##### 



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 June 30, 2003 |  |                                                                                         
|                                            
|or                                          
|                                             |  |                                                                                         
|[   ]                                        |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

|                                   |  |                               
|---------------------------------- |  | ------------------------------
|                                   |  | Commission File Number 0-13147
|For the transition period from  to |  |                               

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

|                                         |  |                                     
|---------------------------------------- |  | ------------------------------------
|OHIO                                     |  | 34-0904517                          
|(State or other jurisdiction of          |  | (I.R.S. Employer Identification No.)
|incorporation or organization)           |  |                                     
|                                         |  |                                     
|15885 Sprague Road                       |  |                                     
|Strongsville, Ohio                       |  | 44136                               
|(Address of principal executive offices) |  | (Zip Code)                          

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

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.   Yes  X    No

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).   Yes    No  X

As of July 31, 2003 the registrant had outstanding 8,525,914 common shares,
without par value.

1



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##### 



PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LESCO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

|                                                                                   |                                    |      |                            |         |                          |      |         |         |   |   |         |         |   |   |         |         |  
|---------------------------------------------------------------------------------- | ---------------------------------- | ---- | -------------------------- | ------- | ------------------------ | ---- | ------- | ------- | - | - | ------- | ------- | - | - | ------- | ------- | -
|                                                                                   |                                    |      | Three Months Ended June 30 |         | Six Months Ended June 30
|                                                                                   |                                    |      |                            |         |                         
|(In thousands, except per share data)                                              |                                    | 2003 |                            | 2002    |                          | 2003 |         | 2002   
|                                                                                   |                                    |      |                            |         |                          |      |         |        
|Net sales                                                                          |                                    | $    | 172,560                    |         |                          | $    | 166,493 |         |   | $ | 267,010 |         |   | $ | 259,972 |        
|                                                                                   | Cost of sales                      |      |                            | 114,672 |                          |      |         | 109,494 |   |   |         | 178,490 |   |   |         | 172,921 |  
|                                                                                   | Cost of sales inventory markdown   |      |                            |        |                          |      |         | 9,581   |   |   |         |        |   |   |         | 9,581   |  
|                                                                                   |                                    |      |                            |         |                          |      |         |         |   |   |         |         |   |   |         |        
|Gross profit on sales                                                              |                                    |      | 57,888                     |         |                          |      | 47,418  |         |   |   | 88,520  |         |   |   | 77,470  |        
|                                                                                   | Warehouse & delivery expense       |      |                            | 14,899  |                          |      |         | 12,874  |   |   |         | 25,202  |   |   |         | 22,790  |  
|                                                                                   | Selling expense                    |      |                            | 22,873  |                          |      |         | 19,968  |   |   |         | 44,076  |   |   |         | 38,303  |  
|                                                                                   | General & administrative expense   |      |                            | 7,222   |                          |      |         | 7,092   |   |   |         | 14,574  |   |   |         | 15,219  |  
|                                                                                   | Asset rationalization              |      |                            |        |                          |      |         | 12,044  |   |   |         |        |   |   |         | 12,044  |  
|                                                                                   | Severance expense                  |      |                            | 447     |                          |      |         | 1,791   |   |   |         | 453     |   |   |         | 3,866   |  
|                                                                                   | Bad debt expense                   |      |                            | 675     |                          |      |         | 777     |   |   |         | 1,104   |   |   |         | 1,182   |  
|                                                                                   |                                    |      |                            |         |                          |      |         |         |   |   |         |         |   |   |         |        
|                                                                                   |                                    |      | 46,116                     |         |                          |      | 54,546  |         |   |   | 85,409  |         |   |   | 93,404  |        
|Income (loss) from operations                                                      |                                    |      | 11,772                     |         |                          |      | (7,128  | )       |   |   | 3,111   |         |   |   | (15,934 | )      
|                                                                                   | Early retirement of debt agreement |      |                            |        |                          |      |         |        |   |   |         |        |   |   |         | (4,550  | )
|                                                                                   | Joint venture results              |      |                            | 220     |                          |      |         | 28      |   |   |         | 590     |   |   |         | 28      |  
|                                                                                   | Customer finance charges           |      |                            | 256     |                          |      |         | 394     |   |   |         | 649     |   |   |         | 780     |  
|                                                                                   | Other income                       |      |                            | 295     |                          |      |         | 144     |   |   |         | 475     |   |   |         | 268     |  
|                                                                                   | Other expense                      |      |                            | (419    | )                        |      |         | (142    | ) |   |         | (652    | ) |   |         | (539    | )
|                                                                                   |                                    |      |                            |         |                          |      |         |         |   |   |         |         |   |   |         |        
|                                                                                   |                                    |      | 352                        |         |                          |      | 424     |         |   |   | 1,062   |         |   |   | (4,013  | )      
|                                                                                   |                                    |      |                            |         |                          |      |         |         |   |   |         |         |   |   |         |        
|Income (loss) before interest and taxes
and cumulative effect of accounting change |                                    |      | 12,124                     |         |                          |      | (6,704  | )       |   |   | 4,173   |         |   |   | (19,947 | )      
|Interest expense                                                                   |                                    |      | 1,291                      |         |                          |      | 1,323   |         |   |   | 2,579   |         |   |   | 2,657   |        
|                                                                                   |                                    |      |                            |         |                          |      |         |         |   |   |         |         |   |   |         |        
|Income (loss) before taxes and
cumulative effect of accounting change              |                                    |      | 10,833                     |         |                          |      | (8,027  | )       |   |   | 1,594   |         |   |   | (22,604 | )      
|Income taxes provision (benefit)                                                   |                                    |      | 4,096                      |         |                          |      | (3,020  | )       |   |   | 604     |         |   |   | (8,485  | )      
|                                                                                   |                                    |      |                            |         |                          |      |         |         |   |   |         |         |   |   |         |        
|Income (loss) before
cumulative effect of accounting change                        |                                    |      | 6,737                      |         |                          |      | (5,007  | )       |   |   | 990     |         |   |   | (14,119 | )      
|Cumulative effect of accounting change for
goodwill charge, net of taxes of $2,735 |                                    |      |                           |         |                          |      |        |         |   |   |        |         |   |   | (4,597  | )      
|                                                                                   |                                    |      |                            |         |                          |      |         |         |   |   |         |         |   |   |         |        
|Net income (loss)                                                                  |                                    | $    | 6,737                      |         |                          | $    | (5,007  | )       |   | $ | 990     |         |   | $ | (18,716 | )      
|                                                                                   |                                    |      |                            |         |                          |      |         |         |   |   |         |         |   |   |         |        
|Basic earnings (loss) per share:                                                   |                                    |      |                            |         |                          |      |         |         |   |   |         |         |   |   |         |        
|Income (loss) before
cumulative effect of accounting change                        |                                    | $    | 0.79                       |         |                          | $    | (0.59   | )       |   | $ | 0.11    |         |   | $ | (1.67   | )      
|Diluted earnings (loss) per share:                                                 |                                    |      |                            |         |                          |      |         |         |   |   |         |         |   |   |         |        
|Income (loss) before
cumulative effect of accounting change                        |                                    | $    | 0.77                       |         |                          | $    | (0.59   | )       |   | $ | 0.11    |         |   | $ | (1.67   | )      
|Cumulative effect of accounting change, net of taxes                               |                                    |      |                           |         |                          |      |        |         |   |   |        |         |   |   | (0.54   | )      
|                                                                                   |                                    |      |                            |         |                          |      |         |         |   |   |         |         |   |   |         |        
|Basic earnings(loss) per share:                                                    |                                    | $    | 0.79                       |         |                          | $    | (0.59   | )       |   | $ | 0.11    |         |   | $ | (2.21   | )      
|                                                                                   |                                    |      |                            |         |                          |      |         |         |   |   |         |         |   |   |         |        
|Diluted earnings(loss) per share:                                                  |                                    | $    | 0.77                       |         |                          | $    | (0.59   | )       |   | $ | 0.11    |         |   | $ | (2.21   | )      
|                                                                                   |                                    |      |                            |         |                          |      |         |         |   |   |         |         |   |   |         |        

See Notes to Consolidated Financial Statements.

