(2)

Item
13.          Certain Relationships and Related Transactions.

Stockholders Agreement

Amended Stockholders Agreement

The stockholders of the Companys Common Stock were parties to a stockholders agreement with the Company and Mr. Bearden
which was amended and restated in July 1998 (the Amended Stockholders Agreement).  Under the Amended Stockholders Agreement, all Continuing Stockholders (other than Mr. Bearden) were granted tag
along rights which provide that if FS&Co. or Mr. Bearden sell all or any part of their shares of the Companys Common Stock to a third party, the non-selling stockholders have the right to sell up to the same percentage of their
shares to that third party on the same terms and conditions.  The non-selling stockholders only have tag along rights on a sale by Mr. Bearden if FS&Co. exercises its own tag along rights.  These rights terminate upon the
Companys initial public offering.

Continuing Stockholders (other than Mr. Bearden) are subject
to a drag along obligation which provides that if FS&Co. wishes to sell all of its Common Stock of the Company to a third party, FS&Co. may cause such Continuing Stockholders to sell all of their capital stock (common or
preferred) to such third party on the same terms and conditions.

The Amended Stockholders Agreement
also contains a right of first refusal first in favor of the Company, then in favor of Mr. Bearden and FS&Co. on a pro rata basis, and then in favor of the Companys other stockholders (other than holders of the Exchange Preferred
Stock) on a pro rata basis, as well as certain transfer restrictions and obligations on termination (including repurchase rights upon the death, divorce or termination of employment of a Continuing Stockholder that operate in a manner substantially
identical to the right of first refusal).

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There are employees of the Company who hold Existing Options who do not currently own
any of the Companys Common Stock.  See Item 11.  1998 Nonqualified Stock Option Plan.  If these employees exercise their options, the shares received upon exercise will become subject to the Amended
Stockholders Agreement.

New Stockholders Agreement

In July 1998, FS&Co., Mr. Bearden and Century Airconditioning Supply, Inc. (CAC) entered into a new
stockholders agreement (the Stockholders Agreement).  Under the Stockholders Agreement, FS&Co. and Mr. Bearden have the right to purchase their pro rata share of certain new issuances of capital stock by the Company. 
These rights will terminate upon the Companys initial public offering or once such partys percentage ownership in the Company (calculated on a fully diluted basis) falls below 10%.  In addition, the Stockholders Agreement provides
that if FS&Co. or Mr. Bearden sells all or any part of their shares in the Company to a third party, the non-selling party has the right to sell up to the same percentage of their shares to that third party on the same terms and
conditions.  These rights terminate upon the Companys initial public offering.  If FS&Co. wishes to sell its entire interest in the Company, it has the right to cause Mr. Bearden to sell all of his shares of capital stock
(common or preferred) to such third party on the same terms and conditions.  These rights terminate once FS&Co.s percentage ownership in the Company (calculated on a fully diluted basis) drops below 20% or drops below the percentage
then held by Mr. Bearden (provided that no effect shall be given to any shares purchased by Mr. Bearden after the closing of the recapitalization of the Company in 1998).  In the Stockholders Agreement, FS&Co. will receive a right
of first offer with respect to proposed sales of capital stock of the Company by Mr. Bearden or CAC, and CAC will transfer its securities of the Company to Mr. Bearden should Mr. Bearden ever fail to control 100% of the outstanding
capital stock of CAC.  These rights terminate in the same manner as FS&Co.s drag along obligation described above.  In the Stockholders Agreement, each of FS&Co. and Mr. Bearden agreed not to pledge, hypothecate or
otherwise encumber any capital stock of the Company held by them, and also agreed not to transfer shares to a third party, except for certain transfers to affiliates (or to a family trust established by Mr. Bearden) or transfers by FS&Co.
to its partners after the Companys initial public offering.

The Stockholders Agreement provides that
the Board of Directors of the Company shall initially consist of five members nominated by FS&Co. and three members nominated by Mr. Bearden.  The members of the Board will include two independent directors if necessary in connection
with the Companys initial public offering, which directors will be elected by a majority of the Board and reasonably acceptable to Mr. Bearden.  Notwithstanding the foregoing, the Stockholders Agreement provides that no action of the
Company, which under Delaware law would have required the prior approval of a majority of the Companys stockholders, will be taken unless and until a meeting of the Companys Board of Directors will have been held upon prior notice duly
given in accordance with the bylaws of the Company.  The rights of FS&Co. and Mr. Bearden described in this paragraph will terminate once such parties percentage ownership in the Company (calculated on a fully diluted basis)
drops below 20% and 10%, respectively.

The Stockholders Agreement provides that at any time beginning six
months after the Companys initial public offering, each of FS&Co. and Mr. Bearden shall have the right to two demand registrations; provided, that to the extent that either of FS&Co. or Mr. Bearden wishes to join in the
others demand registration, then the parties shall participate together in such registration on a pro rata basis.  Following the Companys initial public offering, FS&Co., Mr. Bearden and the Companys other
stockholders shall have customary piggyback registration rights; provided, that such stockholders (other than Mr. Bearden) may be excluded from any such offering, at the discretion of the underwriters participating in such offering, if such
underwriters determine that the inclusion of such stockholders would adversely impact the relevant offering.  Each of the Companys stockholders (including FS&Co. and Mr. Bearden) agreed to a lockup period of up to six months if
imposed by an underwriter in connection with the Companys initial public offering and for any other period requested by an underwriter for any other offering.  The Company will pay all customary fees and expenses in connection with such
registrations.

On January 21, 2002, the Stockholders Agreement was amended to include Joseph Semmer as
a party, in connection with his purchase of Common Stock and appointment as Chief Executive Officer.

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Transactions with Management

The Company leases facilities in Houston, Phoenix, San Antonio, Tucson, and Newport News from Dennis C. Bearden, the former Chief
Executive Officer of the Company, or an entity affiliated with or controlled by Mr. Bearden. Lease expense for leases with affiliates has been $0.9 million, $0.8 million and $0.9 for fiscal 2000, 2001 and 2002, respectively.  In
addition, the Company was a party to the Common Control Mergers.

Transactions with Mr. Semmer

On January 21, 2002, Joseph Semmer was appointed the Chief Executive Officer of the Company and elected as a member of the board of
directors of the Company.  In connection with this appointment, Mr. Semmer was granted a non-qualified option to purchase 190,000 shares of Common Stock and purchased 20,000 shares of Common Stock at a purchase price of $10.00. 
Mr. Semmer paid one-half of the purchase price in cash and one-half with a promissory note secured by pledging 10,000 of the shares of Common Stock purchased by him.  The promissory note accrues interest at a rate of 2.75% per annum and is
payable in full on April 21, 2003.  Mr. Semmer also entered into a Severance Agreement in connection with his appointment.  The Severance Agreement provides that if Mr. Semmer is terminated (i) without cause (as defined
in the agreement) or (ii) pursuant to a Qualifying Resignation (as defined in the agreement), he will receive a severance payment equal to 18 months base salary determined at the annual rate in effect at the time of termination
and the full bonus for the year in which the termination occurred.  The severance payment will be paid over an 18-month period and will be reduced by the amount of any other monthly base compensation that Mr. Semmer earns during that
period.

Transactions with Century Airconditioning Supply

The Company makes convenience sales of inventory, at cost, to CAC and purchases inventory, at cost, from CAC.  The Companys
revenues attributable to sales of inventory to CAC were $0.04 million, $0.04 million and $0.02 million for fiscal 2000, 2001 and 2002, respectively.  The Companys purchases from CAC amounted to $0.6 million, $0.3 million
and $0.1 million for fiscal 2000, 2001 and 2002, respectively.

Noncompete Agreement

Mr. Bearden is the sole stockholder of CAC, which in turn controls Air Management Supply, Inc. (Air Management). 
Both CAC and Air Management compete with the Company in certain sub-markets and with regard to certain products and customers.  In connection with the Recapitalization, Mr. Bearden, CAC and Air Management entered into a noncompete
agreement with the Company whereby they agreed, for a period continuing until the earlier of ten years or the termination of Mr. Beardens employment agreement other than for cause, and subject to certain exceptions, not to
compete with the Company, to preserve its confidential information, not to recruit or employ employees of the Company, and not to solicit customers or suppliers of the Company for competitors.  In particular, and subject to certain exceptions,
Mr. Bearden, CAC and Air Management are prohibited from selling maintenance supplies (which as defined excludes HVAC, appliance parts and refrigeration parts) not only to apartments but also to hotels, prisons, nursing homes, hospitals,
military installations and schools and universities.  In addition, the Company agreed not to sell HVAC in southeast Texas (as defined therein) if such sales would cause the aggregate amount of HVAC sales by the Company for the immediately
preceding 12 months to exceed 12% of the Companys total sales in southeast Texas during the same period.

