MEADOWCRAFT INC, S-1/A, 1997-10-22

MEADOWCRAFT INC
S-1/A, 1997-10-22
HOUSEHOLD FURNITURE

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 22, 1997

REGISTRATION STATEMENT NO. 333-33053
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------

AMENDMENT NO. 2

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------

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

<TABLE>
<S> <C> <C>
DELAWARE 2500 63-0891252
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>

1401 MEADOWCRAFT ROAD
BIRMINGHAM, ALABAMA 35215
(205) 853-2220
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

---------------------

WILLIAM J. MCCANNA
PRESIDENT
MEADOWCRAFT, INC.
1401 MEADOWCRAFT ROAD
BIRMINGHAM, ALABAMA 35215
(205) 853-2220
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

---------------------

COPIES OF COMMUNICATIONS TO:

<TABLE>
<S> <C>
JOHN H. COOPER, ESQ. JAMES C. SCOVILLE, ESQ.
SIROTE & PERMUTT, P.C. DEBEVOISE & PLIMPTON
2222 ARLINGTON AVENUE SOUTH 875 THIRD AVENUE
BIRMINGHAM, ALABAMA 35255-5727 NEW YORK, NEW YORK 10022
TEL: (205) 930-5108 TEL: (212) 909-6000
FAX: (205) 930-5301 FAX: (212) 909-6836
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
==============================================================================================================================
TITLE OF EACH AMOUNT TO PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
CLASS OF SECURITIES BE REGISTERED OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED (1) PER SHARE(2) PRICE(1)(2) FEE(3)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01 per share.... 3,593,750 $15 $53,906,250 $16,336
==============================================================================================================================
</TABLE>

(1) Includes shares that may be purchased by the Underwriters to cover
over-allotments, if any.

(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) of the Securities Act of 1933.

(3) The Company previously paid a registration fee of $15,152 with respect to
the securities being registered hereunder.

---------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED OCTOBER 22, 1997

PROSPECTUS
3,125,000 SHARES

MEADOWCRAFT, INC.
COMMON STOCK
------------------------------

All of the shares of Common Stock, par value $.01 per share (the "Common
Stock"), offered hereby (the "Offering") are being sold by Meadowcraft, Inc.
(the "Company" or "Meadowcraft"). Prior to the Offering, there has been no
public market for the Common Stock of the Company. It is currently anticipated
that the initial public offering price will be between $13.00 and $15.00 per
share. See "Underwriting" for a discussion of the factors to be considered in
determining the initial public offering price. The Common Stock has been
approved for listing on the New York Stock Exchange subject to official notice
of issuance under the symbol "MWI".

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
------------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
===================================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share............................ $ $ $
- -------------------------------------------------------------------------------------------------------------------
Total(3)............................. $ $ $
===================================================================================================================
</TABLE>

(1) See "Underwriting" for indemnification arrangements with the Underwriters.
(2) Before deducting expenses payable by the Company, estimated at $425,000. The
Underwriters have agreed to reimburse the Company $100,000 for certain
expenses incurred in connection with the Offering.
(3) The Company has granted the Underwriters a 30-day option to purchase up to
468,750 shares of Common Stock solely to cover over-allotments, if any. If
such option is exercised in full, the total Price to Public, Underwriting
Discount and Proceeds to Company will be $ , $ and
$ , respectively. See "Underwriting."
------------------------------

The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if issued to and accepted by them and subject to
certain conditions, including the approval of certain legal matters by counsel.
The Underwriters reserve the right to withdraw, cancel or modify such offer and
to reject any orders in whole or in part. It is expected that delivery of the
shares of Common Stock will be made on or about , 1997.
------------------------------

[A.G. EDWARDS & SONS, INC. LOGO]

THE DATE OF THIS PROSPECTUS IS , 1997
<PAGE> 3

[LOGO]

[PHOTO TO BE FILED BY AMENDMENT]

"Meadowcraft," "Plantation Patterns," "Arlington House," "Salterini,"
"Interior Images by Salterini," and "Home Collection from Plantation Patterns"
are trademarks of Meadowcraft, Inc.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK. SUCH
TRANSACTIONS MAY INCLUDE THE PURCHASE OF COMMON STOCK TO COVER SYNDICATE SHORT
POSITIONS, OR FOR THE PURPOSE OF MAINTAINING THE PRICE OF THE COMMON STOCK, AND
THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."

2
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and the financial statements
and related notes thereto appearing elsewhere in this Prospectus. Unless
otherwise indicated, (i) all information in this Prospectus assumes that the
Underwriters' over-allotment option is not exercised; (ii) all references to the
assumed initial public offering price of $14.00 per share of Common Stock are
based on the midpoint of the range set forth on the cover page of this
Prospectus; (iii) references to "Fiscal 1991," "Fiscal 1992," "Fiscal 1993,"
"Fiscal 1994," "Fiscal 1995," and "Fiscal 1996" refer to the Company's fiscal
year ending on the Sunday closest to April 30 of that year, references to
"Fiscal 1997" refer to the Company's fiscal year ended May 3, 1997, and
references to "Fiscal 1998" refer to the Company's fiscal year ending July 31,
1998; and (iv) "Seasonal" year refers to the 12-month period ending July 31 of
the particular year and represents the fiscal year to which the Company plans to
change upon consummation of the Offering.

THE COMPANY

Meadowcraft is one of the leading domestic producers of casual outdoor
furniture and is the largest manufacturer of outdoor wrought iron furniture in
the United States. The Company designs, manufactures and distributes a variety
of wrought iron consumer products, including outdoor and indoor furniture and
accessories, outdoor cushions and umbrellas, and garden products, which it
markets to mass merchandisers and specialty stores primarily in the United
States. The Company believes that it has established a reputation as an
innovator in the design, manufacturing, distribution and marketing of moderately
priced, quality wrought iron furniture. Meadowcraft's net sales have grown from
$50.5 million in Fiscal 1991 to $141.9 million in Fiscal 1997, while pro forma
net income has increased from $1.2 million to $15.9 million over the same
period. For Seasonal 1997, Meadowcraft had net sales of $145.1 million and pro
forma net income of $16.7 million.

The Company offers consumers a wide variety of products across different
price points in three markets: the outdoor mass market under the Plantation
Patterns brand name; the outdoor specialty market under the Meadowcraft,
Arlington House and Salterini brand names; and the indoor specialty and mass
markets under the Interior Images by Salterini and Home Collection from
Plantation Patterns brand names, respectively. For Fiscal 1997, outdoor mass
market sales accounted for approximately 75.1% of the Company's gross sales,
while outdoor specialty market sales represented approximately 16.9% of gross
sales and indoor specialty and mass market sales constituted approximately 4.2%
of gross sales.

Meadowcraft attributes its strong market position in the casual outdoor
furniture industry to the following competitive strengths:

- Meadowcraft's ability to produce quality wrought iron furniture and
accessories with traditional, "high-end" design features, broad
consumer appeal, and high value-to-price characteristics.

- Meadowcraft's ability to ship large quantities of products on a
reliable and timely basis due to its advanced manufacturing and
distribution facilities and computerized inventory tracking and
shipping systems.

- Meadowcraft's excellent relationships with its mass market retail
customers and its extensive network of specialty retail customers.

- Meadowcraft's senior managers with their extensive experience in
the casual furniture and other manufacturing industries.
3
<PAGE> 5
Meadowcraft's objective is to continue to grow sales, earnings and market
share of the casual outdoor and indoor furniture markets by:

- Introducing new products and expanding offerings in its existing
product lines with the same quality and customer value as its
existing products.

- Increasing its manufacturing and product distribution capacity to
meet the demands of new and existing customers in new geographic
regions, as well as to enhance the Company's ability to provide
products to all customers on a timely and reliable basis.

- Heightening brand name awareness and increasing consumer demand for
the Company's products through expanded product offerings and
national marketing and advertising campaigns, such as the Paul
Harvey national radio show.

The Company was incorporated under the laws of Delaware in 1985 as Sam
Blount Company, Inc. and changed its name to Meadowcraft, Inc. in July 1994. The
Company's principal executive and administrative offices are located at 1401
Meadowcraft Road, Birmingham, Alabama 35215, and the Company's telephone number
is (205) 853-2220.

OWNERSHIP

Upon consummation of the Offering, the existing stockholders of the Company
and members of their immediate family will own an aggregate of approximately
85.2% of the outstanding Common Stock (approximately 83.2% if the Underwriters'
over-allotment option is exercised in full), with Samuel R. Blount, Chairman of
the Board of Directors, and his immediate family owning an aggregate of
approximately 76.1% of the outstanding Common Stock (approximately 74.3% if the
Underwriters' over-allotment option is exercised in full). See "Principal
Stockholders."

THE OFFERING

Common Stock offered by the
Company........................... 3,125,000 shares

Common Stock to be outstanding after
the Offering(1)................... 19,125,000 shares

Use of Proceeds..................... The Company will use the net proceeds
from the Offering to pay approximately
$32.7 million of the S Corporation
Distribution (as defined herein) to the
Company's existing stockholders, and
the balance will be used to finance
capital expenditures. See "Use of
Proceeds."

NYSE symbol......................... MWI

- ---------------

(1) Excludes 1,000,000 shares of Common Stock reserved for issuance and not yet
issued under the Company's 1997 Stock Option Plan (the "Plan"). See
"Management -- 1997 Stock Option Plan."

RISK FACTORS

For a discussion of certain factors that should be considered in evaluating
an investment in the Common Stock, see "Risk Factors."
4
<PAGE> 6

SUMMARY HISTORICAL AND OTHER SEASONAL FINANCIAL DATA(1)

(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THIRTEEN WEEKS
FISCAL YEAR ENDED ENDED
-------------------------------------------------------------------------- ----------------------
APRIL 28, MAY 3, MAY 2, MAY 1, APRIL 30, APRIL 28, MAY 3, JULY 31, JULY 31,
1991 1992 1993 1994 1995 1996 1997 1996 1997
--------- ------- ------- ------- --------- --------- -------- ----------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales................... $50,523 $68,359 $73,062 $96,189 $120,767 $117,419 $141,945 $32,233 $35,368
Gross profit................ 13,111 17,519 17,191 25,384 32,180 29,570 43,630 7,963 9,436
Operating income............ 6,126 9,082 8,491 14,972 20,914 17,572 30,652 5,399 6,477
Income before pro forma
provision for income
taxes..................... 1,900 5,108 4,415 10,087 16,033 12,554 25,378 4,095 5,316
Pro forma net income(2)..... 1,206 3,244 2,790 6,415 9,962 7,869 15,939 2,572 3,338
Pro forma net income per
share(3).................. .96 .20
Pro forma weighted average
shares outstanding(3)..... 16,521 16,521
OTHER DATA:
Capital expenditures(4)..... $ 297 $ 1,508 $ 1,700 $ 7,615 $ 16,034 $ 18,676 $ 4,081 $ 1,628 $ 2,070
Depreciation and
amortization.............. 1,242 1,189 1,221 1,482 2,340 4,006 5,099 1,235 1,237
</TABLE>

<TABLE>
<CAPTION>
JULY 31, 1997
---------------------------------------
PRO FORMA
ACTUAL PRO FORMA(5) AS ADJUSTED(6)
------- ------------ --------------
(UNAUDITED)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Total assets................................................ $71,072 $73,772 $81,365
Total debt.................................................. 28,168 28,168 28,168
Stockholders' equity........................................ 33,144 3,174 43,437
</TABLE>

