UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934:

For the period ended September 30, 2003

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

Commission File No. 33-26991

American Builders & Contractors Supply Co., Inc.

(Exact name of registrant as specified in its charter)

Delaware

5033

39-1413708

(State or other jurisdiction of

incorporation or organization)

(Primary Standard

Industrial Classification

Code Number)

(I.R.S. Employer

Identification No.)

One ABC Parkway
Beloit, Wisconsin		53511
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (608) 362-7777

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 filing requirements for the past 90 days. x Yes ¨ No

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

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

Common Stock, $0.01 par value, 147.04 shares as of November 1, 2003

The Registrant is filing this report pursuant to certain of its indenture obligations and not as required under Section 13 or 15(d) of the Securities Exchange Act of 1934

Index

American Builders & Contractors Supply Co., Inc. and Subsidiaries

Part I.	Financial Information

Item 1.	Financial Statements (Unaudited)

	Condensed consolidated balance sheets – September 30, 2003 and December 31, 2002	2

	Condensed consolidated statements of income and retained earnings - Three months ended September 30, 2003 and 2002; Nine months ended September 30, 2003 and 2002	3

	Condensed consolidated statements of cash flows – Nine months ended September 30, 2003 and 2002	4

	Notes to condensed consolidated financial statements – September 30, 2003	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17

Item 4.	Controls and Procedures	17

Part II.	Other Information

Item 6.	Exhibits and Reports on Form 8-K	18

Signatures		19

Financial Information

American Builders & Contractors Supply Co., Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands)

	September 30, 2003		December 31, 2002
ASSETS
Current assets:
Cash	$	3,071	$	6,801
Accounts receivable		271,243		209,813
Inventories		244,927		191,049
Prepaid expenses and other		4,354		3,188

Total current assets		523,595		410,851

Property and equipment, net		90,053		90,875
Net receivable from affiliates		13,508		15,692
Goodwill		38,951		38,851
Other intangible assets		4,231		4,534
Security deposits		1,159		1,011
Other assets		371		826

	$	671,868	$	562,640

LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Accounts payable	$	220,848	$	119,941
Accrued payroll and benefits		17,128		15,586
Accrued liabilities		22,932		19,864
Current portion of long-term debt		11,686		8,721

Total current liabilities		272,594		164,112

Long-term debt		289,025		296,857
Contingent liabilities (Note 2)
Stockholder’s equity:
Common stock		—		—
Additional paid-in capital		3,779		3,779
Retained earnings		106,470		97,892

Total stockholder’s equity		110,249		101,671

	$	671,868	$	562,640

See notes to unaudited condensed consolidated financial statements.

Note: The balance sheet at December 31, 2002 has been derived from the audited balance sheet at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

American Builders & Contractors Supply Co., Inc. and Subsidiaries

Condensed Consolidated Statements of Income and Retained Earnings (Unaudited)

(in thousands)

	Three months ended September 30,						Nine months ended September 30,
	2003			2002			2003			2002
Net sales	$	537,515		$	416,397		$	1,334,248		$	1,073,072
Cost of sales		399,534			309,317			996,632			801,741

Gross profit		137,981			107,080			337,616			271,331

Operating expenses		103,429			82,012			281,715			230,679
Amortization of intangible assets		93			93			277			277

		103,522			82,105			281,992			230,956

Operating income		34,459			24,975			55,624			40,375

Other income (expense):
Interest income		179			181			548			460
Interest expense		(4,113	)		(4,084	)		(11,967	)		(11,099	)

		(3,934	)		(3,903	)		(11,419	)		(10,639	)

Income before provision for income taxes		30,525			21,072			44,205			29,736
Provision for income taxes		315			229			798			597

Net income		30,210			20,843			43,407			29,139

Retained earnings at beginning of period		81,689			72,879			97,892			71,383
Distributions to sole stockholder		(5,429	)		(7,800	)		(34,829	)		(14,600	)

Retained earnings at end of period	$	106,470		$	85,922		$	106,470		$	85,922

See notes to unaudited condensed consolidated financial statements.

