##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

|                                                  |  |                               
|------------------------------------------------- |  | ------------------------------
|For the quarterly period ended September 30, 2002 |  | Commission File Number 0-13147

|                                                      
|------------------------------------------------------
|LESCO, INC.                                           
|                                                      
|(Exact name of registrant as specified in its charter)

|                                         |  |                                        
|---------------------------------------- |  | ---------------------------------------
|OHIO                                     |  | 34-0904517                             
|State or other jurisdiction of           |  | (I.R.S. Employer Identification Number)
|incorporation or organization)           |  |                                        
|                                         |  |                                        
|15885 Sprague Road                       |  |                                        
|Strongsville, Ohio                       |  | 44136                                  
|(Address of principal executive offices) |  | (Zip Code)                             

(440) 783-9250
(Registrants telephone number,
including area code)

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 twelve months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes
X No

Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the close of the latest practical date.

|                                 |  |                                
|-------------------------------- |  | -------------------------------
|Class                            |  | Outstanding atNovember 12, 2002
|Common shares, without par value |  | 8,545,786 shares               

1



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TABLE OF CONTENTS



|                                                   |                                                                                               |  |  |  |  |  |  | 
|-------------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                     
|                                                   | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                                                   | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                                   
|                                                   | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                                   | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK                               
|                                                   | ITEM 4. DISCLOSURE CONTROLS AND PROCEDURES                                                   
|PART II  OTHER INFORMATION                       
|SIGNATURES                                        
|CERTIFICATIONS                                    
|EX-10(Y)(4)13 Fourth Amend. to Credit & Loan Agrmt



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##### Table of Contents






PART I. FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS

LESCO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS  UNAUDITED

|                                                                                            |                                                                                            |      |                                 |        |                                |      |         |         |   |   |         |         |   |   |         |         |  
|------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------ | ---- | ------------------------------- | ------ | ------------------------------ | ---- | ------- | ------- | - | - | ------- | ------- | - | - | ------- | ------- | -
|                                                                                            |                                                                                            |      | Three Months Ended September 30 |        | Nine Months Ended September 30
|                                                                                            |                                                                                            |      |                                 |        |                               
|(In thousands, except per share data)                                                       |                                                                                            | 2002 |                                 | 2001   |                                | 2002 |         | 2001   
|                                                                                            |                                                                                            |      |                                 |        |                                |      |         |        
|Net sales                                                                                   |                                                                                            | $    | 144,009                         |        |                                | $    | 144,084 |         |   | $ | 403,981 |         |   | $ | 398,941 |        
|                                                                                            | Cost of sales                                                                              |      |                                 | 95,362 |                                |      |         | 102,521 |   |   |         | 268,283 |   |   |         | 275,135 |  
|                                                                                            | Cost of sales inventory markdown  Note F                                                  |      |                                 |       |                                |      |         |        |   |   |         | 9,581   |   |   |         |        |  
|                                                                                            |                                                                                            |      |                                 |        |                                |      |         |         |   |   |         |         |   |   |         |        
|Gross profit on sales                                                                       |                                                                                            |      | 48,647                          |        |                                |      | 41,563  |         |   |   | 126,117 |         |   |   | 123,806 |        
|                                                                                            | Warehouse & delivery expense                                                               |      |                                 | 11,798 |                                |      |         | 11,924  |   |   |         | 34,589  |   |   |         | 35,247  |  
|                                                                                            | Selling expense                                                                            |      |                                 | 19,402 |                                |      |         | 18,386  |   |   |         | 57,369  |   |   |         | 56,123  |  
|                                                                                            | General & administrative expense                                                           |      |                                 | 8,787  |                                |      |         | 9,742   |   |   |         | 25,525  |   |   |         | 24,985  |  
|                                                                                            | Asset rationalization  Note E                                                             |      |                                 |       |                                |      |         |        |   |   |         | 12,044  |   |   |         |        |  
|                                                                                            | Severance expense  Note E                                                                 |      |                                 |       |                                |      |         | 139     |   |   |         | 3,866   |   |   |         | 636     |  
|                                                                                            |                                                                                            |      |                                 |        |                                |      |         |         |   |   |         |         |   |   |         |        
|                                                                                            |                                                                                            |      | 39,987                          |        |                                |      | 40,191  |         |   |   | 133,393 |         |   |   | 116,991 |        
|Income (loss) from operations                                                               |                                                                                            |      | 8,660                           |        |                                |      | 1,372   |         |   |   | (7,276  | )       |   |   | 6,815   |        
|                                                                                           
|                                                                                            | Joint venture results                                                                      |      |                                 | 20     |                                |      |         | (148    | ) |   |         | 48      |   |   |         | 36      |  
|                                                                                            | Customer finance charges                                                                   |      |                                 | 494    |                                |      |         | 738     |   |   |         | 1,274   |   |   |         | 1,692   |  
|                                                                                            | Gain on sale of fixed assets                                                               |      |                                 | 185    |                                |      |         |        |   |   |         | 185     |   |   |         |        |  
|                                                                                            | Other income                                                                               |      |                                 | 170    |                                |      |         | 131     |   |   |         | 439     |   |   |         | 537     |  
|                                                                                            | Other expense                                                                              |      |                                 | (244   | )                              |      |         | (99     | ) |   |         | (782    | ) |   |         | (472    | )
|                                                                                            |                                                                                            |      |                                 |        |                                |      |         |         |   |   |         |         |   |   |         |        
|                                                                                            |                                                                                            |      | 625                             |        |                                |      | 622     |         |   |   | 1,164   |         |   |   | 1,793   |        
|                                                                                           
|Earnings (loss) before interest and taxes                                                   |                                                                                            |      | 9,285                           |        |                                |      | 1,994   |         |   |   | (6,112  | )       |   |   | 8,608   |        
|Interest expense                                                                            |                                                                                            |      | 1,122                           |        |                                |      | 1,493   |         |   |   | 3,779   |         |   |   | 5,061   |        
|                                                                                            |                                                                                            |      |                                 |        |                                |      |         |         |   |   |         |         |   |   |         |        
|Income (loss) before taxes, extraordinary charge and
cumulative effect of accounting change |                                                                                            |      | 8,163                           |        |                                |      | 501     |         |   |   | (9,891  | )       |   |   | 3,547   |        
|Income
taxes provision (benefit)                                                            |                                                                                            |      | 3,069                           |        |                                |      | 164     |         |   |   | (3,719  | )       |   |   | 1,277   |        
|                                                                                            |                                                                                            |      |                                 |        |                                |      |         |         |   |   |         |         |   |   |         |        
|Income (loss) before extraordinary charge and
cumulative effect of accounting change        |                                                                                            |      | 5,094                           |        |                                |      | 337     |         |   |   | (6,172  | )       |   |   | 2,270   |        
|                                                                                            | Extraordinary charge, net of taxes of $1,697 - Note G                                      |      |                                 |       |                                |      |         |        |   |   |         | 2,853   |   |   |         |        |  
|                                                                                            | Cumulative effect of accounting change
for goodwill charge, net of taxes of $2,735- Note I |      |                                 |       |                                |      |         |        |   |   |         | 4,597   |   |   |         |        |  
|                                                                                            |                                                                                            |      |                                 |        |                                |      |         |         |   |   |         |         |   |   |         |        
|Net income (loss)                                                                           |                                                                                            | $    | 5,094                           |        |                                | $    | 337     |         |   | $ | (13,622 | )       |   | $ | 2,270   |        
|                                                                                            |                                                                                            |      |                                 |        |                                |      |         |         |   |   |         |         |   |   |         |        
|Basic earnings (loss) per share:                                                            |                                                                                            |      |                                 |        |                                |      |         |         |   |   |         |         |   |   |         |        
|Income (loss) before extraordinary charge and
cumulative effect of accounting change        |                                                                                            | $    | 0.59                            |        |                                | $    | 0.04    |         |   | $ | (0.73   | )       |   | $ | 0.27    |        
|Diluted earnings (loss) per share:                                                          |                                                                                            |      |                                 |        |                                |      |         |         |   |   |         |         |   |   |         |        
|Income (loss) before extraordinary charge and
cumulative effect of accounting change        |                                                                                            | $    | 0.58                            |        |                                | $    | 0.04    |         |   | $ | (0.73   | )       |   | $ | 0.26    |        
|Extraordinary charge, net of taxes                                                          |                                                                                            |      |                                |        |                                |      |        |         |   |   | (0.34   | )       |   |   |        |        
|Cumulative effect of accounting change, net of taxes                                        |                                                                                            |      |                                |        |                                |      |        |         |   |   | (0.54   | )       |   |   |        |        
|                                                                                            |                                                                                            |      |                                 |        |                                |      |         |         |   |   |         |         |   |   |         |        
|Basic earnings (loss) per share:                                                            |                                                                                            | $    | 0.59                            |        |                                | $    | 0.04    |         |   | $ | (1.61   | )       |   | $ | 0.27    |        
|                                                                                            |                                                                                            |      |                                 |        |                                |      |         |         |   |   |         |         |   |   |         |        
|Diluted earnings (loss) per share:                                                          |                                                                                            | $    | 0.58                            |        |                                | $    | 0.04    |         |   | $ | (1.61   | )       |   | $ | 0.26    |        
|                                                                                            |                                                                                            |      |                                 |        |                                |      |         |         |   |   |         |         |   |   |         |        
|Cash dividends per share:                                                                   |                                                                                            | $    |                                |        |                                | $    | 0.075   |         |   | $ |        |         |   | $ | 0.075   |        
|                                                                                            |                                                                                            |      |                                 |        |                                |      |         |         |   |   |         |         |   |   |         |        

See Notes to Consolidated Financial Statements.

