##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

|    |  |                                                                                  
|--- |  | ---------------------------------------------------------------------------------
|[X] |  | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended
September 30, 2003

or

|     |  |                                                                                         
|---- |  | ----------------------------------------------------------------------------------------
|[  ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from
 to

Commission File Number 0-13147

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

|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|OHIO                                                           |  | 34-0904517                          
|                                                               |  |                                     
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                              
|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 by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes
             NoX

As of October 31, 2003 the registrant had outstanding 8,538,914 common shares,
without par value.





---



##### 



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)                                              |                                    | 2003 |                                 | 2002   |                                | 2003 |         | 2002  
|                                                                                   |                                    |      |                                 |        |                                |      |         |       
|Net sales                                                                          |                                    | $    | 147,721                         |        |                                | $    | 144,009 |        |   | $ | 414,731 |         |   | $ | 403,981 |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Cost of sales                      |      |                                 | 97,120 |                                |      |         | 95,362 |   |   |         | 275,610 |   |   |         | 268,283 |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Cost of sales inventory markdown   |      |                                 |       |                                |      |         |       |   |   |         |        |   |   |         | 9,581   |  
|                                                                                   |                                    |      |                                 |        |                                |      |         |        |   |   |         |         |   |   |         |        
|Gross profit on sales                                                              |                                    |      | 50,601                          |        |                                |      | 48,647  |        |   |   | 139,121 |         |   |   | 126,117 |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Warehouse & delivery expense       |      |                                 | 11,895 |                                |      |         | 11,798 |   |   |         | 37,144  |   |   |         | 34,589  |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Selling expense                    |      |                                 | 21,007 |                                |      |         | 19,928 |   |   |         | 65,083  |   |   |         | 58,232  |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | General & administrative expense   |      |                                 | 7,249  |                                |      |         | 7,604  |   |   |         | 21,823  |   |   |         | 22,823  |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Asset rationalization              |      |                                 |       |                                |      |         |       |   |   |         |        |   |   |         | 12,044  |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Severance expense                  |      |                                 | 81     |                                |      |         |       |   |   |         | 487     |   |   |         | 3,866   |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Bad debt expense                   |      |                                 | 552    |                                |      |         | 657    |   |   |         | 1,656   |   |   |         | 1,839   |  
|                                                                                   |                                    |      |                                 |        |                                |      |         |        |   |   |         |         |   |   |         |        
|                                                                                   |                                    |      | 40,784                          |        |                                |      | 39,987  |        |   |   | 126,193 |         |   |   | 133,393 |        
|                                                                                   |                                    |      |                                 |        |                                |      |         |        |   |   |         |         |   |   |         |        
|Income (loss) from operations                                                      |                                    |      | 9,817                           |        |                                |      | 8,660   |        |   |   | 12,928  |         |   |   | (7,276  | )      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Early retirement of debt agreement |      |                                 |       |                                |      |         |       |   |   |         |        |   |   |         | (4,550  | )
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Joint venture results              |      |                                 |       |                                |      |         | 20     |   |   |         | 590     |   |   |         | 48      |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Customer finance charges           |      |                                 | 554    |                                |      |         | 494    |   |   |         | 1,201   |   |   |         | 1,274   |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Gain on sale of fixed assets       |      |                                 |       |                                |      |         | 185    |   |   |         |        |   |   |         | 185     |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Other income                       |      |                                 | 191    |                                |      |         | 170    |   |   |         | 669     |   |   |         | 439     |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Other expense                      |      |                                 | (263   | )                              |      |         | (244   | ) |   |         | (916    | ) |   |         | (782    | )
|                                                                                   |                                    |      |                                 |        |                                |      |         |        |   |   |         |         |   |   |         |        
|                                                                                   |                                    |      | 482                             |        |                                |      | 625     |        |   |   | 1,544   |         |   |   | (3,386  | )      
|                                                                                   |                                    |      |                                 |        |                                |      |         |        |   |   |         |         |   |   |         |        
|Income (loss) before interest and taxes and
cumulative effect of accounting change |                                    |      | 10,299                          |        |                                |      | 9,285   |        |   |   | 14,472  |         |   |   | (10,662 | )      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Interest expense                                                                   |                                    |      | 1,105                           |        |                                |      | 1,122   |        |   |   | 3,683   |         |   |   | 3,779   |        
|                                                                                   |                                    |      |                                 |        |                                |      |         |        |   |   |         |         |   |   |         |        
|Income (loss) before taxes and
cumulative effect of accounting change              |                                    |      | 9,194                           |        |                                |      | 8,163   |        |   |   | 10,789  |         |   |   | (14,441 | )      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Income taxes provision (benefit)                                                   |                                    |      | 3,476                           |        |                                |      | 3,069   |        |   |   | 4,080   |         |   |   | (5,416  | )      
|                                                                                   |                                    |      |                                 |        |                                |      |         |        |   |   |         |         |   |   |         |        
|Income (loss) before
cumulative effect of accounting change                        |                                    |      | 5,718                           |        |                                |      | 5,094   |        |   |   | 6,709   |         |   |   | (9,025  | )      
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Cumulative effect of accounting change for
goodwill charge, net of taxes of $2,735 |                                    |      |                                |        |                                |      |        |        |   |   |        |         |   |   | (4,597  | )      
|                                                                                   |                                    |      |                                 |        |                                |      |         |        |   |   |         |         |   |   |         |        
|Net income (loss)                                                                  |                                    | $    | 5,718                           |        |                                | $    | 5,094   |        |   | $ | 6,709   |         |   | $ | (13,622 | )      
|                                                                                   |                                    |      |                                 |        |                                |      |         |        |   |   |         |         |   |   |         |        
|Basic earnings (loss) per share before cumulative
effect of accounting change      |                                    | $    | 0.67                            |        |                                | $    | 0.59    |        |   | $ | 0.78    |         |   | $ | (1.07   | )      
|                                                                                   |                                    |      |                                 |        |                                |      |         |        |   |   |         |         |   |   |         |        
|Basic earnings (loss) per share                                                    |                                    | $    | 0.67                            |        |                                | $    | 0.59    |        |   | $ | 0.78    |         |   | $ | (1.61   | )      
|                                                                                   |                                    |      |                                 |        |                                |      |         |        |   |   |         |         |   |   |         |        
|Diluted earnings (loss) per share                                                  |                                    | $    | 0.66                            |        |                                | $    | 0.58    |        |   | $ | 0.77    |         |   | $ | (1.61   | )      
|                                                                                   |                                    |      |                                 |        |                                |      |         |        |   |   |         |         |   |   |         |        

See Notes to Consolidated Financial Statements.

