# UNITED STATES

# SECURITIES AND
EXCHANGE COMMISSION

# Washington, D.C. 20549

# FORM 10-K

(Mark One)

Or

# TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from
________________________ to ______________________ Commission File Number                                                                 1-448

# Mestek, Inc.

(Exact
name of registrant as specified in its charter)

|                                                              |                                     
|------------------------------------------------------------- | ------------------------------------
|Pennsylvania                                                  | 25-0661650                          
|(State or other jurisdiction ofincorporation or organization) | (I.R.S. Employer Identification No.)
|                                                              |                                     
|260 North Elm Street, Westfield, MA                           | 01085                               
|(Address of principal executive offices)                      | (Zip Code)                          
|Registrant's telephone number, including area code            | 413-568-9571                        
|                                                             

Securities registered pursuant to
Section 12(b) of the Act:

|Title of each class         | Name of each exchange on which registered
|--------------------------- | -----------------------------------------
|Common Stock  No Par Value | New York Stock Exchange                  

# 

Securities registered pursuant to
section 12(g) of the Act:

NONE

---

(Title of class)

---

(Title of class)

Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes xx No

Indicate by check mark if disclosure
of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this
chapter) is not contained herein, and will not be contained, to the best of
registrants knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

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

The aggregate market value of voting
and non-voting common shares held by non-affiliates of the registrant as of June 30, 2003,
the last business day of the most recently completed second quarter of 2003, based upon
the closing price for the registrants common stock as reported in The Wall Street
Journal as of such date was $54,716,148.

The number of shares of the
registrants common stock issued and outstanding as of April 1, 2004 was 8,721,603.

Portions of the registrants
definitive proxy statement relating to the registrants 2004 Annual Meeting of
Shareholders to be filed hereafter are incorporated by reference into Part II (Item 5) and
Part III (Items 10-14) of this Report on Form 10-K and certain Exhibits to previous
filings with the Securities and Exchange Commission are incorporated by reference into
Part IV, Item 15 of this Report on Form 10-K.

---

# PART I

# Item 1  BUSINESS

Certain
statements in this Annual Report on Form 10-K constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995 that are not
historical facts but rather reflect the Companys current expectations concerning
future results and events. The words believes, expects,
intends, plans, anticipates, hopes,
likely, will, and similar expressions identify such
forward-looking statements. Such forward-looking statements involve known and unknown
risks, uncertainties and other important factors that could cause the actual results,
performance or achievements of the Company (or entities in which the Company has
interests), or industry results, to differ materially from future results, performance or
achievements expressed or implied by such forward-looking statements.

Important
Factors that might cause our actual results to differ materially from the results
contemplated by these forward-looking statements are contained in Item 7.
Managements Discussion and Analysis of Financial Condition and Results of Operations
 Future Impact of Know Trends or Uncertainties and elsewhere in this report
and our future filings with the Securities and Exchange Commission.

Readers
are cautioned not to place undue reliance on these forward-looking statements, which
reflect managements view only as of the date of this Form 10-K. The Company
undertakes no obligation to update the result of any revisions to these forward-looking
statements which may be made to reflect events or circumstances after the date hereof or
to reflect the occurrence of unanticipated events, conditions or circumstances.

# GENERAL

Mestek,
Inc. (Mestek) was incorporated in the Commonwealth of Pennsylvania in 1898 as
Mesta Machine Company. It changed its name to Mestek, Inc. in October 1984, and merged
with Reed National Corp. on July 31, 1986. The Company, as referred to herein,
refers to Mestek and its subsidiaries, collectively.

On
August 26, 2003, Met-Coil Systems Corporation (Met-Coil), a second-tier
subsidiary of the Company, filed a voluntary petition for relief under Chapter 11 of title
11 of the United States Code in the United States Bankruptcy Court for the District of
Delaware. Met-Coil remains in possession of its assets and properties, and continues to
operate its businesses and manage its properties as a debtor-in-possession
pursuant to sections 1107(a) and 1108 of the Bankruptcy Code, as more fully explained in
Note 18 to the consolidated financial statements.

The
Company is comprised of two distinct businesses (Operating Segments): (1) the HVAC Segment
which manufactures heating, ventilating, and air conditioning equipment, and (2) the Metal
Forming Segment which manufactures metal-forming equipment. Both Segments operate in
industries which historically have been highly fragmented. In recent years, both
industries, and in particular the HVAC industry, have undergone a gradual
roll-up or consolidation process. The Companys recent history therefore
is one of acquisition.

A
summary of the Companys acquisitions and divestitures during the most recently
completed three fiscal years is as follows:

On
January 9, 2001 the Company completed the sale of its subsidiary National Northeast
Corporation (National), an aluminum extruder and heat sink fabricator, to
Alpha Technologies Group, Inc. (Alpha) for a total cash consideration of $49.9
million. The Companys net pre-tax gain, after accounting for the minority interest
and related costs of sale, was approximately $16.4 million. The income tax expense
recorded in respect of the gain is higher than would be suggested by applying statutory
rates to the gain recorded for accounting purposes due principally to the fact that, as
part of the agreement for sale, the Company agreed to make on behalf of Alpha an election
under Internal Revenue Code Section 338(h)10, which requires that the Company treat the
transaction for tax purposes as a deemed sale of 100% of Nationals assets, the
negative tax consequences of which inure to the Company. The Company has accounted for the
transaction as a gain on disposal of Discontinued Operations in accordance with APB30.

On
July 2, 2001 the Company, through its wholly owned subsidiary, Formtek, Inc., acquired
100% of the outstanding common stock of SNS Properties, Inc. (SNS), an OH
corporation based in Warrensville Heights, OH. SNS, through its Yoder, Krasny Kaplan and
Mentor AGVS businesses, manufactures sophisticated metal forming equipment, tube mills,
pipe mills, custom engineered material handling equipment, and automated guided vehicle
systems for the global market. The purchase price paid for the stock was $12.5 million and
included $7.7 million in goodwill. The Company also acquired a related manufacturing plant
in Bedford Heights, OH for $1.1 million.

On
December 31, 2001, the Company acquired substantially all of the operating assets and
certain liabilities of King Company (King), a subsidiary of United Dominion
Industries, based in Bishopville, SC, and Owatonna, MN. King manufactures industrial
heating and specialty refrigeration products complementary to certain of the
Companys other industrial HVAC product lines. The purchase price paid, net of
liabilities assumed, was $4 million and included no goodwill. In 2003, the Company ceased
operations in Bishopville, SC, transferring certain King product lines to the
Companys Dallas, TX Mestex subsidiary facility and has sold certain other product
lines and has leased the Bishopville facility itself.

On
August 29, 2003, the Company acquired all of the issued and outstanding stock of Engel
Industries, Inc. (Engel), a Delaware corporation based in St. Louis, MO, for
approximately $5.7 million including $4.2 million in goodwill. Engel manufactures sheet
metal forming and fabricating equipment for the HVAC sheet metal contactor, steel service
center and custom roll former global markets.

The
Companys executive offices are located at 260 North Elm Street, Westfield, MA 01085.
The Companys phone number is 413-568-9571. The Companys Website address is
www.mestek.com. Our Annual Report on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K and amendments to these reports, as well as Section 16 reports
filed by our insiders, are available, without charge, on our website as soon as reasonably
practical after they are filed electronically with the Securities and Exchange Commission.
Also contained on our website are our Code of Business Ethics and our Corporate Governance
Guidelines, as well as a listing of our Board of Directors, Audit Committee Members,
Nominating/Governance Committee Members and Compensation Committee Members, as well as the
Charters for each of these committees. The information contained on our website is not
incorporated by reference in this report. All of these documents are also available in
print upon request to the Secretary of the Company, Legal Department, 260 North Elm
Street, Westfield, MA 01085.

# OPERATIONS OF THE COMPANY

The
Company operates in two business Segments: Heating, Ventilating, and Air Conditioning
(HVAC) and Metal Forming equipment manufacturing. Each of these Segments is
described below.

# EMPLOYMENT

The
Company and its subsidiaries together employed approximately 2,767 persons as of December
31, 2003.

---

# HEATING, VENTILATING AND
AIR CONDITIONING EQUIPMENT SEGMENT

The
Company, through certain divisions of Mestek, Inc. and various of its wholly or majority
owned subsidiaries (collectively, the HVAC Segment), manufactures and
distributes products in the HVAC industry. These products include residential, commercial
and industrial hydronic heat distribution products, commercial and industrial gas-fired
heating and ventilating equipment, commercial, architectural and industrial air control
and distribution products, commercial and residential gas and oil-fired boilers,
specialized air conditioning units, and related products used in heating, ventilating and
air conditioning systems. These products may be used to heat, ventilate and/or cool
structures ranging in size from large office buildings, industrial buildings, warehouses,
stores and residences, to such small spaces as add-on rooms in residences. The HVAC
Segment sells its products to independent wholesale supply distributors, mechanical, sheet
metal and other contractors and, in some cases, to other HVAC manufacturers under original
equipment manufacture (OEM) agreements and direct to certain retailers
pursuant to national account agreements. No single customer accounts for sales in the
aggregate of 10% or more of consolidated revenue. The HVAC Segment is comprised of three
interrelated HVAC product groups: Hydronic Products, Gas and Industrial Products, and Air
Distribution and Cooling Products, described in more detail as follows:

Hydronic
Products consist of residential baseboard heating products, commercial finned tube heating
products, residential boilers, commercial boilers, convectors, kickspace heaters, fan coil
units, steam and hot water unit heaters, copper-finned boilers and water heaters. These
products are sold principally under the Sterling, Vulcan,
Heatrim, Kompak, Petite, Suntemp,
Beacon Morris, Hydrotherm, Airtherm,
Westcast, RBI, and L. J. Wing brand names. Gas and
oil-fired boilers are sold primarily under the RBI and Hydrotherm
brand names operated by subsidiaries of the Company. Westcast, Inc., a wholly owned
subsidiary, is a distributor of gas and oil fired boilers in the commercial and
residential markets sold principally under the name Smith Cast Iron Boilers.
Boyertown Foundry Company (BFC), approximately 97% owned by the Company,
operates a cast-iron foundry in Boyertown, PA, which manufactures products used
principally in the manufacture of oil and gas fired boilers. The hydronic products are
made in manufacturing facilities, in some cases shared with other HVAC Segment Divisions,
in Westfield, MA; South Windsor, CT; Mississauga, Ontario, Canada; Farmville, NC; Forrest
City, AR; Dundalk, MD; and Dallas, TX.

Gas
Products consist of commercial gas-fired heating and ventilating equipment and corrugated
stainless steel gas tubing sold principally under the Sterling and
TracPipe® brand names. The products are made in manufacturing facilities
in Farmville, NC; Dallas, TX; and Exton, PA. Omega Flex, Inc. (Omega), a
wholly owned subsidiary of Mestek, manufactures corrugated flexible stainless steel hose
for use in a wide variety of industrial applications. Its products include annular,
helical and braided metal hose and hose fabrications and are sold primarily through
industrial hose distributors and original equipment manufacturers. Omegas
TracPipe® product line is a corrugated stainless steel tubing developed for use in
piping gas appliances sold primarily for residential and commercial building applications.
The Company has realized significant synergies by distributing TracPipe® through its
extensive HVAC distribution network. International distribution of the TracPipe®
product began in 2002 and is expected to contribute to segment operating profits in 2004.
Industrial Products consist of commercial and industrial indoor and outdoor heating,
ventilating and air conditioning products sold principally under the Applied
Air, King, L. J. Wing, Temprite,
Alton and Aztec brand names. The products are made in
manufacturing facilities in Dallas, TX. Recently, the Company transferred certain King
product lines from Bishopville, SC to Dallas, TX in connection with the closing of the
Bishopville facility.

Cooling
Products consist of niche residential and commercial air conditioning products principally
sold under the Spacepak and Koldwave brand names. The products are
made in manufacturing facilities in Wrens, GA and Dundalk, MD. Air Distribution Products
consist of fire, smoke and air control dampers, louvers, grilles, registers, VAV boxes and
diffusers sold principally under the American Warming and Ventilating,
Air Balance, Arrow, Louvers & Dampers (L &
D)", Cesco and Anemostat brand names. Air distribution
products are devices designed to facilitate the ventilation and safety of buildings,
tunnels and other structures or to control the movement of air through building ductwork
in the event of fire or smoke and, in some cases, wind or rain. The products are made in
manufacturing facilities in Bradner, OH; Waldron, MI; San Fernando, CA; Wyalusing, PA;
Milford, OH; Florence, KY; Wrens, GA; and Carson, CA. In November 2003, the Company closed
substantially all of its operations in Scranton, PA, leaving in place its laboratory and
testing facilities and some sales, marketing, and engineering facilities. The Company sold
its Air Clean Dampers product line, including operating assets and related intellectual
property, manufactured in Milford, OH on March 30, 2004 at a nominal gain.

Collectively,
the HVAC Segments products provide heating, cooling, ventilating, or some
combination thereof, for a wide range of residential, commercial and/or industrial
applications.

Through
its design and application engineering groups, the HVAC Segment often custom designs and
manufactures many HVAC products to meet unique customer needs or specifications not met by
existing products. Such custom designs often represent improvements on existing technology
and often are incorporated into the HVAC Segments standard line of products.

The
HVAC Segment sells its HVAC products primarily through a diverse group of independent
representatives throughout the United States and Canada, many of whom sell several of the
Segments products. These independent representatives usually handle various HVAC
products made by manufacturers other than the Company. These representatives are typically
granted an exclusive or semi-exclusive right to solicit orders for specific HVAC Segment
products from customers in a specific geographic territory. Because of the diversity of
the HVAC Segments product lines, there is often more than one representative in a
given territory. Representatives work closely with the HVAC Segments sales managers,
product managers and its technical personnel to meet customers needs and
specifications. The independent representatives are compensated on a commission basis, but
also at times purchase such products for resale. HVAC products are sold primarily to
contractors, installers, and end users in the construction industry, wholesale
distributors and original equipment manufacturers. Additional buying influences include
consulting engineers, architects and building owners. While the HVAC Segments HVAC
products are distributed throughout the United States and Canada, sales in the northeast,
mid-Atlantic and upper mid-west states are somewhat higher than would be suggested by
unadjusted construction statistics in any given year due to the relative popularity of
hydronic products in these areas. The sale of heating and cooling products is sensitive to
climatic trends in that relatively warm winters and/or cool summers can adversely affect
sales volumes.

The
HVAC Segment sells gas-fired and hydronic heating and ventilating products, boilers and
other HVAC equipment in Canada and also sells its products in other foreign markets from
time to time. Total export sales did not exceed ten percent of total revenues, nor did
foreign assets exceed ten percent of total assets, in any of the most recent five years
ended December 31, 2003.

The
HVAC Segment uses a wide variety of materials in the manufacture of its products, such as
copper, aluminum and steel, as well as electrical and mechanical components (controls,
motors) and other products, including cardboard for packaging. Commodities markets in
general and these commodities in particular have seen significant upward price movement,
resulting in increasing costs to manufacture products and tightening supply. Management
believes that it has adequate sources of supply for its raw materials and components and
has not had significant difficulty in obtaining the raw materials, component parts or
finished goods from its suppliers although many steel distribution centers are now on
allocation from steel mills. No industry segment of the Company is dependent on a single
supplier, the loss of which would have a material adverse effect on its business.
Marketplace conditions may not allow the Company to pass along raw materials or component
part price increases to its customers.

The
businesses of the HVAC Segment are highly competitive. The Company believes that it is the
largest domestic manufacturer of hydronic baseboard heating for residential and commercial
purposes and is one of the three leading manufacturers of commercial and industrial
gas-fired heating and air distribution products. The Company has established itself in the
market for cast-iron boilers in 1991 and 1992, developing strength in the commercial
market and in the copper-finned boiler business through a 1998 acquisition and significant
product and market development. The Company has expanded its portfolio of air control and
distribution products substantially over the last several years, largely by acquisition.
Nevertheless, in all of the industries in which it competes, the Company has competitors
with substantially greater manufacturing, sales, research and financial resources than the
Company has. Competition in these industries is based mainly on price, product offering,
distribution and merchandising capability, technical and customer service, ability to
provide electronic tools to specify products and track orders, and quality and ability to
meet customer requirements. The Company believes that it has achieved and maintained its
position as a substantial competitor in the HVAC industry largely through the strength of
its extensive distribution network, the breadth of its product line and its ability to
meet customer delivery and service requirements. Most of its competitors offer their
products in some but not all of the industries served by the HVAC Segment.

The
periodic results of operations of the HVAC Segment are affected by the construction
industrys demand for heating equipment, which generally peaks in the last four
months of each year (the heating season), and, to a lesser extent, industrial
demand for cooling equipment during summer months in the northeast and year round in the
south and southwest. Accordingly, sales are usually higher during the heating season, and
such higher levels of sales may in some years continue into the following calendar year.
As a result of these seasonal factors, the Companys inventories of finished goods
and accounts receivable reach higher levels during the heating season and are generally
lower during the balance of the year.

BACKLOG

Management
does not believe that backlog figures relating to the HVAC Segment are material to an
understanding of its business because most equipment is shipped promptly after the receipt
of orders.

PATENTS/TRADEMARKS

The
Company owns a number of United States and foreign patents. Although the Company usually
seeks to obtain patents where appropriate, it does not consider any segment materially
dependent upon any single patent or group of related patents. The HVAC Segment trademarks
have been described above.

RESEARCH AND DEVELOPMENT

Expenditures
for research and development for the HVAC Segment in 2003, 2002, and 2001, were
$4,596,000, $4,410,000, and $4,266,000, respectively. Product development efforts are
necessary and ongoing in all product markets.

INTERNATIONAL

The
HVAC Segment sells products in Europe including  the United Kingdom, in Canada and to a
lesser extent in other parts of the world. Total export sales of the HVAC Segment do not
exceed ten percent (10%) of the total revenues of the Segment.

# METAL FORMING SEGMENT

The
Metal Forming Segment, operating under the umbrella name Formtek, is comprised
of several closely related entities, all manufacturers, remanufacturers or distributors of
equipment used in the Metal Forming industry (the uncoiling, straightening, leveling,
feeding, forming, bending, notching, stamping, cutting, stacking, bundling or moving of
metal in the production of metal products, such as steel sheets, office furniture, heating
and air conditioning ducts, appliances, vehicles, buildings, and building components,
among many others).

The
entities are: (1.) Formtek Maine, a division of Formtek, Inc. including the
Cooper-Weymouth, Petersen (CWP), Rowe, and CoilMate/Dickerman product lines;
(2.) Formtek Cleveland, Inc., a subsidiary of Formtek, Inc. including the Yoder,
Dahlstrom, B & K, Krasny-Kaplan and Mentor product lines; (3.) Hill Engineering Inc.,
providing tools and dies complementary to the other subsidiaries product lines and gasket
tooling and tool maintenance for the automotive industry; (4.) Met-Coil Systems
Corporation, comprised of the Lockformer and Iowa Precision (IPI) divisions,
(5) Iowa Rebuilders, Inc., (6) Formtek Metalforming Integration, Inc., and (7) Formtek
Machinery (Beijing) Company Ltd., a Chinese wholly foreign owned enterprise.
In addition, Axon Electric LLC, and Engel Industries, Inc., direct subsidiaries of Mestek,
Inc., make up part of this Segment.

The
Metal Forming Segments products are sold through factory direct sales and
independent dealers, in most cases to end-users and in some cases to other original
equipment manufacturers. The core technologies are processing equipment for roll forming,
coil processing (for stamping, forming and cut-to-length applications), metal duct
fabrication and tube and pipe systems. The products include roll formers, roll forming
systems, wing benders, air, mechanical and hydraulic presses, servo-feeds, straighteners,
cradles, reels, coil feeding systems, cut-to-length lines, flexible fabrication systems,
duct forming systems, rotary shearing, specialty dies, tube cut-off systems, hydraulic
punching, blanking and cutoff systems, rotary punching, flying cut-off saws, plasma
cutting equipment, tube mills, pipe mills and sophisticated material handling systems
including automated vehicle guidance systems. The primary customers for such metal
handling and metal forming equipment include sheet metal and mechanical contractors, steel
service centers, contract metal-stampers, contract roll formers, and manufacturers of
large and small appliances, commercial and residential lighting fixtures, automotive parts
and accessories, office furniture and equipment, tubing and pipe products, metal
construction products, doors, windows and screens, electrical enclosures, shelves and
racks and metal ductwork. The Segments products are manufactured in facilities
having approximately 430,000 square feet of manufacturing space, located in Clinton, ME;
Bedford Heights, OH; Warrensville Heights, OH; Villa Park, IL; Lisle, IL; Cedar Rapids,
IA; Danville, KY; South Elgin, IL; St. Louis, MO; and Beijing, China. The Segment closed
and consolidated into the Cleveland, OH area facilities its Schiller Park, IL facility in
2001. A centralized office for marketing, market development and international sales was
opened in Itasca, IL in late 2002. No single customer accounts for sales in the aggregate
of 10% or more of consolidated revenue.

The
Company believes it has improved its competitive position within the metal forming
marketplace by developing high quality equipment with electronic and software controls,
affording diagnostic, performance and operational features, as well as by the strategic
acquisitions made in recent years, which broadened the Metal Forming Segments
overall product offerings, created cross-selling opportunities, afforded synergies in
sales/marketing and field service and allows the Segment to offer sophisticated metal
forming solutions that reduce scrap, improve quality, increase throughput, shorten set up
or changeover time, reduce downtime, reduce operator involvement and allow a wider variety
of products to be processed. Cooperative marketing, market development, new product
development and international sales and administration also strengthen the individual
business units.

The
start-ups of two rebuilding operations (Formtek Metalforming Integration and Iowa
Rebuilders) an electrical distributor (Axon Electric) and a Beijing-based assembly
facility (Formtek Machinery (Beijing)) will allow the Company to maintain and expand its
core competencies, positioning this Segment very well for the next cyclical upturn in the
machine tool industry.

Many
products made by these units are custom designed and manufactured or the result of applied
engineering in order to meet unique customer needs or specifications not currently met by
existing products. These products, developed by the Segments development, design and
application engineering groups, often represent improvements on existing technology and
are often then incorporated into the standard product line.

The
businesses of the Segment are highly competitive and, due to the nature of the products,
are significantly more cyclical (due to changes in manufacturing capacity utilization and
the cost and availability of financing) than the Companys other operating Segment.
CWP, Rowe, CoilMate/Dickerman, and IPI have a strong presence in the manufacture of coil
processing equipment through their broad and competitive product lines, together with
Formteks customer-driven application engineering and ability to meet customer
delivery and service requirements through separate extensive distribution networks.
Dahlstrom, B & K, Yoder and Lockformer are well-established names in the roll former
market place. The Company believes that the critical mass created by the recent
acquisitions of Engel Industries, Inc. and SNS (now known as Formtek Cleveland, Inc.) will
allow it to more fully leverage its large installed customer base in the sale of
equipment, service and repair parts.

Like
the HVAC Segment, the Metal Forming Segment uses a wide variety of raw materials and
components incorporating raw materials which are experiencing upward price pressure and
commodity shortages threats. The Company, however, believes that its relationship with
materials and component suppliers will assure an adequate supply for its forecast
production in 2004.

The
companies acquired by the Metal Forming Segment in the past were selected for their
synergies with the existing metal forming franchises: complementary products and
distribution channels, potential manufacturing synergies, shared technologies and
engineering skills, potential purchasing synergies, common field service skills and
organizations, and shared customer bases. The most significant synergistic theme has been
the real and potential common customer base. To a large degree, any historical customer of
one of the companies is a potential customer for any of the others. Exploiting this cross
selling opportunity is a central factor in the creation of the Formtek family of metal
forming products and underscores the Segments goal of creating a single integrated
metal forming and fabricating solution provider for the metal forming and fabricating
marketplace worldwide. In addition, customers appreciate the value of acquiring a system
made up of individual units, integrated through electronic and mechanical controls, rather
than working with a number of suppliers and undertaking their own integration.
Accordingly, there is a substantial degree of inter-company sales among the formerly
separate metal forming companies and the new re-building companies that afford the
opportunity to mix new and used equipment for the economy-minded customer.

BACKLOG

The
backlog relating to the Metal Forming Segment at December 31, 2003 was approximately
$27,800,000, compared to approximately $23,118,000, and $21,539,000 at December 31, 2002
and 2001, respectively.

PATENTS/TRADEMARKS

The
units comprising this Segment own a number of United States and foreign patents, but the
Segment does not consider itself materially dependent upon any single patent or group of
related patents. The Lockformer and IPI units had certain patent protections expire in
2002 and 2001, but do not expect a significant decrease in sales due to the engineering of
cost reductions and strong distribution. The B & K unit expects to capitalize on
recently issued patents for its Supermill, Rotary Punch and Rotary Shear products that the
Company believes will be a productivity breakthrough for the steel framing segment of the
metal building market once established.

RESEARCH AND DEVELOPMENT

Expenditures
for research and development for this Segment in 2003, 2002, and 2001 were $1,150,000,
$922,000, and $711,000, respectively.

INTERNATIONAL

The
Metal Forming Segment sells equipment in Canada, Mexico and other foreign markets. Total
export sales did not exceed ten percent (10%) of the total revenues, nor did foreign
assets exceed ten percent (10%) of total assets in any of the most recent five years
ending December 31, 2003.

SEGMENT INFORMATION

Selected
financial information regarding the operations of each of the above Segments, consistent
with statement of Financial Accounting Standard No. 131 and Section 101 (d) of Regulations
S-K, is presented in Note 14, Segment Information, of our Consolidated Financial
Statements.

ENVIRONMENTAL MATTERS

The
Company is subject to numerous laws and regulations that govern the discharge and disposal
of materials into the environment. Except as described below in Item 7 under the heading
Unusual Events  Subsidiary Bankruptcy and Environmental Matters and in
Note 13, Commitments and Contingencies, of our Consolidated Financial Statements,
including the matters related to the discharge of trichloroethylene (TCE) onto or into the
soil of The Lockformer Company division (Lisle, IL) of the Companys second tier
subsidiary, Met-Coil Systems Corporation (Met-Coil), the Company is not aware,
at present, of any material administrative or judicial proceedings against the Company
arising under any Federal, State or local environmental protection laws.

For
discussion of the Companys alleged liability for asbestos-related products, see also
Item 7 and Note 13, Commitments and Contingencies, of our Consolidated Financial
Statements.

The
Company is engaged in various matters with respect to obtaining, amending or renewing
permits required to operate each of its manufacturing facilities. Management does not
believe that a denial of any currently pending permit application would have a material
adverse effect on the companys financial position or the results of operations.

SUBSIDIARY BANKRUPTCY

As
previously disclosed in the Companys quarterly report on Form 10-Q for the period
ended September 30, 2003, on August 26, 2003, as a result of the claims and proceedings
relating to the alleged release and presence of TCE onto or into the soil of The
Lockformer Company, Met-Coil filed a voluntary petition for relief under Chapter 11 of
Title 11 of the United States Code (the Bankruptcy Code) as more fully
discussed below in Item 7 under the heading Unusual Events  Subsidiary
Bankruptcy and Environmental Matters and in Notes 13 and 18 to the Consolidated
Financial Statements.

# Item 2  PROPERTIES

The
HVAC Segment of the Company manufactures equipment at plants that the Company or its
subsidiaries own in Waldron, MI; Bradner, OH; Wyalusing, PA; Dundalk, MD; Wrens, GA;
Milford, OH; Dallas, TX; Exton, PA and Boyertown, PA. The Companys Scranton, PA
plant has been closed (other than for laboratory and office use) and is reflected in the
accompanying financial statements under the heading Property Held For Sale.
The Companys Bishopville, SC plant has been closed and is presently leased to an
unrelated party. The HVAC Segment operates plants that it leases from entities owned
directly or indirectly by certain officers and directors of the Company in Westfield, MA;
Farmville, NC; and South Windsor, CT. The HVAC Segment leases manufacturing space from
unrelated parties in Mississauga, Ontario, Canada; Carson, CA; San Fernando, CA; Florence,
KY; St. Louis, MO; and Forrest City, AR; as well as a regional distribution facility in
Mississauga, Ontario, Canada.

The
Metal Forming Segment manufactures products at plants the Company owns in Clinton, ME;
Villa Park, IL; Schiller Park, IL (closed in 2001, sold in 2002); Danville, KY; Cedar
Rapids, IA; Lisle, IL; South Elgin, IL; Bedford Heights, OH; and St. Louis, MO, and leases
manufacturing space in Cedar Rapids, IA; Warrensville Heights, OH and Beijing, China and
office space in Itasca, IL; Warrensville Heights, OH; New Bremen, OH; and Shanghai, China.

The
Companys principal executive offices in Westfield, MA are leased from an entity
beneficially owned by an officer and director of the Company. The Company also owns an
office building in Holland, OH.

In
addition, the Company and certain of its subsidiaries lease other office space in various
cities around the country for use as sales offices.

Certain
of the owned facilities are pledged as security for certain long-term debt instruments.
See Property and Equipment, Note 5 to the Consolidated Financial Statements. See Note 19
to the Consolidated Financial Statements relative to Plant Shutdown expense.

# Item 3  LEGAL
PROCEEDINGS

The
Company is not presently involved in any litigation that it believes could materially and
adversely affect its financial condition or results of operations except as
described in Item 7  Managements Discussion and Analysis of Financial
Condition and Results of Operations-under the Sub-caption UNUSUAL EVENTS and
in Note 13 of the Companys Consolidated Financial Statements, which are a part of
this Annual Report on Form 10-K.