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LESCO, INC.
CONSOLIDATED BALANCE SHEETS

|                                     |                                                                                                                                                                                                |                                   |        |              |         |              |        |             |         |  |        |         |         | 
|------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------- | ------ | ------------ | ------- | ------------ | ------ | ----------- | ------- |  | ------ | ------- | ------- | 
|                                     |                                                                                                                                                                                                |                                   |        | September 30 |         | September 30 |        | December 31
|(In thousands, except share data)    |                                                                                                                                                                                                | 2002                              |        | 2001         |         | 2001        
|                                     |                                                                                                                                                                                                |                                   |        |              |         |             
|                                     |                                                                                                                                                                                                |                                   |        | (unaudited)  |         | (audited)   
|                                     |                                                                                                                                                                                                |                                   |        |              |         |             
|ASSETS                               |                                                                                                                                                                                                |                                   |        |              |         |              |        |             |         |  |        |        
|CURRENT ASSETS:                      |                                                                                                                                                                                                |                                   |        |              |         |              |        |             |         |  |        |        
|                                     | Cash                                                                                                                                                                                           |                                   | $      | 5,782        |         |              | $      | 4,521       |         |  | $      | 5,035   |        
|                                     | Accounts receivable  net of allowance
of $5,058, $4,640 and $4,370, respectively                                                                                                              |                                   |        | 80,402       |         |              |        | 51,503      |         |  |        | 37,571  |        
|                                     | Inventories                                                                                                                                                                                    |                                   |        |              |         |              |        |             |         |  |        |         |        
|                                     |                                                                                                                                                                                                | Raw materials                     |        |              | 8,417   |              |        |             | 9,173   |  |        |         | 10,197  | 
|                                     |                                                                                                                                                                                                | Finished goods                    |        |              | 88,984  |              |        |             | 100,931 |  |        |         | 82,799  | 
|                                     |                                                                                                                                                                                                |                                   |        |              |         |              |        |             |         |  |        |        
|                                     |                                                                                                                                                                                                | Total inventories                 |        |              | 97,401  |              |        |             | 110,104 |  |        |         | 92,996  | 
|                                     | Deferred income taxes                                                                                                                                                                          |                                   |        | 3,830        |         |              |        | 2,232       |         |  |        | 1,753   |        
|                                     | Prepaid expenses and other assets                                                                                                                                                              |                                   |        | 4,173        |         |              |        | 2,175       |         |  |        | 6,333   |        
|                                     |                                                                                                                                                                                                |                                   |        |              |         |              |        |             |         |  |        |        
|                                     |                                                                                                                                                                                                | TOTAL CURRENT ASSETS              |        |              | 191,588 |              |        |             | 170,535 |  |        |         | 143,688 | 
|Property, plant and equipment        |                                                                                                                                                                                                |                                   | 79,663 |              |         |              | 94,632 |             |         |  | 96,936 |        
|                                     | Less allowance for depreciation and amortization                                                                                                                                               |                                   |        | (45,204      | )       |              |        | (45,932     | )       |  |        | (47,676 | )      
|                                     |                                                                                                                                                                                                |                                   |        |              |         |              |        |             |         |  |        |        
|                                     |                                                                                                                                                                                                | Net property, plant and equipment |        |              | 34,459  |              |        |             | 48,700  |  |        |         | 49,260  | 
|Asset held for sale                  |                                                                                                                                                                                                |                                   | 1,764  |              |         |              | 653    |             |         |  | 653    |        
|Other assets                         |                                                                                                                                                                                                |                                   | 2,959  |              |         |              | 9,823  |             |         |  | 10,995 |        
|Deferred income taxes                |                                                                                                                                                                                                |                                   | 1,699  |              |         |              |       |             |         |  |       |        
|                                     |                                                                                                                                                                                                |                                   |        |              |         |              |        |             |         |  |        |        
|                                     |                                                                                                                                                                                                | TOTAL ASSETS                      |        | $            | 232,469 |              |        | $           | 229,711 |  |        | $       | 204,596 | 
|                                     |                                                                                                                                                                                                |                                   |        |              |         |              |        |             |         |  |        |        
|LIABILITIES AND SHAREHOLDERS EQUITY |                                                                                                                                                                                                |                                   |        |              |         |              |        |             |         |  |        |        
|CURRENT LIABILITIES:                 |                                                                                                                                                                                                |                                   |        |              |         |              |        |             |         |  |        |        
|                                     | Accounts payable                                                                                                                                                                               |                                   | $      | 68,320       |         |              | $      | 67,045      |         |  | $      | 46,847  |        
|                                     | Other current liabilities                                                                                                                                                                      |                                   |        | 13,145       |         |              |        | 9,305       |         |  |        | 9,181   |        
|                                     | Restructuring reserve                                                                                                                                                                          |                                   |        | 4,948        |         |              |        |            |         |  |        |        |        
|                                     | Current portion of debt                                                                                                                                                                        |                                   |        | 1,140        |         |              |        | 50,974      |         |  |        | 970     |        
|                                     |                                                                                                                                                                                                |                                   |        |              |         |              |        |             |         |  |        |        
|                                     |                                                                                                                                                                                                | TOTAL CURRENT LIABILITIES         |        |              | 87,553  |              |        |             | 127,324 |  |        |         | 56,998  | 
|Long-term debt                       |                                                                                                                                                                                                |                                   | 64,102 |              |         |              | 161    |             |         |  | 50,141 |        
|Deferred income taxes                |                                                                                                                                                                                                |                                   |       |              |         |              | 3,176  |             |         |  | 3,541  |        
|SHAREHOLDERS EQUITY:                |                                                                                                                                                                                                |                                   |        |              |         |              |        |             |         |  |        |        
|                                     | Preferred shares without par value
500,000 shares authorized; 1,523 share issued
and outstanding in 2002, liquidation value $1,000 per share                                                 |                                   |        | 1,523        |         |              |        |            |         |  |        |        |        
|                                     | Common shareswithout par value
19,500,000 shares authorized; 8,637,563 shares issued
and 8,545,786 outstanding at September 30, 2002, 8,560,120
at September 30, 2001, and December 31, 2001 |                                   |        | 863          |         |              |        | 863         |         |  |        | 863     |        
|                                     | Paid-in capital                                                                                                                                                                                |                                   |        | 34,901       |         |              |        | 34,780      |         |  |        | 34,800  |        
|                                     | Retained earnings                                                                                                                                                                              |                                   |        | 46,586       |         |              |        | 65,362      |         |  |        | 60,208  |        
|                                     | Accumulated other comprehensive income (loss)                                                                                                                                                  |                                   |        | (1,105       | )       |              |        |            |         |  |        |        |        
|                                     | Less treasury shares, 91,777 at September 30, 2002, 68,443 at
September 30, 2001, and December 31, 2001                                                                                        |                                   |        | (1,623       | )       |              |        | (1,263      | )       |  |        | (1,263  | )      
|                                     | Unearned compensation                                                                                                                                                                          |                                   |        | (331         | )       |              |        | (692        | )       |  |        | (692    | )      
|                                     |                                                                                                                                                                                                |                                   |        |              |         |              |        |             |         |  |        |        
|                                     |                                                                                                                                                                                                | TOTAL SHAREHOLDERS EQUITY        |        |              | 80,814  |              |        |             | 99,050  |  |        |         | 93,916  | 
|                                     |                                                                                                                                                                                                |                                   |        |              |         |              |        |             |         |  |        |        
|                                     |                                                                                                                                                                                                | TOTAL LIABILITIES AND             |        |              |         |              |        |             |         |  |        |         |         | 
|                                     |                                                                                                                                                                                                | SHAREHOLDERS EQUITY              |        | $            | 232,469 |              |        | $           | 229,711 |  |        | $       | 204,596 | 
|                                     |                                                                                                                                                                                                |                                   |        |              |         |              |        |             |         |  |        |        

See Notes to Consolidated Financial Statements.

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LESCO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

|                               |                                                                                   |                                                 |       |                   |         |   |       |          |         |  
|------------------------------ | --------------------------------------------------------------------------------- | ----------------------------------------------- | ----- | ----------------- | ------- | - | ----- | -------- | ------- | -
|                               |                                                                                   |                                                 |       | Nine Months Ended
|                               |                                                                                   |                                                 |       | September 30     
|                               |                                                                                   |                                                 |       |                  
|(In thousands)                 |                                                                                   | 2002                                            |       | 2001             
|                               |                                                                                   |                                                 |       |                  
|                               |                                                                                   |                                                 |       | (unaudited)      
|OPERATING ACTIVITIES:          |                                                                                   |                                                 |       |                   |         |   |       |         
|                               | Net income (loss) before extraordinary charge and cumulative                      |                                                 | $     | (6,172            | )       |   | $     | 2,270    |        
|                               |                                                                                   | effect of accounting change                     |       |                   |         |   |       |          |         |  
|                               | Adjustments to reconcile net income to net cash
provided by operating activities: |                                                 |       |                   |         |   |       |          |        
|                               |                                                                                   | Depreciation and amortization                   |       |                   | 7,284   |   |       |          | 7,151   |  
|                               |                                                                                   | Asset rationalization                           |       |                   | 12,044  |   |       |          |        |  
|                               |                                                                                   | Inventory markdown                              |       |                   | 9,581   |   |       |          |        |  
|                               |                                                                                   | Deferred income taxes                           |       |                   | (3,875  | ) |       |          |        |  
|                               |                                                                                   | Decrease (increase) in accounts receivable      |       |                   | (13,470 | ) |       |          | (11,394 | )
|                               |                                                                                   | Provision for uncollectible accounts receivable |       |                   | 1,839   |   |       |          | 1,420   |  
|                               |                                                                                   | Increase in inventories                         |       |                   | (13,986 | ) |       |          | (10,060 | )
|                               |                                                                                   | Increase in accounts payable                    |       |                   | 21,473  |   |       |          | 33,741  |  
|                               |                                                                                   | Increase in other current items                 |       |                   | 8,127   |   |       |          | 1,289   |  
|                               |                                                                                   | Other assets/liabilities                        |       |                   | (1,835  | ) |       |          | (1,195  | )
|                               |                                                                                   |                                                 |       |                   |         |   |       |         
|                               | NET CASH PROVIDED BY OPERATING ACTIVITIES                                         |                                                 |       | 21,010            |         |   |       | 23,222   |        
|INVESTING ACTIVITIES:          |                                                                                   |                                                 |       |                   |         |   |       |         
|                               | Purchase of property, plant and equipment                                         |                                                 |       | (1,296            | )       |   |       | (7,144   | )      
|                               |                                                                                   |                                                 |       |                   |         |   |       |         
|                               | NET CASH USED IN INVESTING ACTIVITIES                                             |                                                 |       | (1,296            | )       |   |       | (7,144   | )      
|FINANCING ACTIVITIES:          |                                                                                   |                                                 |       |                   |         |   |       |         
|                               | Sale (purchase) of accounts receivable                                            |                                                 |       | (31,200           | )       |   |       | 37,000   |        
|                               | Proceeds from borrowings                                                          |                                                 |       | 477,023           |         |   |       | 151,400  |        
|                               | Reduction of borrowings                                                           |                                                 |       | (462,890          | )       |   |       | (200,072 | )      
|                               | Deferred financing fees                                                           |                                                 |       | (2,000            | )       |   |       |         |        
|                               | Cash dividends                                                                    |                                                 |       |                  |         |   |       | (639     | )      
|                               | Exercised stock options, net of treasury shares                                   |                                                 |       | 100               |         |   |       | (95      | )      
|                               |                                                                                   |                                                 |       |                   |         |   |       |         
|                               | NET CASH USED BY FINANCING ACTIVITIES                                             |                                                 |       | (18,967           | )       |   |       | (12,406  | )      
|                               |                                                                                   |                                                 |       |                   |         |   |       |         
|Net change in cash             |                                                                                   |                                                 | 747   |                   |         |   | 3,672 |         
|Cash  Beginning of the period |                                                                                   |                                                 | 5,035 |                   |         |   | 849   |         
|                               |                                                                                   |                                                 |       |                   |         |   |       |         
|                               | CASH  END OF THE PERIOD                                                          |                                                 | $     | 5,782             |         |   | $     | 4,521    |        
|                               |                                                                                   |                                                 |       |                   |         |   |       |         

See Notes to Consolidated Financial Statements.