<TABLE>
<CAPTION>
OTHER SEASONAL DATA FOR THE SEASONAL YEAR ENDED JULY 31,
----------------------------------------------------------------------
1991 1992 1993 1994 1995 1996 1997
------- ------- ------- ------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales.............................. $54,750 $67,144 $83,937 $99,155 $116,894 $126,926 $145,080
Gross profit........................... 14,960 17,105 20,394 27,909 29,139 32,930 45,103
Operating income....................... 7,858 7,683 10,910 18,047 17,715 20,642 31,730
Income before pro forma provision for
income taxes......................... 3,388 3,932 6,714 13,019 12,728 15,507 26,600
Pro forma net income(2)................ 2,151 2,497 4,243 8,280 7,915 9,725 16,705
OTHER DATA:
Capital expenditures(4)................ $ 596 $ 1,506 $ 1,735 $ 9,825 $ 19,049 $ 13,973 $ 4,523
Depreciation and amortization.......... 1,038 1,196 1,272 1,576 2,664 4,226 5,101
</TABLE>

- ---------------
5
<PAGE> 7

(1) The Company utilizes a 52/53 week fiscal year. In each of Fiscal 1991, 1992,
1993, 1994, 1995 and 1996, the fiscal year ended on the Sunday closest to
the last day of April. In Fiscal 1997, the Company changed its fiscal year
end to the Saturday closest to the last day of April. All fiscal and
seasonal years presented herein represent 52 weeks of operations, except for
Fiscal 1992 and Fiscal 1997 which include 53 weeks of operations. The
12-month period ended July 31 ("Seasonal Year") represents the Company's
natural, or seasonal, year which corresponds to the Company's annual
business cycle. However, due to certain regulations under the Internal
Revenue Code of 1986, as amended (the "Code"), relating to S corporation
elections, the Company's fiscal year was not permitted to match its Seasonal
Year. Upon consummation of the Offering, the Company will terminate its S
corporation election and change its fiscal year end to July 31 to coincide
with the Company's Seasonal Year. As a result, certain unaudited Seasonal
Year information is presented to aid investors in measuring and identifying
trends with respect to the Company's performance related to its Seasonal
Years.
(2) Pro forma net income is presented as if the Company had been a C corporation
for tax purposes for all periods presented. See Notes 2 and 7 of the
Company's audited financial statements and related notes thereto (the
"Financial Statements") included elsewhere in this Prospectus.
(3) The weighted average number of shares of Common Stock outstanding gives
effect to the estimated number of shares of Common Stock that would be
required to be sold, at an assumed initial public offering price of $14.00
per share, to pay the portion of the S Corporation Distribution to be paid
out of the net proceeds of the Offering in excess of Fiscal 1997 earnings.
See "Use of Proceeds."
(4) Capital expenditures include capital leases and capital expenditures
financed with debt.
(5) Reflects, as appropriate, (i) the approximately $32.7 million portion of the
S Corporation Distribution to be paid out of the net proceeds of the
Offering, which represents undistributed earnings from October 1, 1986
through May 3, 1997 that were previously taxed to the existing stockholders,
and (ii) the effect of recording net deferred tax assets which will result
from the termination of the Company's S corporation election, amounting to
approximately $2.7 million at July 31, 1997 (see Notes 2 and 7 of the
Financial Statements included elsewhere in this Prospectus). See "Use of
Proceeds."
(6) Represents pro forma balance sheet data as adjusted to reflect the issuance
and sale of 3,125,000 shares of Common Stock by the Company at an assumed
initial public offering price of $14.00 per share providing assumed net
proceeds of $40.3 million and the application of such proceeds to pay
approximately $32.7 million of the S Corporation Distribution. See "Use of
Proceeds."
6
<PAGE> 8

RISK FACTORS

In addition to the other information contained in this Prospectus,
prospective investors should consider the following factors in evaluating the
Company and its business before purchasing any of the shares of the Common Stock
offered hereby.

CUSTOMER CONCENTRATION

A substantial portion of the Company's sales is derived from a limited
number of customers. In Fiscal 1997, the Company's top five customers
represented approximately 62.6% of the Company's net sales. Wal-Mart Stores,
Inc. ("Wal-Mart") and Sam's Club, Inc. (each of which is a subsidiary of
Wal-Mart, Inc.) represented approximately 21.4% and 12.6%, respectively, of net
sales in Fiscal 1997. The Company has no long-term written contracts for the
purchase of products with its customers, but instead sells its products under
short-term purchase orders, which is consistent with general industry practice.
The loss of any significant customer or a substantial reduction in purchases by
any such customer would have a material adverse effect on the Company if the
Company were unable to replace such customer or purchases. In addition, changes
and consolidation in the retail industry could adversely affect one or more of
the Company's significant customers which, in turn, could materially adversely
affect the Company. See "Business -- Customers and Marketing."

SEASONALITY

The Company's sales in its quarter ended October are significantly lower
than its sales in other quarters due to the seasonal nature of the casual
outdoor furniture industry. The Company has historically experienced operating
losses in the quarter ended October of each year. During the months of August,
September and October, shipments of products to customers are relatively low due
to the completion of the mass market retail selling season and reduced demand
for outdoor casual furniture in the fall and winter months. At the same time,
the Company continues to manufacture products to build inventory to meet
customer orders and anticipated demand for the next selling season, incurring
operating and overhead costs without corresponding sales during the period. In
addition, the Company's sales are also subject to fluctuations on a quarterly
basis due to such factors as weather and customer ordering decisions. Trading
volume and prices for the Common Stock could be subject to wide fluctuations in
response to these variations in operating results. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Quarterly
Results and Seasonality."

CYCLICALITY

The Company's business is subject to cyclical fluctuations based on
economic conditions generally and conditions in the casual furniture industry,
including the effects of consumer behavior, preferences, and confidence; the
level of discretionary spending; housing activity; demographics; interest rates;
and credit availability. These factors not only affect the ultimate consumer,
but also impact mass and specialty retailers, the Company's primary customers.
Recessions or prolonged economic downturns could have a material adverse effect
on the Company's business, financial condition or results of operations.

COMPETITION

The casual furniture industry is highly competitive and includes a large
number of manufacturers, none of which dominate the market. The Company competes
against other domestic and foreign wrought iron furniture manufacturers as well
as manufacturers of aluminum, resin and plastic, wicker and rattan, and wood
casual furniture with respect to its outdoor products and traditional furniture
companies with respect to its indoor products. A number of the companies which
compete directly with the Company may have greater financial and other resources
than the Company. Management believes that competition in the casual furniture
industry is generally a function of timeliness of delivery, price, quality,
product design, product availability and customer service. While sales of
imported, foreign-produced wrought iron consumer products represent a small
percentage of total U.S. wrought iron furniture sales, such sales have increased
in recent years and could adversely affect the Company's sales. See
"Business -- Industry and Competition."

7
<PAGE> 9

MANAGEMENT OF GROWTH

As part of its planned expansion, the Company is constructing an
approximately 530,000 square foot distribution facility and office in
Birmingham, Alabama, and is expanding its Selma and Wadley, Alabama facilities
by approximately 70,000 and 10,000 square feet, respectively. In addition, in
September 1997 the Company commenced construction of an approximately 600,000
square foot manufacturing, distribution and office facility in Arizona in Fiscal
1998, and, in October 1997 the Company purchased an approximately 175,000 square
foot manufacturing facility in Sonora, Mexico. See "Business -- Properties." The
Company also plans to introduce new products, including a new line of tubular
steel furniture in Fiscal 1998, and further diversify its product offerings.
Although the Company has been successful in managing its recent growth and has
taken steps to ensure that its systems and controls are adequate to address its
current and anticipated needs, there can be no assurance that the Company's
systems and controls or staff will be adequate to sustain future growth. If the
Company is unable to manage expansion effectively, its business, results of
operations or financial condition could be materially adversely affected.

FLUCTUATIONS IN PRICE OF RAW MATERIALS

The principal raw materials used by the Company in manufacturing and
distributing its products are steel, fabrics, cardboard, paint and umbrella
frames. Although the Company purchases raw materials from a number of domestic
and foreign suppliers and believes that there are an adequate number of
alternative suppliers available, there can be no assurance that the cost of
these raw materials will not increase in the future or that the Company will
continue to have available necessary raw materials at reasonable prices. The
Company has annual contracts with many of its major suppliers. The Company
commits to purchase the raw materials that it estimates will be needed for the
ensuing year at fixed prices in order to attempt to control production costs and
has historically been able to build increased raw material costs into the prices
of its products. However, there can be no assurance that market and competitive
pressures will permit the Company to build these costs into the prices of its
products on a timely basis if raw material prices increase or that the Company
will be able to offset such raw material cost increases through cost reductions
and, therefore, enable it to maintain the level of profit margins for its
products. See "Business -- Raw Materials and Suppliers."

RISK OF BUSINESS INTERRUPTION

Any prolonged disruption at any of the Company's production facilities due
to labor difficulties, equipment failure, destruction of or material damage to
such facility, or other reasons, could have a material adverse effect on the
Company's business, financial condition or results of operations. Although the
Company maintains property and business interruption insurance to protect
against any such disruptions (other than for labor-related disruptions), there
can be no assurance that the proceeds from such insurance would be adequate to
compensate the Company for losses, including the loss of customers, incurred
during the period of any such disruption or thereafter. See
"Business -- Properties."

DEPENDENCE ON KEY PERSONNEL

The Company's growth has been dependent upon the skills and efforts of its
senior managers and many other key employees. Although the Company has been
successful in hiring qualified and experienced personnel, the loss of services
of any of these executive officers or other key personnel could have a material
adverse effect on the Company's business, financial condition or results of
operations. In addition, the Company's future growth and development will
require it to continue to attract and retain additional qualified personnel.
There can be no assurance that the Company will be able to attract and retain
personnel with the skills and experience necessary to successfully manage the
Company's business and operations. The Company has no employment agreements or
noncompete agreements with any of its employees. The Company has a key-man life
insurance policy on Mr. McCanna in the face amount of five million dollars. See
"Management."

8
<PAGE> 10

CONTROL BY EXISTING STOCKHOLDERS

At the Company's request, up to 357,143 shares (the "Directed Shares") will
be reserved for sale at the initial public offering price and offered to
directors, officers or employees of Meadowcraft and other persons associated
with Meadowcraft's directors or officers, including up to 294,214 shares for
sale to members of the immediate family of the existing stockholders. See
"Underwriting." Upon completion of the Offering, existing stockholders of the
Company and members of their immediate family will own an aggregate of
approximately 85.2% of the outstanding Common Stock (approximately 83.2%
assuming that the Underwriters' over-allotment option is exercised in full),
with Samuel R. Blount, Chairman of the Board of Directors, and members of his
immediate family owning an aggregate of approximately 76.1% of the outstanding
Common Stock (74.3% assuming that the Underwriters' over-allotment option is
exercised in full). Mr. Blount will have effective control over the Company
through his ability to control the election of directors and all other matters
that require action by the Company's stockholders. Such control may have the
effect of preventing any change in control of the Company opposed by him, which
may have an adverse effect on the market price of the Common Stock. See
"Management -- Executive Officers, Directors and Director Nominees," "Principal
Stockholders" and "Description of Capital Stock."

