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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-K

(Mark One)

          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.

          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 o.

          The aggregate market value of the Common Stock of the registrant held by non-affiliates of the registrant is $7,435,350, the assumed fair market value of the registrant’s Common Stock at June 30, 2002 as determined by the Board of Directors.

          Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

          As of March 28, 2003, the number of shares of the registrant’s Common Stock outstanding was 12,190,498.  The registrant’s Common Stock is not traded in a public market.

DOCUMENTS INCORPORATED BY REFERENCE:

None.

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PART I

          This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of Section 27-A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  These statements include without limitation the words “believes,” “anticipates,” “estimates,” “intends,” “expects,” and words of similar import.  All statements other than statements of historical fact included in statements under “Item 1. Business,” “Item 2. Properties,” “Item 3. Legal Proceedings” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation” include forward-looking information and may reflect certain judgements by management. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company or the maintenance, repair and operations industry to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  Certain potential risks and uncertainties that may affect the Company are set forth in the Company’s Registration Statement on Form S-4, as amended, effective January 21, 1999.  The Company disclaims any obligation to update any such factors or to publicly announce the results of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.

Item 1.          Business.

General

               Century Maintenance Supply, Inc., a Delaware corporation (“Century” or the “Company”), is a leading distributor of maintenance, repair and operations (“MRO”) supplies to the $2 billion multifamily apartment market.  Century offers a broad selection of high quality MRO items, with prompt, free delivery provided through the Company’s extensive distribution network.  The Company currently supplies over 5,400 name brand and private label items, including plumbing, hardware, electrical, HVAC and lighting products, to over 35,700 active customers in the United States.

               The Company markets its products to individual apartment maintenance managers as well as to larger property management companies which own and/or manage multiple apartment complexes.  Century provides free same-day or next-day delivery on virtually all orders by delivering its products via Company-operated trucks from 37 distribution centers which are strategically located in major metropolitan markets throughout the United States.  Additionally, the company services 18 other markets out of these distribution centers by Line Haul.  Line Haul delivery is the delivery of the product from a distribution center to another market by common carrier.  In many cases, the product is then delivered locally to the customer via Company-operated trucks.

Market Overview

               The Company operates in what it estimates to be the $10 billion MRO industry, which includes such end-users as apartments, hotels/motels, nursing homes, prisons, military installations, and schools and universities.  The Company currently markets substantially all of its products to the $2 billion multifamily apartment segment of this industry, focusing specifically on markets with at least 60,000 units and apartment complexes containing more than 50 units.  The Company services 37 such markets as of March 28, 2003.

               The MRO market is highly fragmented and has been traditionally served by a variety of distribution channels, including numerous local or regional broad-line suppliers, specialty and industrial suppliers, mail order catalog companies, retail home centers, and traditional hardware stores.  Over the past ten years, the apartment MRO market has shifted its purchasing from broad-line suppliers and retailers serving a broad range of end-users and specialized suppliers serving a discrete product segment of this market, such as plumbing, HVAC or electrical products, to distributors focused on providing a high level of customer service and a product mix tailored to meet the specific needs of the apartment MRO market.

               The property management industry is consolidating.  Over the past few years, the top 50 national apartment management companies have increased their share of apartment units managed.  In addition, property managers are joining national group purchasing organizations (“GPOs”), such as Buyers Access Group, to gain the increased buying power that large volume purchasing offers.  As a result of these trends, property management companies and

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GPOs are increasingly purchasing MRO products from national suppliers who provide broad product selection, convenient ordering, reliable delivery and other value-added services.

               The apartment MRO market has historically been stable and non-cyclical, as maintenance work is required regardless of  economic conditions.  Maintenance managers must keep their apartments in good repair to retain existing tenants and attract new ones (e.g., a leaky faucet must be repaired and a vacant apartment must be refurbished).  The apartment MRO industry has been growing over the past few years, primarily due to increased construction of new apartment buildings and improved standard amenities in the typical apartment unit.  These new features include microwave ovens, washers/dryers, miniblinds and individual water heaters.  In addition to these amenities, properties are upgrading the current inventory to compete with newer properties that include these amenities as well as replacing outdated standard features, such as cabinets and lighting.  These trends provide increased opportunity for incremental sales for the apartment MRO suppliers.