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LESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




NOTE A  Basis of Presentation

The accompanying unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the United States
for interim financial information and with the requirements of Regulation S-X
and Form 10-Q. The statements reflect all adjustments, consisting only of
normal recurring accruals, which are, in the opinion of management, necessary
for a fair presentation of the results for interim periods. For further
information, refer to the audited financial statements and footnotes thereto
for the year ended December 31, 2001 included in the Companys annual report on Form 10-K and
the Companys unaudited financial statements and footnotes for the quarters
ended March 31, 2002 and June 30, 2002 included in the
Companys quarterly reports on Form 10-Q.

Operating results for the nine months ended September 30, 2002 are not
necessarily indicative of the results to be expected for the year due to the
seasonal nature of the Companys business. Certain costs have been
reclassified in the prior period to conform with current year presentation.

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NOTE B  Earnings per Share

The following table sets forth the computation of basic and diluted earnings per
share:

|                                                                                     |                                                      |      |                                 |         |                                |      |           |        |  |   |           |         |   |   |           |        | 
|------------------------------------------------------------------------------------ | ---------------------------------------------------- | ---- | ------------------------------- | ------- | ------------------------------ | ---- | --------- | ------ |  | - | --------- | ------- | - | - | --------- | ------ | 
|                                                                                     |                                                      |      | Three Months Ended September 30 |         | Nine Months Ended September 30
|                                                                                     |                                                      |      |                                 |         |                               
|(In thousands, except per share data)                                                |                                                      | 2002 |                                 | 2001    |                                | 2002 |           | 2001  
|                                                                                     |                                                      |      |                                 |         |                                |      |           |       
|Numerator:                                                                           |                                                      |      |                                 |         |                                |      |           |        |  |   |           |         |   |   |           |       
|Income (loss) before extraordinary charge and
cumulative effect of accounting change |                                                      | $    | 5,094                           |         |                                | $    | 337       |        |  | $ | (6,172    | )       |   | $ | 2,270     |       
|                                                                                     | Preferred stock dividends                            |      |                                 | (26     | )                              |      |           |       |  |   |           | (78     | ) |   |           |       | 
|                                                                                     |                                                      |      |                                 |         |                                |      |           |        |  |   |           |         |   |   |           |       
|Income (loss) available to common shareholders                                       |                                                      |      | 5,068                           |         |                                |      | 337       |        |  |   | (6,250    | )       |   |   | 2,270     |       
|                                                                                     | Extraordinary charge, net of taxes                   |      |                                 |        |                                |      |           |       |  |   |           | (2,853  | ) |   |           |       | 
|                                                                                     | Cumulative effect of accounting change, net of taxes |      |                                 |        |                                |      |           |       |  |   |           | (4,597  | ) |   |           |       | 
|                                                                                     |                                                      |      |                                 |         |                                |      |           |        |  |   |           |         |   |   |           |       
|Net income (loss) available to common shareholders                                   |                                                      | $    | 5,068                           |         |                                | $    | 337       |        |  | $ | (13,700   | )       |   | $ | 2,270     |       
|                                                                                     |                                                      |      |                                 |         |                                |      |           |        |  |   |           |         |   |   |           |       
|Denominator:                                                                         |                                                      |      |                                 |         |                                |      |           |        |  |   |           |         |   |   |           |       
|Basic earnings per share- weighted
average shares                                    |                                                      |      | 8,523,914                       |         |                                |      | 8,507,651 |        |  |   | 8,518,414 |         |   |   | 8,490,603 |       
|Effect of dilutive securities:                                                       |                                                      |      |                                 |         |                                |      |           |        |  |   |           |         |   |   |           |       
|                                                                                     | Employee stock options                               |      |                                 | 220,920 |                                |      |           | 53,195 |  |   |           | 173,218 |   |   |           | 65,964 | 
|                                                                                     | Restricted shares                                    |      |                                 |        |                                |      |           | 10,895 |  |   |           |        |   |   |           | 16,343 | 
|                                                                                     |                                                      |      |                                 |         |                                |      |           |        |  |   |           |         |   |   |           |       
|Diluted potential common shares                                                      |                                                      |      | 220,920                         |         |                                |      | 64,090    |        |  |   | 173,218   |         |   |   | 82,307    |       
|Diluted earnings per share adjusted weighted
average shares and assumed conversions  |                                                      |      | 8,744,834                       |         |                                |      | 8,571,741 |        |  |   | 8,691,632 |         |   |   | 8,572,910 |       
|                                                                                     |                                                      |      |                                 |         |                                |      |           |        |  |   |           |         |   |   |           |       
|Basic earnings (loss) per share:                                                     |                                                      |      |                                 |         |                                |      |           |        |  |   |           |         |   |   |           |       
|Income (loss) before extraordinary charge and
cumulative effect of accounting change |                                                      | $    | 0.59                            |         |                                | $    | 0.04      |        |  | $ | (0.73     | )       |   | $ | 0.27      |       
|Diluted earnings (loss) per share:                                                   |                                                      |      |                                 |         |                                |      |           |        |  |   |           |         |   |   |           |       
|Income (loss) before extraordinary charge and
cumulative effect of accounting change |                                                      | $    | 0.58                            |         |                                | $    | 0.04      |        |  | $ | (0.73     | )       |   | $ | 0.26      |       
|Extraordinary charge, net of taxes                                                   |                                                      |      |                                |         |                                |      |          |        |  |   | (0.34     | )       |   |   |          |       
|Cumulative effect of accounting change, net of taxes                                 |                                                      |      |                                |         |                                |      |          |        |  |   | (0.54     | )       |   |   |          |       
|                                                                                     |                                                      |      |                                 |         |                                |      |           |        |  |   |           |         |   |   |           |       
|Basic earnings (loss) per share:                                                     |                                                      | $    | 0.59                            |         |                                | $    | 0.04      |        |  | $ | (1.61     | )       |   | $ | 0.27      |       
|                                                                                     |                                                      |      |                                 |         |                                |      |           |        |  |   |           |         |   |   |           |       
|Diluted earnings (loss) per share:                                                   |                                                      | $    | 0.58                            |         |                                | $    | 0.04      |        |  | $ | (1.61     | )       |   | $ | 0.26      |       
|                                                                                     |                                                      |      |                                 |         |                                |      |           |        |  |   |           |         |   |   |           |       

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NOTE C  Sales Channel Information

During the third quarter the Company completed its senior management
restructuring and sales force reorganization. These initiatives have been
ongoing since the April 2002 appointment of the new President and Chief Executive Officer. As a result of the restructuring and reorganization the Companys
internal reporting structure has been realigned to a single operating
segment. The President and Chief Executive Officer is the Companys chief
operating decision maker and as such makes decisions on resource allocation and
reviews the profit and loss of the single segment. While the Company will be
reporting under a single segment, sales information for the current and prior
periods will be presented for the Companys three sales channels and five
product lines. The sales channels are defined by the type of customer and
product lines are based on products.

The Lawn Care sales
channel (Lawn Care) operates 227 LESCO Service Centers® and
includes 62 lawn care sales representatives, who market products on a
localized basis. The primary products sold by Lawn Care are
turf care products, including turf and pest control products, fertilizer, grass
seed and related equipment. The Lawn Care market and sell products principally
to smaller lawn care companies, landscapers, nurseries, municipalities,
churches and condominium associations.

The Golf sales
channel (Golf) markets and sells products to private and public
golf courses and other customers having large turf areas through Company
salespersons who operate a fleet of 77 LESCO Stores-on-Wheels®
and through 40 golf sales representatives strategically located in various markets. The primary
products sold by Golf are turf care products, including turf
and pest control products, fertilizer, grass seed and hand held equipment.
The Stores-on-Wheels are well stocked with a wide variety of turf care
products and golf course accessories, which are sold directly from the trucks.
In addition, this sales channel markets its products
internationally, principally through foreign distributors.

The National Accounts
sales channel (National Accounts) markets and sells products to large
national accounts and regional lawn care customers through a separate group of
sales representatives. National Accounts has 13 sales representatives
strategically located in various markets. This sales channel also
distributes selected products through Home Depot stores in the South,
Southwest, Midwest, Mid-Atlantic and Northeast areas of the country, in addition
to selling a consumer line of lawncare products to nationwide retail stores
under several brand names, including LESCO, Scenic Green, Aim Lawn & Garden Products
and Professional Turf Products.

Sales results by sales channel and product lines are as follows (in
thousands):

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LESCO, INC.
Sales Channels

|               |                           |      |                                 |        |                                |      |         |        |   |   |         |         |   |   |         |         |  
|-------------- | ------------------------- | ---- | ------------------------------- | ------ | ------------------------------ | ---- | ------- | ------ | - | - | ------- | ------- | - | - | ------- | ------- | -
|               |                           |      | Three Months Ended September 30 |        | Nine Months Ended September 30
|               |                           |      |                                 |        |                               
|(In thousands) |                           | 2002 |                                 | 2001   |                                | 2002 |         | 2001  
|               |                           |      |                                 |        |                                |      |         |       
|               | Lawn care                 |      | $                               | 76,983 |                                |      |         | 74,338 |   |   | $       | 224,388 |   |   | $       | 213,483 |  
|               | Golf                      |      |                                 | 48,040 |                                |      |         | 47,081 |   |   |         | 116,698 |   |   |         | 117,541 |  
|               | National accounts         |      |                                 | 19,464 |                                |      |         | 23,118 |   |   |         | 64,878  |   |   |         | 69,738  |  
|               | Sales credits and rebates |      |                                 | (478   | )                              |      |         | (453   | ) |   |         | (1,983  | ) |   |         | (1,821  | )
|               |                           |      |                                 |        |                                |      |         |        |   |   |         |         |   |   |         |        
|Net sales      |                           | $    | 144,009                         |        |                                | $    | 144,084 |        |   | $ | 403,981 |         |   | $ | 398,941 |        
|               |                           |      |                                 |        |                                |      |         |        |   |   |         |         |   |   |         |        

Product Lines

|               |                            |      |                                 |        |                                |      |         |        |   |   |         |         |   |   |         |         |  
|-------------- | -------------------------- | ---- | ------------------------------- | ------ | ------------------------------ | ---- | ------- | ------ | - | - | ------- | ------- | - | - | ------- | ------- | -
|               |                            |      | Three Months Ended September 30 |        | Nine Months Ended September 30
|               |                            |      |                                 |        |                               
|(In thousands) |                            | 2002 |                                 | 2001   |                                | 2002 |         | 2001  
|               |                            |      |                                 |        |                                |      |         |       
|               | Fertilizer & combination   |      | $                               | 44,661 |                                |      |         | 46,212 |   |   | $       | 157,667 |   |   | $       | 156,901 |  
|               | Control                    |      |                                 | 48,379 |                                |      |         | 47,280 |   |   |         | 121,631 |   |   |         | 116,535 |  
|               | Equipment, parts & service |      |                                 | 16,170 |                                |      |         | 14,190 |   |   |         | 49,723  |   |   |         | 47,759  |  
|               | Turfgrass
seed             |      |                                 | 25,854 |                                |      |         | 26,941 |   |   |         | 48,753  |   |   |         | 49,107  |  
|               | Other                      |      |                                 | 9,423  |                                |      |         | 9,914  |   |   |         | 28,190  |   |   |         | 30,460  |  
|               | Sales
credits and rebates  |      |                                 | (478   | )                              |      |         | (453   | ) |   |         | (1,983  | ) |   |         | (1,821  | )
|               |                            |      |                                 |        |                                |      |         |        |   |   |         |         |   |   |         |        
|Net sales      |                            | $    | 144,009                         |        |                                | $    | 144,084 |        |   | $ | 403,981 |         |   | $ | 398,941 |        
|               |                            |      |                                 |        |                                |      |         |        |   |   |         |         |   |   |         |        