2



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##### 



LESCO, INC.
CONSOLIDATED BALANCE SHEETS

|                                     |                                                                                                                                                                                                                                                                                                |                                            |        |             |         |           |        |             |         |  |        |         |         | 
|------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------ | ----------- | ------- | --------- | ------ | ----------- | ------- |  | ------ | ------- | ------- | 
|                                     |                                                                                                                                                                                                                                                                                                |                                            |        | June 30     |         | June 30   |        | December 31
|(In thousands)                       |                                                                                                                                                                                                                                                                                                | 2003                                       |        | 2002        |         | 2002     
|                                     |                                                                                                                                                                                                                                                                                                |                                            |        |             |         |          
|                                     |                                                                                                                                                                                                                                                                                                |                                            |        | (unaudited) |         | (audited)
|ASSETS                               |                                                                                                                                                                                                                                                                                                |                                            |        |             |         |           |        |             |         |  |        |        
|CURRENT ASSETS:                      |                                                                                                                                                                                                                                                                                                |                                            |        |             |         |           |        |             |         |  |        |        
|                                     | Cash                                                                                                                                                                                                                                                                                           |                                            | $      | 4,973       |         |           | $      | 4,043       |         |  | $      | 1,354   |        
|                                     | Accounts receivable  net of allowance
of $5,144, $4,854 and $4,980, respectively                                                                                                                                                                                                              |                                            |        | 84,664      |         |           |        | 84,842      |         |  |        | 68,188  |        
|                                     | Inventories                                                                                                                                                                                                                                                                                    |                                            |        |             |         |           |        |             |         |  |        |         |        
|                                     |                                                                                                                                                                                                                                                                                                | Raw materials                              |        |             | 10,839  |           |        |             | 10,689  |  |        |         | 10,977  | 
|                                     |                                                                                                                                                                                                                                                                                                | Finished goods                             |        |             | 100,207 |           |        |             | 91,156  |  |        |         | 75,860  | 
|                                     |                                                                                                                                                                                                                                                                                                |                                            |        |             |         |           |        |             |         |  |        |        
|                                     |                                                                                                                                                                                                                                                                                                | Total inventories                          |        |             | 111,046 |           |        |             | 101,845 |  |        |         | 86,837  | 
|                                     | Deferred income taxes                                                                                                                                                                                                                                                                          |                                            |        | 3,719       |         |           |        | 6,496       |         |  |        | 3,400   |        
|                                     | Prepaid expenses and other assets                                                                                                                                                                                                                                                              |                                            |        | 4,546       |         |           |        | 8,346       |         |  |        | 6,171   |        
|                                     |                                                                                                                                                                                                                                                                                                |                                            |        |             |         |           |        |             |         |  |        |        
|                                     |                                                                                                                                                                                                                                                                                                | TOTAL CURRENT ASSETS                       |        |             | 208,948 |           |        |             | 205,572 |  |        |         | 165,950 | 
|Property, plant and equipment        |                                                                                                                                                                                                                                                                                                |                                            | 84,451 |             |         |           | 79,128 |             |         |  | 80,989 |        
|                                     | Less allowance for depreciation and amortization                                                                                                                                                                                                                                               |                                            |        | (50,187     | )       |           |        | (43,568     | )       |  |        | (47,051 | )      
|                                     |                                                                                                                                                                                                                                                                                                |                                            |        |             |         |           |        |             |         |  |        |        
|                                     |                                                                                                                                                                                                                                                                                                | Net property, plant and equipment          |        |             | 34,264  |           |        |             | 35,560  |  |        |         | 33,938  | 
|Assets held for sale                 |                                                                                                                                                                                                                                                                                                |                                            | 325    |             |         |           | 2,417  |             |         |  | 325    |        
|Other assets                         |                                                                                                                                                                                                                                                                                                |                                            | 3,751  |             |         |           | 2,911  |             |         |  | 3,769  |        
|                                     |                                                                                                                                                                                                                                                                                                |                                            |        |             |         |           |        |             |         |  |        |        
|                                     |                                                                                                                                                                                                                                                                                                | TOTAL ASSETS                               |        | $           | 247,288 |           |        | $           | 246,460 |  |        | $       | 203,982 | 
|                                     |                                                                                                                                                                                                                                                                                                |                                            |        |             |         |           |        |             |         |  |        |        
|LIABILITIES AND SHAREHOLDERS EQUITY |                                                                                                                                                                                                                                                                                                |                                            |        |             |         |           |        |             |         |  |        |        
|CURRENT LIABILITIES:                 |                                                                                                                                                                                                                                                                                                |                                            |        |             |         |           |        |             |         |  |        |        
|                                     | Accounts payable                                                                                                                                                                                                                                                                               |                                            | $      | 85,008      |         |           | $      | 85,886      |         |  | $      | 38,439  |        
|                                     | Other current liabilities                                                                                                                                                                                                                                                                      |                                            |        | 14,559      |         |           |        | 11,451      |         |  |        | 16,290  |        
|                                     | Asset rationalization and severance                                                                                                                                                                                                                                                            |                                            |        | 2,894       |         |           |        | 5,990       |         |  |        | 3,579   |        
|                                     | Revolving credit facility                                                                                                                                                                                                                                                                      |                                            |        | 56,057      |         |           |        | 52,403      |         |  |        | 57,052  |        
|                                     | Current portion of debt                                                                                                                                                                                                                                                                        |                                            |        | 1,123       |         |           |        | 1,140       |         |  |        | 1,148   |        
|                                     |                                                                                                                                                                                                                                                                                                |                                            |        |             |         |           |        |             |         |  |        |        
|                                     |                                                                                                                                                                                                                                                                                                | TOTAL CURRENT LIABILITIES                  |        |             | 159,641 |           |        |             | 156,870 |  |        |         | 116,508 | 
|Long-term debt                       |                                                                                                                                                                                                                                                                                                |                                            | 9,454  |             |         |           | 11,863 |             |         |  | 10,227 |        
|Deferred income taxes                |                                                                                                                                                                                                                                                                                                |                                            | 209    |             |         |           | 1,347  |             |         |  | 314    |        
|SHAREHOLDERS EQUITY:                |                                                                                                                                                                                                                                                                                                |                                            |        |             |         |           |        |             |         |  |        |        
|                                     | Preferred shares without par value
500,000 shares authorized; 1,523 shares issued
and outstanding in 2003, liquidation value $1,000 per share                                                                                                                                                |                                            |        | 1,683       |         |           |        | 1,523       |         |  |        | 1,630   |        
|                                     | Common shareswithout par value
19,500,000 shares authorized; at June 30, 2003 8,639,563 shares
issued and 8,525,914 outstanding and at June 30, 2002
8,633,063 shares were issued and 8,541,286 outstanding and at
December 31, 2002, 8,637,563 shares were issued and 8,523,914 outstanding |                                            |        | 864         |         |           |        | 863         |         |  |        | 864     |        
|                                     | Paid-in capital                                                                                                                                                                                                                                                                                |                                            |        | 34,916      |         |           |        | 34,850      |         |  |        | 34,901  |        
|                                     | Retained earnings                                                                                                                                                                                                                                                                              |                                            |        | 43,580      |         |           |        | 41,493      |         |  |        | 42,642  |        
|                                     | Accumulated other comprehensive loss                                                                                                                                                                                                                                                           |                                            |        | (1,104      | )       |           |        | (395        | )       |  |        | (1,149  | )      
|                                     | Less treasury shares, 113,649 at June 30, 2003, 91,777 at
June 30, 2002, and 113,649 at December 31, 2002                                                                                                                                                                                      |                                            |        | (1,955      | )       |           |        | (1,623      | )       |  |        | (1,955  | )      
|                                     | Unearned compensation                                                                                                                                                                                                                                                                          |                                            |        |            |         |           |        | (331        | )       |  |        |        |        
|                                     |                                                                                                                                                                                                                                                                                                |                                            |        |             |         |           |        |             |         |  |        |        
|                                     |                                                                                                                                                                                                                                                                                                | TOTAL SHAREHOLDERS EQUITY                 |        |             | 77,984  |           |        |             | 76,380  |  |        |         | 76,933  | 
|                                     |                                                                                                                                                                                                                                                                                                |                                            |        |             |         |           |        |             |         |  |        |        
|                                     |                                                                                                                                                                                                                                                                                                | TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY |        | $           | 247,288 |           |        | $           | 246,460 |  |        | $       | 203,982 | 
|                                     |                                                                                                                                                                                                                                                                                                |                                            |        |             |         |           |        |             |         |  |        |        

See Notes to Consolidated Financial Statements.