# Item 4  SUBMISSION
OF MATTER TO A VOTE OF THE SECURITY HOLDERS

No
matters were submitted to the security holders of the Company for a vote during the fourth
quarter of 2003.

---

# PART II

# Item 5  MARKET FOR
REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Mesteks
common stock is listed on the New York Stock Exchange, under the symbol MCC. The number of
shareholders of record as of March 31, 2004, based on inquiries of the registrants
transfer agent, was 941. For this purpose, shareholders whose shares are held by brokers
on behalf of such shareholders (shares held in street name) are not separately
counted.

The
high and low prices of the Companys common stock for the quarterly periods during
2003 and 2002, as reported in the consolidated transaction reporting system, were as
follows:

|               |  | PRICE RANGE |  |       
|-------------- |  | ----------- |  | ------
|
|
|First Quarter  |  |             |  | $18.35
|Second Quarter |  |             |  | $19.10
|Third Quarter  |  |             |  | $20.39
|Fourth Quarter |  |             |  | $20.63

Mestek
has not paid any cash dividends on its common stock since 1979.

No
securities issued by Mestek, other than common stock, are listed on a stock exchange or
are publicly traded.

Our
future decisions concerning the payment of dividends on our common stock will depend upon
our results of operations, financial condition and capital expenditure plans, as well as
such other factors as the Board of Directors, in its sole discretion, may consider
relevant. In addition, our existing indebtedness restricts, and we anticipate our future
indebtedness may restrict, our ability to pay dividends.

The
remaining information called for in the item relating to Securities Authorized for
Issuance under Equity Compensation Plans is reported in Note 17 to the Consolidated
Financial Statements and in the Companys Proxy Statement relating to the Annual
meeting of shareholders to be held on May 25, 2004, under the caption Executive
Compensation. With respect to 2003, no equity compensation plans have been or
currently are submitted for stockholder approval.

# Item 6  SELECTED
FINANCIAL DATA

Selected
financial data for the Company for each of the last five years is shown in the following
table, which is derived from and should be read in conjunction with the Consolidated
Financial Statements included elsewhere in this report. Selected financial data reflecting
the operations of acquired businesses is shown only for periods following the related
acquisition. (2)

---

|SUMMARY OF FINANCIAL POSITION as of December 31, |          |          |          |          |         
|------------------------------------------------ | -------- | -------- | -------- | -------- | --------
|
|
|
|
|Total assets                                     | $246,670 | $220,301 | $259,511 | $293,489 | $242,253
|Working capital                                  | 8,047    | 52,141   | 45,978   | 25,442   | 63,340  
|Total debt                                       | 22,449   | 11,666   | 30,182   | 63,658   | 34,791  
|Shareholders' equity                             | 95,473   | 137,714  | 168,623  | 162,872  | 148,225 
|                                                
|Shareholders' equity per common share (1)        | $10.95   | $15.79   | $19.33   | $18.63   | $16.92  

|SUMMARY OF OPERATIONS - for the years ended December 31, |           |           |          |          |         
|-------------------------------------------------------- | --------- | --------- | -------- | -------- | --------
|
|
|
|
|Revenues from Continuing Operations                      | $366,513  | $373,874  | $394,103 | $375,987 | $328,145
|Income (Loss) from Continuing Operations                 | (43,165)  | (1,071)   | (2,633)  | 15,984   | 17,381  
|Cumulative Effect of a Change in Accounting             
|Principle-Goodwill Impairment                            | ---       | (29,334)  | ---      | ---      | ---     
|Discontinued Operations                                  | ---       | ---       | 8,947    | 666      | 251     
|Net (Loss) Income                                        | ($43,165) | ($30,405) | $6,314   | $16,650  | $17,632 
|                                                        
|Earnings (Loss) per Common Share:                       
|Basic Earnings (Loss) per Common Share:                 
|Continuing Operations                                    | ($4.95)   | ($0.12)   | ($0.30)  | $1.83    | $1.96   
|Cumulative Effect of a Change in Accounting             
|Principle-Goodwill Impairment                            | ---       | (3.36)    | ---      | ---      | ---     
|Discontinued Operations                                  | ---       | ---       | 1.02     | 0.07     | 0.03    
|Net (Loss) Income                                        | ($4.95)   | ($3.48)   | $0.72    | $1.90    | $1.99   
|Diluted Earnings (Loss) Per Common Share                
|Continuing Operations                                    | ($4.95)   | ($0.12)   | ($0.30)  | $1.82    | $1.96   
|Cumulative Effect of a Change in Accounting             
|Principle-Goodwill Impairment                            | ---       | (3.36)    | ---      | ---      | ---     
|Discontinued Operations                                  | ---       | ---       | 1.02     | 0.08     | 0.03    
|Net (Loss) Income                                        | ($4.95)   | ($3.48)   | $0.72    | $1.90    | $1.99   

| | (1) | Equity per common share amounts are computed using the common shares outstanding
                    as of December 31, 2003, 2002, 2001, 2000, and 1999.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Includes the results of acquired companies or asset acquisitions from the date
                    of such acquisition, as follows:
| | --- | -----------------------------------------------------------------------------------------------------------------------------------

| | Engel
Industries, Inc. from August 29, 2003 King Company from December 31, 2001 Formtek
Cleveland, Inc. from July 2, 2001 Airtherm LLC from August 25, 2000 Louvers & Dampers,
Inc. from June 30, 2000 Met-Coil Systems Corporation from June 3, 2000 B & K Rotary
Machinery from February 10, 2000 Cesco Products from January 28, 2000 Air Clean Dampers
from May 7, 1999 Anemostat from March 26, 1999
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

# Item 7 
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

# OVERVIEW

The
Company derives its revenues primarily from the sales of Company-manufactured products in
its HVAC Segment and machinery and repair parts in its Metal Forming Segment. In both
Segments the sale of service generates a relatively small component of total net sales.
Within the HVAC Segment most, but not all, of the products sold involve sheet metal
fabrication, cast iron production, and machining or assembly or stainless steel
fabrication.

The
Company is not dependent on any one customer in either of its Segments for more than 10%
of its consolidated revenues, nor does it derive more than 10% of its consolidated
revenues internationally.

The
Companys HVAC Segment reflects the seasonal nature of a company engaged in heating
products sales, although the broadening of its product offering over the past 10 years to
include cooling products, air handling products and corrugated stainless steel tubing has
made the seasonal curve of the Segments revenue stream somewhat less attenuated.

The
Companys Metal Forming Segment operates within the highly cyclical capital goods
marketplace and reflects the challenges not only with respect to cycling of demands but
also the globalization of the customer base as well as the competitor base, requiring it
to seek a more international focus in supply, manufacturing, sales and marketing. The
Company operates principally within the North American marketplace. However, the Company
does foresee the need for growth both in sales and production in both Europe and Asia.

As
discussed above in Item 1, fluctuations in the metal commodities market in particular can
have significant impacts on the Companys cost structure and may affect profitability
with respect to revenues based on fixed-price contracts with Company customers, or derived
in markets where our pricing cannot be readily adjusted.

The
Company operates in highly competitive markets. While many companies, both larger and
smaller than we are, sell many of the same products and services, our competitive position
is not easily determinable in either of our Segments since no one competitor or group of
competitors offers the same product lines through the same channels. Competitors in both
of our Segments compete primarily through product quality and performance, price, service
(both pre- and post-sale) and technical innovation. The relative importance of these
factors varies from product line to product line.

An
important part of the Companys business strategy is to look for niche areas where
larger competitors in the HVAC arena choose not to focus, or, with respect to our Metal
Forming Segment, where strategic enhancement of product offering will result in a more
competitive position in the marketplace, and, through acquisition or product development,
the Company seeks to address these opportunities. As a part of this process, we
continually review our stable of subsidiary or divisional companies and product lines,
evaluating them with respect to allocation of resources for growth, resuscitation or sale.
Our history over the past twenty years has been growth often through acquisition and this
process continues, as does the occasional divestiture or closing of a company or facility.

As
will be more specifically discussed below, the strength or weakness in the construction
markets directly affects our HVAC business and strength or weakness in the capital goods
markets directly affects our Metal Forming business. In 2003, residential construction was
strong, institutional construction was flat and industrial/commercial construction was off
from prior periods. In the capital goods sector, despite early signs of health, orders for
machinery and machine tools remained volatile, averaging at levels comparable to 2002 but
significantly lower than the periods prior to 2000, resulting in a mixed year for this
Segment of the Companys results of business.

For
2004, the Companys Segment budgets are based upon an overall stability expected in
the construction markets, though the mix of residential, commercial, industrial and
institutional construction spending may change, and a continuation of the upturn in
capital spending, driven in part by the pent-up demand resulting from deferred maintenance
as well as increased manufacturing production utilizing the kind of machinery we sell.
However, rising commodity prices, especially steel, copper and natural gas, are expected
to contribute to upward inflationary pressure, which may also push interest rates higher.
While the Company itself has not historically been highly leveraged and thus cost of
capital has not been as significant a factor in the Companys cost structure as it
may be in other companies, increases in interest rates could slow the domestic residential
construction market or contribute to further declines in the commercial and industrial
construction markets, as well as adversely affect the capital goods market recovery.
Increased shipping costs and benefits expense (primarily health care) are also expected to
have a dampening effect on economic growth, which would have an adverse effect on the
Companys operations.

# NON-GAAP FINANCIAL
MEASURES

# RETURN ON AVERAGE NET
ASSETS EMPLOYED

# 2003, 2002, 2001

The
following analysis of the Companys Results of Operations focuses on the relationship
of Core Operating Profits, a Non-GAAP Financial Measure, as
defined below, to Average Net Assets Employed, as defined below. Management believes this
focus, which is essentially an enterprise value point of view, is more useful
to investors as it isolates and relates the Companys ongoing pre-tax, pre-interest,
operating earnings to the total capital invested, whether debt or equity capital.

The
Companys Operating Profits in 2003 and 2002, as reflected in the accompanying
Consolidated Financial Statements, included disproportionately large Environmental Charges
of $53,665,000 and $18,046,000, respectively, which relate to a particular environmental
litigation matter which is discussed separately herein and which is therefore excluded
from the definition of Core Operating Profits as used herein. Similarly
excluded from the definition of Core Operating Profits in 2003 is $5,963,000 in Subsidiary
Bankruptcy Professional Fees, $5,239,000 in Plant Shutdown and Other Restructuring
Charges, and $9,975,000 in Goodwill Impairment charges, all of which are also discussed
separately herein. Core Operating Profits, as the term is used herein, is defined as
Operating Profits determined in accordance with Generally Accepted Accounting Principles,
as reflected in the accompanying financial statements, plus the aforementioned excluded
charges. Core Operating Profits are intended to be representative of the ongoing
historical pretax, pre-interest, operating earnings stream contained in the Companys
HVAC and Metal Forming businesses. The Environmental Charges and Subsidiary Bankruptcy
Professional Fees which are excluded from the definition of Core Operating Profits relate
to a specific circumstance involving an alleged release of pollutants at a location owned
by a subsidiary prior to the acquisition of that subsidiary by the Company which is
discussed in detail herein under the heading UNUSUAL EVENTS. Management
believes that an analysis of the Companys results of operations independent of the
costs related to this particular matter is beneficial to the reader.

Managements
intent in defining Core Operating Profits in this manner is to assist
shareholders and other investors by separating the underlying operating earnings from
unusual or otherwise anomalous events. The Company operates as a manufacturer
in the HVAC and Metal Forming equipment market places. While subject to the effects of the
business cycle, these are nonetheless mature industries characterized historically by
evolutionary rather than sudden technological change and management believes therefore
that its Core Operating Profits have historically been somewhat more
predictable in nature than has been the case in other industries. It is not
Managements intent to suggest that unusual or anomalous events will not
in some form recur in the future, or that such prospects are not relevant to valuation,
only that the isolation of Core Operating Profits in such mature industries is
useful to investors in their evaluation of the Companys performance.

---

Core
Operating Profits, as defined, represents a Non-GAAP financial measure
which is reconcilable with the comparable GAAP financial measure, Operating
(Loss) Profits, as follows:

|                                                      | 2003      | 2002    | 2001   
|----------------------------------------------------- | --------- | ------- | -------
|
|
|Core Operating Profits (Non-GAAP financial measure)   | $ 14,094  | $18,751 | $15,366
|Less: Environmental Charges                           | 53,665    | 18,046  | 2,000  
|Less: Subsidiary Bankruptcy Professional Fees         | 5,963     | ---     | ---    
|Less: Goodwill Impairment                             | 9,975     | ---     | ---    
|Less: Plant Shutdown and Other Restructuring Charges  | 5,239     | ---     | 1,774  
|Operating Profits (Comparable GAAP financial measure) | ($60,748) | $705    | $11,592

The
Companys Return on Average Net Assets Employed, defined as Core Operating Profits,
over Average Net Assets Employed From Continuing Operations (Total Assets less Current and
Non Current Liabilities-other than Current and Non Current Portions of Long-Term
Debt-averaged over 12 months) for the years 2003, 2002, and 2001 was as follows:

|                                                       | 2003      | 2002      | 2001     
|------------------------------------------------------ | --------- | --------- | ---------
|
|
|Core Operating Profits (Non-GAAP financial measure)    | $  14,094 | $  18,751 | $  15,366
|Average Net Assets Employed from Continuing Operations | $158,295  | $167,440  | $201,676 
|Return on Average Net Assets Employed                  | 8.9%      | 11.2%     | 7.6%     

Average Net Assets Employed from
Continuing Operations in 2003 was further adjusted to exclude the effect of Environmental
Litigation and Remediation Reserves (such that these reserves, including their deferred
tax effects, are not treated as having reduced Net Assets Employed) as more fully
described in Unusual Events herein and in Notes 13 and 18 to the accompanying Consolidated
Financial Statements.

The
reduction in overall Return on Average Net Assets Employed from 11.2% in 2002 to 8.9% in
2003 reflected two significant themes:

| | 1. | Continuing economic softness in the machine tool industry in which the
               Companys Metal Forming Segment operates during which time the Segment
               continued to invest in product and market development in anticipation of
               economic recovery.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | Final year operating losses incurred at the HVACs Segments Anemostat
               (Scranton, PA) and King Company (Bishopville, SC) locations which were closed
               and relocated in 2003.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# RESULTS OF OPERATIONS

# ANALYSIS: 2003 VS. 2002

# HVAC SEGMENT:

The
Companys HVAC Segment reported comparative results from continuing operations for
2003 and 2002 as follows:

|                                                      | 2003     | 2003    | 2002     | 2002   
|----------------------------------------------------- | -------- | ------- | -------- | -------
|
|
|Net Sales                                             | $299,201 | 100.00% | $307,585 | 100.00%
|Gross Profit                                          | $88,906  | 29.71%  | $93,176  | 30.29% 
|Core Operating Profits (a non-GAAP financial measure) | $18,949  | 6.33%   | $21,801  | 7.08%  
|Average Net Assets Employed (ANAE)                    | $126,630 |         | $130,150 |        
|Return on ANAE                                        | 14.96%   |         | 16.75%   |        

The
HVAC Segments revenues by product group were as follows for 2003 and 2002:

|                                      | 2003     | 2002    
|------------------------------------- | -------- | --------
|
|
|Hydronic Products                     | $120,793 | $115,160
|Air Distribution and Cooling Products | 82,994   | 90,502  
|Gas and Industrial Products           | 95,414   | 101,923 
|Segment Total                         | $299,201 | $307,585

The Hydronic Product Groups sales increased in 2003 due to strong commercial boiler product sales which
offset weakness in the market for
certain commercial hydronic products, including finned tube and related products. The Air
Distribution and Cooling Products Groups revenues were impacted negatively in 2003
by the closure and relocation of the Anemostat (Scranton, PA) manufacturing facility
accounting for the majority of the revenue drop in this Product Group. The Gas &
Industrial Products Groups revenues were similarly affected in 2003 by the closure
and relocation of the King Company (Bishopville, SC) manufacturing facility, accounting
for the majority of the revenue drop in this Product Group.

For
the year as a whole, the HVAC Segments revenues were down 2.72%, from $307,585,000
in 2002, to $299,201,000 in 2003, reflecting the various effects mentioned above.

The
HVAC Segments Air Distribution and Cooling Products Group incurred substantial
incremental costs in its Wrens, GA facility in 2003 relating to the relocation of
Anemostat products to that location. A 25,000 square foot plant addition was completed at
the Wrens, GA location in 2003 to accommodate the relocation, and significant disruptions
to the existing product franchises at that location were incurred in the absorption of the
Anemostat product line into the Wrens operations. In addition, continuing softness in
certain commercial construction markets adversely impacted revenues and Return on ANAE for
this Group.

Reflecting
the factors mentioned above, Core Operating Profit, a non-GAAP financial measure, for the
HVAC Segment was reduced by 13.1% from $21,801,000 in 2002 to $18,949,000 in 2003. Core
Operating Profit, a non-GAAP financial measure, is reconcilable with Operating Profit, the
most directly comparable GAAP financial measure, as follows:

|                                                      | 2003    | 2002    
|----------------------------------------------------- | ------- | --------
|
|
|Core Operating Profits (a non GAAP financial Measure) | $18,949 | $21,801 
|Plant Shutdown and Other Restructuring Charges        | (5,239) | ---     
|Operating Profits (Comparable GAAP Financial Measure) | $13,710 | $ 21,801

Sales of Omega Flex,
Inc.'s Trac Pipe® flexible gas piping product and its patented connection system
continued to grow in 2003 sustained by relatively strong single family and multi-family
residential construction activity. TracPipe® is a corrugated stainless steel tubing
product developed especially for use in the piping and installation of gas appliances.

# METAL FORMING SEGMENT:

This
Segment includes a number of established brand names including CWP, Rowe, Dahlstrom, Hill,
CoilMate, Lockformer, and IPI. This Segments results also include the operations of
SNS Properties, Inc. (SNS) (renamed Formtek Cleveland, Inc.) which was acquired on July 2,
2001 and includes the Yoder, Krasny Kaplan and Mentor AGVS businesses which manufacture
sophisticated metal forming equipment, roll-forming equipment, tube mills, pipe mills,
custom engineered material handling equipment, and automated guided vehicle systems. The
Segment acquired 100% of the capital stock of Engel on August 29,
2003 for $5,687,000 after adjustments. Engel is a leading manufacturer of roll forming
equipment whose products are similar to those made by the Lockformer division of Met-Coil
Systems Corporation.

The
Companys Metal Forming Segment reported comparative results from continuing
operations for 2003 and 2002 as follows:

|                                                   | 2003     | 2003    | 2002     | 2002   
|-------------------------------------------------- | -------- | ------- | -------- | -------
|
|
|Net Sales                                          | $ 66,905 | 100.00% | $ 65,855 | 100.00%
|Gross Profit                                       | $ 17,017 | 25.43%  | $ 15,975 | 24.25% 
|Core Operating (Loss) (Non-GAAP financial measure) | ($4,322) | (6.46%) | ($2,492) | (3.78%)
|Average Net Assets Employed (ANAE)                 | $ 31,665 |         | $ 36,943 |        
|Return on ANAE                                     | (13.65)% |         | (6.75%)  |        

directly comparable GAAP financial
measure, as follows:

|                                                             | 2003      | 2002     
|------------------------------------------------------------ | --------- | ---------
|
|
|Core Operating (Loss) (Non-GAAP financial measure)           | ($ 4,322) | ($ 2,492)
|Less: Environmental Charges                                  | 53,665    | 18,046   
|Less: Subsidiary Bankruptcy Professional Fees                | 5,963     | ---      
|Less: Goodwill Impairment                                    | 9,975     | ---      
|Operating (Loss) Profits (Comparable GAAP financial measure) | ($73,925) | ($20,538)

The
Metal Forming Segments products are capital goods used in the handling, forming and
fabrication of sheet metal in various manufacturing applications including those in the
auto, steel service center, stamping and metal appliance and metal office furniture
manufacturing industries, among others. As such, the Segments products are
particularly susceptible to cyclical economic downturns. Reflecting these effects, Net
Sales for the Segment, excluding revenues from Engel,
which was acquired on August 29, 2003, as more fully explained in Note 2 to the
Consolidated Financial Statements, remained depressed relative to historical levels, up
1.6% from 2002, but significantly reduced from a cyclical peak in 2000. The Segments
2003 results reflect the present depressed conditions in the machine tool industry as a
whole.

Core
Operating Profits (Loss) for the Segment in 2003 included approximately $900,000 in
startup and other costs related to the Segments operations in Beijing, the creation
of Formtek Metalforming Integration, Inc. (FMI) and Axon Electric LLC and a number of new
product development and market development efforts undertaken by the Formtek Group located
in Itasca, IL, on behalf of the Segment. Core Operating (Loss) for 2003 also included
operating losses of approximately $950,000 from Engel. Net of these two items, Core
Operating (Loss) for 2003 was comparable to Core Operating (Loss) for 2002, reflecting the
depressed conditions in the machine tool industry which persisted during most of 2003.
Recent signs of economic growth, however, have translated into an improved 2004 outlook.
The Segments sales backlog at February 29, 2004 stood at $30.9 million, up from
$27.8 million at December 31, 2003, $23.7 million at September 30, 2003 and (excluding
Engel) $23.1 million at December 31, 2002.

# CONSOLIDATED RESULTS:

As
a whole, the Company reported comparative results as follows:

|                                               | 2003      | 2003    | 2002      | 2002   
|---------------------------------------------- | --------- | ------- | --------- | -------
|
|
|Net Sales                                      | $366,513  | 100.00% | $373,874  | 100.00%
|Gross Profit                                   | $106,066  | 28.94%  | $109,331  | 29.24% 
|Core Operating Profits (Non-GAAP financial mea | $  14,094 | 3.85%   | $  18,751 | 5.00%  
|Average Net Assets Employed (ANAE)             | $158,295  |         | $167,440  |        
|Return on ANAE                                 | 8.9%      |         | 11.2%     |        

Core Operating Profit (Loss), a
non-GAAP financial measure, is reconcilable with Operating Profit (Loss), the most
directly comparable GAAP Financial Measure, as follows:

|                                                             | 2003      | 2002   
|------------------------------------------------------------ | --------- | -------
|
|
|Core Operating Profit (Non-GAAP financial measure)           | $14,094   | $18,751
|Less: Environmental Charges                                  | 53,665    | 18,046 
|Less: Subsidiary Bankruptcy Professional Fees                | 5,963     | ---    
|Less: Plant Shutdown and Other Restructuring Charges         | 5,239     | ---    
|Less: Goodwill Impairment                                    | 9,975     | ---    
|Operating (Loss) Profits (Comparable GAAP financial measure) | ($60,748) | $705   

The
reduction in Gross Profit margins overall reflects the effect of reduced sales as
explained above.

Sales
expense for the Company as a whole, as a percentage of revenues, increased from 14.34% in
2002 to 14.41% in 2003, reflecting the effect of reduced revenues. General and
Administrative expenses, as a percentage of revenues, increased from 5.89% in 2002 to
6.52% in 2003, reflecting the effect of reduced revenues, and a variety of incremental
expenses associated with the Companys second tier subsidiary, Met-Coil Systems
Corporation and, as well as increased costs associated with environmental litigation and
the bankruptcy process for compliance with the requirements of the Sarbanes-Oxley Act of
2002, and related Securities and Exchange Commission rules and regulations issued pursuant
to the Sarbanes-Oxley Act, and the new Listing Standards of the New York Stock Exchange
also issued, in part, in response to the Sarbanes-Oxley Act. See Note 18 to the
Consolidated Financial Statements. Engineering expense, as a percentage of continuing
revenues, increased slightly, from 4.01% in 2002 to 4.17% in 2003, reflecting the effect
of reduced revenues.

Interest
Expense decreased substantially in 2003, reflecting principally the effects of (1) reduced
investments in inventory and accounts receivable as a result of reduced sales and ongoing
inventory control efforts and (2) positive cash flow from operations, as discussed in more
detail in the Liquidity and Capital Structure section herein. As a result, average
outstanding debt in 2003 was $16.1 million versus $26.6 million in 2002 despite the
acquisition of Engel Industries, Inc. on August 29, 2003 for approximately $5.7 million
and significant spending related to the bankruptcy of the Companys Met-Coil
subsidiary, as more fully discussed in Unusual Events herein and in Note 18 to
the Consolidated Financial Statements.

Income
Tax Expense (Benefit) for 2003 on Income from Continuing Operations, as a percentage of
pretax income (loss), differed substantially from the expected income tax
expense due to the state income tax effects of losses in certain subsidiaries where state
tax benefits from such losses are not available.

# ANALYSIS: 2002 VS. 2001

# HVAC SEGMENT:

The
Companys HVAC Segment reported comparative results from continuing operations for
2002 and 2001 as follows:

|                                   | 2002      | 2002    | 2001      | 2001   
|---------------------------------- | --------- | ------- | --------- | -------
|
|
|Net Sales                          | $307,585  | 100.00% | $313,726  | 100.00%
|Gross Profit                       | $  93,176 | 30.29%  | $  89,226 | 28.44% 
|Operating Profits                  | $  21,801 | 7.08%   | $  21,020 | 6.70%  
|Average Net Assets Employed (ANAE) | $130,150  |         | $135,816 
|Return on ANAE                     | 16.75%    |         | 15.47%    |        

For
the year as a whole, excluding the effects of The King Company (King) which was acquired
on December 31, 2001, the HVAC Segments revenues were down 4.79%, from $313,726,000
in 2001 to $298,674,000 in 2002, reflecting reduced sales of certain air conditioning,
industrial, gas fired heating and air distribution products. The reduced revenues reflect
the continuing downturn in the industrial, and to a lesser extent commercial, construction
marketplace, the effects of certain factory relocations completed in 2002, and, in some
cases, circumstances related to managerial changes made in 2002.

The
HVAC Segments Air Control and Distribution Group continued to incur additional
training and other costs in its Florence, KY facility in 2002 after relocating certain
products to that location in 2001. Significant product development programs, including
laboratory work, remained ongoing in 2002 relative to the Anemostat and Applied Air
business units, contributing to higher engineering costs in the HVAC Segment.

Operating
Profits for the Segment were reduced in 2001 by $636,000 of goodwill amortization.
Comparable Operating Profits for the two years, therefore, were up only
slightly. The improvement in Comparable Operating Profits, however, occurred
despite reduced Net Sales (after adjusting for the acquisition of King on December 31,
2001 as noted above), reflecting the HVAC Segments success in 2002 in its efforts to
reduce overhead in all area, and control its investment in working capital.

Sales
of Omega Flex, Inc.s TracPipe® flexible gas piping product and its patented
connection system continued to grow in 2002, sustained by relatively strong single family
and multi-family residential construction activity. TracPipe® is a corrugated
stainless steel tubing product developed especially for use in the piping and installation
of gas appliances.

# METAL FORMING SEGMENT:

The
Companys Metal Forming Segments results also include the operations of SNS
Properties, Inc. (SNS) (recently renamed Formtek Cleveland, Inc.) which was acquired on
July 2, 2001 and includes the Yoder, Krasny Kaplan and Mentor AGVS businesses which
manufacture sophisticated metal forming equipment, roll-forming equipment, tube mills,
pipe mills, custom engineered material handling equipment, and automated guided vehicle
systems.

The
Companys Metal Forming Segment reported comparative results from continuing
operations for 2002 and 2001 as follows:

|                                                   | 2002     | 2002    | 2001     | 2001   
|-------------------------------------------------- | -------- | ------- | -------- | -------
|
|
|Net Sales                                          | $ 65,855 | 100.00% | $ 79,755 | 100.00%
|Gross Profit                                       | $ 15,975 | 24.25%  | $ 14,419 | 18.08% 
|Core Operating (Loss) (Non-GAAP financial measure) | ($2,492) | (3.78%) | ($5,659) | (7.10%)
|Average Net Assets Employed (ANAE)                 | $ 36,943 |         | $ 65,598 |        
|Return on ANAE                                     | (6.75%)  |         | (8.63%)  |        

Core
Operating (Loss), a non-GAAP financial measure, is reconcilable with Operating (Loss), the
most directly comparable GAAP financial measure, as follows:

|                                                             | 2002      | 2001     
|------------------------------------------------------------ | --------- | ---------
|
|
|Core Operating (Loss) (Non-GAAP financial measure)           | ($ 2,492) | ($ 5,659)
|Less: Environmental Charges                                  | 18,046    | 2,000    
|Operating (Loss) Profits (Comparable GAAP financial measure) | ($20,538) | ($ 7,659)

The
Metal Forming Segments products are capital goods used in the handling, forming and
fabrication of sheet metal in various manufacturing applications including those in the
auto, steel mill, steel service center, stamping and metal appliance and metal office
furniture manufacturing industries, among others. As such, the Segments products are
particularly susceptible to cyclical economic downturns such as that which continued
throughout 2002. In addition, the events of September 11, 2001, in the opinion of
management, have exacerbated the normal recessionary effects of the business cycle by
virtue of their impact on consumer confidence which ultimately impacts the demand for
capital goods. Reflecting these effects, Net Sales for the Segment were down 17.4% from
2001 despite having a full year of operations at Formtek Cleveland, Inc. (f/k/a SNS
Properties) which was acquired on July 2, 2001. If Net Sales were adjusted to incorporate
Formtek Cleveland, Inc.s 2001 pre-acquisition sales, Net Sales would be seen to have
dropped 25.4%.