American Builders & Contractors Supply Co., Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

	Nine months ended September 30,
	2003			2002
Operating activities
Net income	$	43,407		$	29,139
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation		13,004			11,315
Amortization		277			277
Amortization of deferred financing costs		294			231
Provision for doubtful accounts		10,830			8,805
Loss on disposal of property and equipment		269			201
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		(69,123	)		(49,329	)
Inventories		(51,324	)		(35,543	)
Prepaid expenses and other		(1,155	)		386
Other assets		314			78
Accounts payable		99,458			63,466
Accrued liabilities		4,609			3,118

Cash provided by operating activities		50,860			32,144

Investing activities
Additions to property and equipment		(12,279	)		(20,078	)
Proceeds from disposal of property and equipment		521			463
Acquisitions of businesses		(5,053	)		(6,511	)

Cash used in investing activities		(16,811	)		(26,126	)

Financing activities
Net borrowings (payments) under line of credit		(16,878	)		8,521
Proceeds from long-term debt		18,750			10,000
Payments on long-term debt		(6,738	)		(3,516	)
Change in net receivable from affiliates		2,184			(8,938	)
Distributions to stockholder		(34,829	)		(14,600	)
Payments of debt financing costs		(268	)		(313	)

Cash used in financing activities		(37,779	)		(8,846	)

Net decrease in cash		(3,730	)		(2,828	)
Cash at beginning of period		6,801			6,114

Cash at end of period	$	3,071		$	3,286

See notes to unaudited condensed consolidated financial statements.

American Builders & Contractors Supply Co., Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 30, 2003

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting primarily of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2003 are not indicative of the results that may be expected for the year ending December 31, 2003 due to the seasonality of the business. For further information, refer to the consolidated financial statements and footnotes thereto included in American Builders & Contractors Supply Co., Inc.’s (ABC, or together with its subsidiaries, the Company) Annual Report on Form 10-K for the year ended December 31, 2002.

2. Contingent Liabilities

At September 30, 2003 and December 31, 2002, the Company had guaranteed debt of the stockholder in the amounts of $1,210,000 and $1,264,000, respectively. Certain assets owned by the Company serve as collateral as part of an overall guaranty of this debt by the Company. The Company also had outstanding letters of credit in the amounts of $4,562,000 and $5,064,000 at September 30, 2003 and December 31, 2002, with respect to debt of the Company’s stockholder and affiliates.

3. Guarantor Subsidiaries

The following tables present condensed consolidating financial information for the three months and nine months ended September 30, 2003 and 2002 for: (a) ABC and (b) on a combined basis, the guarantors of the Senior Subordinated Notes, which include all of the wholly owned subsidiaries of the Company (Subsidiary Guarantors). Separate financial statements of the Subsidiary Guarantors are not presented because the guarantors are jointly, severally and unconditionally liable under the guarantees, and the Company believes separate financial statements and other disclosures regarding the Subsidiary Guarantors are not material to investors.

American Builders & Contractors Supply Co., Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

(continued)

3. Guarantor Subsidiaries (continued)

Condensed Consolidating Balance Sheet

September 30, 2003

(in thousands)

	ABC			Subsidiary Guarantors			Eliminations			Consolidated
Assets
Current assets:
Cash	$	3,312		$	(241	)	$	—		$	3,071
Accounts receivable		268,380			20,302			(17,439	)		271,243
Inventories		244,936			3,374			(3,383	)		244,927
Intercompany advances		6,709			(6,709	)		—			—
Prepaid expenses and other		1,683			2,671			—			4,354

Total current assets		525,020			19,397			(20,822	)		523,595
Property and equipment, net		83,569			6,484			—			90,053
Investment in subsidiaries		5,704			—			(5,704	)		—
Receivable from affiliates		13,508			—			—			13,508
Goodwill		38,951			—			—			38,951
Other intangible assets		3,804			427			—			4,231
Security deposits		1,659			(500	)		—			1,159
Other assets		(201	)		572			—			371