Private Placement and Registration Rights

Mr. Bearden purchased 80,000 shares of the Series B Preferred Stock with a $8.0 million aggregate liquidation preference, and
FS&Co. purchased 40,000 shares of such Series B Preferred Stock with a $4.0 million aggregate liquidation preference from the Company.  In connection with the Private Placement, the Company entered into an agreement (the Private
Registration Agreement) which provides that the Company will, upon the request of each of Mr. Bearden (or transferee of such shares) and FS&Co. (or its transferees), file and use its best efforts to cause to become effective
registration statements for the Series B Preferred Stock, or, if issued, the Exchange Debentures issuable in exchange therefor (the Private Registration Statements).  The Private Registration Agreement also provides that
(i) the Company will bear all costs and expenses associated with filing

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the Private Registration Statements and using its best efforts to cause them to become effective and (ii) the Company will not file the Private Registration Statements
until any exchange offer registration statement or resale shelf registration statement required by the Registration Rights Agreement have ceased to be effective and are no longer required to be effective.

In addition, in the event that a Voting Rights Triggering Event (as defined in the Companys Certificate of Designation) occurs
with respect to the Exchange Preferred Stock issued in exchange therefor, or with respect to the Series B Preferred Stock, the holders of the Exchange Preferred Stock and the holders of the Series B Preferred Stock will vote together as one
class to elect the two additional directors provided for in the Certificate of Designation.  Because Mr. Bearden and FS&Co. own securities representing 30% of such class, they may be able to exert significant influence on the results
of any such election.

ITEM 14.          CONTROLS AND PROCEDURES

Within 90 days prior to the date of this report, the Company completed an evaluation, under the supervision and with the participation
of the Companys chief executive officer and chief financial officer of the effectiveness of the Companys disclosure controls and procedures pursuant to  Rule 13a-14 of the Exchange Act.  Based on this evaluation, the
Companys chief executive officer and chief financial officer concluded that the Companys disclosure controls and procedures were effective with respect to timely communicating to them all material information required to be disclosed in
this report as it related to the Company and its subsidiaries.

There have been no significant changes in
the Companys internal controls or in other factors that could significantly affect the internal controls subsequent to the date the Company completed this evaluation.

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PART IV

Item 15.          Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

| |         |                                                                                                                                                                                                                                                                          | Page                                                                                                                                      
| | ------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------
| |         |                                                                                                                                                                                                                                                                          |                                                                                                                                           
| | (a)     |                                                                                                                                                                                                                                                                          | Documents filed as part of this report:                                                                                                   
| |         |                                                                                                                                                                                                                                                                          |                                                                                                                                           
| |         | (1)                                                                                                                                                                                                                                                                      | Index to the Consolidated Financial Statements:                                                                                           
| |         |                                                                                                                                                                                                                                                                          |                                                                                                                                           
| |         |                                                                                                                                                                                                                                                                          | Independent Auditors Report.                                                                                                             
| |         |                                                                                                                                                                                                                                                                          | Consolidated Balance Sheets as of December 31, 2001 and December 31, 2002                                                                 
| |         |                                                                                                                                                                                                                                                                          | Consolidated Statements of Income for the Years Ended December 31, 2000, December 31, 2001 and December 31, 2002                          
| |         |                                                                                                                                                                                                                                                                          | Consolidated Statements of Changes in Stockholders Deficit for the Years Ended December 31, 2000, December 31, 2001 and December 31, 2002
| |         |                                                                                                                                                                                                                                                                          | Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, December 31, 2001 and December 31, 2002                      
| |         |                                                                                                                                                                                                                                                                          | Notes to Consolidated Financial Statements                                                                                                
| |         |                                                                                                                                                                                                                                                                          |                                                                                                                                           
| |         | (2)                                                                                                                                                                                                                                                                      | Schedules.                                                                                                                                
| |         |                                                                                                                                                                                                                                                                          |                                                                                                                                           
| |         |                                                                                                                                                                                                                                                                          | None.                                                                                                                                     
| |         |                                                                                                                                                                                                                                                                          |                                                                                                                                           
| |         | (3)                                                                                                                                                                                                                                                                      | Exhibits.                                                                                                                                 
| |         |                                                                                                                                                                                                                                                                          |                                                                                                                                           
| | 2.1(1)  | Agreement and Plan of Merger dated as of May 5, 1998 among Century Acquisition Corporation, Dennis C. Bearden (Bearden), FS Equity Partners IV, LP
(FSEP IV), the Company, and the stockholders of the Company.                                                     
| | 2.2(1)  | First Amendment to Agreement and Plan of Merger dated June 19, 1998 among Century Acquisition Corporation, Bearden, FSEP IV, the Company, and the stockholders
of the Company.                                                                                          
| | 3.1(1)  | Amended and Restated Certificate of Incorporation of Century.                                                                                                                                                                                                           
| | 3.2(1)  | Amended and Restated Bylaws of Century.                                                                                                                                                                                                                                 
| | 3.3(1)  | Certificate of Designation by Century dated July 8, 1998.                                                                                                                                                                                                               
| | 4.1(1)  | Exchange Indenture dated as of July 8, 1998 between Century and United States Trust Company of New York, as Trustee, with respect to the 131⁄4% Senior
Subordinated Exchange Debentures due 2010 (including form of 131⁄4% Senior Subordinated Exchange Debenture due 2010).
| | 4.2(1)  | Registration Agreement dated July 8, 1998 between Century and Salomon Brothers Inc.                                                                                                                                                                                     
| | 10.1(1) | Credit Agreement dated as of July 8, 1998 (the Credit Agreement) among the Company, the lenders party thereto, Salomon Brothers Inc. and Citicorp
USA, Inc. (Citicorp).                                                                                             
| | 10.2(1) | Security Agreement dated as of July 8, 1998 between the Company and Citicorp.                                                                                                                                                                                           
| | 10.3(1) | Pledge Agreement dated as of July 8, 1998 between the Company and Citicorp.                                                                                                                                                                                             
| | 10.4(1) | Subsidiary Guarantee Agreement dated as of July 8, 1998 between the Company and Citicorp.                                                                                                                                                                               
| | 10.5(1) | Indemnity, Subrogation and Contribution Agreement dated as of July 8, 1998 between the Company and Citicorp.                                                                                                                                                            
| | 10.6(1) | Amended and Restated Stockholders Agreement dated as of May 5, 1998 among FSEP IV, Bearden, the Company and certain of its stockholders and their
spouses.                                                                                                             
| | 10.7(1) | Second Amended and Restated Stockholders Agreement dated as of July 8, 1998 among FSEP IV, Bearden, the Company and certain of its stockholders and their
spouses.                                                                                                     
| |         |                                                                                                                                                                                                                                                                          |                                                                                                                                           