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NOTE D  Other Assets

Other assets consist of the following:

|                                          |  |              |       |              |  |             |       |  |  |   |        | 
|----------------------------------------- |  | ------------ | ----- | ------------ |  | ----------- | ----- |  |  | - | ------ | 
|                                          |  | September 30 |       | September 30 |  | December 31
|(In thousands)                            |  | 2002         |       | 2001         |  | 2001       
|                                          |  |              |       |              |  |            
|Goodwill  net (see Note I)               |  | $            |      |              |  | $           | 7,478 |  |  | $ | 7,332  | 
|Patents and trademarks  net (see Note E) |  |              |      |              |  |             | 1,548 |  |  |   | 1,740  | 
|Deferred financing                        |  |              | 2,506 |              |  |             | 535   |  |  |   | 1,472  | 
|Deposits and other                        |  |              | 453   |              |  |             | 262   |  |  |   | 451    | 
|                                          |  |              |       |              | 
|Total other assets                        |  | $            | 2,959 |              |  | $           | 9,823 |  |  | $ | 10,995 | 
|                                          |  |              |       |              | 

Deferred financing relates to costs incurred to obtain financing. These
costs are amortized over the life of the finance agreement. (see
Note G). Deposits and other primarily includes deposits on properties the
Company rents.

NOTE E  Asset Rationalization and Severance Expense

During the second quarter of 2002, the Company completed an asset analysis and
finalized plans to rationalize under-performing assets. The plan includes
ceasing operations at and the decision to sell the Companys manufacturing
facilities in Disputanta, Virginia and Stockton, California. The Company
recorded a pretax charge totaling $13.8 million in the second quarter of 2002,
which is included in the Companys Consolidated Statements of Operations as
Asset Rationalization of $12.0 million and Severance Expense of $1.8 million.
In addition, during the first quarter the Company had recorded severance
expenses of $2.1 million related to changes in executive management and other
employee terminations. Major components of the charge for the asset
rationalization and severance expense and the related remaining reserves and accruals as
of September 30, 2002 are as follows:

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( In thousands):

|                                        |  |            |        |       |  |       |       |                 |  |           |       |       |  |   |        |   |  |   |        |   |  |   |        |  
|--------------------------------------- |  | ---------- | ------ | ----- |  | ----- | ----- | --------------- |  | --------- | ----- | ----- |  | - | ------ | - |  | - | ------ | - |  | - | ------ | -
|                                        |  | Asset      |        |       |  |       |       | Other           |  | Asset     |       |       |  |   |        |   |  |  
|                                        |  | Impairment |        | Lease |  | Exit  |       | Rationalization |  | Severance
|                                        |  | Charges    |        | Costs |  | Costs |       | Subtotal        |  | Expense   |       | Total
|                                        |  |            |        |       |  |       |       |                 |  |           |       |      
|2002 First Quarter                      |  | $          |       |       |  | $     |      |                 |  | $         |      |       |  | $ |       |   |  | $ | 2,075  |   |  | $ | 2,075  |  
|2002 Second Quarter                     |  |            | 9,214  |       |  |       | 1,149 |                 |  |           | 1,681 |       |  |   | 12,044 |   |  |   | 1,791  |   |  |   | 13,835 |  
|2002 Third Quarter                      |  |            |       |       |  |       |      |                 |  |           |      |       |  |   |       |   |  |   |       |   |  |   |       |  
|                                        |  |            |        |       |  |       |       |                 |  |           |       |       |  |   |        |   |  |   |        |   |  |   |        |  
|                                        |  |            | 9,214  |       |  |       | 1,149 |                 |  |           | 1,681 |       |  |   | 12,044 |   |  |   | 3,866  |   |  |   | 15,910 |  
|Amounts utilized in 2002                |  |            | (9,214 | )     |  |       |      |                 |  |           |      |       |  |   | (9,214 | ) |  |   |       |   |  |   | (9,214 | )
|Cash paid in 2002                       |  |            |       |       |  |       | (23   | )               |  |           | (440  | )     |  |   | (463   | ) |  |   | (1,286 | ) |  |   | (1,749 | )
|                                        |  |            |        |       |  |       |       |                 |  |           |       |       |  |   |        |   |  |   |        |   |  |   |        |  
|Remaining reserve at September 30, 2002 |  | $          |       |       |  | $     | 1,127 |                 |  | $         | 1,241 |       |  | $ | 2,368  |   |  | $ | 2,580  |   |  | $ | 4,948  |  
|                                        |  |            |        |       |  |       |       |                 |  |           |       |       |  |   |        |   |  |   |        |   |  |   |        |  

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The asset impairment charges of $9.2 million relate to the asset
write-down of the Disputanta and Stockton facilities to net realizable value
and the write-off of patents and trademarks related to products previously
manufactured at the Disputanta facility. The net realizable value of $1.8
million for these facilities is included in Assets Held for Sale. The Company is accounting for the planned sales of the facilities in
accordance with the guidelines of SFAS 144 Accounting for the Impairment or
Disposal of Long Lived Assets, which was adopted as of January 1, 2002.

The lease cost of $1.1 million includes the aggregate straight-line lease expense
for the Disputanta, Stockton and other facilities. The other exit costs of
$1.7 million relate to costs to maintain the facilities until they are sold and
other exit costs. As of September 30, 2002, $1.3 million of the total severance benefits accrued
have been paid, leaving a remaining balance to be paid of $2.5 million.

NOTE F  Inventory Markdown

Effective July 1, 2002, the Company implemented an inventory life cycle
program which requires the identification of all Stock Keeping Units (SKU)
into one of five categories: active, watch, phase out, discontinued and purge.
SKUs identified as discontinued are progressively marked-down over specified periods until the values are marked down to zero. At that point the SKUs will
be purged and the applicable product destroyed. This progressive markdown
policy replaced the Companys prior obsolescence policy, which maintained a
reserve for slow moving parts, discontinued inventory and products with limited
shelf lives.

In preparation for the conversion to the product life cycle program,
twelve thousand existing SKUs were specifically identified as discontinued. The
Company recorded a $9.6 million one-time charge, net of the obsolescence
reserve, to markdown the cost of these discontinued SKUs to their expected
liquidation value. The charge is included as cost of sales inventory markdown
on the Consolidated Statements of Operations. Since July, 2002, no additional SKUs have been discontinued.

NOTE G  Debt

On January 14, 2002, the Company refinanced the private placement notes,
revolving credit agreement and trade receivables facility with a $122.3 million
senior secured credit facility (Debt Facility). The new Debt Facility includes an amortizing term
loan of approximately $7.3 million and a revolving credit facility of up to
$115 million, maturing in January 2005. The variable interest on
this Debt Facility
is based on LIBOR plus 2.75% to 3.00% or prime rates plus .25% to .50%.
Availability under the revolving portion of the new Debt Facility is determined by a borrowing base
formula calculated upon the Companys eligible receivables and inventories. The
Debt Facility contains restrictive covenants,
including limits on additional borrowings, lease payments and capital
expenditures; maintenance of certain operating and financial ratios;
maintenance of $70.0 million minimum net worth; and a restriction on dividend
payments. The Debt Facility is secured by substantially all of the Companys
assets.

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On July 26, 2002, the Company amended its Debt Facility.
The amendment addressed the impact of the one-time charges for inventory
markdown, asset rationalization and severance expense on the facilities
covenants. As of September 30, 2002, the Company is in compliance with all of
the restrictive covenants in its Debt Facility, as amended.

The Company recorded an extraordinary charge related to the early
termination on debt of approximately $2.9 million net of tax in the first
quarter of 2002.

NOTE H  Derivatives and Comprehensive Income / Loss

The Company utilizes
interest rate swap to reduce its
exposure to market risks from changes in interest rates and foreign exchange
rates. The Company will only enter into agreements with major financial
institutions that are considered to be market makers.

In conjunction with
the signing of its Debt Facility on
January 14, 2002, the Company entered into a three-year, $40.5 million notional
amount interest rate swap agreement expiring in January 2005, which converts
existing variable-rate (based on LIBOR or prime rates), plus applicable
borrowing margin of 2.75% to 3.00%, payments to 4.2% fixed-rate, plus applicable
borrowing margin, payments. The fair value of the interest rate swap is
determined by the estimated cost to terminate the agreement, as determined by
the bank. The Company recognizes the $1.8 million fair market value of the swap
agreement as a liability on the balance sheet at September 30, 2002. Since the
swap is completely effective, changes in the fair
market value are recorded in accumulated other comprehensive income under Shareholders Equity, net of tax. The Companys comprehensive losses for the three and nine months ended September
30, 2002 and September 30, 2001 was as follows:

|                                  |  |                            |       |                           |  |                    |     |                    |  |   |         |   |  |   |       | 
|--------------------------------- |  | -------------------------- | ----- | ------------------------- |  | ------------------ | --- | ------------------ |  | - | ------- | - |  | - | ----- | 
|                                  |  | For the three months ended |       | For the nine months ended
|                                  |  |                            |       |                          
|(In thousands)                    |  | September 30, 2002         |       | September 30, 2001        |  | September 30, 2002 |     | September 30, 2001
|                                  |  |                            |       |                           |  |                    |     |                   
|Net income (loss)                 |  | $                          | 5,094 |                           |  | $                  | 337 |                    |  | $ | (13,622 | ) |  | $ | 2,270 | 
|                                  |  |                            |       |                           |  |                    |     |                    |  |   |         |   |  |   |       | 
|Other comprehensive loss          |  |                            | (710  | )                         |  |                    |    |                    |  |   | (1,105  | ) |  |   |      | 
|                                  |  |                            |       |                           |  |                    |     |                    |  |   |         |   |  |   |       | 
|Total comprehensive income (loss) |  | $                          | 4,384 |                           |  | $                  | 337 |                    |  | $ | (14,727 | ) |  | $ | 2,270 | 
|                                  |  |                            |       |                           |  |                    |     |                    |  |   |         |   |  |   |       | 

NOTE I  Goodwill and Other Intangible Assets

In September 2001, the Financial Accounting Standards Board (FASB) issued
Statements of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other
Intangible Assets. Statement No. 142 provides that goodwill and indefinite
lived intangible assets are no longer amortized but are reviewed annually (or
more frequently if impairment indicators arise) for impairment. Separable
intangible assets that are not deemed to have an indefinite life will continue
to be amortized over their useful lives (but with no maximum life). As reported
in the Companys 10-K, the results of Step 1- goodwill impairment tests
indicated that a potential impairment existed. The Company then completed,
Step 2  measurement of the impairment loss, by evaluating the fair value of
goodwill through appraisals and discounted cash
flow models. Step 2 results indicated that the goodwill of $7.3 million was fully
impaired. Upon the adoption of FAS 142 the Company wrote off all its goodwill
taking a $4.6 million charge, net of taxes, as a cumulative effect of
accounting change as of January 1, 2002.