Core
Operating Profits (Loss) for the Segment in 2001 included $1,526,000 in goodwill
amortization charges. Comparable Core Operating Profits (Loss) therefore
reflected an improvement from ($4,133,000) in 2001 to ($2,492,000) in 2002. The reduction
in operating losses, despite substantially reduced sales, reflects the Metal Forming
Segments progress in 2002 in its efforts to rationalize overhead in all areas in
order to adapt to the current market place for metal forming products worldwide.

The
backlog relating to the Metal Forming Segment at December 31, 2002 was approximately
$23,118,000, compared to approximately $21,539,000 at December 31, 2001.

# CONSOLIDATED RESULTS:

As
a whole, the Company reported comparative results as follows:

|                                                    | 2002      | 2002    | 2001      | 2001   
|--------------------------------------------------- | --------- | ------- | --------- | -------
|
|
|Net Sales                                           | $373,874  | 100.00% | $394,103  | 100.00%
|Gross Profit                                        | $109,331  | 29.24%  | $103,676  | 26.30% 
|Core Operating Profits (Non-GAAP financial measure) | $  18,751 | 5.00%   | $  15,366 | 3.89%  
|Average Net Assets Employed (ANAE)                  | $167,440  |         | $201,676  |        
|Return on ANAE                                      | 11.2%     |         | 7.62%     |        

Core
Operating Profits, a non-GAAP financial measure, is reconcilable with Operating Profits,
the most directly comparable GAAP financial measure, as follows:

|                                                      | 2002    | 2001   
|----------------------------------------------------- | ------- | -------
|
|
|Core Operating Profits (Non-GAAP financial measure)   | $18,751 | $15,366
|Less: Environmental Charges                           | 18,046  | 2,000  
|Less: Plant Shutdown and Other Restructuring Charges  | ---     | 1,774  
|Operating Profits (Comparable GAAP financial measure) | $705    | $11,592
|                                                     

The
improvement in Gross Profit margins overall reflects the successful efforts of the HVAC
and Metal Forming Segments to rationalize manufacturing overhead, as noted above.

Sales
expense for the Company as a whole, as a percentage of revenues, increased from 13.62% to
14.34% and General and Administrative expenses, as a percentage of revenues, increased
slightly from 5.46% to 5.89%. In both cases spending was relatively flat in absolute terms
with the percentage increases traceable to the 5.1% drop in Net Sales on a consolidated
basis. Engineering expense, as a percentage of continuing revenues, increased from 3.31%
to 4.01%, reflecting increased product development costs, as noted above.

Interest
Expense decreased substantially in 2002, reflecting principally the effects of (1) reduced
investments in inventory and accounts receivable as a result of reduced sales and ongoing
inventory control efforts and (2) positive cash flow from operations which reduced debt
overall, as discussed in more detail in the Liquidity and Capital Structure section
herein.

# UNUSUAL EVENTS 
Subsidiary Bankruptcy and Environmental Matters

Bankruptcy 
Met-Coil Systems Corporation

As
disclosed in previous filings, the Lockformer Company (Lockformer), a division
of the Companys second tier subsidiary, Met-Coil Systems Corporation
(Met-Coil), and Mestek directly (under various legal theories) are defendants
in various actions relating to the alleged release and presence of trichloroethylene
(TCE) contamination on and in the vicinity of Lockformers manufacturing
facility in Lisle, IL. On August 26, 2003, Met-Coil filed a voluntary petition for relief
under Chapter 11 of Title 11 of the United States Code (the Bankruptcy Code)
in the United States Bankruptcy Court for the District of Delaware (the Bankruptcy
Court) (Case No. 03-12676-MFW). Met-Coil remains in possession of its assets and
properties and continues to operate its businesses and manage its properties as a
debtor-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy
Code.

As
disclosed in previous filings, a class of residents of approximately 1,400 homes south of
the Lockformer facility filed a class action complaint against Mestek and its subsidiary,
Met-Coil, (Mejdrech, et al. v. The Lockformer Company, et al., filed in the United
States District Court for the Northern District of Illinois, the Mejdrech Class
Action) alleging property damage by reason of contamination of soils, groundwater
and in some cases private drinking water wells. Mestek and Met-Coil have entered into a
letter agreement (the Letter Agreement), dated August 29, 2003, related to a
proposed settlement of the Mejdrech Class Action and a personal injury lawsuit entitled
Schreiber v. The Lockformer Company, et al.  Case No. 02C-6097 (U.S.D.C. for
N.D. Ill.) (the Schreiber Action). Under the Letter Agreement, the various
parties have agreed to the basic framework of a settlement to be set forth in a plan of
reorganization to be submitted by Met-Coil in its pending bankruptcy case, and the
treatment of the Mejdrech class and plaintiffs and the Schreiber Action plaintiff under
such a Plan, all subject to the conditions of the Letter Agreement. The time period of the
original standstill agreement in the Letter Agreement has expired, but no
party has terminated the Letter Agreement. The Letter Agreement may or may not be
finalized in the final reorganization Plan or ultimately approved by the Bankruptcy Court.

Concurrently
with the filing of the Chapter 11 petition on August 26, 2003, Met-Coil filed an adversary
proceeding seeking to stay a series of personal injury actions pending in the United
States District Court of Illinois related to the TCE release (the Illinois
Actions) against Met-Coil, Mestek, and the Met-Coils third-party indemnitee,
Honeywell International, Inc. (Honeywell). The Illinois Actions had been
stayed against Met-Coil upon its filing of its petition, and were subsequently stayed
against the Company as well.

On
November 5, 2003, Mestek and Met-Coil jointly submitted a Plan of Reorganization of
Met-Coil to the Bankruptcy Court (the Plan), and currently an amended Plan and
Disclosure Statement is being prepared for submittal to the Bankruptcy Court. It is the
intention of Met-Coil to seek approval of the amended Plan, which is intended to be
submitted in the second quarter of 2004.

Both
the current Plan and the amended Plan, which Met-Coil and the Company intend to present,
propose to establish various classes of creditors and interests and contemplate the
funding of a capital contribution into Met-Coil by the winning plan sponsor in amounts
sufficient to provide for various distributions to certain of the classes of creditors and
interests. The Plan contemplates and it is expected that the amended Plan will provide for
the issuance of a channeling injunction by the Bankruptcy Court, whereby
future claims relating to personal injury allegedly from TCE contamination of soils, air
or groundwater asserted by persons who resided in a certain geographic area to the south
of the Lockformer facility (the Lockformer Area) would be
channeled to a trust fund to be established for such claims. In the event that
these other claims and potential claims cannot be dealt with in such a Plan in a manner
acceptable to Met-Coil, the Company, and the Bankruptcy Court then the Plan as amended may
not be approved, in which event the proposed settlements may not proceed. Met-Coil is
undertaking to reach settlements with many of its environmental and other creditors in
addition to those tentative and conditional settlements evidenced by the Letter Agreement
described above, so as to monetize as many otherwise un-liquidated claims as possible
prior to seeking acceptance of the Plan as amended.

Bankruptcy
law does not permit solicitation of acceptances of the Plan until the Bankruptcy Court
approves the applicable Disclosure Statement relating to the Plan as providing adequate
information of a kind, and in sufficient detail, as far as is reasonably practicable in
light of the nature and history of the debtor and the condition of the debtors books
and records, that would enable a hypothetical reasonable investor typical of the holder of
claims or interests of the relevant class to make an informed judgment about the Plan.
Accordingly, the disclosure contained in these consolidated financial statements is not
intended to be, nor should it be construed as, a solicitation for a vote on the Plan.
Met-Coil will emerge from Chapter 11 if and when the Plan receives the requisite
stakeholder approval and is confirmed by the Bankruptcy Court and is consummated.

The
other personal injury and property damage lawsuits, the Illinois Actions referenced above,
remain outstanding (including claims made by Honeywell for contribution and
indemnification by the Company and Met-Coil described below).

In
addition, as part of the various environmental litigation relating to the Company and
Met-Coil, Honeywell is seeking indemnification from the Company for losses, including
defense and liability costs, allegedly incurred or to be incurred in connection with the
lawsuits in which it has also been named as a party. Honeywell has asserted claims (the
Honeywell Claims) currently estimated at approximately $5,600,000 in an action
against the Company entitled Honeywell International, Inc. v. Mestek, Inc. and Formtek,
Inc.,Case No. 03-C-6823 (U.S.D.C., N.D. Ill.) originally filed in the Circuit Court
of Cook County, IL. The Company has removed the case to the Illinois Federal District
Court and is vigorously contesting this case.

The
July 2003 jury verdict of compensatory and punitive damages in the amount of $2,368,000 in
another action, Devane, et. al v. The Lockformer Company, 18th Judicial
Circuit Court, DuPage County, IL (Devane), previously disclosed, has
been stayed as a result of the bankruptcy filing of Met-Coil.

The
Illinois Attorney General, in an action (the Attorney General Action)
disclosed in previous filings and brought in the Circuit Court of DuPage County, IL, on
behalf of the State of Illinois, the Illinois Environmental Protection Agency
(IEPA) and other governmental agencies, is seeking to have Met-Coil pay for
the cost of connecting approximately 175 households in the Mejdrech Class Action area
(discussed above) to public water supplies, and pay for the States response and
investigatory costs in this action and civil penalties. No specific monetary claim for
damages or relief is made in the pleadings in this action. Met-Coil is in negotiations
with the Illinois Attorney General on this matter. There is insufficient information
available to management at this time to provide an opinion as to the outcome of these
discussions. The Company has been providing bottled water to certain households still on
wells in the Mejdrech class area.

The
Plan currently contemplates, and it is expected that the amended Plan will provide, that
Met-Coil will continue to fund on-site and specified off-site remediation. The winning
plan sponsor may be required to guarantee some or all of the obligations of Met-Coil in
this regard.

The
Company increased its Environmental Litigation and Remediation Reserve during the three
months ended December 31, 2003 by $19,329,000 to a total at December 31, 2003 of
$50,800,000 as a result of settlement discussions as to amounts that may be required to
settle the various claims related to the Met-Coil bankruptcy, and complete Environmental
Remediation and ongoing monitoring. Accordingly, the financial statements contained in
this report reflect such accrual and reserve included in the caption Liabilities
Subject to Compromise. This reserve has been established in accordance with
Financial Accounting Standard Board Statement No. 5 and Staff Accounting Bulletin No. 92.
However, while this reserve represents managements best estimate of these
liabilities, there is no assurance that it will be adequate, and as previously disclosed,
the resolution of the claims relating to the Lockformer site could have a material adverse
effect on the Companys results of operations and financial position. The proposed
resolution described above, including any additional amounts required to facilitate
acceptance of an amended Plan in the Met-Coil bankruptcy case to address matters outside
the scope of the Letter Agreement, could require the expenditure of funds beyond this
reserve. In addition, there can be no assurance that future claims for personal injury or
property damage will not be asserted by other plaintiffs against Met-Coil and Mestek with
respect to the Lockformer site and facility.

As
additional information and expert opinions become available to management, it may either
be able to revise its estimate of the range of exposure, with appropriate revision to
reserves taken, or continue to believe that no such better estimate is possible at the
time.

Met-Coil
has limited insurance coverage for defense costs and liability associated with these
environmental actions. To date approximately 41% of Met-Coils total out-of-pocket
costs associated with these litigations has been reimbursed by insurance carriers. This
figure does not include any amounts relating to the compensatory or punitive damages
awarded in the Devane case, which have not been paid as of the date of this filing
and certain aspects of which were on appeal at the time that the automatic stay occurred
as a result of Met-Coils filing of its bankruptcy petition on August 26, 2003. Many
of Met-Coils insurance carriers have negotiated a complete settlement with Met-Coil
and are no longer liable for payment of either defense costs or indemnification expense.
Consistent with EITF 93-5, the Company has treated insurance recoveries, whether of
defense costs or in relation to indemnity obligations, on a cash basis except where
settlements that are not subject to further litigation have been reached with insurance
carriers as of quarter end or year end, in which cases receivables have been appropriately
accrued. Accordingly, while there is potential for substantial additional recoveries from
its remaining insurers, with each of whom it either has reached a proposed settlement or
continues in negotiations, no such recoveries have been included in the accompanying consolidated
financial statements.

Summary of Reserves

Met-Coil
is continuing remediation of the Lockformer facility in Lisle, IL, pursuant to a Work Plan
for the site (on-site remediation) approved by the Environmental Protection
Agency (EPA) and is awaiting approval of the remedial standards to be achieved
by such Work Plan from the IEPA. The IEPA has not agreed to any specific target level of
remediation. To date, substantial soil remediation has occurred in areas under and
adjacent to the Lisle facility through both soil vapor extraction and electric resistive
heating processes. Groundwater remediation remains to be accomplished and a work plan for
this is being prepared for submission to regulatory authorities. In the year ended
December 31, 2003, Met-Coil paid $3,178,000 for on-site remediation, and has reserved
$7,632,000 for future remediation costs as of December 31, 2003. This amount is included
in the accompanying financial statements in the heading Liabilities Subject to
Compromise. In light of the remaining uncertainties surrounding the effectiveness of
the available remediation technologies and the future potential changes in remedial
objectives and standards, still further reserves may be needed in the future with respect
to the on-site remediation of the Lisle facility. The complexity of aforementioned factors
makes it impossible to further estimate any additional costs.

The
Companys Environmental Litigation and Remediation Reserve of $50,800,000 at December
31, 2003 is comprised of the following:

|                                                         | (in thousands)
|-------------------------------------------------------- | --------------
|
|
|The Letter Agreement described above                     | $18,500       
|The Devane Case                                          | 2,368         
|Estimated future remediation costs                       | 7,632         
|The Illinois Actions, The Honeywell Claims, The Attorney
|General Action, and all matters related to pending      
|or future personal injury claims in the Lockformer area  | 22,300        
|Total                                                    | $50,800       

Any
additional costs of remediation off of the Lisle site (off-site remediation)
are not determinable at this time and remain a contingency pending the resolution of the
issue of whether Met-Coil has liability for TCE contamination beyond areas for which
settlements have already been reached.

At
December 31, 2003 the Company had been named in 69 outstanding asbestos-related products
lawsuits, an increase of approximately 9 cases since September 30, 2003. All of these
suits seek to establish liability against the Company as successor to companies that may
have manufactured, sold or distributed products containing asbestos materials, and who are
currently in existence and defending thousands of asbestos related cases, or because the
Company currently sells and distributes boilers, an industry that has been historically
associated with asbestos-related products. To the best of its knowledge, the Company has
never manufactured, sold or distributed any product containing asbestos materials. In
addition, the Company believes it has valid defenses to all of the pending claims and
vigorously contests that it is a successor to companies that may have manufactured, sold
or distributed any product containing asbestos materials. However, the results of asbestos
litigation have been unpredictable, and accordingly, an adverse decision or adverse
decisions in these cases, individually or in the aggregate, could materially adversely
affect the financial position and results of operation of the Company and could expose the
Company to substantial additional asbestos related litigation and the defense costs
thereof. The total requested damages of these cases are over $3 billion. Thus far,
however, the Company has had over 40 asbestos-related cases dismissed without any payment
and it settled approximately twenty-three asbestos-related cases for a de minimis value.

In
addition to the Lisle, IL site, the Company has been named or contacted by state
authorities and/or the EPA regarding the Companys asserted liability or has
otherwise determined it may be required to expend funds for the remediation of certain
other sites described below.

In
High Point, NC, the Company has been named as a Potentially Responsible Party
(PRP) with regard to the clean up of groundwater contamination allegedly due to dumping at
a landfill. The Company believes that its activity at the site represented less than one
percent of all activity at the site. State authorities have received for review a report
on the Remedial Investigation of the site, including a supplemental Remedial Investigation
submitted in 2003, a base-line Risk Assessment and a Feasibility Study of the alternative
remedial options for treating groundwater contamination at or near the site. The North
Carolina Department of Environment and Natural Resources (DENR) has not issued its
remaining formal comments on these documents, nor has a final remedial alternative yet
been selected or approved. The Company continues to participate in a joint defense group
to help define and limit its liabilities and may be required to contribute to the
remediation of groundwater contamination. The PRPs anticipate proposing a remedy based
upon the use of phytoremediation and engineered wetlands.

The
Company (along with many other corporations) is involved in a PRP action for the
remediation of a site in Southington, CT, as a result of the EPAs preliminary
assignment of derivative responsibility for the presence of hazardous materials
attributable to two other corporations from whom the Company purchased assets after the
hazardous materials had been disposed of at the Southington site. The Company participated
as part of a joint defense group in a de minimis settlement with the EPA
concerning soil remediation at the Southington, CT site, while the issue of further
groundwater investigation at the site was postponed by the EPA in 1998, pending the soil
remediation. Currently, Monitored Natural Attenuation (MNA) and a landfill cap are being
evaluated as remedial alternatives for groundwater contamination at the site. The landfill
cap has been installed, but its effectiveness has not yet been determined. Likewise, more
study must be performed by the environmental consultant hired by the joint defense group
to support the evaluation of the potential for MNA to control future dissolved volatile
organic compound migration at this site.

The
Process Recovery Corporation (PRC) of which the Companys foundry subsidiary and its
predecessor corporation Eafco, Inc. were shareholders and customers for disposal of used
foundry sand, was notified in 2002 that it had exceeded certain fill parameters of its
permit. Since then PRC has ceased operations and expended almost all of its liquid assets.
The Pennsylvania Department of Environmental Protection (PADEP) contacted the customer
generators of PRC and demanded that they maintain the leachate collection system at the
landfill and execute a permitted closure of the landfill. While the Company does not
believe that any of the PRC customer generators or shareholders are responsible for
closure of the landfill, the Company has nevertheless joined a group of the majority of
PRC customers who have agreed voluntarily to fund operation of the PRC leachate collection
system on an interim basis. This group is also investigating alternative solutions to the
PADEPs concerns, such as sale or lease to a third party. The Company intends to
contest any liability that may be asserted against it to pay for closure of the PRC
landfill. But even if the Company should contribute to a closure voluntarily or through
some equitable court order, management believes that the cost to the Company for its share
of the closure plan, based on calculated tons deposited in the landfill and the current
estimate of the closure plan, should be in the range of $100,000 to $240,000.

A
Company subsidiary that has contracted to sell a facility in Scranton, PA has been
notified by the purchaser that a Phase II environmental site assessment reports the
presence of PCE in certain soil borings taken on the site of the facility in March 2004.
The impacted area of approximately 20,300 square feet will have to be treated to remove
the PCE contamination to the satisfaction of the PADEP. The cost of this treatment is not
quantifiable at this time, but the Company has pollution legal liability insurance with
policy limits of $10,000,000 covering this site, which management believes will limit the
Companys exposure to its $50,000 deductible, based on preliminary estimates that
remediation costs will not exceed the insurance policy limits.

The
Company continues to investigate all of these matters. Given the information presently
known, no estimation can be made of any liability which the Company may have with respect
to these matters. Based on the information presently available to it, the Company does not
believe that any of these last four described matters will be material to the
Companys financial position or results of operations.

# FUTURE IMPACT OF KNOWN
TRENDS OR UNCERTAINTIES

The
Companys operations are sensitive to a number of market factors, any one of which
could materially adversely affect its results of operations in any given year:

Construction
ActivityThe Companys largest Segment, its Heating, Ventilating, and Air
Conditioning (HVAC) Segment, is directly affected and its other Segment, Metal Forming, is
indirectly affected by commercial construction projects and residential housing starts.
Relatively lower interest rates in 2003 and strong institutional activity helped prevent
what might otherwise have been a more pronounced recessionary effect. Significant
increases in interest rates or reductions in construction activity in future periods,
however, could be expected to adversely effect the Companys revenues, possibly
materially.

Manufacturing
ActivityThe Companys Metal Forming Segment, as a manufacturer of capital
goods used in other manufacturing processes, is subject to significant cyclicality based
upon factory utilization. The Companys Metal Forming Segment provides equipment used
to hold, uncoil, straighten, form, bend, cut, and otherwise handle metal used in
manufacturing operations, all activities likely to be adversely affected in recessionary
periods. The level of manufacturing activity in the automotive, steel processing, metal
furniture, and stamping industries, is particularly relevant to this Segment since its
products are typically purchased to upgrade or expand existing equipment or facilities.
Expectations of future business activity are also particularly relevant. Activity in this
Segment has been affected in the recent past by the events of September 11, 2001, and may
be affected significantly in the future by the effects of globalization which impact both
the markets for its products, the competitors it faces in such markets and potentially the
cost and availability of its key components.

Credit
AvailabilityAlthough interest rates trended lower in 2003, reflecting the
Federal Reserves more liberal monetary policy during this period, credit
availability has, in managements view, somewhat tightened for marginal business
borrowers. As the Companys customer base includes many small to medium sized
businesses, the Company believes this has adversely affected the Companys sales. In
addition, recent operating losses associated with a subsidiarys bankruptcy and
environmental liabilities could negatively impact the terms upon which the Company obtains
credit in the future.

Technological
ChangesAlthough the HVAC industry has historically been impacted by technology
changes in a relatively incremental manner, it cannot be discounted that radical
changessuch as might be suggested by fuel cell technology, burner technology and/or
other developing technologiescould materially adversely affect the Companys
results of operations and/or financial position in the future.

Environmental
Laws Affecting Operations and Product Design The Company is subject to numerous
laws and regulations that govern the discharge and disposal of materials into the
environment. The Companys operations and its HVAC products that involve combustion,
refrigeration, air conditioning and related technologies as currently designed and applied
entail the risk of future noncompliance with the evolving landscape of environmental laws
regulations and industry standards. The cost of complying with the various environmental
laws regulations and industry standards is likely to increase over time, and there can be
no assurance that the cost of compliance, including changes to manufacturing processes and
design changes to current HVAC product offerings that involve the creation of carbon
dioxide or other currently unregulated compounds emitted in atmospheric combustion, or
efficiency standards, will not over the long-term and in the future have a material
adverse affect on the Companys results of operations.

Weather
ConditionsThe Companys core HVAC Segment manufactures heating, ventilating
and air conditioning equipment with heating products representing the bulk of the
Segments revenues. As such, the demand for its products depends upon colder weather
and benefits from extreme cold. Severe climatic changes, such as those suggested by the
global warming phenomenon, could over time adversely affect the Companys
results of operation and financial position.

Purchasing
PracticesIt has been the Companys policy in recent years for high value
commodities to aggregate purchase volumes with fewer vendors to achieve maximum cost
reductions while maintaining quality and service. This policy has been effective in
reducing costs but has introduced additional risk which could potentially result in
short-term supply disruptions or cost increases from time to time in the future.

Supply
Disruptions and Commodity RisksThe Company uses a wide variety of materials in
the manufacture of its products, such as copper, aluminum and steel, as well as electrical
and mechanical components, controls, motors and other products. In connection with the
purchase of major commodities, principally copper, stainless steel and aluminum for
manufacturing requirements, the Company enters into commodity forward agreements to
effectively hedge the cost of the commodity. This forward approach is done for a portion
of the Companys requirements, while the balance of the transactions required for
these commodities are conducted in the cash or spot market. The forward
agreements require the Company to accept delivery of the commodity in the quantities
committed, at the agreed upon forward price, and within the timeframe specified. The cash
or spot market transactions are executed at the Companys discretion and
at the current market prices. In addition to the raw material cost strategy described
above, the Company enters into fixed pricing agreements for the fabrication charges
necessary to convert these commodities into useable product. Management believes at
present that it has adequate sources of supply for its raw materials and components
(subject to the risks described above under Purchasing Practices) and has historically not
had significant difficulty in obtaining the raw materials, component parts or finished
goods from its suppliers. No industry Segment of the Company is dependent on a single
supplier, the loss of which would have a material adverse effect on its business.

Interest
Rate SensitivityThe Companys borrowings are largely Libor or Prime Rate
based. The Company believes that a 100 basis-point increase in its cost of funds would not
have a material effect on the Companys financial statements taken as a whole.
Interest rates are nonetheless significant to the Company as a participant in the
construction and capital goods industries. (See Construction Activity, Manufacturing
Activity and Credit Availability above.)

Acquisition
Integration  The Company has historically grown through acquisition.
Acquisitions often involve risks of integration with the parent company and may present
managerial and operational challenges, which can have adverse effects on results of
operations, typically when charges result from impairment of goodwill or indefinite lived
intangibles or cessation of business operations from consolidations or otherwise.
Acquisition integration also often requires considerable diversion of management
attention, difficulty in integrating management resource planning and financial control
systems, increased risk of contingent or unknown liabilities and potential disputes with
sellers of the acquired companies. Expected cost savings from strategic acquisitions may
not be realized or achieved within the timeframe initially expected.

Retention
of Qualified Personnel  The Company does not operate with multiple levels of
management. It is relatively flat organizationally and while we perceive this
as a strength overall, it does subject the Company to the risks associated with the
separation from the Company of critical managers for whatever reason. From time to time,
there may be a shortage of skilled labor, which may make it more difficult and expensive
for the Company to attract and retain qualified employees.

# CRITICAL ACCOUNTING
POLICIES AND USE OF ESTIMATES

Financial
Reporting Release No. 60, released by the Securities and Exchange Commission, requires all
companies to include a discussion of critical accounting policies or methods used in the
preparation of financial statements. Note 1 of the Notes to the Consolidated Financial
Statements includes a summary of the significant accounting policies and methods used in
the preparation of our Consolidated Financial Statements. The following is a brief
discussion of the Companys more significant accounting policies.

The
preparation of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and liabilities
at the dates of the financial statements and the reported amounts of revenues and expenses
during the reporting periods. The most significant estimates and assumptions relate to
revenue recognition, accounts receivable valuations, inventory valuations, goodwill
valuation, intangible asset valuations, warranty costs, product liability costs,
environmental reserves, workers compensation claims reserves, health care claims reserves,
investments, and accounting for income taxes and the realization of deferred tax assets.
Actual amounts could differ significantly from these estimates.

Our
critical accounting policies and significant estimates and assumptions are described in
more detail as follows:

As
discussed more fully in Note 13 to the Consolidated Financial Statements, Mestek and its
subsidiary, Met-Coil Systems Corporation (Met-Coil), are defendants in various
environmental litigation matters relating to alleged releases of pollutants by Met-Coil
prior to its acquisition by the Company on June 3, 2000. These matters require the Company
to establish estimates related to the outcome of various litigation matters as well as
estimates related to soil and groundwater remediation costs, both of which are inherently
judgmental and subject to change on an ongoing basis.

Accounts receivable are reduced by an
allowance for amounts that may become uncollectible in the future. The estimated allowance
for uncollectible amounts is based primarily on specific analysis of accounts in the
receivable portfolio and historical write-off experience. While management believes the
allowance to be adequate, if the financial condition of the Companys customers were
to deteriorate, resulting in impairment of their ability to make payments, additional
allowances may be required.

As explained in more detail in Note
13 to the Consolidated Financial Statements, the Company has absorbed significantly higher
levels of insurance risk subsequent to September 11, 2001 due to the effects of September
11, 2001 on pricing in the commercial insurance marketplace. As a result, the Company must
establish estimates relative to the outcome of various product liability and general
liability matters which are inherently judgmental and subject to ongoing change.

The Company values its inventory at
the lower of cost to purchase and/or manufacture the inventory, principally determined on
the last-in, first-out (LIFO) method, or the current estimated market value of
the inventory. The Company periodically reviews inventory quantities on hand and records a
provision for excess and/or obsolete inventory based primarily on its estimated forecast
of product demand, as well as based on historical usage. A significant decrease in demand
for the Companys products or technological changes in the industries in which the
Company operates could result in an increase of excess or obsolete inventory quantities on
hand, requiring adjustments to the value of the Companys inventories.

The
Companys revenue recognition activities relate almost entirely to the manufacture
and sale of heating, ventilating and air conditioning (HVAC) equipment and metal forming
equipment. Under generally accepted accounting principles, revenues are considered to have
been earned when the Company has substantially accomplished what it must do to be entitled
to the benefits represented by the revenues. With respect to sales of the Companys
HVAC or metal forming equipment, the following criteria represent preconditions to the
recognition of revenue:

| | *
persuasive evidence of an arrangement must exist; * delivery has occurred or services
rendered; * the sales price to the customer is fixed or determinable; and * collection is
reasonably assured.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As discussed more fully in Note 6 to
the Consolidated Financial Statements, the Company has certain investments in CareCentric,
Inc. (CareCentric) which it has historically accounted for by the equity method. On March
29, 2002, the Company transferred certain voting rights to John E. Reed, its Chairman and
CEO, in the context of a refinancing transaction under which both the Company and John E.
Reed invested additional monies in CareCentric. As a result of the transfer of votes, the
Company determined that it no longer had significant influence relative to
CareCentric, as defined in APB 18 and EITF 98-13, and, accordingly, adopted the cost
method of accounting for its investments in CareCentric subsequent to that date. The
Company is currently evaluating the requirements of FASB Interpretation No. 46,
Consolidation of Variable Interest Entities (FIN 46), as they relate to its investments in
CareCentric, as more fully explained in Note 1 to the accompanying Financial Statements.

The Company provides for the
estimated cost of product warranties at the time revenue is recognized based upon
estimated costs, historical and industry experience, and anticipated in-warranty failure
rates. While the Company engages in product quality programs and processes, the
Companys warranty obligation is affected by product failure rates, and repair or
replacement costs incurred in correcting a product failure. Should actual product failure
rates or repair or replacement costs differ from estimates based on historical experience,
revisions to the estimated warranty liability may be required.