28



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##### Table of Contents

|    | 10.8(1)                                                                                                                                                | Stockholders Agreement dated July 8, 1998 among FSEP IV, William C. Johnson (Johnson), The Parthenon Group, Bearden, Century Airconditioning Supply, Inc.
(Century AC) and the Company.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | 10.9(1)                                                                                                                                                | Registration Rights Agreement dated July 8, 1998 among FSEP IV, Bearden, Century AC, the Company and certain stockholders of the Company.                                                  
|    | 10.10(1)                                                                                                                                               | Preferred Stock Registration Rights Agreement dated July 8, 1998 among FSEP IV, Bearden and the Company.                                                                                   
|    | 10.11(1)                                                                                                                                               | Preferred Stock Subscription Agreement dated July 8, 1998 among the Company, FSEP IV and Bearden.                                                                                          
|    | 10.12(1)                                                                                                                                               | 1998 Nonqualified Stock Option Plan.                                                                                                                                                       
|    | 10.13(1)                                                                                                                                               | 1997 Incentive Stock Plan.                                                                                                                                                                 
|    | 10.14(1)                                                                                                                                               | Form of Nonqualified Stock Option Agreement for 1998 Nonqualified Stock Option Plan.                                                                                                       
|    | 10.15(1)                                                                                                                                               | Form of Agreement for 1997 Incentive Stock Plan.                                                                                                                                           
|    | 10.16(1)                                                                                                                                               | Executive Employment Agreement dated July 8, 1998 between Century Maintenance Supply, Inc. and Bearden.                                                                                    
|    | 10.17(1)                                                                                                                                               | Executive Employment Agreement dated July 8, 1998 between Century Maintenance Supply, Inc. and Richard E. Penick.                                                                          
|    | 10.18(1)                                                                                                                                               | Non-competition Agreement dated July 8, 1998 among Bearden, Century AC, Air Management Supply, Inc. and the Company.                                                                       
|    | 10.19(2)                                                                                                                                               | Amendment No. 1 to Credit Agreement dated as of July 14, 2000, by and among the Company, the lenders party thereto, Salomon Brothers Inc. and Citicorp.                                    
|    | 10.20(3)                                                                                                                                               | First Amendment to Stockholders Agreement dated January 21, 2002.                                                                                                                          
|    | 10.21(3)                                                                                                                                               | Severance Agreement dated January 21, 2002 between the Company and Joseph Semmer.                                                                                                          
|    | 10.22(4)                                                                                                                                               | Amendment No. 2 to Credit Agreement dated as of December 31, 2001 by and among the Company, the lenders party thereto, Salomon Brothers Inc. and Citicorp.                                 
|    | 10.23(4)                                                                                                                                               | Secured Promissory Note, dated January 21, 2002, made by Joseph Semmer in favor of the Company.                                                                                            
|    | 10.24(4)                                                                                                                                               | Stock Pledge Agreement, dated January 21, 2002, by and between the Company and Joseph Semmer.                                                                                              
|    | 10.25                                                                                                                                                  | Asset Purchase Agreement, dated March 21, 2003, by and between the Company and Project Lighting Company, Inc.                                                                              
|    | 21.1(1)                                                                                                                                                | Subsidiaries of Century.                                                                                                                                                                   
|    | 24.1                                                                                                                                                   | Power of Attorney (included on the signature pages hereof).                                                                                                                                
|    | 99.1                                                                                                                                                   | Certification of Chief Executive Officer.                                                                                                                                                  
|    | 99.2                                                                                                                                                   | Certification of Chief Financial Officer.                                                                                                                                                  
|    |                                                                                                                                                        |                                                                                                                                                                                            
|   
|(1) | Incorporated by reference to the exhibit designated by the same number in the Form S-4 filed by the Company on September 1, 1998 (File
No. 333-62635).
|(2) | Incorporated by reference to the exhibit designated by the same number in the Form 10-Q/A filed by the Company on December 13, 2000.                  
|(3) | Incorporated by reference to the exhibit designated by the same number in the Form 10-K filed by the Company on April 1, 2002.                        
|(4) | Incorporated by reference to the exhibit designated by the same number in the Form 10-Q filed by the Company on May 15, 2002.                         
|    |                                                                                                                                                       
|    | (b)                                                                                                                                                    | Current Reports on Form 8-K.                                                                                                                                                               
|    |                                                                                                                                                        |                                                                                                                                                                                            
|    |                                                                                                                                                        | None.                                                                                                                                                                                      
|    |                                                                                                                                                        |                                                                                                                                                                                            

29



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##### Table of Contents

Independent Auditors Report

To the Directors and Stockholders of Century Maintenance Supply, Inc.

We have audited the accompanying consolidated balance sheets of Century Maintenance Supply, Inc. and subsidiaries (the Company) as of December 31, 2001 and 2002, and the related consolidated
statements of income, stockholders deficit, and cash flows for each of the three years in the period ended December 31, 2002.  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 auditing standards generally accepted in the United States of
America.  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, such consolidated financial statements present fairly, in all material respects, the
financial position of Century Maintenance Supply, Inc. and subsidiaries as of December 31, 2001 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2002 in
conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the consolidated financial statements, the Company changed its method of
accounting to conform with Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets.

Houston, Texas March 7, 2003, except for Note 9, as to
which the date is March 17, 2003

F-1



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##### Table of Contents

Century Maintenance Supply, Inc.

Consolidated Balance Sheets (In Thousands)

|                           |                                           | December 31 |       
|-------------------------- | ----------------------------------------- | ----------- | ------
|                           |                                           |             |       
|                           |                                           | 2001        |       
|                           |                                           |             |       
|Current assets:            |                                           |             |       
|                           | Cash and cash equivalents                 |             | $     
|                           | Trade accounts receivable, net            |             |       
|                           | Inventories, net                          |             |       
|                           | Deferred income taxes                     |             |       
|                           | Prepaid expenses and other current assets |             |       
|                           |                                           |             |       
|Total current assets       |                                           |             | 69,405
|Goodwill, net              |                                           |             | 5,946 
|Deferred financing costs   |                                           |             | 2,000 
|Other assets               |                                           |             | 390   
|Property and equipment:    |                                           |             |       
|                           | Buildings and improvements                |             |       
|                           | Furniture and fixtures                    |             |       
|                           | Machinery and equipment                   |             |       
|                           |                                           |             |       
|                           |                                           |             | 9,896 
|                           | Less accumulated depreciation             |             |       
|                           |                                           |             |       
|Net property and equipment |                                           |             | 3,428 
|Deferred income taxes      |                                           |             | 344   
|                           |                                           |             |       
|Total assets               |                                           | $           | 81,513
|                           |                                           |             |       
|                           |                                           |             |       

See accompanying notes.

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##### Table of Contents

Century Maintenance Supply, Inc.

Consolidated Balance Sheets (continued) (In Thousands,
except share data)

|                                                             |                                                                                     | December 31 |        
|------------------------------------------------------------ | ----------------------------------------------------------------------------------- | ----------- | -------
|                                                             |                                                                                     |             |        
|                                                             |                                                                                     | 2001        |        
|                                                             |                                                                                     |             |        
|Current liabilities:                                         |                                                                                     |             |        
|                                                             | Accounts payable, trade                                                             |             | $      
|                                                             | Revolving credit facility                                                           |             |        
|                                                             | Income taxes payable                                                                |             |        
|                                                             | Accrued expenses                                                                    |             |        
|                                                             | Current portion of long-term debt                                                   |             |        
|                                                             | Dividends payable                                                                   |             |        
|                                                             |                                                                                     |             |        
|                                                             | Total current liabilities                                                           |             |        
|Long-term debt, less current portion                         |                                                                                     |             | 64,300 
|Commitments and contingencies (see note 4)                   |                                                                                     |             |        
|Redeemable exchangeable preferred stock, net $100 par value: |                                                                                     |             |        
|                                                             | Authorized shares  2,000,000                                                       |             |        
|                                                             | Issued and outstanding shares  527,706 and 539,938 at December 31, 2001 and 2002   |             |        
|Stockholders deficit:                                       |                                                                                     |             |        
|                                                             | Common Stock, $0.001 par value:                                                     |             |        
|                                                             | Authorized shares  15,000,000                                                      |             |        
|                                                             | Issued shares  12,590,536 at December 31, 2001 and 12,610,536 at December 31, 2002 |             |        
|                                                             | Additional paid-in capital                                                          |             |        
|                                                             | Treasury stock, 420,061 shares at December 31, 2001 and 2002, at cost               |             |        
|                                                             | Accumulated deficit                                                                 |             |        
|                                                             | Note receivable from officer                                                        |             |        
|                                                             |                                                                                     |             |        
|Total stockholders deficit                                  |                                                                                     |             | (65,312
|                                                             |                                                                                     |             |        
|Total liabilities and stockholders deficit                  |                                                                                     | $           | 81,513 
|                                                             |                                                                                     |             |        
|                                                             |                                                                                     |             |        

See accompanying notes.

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##### Table of Contents

Century Maintenance Supply, Inc.

Consolidated Statements of Income (In Thousands)

|                                                      |  | Year ended December 31 |        
|----------------------------------------------------- |  | ---------------------- | -------
|                                                      |  |                        |        
|                                                      |  | 2000                   |        
|                                                      |  |                        |        
|Net sales                                             |  | $                      | 257,262
|Cost of goods sold                                    |  |                        | 185,829
|                                                      |  |                        |        
|Gross profit                                          |  |                        | 71,433 
|Selling, general, and administrative expenses (SGA) |  |                        | 41,316 
|SGA - Stock based compensation charges                |  |                        | 56     
|                                                      |  |                        |        
|Operating income                                      |  |                        | 30,061 
|Interest expense                                      |  |                        | 9,681  
|                                                      |  |                        |        
|Income before income taxes                            |  |                        | 20,380 
|Provision for income taxes                            |  |                        | 7,928  
|                                                      |  |                        |        
|Net income                                            |  | $                      | 12,452 
|                                                      |  |                        |        

See accompanying notes.