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The following table reflects consolidated results adjusted as if the
adoption of SFAS 142 occurred as of the beginning of the nine month period
ended January 1, 2001.

|                                                                                      |  |                    |         |                    |  |   |       | 
|------------------------------------------------------------------------------------- |  | ------------------ | ------- | ------------------ |  | - | ----- | 
|                                                                                      |  | Nine
months ended 
|                                                                                      |  |                   
|(In thousands, except per share date)                                                 |  | September 30, 2002 |         | September 30, 2001
|                                                                                      |  |                    |         |                   
|Income (loss) before extraordinary
charge and cumulative effect of
accounting change: |  | $                  | (6,172  | )                  |  | $ | 2,270 | 
|As reported Goodwill amortization ($164
tax effect)                                   |  |                    |        |                    |  |   | 273   | 
|                                                                                      |  |                    |         |                    |  |   |       | 
|As adjusted                                                                           |  | $                  | (6,172  | )                  |  | $ | 2,543 | 
|                                                                                     
|Basic income (loss) per share as reported                                             |  | $                  | (0.73   | )                  |  | $ | 0.27  | 
|Goodwill amortization ($0.02 tax effect)                                              |  |                    |        |                    |  |   | 0.03  | 
|                                                                                      |  |                    |         |                    |  |   |       | 
|As adjusted                                                                           |  | $                  | (0.73   | )                  |  | $ | 0.30  | 
|                                                                                     
|Diluted income (loss) per share as
reported                                           |  | $                  | (0.73   | )                  |  | $ | 0.26  | 
|Goodwill amortization ($0.02 tax effect)                                              |  |                    |        |                    |  |   | 0.03  | 
|                                                                                      |  |                    |         |                    |  |   |       | 
|As adjusted                                                                           |  | $                  | (0.73   | )                  |  | $ | 0.29  | 
|                                                                                     
|Net income (loss)                                                                     |  | $                  | (13,622 | )                  |  | $ | 2,270 | 
|Goodwill amortization ($164 tax effect)                                               |  |                    |        |                    |  |   | 273   | 
|                                                                                      |  |                    |         |                    |  |   |       | 
|As adjusted                                                                           |  | $                  | (13,622 | )                  |  | $ | 2,543 | 
|                                                                                     
|Basic income (loss) per share as reported                                             |  | $                  | (1.61   | )                  |  | $ | 0.27  | 
|Goodwill amortization ($0.02 tax effect)                                              |  |                    |        |                    |  |   | 0.03  | 
|                                                                                      |  |                    |         |                    |  |   |       | 
|As adjusted                                                                           |  | $                  | (1.61   | )                  |  | $ | 0.30  | 
|                                                                                     
|Diluted income (loss) per share as
reported                                           |  | $                  | (1.61   | )                  |  | $ | 0.26  | 
|Goodwill amortization ($0.02 tax effect)                                              |  |                    |        |                    |  |   | 0.03  | 
|                                                                                      |  |                    |         |                    |  |   |       | 
|As adjusted                                                                           |  | $                  | (1.61   | )                  |  | $ | 0.29  | 

Information regarding the Companys intangible assets subject to amortization
is as follows (also see Note E):

|                          |  |         |        |            |  |       |      |         |  |            |        |       |  |   |       |      |  |   |     |   |  |   |       |  
|------------------------- |  | ------- | ------ | ---------- |  | ----- | ---- | ------- |  | ---------- | ------ | ----- |  | - | ----- | ---- |  | - | --- | - |  | - | ----- | -
|                          |  |         |        |            |  | 2002  |      |         |  |            |        |       |  |   |       | 2001 |  |   |     |  
|                          |  |         |        |            |  |       |      |         |  |            |        |       |  |   |       |      |  |   |     |  
|(In thousands)            |  | Patents |        | Trademarks |  | Total |      | Patents |  | Trademarks |        | Total
|                          |  |         |        |            |  |       |      |         |  |            |        |      
|Beginning of year
balance |  | $       | 1,551  |            |  | $     | 188  |         |  | $          | 1,739  |       |  | $ | 1,187 |      |  | $ | 95  |   |  | $ | 1,282 |  
|Amortization expense      |  |         | (62    | )          |  |       | (6   | )       |  |            | (68    | )     |  |   | (66   | )    |  |   | (2  | ) |  |   | (68   | )
|Additions/Disposals*      |  |         | (1,489 | )          |  |       | (182 | )       |  |            | (1,671 | )     |  |   | 306   |      |  |   | 28  |   |  |   | 334   |  
|                          |  |         |        |            |  |       |      |         |  |            |        |       |  |   |       |      |  |   |     |   |  |   |       |  
|End of period balance     |  | $       | 0      |            |  | $     | 0    |         |  | $          | 0      |       |  | $ | 1,427 |      |  | $ | 121 |   |  | $ | 1,548 |  
|(*See NOTE E)             |  |         |        |            |  |       |      |         |  |            |        |       |  |   |       |      |  |   |     |   |  |   |       |  

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NOTE J  Impact of Recently Issued Accounting Standards

In September 2001, FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations. This Statement will be effective for the Company in 2003.
SFAS 143 requires entities to identify and record the fair value of a liability for an
asset retirement obligation in the period in which it is incurred. When a
liability is initially recorded, the entity capitalizes a cost by increasing
the carrying amount of the related long-lived asset. The capitalized cost is
depreciated over the useful life of the related asset. Upon settlement of the
liability, an entity either settles the obligation for its recorded amount or
incurs a gain or loss upon final payment. The Company has not identified any
asset retirement obligations, and thus believes there will be no impact of adoption
on its consolidated financial position or results of operations.

As of January 1, 2002, the Company has adopted FASB issued SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No. 144
provides a single accounting model for long-lived assets to be disposed of, yet
it retains many of the provisions of SFAS 121. This statement significantly
changes the criteria that would have to be met to classify an asset as
held-for-sale. This distinction is important because assets held-for-sale are
stated at the lower of their fair values or carrying amounts and depreciation
is no longer recognized. See Note E for more information on the impact of the
adoption.

As of May 15, 2002, FASB issued SFAS No. 145, Rescission of FASB
Statements No. 4, 44 and 64, amendment of FASB Statement No. 13 and technical
corrections. The Company is required to adopt this statement for fiscal year
beginning January 1, 2003. The Company will not early adopt this statement,
however, the Company that believes the adoption will not impact its
net income. At the time of adoption in the first quarter 2003, the Company will be required to reclassify the extraordinary charge of $4.5 million
related to the early extinguishment of debt to continuing operations.

In September 2002, FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit and Disposal Activities. This Statement is effective
for the Company in 2003. The Company will not early adopt SFAS No. 146. The
Company believes the adoption will not impact its consolidated financial
position or results of operations.

On October 1, 2002, FASB issued SFAS No. 147, Acquisitions of Certain
Financial Institutions. This Statement is effective for the Company in 2003.
The Company will not early adopt this statement, however the Company believes
the adoption will not impact its consolidated financial position or results of
operations.

NOTE K  Investment in Commercial Turf Products, LTD.

The Company has a 50% investment in Commercial Turf Products, Ltd. (CTP),
that is accounted for under the equity method of accounting.
CTPs net sales for
the nine months ended September 30, 2002 were $36.3

14



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million. CTPs gross profit
and net income for the nine months ended September
30, 2002 were $2.5 million and $96,000, respectively. Under the
equity method of accounting, the Company has recorded its portion of
net income of $48,000.

NOTE L  Subsequent Events

a. Martins Ferry Labor DisputeThe Companys collective bargaining agreement with workers at its Martins
Ferry, Ohio facility expired on September 30, 2002. Unsuccessful negotiations
resulted in a lockout effective October 11, 2002. The Martins Ferry facility
has continued to operate without the union workforce. To date the
lockout has not had a significant adverse impact on its
financial position or results of operations. On November 14, 2002, a
new three year collective bargaining agreement was ratified by the
union workforce.

b. Sale of Novex FacilityOn October 24, 2002, the Company entered into a definitive agreement to
sell its Disputanta, Virginia facility. The sale includes inventory, fixed assets at
the facility and patents rights related to products produced at the facility.
The Company received $250,000 in cash at closing and a $1,850,000 four-year
term note, secured by the fixed assets at the facility. The agreement includes a five-year
supply agreement, in which the Company guarantees minimum purchase quantities
at prices that approximate the current cost of production plus raw materials.

15



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LESCO, INC.




ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

Included in the Companys results of operations for the nine months ended
September 30, 2002 are one time charges for the inventory markdown of $9.6
million, asset rationalization of $12.0 million and severance expense of $3.9 million.

The Company implemented an inventory life cycle program which requires the
identification of all Stock Keeping Unit (SKU) into one of five categories:
active, watch, phase out, discontinued and purge. SKUs identified as
discontinued will be progressively marked-down over specified periods until the
values are marked down to zero. At that point the SKUs will be purged and the
applicable products destroyed. This progressive markdown policy has replaced the
Companys prior obsolescence policy, which maintained a reserve for slow moving
parts, discontinued inventory and products with limited shelf lives.

In preparation for the conversion to the product life cycle program,
twelve thousand existing SKUs were specifically identified as discontinued. The
Company recorded a $9.6 million one-time charge, net of its obsolescence
reserve, to markdown the cost of these discontinued SKUs to their expected
liquidation value. The charge is included as cost of sales inventory markdown
on the Consolidated Statements of Operations. The Company will track the
future sales and margins of these discounted SKUs to determine if the markdown
amount was adequate and will adjust the amount of the one-time charge, as
appropriate.

During the first nine months of 2002, the Company completed an asset
analysis and finalized plans to rationalize its under-performing assets. The
plan includes ceasing operations at and the decision to sell the Companys
manufacturing facilities in Disputanta, Virginia and Stockton, California. The
Company recorded a pretax charge totaling $13.8 million in the second quarter
of 2002, which is included in the Companys Consolidated Statements of
Operations as Asset Rationalization of $12.0 million and Severance Expense of
$1.8 million. In addition, during the first quarter the Company had
recognized severance expenses of $2.1 million related to changes in executive
management and other employee terminations. Major components of the charge for the asset rationalization and severance
charges and the related reserves and accruals as of September 30, 2002 are
included in Note E to the Consolidated Financial Statements.

During the third quarter the Company finalized the sale of its former
corporate offices. The sale resulted in a gain of $185,000.

As a result of the implementation of SFAS No. 142 the Company recorded a
$4.6 million, net of taxes of $2.7 million, as a cumulative effect of accounting
change in the quarter ended March 31, 2002. Refer to Note I in the notes to
consolidated financial statements for the explanation of the goodwill charge.