The
Company self-insures a substantial portion of the health benefits provided for its
employees and maintains reserves in this regard. The Company relies upon a recognized
actuarial consulting firm to help it set and maintain these reserves.

The
Company provides workers compensation coverage principally through commercial insurance
carriers using high deductible programs, which require the Company to reserve
for and pay a high proportion of its workers compensation claims payable. The Company
relies upon the expertise of its insurance carriers and its own historical experience in
setting the reserves related to these claims.

Effective January 1, 2002, the
Company adopted the provisions of FAS No. 142, Goodwill and Other Intangible
Assets. This statement affects the Companys treatment of goodwill and other
intangible assets. The statement required that goodwill existing at the date of adoption
be reviewed for possible impairment and that impairment tests be periodically repeated,
with impaired assets written down to fair value. Additionally, existing goodwill and
intangible assets must be assessed and classified within the statements criteria.
Intangible assets with finite useful lives will continue to be amortized over those
periods. Amortization of goodwill and intangible assets with indeterminable lives will
cease.

The
Company completed the first step of the transitional goodwill impairment test during the
six months ended June 30, 2002 based on the amount of goodwill as of the beginning of
fiscal year 2002, as required by FAS No. 142. The Company performed a valuation to
determine the fair value of each of the reporting units. Based on the results of the first
step of the transitional goodwill impairment test, the Company determined that goodwill
impairment existed as of January 1, 2002, in the Companys Metal Forming Segment,
which the Company has determined constitutes a reporting unit under FAS 142.
The Company completed undertaking the second step of the transitional goodwill impairment
test in 2002 and reported a charge for goodwill impairment as explained more fully in Note
1 to the accompanying Consolidated Financial Statements, net of a related tax benefit, of
$29,334,000.

The
Company performed an annual impairment test in accordance with FAS 142 as of December 31,
2003 for both its HVAC Segment and its Metal Forming Segment. The analysis under step one
of FAS 142 indicated impairment of goodwill existed in the Metal Forming Segment as of
December 31, 2003 and computations done in accordance with step two of FAS 142 indicated
that all of this Segments remaining goodwill of $9,975,000 was impaired and is
reported accordingly in the accompanying financial statements under the heading Goodwill
Impairment. The related tax benefit of $420,000, which is included in Income Taxes Benefit
(expense), is substantially lower than what would be expected on the basis of statutory
rates due to the fact that the majority of the goodwill impairment has a zero basis for
tax purposes as a result of having been acquired in stock rather than asset purchase
transaction. Goodwill acquired in a stock rather than asset transaction generally carries
a zero basis for tax purposes.

The
preparation of the Companys Consolidated Financial Statements requires it to
estimate its income taxes in each of the jurisdictions in which it operates, including
those outside the United States which may be subject to certain risks that ordinarily
would not be expected in the United States. The income tax accounting process involves
estimating its actual current exposure together with assessing temporary differences
resulting from differing treatment of items, such as depreciation and equity method gains
and losses, for tax and accounting purposes. These differences result in the recognition
of deferred tax assets and liabilities. The Company must then record a valuation allowance
to reduce its deferred tax assets to the amount that is more likely than not to be
realized. Significant management judgment is required in determining the Companys
provision for income taxes, its deferred tax assets and liabilities and any valuation
allowance recorded against deferred tax assets. In the event that actual results differ
from these estimates or the Company adjusts these estimates in future periods, it may need
to adjust its valuation allowance which could materially impact its financial position and
results of operations.

# IMPACT OF INFLATION

The
very moderate inflationary trend of the past several years has been such that no
discernable effect on the Companys results of operations can be attributed to
inflation. If the rate of inflation climbs, with concurrent interest rate increases, the
Company expects that the construction markets and the capital goods market will be
adversely impacted, thus potentially adversely impacting the Companys results of
operations.

# NON-EXCHANGE TRADED
CONTRACTS

# LIQUIDITY AND CAPITAL
RESOURCES

Total
Debt increased in 2003 by $10,783,000 reflecting the following:

|                                                                 | ($ 000) 
|---------------------------------------------------------------- | --------
|
|Total Debt at December 31, 2002                                  | $ 11,666
|Plus: Purchase of Engel Industries, Inc. (including debt payoff) | 6,360   
|Plus: Subsidiary Bankruptcy Expenses Paid                        | 3,717   
|Plus: Other Environmental Expenses Paid                          | 11,565  
|Less: Operating Cash Flow and Other Effects                      | (10,859)
|Total Debt at December 31, 2003                                  | $ 22,449

The
Companys Long-Term Debt to Equity ratio at December 31, 2003 is 4.6%, up from 3.6%
at December 31, 2002. As of December 31, 2003, the Company had approximately $47.5 million
in remaining untapped credit capacity under its commercial bank lines of credit. The ratio
of the Companys Funded Debt (Long-Term Debt, Current Portion of Long-Term Debt plus
Short-term Notes Payable) to Shareholders Equity was 23.5% at December 31, 2003.

The
Company believes its liquidity position at December 31, 2003 is adequate to meet
foreseeable future needs. As more fully explained in Note 8 to the Consolidated Financial
Statements, the Companys commercial bank line with Fleet Bank expires on July 30,
2004. Its credit line with JPMorgan Chase Bank is an uncommitted facility. The
Company is presently in negotiations relative to the renewal of its Fleet Bank credit
facility through April 30, 2005.

The
Company has a number of contingent obligations (in addition to those related to the
Met-Coil Bankruptcy and Environmental Litigation Disclosed in Unusual Events above) which
can be summarized as follows:

The
Company has guaranteed the obligations of CareCentric, Inc. to Wainwright Bank & Trust
Company under CareCentrics $6 million credit line agreement with the bank, as more
fully described in Notes 6 and 13 to the Consolidated Financial Statements. The
outstanding balance under CareCentrics credit line agreement was $2,125,000 at
December 31, 2003 and $1,825,000 at March 31, 2004. John E. Reed, the Companys
Chairman and Chief Executive Officer, and Chairman of CareCentric, is a shareholder and
director of Wainwright Bank & Trust Company.

The
Company is obligated under Indemnity Agreements executed on behalf of 23 of the
Companys Officers and Directors. Under the terms of the Agreement, the Company is
contingently liable for costs which may be incurred by the Officers and Directors in
connection with claims arising by reason of these individuals roles as Officers and
Directors.

The
Company is contingently liable under standby letters of credit totaling $6,616,000 issued
principally in connection with its commercial insurance coverages. The level of insurance
risk which the Company absorbs under its workers compensation and comprehensive general
liability (including products liability) insurance programs increased substantially after
October 1, 2001, largely as a result of the effects of September 11, 2001 on
the commercial insurance marketplace. For losses occurring in the policy year ending
October 1, 2004, the Company retained liability for the first $2,000,000 per occurrence of
commercial general liability claims (including products liability claims), subject to an
agreed aggregate. In addition, the Company retained liability for the first $250,000 per
occurrence of workers compensation coverage, subject to an agreed aggregate.

Adverse
developments in any of the areas mentioned above could materially affect the
Companys results of operations in any given year.

The
Company leases several manufacturing facilities and its corporate headquarters from
Related Parties, as more fully disclosed in Note 11 to the Consolidated Financial
Statements.

# RECENT ACCOUNTING
PRONOUNCEMENTS

The
Financial Accounting Standards Board (FASB) issued FAS No. 145, Rescission of
FAS No. 4, 44, and 64, Amendment of FAS No. 13, and Technical Corrections, effective for
fiscal years beginning May 15, 2002 or later that rescinds FAS No. 4, Reporting Gains and
Losses from Extinguishment of Debt, FAS No. 64, Extinguishments of Debt made to satisfy
sinking-fund requirement, and FAS No. 44, Accounting for Intangible Assets of Motor
Carriers. This Statement amends FAS No. 4 and FAS No. 13, Accounting for Leases, to
eliminate an inconsistency between the required accounting for sale-leaseback
transactions. This Statement also amends other existing authoritative pronouncements to
make various technical corrections, clarify meanings or describe their applicability under
changed conditions. The Company does not believe adopting FAS No. 145 had a material
impact on its Consolidated Financial Statements.

In
July 2002, the FASB issued FAS No. 146, Accounting for Costs Associated with Exit or
Disposal Activities. FAS No. 146 is based on the fundamental principle that a liability
for a cost associated with an exit or disposal activity should be recorded when it (1) is
incurred, that is, when it meets the definition of a liability in FASB Concepts Statement
No. 6, Elements of Financial Statements, and (2) can be measured at fair value. The
principal reason for issuing FAS No. 146 is the FASBs belief that some liabilities
for costs associated with exit or disposal activities that entities record under current
accounting pronouncements, in particular EITF Issue 94-3, do not meet the definition of a
liability. FAS No. 146 nullifies EITF Issue 94-3; thus, it will have a significant effect
on practice because commitment to an exit or disposal plan no longer will be a sufficient
basis for recording a liability for costs related to those activities. FAS No. 146 is
effective for exit and disposal activities initiated after December 31, 2002. Early
application is encouraged; however, previously issued financial statements may not be
restated. An entity would continue to apply the provisions of EITF Issue 94-3 to an exit
activity that is initiated under an exit plan that met the criteria of EITF Issue 94-3
before the entity initially applied FAS No. 146. The Company does not believe adopting FAS
No. 146 had a material impact on its Consolidated Financial Statements. See Note 19 to the
accompanying Consolidated Financial Statements.

In
November 2002, FASB issued FASB Interpretation No. 45, Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others, an interpretation of FASB Statement Nos. 5, 57, and 107 and Rescission of FASB
Interpretation No. 3 (FIN 45). FIN 45 clarifies the requirement of FAS No. 5, Accounting
for Contingencies, relating to the guarantors accounting for, and disclosure of, the
issuance of certain types of guarantees. FIN 45 requires that upon issuance of a
guarantee, the guarantor must recognize a liability for the fair value of the obligation
it assumes under that guarantee. FIN 45 covers guarantee contracts that have any of the
following four characteristics: (a) contracts that contingently require the guarantor to
make payments to the guaranteed party based on changes in an underlying obligation that is
related to an asset, a liability, or an equity security of the guaranteed party (e.g.,
financial and market value guarantees), (b) contracts that contingently require the
guarantor to make payments to the guaranteed party based on another entitys failure
to perform under an obligation agreement (performance guarantees), (c) indemnification
agreements that contingently require the indemnifying party (guarantor) to make payments
to the indemnified party (guaranteed party) based on changes in an underlying obligation
that is related to an asset, a liability, or an equity security of the indemnified party,
such as an adverse judgment in a lawsuit or the imposition of additional taxes due to
either a change in the tax law or an adverse interpretation of the tax law, and (d)
indirect guarantees of the indebtedness of others. FIN 45 specifically excludes certain
guarantee contracts from its scope. Additionally, certain guarantees are not subject to
FIN 45s provisions for initial recognition and measurement but are subject to its
disclosure requirements. The initial recognition and measurement provisions are effective
for guarantees issued or modified after December 31, 2002. The disclosure requirements are
effective for our annual financial statements for the year ended December 31, 2002. See
Note 13 to the accompanying Consolidated Financial Statements.

In
December 2002, the FASB issued FAS No. 148, Accounting for Stock Based
CompensationTransition and Disclosure, an amendment to FAS No. 123. This Statement
amends FAS No. 123, Accounting for Stock-Based Compensation, to provide alternative
methods of transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation. In addition, this Statement amends the disclosure
requirements of FAS No. 123 to require prominent disclosures in both annual and interim
financial statements about the method of accounting for stock-based employee compensation
and the effect of the method used on reported results. Finally, FAS No. 148 amends APB
Opinion No. 28, Interim Financial Reporting, to require disclosure about those effects in
interim financial reporting. For entities that voluntarily change to the fair value based
method of accounting for stock-based employee compensation, the transition provisions are
effective for fiscal years ending after December 15, 2002. For all other companies, the
disclosure provisions and the amendment to APB No. 28 are effective for interim periods
beginning after December 15, 2002.

The
Company has elected to account for stock based compensation, effective with the fiscal
2003, in accordance with FAS No 148, under the fair value method. The Company
has further elected to account for the change in accounting principle under the
Prospective Method as described in amended paragraph 52b of FAS No. 123. The
Company made no option grants, modifications of option grants, or settlement of option
grants in either the period ended December 31, 2003 or the period ended December 31, 2002
and accordingly the change to the fair value method had no effect in either period on Net
Income, Basic earnings per share or Diluted earnings per share. Under the
Prospective Method any future option grants will affect net income, basic
earnings per share and diluted earnings per share.

In
January 2003, FASB issued FASB Interpretation No. 46, Consolidation of Variable Interest
Entities (FIN 46). FIN 46 requires a variable interest entity to be
consolidated by a company if that company is subject to a majority of the risk of loss
from the variable interest entitys activities or entitled to receive a majority of
the entitys residual returns, or both. FIN 46 also requires disclosures about
variable interest entities that a company is not required to consolidate, but in which it
has a significant variable interest. In December of 2003 FASB issued FIN 46 (R) which,
among other things, deferred the consolidation requirements for existing entities until
the first reporting period ending after March 15, 2004. Certain of the disclosure
requirements apply in all financial statements issued after January 31, 2003, regardless
of when the variable interest entity was established. The Company is currently evaluating
the impact of FIN 46 on its equity investments described in Note 6 to the accompanying
Consolidated Financial Statements.

In
December 2003, the FASB issued FAS 132R Employers Disclosures about Pension and
Other Post-retirement Benefits. This Statement revises employers disclosures about
pension plans and other postretirement benefit plans. It does not change the measurement
or recognition of those plans required by FAS No. 87, Employers Accounting for
Pensions, FAS No. 88, Employers Accounting for Settlements and Curtailments of
Defined Benefit Pension Plans and for Termination Benefits, and FAS No. 106,
Employers Accounting for Postretirement Benefits Other Than Pensions. This Statement
retains the disclosure requirements contained in FAS No. 132, Employers Disclosures
about Pensions and Other Postretirement Benefits, which it replaces. It requires
additional disclosures to those in the original FAS No. 132 about the assets, obligations,
cash flows, and net periodic benefit cost of defined benefit pension plans and other
defined benefit postretirement plans. The Company has adopted the disclosure provisions of
FAS No. 132R. The adoption of this pronouncement did not have a material effect on the
Companys financial position, results of operations or cash flows.

In
December 2003, the SEC issued Staff Accounting Bulletin (SAB) No. 104, Revenue
Recognition, which codifies, revises and rescinds certain sections of SAB No. 101, Revenue
Recognition, in order to make this interpretive guidance consistent with current
authoritative accounting and auditing guidance and SEC rules and regulations. The changes
noted in SAB 104 did not have a material effect on the Companys financial position,
results of operations and cash flows.

# TABULAR DISCLOSURE OF
CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS

Contractual Obligation
and Commercial Commitments

The
Companys primary contractual obligations are summarized in the following table and
are more fully explained in Notes 8, 11, and 13 to the Consolidated Financial Statements.

|                                   |         | Payments Due by Period |           |           |          
|---------------------------------- | ------- | ---------------------- | --------- | --------- | ---------
|
|
|Short Term Debt                    | $17,467 | $17,467                | $       0 | $       0 | $       0
|Long-Term Debt                     | 4,982   | 596                    | 1,113     | 1,128     | 2,145    
|Purchase Obligations               | 23,326  | 23,012                 | 314       | ---       | ---      
|Operating Leases                   | 9,965   | 3,187                  | 3,810     | 2,001     | 967      
|Total Contractual Cash Obligations | $55,740 | $44,262                | $5,237    | $3,129    | $3,112   

The
Companys commercial commitments under letters of credit and guarantees are
illustrated in the following table. These Standby Letters of Credit are reflected in the
After 5 Years column, as they are open-ended commitments not subject to a
fixed expiration date. All guarantees may be extended by the Company for longer periods.
The letters of credit totaling $6,616,000 at December 31, 2003 related principally to the
Companys commercial insurance programs, as more fully explained above and in Note 13
to the Consolidated Financial Statements. The guarantee of $6,000,000 relates to the
Companys guarantee of the obligations of CareCentric under its commercial bank
secured line of credit, as more fully explained in Note 13 to the accompanying Consolidated Financial
Statements.

| | Payments
Due by Period (in thousands)
| | -------------------------------------

|Other Commercial Commitments | Total    | Less than
1 year | 1-3
years | 4-5
years | After 5
years
|---------------------------- | -------- | ---------------- | --------- | --------- | -------------
|
|
|Standby Letters of Credit    | $  6,616 | $       0        | $0        | $0        | $6,616       
|Guarantee                    | 6,000    | 6,000            | 0         | 0         | 0            
|Total Commercial Commitments | $12,616  | $6,000           | $0        | $0        | $6,616       

Off-Balance Sheet
Obligations or Arrangements

The Company is not a party to any
off-balance sheet obligations or arrangements of which it is aware.

# Item 7A. QUANTITIVE AND
QUALITATIVE MARKET RISKS

The
Company does not engage in the purchase or trading of market risk sensitive instruments
other than with respect to a single interest rate swap transaction entered into on
February 9, 2004 whereby the Company has obtained fixed interest rate protection for
approximately $14,000,000 of its bank debt. The Company does not presently have any
positions with respect to hedge transactions such as forward contracts relating to
currency fluctuations. No market risk sensitive instruments are held for speculative or
trading purposes.

---

# Item 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA

# REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors andShareholders of Mestek, Inc.

We
have audited the accompanying consolidated balance sheets of Mestek, Inc. and subsidiaries
as of December 31, 2003 and 2002, and the related consolidated statements of operations,
shareholders equity and comprehensive income (loss), and cash flows for each of the
years in the three year period ended December 31, 2003. These consolidated financial
statements are the responsibility of the Companys management. Our responsibility is
to express an opinion on these consolidated financial statements based on our audits.

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

In
our opinion, the financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Mestek, Inc. and subsidiaries as of
December 31, 2003 and 2002, and the consolidated results of their operations and their
consolidated cash flows for each of the years in the three year period ended December 31,
2003 in conformity with accounting principles generally accepted in the United States of
America.

As
discussed in Note 1 to the consolidated financial statements, the Company adopted
Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible
Assets on January 1, 2002.

/s/ Grant Thornton LLP

Boston, Massachusetts March 30,
2004

---

# MESTEK, INC.CONSOLIDATED
BALANCE SHEETS

# As of December 31,

|                                         | 2003      | 2002      
|---------------------------------------- | --------- | ----------
|
|
|Current Assets                           |           |           
|Cash and Cash Equivalents                | $  10,273 | $    2,675
|Accounts Receivable - less allowances of
|$3,387 and $3,230, respectively          | 54,285    | 53,503    
|Inventories                              | 55,194    | 60,587    
|Deferred Tax Asset                       | 21,916    | 6,087     
|Income Tax Refund Receivable             | 4,121     | ---       
|Other Current Assets                     | 6,691     | 5,285     
|Total Current Assets                     | 152,480   | 128,137   
|Property and Equipment - net             | 62,034    | 56,605    
|Property Held for Sale                   | 1,667     | ---       
|Deferred Tax Asset                       | 5,140     | 3,701     
|Other Assets and Deferred Charges - net  | 4,742     | 5,786     
|Goodwill-net                             | 20,607    | 26,072    
|Total Assets                             | $246,670  | $220,301  

See Accompanying Notes to
Consolidated Financial Statements

---

# MESTEK, INC.

# CONSOLIDATED BALANCE
SHEETS (continued)

# As of December 31,

|                                                     | 2003       | 2002       
|---------------------------------------------------- | ---------- | -----------
|
|
|Current Liabilities:                                 |            |            
|Short Term Notes Payable                             | $   17,467 | $     6,263
|Current Portion of Long-Term Debt                    | 596        | 512        
|Accounts Payable                                     | 18,273     | 16,643     
|Accrued Compensation                                 | 8,377      | 8,614      
|Accrued Commissions                                  | 2,433      | 2,011      
|Reserve for Equity Investment Losses                 | 6,000      | 6,000      
|Customer Deposits                                    | 9,586      | 6,763      
|Accrued Employee Benefits                            | 8,798      | 8,456      
|Environmental Reserves                               | ---        | 7,700      
|Liabilities Subject to Compromise                    | 57,359     | ---        
|Other Accrued Liabilities                            | 15,544     | 13,034     
|Total Current Liabilities                            | 144,433    | 75,996     
|Long-Term Debt                                       | 4,386      | 4,891      
|Pension Obligation                                   | 967        | 558        
|Other Liabilities                                    | 256        | 45         
|Total Liabilities                                    | 150,042    | 81,490     
|Minority Interests                                   | 1,155      | 1,097      
|Shareholders' Equity:                               
|Common Stock - no par, stated value $0.05 per share,
|9,610,135 shares issued                              | 479        | 479        
|Paid in Capital                                      | 15,434     | 15,434     
|Retained Earnings                                    | 90,631     | 133,796    
|Treasury Shares, at cost, 888,532 common shares      | (10,101)   | (10,101)   
|Accumulated Other Comprehensive Loss                 | (970)      | (1,894)    
|Total Shareholders' Equity                           | 95,473     | 137,714    
|Total Liabilities and Shareholders' Equity           | $ 246,670  | $ 220,301  

See Accompanying Notes to
Consolidated Financial Statements.

---

# MESTEK, INC.CONSOLIDATED
STATEMENTS OF OPERATIONS

# For the years ended
December 31,

|                                                                            | 2003       | 2002       | 2001      
|--------------------------------------------------------------------------- | ---------- | ---------- | ----------
|
|
|Net Sales                                                                   | $ 366,513  | $ 373,874  | $ 394,103 
|Cost of Goods Sold                                                          | 260,447    | 264,543    | 290,427   
|Gross Profit                                                                | 106,066    | 109,331    | 103,676   
|Selling Expense                                                             | 52,812     | 53,566     | 53,693    
|General and Administrative Expense                                          | 23,881     | 22,022     | 21,549    
|Engineering Expense                                                         | 15,279     | 14,992     | 13,068    
|Environmental Litigation/Remediation                                        | 53,665     | 18,046     | 2,000     
|Goodwill Impairment                                                         | 9,975      | ---        | ---       
|Plant Shutdown and Other Restructuring Charges                              | 5,239      | ---        | 1,774     
|Operating (Loss) Profit before Reorganization Items                         | (54,785)   | 705        | 11,592    
|Subsidiary Bankruptcy Professional Fees                                     | 5,963      | ---        | ---       
|Operating (Loss) Profit                                                     | (60,748)   | 705        | 11,592    
|Equity Loss in Investee                                                     | ---        | ---        | (14,908)  
|Interest Income                                                             | 68         | 404        | 674       
|Interest Expense                                                            | (690)      | (964)      | (1,396)   
|Other Income (Expense), Net                                                 | (298)      | (350)      | (60)      
|Loss from Continuing Operations Before Income Taxes                         | (61,668)   | (205)      | (4,098)   
|Income Taxes Benefit (Expense)                                              | 18,503     | (866)      | 1,465     
|Loss from Continuing Operations                                             | (43,165)   | (1,071)    | (2,633)   
|Discontinued Operations (see Note 3):                                      
|Gain on Sale of Discontinued Operation                                      | ---        | ---        | 16,446    
|Applicable Income Tax Expense                                               | ---        | ---        | (7,499)   
|Net Gain on Sale of Discontinued Operation                                  | ---        | ---        | 8,947     
|Cumulative Effect of a Change in Accounting Principle:  (See Notes 1 and 7)
|Gross Impairment (Expense)                                                  | ---        | (31,633)   | ---       
|Tax Benefit                                                                 | ---        | 2,299      | ---       
|Net Impairment (Expense)                                                    | ---        | (29,334)   | ---       
|Net (Loss) Income                                                           | ($ 43,165) | ($ 30,405) | $6,314    
|Basic (Loss) Earnings per Common Share:                                    
|Continuing Operations                                                       | ($   4.95) | ($   0.12) | ($   0.30)
|Discontinued Operations                                                     | ---        | ---        | 1.02      
|Cumulative Effect of a Change in Accounting Principle                       | ---        | (3.36)     | ---       
|Net (Loss) Income                                                           | ($4.95)    | ($3.48)    | $0.72     
|Basic Weighted Average Shares Outstanding                                   | 8,722      | 8,722      | 8,723     
|Diluted (Loss) Earnings Per Common Share                                   
|Continuing Operations                                                       | ($   4.95) | ($   0.12) | ($   0.30)
|Discontinued Operations                                                     | ---        | ---        | 1.02      
|Cumulative Effect of a Change in Accounting Principle                       | ---        | (3.36)     | ---       
|Net (Loss) Income                                                           | ($ 4.95)   | ($ 3.48)   | $0.72     
|Diluted Weighted Average Shares Outstanding                                 | 8,722      | 8,722      | 8,765     

---

|                                  |      |         |           |            | Accumulated Other |          
|--------------------------------- | ---- | ------- | --------- | ---------- | ----------------- | ---------
|
|
|
|
|Balance - December 31, 2000       | $479 | $15,434 | $ 157,887 | ($  9,733) | ($  1,195)        | $ 162,872
|Net Income                        |      |         | 6,314     |            |                   | 6,314    
|Cumulative Translation Adjustment |      |         |           |            | (195)             | (195)    
|Net Comprehensive Income          |      |         |           |            |                   | 6,119    
|Common Stock Repurchased          |      |         |           | (368)      |                   | (368)    
|Balance - December 31, 2001       | $479 | $15,434 | $ 164,201 | ($ 10,101) | ($  1,390)        | $ 168,623
|Net Loss                          |      |         | (30,405)  |            |                   | (30,405) 
|Additional Minimum Liability     
|Defined Benefit Plan--Net of Tax  |      |         |           |            | (559)             | (559)    
|Cumulative Translation Adjustment | ---  | ---     | ---       | ---        | 55                | 55       
|Net Comprehensive (Loss)          |      |         |           | -          |                   | (30,909) 
|Balance - December 31, 2002       | $479 | $15,434 | $ 133,796 | ($ 10,101) | ($  1,894)        | $ 137,714
|Net Loss                          |      |         | (43,165)  |            |                   | (43,165) 
|Additional Minimum Liability     
|Defined Benefit Plan--Net of Tax  |      |         |           |            | (247)             | (247)    
|Cumulative Translation Adjustment |      |         |           |            | 1,171             | 1,171    
|Net Comprehensive (Loss)          |      |         |           |            |                   | (42,241) 
|Balance - December 31, 2003       | $479 | $15,434 | $90,631   | ($10,101)  | ($970)            | $95,473  

See Accompanying Notes to
Consolidated Financial Statements

---

# MESTEK, INC.CONSOLIDATED
STATEMENTS OF CASH FLOWS

# For the years ended
December 31,

|                                                     | 2003      | 2002      | 2001     
|---------------------------------------------------- | --------- | --------- | ---------
|
|
|Cash Flows from Operating Activities:                |           |           |          
|Net (Loss) Income                                    | ($43,165) | ($30,405) | $   6,314
|Adjustments to Reconcile Net Income to              
|Net Cash Provided by Operating Activities:          
|Cumulative Effect of Change in Accounting Principle  | ---       | 29,334    | ---      
|Goodwill Impairment                                  | 9,975     | ---       | ---      
|Depreciation and Amortization                        | 8,301     | 8,818     | 9,269    
|Provision for Deferred Taxes                         | (16,192)  | (1,453)   | (4,899)  
|Provision for Losses on Accounts                    
|Receivable, net of write-offs and recoveries         | 157       | (1,009)   | 735      
|Net Change in Minority Interests net of             
|effects of acquisitions and dispositions             | 58        | 12        | 47       
|Equity Loss in Investee                              | ---       | ---       | 14,908   
|Gain on Sale of National Northeast                   | ---       | ---       | (16,446) 
|Changes in assets and liabilities net of            
|effects of acquisitions and dispositions:           
|Accounts Receivable                                  | (663)     | 5,450     | 4,788    
|Inventory                                            | 6,867     | 4,001     | 5,708    
|Accounts Payable                                     | 1,071     | (1,044)   | (2,928)  
|Liabilities Subject to Compromise                    | 57,359    | ---       | ---      
|Other Liabilities                                    | (2,739)   | 12,987    | (10,011) 
|Other Assets                                         | (5,390)   | (1,129)   | 3,763    
|Net Cash Provided by Operating Activities            | 15,639    | 25,562    | 11,248   
|Cash Flows from Investing Activities:               
|Disposition of National Northeast, Inc. (see Note 3) | ---       | ---       | 44,619   
|Capital Expenditures                                 | (13,604)  | (7,526)   | (2,692)  
|Disposition of fixed assets                          | 223       | 785       | ---      
|Acquisition of Businesses (including Debt Pay Off)  
|and Other Assets, Net of Cash Acquired               | (6,360)   | ---       | (17,600) 
|Investment in CareCentric, Inc.                      | ---       | ---       | (1,638)  
|Net Cash (Used in) Provided by Investing Activities  | (19,741)  | (6,741)   | 22,689   
|Cash Flows from Financing Activities:               
|Net Borrowings (Payments) Under                     
|Revolving Credit Agreement                           | 11,203    | (22,747)  | (33,454) 
|Principal Payments Under Long                       
|Term Debt Obligations                                | (674)     | (1,281)   | (22)     
|Proceeds from Issuance of Long Term Debt             | ---       | 5,512     | ---      
|Repurchase of Common Stock                           | ---       | ---       | (368)    
|Net Cash Provided by (Used In) Financing Activities  | 10,529    | (18,516)  | (33,844) 
|Net Increase in Cash and Cash Equivalents            | 6,427     | 305       | 93       
|Translation effect on cash                           | 1,171     | 55        | (195)    
|Cash and Cash Equivalents - Beginning of Year        | 2,675     | 2,315     | 2,417    
|Cash and Cash Equivalents - End of Year              | $ 10,273  | $   2,675 | $   2,315

See Accompanying Notes to
Consolidated Financial Statements.