F-4



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##### Table of Contents

Century Maintenance Supply, Inc.

Consolidated Statements of Changes in Stockholders Deficit (In Thousands, except share data)

|                                    |                                                  | Number of Shares Issued |            | Common Stock |   | Additional Paid-In Capital |   | Treasury Stock |        | Accumulated Deficit |   | Note Receivable from Officer |      | Total Stockholders Deficit |         
|----------------------------------- | ------------------------------------------------ | ----------------------- | ---------- | ------------ | - | -------------------------- | - | -------------- | ------ | ------------------- | - | ---------------------------- | ---- | --------------------------- | --------
|                                    |                                                  |                         |            |              |   |                            |   |                |        |                     |   |                              |      |                             |         
|Balances at  December 31, 1999      |                                                  |                         | 12,443,147 |              | $ | 12                         |   | $              | 70,759 |                     | $ | (1,225                       | )    | $                           | (147,344
|                                    | Purchase of treasury stock, at cost              |                         |            |             |   |                            |  |                |        |                    |   |                              | (586 | )                           |         
|                                    | Purchase of preferred stock                      |                         |            |             |   |                            |  |                |        |                    |   |                              |     |                             |         
|                                    | Exercise of stock options, including tax benefit |                         |            | 147,389      |   |                            | 1 |                |        | 417                 |   |                              |     |                             |         
|                                    | Preferred dividends                              |                         |            |             |   |                            |  |                |        |                    |   |                              |     |                             |         
|                                    | Net income                                       |                         |            |             |   |                            |  |                |        |                    |   |                              |     |                             |         
|                                    |                                                  |                         |            |              |   |                            |   |                |        |                     |   |                              |      |                             |         
|Balances at December 31, 2000       |                                                  |                         | 12,590,536 |              |   | 13                         |   |                | 71,176 |                     |   | (1,811                       | )    |                             | (140,470
|Purchase of treasury stock, at cost |                                                  |                         |           |              |   |                           |   |                |       |                     |   | (294                         | )    |                             |        
|                                    | Preferred dividends                              |                         |            |             |   |                            |  |                |        |                    |   |                              |     |                             |         
|                                    | Net income                                       |                         |            |             |   |                            |  |                |        |                    |   |                              |     |                             |         
|                                    |                                                  |                         |            |              |   |                            |   |                |        |                     |   |                              |      |                             |         
|Balances at December 31, 2001       |                                                  |                         | 12,590,536 |              |   | 13                         |   |                | 71,176 |                     |   | (2,105                       | )    |                             | (134,396
|                                    | Purchase of preferred stock, net                 |                         |            |             |   |                            |  |                |        |                    |   |                              |     |                             |         
|                                    | Preferred dividends                              |                         |            |             |   |                            |  |                |        |                    |   |                              |     |                             |         
|                                    | Issuance of common stock                         |                         |            | 20,000       |   |                            |  |                |        | 200                 |   |                              |     |                             |         
|                                    | Note receivable from officer                     |                         |            |             |   |                            |  |                |        |                    |   |                              |     |                             |         
|                                    | Net income                                       |                         |            |             |   |                            |  |                |        |                    |   |                              |     |                             |         
|                                    |                                                  |                         |            |              |   |                            |   |                |        |                     |   |                              |      |                             |         
|Balances at December 31, 2002       |                                                  |                         | 12,610,536 |              | $ | 13                         |   | $              | 71,376 |                     | $ | (2,105                       | )    | $                           | (124,829
|                                    |                                                  |                         |            |              |   |                            |   |                |        |                     |   |                              |      |                             |         
|                                    |                                                  |                         |            |              |   |                            |   |                |        |                     |   |                              |      |                             |         

See accompanying notes.

F-5



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##### Table of Contents

Century Maintenance Supply, Inc.

Consolidated Statements of Cash Flows (In Thousands)

|                                               |                                                                                   | Year ended December 31 |       
|---------------------------------------------- | --------------------------------------------------------------------------------- | ---------------------- | ------
|                                               |                                                                                   |                        |       
|                                               |                                                                                   | 2000                   |       
|                                               |                                                                                   |                        |       
|Operating activities:                          |                                                                                   |                        |       
|                                               | Net income                                                                        |                        | $     
|                                               | Adjustments to reconcile net income to net cash provided by operating activities: |                        |       
|                                               | Provision (benefit) for deferred income taxes                                     |                        |       
|                                               | Depreciation and amortization                                                     |                        |       
|                                               | Bad debt expense                                                                  |                        |       
|                                               | Changes in operating assets and liabilities:                                      |                        |       
|                                               | Accounts receivable                                                               |                        |       
|                                               | Inventory                                                                         |                        |       
|                                               | Prepaid expenses and other assets                                                 |                        |       
|                                               | Accounts payable                                                                  |                        |       
|                                               | Accrued expenses                                                                  |                        |       
|                                               | Income taxes payable                                                              |                        |       
|                                               |                                                                                   |                        |       
|                                               | Net cash provided by operating activities                                         |                        |       
|Investing activities:                          |                                                                                   |                        |       
|                                               | Purchases of property and equipment                                               |                        |       
|                                               |                                                                                   |                        |       
|                                               | Net cash used in investing activities                                             |                        |       
|Financing activities:                          |                                                                                   |                        |       
|                                               | Borrowings under revolving line of credit                                         |                        |       
|                                               | Repayments under revolving line of credit                                         |                        |       
|                                               | Repayments of long-term debt                                                      |                        |       
|                                               | Deferred financing costs                                                          |                        |       
|                                               | Issuance of common stock and exercise of stock options including tax benefit      |                        |       
|                                               | Purchase of preferred stock, net                                                  |                        |       
|                                               | Repurchase of common stock                                                        |                        |       
|                                               |                                                                                   |                        |       
|                                               | Net cash used in financing activities                                             |                        |       
|                                               |                                                                                   |                        |       
|Net (decrease) increase in cash                |                                                                                   |                        | (3,495
|Cash and cash equivalents at beginning of year |                                                                                   |                        | 3,499 
|                                               |                                                                                   |                        |       
|Cash and cash equivalents at end of year       |                                                                                   | $                      | 4     
|                                               |                                                                                   |                        |       
|                                               |                                                                                   |                        |       

See accompanying notes.

F-6



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##### Table of Contents

Century Maintenance Supply, Inc.

Notes to Consolidated Financial Statements For the Years Ended December 31, 2000, 2001 and 2002

1.  Summary of
Significant Accounting Policies

Description of Business

Century Maintenance Supply, Inc., a Delaware Corporation (the
Company or CMS) distributes general maintenance supplies and air conditioning and heating equipment and parts primarily to apartment complexes throughout the United States.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries.  All significant
intercompany balances and transactions have been eliminated in consolidation.

Recapitalization

Effective July 8, 1998, the Company
completed a recapitalization of the Company pursuant to an agreement and plan of merger (Recapitalization).  The transaction occurred as follows:

| | FS Equity Partners IV, L.P. (FSEP IV), formed Century Acquisition Corporation, a Delaware corporation (Acquisition Co.) on April 21,
1998.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | FSEP IV made an equity contribution of approximately $67,451,000 to Acquisition Co. and two other investors contributed a total of approximately $875,000 to Acquisition Co. (the
Equity Investment).  All of the outstanding capital stock of Acquisition Co. was held by FSEP IV and certain investors thereof.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | The Company issued $40,000,000 of Senior Exchangeable PIK Preferred Stock (the Preferred Stock), of which $12,000,000 was purchased by affiliated parties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | The Company obtained new secured term loan facilities with an aggregate principal amount of $100,000,000 (see Note 3).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | Acquisition Co. was merged into the Company (with the Company as the surviving corporation) and Acquisition Co.s outstanding capital stock was converted into 6,832,619
newly issued shares of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | The Company applied the proceeds of the Equity Investment of $68,326,054, proceeds of the secured term loan facilities of $100,000,000 and the proceeds of the sale of the
Preferred Stock of $40,000,000 to convert 17,396,272 shares of the Company held by the primary stockholder and the management owners (certain management employees of the Company) and certain options into cash of approximately $182,580,000, and paid
costs and expenses associated with the Recapitalization which totaled approximately $14,280,000.  Of the $14,280,000 of costs and expenses, approximately $7,982,000 was expensed and the remainder, related to the Preferred Stock and the new
credit facility, was offset against the proceeds or capitalized as deferred financing costs (see Notes 3 and 7).  The Company also purchased 545,146 options to purchase shares of Common Stock from employees for $4,479,000 (net of exercise
price) resulting in a compensation charge of $4,092,000.