3



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##### 



LESCO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

|                               |                                                                                                     |                                                 |       |                                  |         |   |       |          |         |  
|------------------------------ | --------------------------------------------------------------------------------------------------- | ----------------------------------------------- | ----- | -------------------------------- | ------- | - | ----- | -------- | ------- | -
|                               |                                                                                                     |                                                 |       | For the six months ended June 30
|                               |                                                                                                     |                                                 |       |                                 
|(In thousands)                 |                                                                                                     | 2003                                            |       | 2002                            
|                               |                                                                                                     |                                                 |       |                                 
|OPERATING ACTIVITIES:          |                                                                                                     |                                                 |       |                                  |         |   |       |         
|                               | Net income (loss) before cumulative effect of accounting change                                     |                                                 | $     | 990                              |         |   | $     | (14,119  | )      
|                               | Adjustments to reconcile net income (loss) to net cash
provided by (used for) operating activities: |                                                 |       |                                  |         |   |       |          |        
|                               |                                                                                                     | Early retirement of debt agreement              |       |                                  |        |   |       |          | 4,550   |  
|                               |                                                                                                     | Asset rationalization                           |       |                                  |        |   |       |          | 12,044  |  
|                               |                                                                                                     | Inventory markdown                              |       |                                  |        |   |       |          | 9,581   |  
|                               |                                                                                                     | Depreciation and amortization                   |       |                                  | 4,278   |   |       |          | 5,185   |  
|                               |                                                                                                     | Deferred income taxes                           |       |                                  | (452    | ) |       |          | (3,948  | )
|                               |                                                                                                     | Increase in accounts receivable                 |       |                                  | (17,580 | ) |       |          | (17,253 | )
|                               |                                                                                                     | Provision for uncollectible accounts receivable |       |                                  | 1,104   |   |       |          | 1,182   |  
|                               |                                                                                                     | Increase in inventories                         |       |                                  | (24,209 | ) |       |          | (18,430 | )
|                               |                                                                                                     | Increase in accounts payable                    |       |                                  | 40,218  |   |       |          | 29,140  |  
|                               |                                                                                                     | Increase (decrease) in other current items      |       |                                  | (718    | ) |       |          | 1,653   |  
|                               |                                                                                                     | Other                                           |       |                                  | (502    | ) |       |          | (1,007  | )
|                               |                                                                                                     |                                                 |       |                                  |         |   |       |         
|                               | NET CASH PROVIDED BY OPERATING ACTIVITIES                                                           |                                                 |       | 3,129                            |         |   |       | 8,578    |        
|INVESTING ACTIVITIES:          |                                                                                                     |                                                 |       |                                  |         |   |       |         
|                               | Purchase of property, plant and equipment -net                                                      |                                                 |       | (4,083                           | )       |   |       | (614     | )      
|                               |                                                                                                     |                                                 |       |                                  |         |   |       |         
|                               | NET CASH USED IN INVESTING ACTIVITIES                                                               |                                                 |       | (4,083                           | )       |   |       | (614     | )      
|FINANCING ACTIVITIES:          |                                                                                                     |                                                 |       |                                  |         |   |       |         
|                               | Sale (purchase) of accounts receivable                                                              |                                                 |       |                                 |         |   |       | (31,200  | )      
|                               | Increase in overdraft balances                                                                      |                                                 |       | 6,351                            |         |   |       | 9,899    |        
|                               | Proceeds from borrowings                                                                            |                                                 |       | 280,320                          |         |   |       | 306,863  |        
|                               | Reduction of borrowings                                                                             |                                                 |       | (282,113                         | )       |   |       | (292,568 | )      
|                               | Deferred financing fees                                                                             |                                                 |       |                                 |         |   |       | (2,000   | )      
|                               | Exercised stock options, net of treasury shares                                                     |                                                 |       | 15                               |         |   |       | 50       |        
|                               |                                                                                                     |                                                 |       |                                  |         |   |       |         
|                               | NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES                                                 |                                                 |       | 4,573                            |         |   |       | (8,956   | )      
|                               |                                                                                                     |                                                 |       |                                  |         |   |       |         
|Net change in cash             |                                                                                                     |                                                 | 3,619 |                                  |         |   | (992  | )       
|Cash  Beginning of the period |                                                                                                     |                                                 | 1,354 |                                  |         |   | 5,035 |         
|                               |                                                                                                     |                                                 |       |                                  |         |   |       |         
|                               | CASH  END OF THE PERIOD                                                                            |                                                 | $     | 4,973                            |         |   | $     | 4,043    |        
|                               |                                                                                                     |                                                 |       |                                  |         |   |       |         

See Notes to Consolidated Financial Statements.

4



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##### 



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 quarter ended March 31, 2003
included in the Companys quarterly report 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 six months ended June 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 $19.0 million and $15.8 million for the six months
ended June 30, 2003 and 2002, respectively.

5



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##### 



NOTE B  Earnings (loss) per Share

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

(In thousands, except per share data)

|                                                                                    |                                                      |   |                            |         |                          |   |           |         |      |   |           |         |   |   |           |         |  
|----------------------------------------------------------------------------------- | ---------------------------------------------------- | - | -------------------------- | ------- | ------------------------ | - | --------- | ------- | ---- | - | --------- | ------- | - | - | --------- | ------- | -
|                                                                                    |                                                      |   | Three Months Ended June 30 |         | Six Months Ended June 30
|                                                                                    |                                                      |   |                            |         |                         
|                                                                                    |                                                      |   | 2003                       |         | 2002                     |   | 2003      |         | 2002
|                                                                                    |                                                      |   |                            |         |                          |   |           |         |     
|Numerator:                                                                          |                                                      |   |                            |         |                          |   |           |         |      |   |           |         |   |   |           |        
|Income (loss) before
cumulative effect of accounting change                         |                                                      | $ | 6,737                      |         |                          | $ | (5,007    | )       |      | $ | 990       |         |   | $ | (14,119   | )      
|                                                                                    | Preferred stock dividends                            |   |                            | (27     | )                        |   |           | (27     | )    |   |           | (54     | ) |   |           | (54     | )
|                                                                                    |                                                      |   |                            |         |                          |   |           |         |      |   |           |         |   |   |           |        
|Income (loss) available to common shareholders                                      |                                                      |   | 6,710                      |         |                          |   | (5,034    | )       |      |   | 936       |         |   |   | (14,173   | )      
|                                                                                    | Cumulative effect of accounting change, net of taxes |   |                            |        |                          |   |           |        |      |   |           |        |   |   |           | (4,597  | )
|                                                                                    |                                                      |   |                            |         |                          |   |           |         |      |   |           |         |   |   |           |        
|Net income (loss) available to common shareholders                                  |                                                      | $ | 6,710                      |         |                          | $ | (5,034    | )       |      | $ | 936       |         |   | $ | (18,770   | )      
|                                                                                    |                                                      |   |                            |         |                          |   |           |         |      |   |           |         |   |   |           |        
|Denominator:                                                                        |                                                      |   |                            |         |                          |   |           |         |      |   |           |         |   |   |           |        
|Basic earnings per share- weighted
average shares                                   |                                                      |   | 8,525,914                  |         |                          |   | 8,516,414 |         |      |   | 8,525,025 |         |   |   | 8,515,664 |        
|Effect of dilutive securities:                                                      |                                                      |   |                            |         |                          |   |           |         |      |   |           |         |   |   |           |        
|                                                                                    | Employee stock options                               |   |                            | 232,758 |                          |   |           | 200,023 |      |   |           | 244,763 |   |   |           | 156,114 |  
|                                                                                    |                                                      |   |                            |         |                          |   |           |         |      |   |           |         |   |   |           |        
|Diluted earnings per share adjusted weighted
average shares and assumed conversions |                                                      |   | 8,758,672                  |         |                          |   | 8,716,437 |         |      |   | 8,769,788 |         |   |   | 8,671,778 |        
|                                                                                    |                                                      |   |                            |         |                          |   |           |         |      |   |           |         |   |   |           |        
|Basic earnings (loss) per share:                                                    |                                                      |   |                            |         |                          |   |           |         |      |   |           |         |   |   |           |        
|Income (loss) before
cumulative effect of accounting change                         |                                                      | $ | 0.79                       |         |                          | $ | (0.59     | )       |      | $ | 0.11      |         |   | $ | (1.67     | )      
|Cumulative effect of accounting change, net of taxes                                |                                                      |   |                           |         |                          |   |          |         |      |   |          |         |   |   | (0.54     | )      
|                                                                                    |                                                      |   |                            |         |                          |   |           |         |      |   |           |         |   |   |           |        
|Basic earnings (loss) per share                                                     |                                                      | $ | 0.79                       |         |                          | $ | (0.59     | )       |      | $ | 0.11      |         |   | $ | (2.21     | )      
|                                                                                    |                                                      |   |                            |         |                          |   |           |         |      |   |           |         |   |   |           |        
|Diluted earnings (loss) per share                                                   |                                                      |   |                            |         |                          |   |           |         |      |   |           |         |   |   |           |        
|Income (loss) before
cumulative effect of accounting change                         |                                                      | $ | 0.77                       |         |                          | $ | (0.59     | )       |      | $ | 0.11      |         |   | $ | (1.67     | )      
|Cumulative effect of accounting change, net of taxes                                |                                                      |   |                           |         |                          |   |          |         |      |   |          |         |   |   | (0.54     | )      
|                                                                                    |                                                      |   |                            |         |                          |   |           |         |      |   |           |         |   |   |           |        
|Diluted earnings (loss) per share:                                                  |                                                      | $ | 0.77                       |         |                          | $ | (0.59     | )       |      | $ | 0.11      |         |   | $ | (2.21     | )      
|                                                                                    |                                                      |   |                            |         |                          |   |           |         |      |   |           |         |   |   |           |        