16



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The Company recorded an extraordinary charge related to the early
termination of debt of approximately $2.9 million, net of taxes of $1.7
million, in the first quarter of 2002. Refer to Note G in the notes to
Consolidated Financial Statements.

The following schedules adjust the Companys reported results of
operation, for the three months and nine months ended September 30, 2002, for
these one-time charges and gain. These adjustments follow the guidelines
established by Financial Executives International (FEI) and the National
Investor Relations Institute (NIRI) for consistency and analysis in presenting
financial results. This disclosure is provided to supplement the Companys
Generally Accepted Accounting Principles (GAAP) results and to clarify the
results for the period being reported.

17



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LESCO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS- UNAUDITED

|                                          |                                         |         |                                       |        |          |          |           |                    |         |   |              |        |   |   |         |         |  
|----------------------------------------- | --------------------------------------- | ------- | ------------------------------------- | ------ | -------- | -------- | --------- | ------------------ | ------- | - | ------------ | ------ | - | - | ------- | ------- | -
|                                          |                                         |         | Three Months Ended September 30, 2002 |        |          |          |          
|                                          |                                         |         |                                       |        |          |          |          
|                                          |                                         |         | Reported                              |        |          |          |           |                    | Results |   | Three Months
|                                          |                                         |         | (GAAP)                                |        | One Time |          | Excluding |                    | Ended  
|(In thousands, except per share data)     |                                         | Results |                                       | Gain   |          | Gain (a) |           | September 30, 2001
|                                          |                                         |         |                                       |        |          |          |           |                   
|Net sales                                 |                                         | $       | 144,009                               |        |          | $        |          |                    |         | $ | 144,009      |        |   | $ | 144,084 |        
|                                          | Cost of Sales                           |         |                                       | 95,362 |          |          |           |                   |         |   |              | 95,362 |   |   |         | 102,521 |  
|                                          | Cost of sales inventory markdown        |         |                                       |       |          |          |           |                   |         |   |              |       |   |   |         |        |  
|                                          |                                         |         |                                       |        |          |          |           |                    |         |   |              |        |   |   |         |        
|Gross profit on sales                     |                                         |         | 48,647                                |        |          |          |          |                    |         |   | 48,647       |        |   |   | 41,563  |        
|                                          | Warehouse & delivery expense            |         |                                       | 11,798 |          |          |           |                   |         |   |              | 11,798 |   |   |         | 11,924  |  
|                                          | Selling expense                         |         |                                       | 19,402 |          |          |           |                   |         |   |              | 19,402 |   |   |         | 18,386  |  
|                                          | General & administrative expense        |         |                                       | 8,787  |          |          |           |                   |         |   |              | 8,787  |   |   |         | 9,742   |  
|                                          | Asset rationalization                   |         |                                       |       |          |          |           |                   |         |   |              |       |   |   |         |        |  
|                                          | Severance expense                       |         |                                       |       |          |          |           |                   |         |   |              |       |   |   |         | 139     |  
|                                          |                                         |         |                                       |        |          |          |           |                    |         |   |              |        |   |   |         |        
|                                          |                                         |         | 39,987                                |        |          |          |          |                    |         |   | 39,987       |        |   |   | 40,191  |        
|Income (loss) from operations             |                                         |         | 8,660                                 |        |          |          |          |                    |         |   | 8,660        |        |   |   | 1,372   |        
|                                          | Joint venture results                   |         |                                       | 20     |          |          |           |                   |         |   |              | 20     |   |   |         | (148    | )
|                                          | Customer finance charges                |         |                                       | 494    |          |          |           |                   |         |   |              | 494    |   |   |         | 738     |  
|                                          | Gain on sale of fixed assets            |         |                                       | 185    |          |          |           | (185               | )(b)    |   |              |       |  
|                                          | Other income                            |         |                                       | 170    |          |          |           |                   |         |   |              | 170    |   |   |         | 131     |  
|                                          | Other expense                           |         |                                       | (244   | )        |          |           |                   |         |   |              | (244   | ) |   |         | (99     | )
|                                          |                                         |         |                                       |        |          |          |           |                    |         |   |              |        |   |   |         |        
|                                          |                                         |         | 625                                   |        |          |          | (185      | )                  |         |   | 440          |        |   |   | 622     |        
|Earnings (loss) before interest and taxes |                                         |         | 9,285                                 |        |          |          | (185      | )                  |         |   | 9,100        |        |   |   | 1,994   |        
|Interest expense                          |                                         |         | 1,122                                 |        |          |          |          |                    |         |   | 1,122        |        |   |   | 1,493   |        
|                                          |                                         |         |                                       |        |          |          |           |                    |         |   |              |        |   |   |         |        
|Income (loss) before taxes                |                                         |         | 8,163                                 |        |          |          | (185      | )                  |         |   | 7,978        |        |   |   | 501     |        
|Income taxes (benefit)                    |                                         |         | 3,069                                 |        |          |          | (69       | )                  |         |   | 3,000        |        |   |   | 164     |        
|                                          |                                         |         |                                       |        |          |          |           |                    |         |   |              |        |   |   |         |        
|Net income (loss)                         |                                         | $       | 5,094                                 |        |          | $        | (116      | )                  |         | $ | 4,978        |        |   | $ | 337     |        
|                                          |                                         |         |                                       |        |          |          |           |                    |         |   |              |        |   |   |         |        
|                                          | Basic earnings (loss) per share         |         | $                                     | 0.59   |          |          | $         | (0.01              | )       |   | $            | 0.58   |   |   | $       | 0.04    |  
|                                          |                                         |         |                                       |        |          |          |           |                    |         |   |              |        |   |   |         |        
|                                          | Fully diluted earnings (loss) per share |         | $                                     | 0.58   |          |          | $         | (0.01              | )       |   | $            | 0.57   |   |   | $       | 0.04    |  
|                                          |                                         |         |                                       |        |          |          |           |                    |         |   |              |        |   |   |         |        



|(a) |  | Users of this information are advised to read the Securities and Exchange
Commission report Pro Forma Financial Information: Tips for investors
available at www.sec.gov/investor/pubs/proforma12-4.htm.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Gain on sale of former corporate offices.                                                                                                                                                                 

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Operating Results for the Three Months Ended
September 30, 2002, Excluding One Time Gain

Sales for the third quarter ended September 30, 2002 remained relatively
flat at $144.0 million compared with $144.1 million in 2001. Average selling
prices were down slightly from the same period of 2001 causing a $0.6 million
reduction in sales. Unit volume was slightly higher for 2002 causing a
favorable impact of $0.5 million. Sales increased for the Companys Lawn
Care sales channel by $2.7 million and the Golf sales channel by $959,000 for the third quarter ended September 30, 2002. These increases in
sales were offset by a $3.7 million decrease in National Accounts sales. The
Lawn Care sales channel operated 227 LESCO Service Centers ® during the third
quarter 2002 compared with 232 stores during 2001. The Golf sales channel
operated 77 LESCO Stores-On-Wheels® during the first quarter 2002 compared with
78 in 2001. Sales of the Companys combination products, control products, and
equipment products rose in the third quarter 2002 over 2001, while sales of
fertilizer, seed and other products declined.

Gross profit increased by $7.1 million, in the third quarter of 2002 as
compared to 2001. Factors positively impacting gross profit dollars in 2002
were a reduction of inventory shrinkage of $4.7 million, lower manufacturing
expense of $1.5 million and better sourcing decisions and favorable raw
material pricing totaling approximately $1.4 million. Partially offsetting the
gross profit increase were lower average selling prices of $0.5 million for the
quarter ended September 30, 2002. As a percent of sales, gross profit was
33.8% for the quarter ended September 30, 2002, compared with 28.8% for 2001.

Delivery and warehouse expenses decreased to $11.8 million in the third
quarter 2002 from $11.9 million in 2001. Delivery and warehouse costs declined
to 8.2% of sales in third quarter 2002 compared to 8.3% of sales in 2001.
Selling expense was 13.5% of sales in the third quarter 2002 compared to 12.8%
in the third quarter 2001. Total selling expense increased by $1.0 million in
2002, primarily due to recruiting of and the increase in the number of lawn care
sales representatives. General and
administrative costs decreased in 2002 over 2001 by $955,000 due to
cost reduction efforts, including decreases in consulting and outside
labor of $175,000, and travel and other cost reductions of $77,000.
In addition, the Company recorded certain benefit provisions of
$633,000 in 2001, that were not repeated in 2002. These decreases
were partially offset by $164,000 in increased deferred financing fees related
to the Debt Facility.

Interest expense decreased $371,000 for the third quarter 2002 compared to
the third quarter 2001. The effective interest rate for the third quarter 2002
was 7.13% compared to 6.83% for the third quarter 2001. The average borrowing
levels were lower by $20.9 million for the third quarter ended September 30,
2002 compared to third quarter 2001.

Other expense consists primarily of losses on the sale of fixed assets,
service charge expense, royalty expense and other miscellaneous expenses.
Customer finance charges totaled $494,000 in the third quarter 2002 and
$738,000 in the third quarter 2001. The decrease in customer finance charges
for the third quarter is attributable to a lower accounts receivable balance of
$8.1 million adjusted for asset securitization and a decrease in aged receivables over ninety days of $3.7
million due to more timely accounts receivable collection efforts.

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The Companys net income excluding the gain on the sale of the former
corporate offices, was $5.0 million or $.57 per share in the quarter ended
September 30, 2002 compared with net income of $0.3 million
or $.04 per share
in the quarter ended September 30, 2001.