2



---



##### 



LESCO, INC.
CONSOLIDATED BALANCE SHEETS

|                                     |                                                                                                                                                                                                                                                                                                          |                                            |        |              |         |              |        |             |         |  |        |         |         | 
|------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------ | ------------ | ------- | ------------ | ------ | ----------- | ------- |  | ------ | ------- | ------- | 
|                                     |                                                                                                                                                                                                                                                                                                          |                                            |        | September 30 |         | September 30 |        | December 31
|(In thousands, except share data)    |                                                                                                                                                                                                                                                                                                          | 2003                                       |        | 2002         |         | 2002        
|                                     |                                                                                                                                                                                                                                                                                                          |                                            |        |              |         |             
|                                     |                                                                                                                                                                                                                                                                                                          |                                            |        | (unaudited)  |         | (audited)   
|ASSETS                               |                                                                                                                                                                                                                                                                                                          |                                            |        |              |         |              |        |             |         |  |        |        
|                                    
|                                    
|                                    
|                                    
|CURRENT ASSETS:                      |                                                                                                                                                                                                                                                                                                          |                                            |        |              |         |              |        |             |         |  |        |        
|                                    
|                                    
|                                    
|                                    
|                                     | Cash                                                                                                                                                                                                                                                                                                     |                                            | $      | 2,056        |         |              | $      | 5,782       |         |  | $      | 1,354   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Accounts receivable  net of allowance
of $5,918, $5,058 and $4,980, respectively                                                                                                                                                                                                                        |                                            |        | 81,145       |         |              |        | 80,402      |         |  |        | 68,188  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Inventories                                                                                                                                                                                                                                                                                              |                                            |        |              |         |              |        |             |         |  |        |         |        
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                                                                                                                                                                                                                          | Raw materials                              |        |              | 10,878  |              |        |             | 8,417   |  |        |         | 10,977  | 
|                                    
|                                    
|                                    
|                                    
|                                     |                                                                                                                                                                                                                                                                                                          | Finished goods                             |        |              | 94,442  |              |        |             | 88,984  |  |        |         | 75,860  | 
|                                     |                                                                                                                                                                                                                                                                                                          |                                            |        |              |         |              |        |             |         |  |        |        
|                                     |                                                                                                                                                                                                                                                                                                          | Total inventories                          |        |              | 105,320 |              |        |             | 97,401  |  |        |         | 86,837  | 
|                                    
|                                    
|                                    
|                                    
|                                     | Deferred income taxes                                                                                                                                                                                                                                                                                    |                                            |        | 3,269        |         |              |        | 3,830       |         |  |        | 3,400   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Prepaid expenses and other assets                                                                                                                                                                                                                                                                        |                                            |        | 1,927        |         |              |        | 4,173       |         |  |        | 6,171   |        
|                                     |                                                                                                                                                                                                                                                                                                          |                                            |        |              |         |              |        |             |         |  |        |        
|                                     |                                                                                                                                                                                                                                                                                                          | TOTAL CURRENT ASSETS                       |        |              | 193,717 |              |        |             | 191,588 |  |        |         | 165,950 | 
|                                    
|                                    
|                                    
|                                    
|Property, plant and equipment        |                                                                                                                                                                                                                                                                                                          |                                            | 85,117 |              |         |              | 79,663 |             |         |  | 80,989 |        
|                                    
|                                    
|                                    
|                                    
|                                     | Less allowance for depreciation and amortization                                                                                                                                                                                                                                                         |                                            |        | (52,274      | )       |              |        | (45,204     | )       |  |        | (47,051 | )      
|                                     |                                                                                                                                                                                                                                                                                                          |                                            |        |              |         |              |        |             |         |  |        |        
|                                     |                                                                                                                                                                                                                                                                                                          | Net property, plant and equipment          |        |              | 32,843  |              |        |             | 34,459  |  |        |         | 33,938  | 
|                                    
|                                    
|                                    
|                                    
|Assets held for sale                 |                                                                                                                                                                                                                                                                                                          |                                            | 274    |              |         |              | 1,764  |             |         |  | 325    |        
|                                    
|                                    
|                                    
|                                    
|Other assets                         |                                                                                                                                                                                                                                                                                                          |                                            | 3,869  |              |         |              | 2,959  |             |         |  | 3,769  |        
|                                    
|                                    
|                                    
|                                    
|Deferred income taxes                |                                                                                                                                                                                                                                                                                                          |                                            | 1,142  |              |         |              | 1,699  |             |         |  |       |        
|                                     |                                                                                                                                                                                                                                                                                                          |                                            |        |              |         |              |        |             |         |  |        |        
|                                     |                                                                                                                                                                                                                                                                                                          | TOTAL
ASSETS                               |        | $            | 231,845 |              |        | $           | 232,469 |  |        | $       | 203,982 | 
|                                     |                                                                                                                                                                                                                                                                                                          |                                            |        |              |         |              |        |             |         |  |        |        
|LIABILITIES
AND SHAREHOLDERS EQUITY |                                                                                                                                                                                                                                                                                                          |                                            |        |              |         |              |        |             |         |  |        |        
|                                    
|                                    
|                                    
|                                    
|CURRENT LIABILITIES:                 |                                                                                                                                                                                                                                                                                                          |                                            |        |              |         |              |        |             |         |  |        |        
|                                    
|                                    
|                                    
|                                    
|                                     | Accounts payable                                                                                                                                                                                                                                                                                         |                                            | $      | 62,193       |         |              | $      | 68,320      |         |  | $      | 38,439  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Other current liabilities                                                                                                                                                                                                                                                                                |                                            |        | 15,767       |         |              |        | 13,146      |         |  |        | 16,290  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Asset rationalization and severance                                                                                                                                                                                                                                                                      |                                            |        | 1,827        |         |              |        | 4,948       |         |  |        | 3,579   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Revolving credit facility                                                                                                                                                                                                                                                                                |                                            |        | 57,860       |         |              |        | 53,580      |         |  |        | 57,052  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Current portion of debt                                                                                                                                                                                                                                                                                  |                                            |        | 1,096        |         |              |        | 1,140       |         |  |        | 1,148   |        
|                                     |                                                                                                                                                                                                                                                                                                          |                                            |        |              |         |              |        |             |         |  |        |        
|                                     |                                                                                                                                                                                                                                                                                                          | TOTAL CURRENT LIABILITIES                  |        |              | 138,743 |              |        |             | 141,134 |  |        |         | 116,508 | 
|                                    
|                                    
|                                    
|                                    
|Long-term debt                       |                                                                                                                                                                                                                                                                                                          |                                            | 9,194  |              |         |              | 10,521 |             |         |  | 10,227 |        
|                                    
|                                    
|                                    
|                                    
|Deferred income taxes                |                                                                                                                                                                                                                                                                                                          |                                            |       |              |         |              |       |             |         |  | 314    |        
|                                    
|                                    
|                                    
|                                    
|SHAREHOLDERS EQUITY:                |                                                                                                                                                                                                                                                                                                          |                                            |        |              |         |              |        |             |         |  |        |        
|                                    
|                                    
|                                    
|                                    
|                                     | Preferred shares without par value
500,000 shares authorized; 1,523 share issued
and outstanding in 2003, liquidation value $1,000 per share                                                                                                                                                           |                                            |        | 1,713        |         |              |        | 1,523       |         |  |        | 1,630   |        
|                                    
|                                    
|                                    
|                                    
|                                     | Common shareswithout par value
19,500,000 shares authorized; at September 30, 2003 8,642,563 shares
issued and 8,528,914 outstanding and at September 30, 2002 8,637,563
shares were issued and 8,545,786 outstanding and at December
31, 2002, 8,637,563 shares were issued and 8,523,914 outstanding |                                            |        | 864          |         |              |        | 863         |         |  |        | 864     |        
|                                    
|                                    
|                                    
|                                    
|                                     | Paid-in capital                                                                                                                                                                                                                                                                                          |                                            |        | 34,938       |         |              |        | 34,901      |         |  |        | 34,901  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Retained earnings                                                                                                                                                                                                                                                                                        |                                            |        | 49,268       |         |              |        | 46,586      |         |  |        | 42,642  |        
|                                    
|                                    
|                                    
|                                    
|                                     | Accumulated other comprehensive loss                                                                                                                                                                                                                                                                     |                                            |        | (920         | )       |              |        | (1,105      | )       |  |        | (1,149  | )      
|                                    
|                                    
|                                    
|                                    
|                                     | Less treasury shares, 113,649 at September 30, 2003, 91,777 at
September 30, 2002, and 113,649 at December 31, 2002                                                                                                                                                                                      |                                            |        | (1,955       | )       |              |        | (1,623      | )       |  |        | (1,955  | )      
|                                    
|                                    
|                                    
|                                    
|                                     | Unearned compensation                                                                                                                                                                                                                                                                                    |                                            |        |             |         |              |        | (331        | )       |  |        |        |        
|                                     |                                                                                                                                                                                                                                                                                                          |                                            |        |              |         |              |        |             |         |  |        |        
|                                     |                                                                                                                                                                                                                                                                                                          | TOTAL SHAREHOLDERS EQUITY                 |        |              | 83,908  |              |        |             | 80,814  |  |        |         | 76,933  | 
|                                     |                                                                                                                                                                                                                                                                                                          |                                            |        |              |         |              |        |             |         |  |        |        
|                                     |                                                                                                                                                                                                                                                                                                          | TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY |        | $            | 231,845 |              |        | $           | 232,469 |  |        | $       | 203,982 | 
|                                     |                                                                                                                                                                                                                                                                                                          |                                            |        |              |         |              |        |             |         |  |        |        

See Notes to Consolidated Financial Statements.

3



---



##### 



LESCO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

|                               |                                                                                   |                                                 |       |                                        |         |   |       |          |         |  
|------------------------------ | --------------------------------------------------------------------------------- | ----------------------------------------------- | ----- | -------------------------------------- | ------- | - | ----- | -------- | ------- | -
|                               |                                                                                   |                                                 |       | For the nine months ended September 30
|                               |                                                                                   |                                                 |       |                                       
|(In thousands)                 |                                                                                   | 2003                                            |       | 2002                                  
|                               |                                                                                   |                                                 |       |                                       
|OPERATING ACTIVITIES:          |                                                                                   |                                                 |       |                                        |         |   |       |         
|                              
|                              
|                              
|                              
|                               | Net income (loss), before cumulative effect of accounting change                  |                                                 | $     | 6,709                                  |         |   | $     | (9,025   | )      
|                              
|                              
|                              
|                              
|                               | Adjustments to reconcile net income to net cash provided by operating
activities: |                                                 |       |                                        |         |   |       |          |        
|                              
|                              
|                              
|                              
|                               |                                                                                   | Early retirement of debt agreement              |       |                                        |        |   |       |          | 4,550   |  
|                              
|                              
|                              
|                              
|                               |                                                                                   | Asset rationalization                           |       |                                        |        |   |       |          | 12,044  |  
|                              
|                              
|                              
|                              
|                               |                                                                                   | Inventory markdown                              |       |                                        |        |   |       |          | 9,581   |  
|                              
|                              
|                              
|                              
|                               |                                                                                   | Depreciation and amortization                   |       |                                        | 6,522   |   |       |          | 7,284   |  
|                              
|                              
|                              
|                              
|                               |                                                                                   | Deferred income taxes                           |       |                                        | (328    | ) |       |          | (5,572  | )
|                              
|                              
|                              
|                              
|                               |                                                                                   | Increase in accounts receivable                 |       |                                        | (14,613 | ) |       |          | (13,470 | )
|                              
|                              
|                              
|                              
|                               |                                                                                   | Provision for uncollectible accounts receivable |       |                                        | 1,656   |   |       |          | 1,839   |  
|                              
|                              
|                              
|                              
|                               |                                                                                   | Increase in inventories                         |       |                                        | (18,483 | ) |       |          | (13,986 | )
|                              
|                              
|                              
|                              
|                               |                                                                                   | Increase in accounts payable                    |       |                                        | 16,605  |   |       |          | 23,154  |  
|                              
|                              
|                              
|                              
|                               |                                                                                   | Increase in other current items                 |       |                                        | 2,343   |   |       |          | 8,127   |  
|                              
|                              
|                              
|                              
|                               |                                                                                   | Other                                           |       |                                        | (1,973  | ) |       |          | (1,835  | )
|                               |                                                                                   |                                                 |       |                                        |         |   |       |         
|                               | NET
CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES                               |                                                 |       | (1,562                                 | )       |   |       | 22,691   |        
|                              
|                              
|                              
|                              
|INVESTING ACTIVITIES:          |                                                                                   |                                                 |       |                                        |         |   |       |         
|                              
|                              
|                              
|                              
|                               | Purchase of property, plant and equipment -net                                    |                                                 |       | (4,645                                 | )       |   |       | (1,296   | )      
|                               |                                                                                   |                                                 |       |                                        |         |   |       |         
|                               | NET CASH USED IN INVESTING ACTIVITIES                                             |                                                 |       | (4,645                                 | )       |   |       | (1,296   | )      
|                              
|                              
|                              
|                              
|FINANCING ACTIVITIES:          |                                                                                   |                                                 |       |                                        |         |   |       |         
|                              
|                              
|                              
|                              
|                               | Purchase of accounts receivable                                                   |                                                 |       |                                       |         |   |       | (31,200  | )      
|                              
|                              
|                              
|                              
|                               | Increase (decrease) in overdraft balances                                         |                                                 |       | 7,149                                  |         |   |       | (1,681   | )      
|                              
|                              
|                              
|                              
|                               | Proceeds from borrowings                                                          |                                                 |       | 456,208                                |         |   |       | 477,023  |        
|                              
|                              
|                              
|                              
|                               | Reduction of borrowings                                                           |                                                 |       | (456,485                               | )       |   |       | (462,890 | )      
|                              
|                              
|                              
|                              
|                               | Deferred financing fees                                                           |                                                 |       |                                       |         |   |       | (2,000   | )      
|                              
|                              
|                              
|                              
|                               | Exercised stock options, net of treasury shares                                   |                                                 |       | 37                                     |         |   |       | 100      |        
|                               |                                                                                   |                                                 |       |                                        |         |   |       |         
|                               | NET
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                               |                                                 |       | 6,909                                  |         |   |       | (20,648  | )      
|                               |                                                                                   |                                                 |       |                                        |         |   |       |         
|Net change in cash             |                                                                                   |                                                 | 702   |                                        |         |   | 747   |         
|                              
|                              
|                              
|                              
|Cash  Beginning of the period |                                                                                   |                                                 | 1,354 |                                        |         |   | 5,035 |         
|                               |                                                                                   |                                                 |       |                                        |         |   |       |         
|                               | CASH  END OF THE PERIOD                                                          |                                                 | $     | 2,056                                  |         |   | $     | 5,782    |        
|                               |                                                                                   |                                                 |       |                                        |         |   |       |         