Inventories

Inventories consist wholly of finished goods
and are stated at cost, applied on the weighted average method of costing, which is not in excess of market.  The Company periodically evaluates its reserve for obsolescence.  The reserve was $224,000, $1,179,000 and $58,000 at
December 31, 2000,  2001 and 2002, respectively. Net writeoffs

F-7



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##### Table of Contents

Century Maintenance Supply, Inc.

Notes to Consolidated Financial Statements
(continued)

of obsolete inventory were $150,000, $25,000 and $1,121,000 for the years ended December 31, 2000, 2001 and 2002, respectively.

Allowance for Doubtful Accounts

The Company periodically evaluates the creditworthiness of its customers.  The Companys allowance for doubtful accounts is
based on current market conditions, and losses on uncollectible accounts have consistently been within managements expectations.  The allowance for doubtful accounts was $1,220,000 and $1,817,000 at December 31,  2001 and 2002,
respectively.  Net writeoffs of uncollectible accounts were $885,000, $601,000 and $318,000 for the years ended December 31, 2000, 2001 and 2002, respectively.

Property and
Equipment

Property and equipment are recorded at cost.  Maintenance and repairs are charged to expense as incurred, and renewals and improvements are capitalized.  The cost of
property and equipment sold or otherwise retired and the accumulated depreciation applicable thereto are eliminated from the accounts, and the resulting profit or loss is reflected in operations.

The cost of property and equipment is depreciated over the estimated useful lives of the related assets.  Depreciation is computed using the straight-line method.  The estimated useful lives of property and equipment
are as follows:

|Leasehold improvements  | 3-10 years
|----------------------- | ----------
|Furniture and fixtures  | 5-7 years 
|Machinery and equipment | 3-8 years 

Depreciation expense was $1,507,000, $1,747,000 and $1,661,000 for 2000,
2001 and 2002, respectively.

Intangible Assets

Intangible assets consist primarily of goodwill associated with businesses acquired in
1997 and 1999.  Upon adoption of Statement of Financial Accounting Standards (SFAS) No. 142 (see New Accounting Standards) on January 1, 2002, the Company ceased amortization of its goodwill.  Amortization expense related
to goodwill was $192,000 and $229,000 for 2000 and 2001, respectively.  The Company evaluates the carrying amount of goodwill associated with its operating units on an annual basis using a market value approach to identify any potential
impairment.  No impairment has been recognized in 2002 as a result of this annual evaluation.

Net income, exclusive of amortization expense, would have been as follows for the years ended
December 31:

|                                |  | (in 000s) |       
|------------------------------- |  | --------- | ------
|                                |  |           |       
|                                |  | 2000      |       
|                                |  |           |       
|Reported net income             |  | $         | 12,452
|Add back: Goodwill amortization |  |           | 192   
|                                |  |           |       
|Adjusted net income             |  | $         | 12,644
|                                |  |           |       

Impairment of Long-Lived Assets

Property and equipment and other long-lived assets, such as goodwill, are reviewed for impairment whenever events or changes in business circumstances indicate the carrying values of the assets may not be recoverable. 
Impairment

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##### Table of Contents

Century Maintenance Supply, Inc.

Notes to Consolidated Financial Statements
(continued)

losses would be recorded when the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount of those assets.

Revenue Recognition

Revenue is recognized upon delivery of inventory to customers and when title passes to customer.  The Companys revenue recognition
practices conform with those described in Staff Accounting Bulletin No. 101 issued by the staff of the Securities and Exchange Commission.

Income Taxes

The Company follows the asset and liability method of accounting for income taxes.  Under this method, deferred income tax assets and liabilities are determined based on differences between the financial statement basis
and income tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

Statement of Cash Flows

The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents.

|                          |                                                            | 2000 |   | 2001      |  | 2002 |          
|------------------------- | ---------------------------------------------------------- | ---- | - | --------- |  | ---- | ---------
|                          |                                                            |      |   |           |  |      |          
|Supplemental information: |                                                            |      |   |           |  |      |          
|                          | Interest paid                                              |      | $ | 9,607,000 |  | $    | 7,274,000
|                          |                                                            |      |   |           |  |      |          
|                          | Taxes paid                                                 |      | $ | 5,043,000 |  | $    | 7,227,000
|                          |                                                            |      |   |           |  |      |          
|Noncash transaction:      |                                                            |      |   |           |  |      |          
|                          | Treasury stock acquired for repayment of notes receivables |      | $ |          |  | $    | 248,000  
|                          |                                                            |      |   |           |  |      |          
|                          |                                                            |      |   |           |  |      |          

Advertising Costs

The Company expenses all advertising costs as incurred.  Advertising expense was
approximately $834,000, $870,000 and $1,015,000 for the years ended December 31, 2000, 2001 and 2002, respectively.

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable approximate their fair values due to the short-term maturities of these instruments.

The carrying amounts of borrowings pursuant to the Companys Revolving Credit Facility and the Term Loan Facility approximate fair value because the rates on such agreements are variable, based on current market
rates.

Stock-Based Compensation

SFAS No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148,
encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans at fair value.  The Company has chosen to continue to account for stock-based compensation using the intrinsic value method
prescribed in Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees,

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##### Table of Contents

Century Maintenance Supply, Inc.

Notes to Consolidated Financial Statements
(continued)

and related interpretations.  Accordingly, compensation cost for stock options is measured as the excess, if any, of the quoted market price of the Companys stock at the
date of the grant over the amount an employee must pay to acquire the stock.

At December 31, 2002, the
Company has two stock-based employee compensation plans, which are described more fully in Note 7.  The Company accounts for those plans under the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock
Issued to Employees, and related Interpretations.  No stock-based employee compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on
the date of grant.  The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation, to stock-based
employee compensation.

|                                                                                                                                             |  | Year Ended December 31 |           
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ----------
|                                                                                                                                             |  |                        |           
|                                                                                                                                             |  | 2000                   |           
|                                                                                                                                             |  |                        |           
|Net Income, as reported                                                                                                                      |  | $                      | 12,452,000
|Deduct:  Total stock-based employee compensation expense determined under fair value based method for all awards, net of
related tax effects |  |                        | 47,000    
|                                                                                                                                             |  |                        |           
|Proforma net income                                                                                                                          |  | $                      | 12,405,000
|                                                                                                                                             |  |                        |           

Use of Estimates

The preparation of
financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and
accompanying notes.  Actual results could differ from those estimates.

New Accounting Standards

The Company adopted Statement of
Financial Accounting Standard (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities on January 1, 2001.  SFAS No. 133 requires that all derivatives be recognized as either assets or
liabilities and measured at fair value, and changes in the fair value of derivatives are reported in current earnings, unless the derivative is designated and effective as a hedge.  If the intended use of the derivative is to hedge the exposure
to changes in the fair value of an asset, a liability or a firm commitment, then changes in the fair value of the derivative instrument will generally be offset in the income statement by changes in the hedged items fair value.  However,
if the intended use of the derivative is to hedge the exposure to variability in expected future cash flows, then changes in the fair value of the derivative instrument will generally be reported in Other Comprehensive Income (OCI).  The gains
and losses on the derivative instrument that are reported as OCI will be reclassified to earnings in the periods in which earnings are impacted by the hedged item.

The Company is exposed to
variability of future cash flows related to interest rate risk on its existing long-term debt and entered into interest rate swap agreements to hedge their exposure.  These interest rate swap agreements terminated on September 28,
2001.

There was no impact on the Companys results of operations from the January 1, 2001 implementation of SFAS No. 133.  The net of tax cumulative-effect adjustment
reducing OCI and stockholders equity was approximately $578,000 on January 1, 2001.  For 2001, the Company recorded a net of tax gain on these cash flow hedges of approximately $711,000 on termination of the agreements.

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##### Table of Contents

Century Maintenance Supply, Inc.