LESCO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS- UNAUDITED

|                                                                                            |                                                                                          |         |                                      |         |          |             |           |                    |         |   |             |         |   |   |         |         |  
|------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------- | ------- | ------------------------------------ | ------- | -------- | ----------- | --------- | ------------------ | ------- | - | ----------- | ------- | - | - | ------- | ------- | -
|                                                                                            |                                                                                          |         | Nine Months Ended September 30, 2002 |         |          |             |          
|                                                                                            |                                                                                          |         |                                      |         |          |             |          
|                                                                                            |                                                                                          |         | Reported                             |         |          |             |           |                    | Results |   | Nine Months
|                                                                                            |                                                                                          |         | (GAAP)                               |         | One Time |             | Excluding |                    | Ended  
|(In thousands, except per share data)                                                       |                                                                                          | Results |                                      | Charges |          | Charges (a) |           | September 30, 2001
|                                                                                            |                                                                                          |         |                                      |         |          |             |           |                   
|Net sales                                                                                   |                                                                                          | $       | 403,981                              |         |          | $           |          |                    |         | $ | 403,981     |         |   | $ | 398,941 |        
|                                                                                            | Cost of Sales                                                                            |         |                                      | 268,283 |          |             |           |                   |         |   |             | 268,283 |   |   |         | 275,135 |  
|                                                                                            | Cost of sales inventory markdown                                                         |         |                                      | 9,581   |          |             |           | (9,581             | )(b)    |   |             |        |   |   |         |        |  
|                                                                                            |                                                                                          |         |                                      |         |          |             |           |                    |         |   |             |         |   |   |         |        
|Gross profit on sales                                                                       |                                                                                          |         | 126,117                              |         |          |             | (9,581    | )                  |         |   | 135,698     |         |   |   | 123,806 |        
|                                                                                            | Warehouse & delivery expense                                                             |         |                                      | 34,589  |          |             |           |                   |         |   |             | 34,589  |   |   |         | 35,247  |  
|                                                                                            | Selling expense                                                                          |         |                                      | 57,369  |          |             |           |                   |         |   |             | 57,369  |   |   |         | 56,123  |  
|                                                                                            | General & administrative expense                                                         |         |                                      | 25,525  |          |             |           |                   |         |   |             | 25,525  |   |   |         | 24,985  |  
|                                                                                            | Asset rationalization                                                                    |         |                                      | 12,044  |          |             |           | (12,044            | )(c)    |   |             |        |   |   |         |        |  
|                                                                                            | Severance expense                                                                        |         |                                      | 3,866   |          |             |           | (3,866             | )(d)    |   |             |        |   |   |         | 636     |  
|                                                                                            |                                                                                          |         |                                      |         |          |             |           |                    |         |   |             |         |   |   |         |        
|                                                                                            |                                                                                          |         | 133,393                              |         |          |             | (15,910   | )                  |         |   | 117,483     |         |   |   | 116,991 |        
|Income (Loss) from operations                                                               |                                                                                          |         | (7,276                               | )       |          |             | 25,491    |                    |         |   | 18,215      |         |   |   | 6,815   |        
|                                                                                            | Joint venture results                                                                    |         |                                      | 48      |          |             |           |                   |         |   |             | 48      |   |   |         | 36      |  
|                                                                                            | Customer finance charges                                                                 |         |                                      | 1,274   |          |             |           |                   |         |   |             | 1,274   |   |   |         | 1,692   |  
|                                                                                            | Gain on sale of fixed assets                                                             |         |                                      | 185     |          |             |           | (185               | )(g)    |   |             |        |   |   |         |         |  
|                                                                                            | Other income                                                                             |         |                                      | 439     |          |             |           |                   |         |   |             | 439     |   |   |         | 537     |  
|                                                                                            | Other expense                                                                            |         |                                      | (782    | )        |             |           |                   |         |   |             | (782    | ) |   |         | (472    | )
|                                                                                            |                                                                                          |         |                                      |         |          |             |           |                    |         |   |             |         |   |   |         |        
|                                                                                            |                                                                                          |         | 1,164                                |         |          |             | (185      | )                  |         |   | 979         |         |   |   | 1,793   |        
|Earnings (loss) before interest and taxes                                                   |                                                                                          |         | (6,112                               | )       |          |             | 25,306    |                    |         |   | 19,194      |         |   |   | 8,608   |        
|Interest expense                                                                            |                                                                                          |         | 3,779                                |         |          |             |          |                    |         |   | 3,779       |         |   |   | 5,061   |        
|                                                                                            |                                                                                          |         |                                      |         |          |             |           |                    |         |   |             |         |   |   |         |        
|Income (Loss) before taxes, extraordinary charge and
cumulative effect of accounting change |                                                                                          |         | (9,891                               | )       |          |             | 25,306    |                    |         |   | 15,415      |         |   |   | 3,547   |        
|Income taxes (benefit)                                                                      |                                                                                          |         | (3,719                               | )       |          |             | 9,515     |                    |         |   | 5,796       |         |   |   | 1,277   |        
|                                                                                            |                                                                                          |         |                                      |         |          |             |           |                    |         |   |             |         |   |   |         |        
|Income (Loss) before extraordinary charge and
cumulative effect of accounting change        |                                                                                          |         | (6,172                               | )       |          |             | 15,791    |                    |         |   | 9,619       |         |   |   | 2,270   |        
|Extraordinary charge, net of taxes                                                          |                                                                                          |         | 2,853                                |         |          |             | (2,853    | )(e)               |         |   |            |         |   |   |        |        
|Cumulative effect of accounting change                                                      |                                                                                          |         | 4,597                                |         |          |             | (4,597    | )(f)               |         |   |            |         |   |   |        |        
|                                                                                            |                                                                                          |         |                                      |         |          |             |           |                    |         |   |             |         |   |   |         |        
|Net income (loss)                                                                           |                                                                                          | $       | (13,622                              | )       |          | $           | 23,241    |                    |         | $ | 9,619       |         |   | $ | 2,270   |        
|                                                                                            |                                                                                          |         |                                      |         |          |             |           |                    |         |   |             |         |   |   |         |        
|                                                                                            | Basic earnings (loss) per share                                                          |         | $                                    | (0.73   | )        |             | $         | 1.85               |         |   | $           | 1.12    |   |   | $       | 0.27    |  
|                                                                                            |                                                                                          |         |                                      |         |          |             |           |                    |         |   |             |         |   |   |         |        
|                                                                                            | Fully diluted EPS before extraordinary
charge and cumulative effect of
accounting change |         | $                                    | (0.73   | )        |             | $         | 1.83               |         |   | $           | 1.10    |   |   | $       | 0.26    |  
|                                                                                            |                                                                                          |         |                                      |         |          |             |           |                    |         |   |             |         |   |   |         |        
|                                                                                            | Extraordinary charge, net of taxes                                                       |         |                                      | (0.34   | )        |             |           | 0.34               |         |   |             |        |   |   |         |        |  
|                                                                                            | Cumulative effect of accounting change                                                   |         |                                      | (0.54   | )        |             |           | 0.54               |         |   |             |        |   |   |         |        |  
|                                                                                            |                                                                                          |         |                                      |         |          |             |           |                    |         |   |             |         |   |   |         |        
|                                                                                            | Fully diluted earnings (loss) per share                                                  |         | $                                    | (1.61   | )        |             | $         | 2.71               |         |   | $           | 1.10    |   |   | $       | 0.26    |  
|                                                                                            |                                                                                          |         |                                      |         |          |             |           |                    |         |   |             |         |   |   |         |        



|(a) |  | Users of this information are advised to read the Securities and Exchange
Commission report Pro Forma Financial Information: Tips for investors
available at www.sec.gov/investor/pubs/proforma12-4.htm.                                                   
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | The Company decided to markdown and liquidate its discontinued SKUs
resulting in a $9.6 million pre-tax charge.                                                                                                                                              
|   
|(c) |  | During the second quarter, the Company completed a review of its invested
capital resulting in the decision to sell certain under-performing assets.
In conjunction with this decision, a $12 million pre-tax charge was
recorded.                           
|   
|(d) |  | During the first quarter, the Company recorded a $2.0 million pre-tax
charge relative to executive management changes. During the second quarter
the Company recognized severance expenses of $1.8 million related to
changes in senior and middle management
|   
|(e) |  | The Company recorded an extraordinary charge related to the early
termination of debt of approximately $2.9 million, net of taxes, in the
first quarter of 2002.                                                                                             
|   
|(f) |  | The Company wrote off all its goodwill in accordance with SFAS No. 142
taking a $4.6 million charge, net of taxes, as a cumulative effect of
accounting change as of January 1, 2002.                                                                        
|   
|(g) |  | Gain on sale of former corporate offices.                                                                                                                                                                                                                    

20



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##### Table of Contents



Operating Results for the Nine Months Ended September 30, 2002, Excluding One
Time Charges, Extraordinary Charge and Cumulative Effect of Accounting Change.

Sales for the first nine months ended September 30, 2002 increased
approximately 1.3% to $404.0 million compared with $398.9 million in 2001.
Sales rose by approximately $5.0 million due to improved unit volume of $6.7
million offset by a $1.7 million reduction due to slightly lower average
selling prices. Sales increased for the Companys Lawn Care sales channel
by $10.9 million, while sales for Golf and National Accounts
sales channel decreased by $843,000 and $4.8 million, respectively. Sales of the Companys
combination products, control products and equipment products rose in 2002 over
2001, while sales of fertilizer, seed and other products declined.

Gross profit,
excluding inventory markdown, increased by $11.9 million, for
the nine months ended September 30, 2002 as compared to 2001. Factors
positively impacting gross profit dollars in 2002 were better sourcing
decisions resulted in favorable raw material pricing totaling approximately $6.6
million, lower manufacturing expense of $2.9 million, improved sales volume
impact on gross profit of $2.1 million and a reduction of inventory shrink of
$2.0 million. Partially offsetting
these increases were lower average selling prices of $1.7 million for the nine
months ended September 30, 2002. As a percent of sales, gross profit was 33.6%
for the first nine months ended September 30, 2002 compared with 31.0% for
2001.

For the nine months ended September 30, 2002, delivery and warehouse
expenses decreased by $0.6 million to $34.6 million in 2002 compared to $35.2
million in 2001. As a percent of sales, delivery and warehouse expense was
8.6% for the nine months ended September 30, 2002 versus 8.8% for 2001. For
the nine months ended September 30, 2002, selling expenses increased by $1.2
million, a 2.2% increase, to $57.4 million in 2002 compared to $56.1 million in
2001. Selling expense was 14.2% of sales in the nine months ended September 30,
2002 compared to 14.1% in the nine months ended September 30, 2001. For the
nine months ended September 30, 2002, general and administrative expenses
increased by $0.5 million to $25.5 million in 2002 compared to $25.0 million in
2001. The increase was due to payroll related expenses, including performance
incentives of $1.6 million and an increase in deferred financing fees of
$400,000 related to the Debt Facility. These increases were
partially offset by cost reductions in consulting and outside labor of
$327,000, travel costs of $159,000 and other expenses of
$949,000.

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Interest expense for the first nine months ended September 30, 2002 was
$3.8 million which was $1.3 million less than 2001. Effective interest rates were 6.32% for the first
nine months ended September 30, 2002 compared to 5.55% in the prior period. For
the first nine months ended September 30, 2002, average borrowing levels were
down $18.8 million compared to the first nine months 2001.

Customer finance charges were $1,274,000 for the first nine months 2002
compared to $1,692,000 for the first nine months 2001. The decrease in
customer finance charges for first nine months is attributable to a lower
accounts receivable balance of $8.1 million adjusted for asset
securitization and a decrease in aged receivables
over ninety days of $3.7 million due to more timely accounts receivable
collection efforts.

The Companys net income excluding the inventory markdown, asset
rationalization charges, severance charges, extraordinary item and cumulative
effect in accounting change was $9.6 million or $1.10 per share in the nine
months ended September 30, 2002 compared with net income of
$2.3 million or $0.26 per
share in the nine months ended September 30, 2001.