	$	672,014		$	26,380		$	(26,526	)	$	671,868

Liabilities and stockholder’s equity
Current liabilities:
Accounts payable	$	227,241		$	11,046		$	(17,439	)	$	220,848
Accrued payroll and benefits		16,309			819			—			17,128
Accrued liabilities		21,089			1,843			—			22,932
Current portion of long-term debt		11,417			269			—			11,686

Total current liabilities		276,056			13,977			(17,439	)		272,594
Long-term debt		285,709			3,316			—			289,025
Contingent liabilities
Stockholder’s equity:
Common stock		—			—			—			—
Additional paid-in capital		3,779			1			(1	)		3,779
Retained earnings		106,470			9,086			(9,086	)		106,470

Total stockholder’s equity		110,249			9,087			(9,087	)		110,249

	$	672,014		$	26,380		$	(26,526	)	$	671,868

American Builders & Contractors Supply Co., Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

(continued)

3. Guarantor Subsidiaries (continued)

Condensed Consolidating Balance Sheet

December 31, 2002

(in thousands)

	ABC		Subsidiary Guarantors			Eliminations			Consolidated
Assets
Current assets:
Cash	$	6,897	$	(96	)	$	—		$	6,801
Accounts receivable		207,849		11,242			(9,278	)		209,813
Inventories		190,971		2,703			(2,625	)		191,049
Intercompany advances		2,873		(2,873	)		—			—
Prepaid expenses and other		1,656		1,532			—			3,188

Total current assets		410,246		12,508			(11,903	)		410,851
Property and equipment, net		84,491		6,384			—			90,875
Investment in subsidiaries		4,927		—			(4,927	)		—
Receivable from affiliates		15,692		—			—			15,692
Goodwill		38,851		—			—			38,851
Other intangible assets, net		4,059		475			—			4,534
Security deposits		1,511		(500	)		—			1,011
Other assets		741		85			—			826

	$	560,518	$	18,952		$	(16,830	)	$	562,640

Liabilities and stockholder’s equity
Current liabilities:
Accounts payable	$	124,068	$	5,151		$	(9,278	)	$	119,941
Accrued payroll and benefits		14,834		752			—			15,586
Accrued liabilities		18,147		1,717			—			19,864
Current portion of long-term debt		8,460		261			—			8,721

Total current liabilities		165,509		7,881			(9,278	)		164,112
Long-term debt		293,338		3,519						296,857
Commitments and contingent liabilities
Stockholder’s equity:
Common stock		—		—			—			—
Additional paid-in capital		3,779		1			(1	)		3,779
Retained earnings		97,892		7,551			(7,551	)		97,892

Total stockholder’s equity		101,671		7,552			(7,552	)		101,671

	$	560,518	$	18,952		$	(16,830	)	$	562,640

American Builders & Contractors Supply Co., Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

(continued)

3. Guarantor Subsidiaries (continued)

Condensed Consolidating Statement of Income

for the Three Months ended September 30, 2003

(in thousands)

	ABC			Subsidiary Guarantors			Eliminations			Consolidated
Net sales	$	532,779		$	28,732		$	(23,996	)	$	537,515
Cost of sales		399,231			24,331			(24,028	)		399,534

Gross profit		133,548			4,401			32			137,981

Operating expenses		100,336			3,162			(69	)		103,429
Amortization of intangible assets		77			16			—			93

		100,413			3,178			(69	)		103,522

Operating income		33,135			1,223			101			34,459
Other income (expense):
Interest income		179			—			—			179
Interest expense		(4,082	)		(31	)		—			(4,113	)

		(3,903	)		(31	)		—			(3,934	)

Income before provision for income taxes and equity in earnings of subsidiaries		29,232			1,192			101			30,525
Provision for income taxes		313			2			—			315

		28,919			1,190			101			30,210
Equity in earnings of subsidiaries		1,291			—			(1,291	)		—

Net income	$	30,210		$	1,190		$	(1,190	)	$	30,210

American Builders & Contractors Supply Co., Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

(continued)

3. Guarantor Subsidiaries (continued)

Condensed Consolidating Statement of Income

for the Three Months ended September 30, 2002

(in thousands)