GOVERNMENT REGULATIONS

The Company's operations must meet federal, state and local regulatory
standards in the areas of safety, health, labor and environmental pollution
controls. Historically, compliance with these standards has not had any material
adverse effect on the Company. If the Company fails to comply with such
regulations, the Company could be subject to liability ranging from monetary
damages to injunctive action, which could have an adverse effect on the
Company's business, financial condition or results of operations. Future changes
in such regulations could also have an adverse effect on the Company's business,
financial condition or results of operations. See "Business -- Regulatory
Matters."

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have outstanding
19,125,000 shares of Common Stock. Of these shares, the 3,125,000 shares
(3,593,750 shares if the Underwriters' over-allotment option is exercised in
full) of Common Stock sold in the Offering will be freely tradeable without
restriction or limitation under the Securities Act of 1933, as amended (the
"Securities Act"), except to the extent such shares are subject to the agreement
with the Underwriters described below, and except for any shares purchased by
"affiliates," as that term is defined under the Securities Act, of the Company.
The remaining 16,000,000 shares are "restricted securities" within the meaning
of Rule 144 under the Securities Act, and as such, may not be sold in the
absence of registration under the Securities Act or an exemption therefrom,
including the exemption under Rule 144. The restricted shares were issued and
sold by the Company in private transactions in reliance upon exemptions from
registration under the Securities Act. In addition, the Company has reserved
1,000,000 shares of Common Stock for issuance upon the exercise of options to be
granted under the 1997 Stock Option Plan (the "Plan"). In general, pursuant to
Rule 701 under the Securities Act, any employee, officer or director of the
Company who purchases his or her shares of Common Stock pursuant to the Plan is
entitled to rely on the resale provisions of Rule 701, which permit
non-affiliates to sell such shares without compliance with the public
information, holding period, volume limitation or notice provisions of Rule 144,
and permit affiliates to sell such shares without compliance with the holding
period provisions of Rule 144, in each case commencing 90 days after the date of
this Prospectus. As of the date of this Prospectus, no options have been granted
under the Plan, but the Board of Directors of the Company expects to grant
options under the Plan at the initial public offering price to certain key
employees and nonemployee directors immediately prior to consummation of this
Offering. See "Management -- 1997 Stock Option Plan" and "-- Compensation of
Directors." The Company, its existing stockholders, certain officers and its
directors have agreed not to issue, sell, offer or agree to sell, grant any
option (other than pursuant to the Plan) or other right for the sale of, or
otherwise dispose of, directly or indirectly, any shares of Common Stock (or any
securities convertible into, exercisable for, or exchangeable for Common Stock)
during a period of 270 days from the date of this Prospectus without the prior
written consent of A.G. Edwards & Sons, Inc.,

9
<PAGE> 11

with certain limited exceptions. After expiration of the 270-day period, the
Company and such stockholders, officers and directors may sell shares of Common
Stock without regard to such limitations, subject to the volume limitations, as
applicable, of Rule 144. The sale of a substantial number of shares of Common
Stock held by existing stockholders, or the perception that such sales could
occur, could adversely affect the market price of the Common Stock. See
"Principal Stockholders" and "Underwriting."

DILUTION

Purchasers of the shares of Common Stock offered hereby will experience
immediate and substantial dilution in the net tangible book value per share of
the Common Stock of $11.75 from the initial public offering price. See
"Dilution."

NO PRIOR MARKET FOR COMMON STOCK; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the Offering, there has been no public market for the Common
Stock, and there can be no assurance that an active trading market will develop
or be sustained in the future or that the market price of the Common Stock will
not decline below the initial public offering price. The initial public offering
price of the Common Stock will be determined by negotiations between the Company
and the representatives of the Underwriters and may not be indicative of the
market price of the Common Stock after the Offering. See "Underwriting." From
time to time after the Offering, there may be significant volatility in the
market price for the Common Stock. Quarterly operating results of the Company;
changes in general conditions in the economy, the financial markets, or the
casual furniture industry; or other developments affecting the Company or its
competitors could cause the market price of the Common Stock to fluctuate
substantially. In addition, in recent years, the stock market has experienced
significant price and volume fluctuations. This volatility has affected the
market prices of securities issued by many companies for reasons unrelated to
their operating performance.

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 3,125,000 shares of
Common Stock offered by the Company hereby are estimated to be $40.3 million
($46.4 million if the Underwriters' over-allotment option is exercised in full),
assuming an initial public offering price of $14.00 per share and after
deducting discounts and commissions and estimated Offering expenses.

The Company elected to be taxed as a corporation under subchapter S of the
Code ("S Corporation") beginning October 1, 1986, and, therefore, the income of
the Company is attributable to its existing stockholders for federal and certain
state tax purposes. Upon consummation of the Offering, the Company will
terminate its S Corporation election and will become subject to U.S. federal and
state income taxes at prevailing corporate rates. In connection with the
termination of the Company's S Corporation election, the Company will pay to its
existing stockholders a distribution (the "S Corporation Distribution"), which
will be declared, but not paid, prior to the Offering. The S Corporation
Distribution will be equal to the amount of the Company's undistributed earnings
from October 1, 1986 to May 3, 1997 which were previously taxed to its existing
stockholders plus the Company's S Corporation earnings attributable to the
period from May 4, 1997 to the date of termination of the S Corporation
election. It is not possible to predict the actual amount of the S Corporation
Distribution at this time, because the Company's S Corporation earnings for the
period from May 4, 1997 to the date of termination of the S Corporation election
will be based on a pro rata allocation of the Company's earnings for the
12-month period ending May 2, 1998 (based on the number of days in the period).
The Company will use approximately $32.7 million of the net proceeds of the
Offering to pay a portion of the S Corporation Distribution upon consummation of
the Offering, and, once the actual S Corporation Distribution is determined, the
Company expects to use cash on hand to fund the balance of the S Corporation
Distribution. Purchasers of shares of Common Stock in the Offering will not be
entitled to any portion of the S Corporation Distribution. The Company intends
to use the balance of the net proceeds to finance capital expenditures. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

10
<PAGE> 12

DIVIDEND POLICY

The Company made distributions to its stockholders of $5.1 million in
Fiscal 1995, $8.3 million in Fiscal 1996, $6.3 million in Fiscal 1997, and $11.5
million in the thirteen week period ended July 31, 1997 to pay their tax
liabilities resulting from the Company's status as an S Corporation. See "Use of
Proceeds" and the Financial Statements included elsewhere in this Prospectus.
Except as described under "Use of Proceeds," the Company currently intends to
retain its earnings following the Offering for use in the operation and
expansion of its business, and the Company currently does not anticipate
declaring or paying cash dividends for the foreseeable future. The payment of
cash dividends in the future will depend upon such factors as the Company's
earnings, capital requirements, financial condition, contractual restrictions
and other factors deemed relevant by the Board of Directors. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

DILUTION

The net tangible book value of the Company at July 31, 1997, was $32.7
million, or $2.05 per share of Common Stock. Net tangible book value per share
represents total tangible assets less total liabilities, divided by the number
of outstanding shares of Common Stock.

Dilution in net tangible book value per share represents the difference
between the amount per share paid by purchasers of the shares of Common Stock in
the Offering and the net tangible book value per share upon consummation of the
Offering. Net tangible book value, after giving effect to (i) the approximately
$32.7 million portion of the S Corporation Distribution to be paid out of the
net proceeds of the Offering and (ii) the approximately $2.7 million of pro
forma net deferred tax assets that will be recorded as a result of the
termination of the Company's S Corporation election, would be approximately $2.8
million or $.17 per share of Common Stock. After giving effect to the issuance
and sale by the Company of the 3,125,000 shares of Common Stock offered hereby
at an assumed initial public offering price of $14.00 per share (after deducting
underwriting discounts and estimated expenses of the Offering) and the
application of the estimated net proceeds therefrom, the net tangible book value
of the Company after the Offering would be $43.0 million, or $2.25 per share of
Common Stock. This represents an immediate increase in net tangible book value
of $.20 per share to the existing stockholders and an immediate dilution of
$11.75 per share to new investors. The following table illustrates this dilution
on a per share basis:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $ 14.00
Net tangible book value per share prior to the Offering... $ 2.05
Decrease in net tangible book value per share attributable
to approximately $32.7 million of the S Corporation
Distribution........................................... (2.04)
Increase in net tangible book value per share attributable
to pro forma net deferred tax assets................... .17
Increase in net tangible book value per share attributable
to net proceeds of the Offering........................ 2.07
Pro forma net tangible book value per share after the
Offering.................................................. 2.25
-------
Dilution in net tangible book value per share to new
investors................................................. $ 11.75
=======
</TABLE>

11
<PAGE> 13

The following table summarizes (i) the number and percentage of shares of
Common Stock purchased from the Company (assuming no exercise of the
Underwriters' over-allotment option), (ii) the total cash consideration paid for
the Common Stock, and (iii) the average price per share of Common Stock paid by
existing stockholders and by purchasers of the Common Stock offered hereby (at
an assumed initial public offering price of $14.00 per share):

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
----------------------- ------------------------ AVERAGE PRICE
NUMBER PERCENTAGE AMOUNT PERCENTAGE PER SHARE
---------- ---------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders......... 16,000,000 83.7% $ 500,000 1.1% $ .03
New investors................. 3,125,000 16.3 43,750,000 98.9 14.00
---------- ----- ----------- -----
Total............... 19,125,000 100.0% $44,250,000 100.0%
========== ===== =========== =====
</TABLE>

Each of the foregoing tables excludes 1,000,000 shares of Common Stock
reserved for issuance and not yet issued under the Plan. See "Management -- 1997
Stock Option Plan."

12
<PAGE> 14

CAPITALIZATION

The following table sets forth the capitalization of the Company as of July
31, 1997 (i) on an actual basis, (ii) on a pro forma basis after giving effect
to the payment of approximately $32.7 million of the S Corporation Distribution
and the recording of net deferred tax assets of approximately $2.7 million and
(iii) on a pro forma as adjusted basis after giving effect to the issuance and
sale of the 3,125,000 shares of Common Stock offered by the Company hereby,
based on an assumed initial public offering price of $14.00 per share, and the
application of the net proceeds therefrom as described in "Use of Proceeds" and
assuming no exercise of the Underwriters' over-allotment option. This table
should be read in conjunction with the Financial Statements included elsewhere
in this Prospectus.

<TABLE>
<CAPTION>
JULY 31, 1997
---------------------------------
PRO PRO FORMA AS
ACTUAL FORMA(1) ADJUSTED(2)
------- -------- ------------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Long-term debt.............................................. $13,392 $13,392 $13,392
------- ------- -------
Stockholders' equity:
Common Stock, par value $.01 per share; 100,000,000 shares
authorized; 16,000,000 shares issued and outstanding,
actual and pro forma; 19,125,000 shares issued and
outstanding, as adjusted(3)............................ 160 160 191
Additional paid-in capital................................ 340 340 40,572
Retained earnings......................................... 32,644 2,674 2,674
------- ------- -------
Total stockholders' equity........................ 33,144 3,174 43,437
------- ------- -------
Total capitalization.............................. $46,536 $16,566 $56,829
======= ======= =======
</TABLE>

- ---------------

(1) Pro forma stockholders' equity reflects (i) the approximately $32.7 million
portion of the S Corporation Distribution to be paid out of the net proceeds
of the Offering, which represents undistributed earnings from October 1,
1986 through May 3, 1997 that were previously taxed directly to the existing
stockholders, and (ii) the effect of recording net deferred tax assets which
will result from the termination of the Company's S Corporation election,
amounting to approximately $2.7 million at July 31, 1997 (see Notes 2 and 7
of the Financial Statements included elsewhere in this Prospectus). The
actual net deferred tax assets will be adjusted to reflect the effect of
operations of the Company for the period from August 1, 1997 to the date of
termination of its S Corporation election. The actual amount of the S
Corporation Distribution will be equal to approximately $32.7 million plus
an additional amount based on the Company's S Corporation earnings
attributable to the 12-month period ending May 2, 1998. The Company expects
to use cash on hand to fund such additional amount. See "Use of Proceeds."
(2) Represents pro forma capitalization as adjusted to reflect the issuance and
sale of 3,125,000 shares of Common Stock by the Company at an assumed
initial public offering price of $14.00 per share providing assumed net
proceeds of $40.3 million and the application of such proceeds to pay
approximately $32.7 million of the S Corporation Distribution. See "Use of
Proceeds."
(3) Excludes 1,000,000 shares of Common Stock reserved for issuance and not yet
issued under the Plan. See "Management -- 1997 Stock Option Plan" and Note
11 to the Financial Statements included elsewhere in this Prospectus.