               Labor represents a significantly larger component than supplies of the MRO budget for a typical apartment complex.  Consequently, while competitive pricing is an important criterion for selecting a distributor, maintenance managers value convenient ordering, reliable, prompt delivery, extensive product selection and other value-added services that allow them to use their budgeted man-hours most efficiently.

Product Offerings

               The Company currently offers over 5,400 cataloged stock-keeping units (“SKUs”), providing a full range of MRO supplies to its customers, and continually monitors its product offering to ensure its customers’ needs are met.  The Company offers high quality name brand and private label products in the following core categories: (i) plumbing, (ii) hardware, (iii) HVAC equipment and parts, (iv) lighting, (v) electrical, (vi) appliances and parts, (vii) janitorial and (viii) pool items.

               Century’s product offering includes several private branded products which it believes provide it with a distinct competitive advantage in terms of tailored products and favorable pricing.  These products, which include Boss® janitorial supplies, Rio® ceiling fans, Champion^TM blinds, DuroGuard® air conditioning units, Comfort Range® air conditioning units, and Aspen® faucets accounted for 14.1% of sales in 2002.  The Company plans to continue to develop these products over the next few years.

               The Company currently distributes user-friendly catalogs with approximately 5,400 cataloged items.  Historically, the Company has added approximately 150 SKUs per year to its catalogs.  These products are usually recommended by local salespeople and then reviewed by a panel at Century’s headquarters.  Local distribution center managers have the flexibility to offer selected non-catalog items at their individual distribution centers.  For example, Century’s Denver distribution center stocks snow shovels and ice melt.

               The Company believes that its 5,400 catalogued SKUs represent those items that are most likely to meet the everyday and ongoing needs of the apartment MRO manager in the Company’s target market.  The Company’s core products represent the basic continuing requirements of the apartment maintenance person which change little from year to year.  Consequently, the Company attempts to minimize its exposure to product obsolescence.

Customers

               Century’s customers include local and regional apartment properties as well as larger property management companies.  The Company maintains over 35,700 active accounts, an increase of more than 19,000 over the past six years.  Century defines an active account as a property that generates two or more orders within a 12 month period.

               Century’s management believes its customer satisfaction is illustrated by the recurring revenues generated from its major accounts.  In 2002, sales to the Company’s top five customers increased by approximately 24.4% over the prior year.

               The consolidation of the large apartment management companies is changing the way business is conducted in the apartment MRO market.  The large apartment management companies determine overall maintenance budgets and grant preferred provider status to suppliers with competitive pricing, exceptional quality, and a national

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presence.  Once a budget has been approved by a national management company, local maintenance managers are primarily responsible for making the actual MRO repair decisions and purchases.

               Many property management companies have joined GPOs such as Buyers Access to replicate the purchasing advantages of the larger property managers.  Buyers Access requires vendors to have a national presence in addition to a broad product selection, competitive pricing, and a sophisticated billing system. Century is a preferred provider to Buyers Access and nine out of the ten largest apartment management companies.

Sales and Marketing

               Century’s marketing and sales strategy is based on providing the best possible quality service to its customers.  The Company’s combination of inside and outside salesforces provides it with what it believes to be a competitive advantage over competitors that take orders at a centralized location.

               Outside Sales Staff.  Century employs 166 commission-based local outside sales personnel, who are based at the Company’s distribution centers and are responsible for maintaining close customer relationships and generating new business through regular visits.  Each local outside salesperson typically makes 15-20 sales visits per day.  The outside sales force generally does not take customer orders, allowing it to focus on its core function.  In addition, the outside sales force provides customers with information on products and promotions, provides value-added services such as assistance with inventory management and training issues, and serves as the focal point for customer feedback.