6



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##### 



NOTE C  Other Assets

Other assets consist of the following:

|                                         |  |         |       |         |  |             |       |   |  |   |       |  
|---------------------------------------- |  | ------- | ----- | ------- |  | ----------- | ----- | - |  | - | ----- | -
|                                         |  | June 30 |       | June 30 |  | December 31
|(In thousands)                           |  | 2003    |       | 2002    |  | 2002       
|                                         |  |         |       |         |  |            
|Deferred financing                       |  | $       | 1,606 |         |  | $           | 2,474 |   |  | $ | 2,226 |  
|Long-term note receivable                |  |         | 705   |         |  |             |      |   |  |   | 930   |  
|Investment in joint venture (see NOTE H) |  |         | 741   |         |  |             | (242  | ) |  |   | (65   | )
|Deposits and other                       |  |         | 699   |         |  |             | 679   |   |  |   | 678   |  
|                                         |  |         |       |         |  |             |       |   |  |   |       |  
|Total other assets                       |  | $       | 3,751 |         |  | $           | 2,911 |   |  | $ | 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 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 June 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    |  |             |    |                  |  |                    |      |       |  |   | 453   |   |  |   | 453    |  
|Utilized/spent    |  |             | (19 | )                |  |                    | (331  | )     |  |   | (788  | ) |  |   | (1,138 | )
|                  |  |             |     |                  |  |                    |       |       |  |   |       |   |  |   |        |  
|June 30, 2003     |  | $           | 615 |                  |  | $                  | 1,040 |       |  | $ | 1,239 |   |  | $ | 2,894  |  
|                  |  |             |     |                  |  |                    |       |       |  |   |       |   |  |   |        |  

In 2003, the Company added $453,000 to the accrual for severance payments for
employee terminations occurring before June 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 $5.1 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 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 June 30, 2003, the
Company is in compliance with all of the restrictive covenants in its Debt
Facility.

7



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##### 



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) payments. The fair value of the interest rate swap is
determined by the estimated cost to terminate the agreement, as determined by
the bank. The Company recognizes the $1.8 million fair market value of the swap
agreement as a liability on the balance sheet at June 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 six months ended June 30,
2003 and June 30, 2002 were as follows:

|                                  |  |                          |       |               |  |   |         |  
|--------------------------------- |  | ------------------------ | ----- | ------------- |  | - | ------- | -
|                                  |  | For the six months ended
|                                  |  |                         
|(In thousands)                    |  | June 30, 2003            |       | June 30, 2002
|                                  |  |                          |       |              
|Net income (loss)                 |  | $                        | 990   |               |  | $ | (18,716 | )
|Other comprehensive income (loss) |  |                          | 45    |               |  |   | (395    | )
|                                  |  |                          |       |               |  |   |         |  
|Total comprehensive income (loss) |  | $                        | 1,035 |               |  | $ | (19,111 | )

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. Accordingly, 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, as permitted. 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:

|                                        |         |      |                           |      |  |   |         |       |  
|--------------------------------------- | ------- | ---- | ------------------------- | ---- |  | - | ------- | ----- | -
|                                        |         |      | Six months ended June 30,
|                                        |         |      |                          
|(In thousands, except share data)       |         | 2003 |                           | 2002
|                                        |         |      |                           |     
|Net income (loss)  as reported         |         | $    | 990                       |      |  | $ | (18,716 | )    
|Net income (loss)  pro forma           |         | $    | 562                       |      |  | $ | (19,442 | )    
|Earnings (loss) per share  as reported |         |      |                           |      |  |   |         |      
|                                        | Basic   |      | $                         | 0.11 |  |   | $       | (2.21 | )
|                                        | Diluted |      | $                         | 0.11 |  |   | $       | (2.21 | )
|Earnings (loss) per share  pro forma   |         |      |                           |      |  |   |         |      
|                                        | Basic   |      | $                         | 0.07 |  |   | $       | (2.28 | )
|                                        | Diluted |      | $                         | 0.06 |  |   | $       | (2.28 | )

8



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##### 



Included in these pro forma disclosures are stock options issued in 2003
and 2002 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
weighted-average assumptions used for 2003 and 2002, respectively: dividend
yield of 0.00% and 0.00%; expected stock price volatility of 37% and 37%;
risk-free interest rate of 4.00% and 4.75%; 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  Investment in Commercial Turf Products, LTD.

The Company has a 50% investment in Commercial Turf Products, Ltd. (CTP)
that is accounted for under the equity method of accounting. The other 50%
investment in CTP is owned by MTD Products Inc (MTD). CTPs net sales for the
six months ended June 30, 2003 were $35.3 million. CTPs gross profit and
pre-tax income for the six months ended June 30, 2003 were $4.5 million and
$3.1 million, respectively. Under the equity method of accounting, the Company
has recorded its 50% portion of pre-tax income of $1,564,000, reduced pre-tax
by $217,000 for the Companys portion of CTP income included in the Companys
inventory and reduced pre-tax by $757,000 to reflect a reduction in the fair
value of the Companys investment in CTP. The Companys net investment of
$741,000 in CTP is included in Other Assets. Each owner has guaranteed 50% of
certain liabilities of CTP aggregating $8,145,000 as of June 30, 2003. These
liabilities mature through 2004 and bear interest at rates ranging from 1.7% to
4.25%.

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. The Company believes the adoption will not impact its 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.

9



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##### 



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

Sales Information

The Lawn Care customer channel (Lawn Care) operates 245 LESCO Service
Centers®, including 9 Service Centers opened in the second quarter of 2003, for
a total of 19 new Service Centers in the first half of 2003. The primary
products sold by Lawn Care are turf care products, including turf and pest
control products, fertilizer, grass seed and equipment. Lawn Care markets and
sells products principally to lawn care companies, landscapers, nurseries,
municipalities, churches and condominium associations. The Company plans to
open an additional two Service Centers in the remainder of 2003.

Additionally, the Lawn Care customer channel 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 distribute
selected products through Home Depot stores in the South, Southwest, Midwest,
Mid-Atlantic and Northeast areas of the country. Lawn Care 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, Lawn Care markets products internationally, principally
through foreign distributors.

The Golf customer channel (Golf) markets and sells products to private and
public golf courses and other customers having large turf areas through Company
salespersons who operate a fleet of 72 LESCO Stores-on-Wheels®. The primary
products sold by Golf are turf care products, including turf and pest control
products, fertilizer, grass seed, 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.

Results of Operations

The Company incurred certain charges in the second quarter and first half
of 2002 that were not incurred in 2003 (see following schedule). Management
believes that the respective 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 statement includes 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 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. The discussion following the statements
references reported results unless otherwise indicated.