See Notes to Consolidated Financial Statements.

4



---



##### 



LESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A  Basis of Presentation

The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States for interim financial information and pursuant to rules and
regulations of the Securities and Exchange Commission. 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, 2002 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, 2003 and
June 30, 2003 included in the Companys quarterly reports on Form 10-Q.

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires estimates and
assumptions by management, and actual results may differ from these estimates.

Operating results for the nine months ended September 30, 2003 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 and items have been
reclassified in the prior period to conform with current year presentation.

The Company recognizes revenue when goods are shipped to the customer and
title passes to the customer. The Company has consigned inventory agreements on
certain products. The Company reports gross revenue from the sales of consigned
inventory in accordance with Emerging Issues Task Force 99-19, Reporting
Revenue Gross as a Principal versus Net as an Agent. Sales of consigned
inventory were $26.5 million and $25.7 million for the nine months ended
September 30, 2003 and 2002, respectively.

5



---



##### 



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 share and per share data)                                     |                                                      | 2003 |                                 | 2002    |                                | 2003 |           | 2002   
|                                                                                    |                                                      |      |                                 |         |                                |      |           |        
|Numerator:                                                                          |                                                      |      |                                 |         |                                |      |           |         |   |   |           |         |   |   |           |        
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Income (loss) before
cumulative effect of
accounting change                         |                                                      | $    | 5,718                           |         |                                | $    | 5,094     |         |   | $ | 6,709     |         |   | $ | (9,025    | )      
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Preferred stock dividends                            |      |                                 | (30     | )                              |      |           | (26     | ) |   |           | (84     | ) |   |           | (78     | )
|                                                                                    |                                                      |      |                                 |         |                                |      |           |         |   |   |           |         |   |   |           |        
|Income (loss) available to common shareholders                                      |                                                      |      | 5,688                           |         |                                |      | 5,068     |         |   |   | 6,625     |         |   |   | (9,103    | )      
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Cumulative effect of accounting change, net of taxes |      |                                 |        |                                |      |           |        |   |   |           |        |   |   |           | (4,597  | )
|                                                                                    |                                                      |      |                                 |         |                                |      |           |         |   |   |           |         |   |   |           |        
|Net income (loss) available to common shareholders                                  |                                                      | $    | 5,688                           |         |                                | $    | 5,068     |         |   | $ | 6,625     |         |   | $ | (13,700   | )      
|                                                                                    |                                                      |      |                                 |         |                                |      |           |         |   |   |           |         |   |   |           |        
|Denominator:                                                                        |                                                      |      |                                 |         |                                |      |           |         |   |   |           |         |   |   |           |        
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Basic earnings per share- weighted
average shares                                   |                                                      |      | 8,526,914                       |         |                                |      | 8,523,914 |         |   |   | 8,525,358 |         |   |   | 8,518,414 |        
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Effect of dilutive securities:                                                      |                                                      |      |                                 |         |                                |      |           |         |   |   |           |         |   |   |           |        
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                    | Employee stock options                               |      |                                 | 102,102 |                                |      |           | 220,920 |   |   |           | 130,534 |   |   |           | 173,218 |  
|                                                                                    |                                                      |      |                                 |         |                                |      |           |         |   |   |           |         |   |   |           |        
|Diluted earnings per share adjusted weighted
average shares and assumed conversions |                                                      |      | 8,629,016                       |         |                                |      | 8,744,834 |         |   |   | 8,655,892 |         |   |   | 8,691,632 |        
|                                                                                    |                                                      |      |                                 |         |                                |      |           |         |   |   |           |         |   |   |           |        
|Basic earnings (loss) per share:                                                    |                                                      |      |                                 |         |                                |      |           |         |   |   |           |         |   |   |           |        
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Income (loss) before
cumulative effect ofaccounting change                          |                                                      | $    | 0.67                            |         |                                | $    | 0.59      |         |   | $ | 0.78      |         |   | $ | (1.07     | )      
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Cumulative effect of accounting change, net of taxes                                |                                                      |      |                                |         |                                |      |          |         |   |   |          |         |   |   | (0.54     | )      
|                                                                                    |                                                      |      |                                 |         |                                |      |           |         |   |   |           |         |   |   |           |        
|Basic earnings (loss) per share                                                     |                                                      | $    | 0.67                            |         |                                | $    | 0.59      |         |   | $ | 0.78      |         |   | $ | (1.61     | )      
|                                                                                    |                                                      |      |                                 |         |                                |      |           |         |   |   |           |         |   |   |           |        
|Diluted earnings (loss) per share:                                                  |                                                      |      |                                 |         |                                |      |           |         |   |   |           |         |   |   |           |        
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Income (loss) before
cumulative effect ofaccounting change                          |                                                      | $    | 0.66                            |         |                                | $    | 0.58      |         |   | $ | 0.77      |         |   | $ | (1.07     | )      
|                                                                                   
|                                                                                   
|                                                                                   
|                                                                                   
|Cumulative effect of accounting change, net of taxes                                |                                                      |      |                                |         |                                |      |          |         |   |   |          |         |   |   | (0.54     | )      
|                                                                                    |                                                      |      |                                 |         |                                |      |           |         |   |   |           |         |   |   |           |        
|Diluted earnings (loss) per share                                                   |                                                      | $    | 0.66                            |         |                                | $    | 0.58      |         |   | $ | 0.77      |         |   | $ | (1.61     | )      
|                                                                                    |                                                      |      |                                 |         |                                |      |           |         |   |   |           |         |   |   |           |        

6



---



##### 



NOTE C  Other Assets

Other assets consist of the following:

|                                         |  |         |       |         |  |             |       |   |  |   |       |  
|---------------------------------------- |  | ------- | ----- | ------- |  | ----------- | ----- | - |  | - | ----- | -
|                                         |  | Sept 30 |       | Sept 30 |  | December 31
|(In thousands)                           |  | 2003    |       | 2002    |  | 2002       
|                                         |  |         |       |         |  |            
|Deferred financing                       |  | $       | 1,345 |         |  | $           | 2,506 |   |  | $ | 2,226 |  
|                                        
|                                        
|                                        
|                                        
|Long-term note receivable                |  |         | 1,089 |         |  |             |      |   |  |   | 930   |  
|                                        
|                                        
|                                        
|                                        
|Investment in joint venture (see NOTE H) |  |         | 741   |         |  |             | (224  | ) |  |   | (65   | )
|                                        
|                                        
|                                        
|                                        
|Deposits and other                       |  |         | 694   |         |  |             | 677   |   |  |   | 678   |  
|                                         |  |         |       |         |  |             |       |   |  |   |       |  
|Total other assets                       |  | $       | 3,869 |         |  | $           | 2,959 |   |  | $ | 3,769 |  
|                                         |  |         |       |         |  |             |       |   |  |   |       |  

Deferred financing relates to costs incurred to obtain financing. These
costs are amortized over the life of the finance agreement. The long-term note
receivable arose in connection with the sale of the Companys Novex facility.
Deposits and other primarily includes deposits on properties the Company rents.

NOTE D  Asset Rationalization and Severance Expense

Major components of the asset rationalization and severance expense accrual
as of September 30, 2003 and December 31, 2002 are as follows:

| |  |                    |  |   |     |             |  |                  |       |                    |  |       |        |   |  |   |        |   |  | 
| |  | ------------------ |  | - | --- | ----------- |  | ---------------- | ----- | ------------------ |  | ----- | ------ | - |  | - | ------ | - |  | 
| |  | (In
thousands)     |  |   |     | Lease Costs |  | Other Exit Costs |       | Severance Payments |  | Total
| |  |                    |  |   |     |             |  |                  |       |                   
| |  | December 31, 2002  |  | $ | 634 |             |  | $                | 1,371 |                    |  | $     | 1,574  |   |  | $ | 3,579  |  
|
|
|
|
| |  | 2003 additions     |  |   |    |             |  |                  |      |                    |  |       | 487    |   |  |   | 487    |  
|
|
|
|
| |  | Utilized/spent     |  |   | (39 | )           |  |                  | (734  | )                  |  |       | (1,466 | ) |  |   | (2,239 | )
| |  |                    |  |   |     |             |  |                  |       |                    |  |       |        |   |  |   |        |   |  | 
| |  | September 30, 2003 |  | $ | 595 |             |  | $                | 637   |                    |  | $     | 595    |   |  | $ | 1,827  |  
| |  |                    |  |   |     |             |  |                  |       |                    |  |       |        |   |  |   |        |   |  | 

In 2003, the Company added $487,000 to the accrual for severance payments for
employee terminations occurring before September 30, 2003.