               Inside Sales Force.  The Company employs 119 inside salespeople who are based locally or regionally and are primarily responsible for receiving customer orders and providing technical support.  Additionally, the inside salespeople provide customers with information on pricing and promotions as well as installation procedures and other critical characteristics which help them determine the products best suited to their specific needs.  The Company encourages customers to place all orders with the inside sales staff in order to allow the outside sales staff to focus on building customer relationships.  Providing a local/regional inside salesforce reinforces customer relations as customers usually place orders with the same group of salespeople who are familiar with the customers’ needs and order history.

               National Sales Force.  The Company employs nine salespeople who are responsible for fostering and maintaining relationships with national property management companies and GPOs.  The national sales force negotiates contract terms, including pricing and minimum purchase requirements.

               The Catalog.  The Century Maintenance Catalog includes over 5,400 SKUs and is annually distributed to over 60,000 active and prospective customers.  The catalogs are complete with drawings (of most products), specifications and pricing which facilitate the ordering process and help the customer select the appropriate product.

               Educational Classes.  Century provides educational classes to its customers at most of its distribution centers.  Classes are offered in the areas of basic electrical systems, A/C and heating, appliance repair, refrigeration control circuits, pool chemistry and EPA refrigerant recovery.  Century has tested and EPA certified over 20,000 technicians on refrigerant recovery.  The Company charges a nominal fee to cover the cost of the EPA classes, and the other classes are offered free of charge.

               Sales Terms.  Century’s sales terms are generally net 30 days for customers meeting its credit requirements.

Competition

               The Company believes that the principal competitive factors in the distribution of repair and maintenance products to the apartment housing market and similar markets are customer service, the quality of products offered, reliability of delivery, product pricing and sales relationships.

               The Company competes in each of its regional markets with a number of suppliers, including such national firms as Wilmar Industries, a division of Interline Brands, Inc., or Wilmar, Maintenance Warehouse/America Corp., or Maintenance Warehouse, an affiliate of the Home Depot, Inc., and Chad Supply, a regional distributor primarily

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in the Southeast United States.  Wilmar and Maintenance Warehouse are the Company’s most direct competitors in terms of product line and method of distribution.  The Company believes that it distinguishes itself from these national competitors with its local sales focus and direct delivery from its local distribution centers.  Management also believes that the Company’s strategies build a high degree of customer loyalty through its strong local market presence.  In addition, the Company competes with local or regional broad-line suppliers, specialty and industrial suppliers, other mail order catalog companies, retail home centers, and traditional hardware stores.

Distribution

               The Company delivers over 90% of its sales using its own fleet of trucks, the most of any major competitor.  Each truck is driven by an employee who has a working knowledge of the distribution center’s products and customers.  The Company operates its own fleet of trucks in order to maintain complete control of the delivery process, an approach that the Company’s management believes makes it the most reliable in the industry.  Management believes the additional cost Century spends on operating its trucks is minimal considering the value-added service it provides its customers.  Delivery is free for orders of $50 or more.  Furthermore, the industry trend toward increased order size will benefit companies like Century which operate their own fleet of trucks since each delivery person can carry more items at little or no additional cost.

               Typically, orders are placed via toll free or local telephone calls to one of the Company’s inside salespeople located in the nearest call center.  The inside salespeople confirm the availability of the product ordered and then enter customer orders into the fully-computerized order processing system.  In many locations, orders placed before 10:00 a.m. are delivered on the same day.  Orders placed before 5:00 p.m. are virtually always received by the customer on the following day.

Operations

               In managing its inventory, Century seeks to maintain a steady balance between providing the customer optimal service and limiting costs.  Century has several mechanisms in place to track, measure, replenish and optimize the use of inventory in all Company locations, including monthly tracking, physical counts, and cycle counting.  In 2002, the Company estimates that it maintained an average fill rate of over 97%.

               Century’s distribution centers are monitored monthly by the finance, operations, and purchasing departments at corporate headquarters.  Each center is measured on deliveries, credits, expenses, customer contact, total sales, inventory and surplus inventory dollars, and the percentage of non-catalog and “dead” stock product.  In addition, locations are graded on sales/inventory ratios and inventory turnover.  Furthermore, beginning in 1995, Century instituted a cycle count program.  Locations are required to physically count from 50 to 100 items four days per week, or approximately 200 days per year.