Operating Results for the Three Months Ended June 30, 2003

LESCO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS- UNAUDITED

|                                          |                                         |               |              |               |              |             |         |             |   |   |           |         |      |   |         |         |  
|----------------------------------------- | --------------------------------------- | ------------- | ------------ | ------------- | ------------ | ----------- | ------- | ----------- | - | - | --------- | ------- | ---- | - | ------- | ------- | -
|                                          |                                         |               |              |               |              |             |         |             |   |   | 2002      |         |      |   |        
|                                          |                                         |               |              |               |              |             |        
|                                          |                                         |               | Three Months |               | Three Months |             |         |             |   |   | Results  
|                                          |                                         |               | Ended        |               | Ended        |             |         |             |   |   | Excluding
|(In thousands, except per share data)     |                                         | June 30, 2003 |              | June 30, 2002 |              | Charges (a) |         | Charges (a)
|                                          |                                         |               |              |               |              |             |         |            
|Net sales                                 |                                         | $             | 172,560      |               |              | $           | 166,493 |             |   | $ |          |         |      | $ | 166,493 |        
|                                          | Cost of Sales                           |               |              | 114,672       |              |             |         | 109,494     |   |   |           |        |      |   |         | 109,494 |  
|                                          | Inventory markdown  cost of sales      |               |              |              |              |             |         | 9,581       |   |   |           | (9,581  | )(b) |   |         |        |  
|                                          |                                         |               |              |               |              |             |         |             |   |   |           |         |      |   |         |        
|Gross profit on sales                     |                                         |               | 57,888       |               |              |             | 47,418  |             |   |   | (9,581    | )       |      |   | 56,999  |        
|                                          | Warehouse & delivery expense            |               |              | 14,899        |              |             |         | 12,874      |   |   |           |        |      |   |         | 12,874  |  
|                                          | Selling expense                         |               |              | 22,748        |              |             |         | 19,968      |   |   |           |        |      |   |         | 19,968  |  
|                                          | Preopening costs                        |               |              | 125           |              |             |         |            |   |   |           |        |      |   |         |        |  
|                                          | Bad debt expense                        |               |              | 675           |              |             |         | 777         |   |   |           |        |      |   |         | 777     |  
|                                          | General & administrative expense        |               |              | 7,222         |              |             |         | 7,092       |   |   |           |        |      |   |         | 7,092   |  
|                                          | Asset rationalization                   |               |              |              |              |             |         | 12,044      |   |   |           | (12,044 | )(c) |   |         |        |  
|                                          | Severance expense                       |               |              | 447           |              |             |         | 1,791       |   |   |           | (1,791  | )(d) |   |         |        |  
|                                          |                                         |               |              |               |              |             |         |             |   |   |           |         |      |   |         |        
|                                          |                                         |               | 46,116       |               |              |             | 54,546  |             |   |   | (13,835   | )       |      |   | 40,711  |        
|Income (loss) from operations             |                                         |               | 11,772       |               |              |             | (7,128  | )           |   |   | (23,416   | )       |      |   | 16,288  |        
|                                          | Joint venture results                   |               |              | 220           |              |             |         | 28          |   |   |           |        |      |   |         | 28      |  
|                                          | Customer finance charges                |               |              | 256           |              |             |         | 394         |   |   |           |        |      |   |         | 394     |  
|                                          | Other income                            |               |              | 295           |              |             |         | 144         |   |   |           |        |      |   |         | 144     |  
|                                          | Other expense                           |               |              | (419          | )            |             |         | (142        | ) |   |           |        |      |   |         | (142    | )
|                                          |                                         |               |              |               |              |             |         |             |   |   |           |         |      |   |         |        
|                                          |                                         |               | 352          |               |              |             | 424     |             |   |   |          |         |      |   | 424     |        
|Earnings (loss) before interest and taxes |                                         |               | 12,124       |               |              |             | (6,704  | )           |   |   | (23,416   | )       |      |   | 16,712  |        
|Interest expense                          |                                         |               | 1,291        |               |              |             | 1,323   |             |   |   |          |         |      |   | 1,323   |        
|                                          |                                         |               |              |               |              |             |         |             |   |   |           |         |      |   |         |        
|Income (loss) before taxes                |                                         |               | 10,833       |               |              |             | (8,027  | )           |   |   | (23,416   | )       |      |   | 15,389  |        
|Income taxes (benefit)                    |                                         |               | 4,096        |               |              |             | (3,020  | )           |   |   | (8,806    | )(e)    |      |   | 5,786   |        
|                                          |                                         |               |              |               |              |             |         |             |   |   |           |         |      |   |         |        
|Net income (loss)                         |                                         | $             | 6,737        |               |              | $           | (5,007  | )           |   | $ | (14,610   | )       |      | $ | 9,603   |        
|                                          |                                         |               |              |               |              |             |         |             |   |   |           |         |      |   |         |        
|                                          | Basic earnings (loss) per share         |               | $            | 0.79          |              |             | $       | (0.59       | ) |   | $         | (1.72   | )    |   | $       | 1.13    |  
|                                          |                                         |               |              |               |              |             |         |             |   |   |           |         |      |   |         |        
|                                          | Fully diluted earnings (loss) per share |               | $            | 0.77          |              |             | $       | (0.59       | ) |   | $         | (1.69   | )    |   | $       | 1.10    |  
|                                          |                                         |               |              |               |              |             |         |             |   |   |           |         |      |   |         |        



|(a) |  | The Company incurred certain charges in the second quarter of 2002 that were not incurred in 2003 (see following
footnotes b through e). Management believes that the 2002 results excluding these charges are useful to permit
a better comparison of operating results from period to period. For purposes of reconciliation and better comparability,
the above statement includes 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 $1.8 million pre-tax charge relative to severance for executive, senior and middle management terminations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(e) |  | The Company recognized the income tax benefit of the charges of $8.8 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

10



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##### 



Sales for the second quarter ended June 30, 2003 rose 3.6% to $172.6
million compared to $166.5 million in 2002. Unit sales volume for the second
quarter of 2003 was higher than 2002 causing a favorable impact of $6.6 million
offset by $0.5 million in reduced sales attributable to slightly lower average
selling prices.

Sales by customer channels for the three months ended June 30 are as
follows (in thousands):

|                          |  |      |         |      |  |   |         |  
|------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                          |  | 2003 |         | 2002
|                          |  |      |         |     
|Lawn Care                 |  | $    | 131,600 |      |  | $ | 124,523 |  
|Golf                      |  |      | 41,732  |      |  |   | 42,640  |  
|Sales credits and rebates |  |      | (772    | )    |  |   | (670    | )
|                          |  |      |         |      |  |   |         |  
|Net Sales                 |  | $    | 172,560 |      |  | $ | 166,493 |  
|                          |  |      |         |      |  |   |         |  

Sales increased for the Companys Lawn Care customer channel by $7.1
million. The Lawn Care customer channel operated 245 LESCO Service Centers®
during the second quarter 2003 compared with 227 stores during 2002. Golf
sales in the second quarter 2003 were $908,000 less than in 2002 due to poor
economic conditions in the golf industry. The Golf customer channel operated 78
LESCO Stores-On-Wheels® during the second quarter 2003 compared with 77 in
2002.

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

|                                  |  |      |         |      |  |   |         |  
|--------------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                                  |  | 2003 |         | 2002
|                                  |  |      |         |     
|Fertilizer & combination products |  | $    | 68,367  |      |  | $ | 66,953  |  
|Control products                  |  |      | 52,334  |      |  |   | 51,390  |  
|Equipment, parts & service        |  |      | 22,317  |      |  |   | 20,927  |  
|Turfgrass seed                    |  |      | 18,258  |      |  |   | 15,962  |  
|Pest control                      |  |      | 5,698   |      |  |   | 5,371   |  
|Other                             |  |      | 6,358   |      |  |   | 6,560   |  
|Sales credits and rebates         |  |      | (772    | )    |  |   | (670    | )
|                                  |  |      |         |      |  |   |         |  
|Net Sales                         |  | $    | 172,560 |      |  | $ | 166,493 |  
|                                  |  |      |         |      |  |   |         |  

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

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

|                          |  |      |         |      |  |   |         |  
|------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                          |  | 2003 |         | 2002
|                          |  |      |         |     
|Northeast                 |  | $    | 50,738  |      |  | $ | 49,195  |  
|Mid Central               |  |      | 45,627  |      |  |   | 42,322  |  
|Transition                |  |      | 26,355  |      |  |   | 25,716  |  
|Southeast                 |  |      | 25,172  |      |  |   | 24,395  |  
|West                      |  |      | 5,191   |      |  |   | 5,302   |  
|National Accounts         |  |      | 20,249  |      |  |   | 20,233  |  
|Sales credits and rebates |  |      | (772    | )    |  |   | (670    | )
|                          |  |      |         |      |  |   |         |  
|Net Sales                 |  | $    | 172,560 |      |  | $ | 166,493 |  
|                          |  |      |         |      |  |   |         |  

Sales have increased in 2003 for all of the Companys geographic zones,
except the West Zone.