NOTE E  Debt

The Companys $122.3 million senior secured credit facility, as amended
(Debt Facility), includes an amortizing term loan of approximately $7.3 million
of which $4.4 million remains outstanding and a revolving credit facility of up
to $115 million, maturing in January 2005. The variable interest on the Debt
Facility is based on LIBOR plus 2.75% to 3.00% or prime rate plus .25% to .50%.
Availability under the revolving portion of the 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 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. As of September 30, 2003, the Company
is in compliance with all of the restrictive covenants in the Debt Facility.

NOTE F  Derivatives and Comprehensive Income / Loss

The Company utilizes an interest rate swap in conjunction with the Debt
Facility. The Company will only enter into swap agreements with major financial
institutions that are considered to be market makers.

The interest rate swap agreement is a three-year, $40.5 million notional
amount interest rate swap expiring in January 2005, which converts existing
variable-rate payments (based on LIBOR or prime rates), plus applicable
borrowing margins of 2.75% to 3.00%, to 4.2% fixed-rate plus applicable
borrowing margin of 2.75% to 3.00%. The fair value of the interest rate swap is
determined by the estimated cost to terminate the agreement, as determined by
the issuing bank. The Company recognized the $1.5 million fair market value of
the swap agreement as a liability on the balance sheet at September 30, 2003.
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 income (loss) for the nine months ended
September 30, 2003 and September 30, 2002 were as
follows:

7



---



##### 



|                                  |  |                           |       |               |  |   |         |  
|--------------------------------- |  | ------------------------- | ----- | ------------- |  | - | ------- | -
|                                  |  | For the nine months ended
|                                  |  |                          
|(In thousands)                    |  | Sept 30, 2003             |       | Sept 30, 2002
|                                  |  |                           |       |              
|Net income (loss)                 |  | $                         | 6,709 |               |  | $ | (13,622 | )
|                                 
|                                 
|                                 
|                                 
|Other comprehensive income (loss) |  |                           | 229   |               |  |   | (1,105  | )
|                                  |  |                           |       |               |  |   |         |  
|Total comprehensive income (loss) |  | $                         | 6,938 |               |  | $ | (14,727 | )
|                                  |  |                           |       |               |  |   |         |  

NOTE G  Stock Based Compensation

The Company follows the disclosure-only provisions of Statement of Financial
Accounting Standards No. 148 (SFAS No. 148), Accounting for Stock-Based
Compensation Transition and Disclosure, an amendment to SFAS No. 123. The
Company follows the accounting provisions of Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to Employees, which, if applicable,
recognizes as compensation cost the difference between the fair market value and
the exercise price of stock options at the date of grant. Accordingly, no
compensation expense has been recognized for the stock option plans. Had
compensation cost for the stock option plans been determined based on the fair
value at the grant date in accordance with SFAS No. 148, the Companys net
income and related earnings per share would have been changed to the pro forma
amounts indicated below:

|                                       |         |      |                |      |                |      |       |      |  |   |       |      |  |   |         |       |  
|-------------------------------------- | ------- | ---- | -------------- | ---- | -------------- | ---- | ----- | ---- |  | - | ----- | ---- |  | - | ------- | ----- | -
|                                       |         |      | Three months   |      | Nine months   
|                                       |         |      | ended Sept. 30 |      | ended Sept. 30
|                                       |         |      |                |      |               
|(In thousands, except share data)      |         | 2003 |                | 2002 |                | 2003 |       | 2002
|                                       |         |      |                |      |                |      |       |     
|Net income (loss) as reported         |         | $    | 5,718          |      |                | $    | 5,094 |      |  | $ | 6,709 |      |  | $ | (13,622 | )    
|Net income (loss) pro forma           |         | $    | 5,567          |      |                | $    | 4,822 |      |  | $ | 6,249 |      |  | $ | (14,336 | )    
|Earnings (loss) per share as reported |         |      |                |      |                |      |       |      |  |   |       |      |  |   |         |      
|                                       | Basic   |      | $              | 0.67 |                |      | $     | 0.59 |  |   | $     | 0.78 |  |   | $       | (1.61 | )
|                                       | Diluted |      | $              | 0.66 |                |      | $     | 0.58 |  |   | $     | 0.77 |  |   | $       | (1.61 | )
|Earnings (loss) per share pro forma   |         |      |                |      |                |      |       |      |  |   |       |      |  |   |         |      
|                                       | Basic   |      | $              | 0.65 |                |      | $     | 0.57 |  |   | $     | 0.73 |  |   | $       | (1.68 | )
|                                       | Diluted |      | $              | 0.64 |                |      | $     | 0.56 |  |   | $     | 0.72 |  |   | $       | (1.68 | )

Included in these pro forma disclosures are stock options
that vest at various times pursuant to the terms of the grants. The fair
value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model, with the following assumptions:
dividend yield of 0.00%; expected stock price volatility of 25% to 50%; risk-free interest rate
of 1.10% to 6.60%; and expected lives of four years. This option valuation
model requires input of highly subjective assumptions and, in managements
opinion, does not provide a reliable single measure of fair value of its
employee stock options.

NOTE H  Subsequent Event

On October 28, 2003, the Company announced that it had entered into a
definitive agreement to sell its investment in Commercial Turf Products Ltd.
(CTP) to MTD Consumer Group, Inc (MTD). CTP is a manufacturer of commercial
grade riding and walkbehind turf mowers, blowers, turf renovators, spreaders,
sprayers, associated accessories and service parts. The Company will sell its
investment for a $933,130 promissory note and a release from all of its
guarantees of certain of CTPs liabilities, including an $8.0 million Industrial
Revenue Bond. The note is payable in five equal annual installments of $186,626
beginning November 15, 2003. The Company expects to record a $10,000 gain on the
sale in the fourth quarter of 2003.

Concurrent with the sale, the Company entered into a five-year supply
agreement with CTP and MTD. During the term of the agreement, the Company
maintains the exclusive right to market and sell proprietary products, such as
commercial grade spreaders, sprayers, renovators and blowers and retains certain
customer rights with respect to national accounts. However, the Company is not
required to exclusively source products from CTP and MTD. Additionally, the
Company has the option to exercise a buyout of the agreement prior to the
expiration of the five-year term.

The agreement provides for the following minimum annual purchase targets
based on historical purchases and projected growth rates of the Company: $26.2
million in 2004, $28.9 million in 2005, $31.7 million in 2006, $34.7 million in
2007 and $37.8 million in 2008. To the extent the actual annual purchases are
less than the applicable minimum purchase targets, the price on purchased
products will increase. Pricing during the term of the agreement is based on
pricing prior to the supply agreement, adjusted by changes in the Producers
Price Index, not to exceed two percent (2%) annually.

8



---



##### 



NOTE I  Impact of Recently Issued Accounting Standards

Upon the adoption of SFAS No. 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.

In May 2002, FASB issued SFAS No. 145, Rescission of FASB Statements No. 4,
44 and 64, amendment of FASB Statement No. 13 and technical corrections. As
required, the Company adopted this statement in the first quarter of 2003 and
reclassified the extraordinary charge of $4.6 million related to the early
extinguishment of debt in the first quarter 2002 to continuing operations.

In April 2003, FASB issued SFAS No. 149, Amendment of FASB Statement No. 13
on Derivative Instruments and Hedging Activities. The Company is required to
adopt this statement for agreements entered into or modified after June 30,
2003. Adoption has not impacted the Companys consolidated financial position or
results of operations.

In May 2003, FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity. This Statement
is effective for financial instruments entered into or modified after May 31,
2003. The Company believes the adoption will not impact its consolidated
financial position or results of operations.

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

Sales Information

The Company operates 246 LESCO Service Centers®, including one Service
Center opened in the third quarter of 2003, for a total of 20 new Service
Centers in the first nine months of 2003, compared to 227 Service Centers
operated in 2002. Comparable Service Center sales rose 6.4% and 6.6% for the
three and nine months ended September 30, 2003 over 2002, respectively . Service
Centers opened in 2003 generated sales of $3.7 million and fully diluted
earnings per share of $0.01 for the three months ended September 30, 2003 and
generated sales of $7.1 million and fully diluted loss per share of $0.03 for
the nine months ended September 30, 2003. The primary products sold are turf
care products, including turf and pest control products, fertilizer, grass seed
and equipment. The Service Centers market and sell products principally to lawn
care companies, landscapers, public and private golf courses, nurseries, municipalities, churches and condominium
associations. The Company plans to open one additional Service Center in
November, 2003.

The Company also 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 LESCO Stores-on-Wheels®. The Company operated 72 LESCO
Stores-on-Wheels in 2003 compared to 77 in 2002. The primary products sold are turf care products, including turf and pest control products,
fertilizer, grass seed and hand held equipment and golf course accessories. 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.

Additionally, the Company markets and sells products to large national and
regional lawn care customers through a separate group of 13 sales
representatives. An additional six sales representatives sell selected products
to The Home Depot stores in the South, Southwest, Midwest, Mid-Atlantic and
Northeast areas of the country. The Company also markets products by mail order
catalog and participates in national and regional lawn care trade shows. A
telemarketing sales group calls on inactive accounts and contacts customers not
currently serviced by the Companys outside sales forces. In addition, products
are marketed internationally, principally through foreign distributors.