	ABC			Subsidiary Guarantors			Eliminations			Consolidated
Net sales	$	411,096		$	23,929		$	(18,628	)	$	416,397
Cost of sales		307,751			20,205			(18,639	)		309,317

Gross profit		103,345			3,724			11			107,080

Operating expenses		79,585			2,427			—			82,012
Amortization of intangible assets		77			16			—			93

		79,662			2,443			—			82,105

Operating income		23,683			1,281			11			24,975
Other income (expense):
Interest income		181			—			—			181
Interest expense		(4,029	)		(55	)		—			(4,084	)

		(3,848	)		(55	)		—			(3,903	)

Income before provision for income taxes and equity in earnings of subsidiaries		19,835			1,226			11			21,072
Provision for income taxes		224			5			—			229

		19,611			1,221			11			20,843
Equity in earnings of subsidiaries		1,232			—			(1,232	)		—

Net income	$	20,843		$	1,221		$	(1,221	)	$	20,843

American Builders & Contractors Supply Co., Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

(continued)

3. Guarantor Subsidiaries (continued)

Condensed Consolidating Statement of Income

for the Nine Months ended September 30, 2003

(in thousands)

	ABC			Subsidiary Guarantors			Eliminations			Consolidated
Net sales	$	1,319,403		$	81,090		$	(66,245	)	$	1,334,248
Cost of sales		992,929			68,983			(65,280	)		996,632

Gross profit		326,474			12,107			(965	)		337,616

Operating expenses		272,692			9,230			(207	)		281,715
Amortization of intangible assets		229			48			—			277

		272,921			9,278			(207	)		281,992

Operating income		53,553			2,829			(758	)		55,624
Other income (expense):
Interest income		548			—			—			548
Interest expense		(11,869	)		(98	)		—			(11,967	)

		(11,321	)		(98	)		—			(11,419	)

Income before provision for income taxes and equity in earnings of subsidiaries		42,232			2,731			(758	)		44,205
Provision for income taxes		796			2			—			798

		41,436			2,729			(758	)		43,407
Equity in earnings of subsidiaries		1,971			—			(1,971	)		—

Net income	$	43,407		$	2,729		$	(2,729	)	$	43,407

American Builders & Contractors Supply Co., Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

(continued)

3. Guarantor Subsidiaries (continued)

Condensed Consolidating Statement of Income

for the Nine Months ended September 30, 2002

(in thousands)

	ABC			Subsidiary Guarantors			Eliminations			Consolidated
Net sales	$	1,060,448		$	63,679		$	(51,055	)	$	1,073,072
Cost of sales		798,646			53,677			(50,582	)		801,741

Gross profit		261,802			10,002			(473	)		271,331

Operating expenses		223,449			7,300			(70	)		230,679
Amortization of intangible assets		229			48			—			277

		223,678			7,348			(70	)		230,956

Operating income		38,124			2,654			(403	)		40,375
Other income (expense):
Interest income		460			—			—			460
Interest expense		(10,980	)		(119	)		—			(11,099	)

		(10,520	)		(119	)		—			(10,639	)

Income before provision for income taxes and equity in earnings of subsidiaries		27,604			2,535			(403	)		29,736
Provision for income taxes		591			6			—			597

		27,013			2,529			(403	)		29,139
Equity in earnings of subsidiaries		2,126			—			(2,126	)		—

Net income	$	29,139		$	2,529		$	(2,529	)	$	29,139

American Builders & Contractors Supply Co., Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

(continued)

3. Guarantor Subsidiaries (continued)

Condensed Consolidating Statement of Cash Flows

for the Nine Months ended September 30, 2003

(in thousands)