11



---



##### 



In the second quarter of 2003, the Company opened six new Service Centers,
bringing the total through June 30, 2003 to nineteen new Service Center
openings, and one new Stores-on-Wheels vehicle. The new 2003 facilities added
$3.2 million in revenue growth to the Company for the three months ended June
30, 2003. The new Service Centers operating costs, included in selling
expense, were $0.8 million, including preopening costs for the quarter of
$125,000.

Gross profit, as a percentage of sales, was 33.5% for the second quarter
ended June 30, 2003, compared to 34.2% for 2002, excluding the inventory
markdown of $9.6 million. The decrease principally resulted from the impact of
increased cost of raw materials and lower selling prices.

Delivery and warehouse expenses increased to $14.9 million in the second
quarter 2003 from $12.9 million in 2002. Delivery and warehouse costs increased
to 8.6% of sales in the second quarter 2003 compared to 7.7% of sales in 2002.
This increase is due to the Companys decision to invest in incremental fixed
warehousing expense and the revised network start-up costs.

Selling expense was 13.3% of sales in the second quarter 2003 compared to
12.0% in the second quarter 2002. Total selling expense increased by $2.9
million in second quarter 2003, primarily due to the increased number of lawn
care sales representatives, totaling an additional $1.3 million in compensation
expenses and the timing effect from the change in the sales force commission
program of $387,000. An additional nineteen Service Center locations were
added in the second quarter 2003 with additional operating costs of
approximately $614,000. Information systems operating costs were higher by
$400,000, outside sales representative expense increased by $184,000 and
operating expenses increased by $116,000.

General and administrative costs decreased in second quarter 2003 from
2002 by $130,000, principally due to the elimination of outside professional
costs of $239,000 compared to the second quarter 2002. These decreases were
offset by increases in payroll related costs and software
maintenance.

Interest expense decreased $32,000 for the second quarter 2003 compared to
the second quarter 2002. The effective interest rate for the second quarter
2003 was 6.05% compared to 6.41% for the second quarter 2002. The average
borrowing levels were lower by $18.8 million for the second quarter ended June
30, 2003 compared to second 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 $6.7 million or $0.77 per share in the
quarter ended June 30, 2003 compared with a net loss of $5.0 million or $0.59
per share in the quarter ended June 30, 2002. Net income for the second
quarter 2002 excluding inventory markdown, asset rationalization and severance
charges was $9.6 million or $1.10 per share.

The Company incurred
certain charges in the second quarter and first half of 2002 that
were not incurred in 2003 (see following schedule). Management
believes that the respective 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 statement includes 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 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. The discussion
following the statements references reported results unless otherwise
indicated.

12



---



##### 



Operating Results for the Six Months Ended June 30,
2003

LESCO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS- UNAUDITED

|                                                                                   |                                                                               |               |            |               |            |             |         |             |   |   |           |         |       |   |         |         |  
|---------------------------------------------------------------------------------- | ----------------------------------------------------------------------------- | ------------- | ---------- | ------------- | ---------- | ----------- | ------- | ----------- | - | - | --------- | ------- | ----- | - | ------- | ------- | -
|                                                                                   |                                                                               |               |            |               |            |             |         |             |   |   | 2002      |         |       |   |        
|                                                                                   |                                                                               |               |            |               |            |             |        
|                                                                                   |                                                                               |               | Six Months |               | Six Months |             |         |             |   |   | Results  
|                                                                                   |                                                                               |               | Ended      |               | Ended      |             |         |             |   |   | Excluding
|(In thousands, except per share data)                                              |                                                                               | June 30, 2003 |            | June 30, 2002 |            | Charges (a) |         | Charges (a)
|                                                                                   |                                                                               |               |            |               |            |             |         |            
|Net sales                                                                          |                                                                               | $             | 267,010    |               |            | $           | 259,972 |             |   | $ |          |         |       | $ | 259,972 |        
|                                                                                   | Cost of Sales                                                                 |               |            | 178,490       |            |             |         | 172,921     |   |   |           |        |       |   |         | 172,921 |  
|                                                                                   | Inventory markdown  cost of sales                                            |               |            |              |            |             |         | 9,581       |   |   |           | (9,581  | ) (b) |   |         |        |  
|                                                                                   |                                                                               |               |            |               |            |             |         |             |   |   |           |         |       |   |         |        
|Gross profit on sales                                                              |                                                                               |               | 88,520     |               |            |             | 77,470  |             |   |   | (9,581    | )       |       |   | 87,051  |        
|                                                                                   | Warehouse & delivery expense                                                  |               |            | 25,202        |            |             |         | 22,790      |   |   |           |        |       |   |         | 22,790  |  
|                                                                                   | Selling expense                                                               |               |            | 43,785        |            |             |         | 38,303      |   |   |           |        |       |   |         | 38,303  |  
|                                                                                   | Preopening costs                                                              |               |            | 291           |            |             |         |            |   |   |           |        |       |   |         |        |  
|                                                                                   | Bad debt expense                                                              |               |            | 1,104         |            |             |         | 1,182       |   |   |           |        |       |   |         | 1,182   |  
|                                                                                   | General & administrative expense                                              |               |            | 14,574        |            |             |         | 15,219      |   |   |           |         |       |   |         | 15,219  |  
|                                                                                   | Asset rationalization                                                         |               |            |              |            |             |         | 12,044      |   |   |           | (12,044 | ) (c) |   |         |        |  
|                                                                                   | Severance expense                                                             |               |            | 453           |            |             |         | 3,866       |   |   |           | (3,866  | ) (d) |   |         |        |  
|                                                                                   |                                                                               |               |            |               |            |             |         |             |   |   |           |         |       |   |         |        
|                                                                                   |                                                                               |               | 85,409     |               |            |             | 93,404  |             |   |   | (15,910   | )       |       |   | 77,494  |        
|Income (loss) from operations                                                      |                                                                               |               | 3,111      |               |            |             | (15,934 | )           |   |   | (25,491   | )       |       |   | 9,557   |        
|                                                                                   | Early retirement of debt agreement                                            |               |            |              |            |             |         | (4,550      | ) |   |           | (4,550  | ) (e) |   |         |        |  
|                                                                                   | Joint venture results                                                         |               |            | 590           |            |             |         | 28          |   |   |           |        |       |   |         | 28      |  
|                                                                                   | Customer finance charges                                                      |               |            | 649           |            |             |         | 780         |   |   |           |        |       |   |         | 780     |  
|                                                                                   | Other income                                                                  |               |            | 475           |            |             |         | 268         |   |   |           |        |       |   |         | 268     |  
|                                                                                   | Other expense                                                                 |               |            | (652          | )          |             |         | (539        | ) |   |           |        |       |   |         | (539    | )
|                                                                                   |                                                                               |               |            |               |            |             |         |             |   |   |           |         |       |   |         |        
|                                                                                   |                                                                               |               | 1,062      |               |            |             | (4,013  | )           |   |   | (4,550    | )       |       |   | 537     |        
|Earnings (loss) before interest and taxes                                          |                                                                               |               | 4,173      |               |            |             | (19,947 | )           |   |   | (30,041   | )       |       |   | 10,094  |        
|Interest expense                                                                   |                                                                               |               | 2,579      |               |            |             | 2,657   |             |   |   |          |         |       |   | 2,657   |        
|                                                                                   |                                                                               |               |            |               |            |             |         |             |   |   |           |         |       |   |         |        
|Income (loss) before taxes                                                         |                                                                               |               | 1,594      |               |            |             | (22,604 | )           |   |   | (30,041   | )       |       |   | 7,437   |        
|Income taxes (benefit)                                                             |                                                                               |               | 604        |               |            |             | (8,485  | )           |   |   | (11,281   | ) (f)   |       |   | 2,796   |        
|                                                                                   |                                                                               |               |            |               |            |             |         |             |   |   |           |         |       |   |         |        
|Net income (loss) before cumulative effect
of accounting change                    |                                                                               |               | 990        |               |            |             | (14,119 | )           |   |   | (18,760   | )       |       |   | 4,641   |        
|Cumulative effect of accounting change for
goodwill charge, net of taxes of $2,735 |                                                                               |               |           |               |            |             | 4,597   |             |   |   | (4,597    | ) (g)   |       |   |        |        
|                                                                                   |                                                                               |               |            |               |            |             |         |             |   |   |           |         |       |   |         |        
|Net income (loss)                                                                  |                                                                               | $             | 990        |               |            | $           | (18,716 | )           |   | $ | (23,357   | )       |       | $ | 4,641   |        
|                                                                                   |                                                                               |               |            |               |            |             |         |             |   |   |           |         |       |   |         |        
|                                                                                   | Basic earnings (loss) per share before cumulative
effect of accounting change |               | $          | 0.11          |            |             | $       | (1.67       | ) |   | $         | (2.21   | )     |   | $       | 0.54    |  
|                                                                                   |                                                                               |               |            |               |            |             |         |             |   |   |           |         |       |   |         |        
|                                                                                   | Basic earnings (loss) per share                                               |               | $          | 0.11          |            |             | $       | (2.21       | ) |   | $         | (2.74   | )     |   | $       | 0.53    |  
|                                                                                   |                                                                               |               |            |               |            |             |         |             |   |   |           |         |       |   |         |        
|                                                                                   | Fully diluted earnings (loss) per share                                       |               | $          | 0.11          |            |             | $       | (2.21       | ) |   | $         | (2.74   | )     |   | $       | 0.53    |  
|                                                                                   |                                                                               |               |            |               |            |             |         |             |   |   |           |         |       |   |         |        