Results of Operations

Operating Results for the Three Months Ended September 30, 2003

The Company incurred certain charges in 2002 that were not incurred in 2003
(see following schedule). Management believes that the 2002 results excluding
these charges are useful to investors because they provide a better comparison
to the 2003 operating results. For purposes of reconciliation and better
comparability, the following statements include the 2002 operating results with
these charges, in accordance with generally accepted accounting principles
(GAAP) in column 2, the charges in column 3 and the operating results excluding
the charges in column 4. The statements include a reconciliation of earnings
before interest and taxes, net loss and basic and fully diluted net loss per
share for 2002 including the charges in column 2, the effect of the charges in
column 3, and excluding the charges in column 4. The discussion following the
statements references reported results unless otherwise indicated.

9



---



##### 



LESCO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS  UNAUDITED

|                                      |                                  |              |              |              |              |             |         |             |   |   |           |       |     |   |         |        |  
|------------------------------------- | -------------------------------- | ------------ | ------------ | ------------ | ------------ | ----------- | ------- | ----------- | - | - | --------- | ----- | --- | - | ------- | ------ | -
|                                      |                                  |              | 2003         |              | 2002         |             |         |             |  
|                                      |                                  |              |              |              |              |             |         |             |  
|                                      |                                  |              | Three Months |              | Three Months |             |         |             |   |   | Results  
|                                      |                                  |              | Ended        |              | Ended        |             |         |             |   |   | Excluding
|(In thousands, except per share data) |                                  | September 30 |              | September 30 |              | Charges (a) |         | Charges (a)
|                                      |                                  |              |              |              |              |             |         |            
|Net sales                             |                                  | $            | 147,721      |              |              | $           | 144,009 |             |   | $ |          |       |     | $ | 144,009 |       
|                                     
|                                     
|                                     
|                                     
|                                      | Cost of Sales                    |              |              | 97,120       |              |             |         | 95,362      |   |   |           |      |     |   |         | 95,362 |  
|                                      |                                  |              |              |              |              |             |         |             |   |   |           |       |     |   |         |       
|Gross profit on sales                 |                                  |              | 50,601       |              |              |             | 48,647  |             |   |   |          |       |     |   | 48,647  |       
|                                     
|                                     
|                                     
|                                     
|                                      | Warehouse & delivery expense     |              |              | 11,895       |              |             |         | 11,798      |   |   |           |      |     |   |         | 11,798 |  
|                                     
|                                     
|                                     
|                                     
|                                      | Selling expense                  |              |              | 21,007       |              |             |         | 19,928      |   |   |           |      |     |   |         | 19,928 |  
|                                     
|                                     
|                                     
|                                     
|                                      | Bad debt expense                 |              |              | 552          |              |             |         | 657         |   |   |           |      |     |   |         | 657    |  
|                                     
|                                     
|                                     
|                                     
|                                      | General & administrative expense |              |              | 7,249        |              |             |         | 7,604       |   |   |           |      |     |   |         | 7,604  |  
|                                     
|                                     
|                                     
|                                     
|                                      | Severance expense                |              |              | 81           |              |             |         |            |   |   |           |      |     |   |         |       |  
|                                      |                                  |              |              |              |              |             |         |             |   |   |           |       |     |   |         |       
|                                      |                                  |              | 40,784       |              |              |             | 39,987  |             |   |   |          |       |     |   | 39,987  |       
|                                     
|                                     
|                                     
|                                     
|Income (loss) from operations         |                                  |              | 9,817        |              |              |             | 8,660   |             |   |   |          |       |     |   | 8,660   |       
|                                     
|                                     
|                                     
|                                     
|                                      | Joint venture results            |              |              |             |              |             |         | 20          |   |   |           |      |     |   |         | 20     |  
|                                     
|                                     
|                                     
|                                     
|                                      | Customer finance charges         |              |              | 554          |              |             |         | 494         |   |   |           |      |     |   |         | 494    |  
|                                     
|                                     
|                                     
|                                     
|                                      | Gain on Sale of fixed assets     |              |              |             |              |             |         | 185         |   |   |           | 185   | (b) |   |         |       |  
|                                     
|                                     
|                                     
|                                     
|                                      | Other income                     |              |              | 191          |              |             |         | 170         |   |   |           |      |     |   |         | 170    |  
|                                     
|                                     
|                                     
|                                     
|                                      | Other expense                    |              |              | (263         | )            |             |         | (244        | ) |   |           |      |     |   |         | (244   | )
|                                      |                                  |              |              |              |              |             |         |             |   |   |           |       |     |   |         |       
|                                      |                                  |              | 482          |              |              |             | 625     |             |   |   | 185       |       |     |   | 440     |       
|                                     
|                                     
|                                     
|                                     
|Earnings before interest and taxes    |                                  |              | 10,299       |              |              |             | 9,285   |             |   |   | (185      | )     |     |   | 9,100   |       
|                                     
|                                     
|                                     
|                                     
|Interest expense                      |                                  |              | 1,105        |              |              |             | 1,122   |             |   |   |          |       |     |   | 1,122   |       
|                                      |                                  |              |              |              |              |             |         |             |   |   |           |       |     |   |         |       
|Income before taxes                   |                                  |              | 9,194        |              |              |             | 8,163   |             |   |   | (185      | )     |     |   | 7,978   |       
|                                     
|                                     
|                                     
|                                     
|Income taxes (benefit)                |                                  |              | 3,476        |              |              |             | 3,069   |             |   |   | (69       | )     |     |   | 3,000   |       
|                                      |                                  |              |              |              |              |             |         |             |   |   |           |       |     |   |         |       
|Net income                            |                                  | $            | 5,718        |              |              | $           | 5,094   |             |   | $ | (116      | )     |     | $ | 4,978   |       
|                                      |                                  |              |              |              |              |             |         |             |   |   |           |       |     |   |         |       
|                                      | Basic earnings per share         |              | $            | 0.67         |              |             | $       | 0.59        |   |   | $         | (0.01 | )   |   | $       | 0.58   |  
|                                      |                                  |              |              |              |              |             |         |             |   |   |           |       |     |   |         |       
|                                      | Fully diluted earnings per share |              | $            | 0.66         |              |             | $       | 0.58        |   |   | $         | (0.01 | )   |   | $       | 0.57   |  
|                                      |                                  |              |              |              |              |             |         |             |   |   |           |       |     |   |         |       



|(a) |  | The Company incurred certain charges in 2002 that were not incurred in 2003
(see following footnote b). Management believes that the 2002 results excluding
these charges are a better comparison to the 2003 operating results. For
purposes of reconciliation and better comparability, the above
statements
include the 2002 operating results with these charges, in accordance with
generally accepted accounting principles (GAAP), in column 2, the charges in
column 3 and the operating results excluding the charges in column 4. The
schedule includes a reconciliation of earnings before interest and taxes, net
loss and basic and fully diluted net loss per share for 2002 including the
charges in column 2, the effect of the charges in column 3, and excluding the
charges in column 4.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(b) |  | The Company recorded a $185,000 pre-tax gain on sale of former corporate
offices.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

10



---



##### 



Sales for the third quarter ended September 30, 2003 rose 2.6% to $147.7
million compared to $144.0 million in 2002. Higher selling prices in 2003 than
in 2002 resulted in increased sales of $3.5 million. Unit sales volume was up
slightly resulting in a $0.2 million sales increase.

Sales by customer channel for the three months ended September 30 were as
follows (in thousands):

|                          |  |      |         |      |  |   |         |  
|------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                          |  | 2003 |         | 2002
|                          |  |      |         |     
|Lawn Care                 |  | $    | 105,232 |      |  | $ | 98,997  |  
|                         
|                         
|                         
|                         
|Golf                      |  |      | 42,918  |      |  |   | 45,490  |  
|                         
|                         
|                         
|                         
|Sales credits and rebates |  |      | (429    | )    |  |   | (478    | )
|                          |  |      |         |      |  |   |         |  
|Net Sales                 |  | $    | 147,721 |      |  | $ | 144,009 |  
|                          |  |      |         |      |  |   |         |  

Sales increased for Lawn Care by $6.2 million. Golf sales in the third
quarter 2003 were $2.6 million less than in 2002 due to poor economic conditions
in the golf industry.

Sales by product line for the three months ended September 30 were as
follows (in thousands):

|                                  |  |      |         |      |  |   |         |  
|--------------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                                  |  | 2003 |         | 2002
|                                  |  |      |         |     
|Fertilizer & combination products |  | $    | 48,151  |      |  | $ | 44,660  |  
|                                 
|                                 
|                                 
|                                 
|Control products                  |  |      | 50,625  |      |  |   | 48,379  |  
|                                 
|                                 
|                                 
|                                 
|Equipment, parts & service        |  |      | 13,987  |      |  |   | 16,170  |  
|                                 
|                                 
|                                 
|                                 
|Turfgrass seed                    |  |      | 25,314  |      |  |   | 25,854  |  
|                                 
|                                 
|                                 
|                                 
|Pest control                      |  |      | 5,248   |      |  |   | 4,422   |  
|                                 
|                                 
|                                 
|                                 
|Other                             |  |      | 4,825   |      |  |   | 5,002   |  
|                                 
|                                 
|                                 
|                                 
|Sales credits and rebates         |  |      | (429    | )    |  |   | (478    | )
|                                  |  |      |         |      |  |   |         |  
|Net Sales                         |  | $    | 147,721 |      |  | $ | 144,009 |  
|                                  |  |      |         |      |  |   |         |  

Sales of the Companys fertilizer, combination products, control products,
and pest control rose in the third quarter 2003 over 2002, while sales of
turfgrass seed and other products declined. Equipment sales were higher in 2002
by $2.2 million due to a special pricing program in 2002 not repeated in 2003.