---

# MESTEK, INC.NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS

# 1. SIGNIFICANT
ACCOUNTING POLICIES

# Basis of Presentation

The
Consolidated Financial Statements include the accounts of Mestek, Inc. (Mestek) and its
majority owned subsidiaries (collectively the Company). All material
inter-company accounts and transactions have been eliminated in consolidation. In the
opinion of management, the financial statements include all material adjustments necessary
for a fair presentation of the Companys financial position, results of operations
and cash flows.

# Use of Estimates

The
preparation of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and liabilities
at the dates of the financial statements and the reported amounts of revenues and expenses
during the reporting periods. The most significant estimates and assumptions relate to
revenue recognition, accounts receivable valuations, inventory valuations, goodwill
valuation, intangible asset valuations, warranty costs, product liability costs,
environmental reserves, workers compensation claims reserves, health care claims reserves,
investments, accounting for income taxes and the realization of deferred tax assets.
Actual amounts could differ significantly from these estimates.

# Revenue Recognition

The
Companys revenue recognition activities relate almost entirely to the manufacture
and sale of heating, ventilating and air conditioning (HVAC) equipment and metal forming
equipment. Under generally accepted accounting principles, revenues are considered to have
been earned when the Company has substantially accomplished what it must do to be entitled
to the benefits represented by the revenues. With respect to sales of the Companys
HVAC or metal forming equipment, the following criteria represent preconditions to the
recognition of revenue:

| | *
     persuasive evidence of an arrangement must exist; *      delivery has occurred or services
rendered; *      the sales price to the customer is fixed or determinable; and *      collection is
reasonably assured.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Cash Equivalents

The
Company considers all highly liquid investments with a maturity of 90 days or less at the
time of purchase to be cash equivalents. Cash equivalents include investments in an
institutional money market fund, which invests in U.S. Treasury bills, notes and bonds,
and/or repurchase agreements, backed by such obligations.

# Accounts Receivable

Accounts
receivable are reduced by an allowance for amounts that may become uncollectible in the
future. The estimated allowance for uncollectible amounts is based primarily on specific
analysis of accounts in the receivable portfolio and historical write-off experience.

# Inventories

Inventories
are valued at the lower of cost or market. Cost of inventories is principally determined
by the last-in, first-out (LIFO) method. Approximately 77% and 84% of the cost of
inventories were determined on the basis of the LIFO method for the years ended December
31, 2003 and 2002, respectively.

# Property and Equipment

Property
and equipment are carried at cost. Depreciation and amortization are computed using the
straight-line and accelerated methods over the estimated useful lives of the assets or,
for leasehold improvements, the life of the lease, if shorter. When assets are retired or
otherwise disposed of, the cost and related accumulated depreciation are removed from the
accounts and any resulting gain or loss is reflected in income for the period. The cost of
maintenance and repairs is charged to income as incurred; significant improvements are
capitalized.

# Goodwill

Through
December 31, 2001, the Company amortized Goodwill on the straight-line basis over the
estimated period to be benefited, typically 25 years. The Company continually evaluated
the carrying value of Goodwill in accordance with FAS 121, Accounting for the Impairment
of Long Lived Assets and for Long Lived Assets to be Disposed Of, prior to December 31,
2001. Any impairments are recognized in accordance with the appropriate accounting
standards.

The
Financial Accounting Standards Board (FASB) issued FAS 141, Business Combinations and FAS
142, Goodwill and Intangible Assetsin 2001. FAS 141 was effective for all
business combinations completed after June 30, 2001. FAS 142 was effective for fiscal
years beginning after December 15, 2001; however, certain provisions of this Statement
applied to goodwill and other intangible assets acquired between July 1, 2001 and the
effective date of FAS 142. Major provisions of these Statements and their effective dates
for the Company are as follows: (i) all business combinations initiated after June 30,
2001 must use the purchase method of accounting (the pooling of interest method of
accounting is prohibited except for transactions initiated before July 1, 2001) (ii)
intangible assets acquired in a business combination must be recorded separately from
goodwill if they arise from contractual or other legal rights or are separable from the
acquired entity and can be sold, transferred, licensed, rented or exchanged, either
individually or as part of a related contract, asset or liability, (iii) goodwill and
intangible assets with indefinite lives acquired after June 30, 2001 will not be
amortized, (iv) effective January 1, 2002, all previously recognized goodwill and
intangible assets with indefinite lives are no longer subject to amortization, (v)
effective January 1, 2002, goodwill and intangible assets with indefinite lives will be
tested for impairment annually and whenever there is an impairment indicator, and (vi) all
acquired goodwill must be assigned to reporting units for purposes of impairment testing
and segment reporting.

Accordingly,
the Company ceased recording amortization of goodwill and intangible assets with
indefinite lives effective January 1, 2002. In addition, the Company completed the first
step of the transitional goodwill impairment test based on the amount of goodwill as of
the beginning of fiscal year 2002, as required by FAS 142. The Company performed a
valuation to determine the fair value of each of the reporting units. Based on the results
of the first step of the transitional goodwill impairment test, the Company determined
that goodwill impairment existed as of January 1, 2002, in the Companys Metal
Forming Segment, which the Company determined constituted a reporting unit
under FAS 142.

The
Companys analysis under the second step of FAS 142 indicated that the Metal Forming
Segments goodwill was impaired as of January 1, 2002 in the amount of $31,633,000 as
reflected in the accompanying Statement of Operations for the year ended December 31,
2002. The related tax benefit, $2,299,000, is substantially lower than what would be
expected on the basis of statutory rates due to the fact that the majority of the goodwill
impaired has a zero basis for tax purposes as a result of having been acquired in stock
rather than asset purchase transactions. See Note 10 to these consolidated financial statements.

The
Company performed an annual impairment test in accordance with FAS 142 as of December 31,
2003 for both its HVAC Segment and its Metal Forming Segment. The analysis under step one
of FAS 142 indicated impairment of goodwill existed in the Metal Forming Segment as of
December 31, 2003 and computations done in accordance with step two of FAS 142 indicated
that all of this Segments remaining goodwill of $9,975,000 was impaired and
accordingly was written off in the accompanying financial statements under the heading
Goodwill Impairment. The related tax benefit of $420,000, which is included in
Income Taxes Benefit (expense), is substantially lower than what would be expected on the
basis of statutory rates due to the fact that the majority of the goodwill impairment has
a zero basis for tax purposes as a result of having been acquired in stock rather than
asset purchase transactions. Goodwill acquired in a stock rather than asset transaction
generally carries a zero basis for tax purposes. No impairment was noted in the HVAC
Segment.

The
acquisition of the stock of Engel Industries, Inc. on August 29, 2003, as more fully
described in Note 2, resulted in goodwill of approximately $4.2 million, which, in
accordance with FAS 142, was included in the Goodwill Impairment assessment described
above.

Accumulated
amortization (including goodwill impairments) of goodwill and other intangibles was
$50,289,000 and $40,083,000 at December 31, 2003 and 2002, respectively. See Note 7 to these consolidated financial statements.

# Advertising Expense

Advertising
costs are charged to operations as incurred. Such charges aggregated $5,022,000,
$5,039,000, and $5,184,000, for the years ended December 31, 2003, 2002, and 2001,
respectively.

# Research and Development
Expense

Research
and development expenses are charged to operations as incurred. Such charges aggregated
$5,746,000, $5,332,000, and $4,977,000, for the years-ended December 31, 2003, 2002, and
2001, respectively.

# Treasury Shares

Common
stock held in the Companys treasury has been recorded at cost.

# Earnings per Common Share

Basic
earnings per share have been computed using the weighted average number of common shares
outstanding. Common stock options of the Company, as more fully described in Note 17, were
considered in the computation of diluted earnings per share, except when such effect would
be antidilutive.

Through
December 31, 2002 the Company had accounted for stock based compensation in accordance
with the provisions of Statement of Financial Accounting Standards No. 123, Accounting for
Stock-Based Compensation, (FAS No. 123). As permitted by the statement, the
Company has chosen to continue to account for stock-based compensations using the
intrinsic value method as prescribed by Accounting Principles Board (APB)
Opinion No. 25. Accordingly, no compensation expense has been recognized for its
stock-based compensation plan.

Beginning
January 1, 2003 the Company has elected to account for stock based compensation in
accordance with FAS No 148, Accounting for Stock-Based Compensation  Transition and
Disclosure, under the fair value method. The Company has further elected to
account for the change in accounting principle under the Prospective Method as
described in amended paragraph 52b of FAS No. 123. The Company made no option grants,
modifications of option grants, or settlement of option grants in either the period ended
December 31, 2003 or period ended December 31, 2002 and accordingly the change to the fair
value method had no effect in either period on Net Income, Basic earnings per share or
Diluted earnings per share. Under the Prospective Method any future option
grants will affect Net Income, Basic earnings per share and Diluted earnings per share.

Had
the fair value method of accounting been applied to the Companys stock option plan
for options granted prior to January 1, 2003, with compensation cost for the Plan
determined on the basis of the fair value of the options at the grant date, the
Companys net income and earnings per share would have been as follows (in thousands
except EPS data):

`Years Ended
                                                    December 31,           December 31,           December 31
                                                   2003             2002              2001

     Net (loss) income - as reported               ($43,165)               ($30,405)                  $6,314
     Net (loss) income - pro forma                 ($43,236)               ($30,541)                  $6,215

     Basic (Loss) Earnings per share - as reported   ($4.95)                 ($3.48)                   $0.72
     (Loss) Earnings per share - pro forma           ($4.96)                 ($3.50)                   $0.71`

The
application of FAS 123 for pro forma disclosure may not be representative of future
effects of applying the statement.

# Currency Translation

Assets
and liabilities denominated in foreign currencies are translated into U.S. dollars at
exchange rates prevailing on the balance sheet date. The Statement of Operations is
translated at average exchange rates. Net foreign currency transactions are reported in
the results of operations in U.S. dollars at average exchange rates. Adjustments resulting
from the translation of financial statements are excluded from the determination of income
and are accumulated in a separate component of shareholders equity.

# Income Taxes

Deferred
tax assets and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date. A valuation allowance is provided for
deferred tax assets if it is more likely than not that these items will either expire
before the Company is able to realize the benefit, or that future deductibility is
uncertain.

# Other Comprehensive
(Loss) Income

For
the years ended December 31, 2003, 2002, and 2001, respectively, the components of Other
Comprehensive (Loss) Income consisted of foreign currency translation adjustments and an
additional minimum liability from a defined benefit pension plan, as more fully explained
in Note 12 to these consolidated financial statements.

The
components of accumulated other comprehensive loss (net of tax) at December 31:

`2003      2002
                                                              (in thousands)

Cumulative Translation Adjustment                     ($164)            ($1,335)
Additional Minimum Liability Defined Benefit Plan      (806)               (559)

         Accumulated Other Comprehensive Loss         ($970)            ($1,894)`

# Reclassification

Reclassifications
are made periodically to previously issued financial statements to conform to the current
year presentation.

# New Accounting
Pronouncements

The
FASB issued FAS No. 145, Rescission of FAS Nos. 4, 44, and 64, Amendment of FAS No. 13,
and Technical Corrections, effective for fiscal years beginning May 15, 2002 or later that
rescinds FAS No. 4, Reporting Gains and Losses from Extinguishment of Debt, FAS No.
64, Extinguishments Of Debt Made To Satisfy Sinking-Fund Requirement, and FAS No.
44, Accounting for Intangible Assets of Motor Carriers. This Statement amends FAS
No. 4 and FAS No. 13, Accounting for Leases, to eliminate an inconsistency between
the required accounting for sale-leaseback transactions. This Statement also amends other
existing authoritative pronouncements to make various technical corrections, clarify
meanings or describe their applicability under changed conditions. The Company does not
believe adopting FAS No. 145 had a material impact on its Consolidated Financial
Statements.

In
July 2002, the FASB issued FAS No. 146, Accounting for Costs Associated with Exit or
Disposal Activities, which relates to accounting for plant shutdowns, restructuring
and other such costs. FAS No. 146 is based on the fundamental principle that a liability
for a cost associated with an exit or disposal activity should be recorded when it (1) is
incurred, that is, when it meets the definition of a liability in FASB Concepts Statement
No. 6, Elements of Financial Statements, and (2) can be measured at fair value. The
principal reason for issuing FAS No. 146 is the FASBs belief that some liabilities
for costs associated with exit or disposal activities that entities record under current
accounting pronouncements, in particular EITF Issue 94-3, do not meet the definition of a
liability. FAS No. 146 nullifies EITF Issue 94-3; thus, it will have a significant effect
on practice because commitment to an exit or disposal plan no longer will be a sufficient
basis for recording a liability for costs related to those activities. FAS No. 146 is
effective for exit and disposal activities initiated after December 31, 2002. Early
application is encouraged; however, previously issued financial statements may not be
restated. An entity would continue to apply the provisions of EITF Issue 94-3 to an exit
activity that is initiated under an exit plan that met the criteria of EITF Issue 94-3
before the entity initially applied FAS No. 146. The Company does not believe adopting FAS
No. 146 had a material impact on its Consolidated Financial Statements. See Note 19 to
these consolidated financial statements.

In
November 2002, FASB issued FASB Interpretation No. 45, Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others, an interpretation of FASB Statement No. 5, 57, and 107 and Rescission of FASB
Interpretation No. 3 (FIN 45). FIN 45 clarifies the requirement of FAS No. 5,
Accounting for Contingencies, relating to the guarantors accounting for, and
disclosure of, the issuance of certain types of guarantees. FIN 45 requires that upon
issuance of a guarantee, the guarantor must recognize a liability for the fair value of
the obligation it assumes under that guarantee. FIN 45 covers guarantee contracts that
have any of the following four characteristics: (a) contracts that contingently require
the guarantor to make payments to the guaranteed party based on changes in an underlying
obligation that is related to an asset, a liability, or an equity security of the
guaranteed party (e.g., financial and market value guarantees), (b) contracts that
contingently require the guarantor to make payments to the guaranteed party based on
another entitys failure to perform under an obligation agreement (performance
guarantees), (c) indemnification agreements that contingently require the indemnifying
party (guarantor) to make payments to the indemnified party (guaranteed party) based on
changes in an underlying obligation that is related to an asset, a liability, or an equity
security of the indemnified party, such as an adverse judgment in a lawsuit or the
imposition of additional taxes due to either a change in the tax law or an adverse
interpretation of the tax law, and (d) indirect guarantees of the indebtedness of others.
FIN 45 specifically excludes certain guarantee contracts from its scope. Additionally,
certain guarantees are not subject to FIN 45s provisions for initial recognition and
measurement, but are subject to its disclosure requirements. The initial recognition and
measurement provisions are effective for guarantees issued or modified after December 31,
2002. See Note 13 to these consolidated financial statements.

In
December 2002, the FASB issued FAS No. 148, Accounting for Stock Based
CompensationTransition and Disclosure, an amendment to FAS No. 123. This
Statement amends FAS No. 123, Accounting for Stock-Based Compensation, to provide
alternative methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, this Statement amends the
disclosure requirements of FAS No. 123 to require prominent disclosures in both annual and
interim financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. Finally, FAS No. 148
amends APB Opinion No. 28, Interim Financial Reporting, to require disclosure about
those effects in interim financial reporting. For entities that voluntarily change to the
fair value based method of accounting for stock-based employee compensation, the
transition provisions are effective for fiscal years ending after December 15, 2002. For
all other companies, the disclosure provisions and the amendment to APB No. 28 are
effective for interim periods beginning after December 15, 2002.

The
Company has elected to account for stock based compensation, effective with fiscal 2003,
in accordance with FAS No 148, under the fair value method. The Company has
further elected to account for the change in accounting principle under the
Prospective Method as described in amended paragraph 52b of FAS No. 123. The
Company made no option grants, modifications of option grants, or settlement of option
grants in either the period ended December 31, 2003 or the period ended December 31, 2002
and accordingly the change to the fair value method had no effect in either period on Net
Income, Basic earnings per share or Diluted earnings per share. Under the
Prospective Method any future option grants will affect Net Income, Basic
earnings per share and Diluted earnings per share.

In
January 2003, FASB issued FASB Interpretation No. 46, Consolidation of Variable
Interest Entities(FIN 46). FIN 46 requires a variable interest entity to
be consolidated by a company if that company is subject to a majority of the risk of loss
from the variable interest entitys activities or entitled to receive a majority of
the entitys residual returns, or both. FIN 46 also requires disclosures about
variable interest entities that a company is not required to consolidate, but in which it
has a significant variable interest. In December of 2003 FASB issued FIN 46 (R) which,
among other things, deferred the consolidation requirements for existing entities until
the first reporting period ending after March 15, 2004. Certain of the disclosure
requirements apply in all financial statements issued after January 31, 2003, regardless
of when the variable interest entity was established. The Company is currently evaluating
the impact of FIN 46 on its equity investments described in Note 6 to these consolidated
financial statements.

In
December 2003, FASB issued FAS No. 132R, Employers Disclosures about Pensions and
other Post-retirement Benefits. This Statement revises employers disclosures
about pension plans and other postretirement benefit plans. It does not change the
measurement or recognition of those plans required by FAS No. 87, Employers
Accounting for Pensions, FAS No. 88, Employers Accounting for Settlements and
Curtailments of Defined Benefit Pension Plans and for Termination Benefits, and FAS
No. 106, Employers Accounting for Postretirement Benefits Other Than
Pensions. This Statement retains the disclosure requirements contained in FAS No. 132,
Employers Disclosures about Pensions and Other Postretirement Benefits, which
it replaces. It requires additional disclosures to those in the original FAS No. 132 about
the assets, obligations, cash flows, and net periodic benefit cost of defined benefit
pension plans and other defined benefit postretirement plans. The Company has adopted the
disclosure provisions of FAS No. 132R. The adoption of this pronouncement did not have a
material effect on the Companys financial position, results of operations or cash
flows.

In
December 2003, the SEC issued Staff Accounting Bulletin (SAB) No. 104, Revenue
Recognition, which codifies, revises and rescinds certain sections of SAB No. 101,
Revenue Recognition, in order to make this interpretive guidance consistent with
current authoritative accounting and auditing guidance and SEC rules and regulations. The
changes noted in SAB 104 did not have a material effect on the Companys financial
position, results of operations and cash flows.

# 2. BUSINESS ACQUISITIONS

On
August 29, 2003 the Company acquired 100% of the outstanding capital stock of Engel
Industries, Inc., (Engel), a St. Louis, MO based manufacturer of metal forming
equipment for the HVAC industry and other industrial forming users. The price paid for the
stock was approximately $5,687,000 after final adjustments and included goodwill of
approximately $4,200,000. Engel is reflected herein in the Companys Metal Forming
Segment.

On
December 31, 2001, the Company acquired substantially all of the operating assets and
certain liabilities of The King Company, (King), a subsidiary of United
Dominion Industries, based in Bishopville, SC, and Owatonna, MN. King manufactures
industrial heating and specialty refrigeration and ventilation products complementary to
certain of the Companys other industrial HVAC product lines. The purchase price
paid, net of liabilities assumed, was $4 million and included no goodwill. The Company
accounted for the transaction under the purchase method of accounting.

On
July 2, 2001 the Company, through its wholly owned subsidiary, Formtek, Inc., acquired
100% of the outstanding common stock of SNS Properties, Inc. (SNS), an OH
corporation based in Warrensville Heights, OH. SNS, through its Yoder, Krasny Kaplan and
Mentor AGVS businesses, manufactures sophisticated metal forming equipment, tube mills,
pipe mills, custom engineered material handling equipment, and automated guided vehicle
systems for the global market. The purchase price paid for the stock was $12.5 million and
included $7.7 million in goodwill. The Company also acquired a related manufacturing plant
in Bedford Heights, OH for $1.1 million. The Company accounted for the transaction under
the purchase method of accounting. SNS is reflected in the Companys Metal Forming
Segment.

# 3. BUSINESS DISPOSITIONS

On
January 9, 2001 the Company completed the sale of its subsidiary, National Northeast
Corporation (National), an aluminum extruder and heat sink fabricator, to
Alpha Technologies Group, Inc. (Alpha) for a total cash consideration of $49.9
million. The Companys net pre-tax gain, after accounting for the minority interest
and related costs of sale, was approximately $16.4 million. The Income Tax Expense
recorded in respect of the gain is higher than would be suggested by applying statutory
rates to the gain recorded for accounting purposes due principally to the fact that, as
part of the agreement for sale, the Company agreed to make on behalf of Alpha an election
under Internal Revenue Code Section 338(h)10 which requires that the Company treat the
transaction for tax purposes as a deemed sale of 100% of Nationals assets, the
negative tax consequences of which inure to the Company. The Company has accounted for the
transaction as a Gain on Disposal of Discontinued Operations in accordance with APB30.

The
sale of National is separately reported in accordance with APB30 in the accompanying
Consolidated Statements of Income for the year 2001 under the heading Discontinued
Operations.

# 4. INVENTORIES

Inventories
consisted of the following at December 31:

`2003                   2002
                                                                 (in thousands)

         Finished Goods                            $ 13,866                      $ 16,699
         Work-in-progress                            18,064                        18,908
         Raw materials                               31,269                        32,236
                                                     63,199                        67,843
         Less provision for LIFO
           method of valuation                       (8,005)                       (7,256)
                                                   $ 55,194                      $ 60,587`

# 5. PROPERTY AND EQUIPMENT

Property
and equipment consisted of the following at December 31:

|                         |             |             | Depreciation and
Amortization Est.
|------------------------ | ----------- | ----------- | ----------------------------------
|
|
|Land                     | $     4,929 | $     4,577 |                                   
|Buildings                | 30,831      | 26,027      | 19-39 Years                       
|Leasehold Improvements   | 5,033       | 4,879       | 15-39 Years                       
|Equipment                | 103,499     | 95,671      | 3-10 Years                        
|                         | 144,292     | 131,154    
|Accumulated Depreciation | (82,258)    | (74,549)   
|                         | $62,034     | $ 56,605    |                                   

The
above amounts include $4,714,000 and $1,340,000 at December 31, 2003 and 2002,
respectively, in assets that had not yet been placed in service by the Company. No
depreciation was recorded in the related periods for these assets.

Depreciation
and amortization expense related to continuing operations was $8,301,000, $8,818,000 and
$9,269,000, for the years ended December 31, 2003, 2002, and 2001, respectively.

# 6. INVESTMENTS

CareCentric, Inc.
(CareCentric):

The
Company has certain equity and debt investments in CareCentric, Inc., a healthcare
software company based in Atlanta, GA. Prior to March 2002, the Company had accounted for
this investment under the Equity Method of Accounting. In March of 2002, the Company made
an offer proposing to make available to CareCentric up to $1.1 million of short-term
financing to assist CareCentric with its near term working capital needs. Coincident with
Mesteks offer, John E. Reed, Mesteks Chairman and CEO, made an offer proposing
to make available to CareCentric approximately $900,000 of short-term financing as well.
In connection with these offers, the Company transferred to John E. Reed, effective March
29, 2002, certain of its voting and other rights associated with the Series B Preferred
Stock of CareCentric held by the Company. As a result of this transfer, the Company no
longer has significant influence over CareCentric and, accordingly, has discontinued
accounting for this investment under the Equity Method of Accounting subsequent to March
29, 2002.

Pursuant
to the offer made by the Company in March, on July 1, 2002, the Company exchanged certain
investments in CareCentric, Inc. for certain other securities pursuant to a
Re-capitalization and Refinancing Transaction (the Transaction) approved by
the shareholders of CareCentric on June 6, 2002 and the Board of Directors of Mestek on
April 15, 2002. As a result of the Transaction, the Company agreed to extend its guaranty
of CareCentrics $6.0 million line of credit from Wainwright Bank and Trust Company
until June 30, 2003 (now extended through May 1, 2004) and surrendered or canceled the following:(i) a warrant to purchase
104,712 shares of common stock of CareCentric; (ii) two short term notes totaling $884,883
from CareCentric; (iii) two interest notes totaling $1,059,059; (iv) 850,000 shares of
CareCentric Series C Preferred stock with 170,000 votes attributable thereto; (v) the
obligation to repay $1,092,000 advanced to CareCentric; (vi) the obligation to repay
$114,117 advanced to CareCentric; and (vii) options to purchase up to 159,573 shares of
common stock of CareCentric. In exchange for the foregoing, the Company received the
following: (i) a secured, subordinated, convertible term promissory note (the
Promissory Note) in the amount of $4,000,000 convertible into common stock of
CareCentric at $1.00 per share and bearing interest at 6.25% per annum and maturing on
July 1, 2007; (ii) a convertibility feature on the Companys existing 5,600,000
shares of CareCentric Series B Preferred Stock, convertible at an exchange rate of 1.072
shares of common stock for each share of Series B Preferred Stock; and (iii) 890,396
existing warrants re-priced to purchase CareCentric common stock at $1.00 per share, for a
period extended until June 15, 2004. Except for cash advances made in the second quarter
of 2002 totaling $963,000, and $129,000 advanced on July 1, 2002, (which advances have now
been re-financed as part of the Promissory Note), the above assets were carried on the
Companys balance sheet as of June 30, 2002 at a zero valuation, reflecting the
effect of cumulative equity method losses. Accordingly, the Promissory Note will be
carried for accounting purposes at a basis of $1,092,000, reflecting the cash advances
noted above. The Company continues to monitor these advances for collectibility and make
any valuation adjustments appropriate in accordance with the FAS No. 114, Accounting by
Creditors for Impairment of a Loan.See also Note 13 to these consolidated financial statements.

Pursuant
to the offer made by John E. Reed in March of 2002, on July 1, 2002, John E. Reed
exchanged certain investments in CareCentric, Inc. for certain other securities pursuant
to the Transaction described above. As a result of the Transaction, John E. Reed
surrendered certain notes receivable and other advances totaling approximately $3.555
million and received in return a $3.555 million secured convertible note maturing on July
1, 2007 and bearing interest at 6.25% per annum. The conversion feature reflects an
exercise price of $1 per share of CareCentric common stock. In addition, 398,406 shares of
CareCentrics Series D Preferred Stock held by Mr. Reed were made convertible into
CareCentric common stock at an exchange rate of 2.51 shares of common stock per share of
Series D Preferred Stock. The Companys Promissory Note, described in the previous
paragraph, is subordinated to the $3,555,000 facility owed by CareCentric to John E. Reed
and also to a $600,000 Note payable to an unrelated third party.

The H. B. Smith Company, Inc. (HBS):

Prior
to June 27, 2003 the Company held an investment in HBS common stock which was sold on June
27, 2003 for $103,413 and a gain in this amount was recorded in connection with the sale.
The Companys note receivable from HBS, carried at a value of $1,264,000 as of
December 31, 2002, was purchased by HBS on June 30, 2003 for $1,264,000. No gain or loss
was recorded on the disposition of the note. The Company purchases certain products from
HBS under a Supply Agreement and purchases and provides certain services from and to HBS
under a Manufacturing Agreement, both through a subsidiary.

# 7. GOODWILL AND OTHER
INTANGIBLE ASSETS  ADOPTION OF FAS 142

As
explained more fully in Note 1, the Company ceased amortization of goodwill and intangible
assets with indefinite lives effective January 1, 2002. The following table presents net
income on an adjusted basis by adding back goodwill amortization, which had primarily been
recorded as a cost of sale item, to get Adjusted Net Income. As discussed in Note 1, in
2003 and 2002, the Company recorded Goodwill impairment charges in the Metal Forming
reporting unit. These charges are reflected in the 2003 & 2002 adjusted net
income line.

`For the Period Ended
                                                              December 31,
                                                  2003             2002              2001
                                  (dollars in thousands, except for earnings per share amounts)

Reported Net (Loss) Income                   ($43,165)           ($30,405)           $6,314
Add back:  Goodwill Amortization                ---                  ---              1,340
Adjusted Net (Loss) Income                   ($43,165)           ($30,405)           $7,654


Basic (Loss) Earning per Share                 ($4.95)             ($3.48)            $0.72
Add back:  Goodwill Amortization                ---                ---                 0.15
     Adjusted Net (Loss) Income                ($4.95)             ($3.48)            $0.87


Diluted (Loss) Earning per Share               ($4.95)             ($3.48)            $0.72
Add back:  Goodwill Amortization                ---                   ---              0.15
Adjusted Net (Loss) Income                     ($4.95)             ($3.48)            $0.87`

# 8. DEBT

Short-term Debt:

Short-term
debt consisted of the following at December 31:

|                         | 2003    | 2002   
|------------------------ | ------- | -------
|
|
|Revolving Loan Agreement | $17,467 | $   763
|Notes Payable            | ---     | 5,500  
|                         | $17,467 | $6,263 

Revolving
Loan Agreement  The Company has a Revolving Loan Agreement and Letter of Credit
Facility (the Agreement) with Fleet Bank. The Agreement has been amended and extended
through July 30, 2004. The Company is presently in negotiation relative to the renewal of
the facility. The Agreement, as amended, provides $50 million of unsecured revolving
credit including $10 million of standby letter of credit capacity. Borrowings
under the Agreement bear interest at a floating rate based on the banks prime rate
less one and three quarters percent (1.75%) or, at the discretion of the borrower, LIBOR
plus a quoted market factor or, alternatively, in lieu of the prime based rate, a rate
based on the overnight Federal Funds Rate. The Agreement contains financial covenants,
which require that the Company maintain ratios, relating to interest coverage and
leverage. As a result of the Environmental Litigation and Remediation Reserve, and the
related subsidiary bankruptcy, as more fully described in Notes 13 and 18 to the
Consolidated Financial Statements, the Company was in technical violation of the
aforementioned financial covenants as of December 31, 2003. Fleet Bank has agreed to waive
this violation. This Agreement also contains restrictions regarding the creation of
indebtedness, the occurrence of mergers or consolidations, the sale of subsidiary stock
and the payment of dividends in excess of 50 percent (50%) of net income. The Company has
outstanding at December 31, 2003, $6,616,000 in standby letters of credit issued
principally in connection with its commercial insurance programs.