Liquidity and Capital Resources

On January 14, 2002, the Company refinanced the private placement notes,
revolving credit agreement and trade receivables facility with a $122.3 million
senior secured credit facility. The facility includes an amortizing term loan
of approximately $7.3 million and a revolving credit facility of up to $115
million, maturing in January 2005. The variable interest on this facility is
based on the LIBOR plus 2.75% to 3.00% or prime rates .25% to .50%.
Availability under the new revolving facility is determined by a borrowing base
formula based upon the Companys eligible receivables and inventories. The
senior secured credit facility contains various restrictive covenants,
including limits on additional borrowings, lease payments and capital
expenditures; maintenance of certain operating and financial ratios; and
maintenance of minimum net worth of $70.0 million. The new facility is secured
by substantially all of the Companys assets. The Company had $35.6 million
available to borrow under its credit agreement as of September 30, 2002.

On July 26, 2002, the Company amended its senior secured credit facility.
The amendment addresses the impact of the one-time charges for inventory
markdown, asset rationalization and severance expense on the agreements
covenants. The amended minimum net worth covenant was decreased to $70.0
million. As of September 30, 2002, the Company is in compliance with all of
the restrictive covenants included in its credit facility, as amended.
As part of this agreement the Company was required to enter into an interest
rate swap at 4.2% plus the borrowing margin of 2.75 % to 3.00%.

Total outstanding debt was $65.2 million as of September 30, 2002 compared
to $88.0 million as of September 30, 2001 and $82.3 million as of December 31,
2001. At September 30, 2001 and at the December 31, 2001, the outstanding
balance from the asset securitization of trade accounts receivable was $37
million and $31.2 million, respectively. On January 14, 2002, the asset
securitization of trade accounts receivable was terminated under the new
financing agreement.

The Companys invested capital (total assets less non-debt related
liabilities) as of September 30, 2002 was $146.0 million compared to $187.2
million as of September 30, 2001 and $176.3 million as of December 31,

22



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2001.

23



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LESCO, INC.

|                                   |                                                                   |                                                                                           |       |              |       |              |       |             |       |   |       |       |       | 
|---------------------------------- | ----------------------------------------------------------------- | ----------------------------------------------------------------------------------------- | ----- | ------------ | ----- | ------------ | ----- | ----------- | ----- | - | ----- | ----- | ----- | 
|                                   |                                                                   |                                                                                           |       | September 30 |       | September 30 |       | December 31
|(in thousands)                     |                                                                   | 2002                                                                                      |       | 2001         |       | 2001        
|                                   |                                                                   |                                                                                           |       |              |       |              |      
|Assets                             |                                                                   |                                                                                           |       |              |       |              |       |             |       |   |       |      
|                                   | Accounts receivable  net                                         |                                                                                           | $     | 80.4         |       |              | $     | 51.5        |       |   | $     | 37.5  |      
|                                   | Add back asset securitization of accounts receivable (See Note G) |                                                                                           |       |             |       |              |       | 37.0        |       |   |       | 31.2  |      
|                                   |                                                                   |                                                                                           |       |              |       |              |       |             |       |   |       |      
|                                   | Accounts receivable  subtotal                                    |                                                                                           |       | 80.4         |       |              |       | 88.5        |       |   |       | 68.7  |      
|                                   |                                                                   |                                                                                           |       |              |       |              |       |             |       |   |       |      
|                                   | Inventory                                                         |                                                                                           |       | 97.4         |       |              |       | 110.1       |       |   |       | 92.9  |      
|                                   | Net property, plant and equipment                                 |                                                                                           |       | 34.5         |       |              |       | 48.7        |       |   |       | 49.2  |      
|                                   | Remaining other assets                                            |                                                                                           |       | 20.1         |       |              |       | 19.4        |       |   |       | 25.0  |      
|                                   |                                                                   |                                                                                           |       |              |       |              |       |             |       |   |       |      
|Total Assets                       |                                                                   | $                                                                                         | 232.4 |              |       | $            | 266.7 |             |       | $ | 235.8 |      
|Less: Non-debt related liabilities |                                                                   |                                                                                           |       |              |       |              |       |             |       |   |       |      
|                                   | Accounts payable                                                  |                                                                                           |       | (68.3        | )     |              |       | (67.0       | )     |   |       | (46.8 | )    
|                                   | Other current liabilities                                         |                                                                                           |       | (18.1        | )     |              |       | (9.3        | )     |   |       | (9.2  | )    
|                                   | Deferred income taxes                                             |                                                                                           |       |             |       |              |       | (3.2        | )     |   |       | (3.5  | )    
|                                   |                                                                   |                                                                                           |       |              |       |              |       |             |       |   |       |      
|Invested Capital                   |                                                                   | $                                                                                         | 146.0 |              |       | $            | 187.2 |             |       | $ | 176.3 |      
|                                   |                                                                   |                                                                                           |       |              |       |              |       |             |       |   |       |      
|Return on invested capital:        |                                                                   |                                                                                           |       |              |       |              |       |             |       |   |       |      
|                                   |                                                                   | Earnings before interest and taxes (EBIT), excluding one time charges
(See Notes E and F) |       | $            | 19.1  |              |       | $           | 8.6   |   |       | $     | 1.2   | 
|                                   |                                                                   | Less: Taxes on EBIT, excluding one time charges                                           |       |              | 7.2   |              |       |             | 3.2   |   |       |       | 0.5   | 
|                                   |                                                                   |                                                                                           |       |              |       |              |       |             |       |   |       |      
|                                   |                                                                   | Net
operating profit after taxes (NOPAT)                                                  |       | $            | 11.9  |              |       | $           | 5.4   |   |       | $     | 0.7   | 
|                                   |                                                                   |                                                                                           |       |              |       |              |       |             |       |   |       |      
|                                   |                                                                   | Invested capital at period end                                                            |       | $            | 146.0 |              |       | $           | 187.2 |   |       | $     | 176.3 | 
|                                   |                                                                   |                                                                                           |       |              |       |              |       |             |       |   |       |      
|Return
on Invested Capital (ROIC)  |                                                                   |                                                                                           | 8.2   | %            |       |              | 2.9   | %           |       |   | 0.4   | %    
|                                   |                                                                   |                                                                                           |       |              |       |              |       |             |       |   |       |      

24



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Invested capital at September 30, 2002 was $146.0 million compared to
$187.2 million at September 30, 2001 and $176.3 million at December 31, 2001.
The decrease in invested capital of $40.8 million from September 30, 2001 is
due primarily to the one time charges for the inventory markdown, asset
rationalization, the write off of goodwill and deferred financing fees totaling
$22.2 million, net of taxes. Also impacting the decrease was lower accounts
receivable of $8.1 million, un-leveraged inventory of $4.4 million and
property, plant and equipment of $5.0 million. The decrease in invested capital
of $30.3 million from December 31, 2001 is due primarily to the one time
charges totaling $22.2, net of taxes and lower levels of un-leveraged inventory
of $7.5 million. The lower levels of un-leveraged inventory are due primarily
to better inventory and payables management.

Return on invested capital, excluding one time charges, increased to 8.2 %
for the nine months ended September 30, 2002 compared with 2.9% for the same
period in 2001. For the full year ended December 31, 2001, return on invested
capital was 0.4%. The return on invested capital improvement relates to higher
earnings before interest and taxes in 2002 and lower invested capital. The
lower invested capital was due to the reasons stated in the preceding paragraph.

Capital expenditures for the first nine months of 2002 totaled $1,296,000.
These expenditures consisted of improvements to manufacturing and hub
facilities totaling $637,000, improvements to the Companys information systems
totaling $557,000 and remodeling 47 of the 77 Companys Stores-On-Wheels for a
total cost of $102,000.

The Company believes its current borrowing capacity is adequate to
maintain operations and capital requirements for the next three years.

Forward-Looking Statements

Certain statements included in the report are forward-looking statements
that involve a number of risks and uncertainties that are based on managements current belief, assumptions and expectations.
These forward-looking statements can be identified by the use of predictive or
future tense terms such as anticipate, estimate, expect, believe, project, may, will
or similar terms. These statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. The
Companys actual results may differ materially from those stated, implied or anticipated
in the forward-looking statements, as a result of a number of factors
that include, but are not limited to:



| |  |  | adverse effects arising from the labor dispute at with one its manufacturing facilities;                                               
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | regional weather conditions which have an impact on both timing and volume of sales;                                                   
|
| |  |  | the Companys successful execution of its operating plans;                                                                             
|
| |  |  | the Companys ability to integrate business acquisitions successfully;                                                                 
|
| |  |  | the Companys strategic reviews of its invested capital which could
result in the disposition or closing of locations or product lines;
|
| |  |  | general economic and business conditions;                                                                                              
|
| |  |  | changes in market demographics;                                                                                                        
|
| |  |  | changes in the governmental regulation applicable to Companys products, including
applicable environmental regulations; and           
|
| |  |  | the Companys ability to effectively manufacture, market and
distribute new products.                                                  

25



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##### Table of Contents






ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK

Not applicable.




ITEM 4. DISCLOSURE CONTROLS AND PROCEDURES

Within 90 days of the date of this report, the Company performed an evaluation under the supervision
and with the participation of the Companys management including the Chief
Executive Officer and Senior Vice President and Chief Financial Officer, of the
effectiveness of the Companys disclosure controls
and procedures. Based on that evaluation, the Companys management, including
the Chief Executive Officer and Senior Vice President and Chief Financial
Officer, concluded that the Companys disclosure controls and procedures were
effective in ensuring that material information relating to the Company with
respect to the period covered by this report was made known to them. There have been no significant changes in the Companys internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation.




PART II  OTHER INFORMATION

Except as noted below, the items in Part II are inapplicable or, if
applicable, would be answered in the negative. These items have been omitted
and no other reference is made thereto.

Item 6  Exhibits and Reports on
Form 8-K

| |  |                                                                                         
| |  | ----------------------------------------------------------------------------------------
| |  | Exhibits:                                                                               
|
| |  | (a)     10(y)(4)13 Fourth Amendment to Revolving Credit Term Loan and Security Agreement
|
| |  | (b)     Reports on Form 8-K: There were no reports on Form 8-K filed
during this period 




SIGNATURES

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

|                  |  |                                                                                                                       
|----------------- |  | ----------------------------------------------------------------------------------------------------------------------
|                  |  | LESCO, INC.                                                                                                           
|                 
|                 
|                 
|November 14, 2002 |  | /s/ Jeffrey L. RutherfordJeffrey L. Rutherford
Senior Vice-President, Chief
Financial Officer, Treasurer and Secretary

26



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##### Table of Contents






CERTIFICATIONS

I, Michael P. DiMino, certify that:



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



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



|5. |  | The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of 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 officers and I have indicated in this
quarterly 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.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                  |  |                                                                             
|----------------- |  | ----------------------------------------------------------------------------
|November 14, 2002 |  | /s/ Michael P. DiMinoMichael P. DiMino
Chief Executive Officer and President

27



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##### Table of Contents



I, Jeffrey L. Rutherford, certify that:



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



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



|5. |  | The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the audit
committee of 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 officers and I have indicated
in this quarterly 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.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                  |  |                                                                                                                       
|----------------- |  | ----------------------------------------------------------------------------------------------------------------------
|November 14, 2002 |  | /s/ Jeffrey L. RutherfordJeffrey L. Rutherford
Senior Vice-President, Chief Financial Officer, Treasurer and
Secretary

28