Sales by geographic zone for the three months ended September 30 were as
follows (in thousands):

|                          |  |      |         |      |  |   |         |  
|------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                          |  | 2003 |         | 2002
|                          |  |      |         |     
|Northeast                 |  | $    | 40,314  |      |  | $ | 37,394  |  
|                         
|                         
|                         
|                         
|Mid Central               |  |      | 33,608  |      |  |   | 33,831  |  
|                         
|                         
|                         
|                         
|Transition                |  |      | 28,679  |      |  |   | 27,899  |  
|                         
|                         
|                         
|                         
|Southeast                 |  |      | 25,603  |      |  |   | 24,605  |  
|                         
|                         
|                         
|                         
|West                      |  |      | 4,747   |      |  |   | 4,991   |  
|                         
|                         
|                         
|                         
|National Accounts         |  |      | 15,199  |      |  |   | 15,767  |  
|                         
|                         
|                         
|                         
|Sales credits and rebates |  |      | (429    | )    |  |   | (478    | )
|                          |  |      |         |      |  |   |         |  
|Net Sales                 |  | $    | 147,721 |      |  | $ | 144,009 |  
|                          |  |      |         |      |  |   |         |  

Sales in the Companys Northeast, Transition and Southeast United States
geographic zones all increased in the third quarter 2003. Slight decreases in
the Mid Central and West zones were reported. National Account sales decreased
due to lower retail sales.

11



---



##### 



Gross profit, as a percentage of sales, was 34.3% for the third quarter
ended September 30, 2003, compared to 33.8% for 2002. The increase resulted
primarily from higher selling prices, lower manufacturing costs and lower
inventory shrink expense. Partially offsetting these improvements were higher
raw material costs, principally for urea.

Delivery and warehouse expenses increased slightly to $11.9 million in the
third quarter 2003 from $11.8 million in 2002. Delivery and warehouse costs
decreased to 8.0% of sales in the third quarter 2003 compared to 8.2% of sales
in 2002. Selling expense was 14.2% of sales in the third quarter 2003 compared
to 13.8% in the third quarter 2002. Total selling expense increased by $1.1
million in third quarter 2003, primarily due to the additional Service Center
locations opened in 2003, which added additional operating costs of
approximately $876,000. Also, higher information system costs and other
operating costs were partially offset by lower commission expense.

General and administrative costs decreased in third quarter 2003 from 2002
by $355,000, principally due to reductions in payroll related costs, management
incentives, and employee recruiting and relocation expenses. These decreases
were partially offset by higher insurance, depreciation, and software
maintenance costs.

Interest expense decreased $17,000 for the third quarter 2003 compared to
the third quarter 2002. The effective interest rate for the third quarter 2003
was 6.67% compared to 6.84% for the third quarter 2002. The average borrowing
levels were higher by $1.8 million for the third quarter ended September 30,
2003 compared to third quarter 2002.

Other expense consists primarily of losses on the sale of fixed assets,
royalty expense and other miscellaneous expenses.

The Companys net income was $5.7 million or $0.66 per fully diluted share
in the quarter ended September 30, 2003 compared to a net income of $5.1 million
or $0.58 per fully diluted share in the quarter ended September 30, 2002. Net
income for the third quarter 2002 excluding a gain on sale of fixed assets was
$5.0 million or $0.57 per fully diluted share.

Operating Results for the Nine Months Ended September 30, 2003

The Company incurred certain charges in 2002 that were not incurred in 2003
(see following schedule). Management believes that the 2002 results excluding
these charges are useful to investors because they provide a better comparison
to the 2003 operating results. For purposes of reconciliation and better
comparability, the following statements include the 2002 operating results with
these charges, in accordance with generally accepted accounting principles
(GAAP) in column 2, the charges in column 3 and the operating results excluding
the charges in column 4. The statements include a reconciliation of earnings
before interest and taxes, net loss and basic and fully diluted net loss per
share for 2002 including the charges in column 2, the effect of the charges in
column 3, and excluding the charges in column 4. The discussion following the
statements references reported results unless otherwise indicated.

12



---



##### 



LESCO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS  UNAUDITED

|                                                                                   |                                                                               |              |             |              |             |             |         |             |   |   |           |         |      |   |         |         |  
|---------------------------------------------------------------------------------- | ----------------------------------------------------------------------------- | ------------ | ----------- | ------------ | ----------- | ----------- | ------- | ----------- | - | - | --------- | ------- | ---- | - | ------- | ------- | -
|                                                                                   |                                                                               |              | 2003        |              | 2002       
|                                                                                   |                                                                               |              |             |              |            
|                                                                                   |                                                                               |              | Nine Months |              | Nine Months |             |         |             |   |   | Results  
|                                                                                   |                                                                               |              | Ended       |              | Ended       |             |         |             |   |   | Excluding
|(In thousands, except per share data)                                              |                                                                               | September 30 |             | September 30 |             | Charges (a) |         | Charges (a)
|                                                                                   |                                                                               |              |             |              |             |             |         |            
|Net sales                                                                          |                                                                               | $            | 414,731     |              |             | $           | 403,981 |             |   | $ |          |         |      | $ | 403,981 |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Cost of Sales                                                                 |              |             | 275,610      |             |             |         | 268,283     |   |   |           |        |      |   |         | 268,283 |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Inventory markdown  cost of sales                                            |              |             |             |             |             |         | 9,581       |   |   |           | (9,581  | )(b) |   |         |        |  
|                                                                                   |                                                                               |              |             |              |             |             |         |             |   |   |           |         |      |   |         |        
|Gross profit on sales                                                              |                                                                               |              | 139,121     |              |             |             | 126,117 |             |   |   | (9,581    | )       |      |   | 135,698 |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Warehouse & delivery expense                                                  |              |             | 37,144       |             |             |         | 34,589      |   |   |           |        |      |   |         | 34,589  |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Selling expense                                                               |              |             | 65,083       |             |             |         | 58,232      |   |   |           |        |      |   |         | 58,232  |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Bad debt expense                                                              |              |             | 1,656        |             |             |         | 1,839       |   |   |           |        |      |   |         | 1,839   |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | General & administrative expense                                              |              |             | 21,823       |             |             |         | 22,823      |   |   |           |         |      |   |         | 22,823  |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Asset rationalization                                                         |              |             |             |             |             |         | 12,044      |   |   |           | (12,044 | )(c) |   |         |        |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Severance expense                                                             |              |             | 487          |             |             |         | 3,866       |   |   |           | (3,866  | )(d) |   |         |        |  
|                                                                                   |                                                                               |              |             |              |             |             |         |             |   |   |           |         |      |   |         |        
|                                                                                   |                                                                               |              | 126,193     |              |             |             | 133,393 |             |   |   | (15,910   | )       |      |   | 117,483 |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Income (Loss) from operations                                                      |                                                                               |              | 12,928      |              |             |             | (7,276  | )           |   |   | (25,491   | )       |      |   | 18,215  |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Early retirement of debt agreement                                            |              |             |             |             |             |         | (4,550      | ) |   |           | (4,550  | )(e) |   |         |        |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Joint venture results                                                         |              |             | 590          |             |             |         | 48          |   |   |           |        |      |   |         | 48      |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Customer finance charges                                                      |              |             | 1,201        |             |             |         | 1,274       |   |   |           |        |      |   |         | 1,274   |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Gain on Sale of fixed assets                                                  |              |             |             |             |             |         | 185         |   |   |           | 185     | (f)  |   |         |        |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Other income                                                                  |              |             | 669          |             |             |         | 439         |   |   |           |        |      |   |         | 439     |  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                   | Other expense                                                                 |              |             | (916         | )           |             |         | (782        | ) |   |           |        |      |   |         | (782    | )
|                                                                                   |                                                                               |              |             |              |             |             |         |             |   |   |           |         |      |   |         |        
|                                                                                   |                                                                               |              | 1,544       |              |             |             | (3,386  | )           |   |   | (4,365    | )       |      |   | 979     |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Earnings (loss) before interest and taxes                                          |                                                                               |              | 14,472      |              |             |             | (10,662 | )           |   |   | (29,856   | )       |      |   | 19,194  |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Interest expense                                                                   |                                                                               |              | 3,683       |              |             |             | 3,779   |             |   |   |          |         |      |   | 3,779   |        
|                                                                                   |                                                                               |              |             |              |             |             |         |             |   |   |           |         |      |   |         |        
|Income (Loss) before taxes                                                         |                                                                               |              | 10,789      |              |             |             | (14,441 | )           |   |   | (29,856   | )       |      |   | 15,415  |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Income taxes (benefit)                                                             |                                                                               |              | 4,080       |              |             |             | (5,416  | )           |   |   | (11,212   | )(g)    |      |   | 5,796   |        
|                                                                                   |                                                                               |              |             |              |             |             |         |             |   |   |           |         |      |   |         |        
|Net Income (Loss) before cumulative effect
of accounting change                    |                                                                               |              | 6,709       |              |             |             | (9,025  | )           |   |   | (18,644   | )       |      |   | 9,619   |        
|                                                                                  
|                                                                                  
|                                                                                  
|                                                                                  
|Cumulative effect of accounting change for
goodwill charge, net of taxes of $2,735 |                                                                               |              |            |              |             |             | 4,597   |             |   |   | (4,597    | )(h)    |      |   |        |        
|                                                                                   |                                                                               |              |             |              |             |             |         |             |   |   |           |         |      |   |         |        
|Net income (loss)                                                                  |                                                                               | $            | 6,709       |              |             | $           | (13,622 | )           |   | $ | (23,241   | )       |      | $ | 9,619   |        
|                                                                                   |                                                                               |              |             |              |             |             |         |             |   |   |           |         |      |   |         |        
|                                                                                   | Basic earnings (loss) per share before
cumulative effect of accounting change |              | $           | 0.78         |             |             | $       | (1.07       | ) |   | $         | (2.17   | )    |   | $       | 1.12    |  
|                                                                                   |                                                                               |              |             |              |             |             |         |             |   |   |           |         |      |   |         |        
|                                                                                   | Basic earnings (loss) per share                                               |              | $           | 0.78         |             |             | $       | (1.61       | ) |   | $         | (2.71   | )    |   | $       | 1.12    |  
|                                                                                   |                                                                               |              |             |              |             |             |         |             |   |   |           |         |      |   |         |        
|                                                                                   | Fully diluted earnings (loss) per share                                       |              | $           | 0.77         |             |             | $       | (1.61       | ) |   | $         | (2.71   | )    |   | $       | 1.10    |  
|                                                                                   |                                                                               |              |             |              |             |             |         |             |   |   |           |         |      |   |         |        