Notes to Consolidated Financial Statements
(continued)

In July 2001, the FASB issued SFAS No. 141, Business Combinations and SFAS No. 142, Goodwill and Other Intangible Assets.  SFAS No. 141
establishes new standards for accounting and reporting requirements for business combinations and requires the purchase method of accounting be used for all business combinations initiated after June 30, 2001.  Use of the pooling-of-interests
method is prohibited.  SFAS No. 142, Goodwill and Other Intangible Assets, supersedes APB opinion No. 17, Intangible Assets.  SFAS No. 142 establishes new standards for goodwill acquired in a business
combination and eliminates amortization of goodwill and instead sets forth methods to periodically evaluate goodwill for impairment.  The Company adopted this statement during the first quarter of 2002.  Upon adoption of SFAS No. 142, the
Company ceased amortization of goodwill.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.  SFAS No. 144
addresses financial accounting and reporting for the impairment and disposal of long-lived assets.  The Company adopted this statement during the first quarter of 2002.  The adoption of this statement has had no significant effect on the
Companys consolidated financial position or results of operations.

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of
FASB Statement No. 13, and Technical Corrections.  SFAS No. 145, among other things, amends SFAS No. 4 and SFAS No. 64 to require that gains and losses from the extinguishment of debt generally be classified within
continuing operations.  The provisions of SFAS No. 145 are effective for fiscal years beginning after May 15, 2002.  Management does not believe the adoption will have a significant impact on the Companys financial
statements.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities.  SFAS No. 146 replaces Emerging Issues Task
Force (EITF) Issue 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit and Activity.  This standard requires companies to recognize costs associated with exit or disposal activities when
they are incurred rather than at a date of a commitment to an exit or disposal plan.  This statement is effective for exit or disposal activities that are initiated after December 31, 2002.  The adoption of SFAS 146 did not have a
significant impact on the Companys financial statements.

In December 2002, the Financial Accounting Standards Board (FSAB) issued SFAS No. 148, Accounting for Stock-Based
Compensation - Transition and Disclosure.  This statement amends SFAS No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for
stock-based compensation.  In addition, this Statement amends the disclosure requirements of SFAS No. 123 to require revised disclosures in both annual and interim financial statements about the method of accounting for stock-based compensation
and the effect of the method used on reported results.

2.  Related Parties

The Company purchases and sells various inventory items
at cost from and to Century Airconditioning Supply, Inc. (CAC), which is a stockholder of the Company and is wholly-owned by a director of the Company and extends credit under standard terms in connection with these sales.  The
Company paid off certain notes payable to the former majority stockholder of the Company in connection with the recapitalization.

Sales to and purchases from CAC amounted to $44,000 and $617,000
for 2000, $41,000 and $270,000 for 2001 and $21,000 and $126,000 for 2002, respectively.  The Company had lease expense to related parties amounting to $928,000 for 2000, $831,000 for 2001 and $929,000 for 2002.

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##### Table of Contents

Century Maintenance Supply, Inc.

Notes to Consolidated Financial Statements
(continued)

3.  Long-Term Debt and Notes Payable

Long-term debt consisted of the following:

|                     |                                | December 31 |           
|-------------------- | ------------------------------ | ----------- | ----------
|                     |                                |             |           
|                     |                                | 2001        |           
|                     |                                |             |           
|Long-term debt:      |                                |             |           
|                     | Tranche A Facility (see below) |             | $         
|                     | Tranche B Facility (see below) |             |           
|                     |                                |             |           
|                     |                                |             | 77,900,000
|Less current portion |                                |             | 13,600,000
|                     |                                |             |           
|                     |                                | $           | 64,300,000
|                     |                                |             |           

On July 8, 1998, as part of the Recapitalization, the Company entered into a credit
facility, providing for $100.0 million of secured term loan facilities and a $25.0 million revolving loan facility (the Revolving Credit Facility).  The term loan facility consists of a $40.0 million Tranche A Term
Facility and a $60.0 million Tranche B Term Facility (collectively called the Term Loan Facility).  The Term Loan Facility will amortize over a five-year period for the Tranche A Term Facility and a seven-year period
for the Tranche B Term Facility, and the Revolving Credit Facility will mature on September 30, 2003.  The payments increase over the amortization periods.  The interest rate under the credit facility is variable and based, at the option
of the Company, upon either a Eurodollar rate plus 2.5% or a base rate plus 1.5% (for the Revolving Credit Facility and the Tranche A Term Facility) and the Eurodollar rate plus 2.75% or a base rate plus 1.75% (for the Tranche B Term
Facility) per annum.  As of December 31, 2002 the effective rate was 3.4375% and between 4.125% and 4.1875% for the Tranche A facility and Tranche B Term facility, respectively.  Pursuant to the terms of the Credit Facility, because
the Company achieved certain performance goals, rates under the Tranche A Term Facility, the Revolving Facility and the commitment fee have been reduced as agreed.  A commitment fee of 0.375% per annum will be charged on the unused portion of
the Revolving Credit Facility.  The Company has paid commitment fees of $104,000, $99,000 and $79,000 in 2000, 2001 and 2002, respectively.

The credit facility contains certain non-financial
and financial covenants including restrictions on the ability to incur additional debt, declare dividends, purchase treasury stock and capital expenditures.  The credit facility is collateralized by substantially all assets of the
Company.  The Company incurred approximately $4,552,000 of costs as part of obtaining the credit facility which have been recorded as deferred financing costs.  The Company amortizes these costs over the average life of the credit
facility.  The Company recognized amortization of $767,000, $782,000 and $897,000 as interest expense in December 31, 2000, 2001 and 2002, respectively.

Effective September 30,
1998, the Company entered into two three-year interest swap agreements to reduce a portion of its interest rate exposure on its credit facility which terminated on September 20, 2001.  Under the terms of the first agreement, the Company
pays 8.81% on notional principal of $29,925,000 and receives LIBOR plus 2.75% on the notional balance.  Under the terms of the second agreement, the Company pays 8.54% on a notional balance of $20,000,000 which declines to $13,000,000 in 2001,
and received LIBOR plus 2.5% on the notional balance.  The Company recognized interest benefit of $174,000 in 2000 and an expense of $327,000 in 2001, respectively, related to the interest rate swap agreements.  On termination of these
agreements, the Company recorded a net of tax gain on these cash flow hedges of approximately $711,000 in 2001.

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##### Table of Contents

Century Maintenance Supply, Inc.

Notes to Consolidated Financial Statements
(continued)

Maturities of long-term debt at December 31, 2002 are summarized as follows:

|2003 |  |   | 18,800,000 | 
|---- |  | - | ---------- | 
|2004 |  |   | 28,500,000 | 
|2005 |  |   | 17,000,000 | 
|     |  |   |            | 
|     |  | $ | 64,300,000 | 
|     |  |   |            | 

4.  Commitments and Contingencies

The Company leases store and distribution center facilities in 37 locations under operating leases that expire over the next five years.  The Company also leases vehicles under operating leases.

Future minimum payments under these operating leases are as follows:

|Year ending December 31 |  |   |           | 
|----------------------- |  | - | --------- | 
|                        |  |   |           | 
|2003                    |  |   | 3,672,000 | 
|2004                    |  |   | 1,908,000 | 
|2005                    |  |   | 988,000   | 
|2006                    |  |   | 354,000   | 
|2007                    |  |   | 235,000   | 
|                        |  |   |           | 
|                        |  | $ | 7,157,000 | 
|                        |  |   |           | 

Rental expenses for 2000, 2001 and 2002 were $5,742,000, $6,175,000 and $6,444,000,
respectively.

The Company is party to lawsuits and other proceedings incidental to its business.  While the results of such lawsuits and other proceedings cannot be predicted with certainty,
management does not expect that ultimate liabilities, if any, will have a material adverse effect on the financial position, results of operations, or cash flow of the Company.

5.  Income
Taxes

The provision (benefit) for income taxes for the years ended December 31, 2000, 2001 and 2002 consisted of the following:

|         |         | 2000 |           | 2001      |  | 2002      |          
|-------- | ------- | ---- | --------- | --------- |  | --------- | ---------
|         |         |      |           |           |  |           |          
|Current: |         |      |           |           |  |           |          
|         | Federal |      | $         | 7,583,000 |  | $         | 7,332,000
|         | State   |      |           | 753,000   |  |           | 694,000  
|         |         |      |           |           |  |           |          
|         |         |      | 8,336,000 |           |  | 8,026,000 |          

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##### Table of Contents

Century Maintenance Supply, Inc.