13
<PAGE> 15
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The selected statement of income data, other data and balance sheet data
for each of the five fiscal years in the period ended May 3, 1997 and the
thirteen week period ended July 31, 1997 set forth below have been derived from
the financial statements of the Company audited by Arthur Andersen LLP,
independent public accountants. The selected statements of income data, other
data and balance sheet data for each of the two fiscal years in the period ended
May 3, 1992 set forth below have been derived from the audited financial
statements of the Company. The data for the thirteen week period ended July 31,
1996 has been derived from unaudited financial statements of the Company. The
unaudited financial statements include all adjustments, consisting of normal
recurring adjustments, which the Company considers necessary for a fair
representation of its financial position and results of operations for this
period. The following data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Company's Financial Statements included elsewhere in this Prospectus.

The selected statement of income data, other data and balance sheet data
set forth below with respect to the Company's Seasonal Years has been derived
from the Company's unaudited financial statements based on the twelve month
periods ending July 31, 1991 to 1997, which represent the Company's Seasonal
Year and correspond to its annual business cycle. Due to certain Code
regulations relating to S Corporation elections, the Company's fiscal year was
not permitted to match its Seasonal Year. Upon consummation of the Offering, the
Company will terminate its S Corporation election and change its fiscal year end
to July 31 to coincide with the Company's Seasonal Year. As a result, certain
unaudited Seasonal Year information is presented to aid investors in measuring
and identifying trends with respect to the Company's performance related to its
Seasonal Years. In the opinion of management, the unaudited financial statements
from which Seasonal Year data have been derived include all adjustments
(consisting of only normal recurring adjustments) necessary for a fair
presentation of the Seasonal Year information set forth below.

<TABLE>
<CAPTION>
THIRTEEN WEEKS
FISCAL YEAR ENDED(1) ENDED
-------------------------------------------------------------------------- ----------------------
APRIL 28, MAY 3, MAY 2, MAY 1, APRIL 30, APRIL 28, MAY 3, JULY 31, JULY 31,
1991 1992 1993 1994 1995 1996 1997 1996 1997
--------- ------- ------- ------- --------- --------- -------- ----------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales................... $50,523 $68,359 $73,062 $96,189 $120,767 $117,419 $141,945 $32,233 $35,368
Cost of sales............... 37,412 50,840 55,871 70,805 88,587 87,849 98,315 24,270 25,932
------- ------- ------- ------- -------- -------- -------- ------- -------
Gross profit................ 13,111 17,519 17,191 25,384 32,180 29,570 43,630 7,963 9,436
Selling expense............. 3,015 4,675 4,328 5,551 6,101 6,092 6,939 1,232 1,517
General and administrative
expense.................... 3,970 3,762 4,372 4,861 5,165 5,906 6,039 1,332 1,442
------- ------- ------- ------- -------- -------- -------- ------- -------
Operating income............ 6,126 9,082 8,491 14,972 20,914 17,572 30,652 5,399 6,477
Interest expense............ 4,226 3,974 4,076 4,885 4,881 5,018 5,274 1,304 1,161
------- ------- ------- ------- -------- -------- -------- ------- -------
Income before pro forma
provision for income
taxes...................... 1,900 5,108 4,415 10,087 16,033 12,554 25,378 4,095 5,316
Pro forma provision for
income taxes(2)............ 694 1,864 1,625 3,672 6,071 4,685 9,439 1,523 1,978
------- ------- ------- ------- -------- -------- -------- ------- -------
Pro forma net income(2)..... $ 1,206 $ 3,244 $ 2,790 $ 6,415 $ 9,962 $ 7,869 $ 15,939 $ 2,572 $ 3,338
======= ======= ======= ======= ======== ======== ======== ======= =======
Pro forma net income per
share(3)................... $ .96 $ .20
======== =======
Pro forma weighted average
shares outstanding(3) 16,521 16,521
======== =======
OTHER DATA:
Capital expenditures(4)..... $ 297 $1,508 $ 1,700 $ 7,615 $ 16,034 $ 18,676 $ 4,081 $ 1,628 $ 2,070
Depreciation and
amortization............... 1,242 1,189 1,221 1,482 2,340 4,006 5,099 1,235 1,237
</TABLE>
<TABLE>
<CAPTION>

APRIL 28, MAY 3, MAY 2, MAY 1, APRIL 30, APRIL 28, MAY 3, JULY 31,
1991 1992 1993 1994 1995 1996 1997 1996
--------- ------- ------- ------- --------- --------- -------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets......... $ 39,142 $46,353 $56,133 $79,921 $111,815 $126,479 $127,061 $68,360
Total debt........... 44,867 44,471 50,219 64,614 71,836 84,737 68,966 38,910
Stockholders' equity
(deficit)........... (14,559) (9,451) (5,036) 5,051 15,984 20,200 39,328 18,795

<CAPTION>
JULY 31, 1997
---------------------------------
PRO PRO FORMA AS
ACTUAL FORMA(5) ADJUSTED(6)
------- -------- ------------
(UNAUDITED)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Total assets......... $71,072 $73,772 $81,365
Total debt........... 28,168 28,168 28,168
Stockholders' equity
(deficit)........... 33,144 3,174 43,437
</TABLE>

14
<PAGE> 16

<TABLE>
<CAPTION>
OTHER SEASONAL DATA FOR THE SEASONAL YEAR ENDED JULY 31,(1)
----------------------------------------------------------------------
1991 1992 1993 1994 1995 1996 1997
------- ------- ------- ------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales................................................ $54,750 $67,144 $83,937 $99,155 $116,894 $126,926 $145,080
Cost of sales............................................ 39,790 50,039 63,543 71,246 87,755 93,996 99,977
------- ------- ------- ------- -------- -------- --------
Gross profit............................................. 14,960 17,105 20,394 27,909 29,139 32,930 45,103
Selling expense.......................................... 3,371 5,295 4,463 5,250 6,072 6,198 7,224
General and administrative expense....................... 3,731 4,127 5,021 4,612 5,352 6,090 6,149
------- ------- ------- ------- -------- -------- --------
Operating income......................................... 7,858 7,683 10,910 18,047 17,715 20,642 31,730
Interest expense......................................... 4,470 3,751 4,196 5,028 4,987 5,135 5,130
------- ------- ------- ------- -------- -------- --------
Income before pro forma provision for income taxes....... 3,388 3,932 6,714 13,019 12,728 15,507 26,600
Pro forma provision for income taxes(2).................. 1,237 1,435 2,471 4,739 4,813 5,782 9,895
------- ------- ------- ------- -------- -------- --------
Pro forma net income(2).................................. $ 2,151 $ 2,497 $ 4,243 $ 8,280 $ 7,915 $ 9,725 $ 16,705
======= ======= ======= ======= ======== ======== ========
OTHER DATA:
Capital expenditures(4).................................. $ 596 $ 1,506 $ 1,735 $ 9,825 $ 19,049 $ 13,973 $ 4,523
Depreciation and amortization............................ 1,038 1,196 1,272 1,576 2,664 4,226 5,101
</TABLE>

<TABLE>
<CAPTION>
JULY 31,
---------------------------------------------------------------------
1991 1992 1993 1994 1995 1996 1997
------- ------- ------- ------- -------- -------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets.............................................. $15,255 $16,410 $28,233 $37,706 $ 61,842 $ 68,360 $71,072
Total debt................................................ 25,907 21,338 25,275 26,626 40,384 38,909 28,168
Stockholders' equity (deficit)............................ (14,154) (10,221) (3,507) 5,497 11,126 18,795 33,144
</TABLE>

- ---------------

(1) The Company utilizes a 52/53 week fiscal year. In each of Fiscal 1991, 1992,
1993, 1994, 1995 and 1996, the fiscal year ended on the Sunday closest to
the last day of April. In Fiscal 1997, the Company changed its fiscal year
end to the Saturday closest to the last day of April. All fiscal years and
seasonal years presented herein represent 52 weeks of operations, except for
Fiscal 1992 and Fiscal 1997 which include 53 weeks of operations.
(2) Pro forma provision for income taxes and pro forma net income are presented
as if the Company were a C corporation for tax purposes for all periods
presented. See Notes 2 and 7 of the Financial Statements included elsewhere
in this Prospectus.
(3) The weighted average number of shares of Common Stock outstanding gives
effect to the estimated number of shares of Common Stock that would be
required to be sold, at an assumed initial public offering price of $14.00
per share, to pay the portion of the S Corporation Distribution to be paid
out of the net proceeds of the Offering in excess of Fiscal 1997 earnings.
See "Use of Proceeds."
(4) Capital expenditures include capital leases and capital expenditures
financed with debt.
(5) Reflects, as appropriate, (i) the approximately $32.7 million portion of the
S Corporation Distribution to be paid out of the net proceeds of the
Offering, which represents undistributed earnings from October 1, 1986
through May 3, 1997 that were previously taxed to the existing stockholders,
and (ii) the effect of recording net deferred tax assets which will result
from the termination of the Company's S Corporation election, amounting to
approximately $2.7 million at July 31, 1997 (see Notes 2 and 7 of the
Financial Statements included elsewhere in this Prospectus). See "Use of
Proceeds."
(6) Represents pro forma balance sheet data as adjusted to reflect the issuance
and sale of 3,125,000 shares of Common Stock by the Company at an assumed
initial public offering price of $14.00 per share providing assumed net
proceeds of $40.3 million and the application of such proceeds to pay
approximately $32.7 million of the S Corporation Distribution. See "Use of
Proceeds."

15
<PAGE> 17

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Meadowcraft is one of the leading domestic producers of casual outdoor
furniture and is the largest manufacturer of outdoor wrought iron furniture in
the United States. The Company sells its products in three markets: the outdoor
mass market under the Plantation Patterns brand name; the outdoor specialty
market under the Meadowcraft, Arlington House and Salterini brand names; and the
indoor specialty and mass markets under the Interior Images by Salterini and
Home Collection from Plantation Patterns brand names, respectively. During
Fiscal 1997, the Company introduced a line of wrought iron garden products to
both the specialty and mass markets. The following is a summary of the
percentage of gross sales by market category for each of the last three fiscal
years and for the thirteen weeks ended July 31, 1996 and 1997:

In recent years, the Company has supported its sales growth by investing in
additional manufacturing and distribution capacity. During the last three fiscal
years, Meadowcraft has invested $38.8 million in expanding and enhancing its
facilities. In 1994 and 1995, Meadowcraft increased distribution capacity by
approximately 1,300,000 square feet with the completion of the Birmingham
(Carson Road) and Wadley distribution facilities. In 1996, Meadowcraft completed
the construction of a new production facility in Birmingham and a manufacturing
and distribution facility in Selma. At present, the Company is constructing a
new 530,000 square foot distribution center and office building in Birmingham
(Carson Road) as well as expanding the Selma and Wadley plants, all of which are
expected to be completed by December 1997. Additionally, the Company intends
during Fiscal 1998 to establish manufacturing and distribution facilities in
Mexico and Arizona to serve customers in the western United States.