Notes
Payable  The Company has an unsecured uncommitted Demand Loan Facility with a
second commercial bank, JP Morgan Chase, in the amount of $15 million under which the
Company can borrow on a LIBOR basis. The facility has been renewed through June 30, 2004.
No balances were outstanding under the facility at December 31, 2003 or December 31, 2002.

The
Companys subsidiary, Met-Coil Systems Corporation, borrowed $5.5 million from MB
Financial Corporation, a commercial bank, on July 26, 2002 in connection with the
settlement of an environmental litigation matter described in more detail in Note 13.
Fleet Bank provided a letter of credit in support of this loan which was drawn upon in
full by MB Financial Corporation on September 8, 2003 in connection with the Chapter 11
filing of Met-Coil which is described in more detail in Note 18 to these consolidated financial statements.

Long-term Debt:

Long-term
debt consisted of the following at December 31:

`2003                       2002
                                                                  (in thousands)

              Industrial Development Bond             $  4,771                   $  5,403
              Other Bonds and Notes Payable                211                       ---
                                                         4,982                      5,403
              Less Current Maturities                     (596)                      (512)
                                                        $4,386                     $4,891`

Industrial
Development Bond  On April 19, 2002, the Companys subsidiary, Boyertown
Foundry Company, Inc. (BFC), borrowed $5,512,490 under a note issued through the Berks
County Industrial Development Authority in Berks County, PA in connection with a project
to upgrade BFCs foundry equipment in Boyertown, PA. The note bearing interest at
4.93% per annum, matures on April 19, 2012, and is payable in equal monthly payments of
principal and interest over the term of the loan. The note is secured by a Loan and
Security Agreement under which the equipment purchased by BFC with the loan proceeds is
pledged as security for the note. The note is expected to be a Qualified small Issue
Bond under Section 144 (a)(12) of the Internal Revenue Code, entitling the holder to
tax exempt treatment on the interest. In the event the note is found to be not in
compliance with Section 144 (a)(12), the interest rate on the note may increased.

Maturities
of debt in each of the next five years and thereafter are as follows in thousands:

`Short-term           Long-term
                                     Debt                Debt            Total

               2004                $17,467                $596        $18,063
               2005                                        589            589
               2006                                        524            524
               2007                                        550            550
               2008                                        578            578
               Thereafter                                2,145          2,145

                   Total           $17,467              $4,982       $ 22,449`

The
fair value of the Companys long-term debt is estimated based on the current interest
rates offered to the Company for debt of the same remaining maturities. Management
believes the carrying value of debt and the contractual values of the outstanding letters
of credit approximate their fair values as of December 31, 2003.

Cash
paid for interest was $623,000, $969,000, and $1,396,000 during the years ended December
31, 2003, 2002, and 2001, respectively.

# 9. SHAREHOLDERS
EQUITY

Mestek
has authorized common stock of 20,000,000 shares with no par value, and a stated value of
$0.05 per share. As of December 31, 2003, John E. Reed, Chairman and CEO of Mestek, and
Stewart B. Reed, a director of Mestek and son of John E. Reed, together beneficially own a
majority of the outstanding shares of Mesteks common stock.

Mesteks
Articles of Incorporation authorize 10,000,000 shares of a preferred stock (the Preferred
Stock). As of December 31, 2003 and 2002 no shares of the Preferred Stock have been
issued.

# 10. INCOME TAXES

Income
tax expense from continuing operations consisted of the following:

`2003              2002                 2001
                                                           (in thousands)
Federal Income Tax:
                  Current                 ($ 4,121)           $  784              $ 2,325
                  Deferred                 (14,368)           (1,386)              (4,240)
State Income Tax:
                  Current                    1,049               902                  552
                  Deferred                  (1,376)              (41)                (948)
Foreign Income Tax:
                  Current                      761               633                  557
                  Deferred                    (448)              (26)                 289
         Income Tax Expense (Benefit)     ($18,503)             $866              ($1,465)`

Income
tax expense from discontinued operations was $7,499,000 for 2001. There were no
discontinued operations in 2003 or 2002. Discontinued operations are discussed at greater
length in Note 3. Income tax benefit from a change in accounting method in 2002 was
$2,299,000. The change in accounting method for goodwill is discussed at greater length in
Note 1. Income from Continuing Operations before income taxes included foreign income of
$1,559,000, $1,689,000, and $1,505,000 in 2003, 2002, and 2001, respectively.

Total
income tax expense from continuing operations differed from expected  income
tax expense, computed by applying the U.S. federal income tax rate of 35% to earnings
before income tax, as follows:

`2003         2002           2001
                                                                  (in thousands)

Computed "expected" income tax (benefit) expense     ($21,584)       ($72)        ($1,434)
State income tax, net of federal tax benefit               21         767            (11)
Foreign tax rate differential                            (172)       (186)            47
Goodwill Impairment - permanent portion                 3,089         ---           ---
Other - net                                               143         357            (67)
Income Tax Expense (Benefit)                         ($18,503)       $866        ($1,465)`

A
deferred income tax (expense) benefit results from temporary timing differences in the
recognition of income and expense for income tax and financial reporting purposes. The
components of and changes in the net deferred tax assets (liabilities) which give rise to
this deferred income tax (expense) benefit for the year ended December 31, 2003 are as
follows:

`Change in
                                                   December 31,      (Expense)    December 31,
                                                       2002           Benefit          2003
                                                                  (in thousands)

Deferred Tax Assets:
Warranty Reserve                                       $1,097           ($267)          $830
Remediation Reserve                                     3,004          15,284         18,288
Compensated Absences                                    1,028              42          1,070
Inventory Valuation                                       822              13            835
Workers Compensation Reserve                             ---              531            531
Equity Losses in Investee                               5,734            ---           5,734
Accounts Receivable Valuation                           1,014             329          1,343
Federal Tax Operating Loss/Credit Carryforward            401             259            660
State Tax Operating Loss/Credit
   Carryforward                                           645             301            946
Deferred Income on Sale of Assets
   to Non-consolidated Investees                          159            ---             159
Other                                                     821             846          1,667
Total Gross Deferred Tax Assets                        14,725          17,338         32,063

Deferred Tax Liabilities:
Prepaid Expenses                                       (1,019)           (221)        (1,240)
Depreciation and Amortization                          (3,918)            151         (3,767)
       Deferred Tax Liabilities                        (4,937)            (70)        (5,007)
       Net Deferred Tax Benefit                        $9,788         $17,268        $27,056`

At
December 31, 2003, the Company has a Federal tax operating loss of approximately
$11,800,000 which will be carried back to offset 2001 federal taxable income, resulting in
a tax refund of approximately $4,100,000. At December 31, 2003, the Company has foreign
tax operating loss carry forwards of approximately $960,000 and state tax operating loss
carry forwards of approximately $9,892,000, which are available to reduce future income
taxes payable, subject to applicable carry forward rules and limitations.
These losses begin to expire after the year 2009.

Management
believes it is more likely than not that the Company will have sufficient taxable income
when these timing differences are reversed and that the deferred tax asset will be
realized and accordingly no valuation allowance is deemed necessary.

Cash
paid for income taxes, net of refunds received, was $357,000, $3,532,000, and $10,711,000
for the years ended December 31, 2003, 2002, and 2001, respectively.

# 11. LEASES

The
Company leases various manufacturing facilities and equipment from companies owned by
certain officers and directors of the Company, either directly or indirectly, through
affiliates. The leases generally provide that the Company will bear the cost of property
taxes and insurance.

Details
of the principal operating leases with related parties as of December 31, 2003, including
the effect of renewals and amendments executed subsequent to December 31, 2003, are as
follows:

`Basic     Minimum
                                       Date of                   Annual    Future
                                       Lease           Term       Rent     Rentals
                                                                  (in thousands)

Sterling Realty Trust
   Land and Building-Main              11/08/00        5 years    $282      $564
   Land and Building Beacon Morris     07/01/03        5 years      80       372
   Land and Building-South Complex     01/01/94       14 years     257     1,284
   Land and Building Torrington        07/01/99     6.17 years     187       327
Rudbeek Realty Corp.
   (Farmville Location)                07/01/97     13.5 years     436     3,049
MacKeeber
   (South Windsor, CT)                 01/01/97        9 years     325       325
SNS
   (Formtek Cleveland)                 07/02/01        8 years     343       866`

# All Leases

Rent
expense for operating leases, including those with related parties, was $3,602,600,
$3,788,000, and $3,728,000 for the years ended December 31, 2003, 2002, and 2001,
respectively. Rents to related parties were approximately $1,562,000 in each of the years
2003, 2002 and 2001.

Future
minimum lease payments under all non-cancelable leases as of December 31, 2003 are as
follows:

`Year Ending December 31,                          Operating
                                                                              Leases
                                                                          (in thousands)

                                   2004                                        $3,187
                                   2005                                         2,334
                                   2006                                         1,476
                                   2007                                         1,181
                                   2008                                           820
                             Thereafter                                           967

                        Total Minimum Lease payments                           $9,965`

# 12. EMPLOYEE BENEFIT
PLANS

Defined
Contribution and 401-K Plans

The
Company maintains a qualified non-contributory profit-sharing plan (Profit-Sharing
Plan)covering all eligible employees. Contributions to the Profit-Sharing Plan were
$1,784,000, $1,513,000, and $1,383,000 for the years ended December 31, 2003, 2002, and
2001, respectively. Contributions to the Profit-Sharing Plan are defined as three percent
(3%) of gross wages up to the current Old Age, Survivors, and Disability (OASDI) limit and
six percent (6%) of the excess over the OASDI limit, subject to the maximum allowed under
the Employee Retirement Income Security Act of 1974, (ERISA). The Profit-Sharing
Plans vesting terms are twenty percent (20%) vesting after 3 years of service, forty
percent (40%) after 4 years, sixty percent (60%) after 5 years, eighty percent (80%) after
6 years, and one hundred percent (100%) vesting after 7 years.

The
Company maintains a retirement savings plan (Retirement Savings Plan)
qualified under Internal Revenue Code Section 401(k) for employees covered under certain
collective bargaining agreements. Service eligibility requirements differ by division and
collective bargaining agreement. Participants may elect to have up to fifty percent (50%)
of their compensation withheld, up to the maximum allowed by the Internal Revenue Code.
Participants may also elect to make after tax voluntary contributions up to an additional
ten percent (10%) of their gross earnings each year within the legal limits. The Company
contributes differing amounts depending upon the divisions collective bargaining
agreement. Contributions are funded on a current basis. Company contributions to the
Retirement Savings Plan were $445,000, $393,000, and $328,000 for the years ended December
31, 2003, 2002, and 2001, respectively.

The
Company maintains a separate qualified 401(k) plan (401(k) Plan) for salaried
employees not covered by a collective bargaining agreement who choose to participate.
Participants may elect to have up to fifty percent (50%) of their compensation withheld,
up to the maximum allowed by the Internal Revenue Code. Participants may also elect to
make after tax voluntary contributions up to an additional ten percent (10%) of their
gross earnings each year within the legal limits. The Company contributes $0.25 of each
$1.00 deferred by participants and deposited in to the 401(k) Plan not to exceed one and
one half percent (1.5%) of an employees compensation. The Company does not match any
amounts for withholdings from participants in excess of six percent (6%) of their
compensation or for any after tax voluntary contributions. Contributions are funded on a
current basis. Contributions to the Plan were $655,000, $643,000, and $528,000 for the
years ended December 31, 2003, 2002, and 2001, respectively.

Defined
Benefit Plans

The
Companys second-tier subsidiary, Met-Coil, maintained, prior to its acquisition by
the Companys subsidiary, Formtek Inc. on June 3, 2000, several defined benefit
pension plans (the Met-Coil Plans) covering certain of its employees. The Met-Coil Plans
were frozen and merged prior to the acquisition, locking in
retirement benefits earned to that date and precluding any further benefits for future
service. Due to recent adverse investment performance and reduced expectations of future
investment earnings, the Met-Coil Plans administrator has determined that
the Accumulated Benefit Obligation, the present value of future pension obligations to
Met-Coil Plan participants, exceeds the fair market value of the Met-Coil Plans
assets as of December 31, 2003 and 2002. In accordance with the requirements of FAS 87,
Employers Accounting for Pensions, the Company has therefore recorded charges in
2003 and 2002 net of related tax benefit, to the Shareholders Equity section of the
consolidated Balance Sheet contained herein of $205,000 and $559,000, respectively, under
the heading Additional Minimum Liability-Defined Benefit Plan. There was no
pension expense under this plan for the years ended December 31, 2003, 2002, and 2001.

In
connection with the acquisition of the assets of Airtherm Manufacturing Company and
Airtherm Products, Inc. in 2000, the Company assumed certain obligations related to the
defined benefit plan maintained by Airtherm, the Airtherm LLC Retirement Income Plan,
prior to the acquisition date. The Airtherm LLC Retirement Income Plan was
frozen prior to acquisition in a manner similar to the Met-Coil Plans
described above. In accordance with the requirements of FAS 87, Employers Accounting
for Pensions, the Company recorded a charge in 2003, net of related tax benefit, to the
Shareholders Equity section of the Consolidated Balance Sheet contained herein of $42,000
relating to the Airtherm LLC Retirement Income Plan under the heading Additional
Minimum Liability-Defined Benefit Plan. Pension expense under the Airtherm LLC Retirement
Income Plan was $0 for the year ended December 31, 2003 and $164,000 for the year ended
December 31, 2002.

The
Company uses a December 31, 2003 measurement date for the Airtherm LLC Retirement Income
Plan and September 30, 2003 for the Met-Coil Plan.

Obligation
and Funded Status

|                                        | Met-Coil
September 30, |         | Airtherm
December 31, |        
|--------------------------------------- | ---------------------- | ------- | --------------------- | -------
|
|
|Change in benefit obligation            |                        |         |                       |        
|Benefit obligation at beginning of year | $ 4,004                | $ 3,527 | $ 3,294               | $ 3,096
|Interest cost                           | 272                    | 256     | 209                   | 209    
|Actuarial loss                          | 466                    | 451     | 219                   | 165    
|Benefits paid                           | (240)                  | (230)   | (194)                 | (176)  
|Benefit obligation at end of year       | $ 4,502                | $ 4,004 | $ 3,528               | $ 3,294

Change in plan assets

|                                               |          |          |          |         
|---------------------------------------------- | -------- | -------- | -------- | --------
|Fair value of plan assets at beginning of year | $ 3,625  | $ 3,801  | $ 3,196  | $ 3,178 
|Actual return on plan assets                   | 349      | (3)      | 293      | 186     
|Employer contribution                          | 33       | 57       | ---      | 7       
|Benefits paid                                  | (240)    | (230)    | (194)    | (175)   
|Fair value of plan assets at end of year       | 3,767    | 3,625    | 3,295    | 3,196   
|Funded status                                  | (735)    | (379)    | (233)    | (98)    
|Unrecognized transition (asset) obligation     | (8)      | (17)     | ---      | ---     
|Unrecognized net actuarial loss (gain)         | 1,273    | 926      | 76       | (66)    
|Unrecognized prior service cost (benefit)      | ---      | ---      | ---      | ---     
|Net amount recognized                          | $    530 | $    530 | ($  157) | ($  164)

Amounts
recognized in the statement of financial position consist of:

|                                       | Met-Coil
September 30, |          | Airtherm
December 31, |         
|-------------------------------------- | ---------------------- | -------- | --------------------- | --------
|
|
|Accrued benefit cost                   | ($  735)               | ($  379) | ($  233)              | ($  164)
|Accumulated other comprehensive income | 1,265                  | 909      | 76                    | ---     
|Net amount recognized                  | $    530               | $ 530    | ($  157)              | ($  164)

The
accumulated benefit obligation for all defined benefit pension plans was $8,030,000 and
$7,298,000 at December 31, 2003 and 2002, respectively.

Information
for pension plans with an accumulated benefit obligation in excess of plan assets:

|                               | Met-Coil
September 30, |        | Airtherm
December 31, |       
|------------------------------ | ---------------------- | ------ | --------------------- | ------
|
|
|Projected benefit obligation   | $4,502                 | $4,004 | $3,528                | $3,294
|Accumulated benefit obligation | $4,502                 | $4,004 | $3,528                | $3,294
|Fair value of plan assets      | $3,767                 | $3,625 | $3,295                | $3,196

Components
of Net Periodic Benefit Cost:

|                                              | Met-Coil
September 30, |       | Airtherm
December 31, |      
|--------------------------------------------- | ---------------------- | ----- | --------------------- | -----
|
|
|Interest cost                                 | $ 272                  | $ 256 | $ 209                 | $ 209
|Expected return on plan assets                | (282)                  | (334) | (216)                 | (216)
|Amortization of transition (asset) obligation | (10)                   | (10)  | ---                   | ---  
|Amortization of prior service cost            | 4                      | 4     | ---                   | ---  
|Amortization of net (gain) loss               | 33                     | ---   | ---                   | ---  
|Other                                         | (17)                   | 84    | 7                     | 171  
|Net periodic benefit cost                     | ---                    | ---   | ---                   | $ 164

Additional Information

|                                           | Met-Coil
September 30, |      | Airtherm
December 31, |     
|------------------------------------------ | ---------------------- | ---- | --------------------- | ----
|
|
|Increase in minimum liability included     |                        |      |                       |     
|in other comprehensive income (gross)      | $356                   | $909 | $76                   | $---
|Increase in minimum liability included    
|in other comprehensive income (net of tax) | $205                   | $559 | $42                   | $---

Assumptions

Weighted-average
assumptions used to determine benefit obligations at December 31

|                              | Met-Coil
September 30, |     | Airtherm
December 31, |     
|----------------------------- | ---------------------- | --- | --------------------- | ----
|
|
|Discount rate                 | 6%                     | 7%  | 6%                    | 6.5%
|Rate of compensation increase | n/a                    | n/a | n/a                   | n/a 

Weighted-average assumptions
used to determine net periodic benefit cost for years ended December 31:

|                                         | Met-Coil
September 30, |     | Airtherm
December 31, |    
|---------------------------------------- | ---------------------- | --- | --------------------- | ---
|
|
|Discount rate                            | 6                      | 7   | 6                     | 6.5
|Expected long-term return on plan assets | 8                      | 9   | 6.5                   | 7  
|Rate of compensation increase            | n/a                    | n/a | n/a                   | n/a

Each
plan utilizes the services of its own actuary. The actuaries apply rates of return based
on historic performance of the type of investments which comprise the respective plans,
and analysis of the current trends of return rates for these types of investments and the
investment policy adopted by the respective plans. The expected rates are based on
published surveys of expected long-term rates.

Plan
Assets

Mesteks
frozen defined benefit pension plan weighted-average asset allocations at December 31,
2003, and 2002, by asset category are as follows:

|                  | Met-Coil
September 30, |      | Airtherm
December 31, |     
|----------------- | ---------------------- | ---- | --------------------- | ----
|
|
|Equity securities | 38%                    | 38%  | 0%                    | 0%  
|Debt securities   | 30%                    | 30%  | 0%                    | 0%  
|Real estate       | 0%                     | 0%   | 0%                    | 0%  
|Other             | 32%                    | 32%  | 100%                  | 100%
|Total             | 100%                   | 100% | 100%                  | 100%

The
Airtherm defined benefit plan is invested in a guaranteed investment contract or
guaranteed account of a life insurance company. This contract obligates the
issuer to pay an annually or semi-annually adjusted fixed rate of return on the amount
invested, which itself does not appreciate or depreciate in value, other than by reason of
the interest or guaranteed investment return, benefit payments or additional employer
contributions. The investment strategy is to conserve the capital for the Airtherm Plan. The Met-Coil defined benefit plan has
approximately 32% of its assets similarly invested, with the balance, or approximately 68%
of its assets in a bank-managed portfolio of debt and equity securities. Conservation of
capital with some conservative growth potential is the strategy for this plan. The Company
does not expect a material level of employer contributions to the required for either of
these frozen plans.  Further, the Company does not expect a material change in the level
of benefits to be paid in the next ten years

The
Company maintains bonus plans for its officers and other key employees. The plans
generally allow for annual bonuses for individual employees based upon the operating
results of related profit centers in excess of a percentage of the Companys
investment in the respective profit centers. The Company maintains an employment agreement
with its chief executive officer.

Approximately forty-one percent (41%)
of the Companys employees are covered under collective bargaining agreements, of
which thirty-one percent (31%) of these employees are covered under agreements expected to
be renewed in 2004.

# 13. COMMITMENTS AND
CONTINGENCIES

The
Company is obligated under Indemnity Agreements (Indemnity Agreements)
executed on behalf of 23 of the Companys Officers and Directors. Under the terms of
the Indemnity Agreements Agreement, the Company is contingently liable for costs which may
be incurred by the Officers and Directors in connection with claims arising by reason of
these individuals roles as Officers and Directors.

The
Company is contingently liable under standby letters of credit totaling $6,616,000 issued
principally in connection with its commercial insurance coverages. The level of insurance
risk which the Company absorbs under its workers compensation and comprehensive general
liability (including products liability) insurance programs increased substantially after
October 1, 2001, largely as a result of the effects of September 11, 2001 on
the commercial insurance marketplace. For losses occurring in the policy year ending
October 1, 2004, the Company retained liability for the first $2,000,000 per occurrence of
commercial general liability claims (including products liability claims), subject to an
agreed aggregate. In addition, the Company retained liability for the first $250,000 per
occurrence of workers compensation coverage, subject to an agreed aggregate.

The
Company is obligated as guarantor with respect to the debt of MacKeeber Associates Limited
Partnership, a Connecticut limited partnership (MacKeeber), a related party,
under an Industrial Development Bond issued in 1984 by the Connecticut Development
Authority. The balance outstanding under the bond as of December 31, 2003 was $85,000. Mr.
John E. Reed, Mesteks Chairman and Chief Executive Officer, is both the general
partner and a limited partner of MacKeeber.

The
Company is obligated as a guarantor with respect to certain debt of CareCentric, Inc.
(formerly Simione Central Holdings, Inc.  see Note 6) to CareCentrics primary
commercial bank, Wainwright Bank & Trust Company, in the amount of $6 million. The $6
million Wainwright credit line is secured by substantially all of CareCentrics
assets. The balance outstanding under CareCentrics credit line with Wainwright Bank
& Trust Company as of December 31, 2003 was $2,125,000, a reduction of $3,447,000
since December 31, 2001. Under the Equity Method of Accounting, in December 2001, the
Company accrued this guarantee of $6 million as a reserve for Equity Investment Losses.
John E. Reed, the Mesteks Chairman and Chief Executive Officer, is a shareholder and
director of Wainwright Bank & Trust Company.

The
Company is subject to several legal actions and proceedings in which various monetary
claims are asserted. Management, after consultation with its corporate legal department
and outside counsel, does not anticipate that any ultimate liability arising out of all
such litigation and proceedings will have a material adverse effect on the financial
condition of the Company except as set forth below.

ENVIRONMENTAL DISCLOSURE

Bankruptcy and
Environmental Issues Involving Releases of Hazardous Materials

As
disclosed in previous filings, the Lockformer Company (Lockformer), a division
of the Companys second tier subsidiary, Met-Coil Systems Corporation
(Met-Coil), and Mestek directly (under various legal theories) are defendants
in various actions relating to the alleged release and presence of trichloroethylene (TCE)
contamination on and in the vicinity of Lockformers manufacturing facility in Lisle,
IL. On August 26, 2003, Met-Coil filed a voluntary petition for relief under Chapter 11 of
Title 11 of the United States Code (the Bankruptcy Code) in the United States
Bankruptcy Court for the District of Delaware (the Bankruptcy Court) (Case No.
03-12676-MFW). Met-Coil remains in possession of its assets and properties and continues
to operate its businesses and manage its properties as a debtor-in-possession
pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.

As
disclosed in previous filings, a class of residents of approximately 1,400 homes south of
the Lockformer facility filed a class action complaint against Mestek and its subsidiary,
Met-Coil, (Mejdrech, et al. v. The Lockformer Company, et al., filed in the United
States District Court for the Northern District of Illinois, the Mejdrech Class
Action) alleging property damage by reason of contamination of soils, groundwater
and in some cases private drinking water wells. Mestek and Met-Coil have entered into a
letter agreement (the Letter Agreement), dated August 29, 2003, related to a
proposed settlement of the Mejdrech Class Action and a personal injury lawsuit entitled
Schreiber v. The Lockformer Company, et al.  Case No. 02C-6097 (U.S.D.C. for
N.D. Ill.) (the Schreiber Action). Under the Letter Agreement, the various
parties have agreed to the basic framework of a settlement to be set forth in a plan of
reorganization to be submitted by Met-Coil in its pending bankruptcy case, and the
treatment of the Mejdrech class and plaintiffs and the Schreiber Action plaintiff under
such a Plan, all subject to the conditions of the Letter Agreement. The time period of the
original standstill agreement in the Letter Agreement has expired, but no
party has terminated the Letter Agreement. The Letter Agreement may or may not be
finalized in the final reorganization Plan or ultimately approved by the Bankruptcy Court.

Concurrently
with the filing of the Chapter 11 petition on August 26, 2003, Met-Coil filed an adversary
proceeding seeking to stay a series of personal injury actions pending in the United
States District Court of Illinois related to the TCE release (the Illinois
Actions) against Met-Coil, Mestek, and the Met-Coils third-party indemnitee,
Honeywell International, Inc. (Honeywell). The Illinois Actions had been
stayed against Met-Coil upon its filing of its petition, and were subsequently stayed
against the Company as well.

On
November 5, 2003 Mestek and Met-Coil jointly submitted a Plan of Reorganization of
Met-Coil to the Bankruptcy Court (the Plan), and currently an amended Plan and
Disclosure Statement is being prepared for submittal to the Bankruptcy Court. It is the
intention of Met-Coil to seek approval of the amended Plan.

Both
the current Plan and the amended Plan, which Met-Coil and the Company intend to present,
propose to establish various classes of creditors and interests and contemplate the
funding of a capital contribution into Met-Coil by the winning plan sponsor in amounts
sufficient to provide for various distributions to certain of the classes of creditors and
interests. The Plan contemplates and it is expected that the amended Plan will provide for
the issuance of a channeling injunction by the Bankruptcy Court, whereby
future claims relating to personal injury allegedly from TCE contamination of soils, air
or groundwater asserted by persons who resided in a certain geographic area to the south
of the Lockformer facility (the   Lockformer Area) would be channeled to a trust fund to be
established for such claims. In the event that these other claims and potential claims
cannot be dealt with in such a Plan in a manner acceptable to Met-Coil and the Company, and the Bankruptcy Court
then the Plan as amended may not be approved, in which event the proposed settlements may
not proceed. Met-Coil is undertaking to reach settlements with many of its environmental
and other creditors in addition to those tentative and conditional settlements evidenced
by the Letter Agreement described above, so as to monetize as many otherwise un-liquidated
claims as possible prior to seeking acceptance of the Plan as amended.

Bankruptcy
law does not permit solicitation of acceptances of the Plan until the Bankruptcy Court
approves the applicable Disclosure Statement relating to the Plan as providing adequate
information of a kind, and in sufficient detail, as far as is reasonably practicable in
light of the nature and history of the debtor and the condition of the debtors books
and records, that would enable a hypothetical reasonable investor typical of the holder of
claims or interests of the relevant class to make an informed judgment about the Plan.
Accordingly, the disclosure contained in these consolidated financial statements is not
intended to be, nor should it be construed as, a solicitation for a vote on the Plan.
Met-Coil will emerge from Chapter 11 if and when the Plan receives the requisite
stakeholder approval, and is confirmed by the Bankruptcy Court and is consummated.

The
other personal injury and property damage lawsuits, the Illinois Actions referenced above,
remain outstanding (including claims made by Honeywell for contribution and
indemnification by the Company and Met-Coil described below).

In
addition, as part of the various environmental litigation relating to the Company and
Met-Coil, Honeywell is seeking indemnification from the Company for losses, including
defense and liability costs, allegedly incurred or to be incurred in connection with the
lawsuits in which it has also been named as a party. Honeywell has asserted claims (the
Honeywell Claims) currently estimated at approximately $5,600,000 in an action
against the Company entitled Honeywell International, Inc. v. Mestek, Inc. and Formtek,
Inc.,Case No. 03-C-6823 (U.S.D.C., N.D. Ill.) originally filed in the
Circuit Court of Cook County, IL. The Company has removed the case to the Illinois Federal
District Court and is vigorously contesting this case.

The
July 2003 jury verdict of compensatory and punitive damages in the amount of $2,368,000 in another action, Devane, et. al v.
The Lockformer Company, 18th Judicial Circuit Court, DuPage County, IL
(Devane), previously disclosed, has been stayed as a result of the
bankruptcy filing of Met-Coil.