Notes to Consolidated Financial Statements
(continued)

|          |         | 2000 |           | 2001     |   | 2002      |         
|--------- | ------- | ---- | --------- | -------- | - | --------- | --------
|          |         |      |           |          |   |           |         
|Deferred: |         |      |           |          |   |           |         
|          | Federal |      |           | (387,000 | ) |           | (354,000
|          | State   |      |           | (22,000  | ) |           | (33,000 
|          |         |      |           |          |   |           |         
|          |         |      | (409,000  | )        |   | (387,000  | )       
|          |         |      |           |          |   |           |         
|          |         | $    | 7,927,000 |          | $ | 7,639,000 |         
|          |         |      |           |          |   |           |         

The differences between income taxes computed at the federal statutory income tax rate and the
provision for income taxes for the years ended December 31, 2000, 2001 and 2002 are as follows:

|                                                          |  | 2000 |           | 2001 |   | 2002      |  
|--------------------------------------------------------- |  | ---- | --------- | ---- | - | --------- | -
|                                                          |  |      |           |      |   |           |  
|Income tax computed at federal statutory income tax rate  |  | $    | 7,158,000 |      | $ | 7,105,000 |  
|State income taxes, net of federal benefit                |  |      | 461,000   |      |   | 429,000   |  
|Amortization of nondeductible goodwill                    |  |      | 72,000    |      |   | 80,000    |  
|Nondeductible portion of business meals and entertainment |  |      | 37,000    |      |   | 48,000    |  
|Other                                                     |  |      | 200,000   |      |   | (23,000   | )
|                                                          |  |      |           |      |   |           |  
|Provision for income taxes                                |  | $    | 7,928,000 |      | $ | 7,639,000 |  
|                                                          |  |      |           |      |   |           |  

Deferred tax assets and liabilities as of December 31, 2001 and 2002 comprised the
following:

|                               |                                     | 2001 |           | 2002    |  
|------------------------------ | ----------------------------------- | ---- | --------- | ------- | -
|                               |                                     |      |           |         |  
|Deferred tax assets:           |                                     |      |           |         |  
|                               | Bad debt allowances                 |      | $         | 466,000 |  
|                               | Inventory and sales return reserves |      |           | 450,000 |  
|                               | Property, plant, and equipment      |      |           | 345,000 |  
|                               |                                     |      |           |         |  
|Total deferred tax assets      |                                     |      | 1,262,000 |         |  
|Deferred tax liabilities:      |                                     |      |           |         |  
|                               | Other                               |      |           | (37,000 | )
|                               |                                     |      |           |         |  
|Total deferred tax liabilities |                                     |      | (37,000   | )       |  
|                               |                                     |      |           |         |  
|Net deferred tax assets        |                                     | $    | 1,225,000 |         | $
|                               |                                     |      |           |         |  
|                               |                                     |      |           |         |  

6.  Stockholders Deficit

In  2000 and 2001, the Company purchased 97,727 shares for $586,000 in
cash, and 7,517 shares for $45,000 in cash, respectively, from stockholders.  Additionally, in 2001, the Company acquired 31,013 shares of Common Stock for the repayment of notes receivable of $248,000 from certain stockholders.  These
shares have been placed in treasury stock.

As part of the Recapitalization the Company sold $40.0 million of 13.25% Senior Exchangeable PIK (Payment- in-kind) Preferred Stock of which
$12.0 million was sold to affiliates of the Company.  The Preferred stock is due in 2010 with an aggregate liquidation preference of $40.00 million or $100 per share.  Dividends are payable

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##### Table of Contents

Century Maintenance Supply, Inc.

Notes to Consolidated Financial Statements
(continued)

semiannually in cash, except that on each dividend payment date on or prior to July 1, 2003, dividends may be paid, at the Companys option, by issuance of additional shares
of preferred stock.  Preferred stock is subject to mandatory redemption at its liquidation preference, plus accumulated and unpaid dividends, on July 1, 2010.  The Company may redeem the preferred stock in accordance with certain
redemption provisions at a date earlier than July 1, 2010. If the Company elects to redeem the preferred stock on or before July 1, 2003, the redemption price will be 113.25% of the liquidation preference price of $100 per share. 
Holders of preferred stock have no voting rights.

At any time, the Company may, at its option, exchange all of the shares of preferred stock then outstanding for Exchange Debentures in a principal
amount equal to the liquidation preference of the shares being exchanged.  The exchange debentures would have interest of 13.25% and would be due in 2010.  The Companys credit facility currently prohibits the Company from exchanging
the preferred stock.  The Company incurred approximately $2,803,000 of costs as part of the sale of the preferred stock which has been offset against the proceeds.  The Company has accreted approximately $549,000, $200,409 and $424,761 in
2000, 2001 and 2002, respectively to accumulated deficit as part of the dividends accrued.  Included in the 2000 and 2002 accretion is $324,000 and $234,000, respectively, related to the repurchase of Preferred Stock.

7.  Employee Stock Option Plan

In July 1997, the Company established the 1997 Incentive Stock Plan (the Stock Option Plan),
pursuant to which options may be granted to eligible employees of the company or its subsidiaries for the purchase of an aggregate of 1,000,000 shares of common stock of the Company (the Common Stock).  The Stock Option Plan is
administered by the Board of Directors (the Board).  The Board has the power to determine which eligible employees will receive stock option rights, the timing and manner of the grant of such rights, the exercise price, the number
of shares to be covered by the option, and the type and terms of the options.  The Board may, at any time, terminate or amend the Stock Option Plan, provided that no such amendment may adversely affect the rights of optionees with regard to
outstanding options.

On July 1, 1997, the Company granted 620,033 non-qualified, fully vested stock options to purchase Common Stock with an exercise price of $1.74 per common share with an
expiration date of three years after the date of grant.  The grant of options resulted in compensation expense of $625,000 for the excess of the fair value of the Common Stock over the exercise price at the date of grant.  The Company also
granted 322,095 non-qualified, fully vested stock options to purchase Common Stock, with an exercise price of $3.04 per common share and with an expiration date of three years after the date of grant on July 11, 1997.  As part of the
Recapitalization, the Company repurchased 545,146 of the outstanding options and recognized a compensation charge of $4,092,000 (see Note 1).

In connection with the Recapitalization, the Company
adopted the 1998 Nonqualified  Stock Option Plan (the Nonqualified Stock Option Plan), pursuant to which options may be granted to eligible employees of the Company for the purchase of an aggregate of 1,642,500 shares of Common
Stock of the Company.  The 1998 Nonqualified Stock Option Plan is administered by the Board of Directors (the Board).  On July 9, 1998, the Company granted 692,000 non-qualified stock options to purchase Common Stock with
an exercise price of $10.00 per common share with an expiration date of seven years after the date of grant.  The stock options become exercisable over a four-year period based on the Company meeting certain financial goals each year or on a
cumulative basis over the four-year period as set forth in the stock option agreement.  Effective December 31, 1998, the Board of Directors approved the vesting of 57,667 options to purchase Common Stock under the 1998 Nonqualified Stock
Option Plan.

On July 9, 1998, under the 1998 Nonqualified Stock Option Plan, the Company granted a primary stockholder 180,000 non-qualified stock options to purchase Common Stock of the
Company with an exercise price of $10.00 per common share with an expiration date of seven years after the grant date.  The stock options become exercisable over a three-year period based on the Company meeting certain financial goals each year
or on a cumulative basis over the three-year period as set forth in the stock option agreement.

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##### Table of Contents

Century Maintenance Supply, Inc.

Notes to Consolidated Financial Statements
(continued)

In connection with the Recapitalization, the Company granted to a new director of the Company 50,000 non-qualified stock options to purchase Common Stock of the Company.  The
stock options have an exercise price of $10.00 per common share with an expiration of 7 years after the grant date and are fully vested and exercisable.

On June 15, 2000, the Company granted
non-qualified options to purchase 90,900 shares of Common Stock of the Company at an exercise price of $10.00 per share with an expiration date of seven years after the date of grant.  The stock options granted vest over a three year period,
with the first vesting date occurring on July 9, 2000 and all options vesting in full on July 9, 2002.

On January 21, 2002, the Company granted to Joseph Semmer, Centurys newly
appointed Chief Executive Officer, a non-qualified option to purchase up to 190,000 shares of Common Stock.  40,000 shares subject to the option are immediately exercisable at an exercise price of $10.00 per share.  The remaining shares
subject to the option become exercisable over the next three years on the anniversary of the date of grant at exercise prices between $10.00 and $15.00 per share.  The option will terminate on the seven-year anniversary of the grant
date.