	ABC			Subsidiary Guarantors			Eliminations			Consolidated
Operating activities
Net income	$	43,407		$	2,729		$	(2,729	)	$	43,407
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation		12,443			561			—			13,004
Amortization		229			48			—			277
Amortization of deferred financing costs		294			—			—			294
Provision for doubtful accounts		10,830			—			—			10,830
Loss on disposal of property and equipment		262			7			—			269
Change in operating assets and liabilities:
Accounts receivable		(69,673	)		(9,059	)		9,609			(69,123	)
Inventories		(51,411	)		(671	)		758			(51,324	)
Prepaid expenses and other		(16	)		(1,139	)		—			(1,155	)
Other assets		(3,033	)		3,347			—			314
Accounts payable		103,172			5,895			(9,609	)		99,458
Accrued liabilities		4,417			192			—			4,609

Cash provided by operating activities		50,921			1,910			(1,971	)		50,860

Investing activities
Additions to property and equipment		(11,570	)		(709	)		—			(12,279	)
Proceeds from disposal of property and equipment		480			41			—			521
Acquisitions of businesses		(5,053	)		—			—			(5,053	)
Investment in subsidiaries		(1,971	)		—			1,971			—

Cash used in investing activities		(18,114	)		(668	)		1,971			(16,811	)

Financing activities
Net payments under line of credit		(16,878	)		—			—			(16,878	)
Proceeds from long-term debt		18,750			—			—			18,750
Payments on long-term debt		(6,544	)		(194	)		—			(6,738	)
Change in net receivable from affiliates		2,184			—			—			2,184
Distributions to sole stockholder		(33,636	)		(1,193	)		—			(34,829	)
Payments of debt financing costs		(268	)		—			—			(268	)

Cash used in financing activities		(36,392	)		(1,387	)		—			(37,779	)

Net decrease in cash		(3,585	)		(145	)		—			(3,730	)
Cash at beginning of period		6,897			(96	)		—			6,801

Cash at end of period	$	3,312		$	(241	)	$	—		$	3,071

American Builders & Contractors Supply Co., Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

(continued)

3. Guarantor Subsidiaries (continued)

Condensed Consolidating Statement of Cash Flows

for the Nine Months ended September 30, 2002

(in thousands)

	ABC			Subsidiary Guarantors			Eliminations			Consolidated
Operating activities
Net income	$	29,139		$	2,529		$	(2,529	)	$	29,139
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation		10,894			421			—			11,315
Amortization		229			48			—			277
Amortization of deferred financing costs		231			—			—			231
Provision for doubtful accounts		8,805			—			—			8,805
Loss on disposal of property and equipment		195			6			—			201
Change in operating assets and liabilities:
Accounts receivable		(47,329	)		(5,598	)		3,598			(49,329	)
Inventories		(35,402	)		(544	)		403			(35,543	)
Prepaid expenses and other		929			(543	)		—			386
Other assets		(4,614	)		4,692			—			78
Accounts payable		66,136			928			(3,598	)		63,466
Accrued liabilities		2,168			950			—			3,118

Cash provided by operating activities		31,381			2,889			(2,126	)		32,144

Investing activities
Additions to property and equipment		(18,896	)		(1,182	)		—			(20,078	)
Proceeds from disposal of property and equipment		430			33			—			463
Acquisitions of businesses		(6,511	)		—			—			(6,511	)
Investment in subsidiaries		(2,126	)		—			2,126			—

Cash used in investing activities		(27,103	)		(1,149	)		2,126			(26,126	)

Financing activities
Net borrowings under line of credit		8,521			—			—			8,521
Proceeds from long term debt		10,000			—			—			10,000
Payments on long-term debt		(3,411	)		(105	)		—			(3,516	)
Change in net receivable from affiliates		(8,938	)		—			—			(8,938	)
Distributions to sole stockholder		(13,091	)		(1,509	)		—			(14,600	)
Payments of debt financing costs		(313	)		—			—			(313	)

Cash used in financing activities		(7,232	)		(1,614	)		—			(8,846	)

Net increase (decrease) in cash		(2,954	)		126			—			(2,828	)
Cash at beginning of period		6,040			74			—			6,114

Cash at end of period	$	3,086		$	200		$	—		$	3,286

American Builders & Contractors Supply Co., Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

(continued)

4. Comprehensive Income

The Company’s comprehensive income for the three and nine month periods ended September 30, 2003 and 2002, as required to be reported by Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 130, was identical to the actual income reported for those periods.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Overview

The Company. ABC is a distributor of exterior building products and is the largest wholesale distributor of roofing products and one of the largest wholesale distributors of vinyl siding materials in the United States, operating 261 distribution centers located in 43 states and the District of Columbia as of September 30, 2003. Since January 1, 2003, the Company has completed three acquisitions with six locations, five of which were consolidated into existing ABC centers, opened twelve distribution centers, consolidated four other distribution centers and closed four distribution centers.