|(a) |  | The Company incurred certain charges in 2002 that were not incurred in 2003
(see following footnotes b through h). Management believes that the 2002 results
excluding these charges are a better comparison to the 2003 operating results.
For purposes of reconciliation and better comparability, the above
statements
include the 2002 operating results with these charges, in accordance with
generally accepted accounting principles (GAAP), in column 2, the charges in
column 3 and the operating results excluding the charges in column 4. The
schedule includes a reconciliation of earnings before interest and taxes, net
loss and basic and fully diluted net loss per share for 2002 including the
charges in column 2, the effect of the charges in column 3, and excluding the
charges in column 4.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(b) |  | The Company recorded a markdown and liquidation of its discontinued SKUs
resulting in a $9.6 million pre-tax charge.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|   
|   
|   
|(c) |  | 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 $12.0 million pre-tax charge was recorded.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|   
|   
|   
|(d) |  | The Company recorded a $3.9 million pre-tax charge relative to severance for
executive, senior and middle management terminations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|   
|   
|   
|(e) |  | The Company recorded a $4.6 million pre-tax charge related to the early
termination of debt.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|   
|   
|   
|(f) |  | The Company recorded a $185,000 pre-tax gain on sale of former corporate
offices.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|   
|   
|   
|(g) |  | The Company recognized the income tax benefit of the adjustment for charges
(excluding the tax effect of the cumulative effect of accounting change (h)) of
$11.2 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|   
|   
|   
|(h) |  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

13



---



##### 



Sales for the first nine months ended September 30, 2003 rose 2.7% to $414.7
million compared to $404.0 million in 2002. Unit sales volume was higher in 2003
causing a favorable impact of $10.3 million. Average selling prices were up
slightly from the same period of 2002 causing a $400,000 increase in sales.

Sales by customer channel for the nine months ended September 30 were as
follows (in thousands):

|                          |  |      |         |      |  |   |         |  
|------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                          |  | 2003 |         | 2002
|                          |  |      |         |     
|Lawn Care                 |  | $    | 314,447 |      |  | $ | 298,121 |  
|                         
|                         
|                         
|                         
|Golf                      |  |      | 102,547 |      |  |   | 107,843 |  
|                         
|                         
|                         
|                         
|Sales credits and rebates |  |      | (2,263  | )    |  |   | (1,983  | )
|                          |  |      |         |      |  |   |         |  
|Net Sales                 |  | $    | 414,731 |      |  | $ | 403,981 |  
|                          |  |      |         |      |  |   |         |  

Sales increased for Lawn Care by $16.3 million. Golf sales in 2003 were $5.3
million less than 2002 due to the late spring and poor economic conditions in
the golf industry.

Sales by product line for the nine months ended September 30 were as follows
(in thousands):

|                                  |  |      |         |      |  |   |         |  
|--------------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                                  |  | 2003 |         | 2002
|                                  |  |      |         |     
|Fertilizer & combination products |  | $    | 162,922 |      |  | $ | 157,667 |  
|                                 
|                                 
|                                 
|                                 
|Control products                  |  |      | 124,295 |      |  |   | 121,631 |  
|                                 
|                                 
|                                 
|                                 
|Equipment, parts & service        |  |      | 50,563  |      |  |   | 49,724  |  
|                                 
|                                 
|                                 
|                                 
|Turfgrass seed                    |  |      | 50,362  |      |  |   | 48,753  |  
|                                 
|                                 
|                                 
|                                 
|Pest control                      |  |      | 14,250  |      |  |   | 12,903  |  
|                                 
|                                 
|                                 
|                                 
|Other                             |  |      | 14,602  |      |  |   | 15,286  |  
|                                 
|                                 
|                                 
|                                 
|Sales credits and rebates         |  |      | (2,263  | )    |  |   | (1,983  | )
|                                  |  |      |         |      |  |   |         |  
|Net Sales                         |  | $    | 414,731 |      |  | $ | 403,981 |  
|                                  |  |      |         |      |  |   |         |  

Sales of the Companys fertilizer, combination products, control, equipment,
turfgrass seed and pest control rose in the first nine months of 2003 over 2002,
while sales of other products declined.

Sales by geographic zone for the nine months ended September 30 were as
follows (in thousands):

|                          |  |      |         |      |  |   |         |  
|------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                          |  | 2003 |         | 2002
|                          |  |      |         |     
|Northeast                 |  | $    | 107,707 |      |  | $ | 104,621 |  
|                         
|                         
|                         
|                         
|Mid Central               |  |      | 95,508  |      |  |   | 90,075  |  
|                         
|                         
|                         
|                         
|Transition                |  |      | 74,559  |      |  |   | 72,211  |  
|                         
|                         
|                         
|                         
|Southeast                 |  |      | 73,508  |      |  |   | 70,491  |  
|                         
|                         
|                         
|                         
|West                      |  |      | 13,631  |      |  |   | 13,931  |  
|                         
|                         
|                         
|                         
|National Accounts         |  |      | 52,081  |      |  |   | 54,635  |  
|                         
|                         
|                         
|                         
|Sales credits and rebates |  |      | (2,263  | )    |  |   | (1,983  | )
|                          |  |      |         |      |  |   |         |  
|Net Sales                 |  | $    | 414,731 |      |  | $ | 403,981 |  
|                          |  |      |         |      |  |   |         |  

Sales in the Companys Northeast, Mid Central, Transition, and Southeast
United States geographic zones all increased in 2003. A slight decrease in the
West zone was reported. National Account sales decreased due to lower retail
sales and lower sales of sulfur coated urea to resellers.

Gross profit, as a percent of sales, was 33.5% for the nine months ended
September 30, 2003, compared to 31.2% for 2002 (33.6% excluding the inventory
markdown of $9.6 million). Margins were negatively impacted by the increased
cost of raw materials and purchased products. Offsetting the cost increases were
improved selling prices as well as lower manufacturing expenses and lower
inventory shrink expense.

14



---



##### 



Delivery and warehouse expenses increased to $37.1 million in the first nine
months 2003 from $34.6 million in 2002. Delivery and warehouse costs increased
to 9.0% of sales in the first nine months 2003 compared to 8.6% of sales in
2002. This increase was due to the Companys decision to invest in incremental
fixed warehousing expense and the revised network start-up costs.

Selling expense was 15.7% of sales in the first nine months 2003 compared to
14.4% in the first nine months 2002. Total selling expense increased by $6.9
million in 2003, primarily due to higher payroll related costs of $819,000 and
the timing effect from the change in the sales force commission program of $1.0
million. The higher payroll costs in 2003 relate to an additional 61 sales
representatives during the first half of 2003 compared to 2002. A reduction in
force in June 2003 reduced these positions by 41. An additional 20 Service
Center locations were opened in the first nine months 2003 with additional
operating costs of approximately $2.2 million. Information systems operating
costs were higher by $820,000. Also, increased costs were incurred for
advertising and promotions, utilities, merchant discounts and other operating
expenses.

General and administrative costs decreased in 2003 over 2002 by $1.0 million
principally due to a reduction in payroll related costs, management incentives,
recruiting, relocation, and outside consulting costs. These decreases were
partially offset by higher product registration, software maintenance, and
depreciation expense.

Interest expense decreased $96,000 for the first nine months of 2003
compared to the first nine months of 2002. The effective interest rate for the
first nine months of 2003 was 6.30% compared to 6.32% for the first nine months
of 2002. The average borrowing levels were lower by $1.0 million for the first
nine months ended September 30, 2003 compared to the first nine months 2002.

Other expense consists primarily of losses on the sale of fixed assets,
royalty expense and other miscellaneous expenses.

The Companys net income was $6.7 million or $0.77 per fully diluted share
in the nine months ended September 30, 2003 compared with a net loss of $13.6
million or $1.61 per fully diluted share in the nine months ended September 30,
2002. Net income for the first nine months of 2002 excluding debt retirement,
inventory markdown, asset rationalization, severance charges and
cumulative effect of accounting change was $9.6 million
or $1.10 per fully diluted share.

Liquidity and Capital Resources

The Companys $122.3 million senior secured credit facility (Debt Facility)
includes an amortizing term loan of approximately $7.3 million, of which $4.4
million remains outstanding, and a revolving credit facility of up to $115
million, maturing in January 2005. The variable interest on the 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 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.

As of September 30, 2003, the Company is in compliance with all of the
restrictive covenants of its Debt Facility, as amended. The Company had $36.5
million available to borrow under its Debt Facility as of September 30, 2003.

Total outstanding debt was $68.2 million as of September 30, 2003 compared
to $65.2 million as of September 30, 2002 and $68.4 million as of December 31,
2002.

The Companys invested capital (total assets less non-debt related
liabilities) as of September 30, 2003 was $152.0 million compared to $146.1
million as of September 30, 2002 and $145.3 million as of December 31, 2002.

The Company has elected to use the measurement of return on invested capital
as an evaluation benchmark for internal allocations of capital resources and
external communications. Accordingly, the Company has included a presentation of
its return on invested capital for the periods covered by this report. The
Company incurred certain charges in 2002 that were not incurred in 2003.
Management believes that the 2002 results excluding these charges are a better
comparison to the 2003 operating results. For purposes of better comparability
the September 30, 2002 and December 31, 2002 return on invested capital
calculations below exclude these charges.