In October 2002, the Company granted non-qualified options to purchase an aggregate of 124,500 shares of Common Stock to its directors, officers and employees under the Companys 1998
Nonqualified Stock Option Plan.  The options have an exercise price of $11.00 and vest over a three-year period.

Changes to the outstanding options granted pursuant to the Stock Option Plan
are summarized in the table below:

|                                 |  | Number of Shares |           | Weighted Average Exercise Price Per Share |   | Weighted Average Fair Value Per Share | 
|-------------------------------- |  | ---------------- | --------- | ----------------------------------------- | - | ------------------------------------- | 
|                                 |  |                  |           |                                           |   |                                       | 
|Outstanding at December 31, 1999 |  |                  | 1,153,684 |                                           | $ | 7.54                                  | 
|Granted - June 2000              |  |                  | 90,900    |                                           | $ | 10.00                                 | 
|Forfeitures - 2000               |  |                  | (200,797  | )                                         | $ | 4.09                                  | 
|Exercised - July 2000            |  |                  | (199,587  | )                                         | $ | 1.74                                  | 
|                                 |  |                  |           |                                           |   |                                       | 
|Outstanding at December 31, 2000 |  |                  | 844,200   |                                           | $ | 10.00                                 | 
|                                 |  |                  |           |                                           |   |                                       | 
|Forfeitures - 2001               |  |                  | (206,200  | )                                         | $ | 10.00                                 | 
|                                 |  |                  |           |                                           |   |                                       | 
|Outstanding at December 31, 2001 |  |                  | 638,000   |                                           | $ | 10.00                                 | 
|                                 |  |                  |           |                                           |   |                                       | 
|Granted - January 2002           |  |                  | 190,000   |                                           | $ | 11.97                                 | 
|Granted - December 2002          |  |                  | 124,500   |                                           | $ | 11.00                                 | 
|Forfeitures - 2002               |  |                  | (33,500   | )                                         | $ | 10.00                                 | 
|                                 |  |                  |           |                                           |   |                                       | 
|Outstanding at December 31, 2002 |  |                  | 919,000   |                                           | $ | 10.54                                 | 
|                                 |  |                  |           |                                           |   |                                       | 

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##### Table of Contents

Century Maintenance Supply, Inc.

Notes to Consolidated Financial Statements
(continued)

The following summarizes information related to stock options outstanding at December 31, 2002:

|                |  | Options Outstanding |         | Options Exercisable             |  
|--------------- |  | ------------------- | ------- | ------------------------------- | -
|                |  |                     |         |                                 |  
|Exercise Price  |  | Options             |         | Weighted Average Exercise Price |  
|                |  |                     |         |                                 |  
|$10.00 - $15.00 |  |                     | 919,000 |                                 | $

The Company has elected to follow APB Opinion No. 25, Accounting for
Stock Issued to Employees, and related interpretations in accounting for stock-based compensation arrangements.

Pro forma information regarding net income per share is required by SFAS
No. 123, Accounting for Stock-Based Compensation (FAS 123), which also requires that the information be determined as if the Company had accounted for its employee stock options granted under the fair value method of SFAS No.
123.  The fair value for these options was estimated at the date of grant using the minimum value option pricing model using the following assumptions:  risk-free interest rate of 5.2%, 6.5% and 2.6% for 1998, 2000 and 2002, respectively,
a dividend yield of 0% and an expected life of 5 years for 1998, 2000 and 2002.  Because the Companys employee stock options have characteristics significantly different from those of traded options and because changes in the
subjective input assumptions can materially affect the fair value estimate, in managements opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

8.  Profit Sharing Plan and Defined Contribution Plan

CAC sponsors a noncontributory, defined contribution profit sharing plan for the benefit of all
eligible employees (as defined in the plan agreement), in which subsidiaries participate.  The annual contribution to the plan is determined at the discretion of the Board.  For the years ended December 31, 2000, 2001 and 2002, the
Company made no contributions to the plan.

The Company sponsors a 401(k) savings and retirement plan which is open to all employees who have attained age 21 and who have completed one full
year of service.  Each employee may contribute a minimum of 2%, up to a maximum of 15%, of basic compensation.  The Company matches contributions at a rate of 50% for contributions by the employee up to 8% of an employees
compensation.  The Company contributed approximately $382,000,  $492,000 and $528,000 in 2000, 2001 and 2002, respectively, as matching funds to the plan.  No discretionary, lump-sum contributions were made in 2000, 2001 and
2002.

9.  Subsequent Event

On March 17, 2003, the Company entered into an asset purchase agreement with Project Lighting Company,
Inc. to acquire certain operating assets including accounts receivables, inventory, and equipment and machinery.  The purchase price was approximately $3.51 million, which was paid in cash and resulted in approximately $1.15 million in goodwill
to be recorded in fiscal year 2003.  The historical operations of Project Lighting Company, Inc. for the periods prior to the asset purchase are not material to the operations of the Company.

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##### Table of Contents

SIGNATURE

Pursuant to the requirements of Section 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|               | CENTURY MAINTENANCE SUPPLY, INC.
|-------------- | --------------------------------
|               |                                 
|March 28, 2003 | By:                             
|               |                                 
|               |                                 

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Richard E. Penick his true and lawful attorney-in-fact with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to
this Report on Form 10-K and to file same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
on Form 10-K has been signed by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

|Signature                 |  | Title                                                                             |  | Date          
|------------------------- |  | --------------------------------------------------------------------------------- |  | --------------
|                          |  |                                                                                   |  |               
|/s/  Joseph Semmer        |  | Chief Executive Officer and Director (Principal Executive Officer)                |  | March 28, 2003
|                          |  |                                                                                   |  |               
|Joseph Semmer             |  |                                                                                   |  |               
|                          |  |                                                                                   |  |               
|/s/  Richard E. Penick    |  | Chief Financial Officer and Director (Principal Financial and Accounting Officer) |  |               
|                          |  |                                                                                   |  |               
|Richard E. Penick         |  |                                                                                   |  |               
|                          |  |                                                                                   |  |               
|/s/  Dennis C. Bearden    |  | Director                                                                          |  | March 28, 2003
|                          |  |                                                                                   |  |               
|Dennis C. Bearden         |  |                                                                                   |  |               
|                          |  |                                                                                   |  |               
|/s/  Mark J. Doran        |  | Director                                                                          |  | March 28, 2003
|                          |  |                                                                                   |  |               
|Mark J. Doran             |  |                                                                                   |  |               
|                          |  |                                                                                   |  |               
|                          |  | Director                                                                          |  |               
|                          |  |                                                                                   |  |               
|William C. Johnson        |  |                                                                                   |  |               
|                          |  |                                                                                   |  |               
|/s/  Jon D. Ralph         |  | Director                                                                          |  | March 28, 2003
|                          |  |                                                                                   |  |               
|Jon D. Ralph              |  |                                                                                   |  |               
|                          |  |                                                                                   |  |               
|/s/  J. Frederick Simmons |  | Director                                                                          |  | March 28, 2003
|                          |  |                                                                                   |  |               
|J. Frederick Simmons      |  |                                                                                   |  |               
|                          |  |                                                                                   |  |               
|/s/  Ronald P. Spogli     |  | Director                                                                          |  | March 28, 2003
|                          |  |                                                                                   |  |               
|Ronald P. Spogli          |  |                                                                                   |  |               

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##### Table of Contents

CERTIFICATIONS

I, Joseph Semmer, certify that:

1.          I have reviewed this annual report on Form 10-K of Century
Maintenance Supply, Inc.;

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

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

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

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

b.        
  evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the Evaluation Date); and

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

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

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

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

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

|Date:  March 28, 2003 | /s/    Joseph Semmer                 
|--------------------- | -------------------------------------
|                      |                                      
|                      | Joseph Semmer Chief Executive Officer

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##### Table of Contents

CERTIFICATIONS

I, Richard E. Penick, certify that:

1.          I have reviewed this annual report on Form 10-K of Century
Maintenance Supply, Inc.;

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

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

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

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

b.        
  evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the Evaluation Date); and

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

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

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

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

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

|Date:  March 28, 2003 | /s/   Richard E. Penick                                                
|--------------------- | -----------------------------------------------------------------------
|                      |                                                                        
|                      | Richard E. Penick Chief Financial Officer, Vice President and Secretary

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##### Table of Contents

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.

Other than this Report on Form 10-K, no other
annual report and no proxy materials have been sent or will be furnished to the Companys security holders.

II-4