The Company was on a 52/53 week year with the fiscal year ending on the
Sunday closest to the last day of April. During Fiscal 1997, the Company changed
its reporting period to a fiscal year ending on the Saturday closest to the last
day of April. As a result of this change, Fiscal 1997 includes 53 weeks of
operations versus 52 weeks in each of Fiscal 1996 and 1995.

Net sales as reflected throughout Management's Discussion and Analysis of
Financial Condition and Results of Operations reflect gross sales less returns,
allowances and discounts. The Company generally does not allow returns unless
products are damaged, in which case they would be covered under its warranty
policy. The Company offers up to a 36-month limited warranty on certain
products. As such, estimated warranty costs are accrued at the time products are
sold based on a historical percentage of warranty costs to gross sales. The
charge for such accrual is reflected as returns and allowances, which reduces
gross sales to net sales. Historically, warranty costs as a percentage of gross
sales have not been material. See Note 2 of the Financial Statements included
elsewhere in this Prospectus.

16
<PAGE> 18

RESULTS OF OPERATIONS

The following table sets forth certain information relating to the
Company's operations expressed as a percentage of the Company's net sales for
the respective periods:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED THIRTEEN WEEKS ENDED
-------------------------------- ----------------------
APRIL 30, APRIL 28, MAY 3, JULY 31, JULY 31,
1995 1996 1997 1996 1997
--------- --------- ------ -------- --------
<S> <C> <C> <C> <C> <C>
Net sales......................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales..................... 73.4 74.8 69.3 75.3 73.3
----- ----- ----- ----- -----
Gross profit...................... 26.6 25.2 30.7 24.7 26.7
Selling expense................... 5.1 5.2 4.8 3.8 4.3
General and administrative
expense......................... 4.2 5.0 4.3 4.1 4.1
----- ----- ----- ----- -----
Operating income.................. 17.3 15.0 21.6 16.8 18.3
Interest expense.................. 4.1 4.3 3.7 4.1 3.3
----- ----- ----- ----- -----
Income before pro forma provision
for income taxes................ 13.2 10.7 17.9 12.7 15.0
Pro forma provision for income
taxes........................... 5.0 4.0 6.7 4.7 5.6
----- ----- ----- ----- -----
Pro forma net income.............. 8.2% 6.7% 11.2% 8.0% 9.4%
===== ===== ===== ===== =====
</TABLE>

THIRTEEN WEEKS ENDED JULY 31, 1997 COMPARED TO THIRTEEN WEEKS ENDED JULY 31,
1996

Net Sales

Net sales increased $3.1 million, or 9.7%, to $35.4 million for the
thirteen weeks ended July 31, 1997 from $32.2 million in the comparable period
in the prior year. The increase was due primarily to an approximately $2.6
million, or 12.9%, increase in gross sales in the Plantation Patterns product
line resulting from increased end of season sales.

Gross Profit

Gross margin is defined as gross profit as a percentage of net sales. Gross
profit for the thirteen weeks ended July 31, 1997 increased $1.4 million, or
17.5%, to $9.4 million from $8.0 million in the comparable period in the prior
year. Gross margin improved to 26.7% of net sales for the thirteen weeks ended
July 31, 1997 from 24.7% of net sales for the comparable period in the prior
year. The improvement was due to production efficiencies achieved in conjunction
with the extended production period required as a result of increased sales.

Selling Expense

Selling expense as a percentage of net sales increased to 4.3% for the
thirteen weeks ended July 31, 1997 from 3.8% for the comparable period in the
prior year due primarily to the national radio advertising program implemented
in 1997 with Paul Harvey. Selling expense, which includes commissions,
advertising and promotion expense, increased $0.3 million, or 23.1%, to $1.5
million for the thirteen weeks ended July 31, 1997 from $1.2 million for the
comparable period in the prior year.

General and Administrative

General and administrative expense as a percentage of net sales remained
flat at 4.1%. General and administrative expense, which includes corporate
salaries, employee benefits and professional fees, increased $0.1 million, or
8.3%, to $1.4 million for the thirteen weeks ended July 31, 1997 from $1.3
million for the comparable period in the prior year primarily due to increases
in management incentives, which were due to the enhanced financial performance
for the quarter.

17
<PAGE> 19

Interest Expense

Interest expense as a percentage of net sales declined to 3.3% for the
thirteen weeks ended July 31, 1997 from 4.1% for the comparable period in the
prior year. Interest expense, which includes factor fees, decreased by $0.1
million, or 11.0%, to $1.2 million for the thirteen weeks ended July 31, 1997
from $1.3 million in the comparable period in the prior year due to lower debt
levels, which were the result of the Company's financial performance.

Pro Forma Provision for Income Taxes

Since the Company has elected to be taxed as an S Corporation, no provision
for income taxes has been provided in the Company's historical financial
statements. The pro forma provision for income taxes gives effect to the
application of income taxes that would have been reported had the Company been a
C Corporation subject to federal and state income taxes. The pro forma income
tax provision for the thirteen week's ended July 31, 1997 was $2.0 million
versus $1.5 million for the comparable period in the prior year. The effective
tax rate in both 1997 and 1996 was 37.2%.

FISCAL 1997 COMPARED TO FISCAL 1996

Net Sales

Net sales in Fiscal 1997 increased $24.5 million, or 20.9%, to $141.9
million from $117.4 million in Fiscal 1996. This increase was due primarily to a
$17.7 million, or 18.8%, increase in gross sales of the Company's Plantation
Patterns product line. In addition, other product lines contributed to the
growth in sales. The Home Collection from Plantation Patterns indoor furniture
line increased to $3.3 million in Fiscal 1997, from $1.0 million in gross sales
in Fiscal 1996 while gross sales from the introduction of the garden products
line were $3.3 million in Fiscal 1997.

Gross Profit

Gross margin improved to 30.7% in Fiscal 1997 from 25.2% in Fiscal 1996,
primarily as the result of higher production volume required to meet additional
customer demand and efficiencies realized at the new Birmingham production
facility (Carson Road) and a more favorable product mix. Gross profit in Fiscal
1997 increased $14.0 million, or 47.5%, to $43.6 million from $29.6 million in
Fiscal 1996.

Selling Expense

Selling expense as a percentage of net sales declined to 4.8% in Fiscal
1997 from 5.2% in Fiscal 1996 because of increases in net sales without
corresponding increases in selling expense. In Fiscal 1997, selling expense
increased by $0.8 million, or 13.9%, to $6.9 million from $6.1 million in Fiscal
1996, due primarily to increases in advertising expense, of which $0.4 million
related to the Company's newly implemented national radio advertising campaign
featuring Paul Harvey. Additionally, higher net sales resulted in an increase in
sales commissions and other variable selling costs.

General and Administrative Expense

General and administrative expense as a percentage of net sales decreased
to 4.3% in Fiscal 1997 from 5.0% in Fiscal 1996 as the growth in sales outpaced
increases in general and administrative expense. General and administrative
expense increased $0.1 million, or 2.3%, to $6.0 million in Fiscal 1997 from
$5.9 million in Fiscal 1996. This increase was due partially to a $0.5 million
increase in management incentives attributable to the increased performance of
the Company in Fiscal 1997, which was offset by a legal settlement in favor of
the Company in the amount of $0.7 million.

Interest Expense

Interest expense as a percentage of net sales declined to 3.7% in Fiscal
1997 from 4.3% in Fiscal 1996. Interest expense increased by $0.3 million, or
5.1%, to $5.3 million in Fiscal 1997 from $5.0 million in Fiscal 1996 due to
higher interest rates on consistent debt levels.

18
<PAGE> 20

Pro Forma Provision for Income Taxes

The pro forma income tax provision in Fiscal 1997 was $9.4 million versus
$4.7 million in Fiscal 1996. The effective tax rate in Fiscal 1997 was 37.2%
versus 37.3% in Fiscal 1996.

FISCAL 1996 COMPARED TO FISCAL 1995

Net Sales

Net sales in Fiscal 1996 decreased $3.3 million, or 2.8%, to $117.4 million
from $120.8 million in Fiscal 1995. Net sales during the first quarter of Fiscal
1996 (May, June and July of 1995) were $3.9 million lower than the comparable
period in Fiscal 1995. The first quarter decline was primarily due to decreased
sales of outdoor products in both the mass and specialty markets caused
principally by weak consumer confidence in the first half of 1995 and a late
spring in most parts of the U.S., which caused retailers to reduce late season
purchases in order to liquidate inventory.

Gross Profit

Gross margin declined to 25.2% in Fiscal 1996 from 26.6% in Fiscal 1995.
Gross profit in Fiscal 1996 declined $2.6 million, or 8.1%, to $29.6 million
from $32.2 million in Fiscal 1995. The decline in net sales during the first
quarter of Fiscal 1996 and the resulting cut back in production levels accounted
for $1.3 million of the gross profit decline. Higher raw material costs and
inefficiencies associated with the start up of the new Birmingham production
facility accounted for the balance of the decline.

Selling Expense

Selling expense as a percentage of net sales rose modestly to 5.2% in
Fiscal 1996 from 5.1% in Fiscal 1995 primarily as a result of lower sales in
Fiscal 1996 without a corresponding reduction in certain fixed selling costs.
Selling expense remained virtually flat at $6.1 million in Fiscal 1996.

General and Administrative Expense

General and administrative expense as a percentage of net sales increased
to 5.0% in Fiscal 1996 from 4.2% in Fiscal 1995. General and administrative
expense increased $0.7 million, or 14.3%, to $5.9 million in Fiscal 1996 from
$5.2 million in Fiscal 1995. The increase in general and administrative expense
in Fiscal 1996 was primarily due to higher salary cost of $0.3 million resulting
from an increase in employees related to the expansion of the Company's
operations and, to a lesser extent, higher legal fees related to certain
litigation.

Interest Expense

Interest expense as a percentage of net sales increased to 4.3% in Fiscal
1996 from 4.1% in Fiscal 1995. Interest expense increased by $0.1 million, or
2.8%, to $5.0 million in Fiscal 1996, from $4.9 million in Fiscal 1995 due to
higher debt levels incurred to fund capital expansion programs. Higher debt
levels were offset in part with lower interest rates achieved by the Company on
revolving credit borrowings.

Pro Forma Provision for Income Taxes

The pro forma income tax provision in Fiscal 1996 was $4.7 million versus
$6.1 million in Fiscal 1995. The effective tax rate in Fiscal 1996 was 37.3%
versus 37.9% in Fiscal 1995 which was due to a higher federal tax rate that was
applicable in Fiscal 1995 as a result of higher income in Fiscal 1995.

QUARTERLY RESULTS AND SEASONALITY

Consistent with the nature of the casual outdoor furniture industry, the
Company's sales are very seasonal. Historically, approximately 50% of the
Company's net sales have been realized in the quarter ended April, while only
approximately 5% of the Company's net sales have occurred in the quarter ended
October. As a result, the Company typically shuts down its production facilities
during August for vacation, repairs and

19
<PAGE> 21

maintenance. The Company begins manufacturing in September and October to build
inventory to meet customer orders and anticipated demand for the next selling
season, incurring increased operating and overhead costs without corresponding
sales for the period. The Company has historically experienced operating losses
in the quarter ended October of each year. In addition, the Company's sales are
subject to fluctuations on a quarterly basis due to such factors as weather and
customer ordering decisions.