15



---



##### 



|                                           |                                   |                                                                 |       |         |       |         |       |             |       |   |       |       |       |  
|------------------------------------------ | --------------------------------- | --------------------------------------------------------------- | ----- | ------- | ----- | ------- | ----- | ----------- | ----- | - | ----- | ----- | ----- | -
|                                           |                                   |                                                                 |       | Sept 30 |       | Sept 30 |       | December 31
|(in thousands)                             |                                   | 2003                                                            |       | 2002    |       | 2002   
|                                           |                                   |                                                                 |       |         |       |        
|Assets                                     |                                   |                                                                 |       |         |       |         |       |             |       |   |       |      
|                                          
|                                          
|                                          
|                                          
|                                           | Accounts receivable  net         |                                                                 | $     | 81.1    |       |         | $     | 80.4        |       |   | $     | 68.2  |      
|                                          
|                                          
|                                          
|                                          
|                                           | Inventory                         |                                                                 |       | 105.3   |       |         |       | 97.4        |       |   |       | 86.8  |      
|                                          
|                                          
|                                          
|                                          
|                                           | Net property, plant and equipment |                                                                 |       | 32.8    |       |         |       | 34.5        |       |   |       | 33.9  |      
|                                          
|                                          
|                                          
|                                          
|                                           | Remaining other assets            |                                                                 |       | 12.6    |       |         |       | 20.2        |       |   |       | 15.0  |      
|                                           |                                   |                                                                 |       |         |       |         |       |             |       |   |       |      
|Total Assets                               |                                   | $                                                               | 231.8 |         |       | $       | 232.5 |             |       | $ | 203.9 |      
|                                          
|                                          
|                                          
|                                          
|Less: Non-debt related liabilities         |                                   |                                                                 |       |         |       |         |       |             |       |   |       |      
|                                          
|                                          
|                                          
|                                          
|                                           | Accounts payable                  |                                                                 |       | (62.2   | )     |         |       | (68.3       | )     |   |       | (38.4 | )    
|                                          
|                                          
|                                          
|                                          
|                                           | Other current liabilities         |                                                                 |       | (17.6   | )     |         |       | (18.1       | )     |   |       | (19.9 | )    
|                                          
|                                          
|                                          
|                                          
|                                           | Deferred income taxes             |                                                                 |       |        |       |         |       |            |       |   |       | (0.3  | )    
|                                           |                                   |                                                                 |       |         |       |         |       |             |       |   |       |      
|Invested Capital                           |                                   | $                                                               | 152.0 |         |       | $       | 146.1 |             |       | $ | 145.3 |      
|                                           |                                   |                                                                 |       |         |       |         |       |             |       |   |       |      
|Return on invested capital:                |                                   |                                                                 |       |         |       |         |       |             |       |   |       |      
|                                          
|                                          
|                                          
|                                          
|                                           |                                   | EBIT as reported rolling 12 months                              |       | $       | 10.9  |         |       | $           | (13.2 | ) |       | $     | (14.4 | )
|                                          
|                                          
|                                          
|                                          
|                                           |                                   | Addback effect of: Severance expense                            |       |         |      |         |       |             | 3.9   |   |       |       | 3.4   |  
|                                          
|                                          
|                                          
|                                          
|                                           |                                   | Early retirement of debt agreement                              |       |         |      |         |       |             | 4.6   |   |       |       | 4.6   |  
|                                          
|                                          
|                                          
|                                          
|                                           |                                   | Inventory markdown                                              |       |         |      |         |       |             | 9.2   |   |       |       | 9.2   |  
|                                          
|                                          
|                                          
|                                          
|                                           |                                   | Asset rationalization                                           |       |         |      |         |       |             | 12.0  |   |       |       | 12.0  |  
|                                           |                                   |                                                                 |       |         |       |         |       |             |       |   |       |      
|                                           |                                   | Earnings before interest and taxes (EBIT) rolling twelve months |       | $       | 10.9  |         |       | $           | 16.5  |   |       | $     | 14.8  |  
|                                          
|                                          
|                                          
|                                          
|                                           |                                   | Taxes on EBIT                                                   |       |         | 4.1   |         |       |             | 6.2   |   |       |       | 5.6   |  
|                                           |                                   |                                                                 |       |         |       |         |       |             |       |   |       |      
|                                           |                                   | Net operating profit after taxes (NOPAT)                        |       | $       | 6.8   |         |       | $           | 10.3  |   |       | $     | 9.2   |  
|                                           |                                   |                                                                 |       |         |       |         |       |             |       |   |       |      
|                                           |                                   | Invested capital at period end                                  |       | $       | 152.0 |         |       | $           | 146.1 |   |       | $     | 145.3 |  
|                                           |                                   |                                                                 |       |         |       |         |       |             |       |   |       |      
|Adjusted Return on Invested Capital (ROIC) |                                   |                                                                 | 4.5   | %       |       |         | 7.0   | %           |       |   | 6.3   | %    
|                                           |                                   |                                                                 |       |         |       |         |       |             |       |   |       |      

The increase in invested capital of $5.9 million from September 30, 2002 is
primarily due to higher inventory of $7.9 million and lower accounts payable of
$6.1 million, offset by lower other assets of $7.6 million (principally cash,
income tax receivables, and assets held for sale). The increase in invested
capital of $6.7 million from December 31, 2002 is primarily due to higher
seasonal inventory levels of $18.5 million and accounts receivable of $12.9
million, offset by higher seasonal levels of accounts payable of $23.8 million.

Return on invested capital decreased 2.5% for the rolling twelve months
ended September 30, 2003 compared with the same period in 2002. For the full
year ended December 31, 2002, return on invested capital was 6.3%. The decrease
compared to September 30, 2002 principally relates to lower earnings before
interest and taxes and higher invested capital, which is discussed above.

Capital expenditures for the first nine months of 2003 totaled $4.6 million.
These expenditures consisted of improvements to the Companys information
systems totaling $2.2 million which includes the Unity point-of-sales system,
improvements to manufacturing and hub facilities totaling $1.2 million and the
costs of opening and remodeling Service Centers and Stores-On-Wheels of $1.2
million.

The Company has entered into contracts to purchase 139,000 tons of urea at
fixed prices through 2004 which approximated market value on the dates of
commitment.

The Company believes its current borrowing capacity is adequate to maintain
operations and capital requirements through the end of its Debt Facility.

Forward-Looking Statements

Certain statements included in this report are forward-looking statements
that involve a number of risks and uncertainties and which are based on
managements current beliefs, 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, the Companys ability to add new
Service Centers in accordance with its

16



---



##### 



plans, which can be affected by local
zoning and other governmental regulations and its ability to find favorable
store locations, to negotiate favorable leases, to hire qualified individuals to
operate the Service Centers, and to integrate new Service Centers into the
Companys systems; competitive factors in the Companys business, including
pricing pressures; lack of availability or instability in the cost of raw
materials which affects the costs of certain products; the Companys ability to
impose price increases on customers without a significant loss in revenues;
potential rate increases by third-party carriers which affects the cost of
delivery of products; potential regulations; the Companys ability to
effectively manufacture, market and distribute new products; the success of the
Companys operating plans; regional weather conditions; and the condition of the
industry and the economy. For a further discussion of risk factors, investors
should refer to the Companys Securities and Exchange Commission reports,
including but not limited to the Companys Annual Report on Form 10-K for the
year ended December 31, 2002 and the Companys Quarterly Reports on Form 10-Q
for the quarters ended March 31, 2003 and June 30, 2003.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See Item 2, Liquidity and Capital Resources, above, and Note F,
Derivatives and Comprehesive Income/Loss, in the Notes to Consolidated Financial
Statements.

ITEM 4. CONTROLS AND PROCEDURES

The Company performed an evaluation under the supervision and with the
participation of the Companys management, including the President and Chief Executive Officer
and Senior Vice President and Chief Financial Officer, of the effectiveness of
the Companys disclosure controls and procedures as of the end of the period
covered by this report. 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 recorded,
processed, summarized and reported on a timely basis.

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 1.  LEGAL PROCEEDINGS

On July 14, 2003, an administrative complaint was filed against the Company
by the State of New York Department of Environmental Conservation (NYSDEC)
alleging violation of state law regarding the registration of pesticides. The
complaint alleges that the Company distributed 3,440 bags of the Companys
Dimension® Crabgrass Preemergent Plus Fertilizer to one of its retail
customers in New York State without having proper registration therefor. The
complaint seeks a civil penalty of $3,440,000. NYSDEC filed a similar complaint
against the retail customer seeking a civil penalty of $3,440,000. The Company
intends to indemnify the retail customer for such claim pursuant to a vendor
agreement between the parties. The Company is in discussions with the NYSDEC
relative to a settlement.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

|    |  |           |  |              |  |                                                                                                                                                                                                          
|--- |  | --------- |  | ------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Exhibits: |  | Exhibit 3(a) |  | Amended Articles of Incorporation of the Registrant (included as an exhibit to the
Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2002 and
incorporated herein by reference).
|    | 
|    |  |           |  | Exhibit 3(b) |  | Amended Code of Regulations
of the Registrant (included as
an exhibit to the Registrants
Annual Report on Form 10-K for
the year ended December 31, 2002
and incorporated herein by
reference).         
|    | 
|    |  |           |  | Exhibit 31.1 |  | Michael P. DiMino Rule 13a-14(a)/15d-14(a) Certification                                                                                                                                                 
|    | 
|    |  |           |  | Exhibit 31.2 |  | Jeffrey L. Rutherford Rule 13a-14(a)/15d-14(a) Certification                                                                                                                                             
|    | 
|    |  |           |  | Exhibit 32.1 |  | Michael P. DiMino Section 1350 Certification                                                                                                                                                             
|    | 
|    |  |           |  | Exhibit 32.2 |  | Jeffrey L. Rutherford Section 1350 Certification                                                                                                                                                         

17



---



##### 





|(b) |  | Reports on Form 8-K:                                                                                                                           
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | On July 29, 2003, the Company filed a report on Form 8-K relating
to the Companys Earnings Release for the second quarter ended June
30, 2003.

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 13, 2003 |  | /s/ Jeffrey L. RutherfordJeffrey L. Rutherford
Senior Vice President, Chief Financial Officer,
Treasurer and Secretary

18