Provision for Income Taxes. ABC and its subsidiaries are operated as Subchapter S corporations under the Internal Revenue Code. As a result, these entities do not incur federal and state income taxes (except with respect to certain states) and, accordingly, no discussion of income taxes is included in “Results of Operations” below. Federal and state income taxes (except with respect to certain states) on the income of such corporations are incurred and paid directly by the Company’s sole stockholder. Such corporations have historically made periodic distributions to the stockholder with respect to such tax liabilities. The Company entered into the Tax Allocation Agreement with the sole stockholder, pursuant to which he will receive distributions from the Company with respect to taxes associated with the Company’s income.

Special Note Regarding Forward-Looking Statements

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended. Such forward-looking statements are based on the beliefs of the Company’s management as well as on assumptions made by and information currently available to the Company at the time such statements were made. When used in this MD&A, the words “anticipate,” “believe,” “estimate,” “expect,” “intends” and similar expressions, as they relate to the Company are intended to identify forward-looking statements, which include statements relating to, among other things: (i) the ability of the Company to continue to successfully compete in the exterior building products market; (ii) the continued effectiveness of the Company’s sales and marketing strategy; and (iii) the ability of the Company to continue to successfully develop and launch new distribution centers. Actual results could differ materially from those projected in the forward-looking statements as a result of the matters discussed herein and certain economic and business factors, some of which may be beyond the control of the Company.

Results of Operations

The following table summarizes the Company’s historical results of operations as a percentage of net sales for the three and nine months ended September 30, 2003 and 2002:

	Three months ended September 30,				Nine months ended September 30,
	2003		2002		2003		2002
Income statement data:
Net sales	100.0	%	100.0	%	100.0	%	100.0	%
Cost of sales	74.3		74.3		74.7		74.7

Gross profit	25.7		25.7		25.3		25.3
Operating expenses	19.3		19.7		21.1		21.5

Operating income	6.4	%	6.0	%	4.2	%	3.8	%

Comparison of the Three and Nine Month Periods Ended September 30, 2003 to the Three and Nine Month Periods Ended September 30, 2002

The Company’s results of operations are affected by the seasonal nature of the roofing and siding business. See “Seasonality.”

Net sales for the three months ended September 30, 2003 increased by 29.1% to $537.5 million from $416.4 million for the three months ended September 30, 2002. Net sales for the nine months ended September 30, 2002 increased by 24.3% to $1,334.2 million from $1,073.1 million for the nine months ended September 30, 2002. Increases for both the three and nine months are primarily due to the 2002 acquisition activity. Comparable distribution center sales growth was 12.2% for the three months ended September 30, and 6.6% for the nine months ended September 30. Increases in comparable distribution center sales are due primarily to increases in volume.

Gross profit for the three months ended September 30, 2003 increased by 28.8%, to $138.0 million from $107.1 million for the three months ended September 30, 2002, primarily as a result of profits associated with increased sales. Gross profit, as a percent of net sales, for both the three months ended September 30, 2003 and 2002 were 25.7%. Gross profit for the nine months ended September 30, 2003 increased by 24.4% to $337.6 million from $271.3 million for the nine months ended September 30, 2002, primarily as a result of profits associated with increased sales. Gross profit, as a percent of net sales, for both the nine months ended September 30, 2003 and 2002 were 25.3%.