The
Illinois Attorney General, in an action (the Attorney General Action)
disclosed in previous filings and brought in the Circuit Court of DuPage County, IL, on
behalf of the State of Illinois, the Illinois Environmental Protection Agency
(IEPA) and other governmental agencies, is seeking to have Met-Coil pay for
the cost of connecting approximately 175 households in the Mejdrech Class Action area
(discussed above) to public water supplies, and pay for the States response and
investigatory costs in this action and civil penalties. No specific monetary claim for
damages or relief is made in the pleadings in this action. Met-Coil is in negotiations
with the Illinois Attorney General on this matter. There is insufficient information
available to management at this time to provide an opinion as to the outcome of these
discussions. The Company has been providing bottled water to certain households still on
wells in the Mejdrech class area.

The
Plan currently contemplates and it is expected that the amended Plan will provide, that
Met-Coil will continue to fund on-site and specified off-site remediation. The winning
plan sponsor may be required to guarantee some or all of the obligations of Met-Coil in
this regard.

The
Company increased its Environmental Litigation and Remediation Reserve during the three
months ended December 31, 2003 by $19,329,000 to a total at December 31, 2003 of
$50,800,000 as a result of settlement discussions as to amounts that may be required to
settle the various claims related to the Met-Coil bankruptcy, and complete Environmental
Remediation and ongoing monitoring. Accordingly, the financial statements contained in
this report reflect such accrual and reserve included in the caption Liabilities
Subject to Compromise. This reserve has been established in accordance with
Financial Accounting Standard Board Statement No. 5 and Staff Accounting Bulletin No. 92.
However, while this reserve represents managements best estimate of these
liabilities, there is no assurance that it will be adequate, and as previously disclosed,
the resolution of the claims relating to the Lockformer site could have a material adverse
effect on the Companys results of operations and financial position. The proposed
resolution described above, including any additional amounts required to facilitate
acceptance of an amended Plan in the Met-Coil bankruptcy case to address matters outside
the scope of the Letter Agreement, could require the expenditure of funds beyond this
reserve. In addition, there can be no assurance that future claims for personal injury or
property damage will not be asserted by other plaintiffs against Met-Coil and Mestek with
respect to the Lockformer site and facility.

As
additional information and expert opinions become available to management, it may either
be able to revise its estimate of the range of exposure, with appropriate revision to
reserves taken, or continue to believe that no such better estimate is possible at the
time.

Met-Coil
has limited insurance coverage for defense costs and liability associated with these
environmental actions. To date approximately 41% of Met-Coils total out-of-pocket
costs associated with these litigations has been reimbursed by insurance carriers. This
figure does not include any amounts relating to the compensatory or punitive damages
awarded in the Devane case, which have not been paid as of the date of this filing
and certain aspects of which were on appeal at the time that the automatic stay occurred
as a result of Met-Coils filing of its bankruptcy petition on August 26, 2003. Many
of Met-Coils insurance carriers have negotiated a complete settlement with Met-Coil
and are no longer liable for payment of either defense costs or indemnification expense.
Consistent with EITF 93-5, the Company has treated insurance recoveries, whether of
defense costs or in relation to indemnity obligations, on a cash basis except where
settlements that are not subject to further litigation have been reached with insurance
carriers as of quarter end or year end, in which cases receivables have been appropriately
accrued. Accordingly, while there is potential for substantial additional recoveries from
its remaining insurers, with each of whom it either has reached a proposed settlement or
continues in negotiations, no such recoveries have been anticipated in the these financial
statements.

Summary of Reserves

Met-Coil
is continuing remediation of the Lockformer facility in Lisle, IL, pursuant to a Work Plan
for the site (on-site remediation) approved by the Environmental Protection Agency (EPA) and is awaiting
approval of the remedial standards to be achieved by such Work Plan from the IEPA. The
IEPA has not agreed to any specific target level of remediation. To date, substantial soil
remediation has occurred in areas under and adjacent to the Lisle facility through both
soil vapor extraction and electric resistive heating processes. Groundwater remediation
remains to be accomplished and a work plan for this is being prepared for submission to
regulatory authorities. In the year ended December 31, 2003, Met-Coil paid $3,178,000 for
on-site remediation, and has reserved $7,632,000 for future remediation costs as of
December 31, 2003. This amount is included in the accompanying financial statements in the
heading Liabilities Subject to Compromise. In light of the remaining
uncertainties surrounding the effectiveness of the available remediation technologies and
the future potential changes in remedial objectives and standards, still further reserves
may be needed in the future with respect to the on-site remediation of the Lisle facility.
The complexity of aforementioned factors makes it impossible to further estimate any
additional costs.

The
Companys Environmental Litigation and Remediation Reserve of $50,800,000 at December
31, 2003 is comprised of the following:

`(in thousands)

         The Letter Agreement described above                                    $18,500
         The Devane Case                                                           2,368
         Estimated future remediation costs                                        7,632
         The Illinois Actions, The Honeywell Claims, The Attorney
              General Action, and all matters related to pending
              or future personal injury claims in the Lockformer Area             22,300
              Total                                                              $50,800`

Any
additional costs of remediation off of the Lisle site (off-site remediation)
are not determinable at this time and remain a contingency pending the resolution of the
issue of whether Met-Coil has liability for TCE contamination beyond areas for which
settlements have already been reached.

At December 31, 2003, the Company had been named in 69 outstanding asbestos-related products lawsuits, an increase
of approximately 9 cases since September 30, 2003. All of these suits seek to establish
liability against the Company as successor to companies that may have manufactured, sold
or distributed products containing asbestos materials, and who are currently in existence
and defending thousands of asbestos related cases, or because the Company currently sells
and distributes boilers, an industry that has been historically associated with
asbestos-related products. To the best of its knowledge, the Company has never
manufactured, sold or distributed any product containing asbestos materials. In addition,
the Company believes it has valid defenses to all of the pending claims and vigorously
contests that it is a successor to companies that may have manufactured, sold or
distributed any product containing asbestos materials. However, the results of asbestos
litigation have been unpredictable, and accordingly, an adverse decision or adverse
decisions in these cases, individually or in the aggregate, could materially adversely
affect the financial position and results of operation of the Company and could expose the
Company to substantial additional asbestos related litigation and the defense costs
thereof. The total requested damages of these cases are over $3 billion. Thus far,
however, the Company has had over 40 asbestos-related cases dismissed without any payment
and it settled approximately twenty-three asbestos-related cases for a de minimis value.

In
addition to the Lisle, IL site, the Company has been named or contacted by state
authorities and/or the EPA regarding the Companys asserted liability or has
otherwise determined it may be required to expend funds for the remediation of certain
other sites described below.

In
High Point, NC, the Company has been named as a Potentially Responsible Party
(PRP) with regard to the clean up of groundwater contamination allegedly due to dumping at
a landfill. The Company believes that its activity at the site represented less than one
percent of all activity at the site. State authorities have received for review a report
on the Remedial Investigation of the site, including a supplemental Remedial Investigation
submitted in 2003, a base-line Risk Assessment and a Feasibility Study of the alternative
remedial options for treating groundwater contamination at or near the site. The North
Carolina Department of Environment and Natural Resources (DENR) has not issued its
remaining formal comments on these documents, nor has a final remedial alternative yet
been selected or approved. The Company continues to participate in a joint defense group
to help define and limit its liabilities and may be required to contribute to the
remediation of groundwater contamination. The PRPs anticipate proposing a remedy based
upon the use of phytoremediation and engineered wetlands.

The
Company (along with many other corporations) is involved in a PRP action for the
remediation of a site in Southington, CT, as a result of the EPAs preliminary
assignment of derivative responsibility for the presence of hazardous materials
attributable to two other corporations from whom the Company purchased assets after the
hazardous materials had been disposed of at the Southington site. The Company participated
as part of a joint defense group in a de minimis settlement with the EPA
concerning soil remediation at the Southington, CT site, while the issue of further
groundwater investigation at the site was postponed by the EPA in 1998, pending the soil
remediation. Currently, Monitored Natural Attenuation (MNA) and a landfill cap are being
evaluated as remedial alternatives for groundwater contamination at the site. The landfill
cap has been installed, but its effectiveness has not yet been determined. Likewise, more
study must be performed by the environmental consultant hired by the joint defense group
to support the evaluation of the potential for MNA to control future dissolved volatile
organic compound migration at this site.

The
Process Recovery Corporation (PRC) of which the Companys foundry subsidiary and its
predecessor corporation Eafco, Inc. were shareholders and customers for disposal of used
foundry sand, was notified in 2002 that it had exceeded certain fill parameters of its
permit. Since then PRC has ceased operations and expended almost all of its liquid assets.
The Pennsylvania Department of Environmental Protection (PADEP) contacted the customer
generators of PRC and demanded that they maintain the leachate collection system at the
landfill and execute a permitted closure of the landfill. While the Company does not
believe that any of the PRC customer generators or shareholders are responsible for
closure of the landfill, the Company has nevertheless joined a group of the majority of
PRC customers who have agreed voluntarily to fund operation of the PRC leachate collection
system on an interim basis. This group is also investigating alternative solutions to the
PADEPs concerns, such as sale or lease to a third party. The Company intends to
contest any liability that may be asserted against it to pay for closure of the PRC landfill. But even if the Company
should contribute to a closure voluntarily or through some equitable court order, the Company believes that the cost
to the Company for its share of the closure plan, based on calculated tons deposited in
the landfill and the current estimate of the closure plan, should be in the range of
$100,000 to $240,000.

A
Company subsidiary that has contracted to sell a facility in Scranton, PA has been
notified by the purchaser that a Phase II environmental site assessment reports the
presence of PCE in certain soil borings taken on the site of the facility in March 2004.
The impacted area of approximately 20,300 square feet will have to be treated to remove
the PCE contamination to the satisfaction of the PADEP. The cost of this treatment is not
quantifiable at this time, but the Company has pollution legal liability insurance with
policy limits of $10,000,000 covering this site, which management believes will limit the Companys exposure to
its $50,000 deductible, based on preliminary estimates that remediation costs will not
exceed the insurance policy limits.

The
Company continues to investigate all of these matters. Given the information presently
known, no estimation can be made of any liability which the Company may have with respect
to these matters. Based on the information presently available to it, the Company does not
believe that any of these last four described matters will be material to the
Companys financial position or results of operations.

# 14. SEGMENT INFORMATION

# Description of the types
of products and services from which each reportable Segment derives its revenues:

The
Company has two reportable Segments: the manufacture of heating, ventilating and
air-conditioning equipment (HVAC) and the manufacture of metal handling and
metal forming machinery (Metal Forming).

The
Companys HVAC Segment manufactures and sells a variety of complementary residential,
commercial and industrial heating, cooling and air control and distribution products. The
HVAC Segment sells its products to independent wholesale supply distributors, mechanical,
sheet metal and other contractors and, in some cases, to other HVAC manufacturers under
original equipment manufacture (OEM) agreements and direct to certain
retailers pursuant to national account agreements. The HVAC Segment is comprised of three
interrelated HVAC product groups: Hydronics Products, Gas and Industrial Products, and Air
Distribution and Cooling Products, described in more detail as follows:

Hydronics
Products consist of residential baseboard heating products, commercial finned tube heating
products, residential boilers, commercial boilers, convectors, kickspace heaters, fan coil
units, steam & hot water unit heaters, finned-copper tube boilers and water heaters.

Gas
Products consist of commercial gas fired heating and ventilating equipment and corrugated
stainless steel gas tubing. Industrial Products consist of commercial and industrial
indoor and outdoor heating and air conditioning products.

Air
Distribution Products consist of fire, smoke and air control dampers, louvers, grilles,
registers, VAV boxes and diffusers. Cooling Products consist of residential and commercial
air conditioning products.

Collectively,
the HVAC Segments products provide heating, cooling, ventilating, or some
combination thereof, for residential, commercial and/or industrial building applications.

The
Metal Forming Segment, operating under the umbrella name Formtek, is comprised
of several subsidiaries and divisions, all manufacturers of equipment used in the metal
forming industry (the uncoiling, straightening, leveling, feeding, forming, bending,
notching, stamping, cutting, stacking, bundling or moving of metal in the production of
metal products, such as steel sheets, office furniture, appliances, vehicles, buildings,
and building components, among many others).

# Measurement of Segment
profit or loss and Segment assets:

The
Company evaluates performance and allocates resources based on profit or loss from
operations before interest expense and income taxes (Operating Profit), not including
non-operating gains and losses. The accounting policies of the reportable Segments are the
same as those described in the significant accounting policies. Inter-Segment sales and
transfers are recorded at prices substantially equivalent to the Companys cost;
inter-company profits on such inter-Segment sales or transfers are not material.

# Factors management used
to identify the enterprises reportable segments:

The
factors which identify the HVAC Segment as a reportable Segment are as follows:

The HVAC
industry in which the HVAC Segment operates has been characterized for many years by a
gradual consolidation or roll-up process in which smaller companies, typically
built around one or two niche products, are subsumed into the larger product family of
more established HVAC companies. The HVAC Segment has grown incrementally over many years
by internal growth and by adding complementary HVAC product lines via acquisition on a
regular basis. The HVAC Segment has acquired in this manner over 20 companies since 1986
at an average transaction size of approximately $5 million. By design, the HVAC
Segments acquisition strategy has been to acquire complementary HVAC products in
order to exploit specific marketing, distribution, manufacturing, product development and
purchasing synergies. Management, accordingly, views and operates the HVAC Segment as a
single cohesive business made up of a large number of mutually reinforcing HVAC product
lines acquired over a number of years.

All
of the Segments HVAC Products described above share common customers, common
distribution channels, common manufacturing methods (and in many cases shared
manufacturing facilities), common manufacturing services, common purchasing services,
common executive and financial management, and common engineering and product development
resources. The business decisions regarding Sales, Marketing, Operations, Engineering, and
Product Development are made on a centralized basis by the Segments core management
group.

Common
Sales/Marketing Management: Executive sales/marketing management is provided for
substantially all of the HVAC product groups from the HVAC Segments headquarters in
Westfield, MA. Most, if not all, of the HVAC Segments customers are current
customers or potential future customers for more than one of the Segments product
groups. As explained above, the HVAC Segments acquisitions are typically based in
fact upon just such cross-selling and common distribution synergy opportunities.

The
HVAC industrys most significant trade association, ASHRAE, (American Society of
Heating, Refrigeration, and Air conditioning Engineers), hosts an annual trade show at
which all of the HVAC Segments products and brand names are represented at a single
consolidated physical location under the Mestek name. Representatives of the HVAC industry
customer base  independent manufacturers representatives, contractors, engineers,
wholesale distributors etc.  are all typically in attendance at this event which
underscores the interrelated nature of the HVAC industry.

Common
Manufacturing Management. Substantially all of the products made at the HVAC
Segments 20 manufacturing locations involve sheet metal fabrication, paint, packing
and assembly. As such, they share many common characteristics and, in fact, a centralized
Manufacturing Services Group serving the Segment based in Westfield, MA provides a wide
variety of manufacturing related services to these locations. Opportunities to combine
similar manufacturing operations are commonplace and the HVAC Segment routinely undertakes
such consolidations resulting in numerous instances where several HVAC product groups
share a single manufacturing facility.

Common
Purchasing Management. The HVAC Segment, composed primarily of HVAC sheet metal
fabrication and assembly operations, presents a great deal of common purchasing
opportunities. A centralized Purchasing Department serving the HVAC Segment based in
Westfield, MA, therefore serves all of the 20 manufacturing locations in the Segment by
aggregating the more significant purchasing opportunities. Common items purchased include
copper tube, aluminum fin stock, cold rolled steel, pre-painted steel, motors, controls,
and freight, among many others.

Common
Financial Management. Income statements are prepared at the HVAC Segments
Westfield MA headquarters each month for substantially all of the products made at the 20
HVAC locations mentioned above with further breakdown among specific product lines, and
these are reviewed by the appropriate Chief Operating Decision Maker.

The
factors which identify the Metal Forming Segment as a reportable Segment are as follows:

The companies
acquired by the Metal Forming Segment in the past were selected for their synergies with
the existing metal forming franchises: complementary products and distribution channels,
potential manufacturing synergies, shared technologies and engineering skills, potential
purchasing synergies, common field service skills and organizations, and shared customer
bases. The most significant synergistic theme has been the real and potential common
customer base. To a large degree, any historical customer of one of the companies is a
potential customer for any of the others. Exploiting this cross selling opportunity is a
central factor in the creation of the Formtek family of metal forming products and
underscores the Segments goal of creating a single integrated metal forming solution
provider for the metal forming marketplace worldwide. Accordingly, there is a substantial
degree of inter-company sales among the four formerly separate metal forming companies.

Notwithstanding
the interrelation of these subsidiaries, separate income statements and balance sheets are
maintained for each of the entities and the appropriate Chief Operating Decision Maker
reviews each of them separately on a monthly basis. The entities are contained in separate
corporations, each a legally distinct entity in its own right.

Common
Sales/Market Management. Corporate sales/marketing support is provided for all of the
Segments entities from a central office in Itasca, IL, which focuses on promoting
Formtek as a family of integrated products for the metal forming marketplace, through the
use of market managers.

Common
Manufacturing Management. Substantially all of the products made at the Segments
various entities involve the manufacture of metal forming equipment. As such, the entities
share many common characteristics and in fact a centralized Manufacturing Services Group
serving the Segment based in Westfield, MA provides a wide variety of manufacturing
related services to these locations. Opportunities to combine similar manufacturing
operations are commonplace and the Segment routinely undertakes such consolidations.

Common
Purchasing Management. The Segment, composed of manufacturers of metal forming
equipment, presents numerous common purchasing opportunities. A centralized Purchasing
Department serving the Segment based in Westfield, MA, therefore serves the Segment by
aggregating these purchasing opportunities.

Common
Financial Management. Income statements are prepared at the Segments Westfield,
MA headquarters each month for all of the products made at the four entities mentioned
above and these are reviewed by the appropriate Chief Operating Decision Maker. Separate
general ledgers and balance sheets for the four entities are maintained as they are
legally distinct subsidiaries necessitating this level of detail.

Shared
New Product Development. The Segments operating units utilize common resources
provided by Formtek, Inc. for new product development, including market research,
engineering and financial viability forecasting.

Information
presented in the following tables relates to continuing operations only.

# Year endedDecember 31,
2003

# (in thousands)

|                                       | HVAC        | Metal
Forming | All
Other      | Totals      
|-------------------------------------- | ----------- | ------------- | -------------- | ------------
|
|
|Revenues from External Customers       |             |               |                |             
|                                       | $299,201    | $66,905       | $        407   | $ 366,513   
|Intersegment and Intrasegment Revenues
|                                       | $  14,463   | $  5,262      | ---            | $   19,725  
|Interest Expense                       | $       484 | $     202     | $            4 | $        690
|Depreciation Expense                   | $    6,456  | $  1,664      | ---            | $     8,120 
|Amortization Expense                   | $       175 | $         6   | ---            | $        181
|Segment Operating Profit (Loss)        | $13,710**   | ($73,925)     | ($    533)     | ($ 60,748)  
|Segment Assets                         | $175,098    | $70,191       | $     1,381    | $ 246,670   
|Expenditures for Long-lived Assets (1) | $    9,543  | $  4,061      | ---            | $   13,604  
|                                      
|                                      

* includes $53,665,000 in
Environmental Litigation/Remediation expense (see Note 13), $5,963,000 in Subsidiary
Bankruptcy Professional Fees (see Note 18) and $9,975,000 in Goodwill Impairment charges
(see Note 1).

** includes $5,239,000 in Plant
Shutdown and Other Restructuring Charges (see Note 19).

(1)    
          excludes long lived assets acquired via business acquisition

# Year endedDecember 31,
2002

# (in thousands)

|                                       | HVAC        | Metal
Forming | All
Other | Totals     
|-------------------------------------- | ----------- | ------------- | --------- | -----------
|
|
|Revenues from External Customers       | $307,585    | $ 65,855      | $ 434     | $373,874   
|Intersegment and Intrasegment Revenues | $  15,299   | $   4,997     | ---       | $  20,296  
|Interest Expense                       | $       746 | $      218    | ---       | $       964
|Depreciation Expense                   | $    6,812  | $   1,657     | ---       | $    8,469 
|Amortization Expense                   | $       126 | $      223    | ---       | $       349
|Segment Operating Profit               | $  21,801   | ($20,538)     | ($   558) | $       705
|Segment Assets                         | $170,217    | $ 49,737      | $ 347     | $220,301   
|Expenditures for                      
|Long-lived Assets                      | $    7,079  | $      447    | ---       | $    7,526 

# Year endedDecember 31, 2001

# (in thousands)

|                                       | HVAC        | Metal
Forming | All
Other      | Totals    
|-------------------------------------- | ----------- | ------------- | -------------- | ----------
|
|
|Revenues from External Customers       |             |               |                |           
|                                       | $313,726    | $ 79,755      | $        622   | $394,103  
|Intersegment and Intrasegment Revenues
|                                       | $  13,607   | $   3,647     | ---            | $  17,254 
|Interest Expense                       | $       938 | $      457    | $            1 | $    1,396
|Depreciation Expense                   | $    5,015  | $   1,652     | $          84  | $    6,751
|Amortization Expense                   | $       990 | $   1,528     | ---            | $    2,518
|Segment Operating Profit (Loss)        | $  21,020   | ($  7,659)    | ($  1,769)     | $  11,592 
|Segment Assets                         | $174,201    | $ 85,047      | $        263   | $259,511  
|Expenditures for Long-lived Assets (1) | $    2,667  | $        25   | ---            | $    2,692

(1)    
          excludes long lived assets acquired via business acquisition

---

|HVAC Segment Revenues by HVAC Product Group: |          |          |         
|-------------------------------------------- | -------- | -------- | --------
|
|
|Hydronic Products                            | $120,793 | $115,160 | $114,455
|Air Distribution and Cooling Products        | 82,994   | 90,502   | 103,877 
|Gas and Industrial Products                  | 95,414   | 101,923  | 95,394  
|Total Consolidated Revenues                  | $299,201 | $307,585 | $313,726

# RECONCILIATION WITH
CONSOLIDATED DATA:

|Revenues                                                |           |           |          
|------------------------------------------------------- | --------- | --------- | ---------
|
|
|Total External Revenues For Reportable Segments         | $ 366,513 | $ 373,874 | $ 394,103
|Inter and Intrasegment Revenues For Reportable Segments | 19,725    | 20,296    | 17,254   
|Elimination of Inter and Intrasegment Revenues          | (19,725)  | (20,296)  | (17,254) 
|Total Consolidated Revenues                             | $ 366,513 | $ 373,874 | $ 394,103
|                                                       

# Profit or Loss

|                                                    |           |           |          
|--------------------------------------------------- | --------- | --------- | ---------
|
|
|Reportable Segments Operating Profit (Loss)         |           |           |          
|from continuing operations                          | ($60,748) | $ 705     | $ 11,592 
|Interest Expense-Net                                | (622)     | (560)     | (722)    
|Other Income (Expense) Net                          | (298)     | (350)     | (60)     
|Equity Loss In Investee                             | ---       | ---       | (14,908) 
|Loss from continuing operations before income taxes | ($61,668) | ($   205) | ($ 4,098)

# GEOGRAPHIC INFORMATION:

|Revenues:               |          |          |         
|----------------------- | -------- | -------- | --------
|
|
|United States           | $341,104 | $352,993 | $368,735
|Canada                  | 15,464   | 13,385   | 15,233  
|Other Foreign Countries | 9,945    | 7,496    | 10,135  
|Consolidated Total      | $366,513 | $373,874 | $394,103

# Long Lived Assets:

|                        |         |         |         
|----------------------- | ------- | ------- | --------
|
|
|United States           | $82,089 | $81,057 | $115,386
|Canada                  | 1,966   | 1,712   | 1,672   
|Other Foreign Countries | 59      | ---     | ---     
|Consolidated Total      | $84,114 | $82,769 | $117,058

# 15. SELECTED QUARTERLY
INFORMATION (UNAUDITED)

| | The
table below sets forth selected quarterly information for each full quarter of 2003 and
2002. (Dollars in thousands except per common share amounts).
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------

|2003                  |           |           |           |          
|--------------------- | --------- | --------- | --------- | ---------
|
|
|Total Revenues        | $86,156   | $ 86,958  | $ 97,259  | $ 96,140 
|Gross Profit          | $24,973   | $ 24,580  | $ 28,855  | $ 27,658 
|Net Income (Loss) (1) | $     842 | ($ 9,509) | ($ 9,472) | ($25,026)
|Per Common Share:    
|Basic                 | $    0.10 | ($  1.09) | ($  1.09) | ($  2.87)
|Diluted               | $    0.10 | ($  1.09) | ($  1.09) | ($  2.87)

|2002                  |          |         |        |       
|--------------------- | -------- | ------- | ------ | ------
|
|
|Total Revenues        | 89,061   | 90,630  | 95,305 | 98,878
|Gross Profit          | 24,967   | 26,605  | 27,878 | 29,881
|Net Income (Loss) (2) | (27,818) | (4,481) | 1,884  | 10    
|Per Common Share:    
|Basic                 | (3.19)   | (0.51)  | 0.22   | ---   
|Diluted               | (3.19)   | (0.51)  | 0.22   | ---   

(1)    
          the Company recorded pretax charges of approximately $1,200,000, $16,000,000,
          $16,700,000, $19,700,000 in the first second, third, and fourth quarters of
          2003, respectively, related to the Lisle, IL environmental matter, which is
          described in more detail in Note 13, and a pretax charge in the fourth quarter
          of 2003 of $9,975,000 for Goodwill Impairment.

(2)    
          reflects goodwill impairment charge of $29,334,000 as of January 1, 2002 in
          accordance with FAS 142. See Notes 1 and 7.

16.    
          COMMON STOCK REPURCHASES

In
2003 and 2002 the Company did not repurchase any of its common shares in the open market.
The Company acquired 21,500 shares in 2001. All such shares are accounted for as treasury
shares.

17.    
          STOCK OPTION PLANS

On
March 20, 1996, the Company adopted a stock option plan, the Mestek, Inc. 1996 Stock
Option Plan, (Stock Option Plan), which provides for the granting of options
to purchase 500,000 shares of the Companys common stock. The Stock Option Plan
provides for the awarding of incentive and non-qualified stock options to certain
employees of the Company and other persons, including directors, for the purchase of the
Companys common stock at fair market value on the grant date. The Stock Option Plan
was approved by the Companys shareholders on May 22, 1996. Options granted under the
Stock Option Plan vest over a five-year period and expire at the end of ten years.

A
summary of transactions for the years ended December 31, 2003, 2002, and 2001 are as
follows:

`Weighted
                                               Number of                   Average
                                               Options                Exercise Price

         Balance - December 31, 2000          175,000                    $16.79
         Granted                               25,000                    $23.25

         Balance - December 31, 2001          200,000                    $17.60

         Balance - December 31, 2002          200,000                    $17.60

         Balance - December 31, 2003          200,000                    $17.60`

Options
exercisable for the years ended December 31, 2003, 2002, and 2001, were 168,000, 146,000,
and 124,000, respectively. The weighted average exercise price for all exercisable options
as of December 31, 2003 was $16.85.

The
weighted average fair values at the date of grant for options outstanding as of December
31, 2003, 2002, and 2001, were $8.64, $8.64, and $8.64, respectively. The fair value of
options at the date of grant was estimated using the Black-Scholes model with the
following weighted average assumptions:

`Options
                                                             Granted in
                                                                2001

         Expected life (years)                                   10
         Interest                                              4.39%
         Volatility                                           22.52%
         Dividend yield                                          0%`

The
Company accounts for stock-based compensation issued prior to January 1, 2003 under the
intrinsic value method in accordance with APB 25. Pro forma disclosure of net income and
earnings per share on the basis of the fair value method is included in Note 1.

The
Company has elected to account for stock based compensation, effective with fiscal 2003
year, in accordance with FAS No. 148, under the fair value method. The Company
has further elected to account for the change in accounting principle under the
Prospective Method as described in amended paragraph 52b of FAS No. 123. The
Company made no option grants, modifications of option grants, or settlement of option
grants in either the period ended December 31, 2003 or the period ended December 30, 2002
and accordingly the change to the fair value method had no effect in either period on Net
Income, Basic earnings per share or Diluted earnings per share. Under the
Prospective Method any future option grants will affect Net Income, Basic
earnings per share and Diluted earnings per share.

Effective
July 1, 1996, the Companys subsidiary, Omega adopted a stock option plan
(Omega Plan) which provides for the granting of both Incentive and
Non-Qualified Stock Options (as those terms are defined in the Internal Revenue Code) of
up to 200 shares of stock to certain employees of Omega for the purchase of Omegas
common stock at fair market value as of the date of grant. The Omega Plan was approved as
of July 1, 1996 by John E. Reed, representing Mestek, and the sole shareholder of Omega,
pursuant to authority vested in him by vote of the Board of Directors of Mestek dated May
22, 1996. Options to purchase an aggregate of 140 shares of the common stock of Omega,
representing a 14% equity share, were granted to two Omega executives effective July 1,
1996. The options vest over a five-year period commencing May 1, 1999 and ending on May 1,
2003 and expire on July 1, 2006. None of the options granted have been exercised. Through
a separate agreement, the option holders currently have a put right after exercise which
allows them to sell their option shares to Omega at a figure based upon book value and
Omega currently has a corresponding call option at a figure based upon book value. In
accordance with APB 25, the Company has reflected pre-tax charges to earnings in 2003,
2002, and 2001 of $668,000, $635,000 and $444,000, respectively, for the compensation
value in those periods of the options granted.