In order to stimulate off-season sales and, thus, lessen the effects of
seasonality, the Company utilizes several incentive programs for its outdoor
specialty product lines. Most of these programs provide for some form of
deferred payment, referred to as "dating," to promote the early shipment of
products to customers and the recognition of sales during the off-season. Upon
shipment, the Company recognizes sales. Although shipments are made early in the
Company's seasonal year, dated receivables are generally due from April through
June.

Since the Company's revolving credit facility is used to support both the
build-up of inventory during the fall and winter months and the dating programs,
short term borrowings and interest expense peak during the period from January
through April. To lessen further the effects of seasonality, the Company has
expanded its offerings of indoor products and diversified into garden products.
By increasing off-season sales, the Company can extend its production period and
level its production activity and, thus, better match sales to operating
expenses.

The following table sets forth certain unaudited financial statement data
from the Company's statements of income for each of the Company's last 11
quarters in the period ended May 3, 1997. The financial statement data for the
quarter ended July 31, 1997 has been audited by Arthur Andersen LLP, independent
public accountants. In the opinion of management, the unaudited financial
statements from which this data have been derived include all adjustments
(consisting of only normal recurring adjustments) necessary for a fair
presentation of the information set forth therein. Pro forma net income (loss)
is presented as if the Company had been a C corporation for tax purposes for all
periods presented. See "Use of Proceeds" and "Selected Financial Data."

<TABLE>
<CAPTION>
TWELVE MONTHS
QUARTER ENDED ENDED
---------------------------------------------- -------------
OCTOBER 31, JANUARY 31, MAY 3, JULY 31, JULY 31,
1996 1997 1997 1997 1997
----------- ----------- ------- -------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net sales................................. $ 6,622 $27,183 $75,907 $35,368 $145,080
Gross profit.............................. 555 9,137 25,975 9,436 45,103
Operating income (loss)................... (1,841) 7,043 20,051 6,477 31,730
Income (loss) before pro forma provision
for income taxes........................ (2,826) 5,866 18,244 5,316 26,600
Pro forma net income (loss)............... (1,775) 3,684 11,458 3,338 16,705
</TABLE>

<TABLE>
<CAPTION>
TWELVE MONTHS
QUARTER ENDED ENDED
------------------------------------------------ -------------
OCTOBER 31, JANUARY 31, APRIL 28, JULY 31, JULY 31,
1995 1996 1996 1996 1996
----------- ----------- --------- -------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net sales................................. $ 5,277 $21,971 $67,445 $32,233 $126,926
Gross profit (loss)....................... (1,339) 5,222 21,084 7,963 32,930
Operating income (loss)................... (3,488) 2,434 16,297 5,399 20,642
Income (loss) before pro forma provision
for income taxes........................ (4,330) 1,160 14,582 4,095 15,507
Pro forma net income (loss)............... (2,714) 727 9,140 2,572 9,725
</TABLE>

20
<PAGE> 22

<TABLE>
<CAPTION>
TWELVE MONTHS
QUARTER ENDED ENDED
------------------------------------------------ -------------
OCTOBER 31, JANUARY 31, APRIL 30, JULY 31, JULY 31,
1994 1995 1995 1995 1995
----------- ----------- --------- -------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net sales................................. $ 6,987 $23,272 $63,909 $22,726 $116,894
Gross profit (loss)....................... (731) 6,024 19,243 4,603 29,139
Operating income (loss)................... (2,723) 3,466 14,643 2,329 17,715
Income (loss) before pro forma provision
for income taxes........................ (3,387) 2,233 12,740 1,142 12,728
Pro forma net income (loss)............... (2,104) 1,387 7,916 716 7,915
</TABLE>

In the quarter ended October, the Company's sales to mass merchandisers are
relatively low since at this time these customers have just completed the mass
retail selling season (namely, the period from January through July) and are
planning their product selections for the next selling season. The Company's
sales during this period are primarily to specialty retail customers who have a
longer selling season. Gross profit in this quarter is normally low due to the
lower amount of sales. In addition, production levels of inventory are lower in
this quarter due to the shutdown of facilities which reduces the absorption of
fixed costs.

In the quarter ended January, sales increase over the previous quarter as
the selling season begins with mass merchandisers and specialty retailers
filling their floor space. Production of inventory is at its highest level
thereby absorbing fixed costs more efficiently than in the previous quarter. As
a result of these factors, gross profit increases during this period.

Sales and profitability are highest in the quarter ended April since this
is the high point of the mass retail selling season. Production continues at
high levels during this quarter to meet existing orders and to replenish
retailers' inventories. In the quarter ended May 3, 1997, the Company changed
its year end to the Saturday closest to April 30 from the Sunday closest to
April 30. The effect of this change was to increase the number of weeks in the
quarter ended May 3, 1997 to 14 weeks versus 13 weeks in the quarters ended
April 28, 1996 and April 30, 1995.

In the quarter ended July, the Company's sales are significantly lower than
in the previous quarter as the mass retail selling season comes to a close.
Additionally, production levels generally decrease resulting in less efficient
absorption of fixed costs than in the quarter ended April. As a result of these
factors, gross profit is lower than in the quarter ended April.

LIQUIDITY AND CAPITAL RESOURCES

The following table presents a summary of the Company's cash flows for the
respective periods:

<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
---------------------
APRIL 30, APRIL 28, MAY 3, JULY 31, JULY 31,
1995 1996 1997 1996 1997
--------- --------- -------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net cash provided by operations..... $ 6,137 $ 14,361 $ 26,102 $ 52,956 $ 54,368
INVESTING ACTIVITIES:
Capital expenditures................ (16,034) (15,676) (3,406) (1,628) (2,070)
FINANCING ACTIVITIES:
Net borrowings (payments) on notes
payable........................... 11,704 2,656 (11,632) (45,519) (38,670)
Proceeds from issuance of long-term
debt.............................. 8,720 10,500 0 974 0
Principal payments of long-term
debt.............................. (5,374) (3,255) (4,814) (1,283) (2,128)
Payment of S Corporation
distributions..................... (5,100) (8,338) (6,250) (5,500) (11,500)
</TABLE>

The Company has historically financed its operations and growth from
seasonal borrowings under its bank line of credit, from internally generated
funds, and from other term debt. The Company's primary liquidity requirements
are for capital expenditures, working capital and debt service.

21
<PAGE> 23

The Company's operating activities in the thirteen week periods ended July
31, 1996 and July 31, 1997 provided cash of $52.9 million and $54.4 million,
respectively. This was primarily due to a decrease of total receivables of $50.1
million and $47.0 million at July 31, 1996 and July 31, 1997, respectively,
caused by the mass retail selling season coming to a close. Cash flows from
investing activities are related solely to capital expenditures. Financing
activities in the thirteen week periods ended July 31, 1996 and July 31, 1997
resulted in net payments of debt in the amounts of $45.8 million and $40.8
million, respectively, which were funded out of working capital generated by
operations. S Corporation distributions during the thirteen week periods ended
July 31, 1996 and July 31, 1997 were $5.5 million and $11.5 million,
respectively. Such distributions were utilized by the stockholders to pay income
taxes on the Company's earnings.

The Company's operating activities over the last three fiscal years have
generated cash of $46.6 million. Net cash provided by operations for Fiscal 1997
amounted to $26.1 million, primarily the result of $25.4 million in net income
in Fiscal 1997. Net cash provided by operations in Fiscal 1996 of $14.4 million
was primarily the result of net income of $12.6 million. In Fiscal 1995, net
cash provided by operations of $6.1 million was the result of net income of
$16.0 million and the offset of higher accounts receivable balances due to the
growth in sales primarily in the fourth quarter of Fiscal 1995. See
"-- Factoring."

Cash flows from investing activities are related solely to capital
expenditures. Capital expenditures (excluding capital leases and certain capital
expenditures financed with debt) incurred by the Company over the last three
fiscal years amounted to $35.1 million and were primarily related to the
Company's new manufacturing and distribution facilities in Birmingham, Alabama
and construction of the Selma, Alabama facility. Capital expenditures in Fiscal
1997 were significantly lower than in Fiscal 1996 and 1995 as these projects
were completed in Fiscal 1996. It is anticipated that the Company will invest
approximately $32.5 million over the next twelve months for production and
distribution facilities to service the western United States, new distribution
facilities in Birmingham and Selma and continued productivity and product line
improvements for existing facilities.

Financing activities are generally related to the issuance and repayment of
debt and the payment of S Corporation distributions. Financing activities in
Fiscal 1997 resulted in net payments of debt in the amount of $16.4 million as
compared to net borrowings of debt in Fiscal 1996 and Fiscal 1995 of $9.9
million and $15.1 million, respectively. The decline in permanent debt financing
is primarily attributable to the improvement in cash generated from operations
in Fiscal 1995, Fiscal 1996 and Fiscal 1997 and the reduction in capital
expenditures in Fiscal 1997 as the major capital projects were completed in
Fiscal 1996. S Corporation distributions in Fiscal 1997, 1996 and 1995 were $6.3
million; $8.3 million; and $5.1 million, respectively. Such distributions were
utilized by the stockholders to pay income taxes on the Company's earnings.

Upon consummation of the Offering, the Company intends to terminate its S
Corporation election and, as a result, the Company will become a taxable C
corporation. While S Corporation distributions, other than the portion of the S
Corporation Distribution which will not be paid out of the net proceeds of the
Offering, will no longer be made upon conversion to a C corporation, the Company
will be required to pay the income tax liability which arises from the Company's
future earnings. The actual amount of the S Corporation Distribution will be
equal to approximately $32.7 million plus an additional amount based on the
Company's S Corporation earnings attributable to the 12-month period ending May
2, 1998. The Company expects to use cash on hand to fund such additional amount.
See "Use of Proceeds."

Currently, the Company maintains a $90 million revolving line of credit
(the "Revolving Credit Facility") and $36.4 million of term debt facilities (the
"Term Debt Facilities" and, together with the Revolving Credit Facility, the
"Credit Facilities") with a consortium of lenders led by NationsBank N.A.
("NationsBank"). As a result of the seasonal nature of the Company's business,
the Company utilizes the Revolving Credit Facility to build up inventory levels
during the first half of the Company's fiscal year, among other things. This
build-up is necessary to meet the peak selling season which occurs in the latter
part of the quarter ended April and generally lasts through June. See
"-- Quarterly Results and Seasonality." The Company also finances this inventory
build-up through a vendor deferred payment program, which allows the

22
<PAGE> 24

Company to order and receive raw materials for production in the fall and winter
months and delay vendor payments until the spring.

The Revolving Credit Facility is subject to certain borrowing base
limitations, which are related primarily to accounts receivable and inventory
balances, and compliance with customary financial and other covenants. As of
August 31, 1997, the outstanding balance under the Revolving Credit Facility
amounted to $0.1 million, and $9.7 million was available to be borrowed at
August 31, 1997 based upon the borrowing base. In addition, $18.6 million was
outstanding and $17.8 million was available to be borrowed under the Term Debt
Facilities at August 31, 1997.