Operating expenses increased by $21.4 million to $103.4 million from $82.0 million for the three months ended September 30, 2003 and 2002, respectively. As a percent of net sales, operating expenses for the three months ended September 30, decreased to 19.3% in 2003 from 19.7% in 2002. For the nine months ended September 30, operating expenses increased by $51.0 million to $281.7 million in 2003, from $230.7 million in 2002. As a percent of net sales, operating expenses for the nine months ended September 30, decreased to 21.1% in 2003 from 21.5% in 2002. The decrease in operating expenses as a percent of net sales for both the three and nine months ended September 30 is due to the Company’s ability to administer continued growth without incrementally increasing operating expenses at its distribution centers, as well as at the corporate and regional levels.

Operating income for the three months ended September 30, 2003 increased by $9.5 million to $34.5 million from $25.0 million for the same period in 2002. Operating income for the nine months ended September 30, increased by $15.2 million to $55.6 million in 2003 from $40.4 million in 2002. The increase for the three and nine months ended September 30, is a result of the factors discussed above.

Interest expense for the three months ended September 30, 2003 remained level at 4.1 million for both the three months ended September 30, 2003 and 2002. For the nine months ended September 30, interest expense increased by $0.9 million or 7.8% to $12.0 million in 2003 from $11.1 million in 2002. The increase for the nine month period is due primarily to an increase in the Company’s average borrowing levels, being offset by reduced rates on the Company’s LIBOR and prime rate borrowings.

Liquidity and Capital Resources

Cash Flows from Operating Activities. Net cash provided by operating activities was $50.9 million and $32.1 million for the nine months ended September 30, 2003 and 2002, respectively. The change was due primarily to increases in net income and accounts payables, being partially offset by increases in accounts receivable, due to increased sales, and increased inventories due to the increased number of distribution centers.

Cash Flows from Investing Activities. Net cash used in investing activities decreased to $16.8 million from $26.1 million for the nine months ended September 30, 2003 and 2002, respectively, due to reductions in additions to property and equipment as well as a reduction in acquisitions of businesses.

Cash Flows from Financing Activities. Net cash used in financing activities was $37.8 million and $8.8 million for the nine months ended September 30, 2003 and 2002, respectively, primarily due to increased payments made under the line of credit as well as increased distributions made to the stockholder, partially offset by proceeds from long-term debt and net change in receivables from affiliates.

Liquidity. The Company’s principal sources of funds are anticipated to be cash flows from operating activities and borrowings under its revolving credit agreement. The Company believes that these funds will provide the Company with sufficient liquidity and capital resources for the Company to meet its financial obligations, as well as to provide funds for the Company’s working capital, capital expenditures and other needs for the foreseeable future. No assurances can be given, however, that this will be the case.

Seasonality

Because of cold weather conditions in many of the markets in which the Company does business and the seasonal nature of the roofing and siding business generally, the Company’s revenues vary substantially throughout the year, with its lowest revenues typically occurring in the months of December through February.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company’s quantitative and qualitative disclosures about market risk are incorporated by reference from Item 7A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2002, and have not materially changed since that report was filed.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures. The Company’s chief executive officer and chief financial officer have performed an evaluation of the Company’s disclosure controls and procedures (as that term is defined in Rule 13a-15(e) issued under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 30, 2003. Based on that evaluation, the chief executive officer and chief financial officer each have concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed in the Company’s periodic reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and regulation.

Changes in internal controls. No changes in the Company’s internal controls over financial reporting occurred during the quarter ended September 30, 2003 that have materially affected, or are reasonabley likely to materially affect, the Company’s internal controls over financial reporting.

Part II. Other Information

Item 6. Exhibits and Reports on Form 8-K

(a)

Exhibits

31.1		Rule 15d-14(a) Certifications of CEO
31.2		Rule 15d-14(a) Certifications of CFO

(b)

Reports on Form 8-K

The Company did not file any reports on Form 8-K during the three months ended September 30, 2003.

Signatures

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

						American Builders & Contractors Supply Co., Inc.

November 13, 2003						/s/ Kendra A. Story
Date:						Kendra A. Story
						Chief Financial Officer and Director

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AMERICAN BUILDERS & CONTRACTORS SUPPLY CO INC 10-Q