# 18. SUBSIDIARY BANKRUPTCY

As
a result of the ongoing environmental litigation described more fully in Note 13, on
August 26, 2003, Met-Coil Systems Corporation (Met-Coil or, the
Debtor), a second-tier subsidiary of Mestek filed a voluntary petition for
relief under Chapter 11 of title 11 of the United States Code (the Bankruptcy
Code) in the United States Bankruptcy Court for the District of Delaware (the
Bankruptcy Court). The Debtor remains in possession of its assets and
properties, and continues to operate its businesses and manage its properties as a
debtor-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy
Code.

Concurrently
with the filing of the Chapter 11 petition, on August 26, 2003, the Debtor was granted a
stay relative to a series of actions pending in the United States District
Court of Illinois (Illinois Actions) against the Debtor, Mestek, and the
Debtors third-party indemnitee, Honeywell International, Inc.
(Honeywell). The Illinois Actions have been described in previous filings in
the Commitments and Contingencies Note, and in Note 13.

The
Bankruptcy Court has approved an $8,000,000 Debtor in Possession (DIP) revolving credit
facility under which Mestek is providing post petition working capital funding to
Met-Coil. This credit facility has a first priority lien on the assets of the Debtor,
accrues interest at Prime plus 4%, and matured on December 26, 2003. Mestek has extended
the DIP facility through June 30, 2004.

The
Company has received a waiver letter from Fleet Bank (Fleet) whereby Fleet has agreed to
waive, through June 30, 2004, any existing Defaults or Events of Default which may have
occurred or currently exist under the Amended and Restated Revolving Loans and Foreign
Exchange Facilities Agreement between the Company and Fleet dated July 15, 1997, as
amended (the Loan Agreement) relating to Met-Coils filing of the
petition under Chapter 11 of the United States Bankruptcy Code.

The
Debtor filed a Plan of Reorganization (the Plan) with the Bankruptcy Court on
November 5, 2003. In connection with the Plan, the Debtor and Mestek are continuing
settlement negotiations with the various litigants described in Note 13.

The
Plan proposes to establish various classes of creditors and interests and contemplates the
funding of a capital contribution into Met-Coil by the winning Plan sponsor in amounts
sufficient to provide for various distributions to certain of the classes of creditors and
interests. Met-Coil is undertaking to reach settlements with many of its environmental and
other creditors in addition to those tentative and conditional settlements evidenced by a
Letter Agreement more fully described in Note 13 above, so as to monetize as many
otherwise un-liquidated claims as possible prior to seeking acceptance of the Plan.
Subject to a review of the commitments that may be required as a result of these
settlements and other distribution requirements to achieve confirmation of the Plan,
Mestek intends to be active in this process. In connection with this process it is the
intention of Met-Coil to submit an amended Plan to the Bankruptcy court in the second
quarter of 2004.

As
Met-Coil has retained control of its operations as a debtor in possession and
as Mestek expects that the Debtor will be successfully reorganized, Mestek has not
deconsolidated the operations of Met-Coil for accounting purposes. In
accordance with generally accepted accounting principles and the related technical
literature, the Debtor has established reserves related to the Met-Coil environmental
litigation and environmental remediation matters, as more fully described in Note 13. In
accordance with SOP 90-7, certain of Met-Coils pre-petition liabilities have been
reclassified in the accompanying Consolidated Financial Statements under the heading
Liabilities Subject to Compromise. The liabilities included in this category are:

`Accounts Payable                                                   $  4,125,000
        Accrued Expenses                                                   $  2,375,000
        Environmental Litigation and Remediation reserves                   $50,800,000
        Commissions Payable                                              $       59,000
        Total Consolidated Liabilities Subject to Compromise                $57,359,000
        Plus: Notes and Other Payables to Mestek and affiliates            $  7,610,000
        Met-Coil Liabilities Subject to Compromise                          $64,969,000`

Met-Coil
recorded net additions to its environmental litigation and remediation reserves totaling
$19,329,000 during the three months ended December 31, 2003 bringing the total
Environmental Litigation and Remediation Reserve to $50,800,000 as of December 31, 2003.
The Company as a whole incurred $5,963,000 in legal and other professional fees costs in
the year ended December 31, 2003 relating to the administration of Met-Coils
Bankruptcy which are reported in the accompanying financial statements as
Reorganization Items under the heading Subsidiary Bankruptcy Professional
Fees.

The
following condensed financial statements of Met-Coil Systems Corporation (Debtor in
Possession) are prepared on the same basis as the consolidated financial statements of
Mestek. Inc.

---

Note 18  continued

# MET-COIL SYSTEMS
CORPORATIONDEBTOR-IN-POSSESSION

# CONDENSED BALANCE
SHEETS

# as of December 31,

|                                              | 2003      | 2002       
|--------------------------------------------- | --------- | -----------
|
|
|ASSETS                                        |           |            
|Current Assets                               
|Cash                                          | $   2,218 | $        56
|Accounts Receivable, net                      | 2,818     | 1,165      
|Inventories                                   | 7,780     | 8,993      
|Deferred Tax Asset                            | 18,885    | 3,377      
|Other Current Assets                          | 1,570     | 1,712      
|Total Current Assets                          | 33,271    | 15,303     
|Property and Equipment - net                  | 5,405     | 5,609      
|Deferred Tax Asset                            | 26        | ---        
|Other Assets and Deferred Charges             | 307       | 195        
|Total Assets                                  | $ 39,009  | $ 21,107   
|LIABILITIES AND SHAREHOLDERS' EQUITY         
|Current Liabilities                          
|Current Portion of Long-Term Debt             | ---       | 5,500      
|Accounts Payable                              | 1,761     | 1,322      
|Notes Payable - Affiliates                    | 4,941     | ---        
|Customer Deposits                             | 2,084     | 2,396      
|Environmental Litigation/Remediation Reserves | ---       | 8,700      
|Liabilities Subject to Compromise             | 64,969    | ---        
|Other Accrued Liabilities                     | 2,473     | 4,848      
|Total Current Liabilities                     | 76,228    | 22,766     
|Other Liabilities                             | 799       | ---        
|Total Liabilities                             | 77,027    | 22,766     
|Shareholders' Equity                         
|Common Stock                                  | 45        | 45         
|Paid in Capital                               | 33,518    | 33,518     
|Retained Earnings                             | (70,818)  | (34,664)   
|Other Comprehensive Loss                      | (763)     | (558)      
|Total Shareholders' Equity                    | (38,018)  | (1,659)    
|Total Liabilities and Shareholders' Equity    | $ 39,009  | $ 21,107   

The
deferred tax asset included above reflects the fact that Met-Coil has historically been
included in the Mestek consolidated federal income tax return and Mestek believes it is
more likely than not it will be so included in the future and may not be indicative of the
value assignable to this asset should Met-Coil no longer participate in a consolidated
federal income tax filing with Mestek.

---

Note 18  continued

# MET-COIL SYSTEMS
CORPORATIONDEBTOR-IN-POSSESSION

# CONDENSED STATEMENTS
OF OPERATIONS

# For the years ended
December 31,

|                                                       | 2003      | 2002      | 2001     
|------------------------------------------------------ | --------- | --------- | ---------
|
|
|Net Sales                                              | $ 34,808  | $ 36,407  | $ 46,039 
|Cost of Goods Sold                                     | 25,122    | 28,041    | 36,123   
|Gross Profit                                           | 9,686     | 8,366     | 9,916    
|Selling Expense                                        | 4,238     | 4,470     | 6,079    
|General and Administrative Expense                     | 3,110     | 3,162     | 3,040    
|Engineering Expense                                    | 1,917     | 1,931     | 1,071    
|Environmental Litigation/Remediation                   | 53,205    | 17,096    | 2,000    
|Operating Loss before Reorganization Items             | (52,784)  | (18,293)  | (2,274)  
|Bankruptcy Professional Fees                           | 2,998     | ---       | ---      
|Operating Loss                                         | (55,782)  | (18,293)  | (2,274)  
|Other (Expense) Income - net                           | (104)     | (134)     | 104      
|Loss Before Income Taxes and Cumulative               
|Effect of a Change in Accounting Principle             | (55,886)  | (18,427)  | (2,170)  
|Income Taxes (Benefit)                                 | (19,732)  | (5,028)   | (681)    
|Loss Before Cumulative                                
|Effect of a Change in Accounting Principle             | (36,154)  | (13,399)  | (1,489)  
|Cumulative Effect of a Change in Accounting Principle:
|Gross Impairment (Expense)                             | ---       | (22,329)  | ---      
|Tax Benefit                                            | --        | 1,623     | --       
|Net Impairment (Expense)                               | --        | (20,706)  | --       
|Net Loss                                               | ($36,154) | ($34,105) | ($ 1,489)

---

Note 18  continued

# MET-COIL SYSTEMS
CORPORATIONDEBTOR-IN-POSSESSION

# CONDENSED STATEMENTS
OF CASH FLOWS

# For the years ended
December 31

|                                                     | 2003      | 2002        | 2001     
|---------------------------------------------------- | --------- | ----------- | ---------
|
|
|Cash Flows from Operating Activities:                |           |             |          
|Net Loss                                             | ($36,154) | ($34,105)   | ($ 1,489)
|Adjustments to Reconcile Net Income to Net Cash     
|Provided by Operating Activities:                   
|Cumulative Effect of Change in Accounting Principle  | ---       | 20,706      | ---      
|Depreciation and Amortization                        | 509       | 733         | 1,700    
|Provision for Losses on Accounts Receivable          | 2         | (78)        | 344      
|Subsidiary Bankruptcy Professional Fees              | 2,998     | ---         | ---      
|Changes in Assets and Liabilities:                  
|Accounts Receivable                                  | (1,655)   | 480         | 341      
|Inventory                                            | 1,213     | 2,324       | (438)    
|Accounts Payable                                     | 439       | (140)       | (388)    
|Accrued Expenses/Other Liabilities                   | (3,128)   | 1,112       | (1,410)  
|Liabilities Subject to Compromise                    | 64,969    | ---         | ---      
|Deferred Tax Asset                                   | (15,534)  | (1,326)     | (428)    
|Environmental Litigation/Remediation Reserves        | (8,700)   | 6,700       | 2,000    
|Other Assets                                         | 31        | (542)       | (842)    
|Net Cash Provided by (Used in) Operating            
|Activities before Reorganization Items               | 4,990     | (4,136)     | (610)    
|Operating Cash Flows from Reorganization Items:     
|Bankruptcy Professional Fees                         | (2,998)   | ---         | ---      
|Change in Accrued Expenses                           | 1,034     | --          | --       
|Net Cash Used in Reorganization Items                | (1,964)   | --          | --       
|Net Cash Provided by (Used in) Operating Activities  | 3,026     | (4,136)     | (610)    
|Cash Flows from Investing Activities:               
|Capital Expenditures                                 | (305)     | (65)        | (414)    
|Net Cash Used in Investing Activities                | (305)     | (65)        | (414)    
|Cash Flows from Financing Activities:               
|Net Borrowings                                      
|Under Revolving Credit Agreements                    | 4,941     | 5,500       | 785      
|Principal Payments Under Long Term Debt Agreements   | (5,500)   | (1,432)     | --       
|Net Cash (Used In) Provided by Financing Activities  | (559)     | 4,068       | 785      
|Net Increase (Decrease) in Cash and Cash Equivalents | 2,162     | (133)       | (239)    
|Cash and Cash Equivalents - Beginning of Period      | 56        | 189         | 428      
|Cash and Cash Equivalents - End of Period            | $   2,218 | $        56 | $    189 

---

# 19. PLANT SHUTDOWN AND
OTHER RESTRUCTURING CHARGES

In
April of 2003, the Company announced the closing of its Scranton, PA, and Bishopville, SC,
manufacturing facilities. In connection with these closings, Mestek, Inc. restructured and
relocated manufacturing operations of the Anemostat and King products to Wrens, GA;
Florence, KY; Dallas, TX; Carson, CA and Westfield, MA. Shutdown expenses incurred in 2003
of $4,259,000 include the accrual of $2,414,000 at December 31, 2003, representing a
withdrawal liability relative to Pension Plan of the Sheet Metal Workers
International Association, Local No. 550, determined under FAS No. 146 guidelines

The
Company also incurred $980,000 in restructuring costs related to relocation, retraining
and other costs incidental to the start-up of the King and Anemostat products in the new
locations.

# 20. SUBSEQUENT EVENTS

On
March 30, 2004, the Company sold the operating assets and intellectual property related to
its Air Clean Damper Company division and product line at a nominal gain, retaining the
real estate and building and certain other assets located in Milford, OH.

---

# Item 9  CHANGES IN
DISAGREEMENT WITH ACCOUNTANT ON ACCOUNTING FINANCIAL DISCLOSURE

# Item 9A  CONTROLS
AND PROCEDURES

(a)     Evaluation
          of Disclosure Controls and Procedures.

| | Subsequent
to the enactment in 2002 of the Sarbanes-Oxley Act, the Company established a Disclosure
Committee comprised currently of its Chief Legal Officer, its Associate General Counsel,
its Corporate Controller, its Corporate Manger of Internal Audit, and its Chief Financial
Officer. The Disclosure Committee on a quarterly basis reviews written sub-attestations
obtained from key financial and operating personnel, consults with outside technical
advisers as needed, and meets with the Companys CEO, among other steps. As of the
end of the period covered by this Annual Report on Form 10-K, Company Management,
including the Chief Executive Officer and Chief Financial Officer, have conducted an
evaluation of the effectiveness of the design and operation of the Companys
Disclosure Controls and procedures as defined in the Rule 13a-15(e) of Securities Exchange
Act of 1934. Based on that evaluation, the Chief Executive Officer and Chief Financial
Officer have concluded that the Companys disclosure controls and procedures are
effective to provide reasonable assurance of achieving the purposes described in Rule
13a-15(e), and no changes are required at this time.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(b)    
          Changes in Internal Controls.

| | Subsequent
to the enactment in 2002 of the Sarbanes-Oxley Act, the Company undertook a review of its
internal controls, including its internal accounting controls. This process resulted in an
expanded Internal Control & Accounting Policy & Procedures Manual which has now
been widely disseminated within the Company. While numerous policies were clarified as a
result, and some formerly informal policies were formalized, the Company does not believe
that any such changes represented corrective actions taken with regard to significant
deficiencies and material weaknesses. The Company believes that there were no significant
changes in the fourth quarter of 2003 in internal controls or in factors that have
materially affected or are reasonably likely to significantly affect internal controls,
subsequent to the date the Chief Executive Officer and Chief Financial Officer completed
their evaluation. However, during the 2003 audit process, management, in consultation with
Grant Thornton, LLP the Companys independent auditors, has identified and reported
to the Audit Committee of the Companys Board of Directors the following internal
control matters which Grant Thornton LLP considers to be significant
deficiencies, though not material weaknesses as both terms are defined
in the authoritative accounting literature.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Companys auditors noted an instance during their auditing procedures where a number
of inventory tags were not properly accounted for leading to an error which while not
material in amount was nonetheless indicative in the opinion of the auditors of a need for
tighter controls on this inventory process and expanded internal audit oversight.
Management concurs with the auditors observations and is in the process of undertaking
steps to strengthen its procedures and internal audit oversight capabilities in this area.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Companys auditors noted during their procedures that an internal software utility
used by the Companys credit department to maintain accounts receivable records was
potentially susceptible to use by unauthorized users due to insufficient restrictions on
access. Though no unauthorized use was indicated, and management believes there are
compensating controls, management concurs with the auditors observations and has
taken steps to further restrict the utilization of the software utility in question.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Companys auditors also noted during their procedures that the Companys written
IT Security procedures did not adequately address changes in individual employee job
responsibilities which in some instances should result in changes in levels of IT access.
Although management believes there are compensating controls in this area, management
concurs with the auditors observations and is undertaking revisions to its written
IT Security procedures to address this oversight.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

# PART III

With
respect to items 10 through 14, the Company will file with the Securities and Exchange
Commission, within 120 days of the close of its fiscal year, a definitive proxy statement
pursuant to Regulation 14A.

# Item 10  DIRECTORS
AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information
regarding directors of the Company will be set forth in the Companys proxy statement
relating to the annual meeting of shareholders to be held May 25, 2004, under the caption
Current Directors and Nominees for Election  Background Information, and
to the extent required and except as set forth therein, is incorporated herein by
reference. At its March 9, 2004 meeting, the Companys Board of Directors voted to
amend the Companys Bylaws such that any shareholder or shareholder group holding
five percent (5%) or more of the Companys common stock for at least one year may
nominate candidates for election to the Board of Directors, (as may the Board of
Directors, itself, and its nominating/governance committee). Upon timely receipt of such
nomination(s), information relating to the nominee or nominees will be included in the
Companys Proxy Statement and Proxy.

Information
regarding executive officers of the Company will be set forth under the caption
Executive Officers in the Companys proxy statement, and to the extent
required and except as set forth therein, incorporated herein by reference.

Information
regarding the Companys Audit Committee and its Audit Committee Financial
Expert will be set forth in the Companys Proxy Statement also, under the
caption Board Committees, incorporated herein by reference. Information
concerning section 16(a) Beneficial Ownership Reporting Compliance will be set forth in
the Companys Proxy Statement also, under the Caption Compliance with Section
16(a) of the Securities Exchange Act incorporated herein by reference.

The
Company has adopted a Code Of Business Ethics (Code)applicable to its
principal executive officer, principal financial and accounting officers, its directors
and all other employees generally. A copy of the Code will be set forth as Appendix B in
the Companys Proxy Statement and also may be found at the Companys website
www.mestek.com. Any changes to or waivers from this Code will be disclosed on the
Companys website as well as in appropriate filings with the Securities and Exchange
Commission.

# Item 11  EXECUTIVE
COMPENSATION

Information
regarding executive compensation will be set forth in the Companys proxy statement
relating to the annual meeting of shareholders to be held May 25, 2004, and under the
caption Executive Compensation to the extent required and except as set forth
therein, is incorporated herein by reference.

The
report of the Compensation Committee of the Board of Directors of the Company shall not be
deemed incorporated by reference by any general statement incorporating by reference the
proxy statement into any filing under the Securities Exchange Act of 1934, and shall not
otherwise be deemed filed under such Act.

# Item 12  SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information
regarding security ownership of certain beneficial owners and management as well as
information regarding equity compensation plans and individual equity contracts or
arrangements will be set forth in the Companys proxy statement relating to the
annual meeting of shareholders to be held May 25, 2004 under the caption Security
Ownership of Certain Beneficial Owners and Management, and to the extent required
and except as set forth therein, is incorporated herein by reference.

# Item 13  CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS

Information
regarding certain relationships and related transactions will be set forth in the
Companys proxy statement relating to the annual meeting of shareholders to be held
May 25, 2004, under the caption  Certain Relationships and Related
Transactions and to the extent requiredand except as set forth therein, is
incorporated herein by reference.

# Item 14  PRINCIPAL
ACCOUNTING FEES AND SERVICES

Information regarding financial
accounting fees and services will be set forth in the Companys proxy statement
relating to the annual meeting of shareholders to be held May 25, 2004, under the caption
Principal Accounting Fees and Services, and to the extent required, and except
as set forth therein, is incorporated herein by reference.

# PART IV

# Item 15  EXHIBITS,
FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K

(a)       
          The following documents are filed as part of this Form 10-K:

1.    
          All financial statements. See Index to Consolidated Financial Statements on page
          74 of this Form 10-K.

2.    
          Financial Statement Schedules. None Required.

3.    
          Exhibits. See Index to Exhibits.

(b)    
          Reports on Form 8-K.

| | The following reports on Form 8-K were filed or furnished, as indicated below, during the last quarter of the
fiscal year ending December 31, 2003:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------

`Date                                         Item Reported On

                           November 17, 2003 *                                        12

                           December 9, 2003                                            5

                           December 12, 2003                                           5

                           *  Furnished`

---

# INDEX

`Pages of
                                                                                               this report


Independent Auditors' Reports                                                                      Page 32

Financial Statements:

(a)(1)   Consolidated Balance Sheets as of December 31, 2003 and 2002                      Pages 33 and 34

     Consolidated Statements of Operations for the Years
     Ended December 31, 2003, 2002, and 2001                                                       Page 35

     Consolidated Statements of Shareholders' Equity and Comprehensive Loss for
     the Years Ended December 31, 2003, 2002, and 2001                                             Page 36

     Consolidated Statements of Cash Flows for the Years
         Ended December 31, 2003, 2002, and 2001                                                   Page 37

     Notes to the Consolidated Financial Statements                                    Pages 38 through 70

(a)(2)   Financial Statement Schedules

Report of Independent Certified Public Accountants on Supplement Schedule                          Page 75

     II. Valuation and Qualifying Accounts                                                         Page 76`

All
other financial statement schedules required by Item 14(a)(2) have been omitted because
they are inapplicable or because the required information has been included in the
Consolidated Financial Statements or notes thereto.

(a)(3) Exhibits

The
Exhibit Index is set forth on Pages 78 through 81

No
annual report to security holders as of December 31, 2003 has been sent to security
holders and no proxy statement, form of proxy or other proxy soliciting material has been
sent by the registrant to more than ten of the registrants security holders with
respect to any annual or other meeting of security holders held or to be held in 2003.
Such annual report to security holders, proxy statement or form of proxy will be furnished
to security holders subsequent to the filing of this Annual Report on Form 10-K.

---

# REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS ON SUPPLEMENTAL SCHEDULE

The Board of Directors and
Shareholders of Mestek, Inc.

We
have audited, in accordance with auditing standards generally accepted in the United
States of America, the consolidated financial statements of Mestek, Inc. and subsidiaries
as of December 31, 2003 and 2002 and for the three years in the period ended December 31,
2003, included in this Form 10-K, and have issued our report thereon dated March 30, 2004.
Our audits were made for the purpose of forming an opinion on those consolidated financial
statements taken as a whole. The schedule of Valuation and Qualifying Accounts is the
responsibility of the Companys management and is presented for the purposes of
complying with the Securities and Exchange Commissions rules and is not a part of
the basic consolidated financial statements. This schedule has been subjected to auditing
procedures applied in the audits of the basic consolidated financial statements and, in
our opinion, fairly states, in all material respects, the financial data required to be
set forth therein in relation to the basic consolidated financial statements taken as a
whole.

Boston, MassachusettsMarch 30,
2004

---

Schedule II

# MESTEK, INC.

# Valuation and
Qualifying Accounts

Years ended December
31, 2003, 2002, and 2001

`(Credited)
                             Bal. at           Charged                          Bad Debt               Bal.
                             at Beg.             to              Other         Write-offs             at end
Year     Description         of Year           expense            (1)                                 of Year

                                            (dollars in thousands)

2003     Allowance
         for doubtful
         accounts             $3,230           $1,043              $165         ($1,051)            $3,387
2002     Allowance
         for doubtful
         accounts             $4,239           ($397)                $6           ($618)            $3,230
2001     Allowance
         for doubtful
         accounts             $3,746           $1,108            ($218)           ($397)            $4,239`

| | (1) | Includes recoveries of amounts previously written-off, effects of currency
               translations, and other diminimis amounts.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------

---

EXHIBIT
INDEX

Those
documents followed by a parenthetical notation are incorporated herein by reference to
previous filings with the Securities and Exchange Commission as set forth below.

`Exhibit No.                                                                                          Reference
Description                                                                                             Key
*************             **********
3.1      Articles of Incorporation of Mestek, Inc., as amended                                         (F)

3.2      Amended and Restated By-laws of Mestek, Inc. as amended through December 12, 2000             (B)

10.1     Employment Agreement dated January 1, 1982 between Mestek
         and John E. Reed                                                                              (A)

10.2     Lease Agreement dated January 1, 2000 between Mestek (lessee) and
         Sterling Realty Trust (lessor); 260 North Elm                                                 (B)

10.3     Lease dated January 1, 1994 between Mestek (lessee) and
         Sterling Realty Trust (lessor); South Complex                                                 (D)

10.4     Amended and Restated Lease Agreement dated as of July 1, 1997
         between Mestek, Inc. (lessee) and Rudbeek Realty Corp. (lessor)                               (H)

10.5     Amended and Restated Lease Agreement dated as of January 1, 1997
         between Vulcan Radiator Division, Mestek, Inc. (lessee) and
         MacKeeber Associates Limited Partnership (lessor).                                            (F)

10.6     Loan Agreement dated as of May 1, 1984 among the Connecticut
         Development Authority (the "CDA"), MacKeeber Limited Partnership,
         Vulcan Radiator Corporation and the Promissory Notes there under;
         Guaranty of Vulcan Radiator Corporation and Reed National Corp.
         to the Connecticut Bank and Trust Company, NA                                                 (A)

10.7     Form of Indemnification Agreements entered into between Mestek, Inc. and
         its Directors and Officers and the Directors of its wholly-owned
         subsidiaries incorporated by reference as provided herein, except
         as set forth in the attached schedule                                                         (C)

10.8     Schedule of Directors/Officers with Indemnification Agreement

10.9     Lease Agreement dated July 1, 1998 between Mestek (lessee) and
         Sterling Realty Trust (lessor); 161 Notre Dame                                                (I)

10.10    1996 Mestek, Inc. Stock Option Plan.                                                          (E)

10.11    Amended and Restated Revolving Loans and Foreign Exchange Facilities
         Agreement between Mestek, Inc. and Bank Boston dated July 15, 1997.                           (G)

10.12    Second Amendment dated May 31, 2001 to Amended and Restated Revolving loans
         and Foreign Exchange facilities Agreement between Mestek, Inc. and Fleet National Bank        (K)

10.13    Form of Supplemental Executive Retirement Agreements entered into between
         Mestek, Inc. and certain of its officers.                                                     (G)

10.14    Schedule of Officers with Supplemental Executive Retirement Agreements

10.15    Form of Change of Control Agreement

10.16    Schedule of Officers with Change of Control Agreement

10.17    Lease dated July 1, 1999 between Mestek (Lessee) and
         Sterling Realty Trust (Lessor) for 1st floor - Torrington Building.                           (J)

10.18    Lease dated July 1, 1999 between Mestek (Lessee) and
         Sterling Realty Trust (Lessor) for 3rd and 4th Floor - Torrington Building.                     (J)

10.18    Lease dated October 1, 2000 between Mestek (Lessee) and
         Sterling Realty (Lessor); 1st Floor Torrington Building                                       (B)

11.1     Schedule of Computation of Earnings per Common Share.

14.1     Code of Business Ethics

21.1     List of Subsidiaries of Mestek, Inc.

23.1     Consent of Grant Thornton LLP

31.1     CEO Certification

31.2     CFO Certification

32.1     906 CEO Certification

32.2     906 CFO Certification

99.1     Corporate Governing Guidelines

99.2     New York Stock Exchange Certification of Chief Executive Officer


Reference Key

        (A)      Filed as an Exhibit to the Registration Statement 33-7101,effective July 31, 1986

        (B)      Filed as an Exhibit to the Annual Report on Form 10-K for the year ended December 31, 2000

        (C)      Filed as an Exhibit to the Annual Report on Form 10-K for the year ended December 31, 1987

        (D)      Filed as an Exhibit to the Annual Report on Form 10-K for the year ended December 31, 1993

        (E)      Filed as an Exhibit to the Quarterly Report on Form 10-Q for the quarter
                 ended September 30, 1996.

        (F)      Filed as an Exhibit to the Annual Report on Form 10-K for the year ended December 31, 1996.

        (G)      Filed as an Exhibit to the Quarterly Report on Form 10-Q for the quarter
                 ended September 31, 1997.

        (H)      Filed as an Exhibit to the Annual Report on Form 10-K for the year ended December 31, 1997.

        (I)      Filed as an Exhibit to the Quarterly Report on Form 10-Q for the quarter ended March 31, 1999.

        (J)       Filed as an Exhibit to the Annual Report on Form 10-K for the year ended December 31, 1999.

(K)      Filed as an Exhibit to the Annual Report a Form 10-K for the year ended December 31, 2001.


Each management contract or compensatory plan or arrangement to be filed as an exhibit to this report pursuant to item
15 is listed in Exhibit numbers 10.1, 10.10 and 10.13.`

---

`SIGNATURES


     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant
has caused this report be signed on its behalf by the undersigned, thereunto duly authorized.

                                                    MESTEK, INC.


Date:  April 14, 2004                                  By:    /S/ John E. Reed
                                                               John E. Reed, Chairman of the Board
                                                               and Chief Executive Officer

Date:  April 14, 2004                                  By:    /S/ Stephen M. Shea
                                                               Stephen M. Shea, Senior Vice President
                                                               Finance, Chief Financial Officer`

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

`Date:  April 14, 2004                                  By:    /S/ William J. Coad
                                                              William J. Coad, Director





Date:  April 14, 2004                                  By:    /S/ Winston R. Hindle, Jr.
                                                              Winston R. Hindle, Jr., Director




Date:  April 14, 2004                                  By:    /S/ David W. Hunter
                                                              David W. Hunter, Director




Date:  April 14, 2004                                  By:    /S/ David M. Kelly
                                                              David M. Kelly, Director




Date:  April 14, 2004                                  By:    /S/ George F. King
                                                              George F. King, Director










Date:  April 14, 2004                                  By:    /S/ John E. Reed
                                                              John E. Reed, Director




Date:  April 14, 2004                                  By:    /S/ Stewart B. Reed
                                                              Stewart B. Reed, Director`