The Company's debt agreements contain, among other things, certain
restrictions relating to net worth, capital expenditures, current ratio and debt
service ratio. The Company was in compliance with all covenants at August 31,
1997. The Company's total debt obligations maturing in each of the next five
fiscal years at May 3, 1997 are as follows: $4.8 million in 1998, $4.5 million
in 1999, $3.4 million in 2000, $2.4 million in 2001, $1.0 million in 2002 and
$4.1 million thereafter.

The Company believes that cash flow from operations, together with the
Company's unused borrowing capacity under the Credit Facilities and proceeds
from this Offering, will be sufficient to fund the Company's debt service
requirements, capital expenditures and working capital needs through the
maturity date of the Credit Facilities. See "Use of Proceeds." Pursuant to its
terms, the Revolving Credit Facility expires on August 28, 2000 and the
principal balances outstanding on all loans thereunder will mature on that date.
In addition, to provide any additional funds necessary for the continued pursuit
of the Company's growth strategies, the Company may incur, from time to time,
additional short- and long-term bank indebtedness and may issue additional debt
or equity securities, the availability and terms of which would depend upon
market and other conditions. There can be no assurance that such additional
financing would be available on terms acceptable to the Company.

FACTORING

In order to provide additional liquidity and to reduce the Company's
exposure to the credit risk of certain of its customers, the Company factors a
significant portion of its trade accounts receivable without recourse to the
Company with respect to credit risk. Currently, the Company maintains two
factoring agreements with financial institutions. The vast majority of the
factored receivables are with an affiliate of NationsBank, and the proceeds from
factoring are generally used to repay the outstanding borrowings on the Credit
Facility. When the Company makes a sale to a customer, generally the receivable
from that customer is factored without recourse. Thereafter, the Company removes
the receivable from the balance sheet and records a receivable from the factor
at a discounted amount. Such amount is referred to as "Due from Factor" in the
Financial Statements. The difference in the account receivable from the customer
and the amount recorded as Due from Factor represents factor fees which are
reflected as interest expense in the Financial Statements. The Due from Factor
amount is paid to the Company by the factor on a predetermined date, based
primarily upon the customer's invoice due date, and is not contingent upon
collection of the customer's receivable by the factor. The Company does not
factor its receivables related to certain of its large customers. Therefore, the
Company retains credit risk with respect to these customers, which the Company
believes is insignificant. See Note 2 to the Financial Statements included
elsewhere in this Prospectus.

INFLATION

The Company believes that the relatively moderate rate of inflation
experienced over the last three years has not had a material impact on its sales
or profitability. The Company generally has been able to absorb increases in
costs without significantly increasing the selling prices of its products due to
cost reductions and improved manufacturing efficiencies. However, there can be
no assurances that the Company's business will not be adversely affected by
inflation in the future.

23
<PAGE> 25

FORWARD-LOOKING STATEMENTS

"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and other sections of this Prospectus contain forward-looking
statements which are subject to various risks and uncertainties. Actual results
could differ materially from those discussed herein. Important factors that
could cause or contribute to such differences include those discussed under
"Risk Factors" as well as those discussed elsewhere in this Prospectus.

24
<PAGE> 26

BUSINESS

OVERVIEW

The Company is one of the leading domestic producers of casual outdoor
furniture and is the largest manufacturer of outdoor wrought iron furniture in
the United States. The Company designs, manufactures and distributes a variety
of wrought iron consumer products, including outdoor and indoor furniture and
accessories, outdoor cushions and umbrellas, and garden products, which it
markets to mass merchandisers and specialty stores primarily in the United
States. The Company believes that it has established a reputation as an
innovator in the design, manufacturing, distribution and marketing of moderately
priced, quality wrought iron furniture. The Company's net sales have grown from
$50.5 million in Fiscal 1991 to $141.9 million in Fiscal 1997, while pro forma
net income has increased from $1.2 million to $15.9 million over the same
period. For Seasonal 1997, the Company had net sales of $145.1 million and pro
forma net income of $16.7 million.

COMPETITIVE STRENGTHS

The Company attributes its strong market position to the high
value-to-price characteristics and design of its products as well as its
low-cost production and efficient distribution systems. These factors have
contributed to the Company's success with its customers -- both mass and
specialty retailers and consumers. The Company believes its competitive
strengths include the following:

Low-Cost Producer. The Company believes that its low-cost,
high-volume production systems have enabled it to design, manufacture
and distribute quality wrought iron furniture and accessories with
traditional, "high-end" design features, broad consumer appeal, and
high value-to-price characteristics. The Company developed its
low-cost production systems by combining design and production
expertise developed for the specialty markets with efficient,
innovative manufacturing and distribution systems designed to
accommodate the needs of mass merchandisers. Management believes that
by applying its low-cost manufacturing expertise to additional product
lines it can increase its share of the casual outdoor furniture market
as well as gain market share in the indoor furniture market.

Advanced Manufacturing and Distribution Systems. The Company's
advanced manufacturing and distribution facilities and computerized
inventory tracking and shipping systems enable the Company to produce
and ship large quantities of products on a timely and reliable basis.
Timely and reliable shipment of products is an important competitive
factor in the casual furniture industry, especially in the mass market
where customers often require shipment of a large volume of products
on short notice throughout the spring and summer months. The Company's
manufacturing facilities are designed to accommodate efficient
production of products for both the mass and specialty markets, with
common product design elements and flexible production systems
permitting rapid transition between product styles and colors. In
addition, the Company's management information systems integrate all
aspects of production, distribution and shipping.

Relationships with Mass Market and Specialty Retail
Customers. By manufacturing and delivering quality products reliably,
the Company has built excellent relationships with its mass market
customers and has developed an extensive network of specialty
retailers. The Company sells its mass market products to seven of the
top ten U.S. discount retailers/mass merchants and home centers in
terms of 1996 revenues, and believes that it has excellent
relationships with its existing mass market customers. For example,
the Company was named "Vendor/Partner of the Year" by

25
<PAGE> 27

Wal-Mart in the outdoor products category for 1995, the most recent period
for which the award was given, and was one of only 40 of Wal-Mart's
approximately 10,000 vendors to receive this award. In the specialty
market, the Company maintains an extensive network of over 1,500 specialty
accounts, which allows the Company to test new products before introducing
them into the mass markets. The Company believes that its relationships
with mass market retail customers and specialty retail customers position
it to increase sales of existing products and introduce new products and
product lines successfully through these distribution channels. In
addition, by leveraging relationships established in the outdoor furniture
market, management believes that the Company will be able to gain access to
distribution channels for new products such as indoor furniture and
accessories and garden products.

Experienced Management. The Company believes that its
experienced and dedicated management team has been instrumental in its
success and distinguishes the Company from other manufacturers of
wrought iron furniture. The Company's top five senior executives have
each been with the Company for over six years, and its senior
management team has extensive experience in the casual furniture and
other manufacturing industries. The Company's Chairman has 18 years of
experience in the casual furniture industry, and its President has 32
years of management experience in the casual furniture and other
manufacturing industries, the most recent six of which have been at
the Company.

STRATEGY

Since 1991, the Company has profitably built its business by providing
quality wrought iron furniture to the mass and specialty markets. Meadowcraft
has redefined and expanded the outdoor wrought iron furniture market by
designing, producing and shipping on a reliable, timely and cost-effective basis
quality products with broad consumer appeal and high value-to-price
characteristics. The Company has identified future growth opportunities and has
developed a strategy to increase its sales, earnings and market share of the
casual outdoor and indoor furniture markets, including the following
initiatives:

Introduce New Products and Expand Product Offerings. The Company
intends to apply its low-cost production expertise to introduce more
new products with traditional, "high end" design features, broad
consumer appeal, and high value-to-price characteristics, and to
expand product offerings in its existing product lines. For example,
in the outdoor market, the Company introduced a new line of wrought
iron garden products in Fiscal 1997 and plans to introduce a new line
of tubular steel outdoor furniture in Fiscal 1998. In the indoor
market, the Company is expanding the product offerings under its Home
Collection from Plantation Patterns and Interior Images by Salterini
lines. This strategy is designed to expand market share within the
casual outdoor and indoor furniture markets.

Increase Manufacturing and Distribution Capacity. The Company
plans to increase its manufacturing and product distribution capacity
to allow the Company to meet the demands of new and existing customers
in new geographic regions, as well as to enhance the Company's ability
to provide products to all customers on a timely and reliable basis.
For example, in September 1997 the Company commenced construction of a
distribution facility in the southwestern United States, and in
October 1997 the Company acquired a manufacturing facility in Mexico
to serve customers in the western United States. In addition, the
Company is converting an idle manufacturing facility in Alabama to the
production of tubular steel outdoor furniture, which is expected to be
completed by December 1997. The Company will continue to evaluate
opportunities to produce and distribute products efficiently in
markets outside of the United States.

Heighten Brand Awareness. In addition to expanded offerings of
products with high value-to-price characteristics, management believes
that by targeting the ultimate consumer directly through national
marketing and advertising campaigns, such as the Paul Harvey national
radio show, the Company will heighten brand name awareness and
increase consumer demand for the Company's products.

26
<PAGE> 28

PRODUCTS

The Company designs and manufactures a variety of quality wrought iron
outdoor and indoor furniture and accessories, cushions and umbrellas, and garden
products. These products are sold primarily in the United States through mass
merchants and specialty retailers. For Fiscal 1997, sales of the Company's
outdoor furniture and accessories (including cushions and umbrellas) constituted
approximately 92.0% of gross sales, while sales of indoor furniture and
accessories and garden products represented 4.2% and 2.3% of gross sales,
respectively.

Historically, the Company manufactured exclusively outdoor wrought iron
furniture. In Fiscal 1993, the Company expanded its product lines to include
indoor wrought iron furniture and accessories. In addition, Meadowcraft further
broadened its product offerings with the introduction of wrought iron garden
products in Fiscal 1997. In Fiscal 1998, the Company plans to introduce a line
of tubular steel outdoor furniture.

The Company's outdoor products are sold through mass merchandisers under
the Plantation Patterns brand name and include dining groups composed of action
chairs, stack chairs, dining tables, bistro groups and accent tables;
accessories such as chaises, gliders, bakers' racks and tea carts; cushions and
umbrellas; and garden products. In addition, the Company sells a similar line of
outdoor products in the specialty market under the Meadowcraft, Arlington House
and Salterini brand names. The Company's outdoor casual furniture products come
in a variety of styles and colors and are sold across different price points to
appeal to a range of consumers in the mass and specialty markets.

The Company's indoor wrought iron furniture is sold to specialty furniture
stores and department stores under the Interior Images by Salterini brand name
and to mass merchants under the Home Collection from Plantation Patterns brand
name. The indoor collections include occasional tables, dining groups and beds,
as well as accent pieces. The Company's garden products include shepherds'
hooks, trellises, arbors, and plant stands and are sold through both mass
merchandisers and specialty retailers under the Plantation Patterns brand name.

The Company continuously designs and develops new products and new product
styles and expands product lines to meet customer demand and changes in consumer
preferences. The Company's product design process begins with marketing
personnel identifying customer needs and creating product ideas. A variety of
sketches are produced, usually by Company engineers, from which prototype
products are built. The Company's engineering department then prepares the
prototype for actual full-scale production. The Company consults with its
marketing personnel, sales representatives and selected customers throughout
this process to develop quality products that satisfy both specialty and mass
market consumers. The Company often introduces new products through its network
of over 1,500 specialty accounts in order to gather market feedback before
introducing the products in the mass market.