|(a) |  | The Company incurred certain charges in the first half of 2002 that were not incurred in 2003 (see following footnotes b through g). Management believes that
the 2002 results excluding these charges are useful to permit a better comparison of operating results from period to period. For purposes of reconciliation
and better comparability, the above statement includes 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 recognized the income tax benefit of the adjustment for charges (excluding the tax effect of the cumulative effect of accounting change (g)) of $11.3 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(g) |  | 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 six months ended June 30, 2003 rose 2.7% to $267.0
million compared to $260.0 million in 2002. Unit sales volume was higher in
2003 causing a favorable impact of $8.7 million. Average selling prices were
down slightly from the same period of 2002 causing a $1.7 million reduction in
sales.

Sales by customer channel for the six months ended June 30 are as
follows (in thousands):

|                          |  |      |         |      |  |   |         |  
|------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                          |  | 2003 |         | 2002
|                          |  |      |         |     
|Lawn Care                 |  | $    | 209,213 |      |  | $ | 199,125 |  
|Golf                      |  |      | 59,630  |      |  |   | 62,353  |  
|Sales credits and rebates |  |      | (1,833  | )    |  |   | (1,506  | )
|                          |  |      |         |      |  |   |         |  
|Net Sales                 |  | $    | 267,010 |      |  | $ | 259,972 |  
|                          |  |      |         |      |  |   |         |  

Sales increased for the Companys Lawn Care customer channel by $10.1
million. Golf sales in 2003 were $2.7 million less than 2002 due to lower sales in
the Northeast caused by the late spring and poor economic conditions in the
golf industry. The Lawn Care customer channel operated 245 LESCO Service
Centers® during the first six months 2003 compared with 227 stores during 2002.
The Golf customer channel operated 78 LESCO Stores-On-Wheels® during the first
six months 2003 compared with 77 in 2002.

Sales by product line
for the six months ended June 30 are as
follows (in thousands):

|                                  |  |      |         |      |  |   |         |  
|--------------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                                  |  | 2003 |         | 2002
|                                  |  |      |         |     
|Fertilizer & combination products |  | $    | 114,771 |      |  | $ | 113,007 |  
|Control products                  |  |      | 73,670  |      |  |   | 73,252  |  
|Equipment, parts & service        |  |      | 36,576  |      |  |   | 33,554  |  
|Turfgrass seed                    |  |      | 25,048  |      |  |   | 22,899  |  
|Pest control                      |  |      | 9,002   |      |  |   | 8,481   |  
|Other                             |  |      | 9,776   |      |  |   | 10,285  |  
|Sales credits and rebates         |  |      | (1,833  | )    |  |   | (1,506  | )
|                                  |  |      |         |      |  |   |         |  
|Net Sales                         |  | $    | 267,010 |      |  | $ | 259,972 |  
|                                  |  |      |         |      |  |   |         |  

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

Sales by geographic zone for the six months ended June 30 are as
follows (in thousands):

|                          |  |      |         |      |  |   |         |  
|------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                          |  | 2003 |         | 2002
|                          |  |      |         |     
|Northeast                 |  | $    | 67,393  |      |  | $ | 67,227  |  
|Mid Central               |  |      | 61,900  |      |  |   | 56,243  |  
|Transition                |  |      | 45,879  |      |  |   | 44,313  |  
|Southeast                 |  |      | 47,904  |      |  |   | 45,886  |  
|West                      |  |      | 8,884   |      |  |   | 8,940   |  
|National Accounts         |  |      | 36,883  |      |  |   | 38,869  |  
|Sales credits and rebates |  |      | (1,833  | )    |  |   | (1,506  | )
|                          |  |      |         |      |  |   |         |  
|Net Sales                 |  | $    | 267,010 |      |  | $ | 259,972 |  
|                          |  |      |         |      |  |   |         |  

Sales have increased in 2003 for all of the Companys geographic zones,
except the West Zone and National Accounts.

14



---



##### 



The new 2003 facilities added $3.4 million in revenue growth to the
Company for the six months ended June 30, 2003. The new Service Centers
operating costs, included in selling expense, were $1.3 million, including
preopening costs of $291,000 for the six months ended June 30, 2003. The
Company plans to open two additional Service Centers in the remainder of 2003.

Gross profit, as a percent of sales, was 33.2% for the six months ended
June 30, 2003, compared to 33.5% for 2002, excluding the inventory markdown of
$9.6 million. The decrease resulted from the impact of increased cost of raw
materials and purchased products and slightly lower selling prices, partially
offset by lower manufacturing expenses and lower inventory shrink expense.

Delivery and warehouse expenses increased to $25.2 million in the first
six months 2003 from $22.8 million in 2002. Delivery and warehouse costs
increased to 9.4% of sales in first six months 2003 compared to 8.8% 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 16.5% of sales in the first six months 2003 compared
to 14.7% in the first six months 2002. Total selling expense increased by $5.8
million in 2003, primarily due to the increased number of lawn care sales
representatives, totaling an additional $1.0 million in compensation expense
and the timing effect from the change in the sales force commission program of
$1.1 million. Under the Companys current commission program, progress
payments will be earned, expensed and paid each quarter. Under the Companys
previous commission program, no commissions were earned, expensed or paid in
the first quarter. An additional nineteen Service Center locations and one
Stores-on-Wheels vehicle were added in the first six months 2003 with additional
operating costs of approximately $1.1 million. Information systems operating
costs were higher by $432,000 and outside sales representative payments
increased by $348,000. Advertising and promotional costs were higher by
$471,000 and utilities increased $156,000 due to colder climate conditions
early in the year.

General and administrative costs decreased in 2003 over 2002 by $645,000
principally due to payroll related cost reductions of $555,000. Additionally,
general and administrative costs for consulting and outside labor decreased by
$567,000. These decreases were partially offset by higher product registration
fees of $150,000, higher software maintenance expenses of $127,000 and
increased other administrative costs of $200,000.

Interest expense decreased $78,000 for the first six months of 2003
compared to the first six months of 2002. The effective interest rate for the
first six months of 2003 was 6.24% compared to 6.21% for the first six months
of 2002. The average borrowing levels were lower by $25.1 million for the first
six months ended June 30, 2003 compared to the first six months 2002.

15



---



##### 



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

The Companys net income was $990,000 or $0.11 per share in the six months
ended June 30, 2003 compared with a net loss of $18.7 million or $2.21 per
share in the six months ended June 30, 2002. Net income for the first six
months of 2002 excluding debt retirement, inventory markdown, asset
rationalization and severance charges was $4.6 million or $0.53 per 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 $5.1 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 June 30, 2003, the Company is in compliance with all of the
restrictive covenants of its Debt Facility, as amended. The Company had $52.6
million available to borrow under its Debt Facility as of June 30, 2003.