Suppliers and Purchasing

               Century currently purchases products from approximately 1,200 vendors.  In 2002, no Company vendor accounted for more than 7.4% of purchases in 2002, and the top ten vendors accounted for approximately 41.8% of total purchases.

               The Company’s use of volume purchasing has enabled it to benefit from favorable pricing and payment terms in the past.  The benefit the Company derives from volume-based terms is expected to increase as a result of increased sales volume and further realization of efficiencies.

               The Company’s management believes it has good relationships with its vendors and, to date, has not experienced any difficulty obtaining products in sufficient quantities at competitive prices.

MIS System

               Century’s management and information system is a comprehensive sales, order-entry, inventory and reporting system.

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               The capabilities of the Century system allow the Company to analyze historical customer buying patterns, in addition to managing the sales, credit and collections, order-entry and financial reporting functions.  Optimal inventory levels are calculated real-time on a per SKU basis.

Government Regulation and Environmental Matters

               The Company and its customers are subject to Federal and state regulation in the United States, and some of the Company’s vendors are located overseas and are therefore subject to regulation by foreign governments.  The Company cannot predict the extent to which future legislative and regulatory developments concerning its practices and products may affect the Company.  The Company is also subject to numerous Federal, state and local laws and regulations relating to such matters as safe working conditions, fire hazard control and the handling and disposal of hazardous or infectious materials or substances and emissions of air pollutants.  The Company leases properties which are subject to environmental laws and regulations.  There can be no assurance that the Company will not be required to incur significant costs to comply with such laws and regulations in the future or that such laws or regulations will not have a material adverse effect upon the Company’s business, financial condition or results of operations.  The Company believes it is currently in material compliance with all applicable laws and regulations.

Trademarks

               The Company is not able to register the trademarks “Century Maintenance Supply” or “Century” with the United States Patent and Trademark Office because a third party owns a federal registration for the mark “Century.”  The Company, at this time, is not prevented from using the Century name; however, it is possible that this third party could bring an infringement action against the Company for the use of the name.  If an infringement action were successful, it is possible that the Company would be prohibited from using the Century name on a regional, or possibly national, basis.

Employees

               As of March 28, 2003, the Company employed 956 full-time employees and 16 part-time employees.  None of the Company’s employees are represented by unions and the Company considers its employee relations to be good.

Where you can find more information

               Century files periodic reports with the Securities and Exchange Commission although Century is not subject to the reporting requirements of the Securities and Exchange Act of 1934.  You may read and copy the periodic reports that Century has filed or may file in the future at the SEC’s public reference facility in Room 1024, 450 Fifth Street, N.W., Washington, D.C.  20549.  Please call the SEC at 1-800-SEC-0330 for further information on the public reference room.  The SEC maintains a web site that contains periodic reports and other information regarding the registrants that file electronically with the SEC at http://www.sec.gov.

Item 2.          Properties.

               The Company currently operates in 37 different geographic markets, each with a distribution center ranging in size from 12,000 to 114,000 square feet.  The Company leases all of its distribution centers, with lease expiration dates ranging from March 2003 to November 2007.  Management believes significant additional capacity can be added at minimal cost to most of the locations utilizing available contiguous space.

Item 3.           Legal Proceedings.

               The Company is party to lawsuits and other proceedings incidental to its business.  While the results of such lawsuits and other proceedings cannot be predicted with certainty, management does not expect that ultimate liabilities, if any, will have a material adverse effect on the financial position, results of operations, or cash flows of the Company.

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Item 4.          Submission of Matters to a Vote of Security Holders.

               None.

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PART II

Item 5.          Market for Registrant’s Common Equity and Related Stockholder Matters.

               There is no established public trading market for the Company’s Common Stock.  As of March 28, 2003, all of the Common Stock of the Company is held by 42 holders of record.

               The following is a summary of the transactions engaged in by the Company during the past three fiscal years involving sales of the Company’s securities that were not registered under the Securities Act:

               From January 1, 2000 through December 31, 2000, the Company issued and sold 147,389 shares of Common Stock to employees upon the exercise of options to purchase Common Stock for an exercise price of $1.74 per share for an aggregate purchase price of approximately $347,281, which was paid with proceeds of loans received from the Company in the principal amount of $297,242, bearing interest at the rate of 0% over a term of 9 months.  These employees paid the balance of the exercise price of the options in cash.

               The issuances described above were exempt from registration under the Securities Act pursuant to Section 4(2) of the Securities Act as a transaction by an issuer not involving a public offering or Rule 701 promulgated under the Securities Act for securities sold by a company not subject to the reporting requirements under the Securities Exchange Act of 1934 pursuant to certain compensatory benefit plans and contracts relating to compensation.  Appropriate legends were affixed to the stock certificates issued in these transactions and there was no general solicitation or advertising.

               From January 1, 2000 through December 31, 2000, the Company granted non-qualified options to purchase an aggregate of 90,900 shares of Common Stock to its directors, officers and employees under the Company’s 1998 Nonqualified Stock Option Plan.  The options have an exercise price of $10.00 and vest over a three-year period.  The issuances were exempt from the registration requirements of the Securities Act either by virtue of (i) an exemption provided by Rule 701 promulgated under the Securities Act, or (ii) a “no-sale” theory under Section 5 of the Securities Act, since none of the optionees provided any consideration for the grants (the sale of the underlying option shares occurs only when the option is exercised and the purchase price for the shares is paid to the Company).

               No underwriter was employed with respect to any sales of securities of the Company in the transactions described above.  No commissions or fees were paid with respect to any such sales. 

               The Company did not issue or sell any shares of Common Stock nor grant any options in 2001.

               From January 1, 2002 through December 31, 2002, the Company granted non-qualified options to purchase an aggregate of 124,500 shares of Common Stock to its directors, officers and employees under the Company’s 1998 Nonqualified Stock Option Plan.  The options have an exercise price of $11.00 and vest over a three-year period.  Additionally, the Company granted to Joseph Semmer in connection with his appointment as Chief Executive Officer in January 2002 a non-qualified option to purchase up to 190,000 shares of Common Stock.  40,000 shares subject to the option are immediately exercisable at an exercise price of $10.00 per share.  The remaining shares subject to the option become exercisable over a three-year period at exercise prices between $10.00 and $15.00 per share. The issuances were exempt from the registration requirements of the Securities Act, either by virtue of (i) an exemption provided by Rule 701 promulgated under the Securities Act, or (ii) a “no-sale” theory under Section 5 of the Securities Act, since none of the optionees provided any consideration for the grants (the sale of the underlying option shares occurs only when the option is exercised and the purchase price for the shares is paid to the Company).

               In January 2002, the Company sold 20,000 shares of its Common Stock to the Company’s Chief Executive Officer pursuant to its Stock Subscription Plan for an aggregate purchase price of $200,000, payable with a promissory note for $100,000 bearing interest at a rate of 2.75% with a fifteen month term and $100,000 in cash.  The sale was exempt from registration pursuant to Section 4(2) of the Securities Act as a transaction by an issuer not involving a public offering.

               The Company has not paid cash dividends to its stockholders and does not intend to pay cash dividends to its stockholders in the foreseeable future.  See “Item 7. Management’s Discussion and Analysis of Financial

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Condition and Results Operations—Liquidity and Capital Resources” for a discussion of restrictions on the Company’s ability to pay cash dividends.

Item 6.          Selected Financial Data.

               The following selected financial data should be read in conjunction with “Management’s Discussion and Analysis and Results of Operations” and the consolidated financial statements of the Company as of December 31, 2001 and 2002 and for the three years in the period ended December 31, 2002, included elsewhere in this Annual Report on Form 10-K.  The Operating Data, Cash Flow Data and the Balance Sheet Data as of and for the years ended December 31, 1998, 1999, 2000, 2001 and 2002 are derived from audited consolidated financial statements of the Company.  In 1998, the Company completed the Recapitalization (see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—The Recapitalization”), which significantly affected 1998 financial data.

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