Total outstanding debt was $66.6 million as of June 30, 2003 compared to
$65.4 million as of June 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 June 30, 2003 was $144.6 million compared to $141.9 million
as of June 30, 2002 and $145.3 million as of December 31, 2002.

|                                   |                                   |                                                                 |       |         |       |         |       |             |       |   |       |       |       |  
|---------------------------------- | --------------------------------- | --------------------------------------------------------------- | ----- | ------- | ----- | ------- | ----- | ----------- | ----- | - | ----- | ----- | ----- | -
|                                   |                                   |                                                                 |       | June 30 |       | June 30 |       | December 31
|(in thousands)                     |                                   | 2003                                                            |       | 2002    |       | 2002   
|                                   |                                   |                                                                 |       |         |       |        
|Assets                             |                                   |                                                                 |       |         |       |         |       |             |       |   |       |      
|                                   | Accounts receivable  net         |                                                                 | $     | 84.7    |       |         | $     | 84.8        |       |   | $     | 68.2  |      
|                                   | Inventory                         |                                                                 |       | 111.0   |       |         |       | 101.8       |       |   |       | 86.8  |      
|                                   | Net property, plant and equipment |                                                                 |       | 34.3    |       |         |       | 35.5        |       |   |       | 33.9  |      
|                                   | Remaining other assets            |                                                                 |       | 17.3    |       |         |       | 24.4        |       |   |       | 15.0  |      
|                                   |                                   |                                                                 |       |         |       |         |       |             |       |   |       |      
|Total Assets                       |                                   | $                                                               | 247.3 |         |       | $       | 246.5 |             |       | $ | 203.9 |      
|Less: Non-debt related liabilities |                                   |                                                                 |       |         |       |         |       |             |       |   |       |      
|                                   | Accounts payable                  |                                                                 |       | (85.0   | )     |         |       | (85.9       | )     |   |       | (38.4 | )    
|                                   | Other current liabilities         |                                                                 |       | (17.5   | )     |         |       | (17.4       | )     |   |       | (19.9 | )    
|                                   | Deferred income taxes             |                                                                 |       | (0.2    | )     |         |       | (1.3        | )     |   |       | (0.3  | )    
|                                   |                                   |                                                                 |       |         |       |         |       |             |       |   |       |      
|Invested Capital                   |                                   | $                                                               | 144.6 |         |       | $       | 141.9 |             |       | $ | 145.3 |      
|                                   |                                   |                                                                 |       |         |       |         |       |             |       |   |       |      
|Return on invested capital:        |                                   |                                                                 |       |         |       |         |       |             |       |   |       |      
|                                   |                                   | EBIT
as reported rolling 12 months                              |       | $       | 9.8   |         |       | $           | (20.3 | ) |       | $     | (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 |       | $       | 9.8   |         |       | $           | 9.4   |   |       | $     | 14.8  |  
|                                   |                                   | Taxes
on EBIT                                                   |       |         | 3.7   |         |       |             | 3.5   |   |       |       | 5.6   |  
|                                   |                                   |                                                                 |       |         |       |         |       |             |       |   |       |      
|                                   |                                   | Net operating profit after taxes (NOPAT)                        |       | $       | 6.1   |         |       | $           | 5.9   |   |       | $     | 9.2   |  
|                                   |                                   |                                                                 |       |         |       |         |       |             |       |   |       |      
|                                   |                                   | Invested capital at period end                                  |       | $       | 144.6 |         |       | $           | 141.9 |   |       | $     | 145.3 |  
|                                   |                                   |                                                                 |       |         |       |         |       |             |       |   |       |      
|Return on Invested Capital (ROIC)  |                                   |                                                                 | 4.2   | %       |       |         | 4.1   | %           |       |   | 6.3   | %    
|                                   |                                   |                                                                 |       |         |       |         |       |             |       |   |       |      

16



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##### 



Invested capital at June 30, 2003 was $144.6 million compared to $141.9
million at June 30, 2002 and $145.3 million at December 31, 2002. The increase
in invested capital of $2.7 million from June 30, 2002 is primarily due to
higher inventory of $9.2 million, offset by lower other assets of $7.1 million.
The decrease in invested capital of $0.7 million from December 31, 2002 is
primarily due to higher seasonal inventory levels of $24.2 million and accounts
receivable of $16.5 million, offset by higher accounts payable of $46.6
million.

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.

Return on invested capital increased 0.1% for the rolling twelve months
ended June 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 increase
over June 30, 2002 principally relates to improved earnings before interest and
taxes compared to 2002, slightly offset by higher invested capital, which is
discussed above.

Capital expenditures for the first six months of 2003 totaled $4.1
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
$990,000 and the costs of opening and remodeling Service Centers and
Stores-On-Wheels of $984,000.

At June 30, 2003, the Company is committed to purchases of 66,000 tons of
urea at a fixed price, which approximates market value.

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

Forward-Looking Statements

Certain statements included in 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 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 Report on Form 10-Q for the quarter ended March 31, 2003.

17



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##### 



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

The Company performed an evaluation under the supervision and with the
participation of the Companys management, including the Chief Executive
Officer and Senior Vice President and Chief Financial Officer, of the
effectiveness of the Companys disclosure controls and procedures 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 made known to
them.

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 Home Depot
stores in New York State without having proper registration therefor. The
complaint seeks a civil penalty of $3,440,000. The Company is in discussions
with the NYSDEC relative to a settlement.

ITEM 4.  SUBMISSION OF MATTERS
TO A VOTE OF SECURITY HOLDERS

At the Companys
Annual Meeting of Shareholders held on May 14, 2003, the shareholders
elected nine directors to serve one-year terms. No other matters were
voted upon at the meeting.

Following is the final result of the votes cast:

|                        |  |  |           |  |  |  |          | 
|----------------------- |  |  | --------- |  |  |  | -------- | 
|                        |  |  | For       |  |  |  | Withheld
|                        |  |  |           |  |  |  |         
|Ronald Best             |  |  | 7,742,598 |  |  |  | 76,936   | 
|                       
|                       
|                       
|                       
|Robert F. Burkhardt     |  |  | 7,743,760 |  |  |  | 75,774   | 
|                       
|                       
|                       
|                       
|Michael P. DiMino       |  |  | 6,866,433 |  |  |  | 953,101  | 
|                       
|                       
|                       
|                       
|J. Martin Erbaugh       |  |  | 7,737,761 |  |  |  | 81,773   | 
|                       
|                       
|                       
|                       
|Michael E. Gibbons      |  |  | 6,877,770 |  |  |  | 941,764  | 
|                       
|                       
|                       
|                       
|Enrique Foster Gittes   |  |  | 7,737,774 |  |  |  | 81,760   | 
|                       
|                       
|                       
|                       
|Lee C. Howley           |  |  | 7,737,124 |  |  |  | 82,410   | 
|                       
|                       
|                       
|                       
|Christopher H. B. Mills |  |  | 7,744,574 |  |  |  | 74,960   | 
|                       
|                       
|                       
|                       
|R. Lawrence Roth        |  |  | 7,737,263 |  |  |  | 82,271   | 

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                                                                                                                                                         

|    |  |                                                                                                                                                 
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------
|(b) |  | Reports on Form 8-K:                                                                                                                            
|    |  |                                                                                                                                                 
|    |  | On April 24, 2003,
the Company filed a report on Form 8-K relating to the Companys
Earnings Release for the first quarter ended March 31, 2003.
|    |  |                                                                                                                                                 
|    |  | On May 21, 2003, the Company filed a report on Form 8-K relating to
the dismissal of Ernst and Young LLP as its independent accountants.        

18



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##### 



| |  |                                                                                                                                                                                                                                                 
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                                                                                                                                                                                                                                 
| |  | On May 23, 2003, the Company filed a report on Form 8-K relating to
the engagement of KPMG LLP as the Companys principal independent
accountants to audit the financial statements of the Company for its
fiscal year ending December 31, 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                                                                                    |  | 
|                |  |                                                                                               |  | 
|August 13, 2003 |  | /s/ Jeffrey L. Rutherford                                                                     |  | 
|                |  |                                                                                               |  | 
|                |  | Jeffrey L. Rutherford
Senior Vice President, Chief
Financial Officer, Treasurer and
Secretary |  | 

19