CUSTOMERS AND MARKETING

The Company's primary customers are domestic retailers in the mass and
specialty markets. Meadowcraft serves three markets: the outdoor mass market,
which includes national chains, discount retailers, mass merchants, and home
centers; the outdoor specialty market, which includes furniture stores,
specialty stores and garden shops; and the indoor market, which includes
specialty furniture stores, mass merchandisers and department stores. In Fiscal
1997, the Company sold products to over 1,500 mass and specialty accounts,
including seven of the top ten U.S. discount retailers/mass merchants and home
centers (based on 1996 revenues). Sales to its top five customers accounted for
approximately 62.6% of the Company's net sales in Fiscal 1997. The Company's top
three customers, Wal-Mart Stores, Inc., Sam's Club, Inc. (each of which is a
subsidiary of Wal-Mart, Inc.) and Service Merchandise, Inc., represented
approximately 21.4%, 12.6% and 9.8%, respectively, of the Company's net sales in
Fiscal 1997.

The Company believes that its relationship with all of its top customers is
excellent, which management believes positions the Company to increase sales of
existing products and introduce new products. In 1996, Wal-Mart awarded the
Company its "Vendor/Partner of the Year" award in the outdoor products category
for 1995, the most recent period for which the award was given. The Company was
one of only 40 vendors of Wal-

27
<PAGE> 29

Mart's approximately 10,000 vendors to receive this award. In 1997, ShopKo
Stores, Inc. awarded the Company its "Vendor of the Year" award in the indoor
and outdoor furniture category. For Seasonal 1998, Wal-Mart has informed the
Company that it has been selected as the sole supplier for Wal-Mart's outdoor
wrought iron furniture products.

To service its mass merchant and specialty accounts, Meadowcraft has
tailored its sales strategy to meet the distinct needs of each market.

The mass market sales team consists of the Vice President of Sales and
Marketing (Mass Accounts) and three national sales managers. This four person
in-house sales staff is supported by 15 independent sales representatives with
account coverage organized by territory. Each summer, Meadowcraft's sales
managers meet with their mass market accounts to plan product purchases and
shipping schedules for the following selling season. The Company's marketing
efforts in the mass market culminate with the National Hardware Show in August
at which Meadowcraft exhibits its product line for the upcoming mass retail
selling season. Typically, by September of each year, the Company has received
estimated requirements from customers for approximately seventy percent of the
sales that it will produce and ship during the following selling season.
Throughout the selling season, Meadowcraft works closely with its customers to
assure timely shipment of sales orders and to monitor and respond to sales
trends and feedback.

The specialty market sales team is served by an in-house team consisting of
the Vice President of Sales and Marketing (Specialty Accounts) and four regional
sales managers (including two who cover international accounts), as well as 35
independent sales representatives. This team markets both standard and made-to-
order products to over 1,500 specialty accounts throughout North America and
Europe. Given the number of specialty accounts and the seasonality of its
business, the Company believes that the use of independent representatives is an
effective and cost-efficient means to serve the specialty market. These
representatives are paid on a commission-only basis, which the Company believes
makes them highly entrepreneurial. Participation in trade shows, particularly
the International Casual Furniture Market held at the Merchandise Mart in
Chicago, is an important element of Meadowcraft's marketing efforts directed at
specialty retail customers.

To supplement its sales efforts to mass market and specialty account
customers, Meadowcraft uses a variety of means to advertise and promote its
products, including product brochures, trade shows and cooperative advertising
with some of its specialty accounts.

In addition, to complement the Company's marketing efforts to its mass and
specialty accounts, Meadowcraft targets consumers directly through a national
radio advertising campaign featuring Paul Harvey. The Company believes that by
enhancing brand awareness among consumers, Meadowcraft can build a brand
franchise and ultimately increase sales.

MANUFACTURING AND DISTRIBUTION

The Company operates four manufacturing facilities and four distribution
centers in Alabama. The Company believes that it operates advanced manufacturing
and distribution systems. These facilities are run by well-trained and
experienced production personnel and have allowed the Company to become a
low-cost producer in the wrought iron furniture industry.

The Company's manufacturing process combines sophisticated, computerized
materials handling systems and advanced primer and paint systems with a skilled
work force. The Company emphasizes cost-efficiencies in the manufacturing
process and has consistently modernized its manufacturing equipment and
facilities through capital expenditures in order to improve the process. Due to
the Company's high volume of business with mass merchandisers, Meadowcraft
begins production and warehouses products during the off season in order to meet
in-season purchases from customers. Through the extension of the production
season and the leveling of production activity, Meadowcraft reduces the
seasonality of the manufacturing process.

The Company's modern distribution facilities are located adjacent to its
manufacturing facilities and utilize integrated materials handling systems. The
Company utilizes sophisticated computer systems to code and track inventory and
to coordinate and monitor loading and shipment of products to retailers.
Coordination

28
<PAGE> 30

of the manufacturing, packaging and distribution functions allows for greater
quality control and production efficiencies.

MANAGEMENT INFORMATION SYSTEMS

The Company believes that it is technologically advanced and that its
manufacturing and distribution systems and computerized inventory tracking and
shipping systems are superior to its competitors largely because of its
sophisticated management information systems. Initially, the Company developed
its proprietary management information systems for its specialty retail business
in order to track special orders (particularly made-to-order items) and to
determine what and when to build. The Company subsequently expanded the systems
to support all product lines. The Company uses a forecasting system that
integrates all aspects of production, distribution and shipping and guides the
Company by one Company-wide plan. The forecasting system allows the Company to
build sales forecasts based on feedback from retail buyers and then to derive
materials planning and production allocation, as well as to monitor production
capacity, inventory and invoicing of finished goods. The Company employs its own
computer programmers and owns all of its information systems hardware, which is
serviced under maintenance and support agreements.

INDUSTRY AND COMPETITION

Although there are no published figures available, the Company estimates
that wholesale sales of outdoor casual furniture exceeded $1.0 billion in 1996.
Home Furnishings News ("HFN"), a trade publication, reported that retail sales
of outdoor casual furniture were $1.5 billion in 1996. The residential casual
furniture market consists of five principal product categories: aluminum
(including tubular, wrought and cast), wrought iron, resin and plastic, wicker
and rattan, and wood.

Access to diverse distribution channels is an important factor in the
residential casual furniture industry. According to the HFN, the major
distribution channels for outdoor casual furniture in 1996 included mass
merchants (32%), home centers (30%), national chains (13%), specialty stores
(12%) and warehouse clubs (10%). Management believes that the Company is well
positioned to service these channels. In May 1997, Home Improvement Executive,
another industry publication, reported that home center chains predicted that
the Company's Plantation Patterns line would comprise approximately 76% of their
outdoor wrought iron furniture business. Management believes that the Company's
Plantation Patterns products will have equal or greater penetration in Fiscal
1998 with certain national mass merchants, home center chains and warehouse
clubs, but there can be no assurance that the Company will achieve such
penetration in Fiscal 1998.

The casual furniture industry is highly competitive and includes a large
number of manufacturers, none of which dominate the market. The Company competes
against other domestic and foreign wrought iron furniture manufacturers as well
as manufacturers of aluminum, resin and plastic, wicker and rattan, and wood
casual furniture with respect to its outdoor products and traditional furniture
companies with respect to its indoor products. A number of the companies which
compete directly with the Company may have greater financial and other resources
than the Company. Management believes that the competition in the wrought iron
furniture industry is generally a function of timeliness of delivery, price,
quality, product design, product availability and customer service. In addition
to the factors which the Company believes allow it to compete effectively with
all of its competitors, the Company believes that the proximity of its U.S.
manufacturing and distribution facilities to its customers is a competitive
advantage over foreign manufacturers due to its ability to respond timely to
in-season orders and the higher freight costs incurred in shipping products from
foreign manufacturers.

RAW MATERIALS AND SUPPLIERS

The primary raw materials used by the Company to manufacture and distribute
its products are steel, fabrics, cardboard, paint and umbrella frames. Each
year, the Company purchases its raw materials from a number of domestic and
foreign suppliers. The Company has annual contracts with many of its major
suppliers, and the Company does not anticipate, nor has it experienced, any
difficulty in obtaining any of its raw materials. The Company believes that
there are a relatively large number of other suppliers of raw

29
<PAGE> 31

materials available, which enable the Company to obtain competitive prices for
its raw materials. While the cost of raw materials is subject to fluctuations,
the Company commits to purchase the raw materials that it estimates will be
needed for the ensuing year at fixed prices in order to attempt to control
production costs. Significant increases in the costs of raw materials in a
particular year could have an effect on the Company's margins for its products
if the Company were unable to build these costs into the prices of its products
or to offset such raw material cost increases through cost reductions in the
following year. See "Risk Factors--Raw Materials."

REGULATORY MATTERS

The Company's operations must meet federal, state and local regulatory
standards in the areas of safety, health, labor and environmental pollution
controls. To the best of the Company's knowledge, it is in substantial
compliance with all federal, state and local regulatory standards and
environmental protection provisions. Historically, compliance with these
standards has not had any material adverse effect on the Company's results of
operations. In addition, the Company is subject to numerous environmental laws
and regulations concerning air emissions, discharges into waterways and the
generation, handling, storage, transportation, treatment and disposal of waste
materials. These laws and regulations are subject to change, and it is
impossible to predict with accuracy the effect they may have on the Company in
the future. Like many other industrial companies, the Company's manufacturing
operations entail the risk of noncompliance, which may result in fines,
penalties and remediation costs, and there can be no assurance that such costs
will be insignificant. The Company believes that any future fines, penalties and
remediation costs associated with noncompliance should not have a material
adverse effect on capital expenditures, earnings or the Company's competitive
position. However, legal and regulatory requirements in those areas have been
increasing, and there can be no assurance that significant costs and liabilities
will not be incurred in the future due to regulatory noncompliance.

LEGAL PROCEEDINGS

The Company, from time to time, is subject to legal proceedings and other
claims arising in the ordinary course of its business. Management believes that
the Company is not presently a party to any litigation, the outcome of which
would have a material adverse effect on its business or operations.

EMPLOYEES

As of May 3, 1997, the Company employed approximately 1,630 persons,
approximately 1,409 of whom were subject to collective bargaining agreements.
Employment levels fluctuate throughout the year due to the seasonal nature of
the Company's business. The Company's non-salaried employees are covered by
three separate collective bargaining agreements. One of the Company's collective
bargaining agreements, covering an aggregate of approximately 786 employees at
two facilities in Birmingham, Alabama, expires on July 1, 1998. The Company
believes that its relations with its employees are good.

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<PAGE> 32

PROPERTIES

The table below presents certain information with respect to the Company's
principal properties. The Company believes that all of its properties are
well-maintained and in good condition and are capable of handling increased
production. All of the properties are equipped with automatic sprinkler systems
and modern fire protection equipment, which management believes are adequate.

<TABLE>
<CAPTION>
APPROXIMATE SIZE
LOCATION PRIMARY USE (SQUARE FEET) OWNED/LEASED
- -------- ----------- ---------------- ------------
<S> <C> <C> <C>
BIRMINGHAM, AL
Carson Road.......... Manufacturing/Offices/Distribution 1,000,000 Owned
Meadowcraft Road..... Manufacturing/Offices 240,000 Leased (1)
Goodrich Drive....... Distribution 340,000 Leased (2)
WADLEY, AL............. Manufacturing/Distribution 989,000 Owned
SELMA, AL.............. Manufacturing/Distribution 202,000 Owned
</TABLE>

- ---------------

(1) Lease expires August 29, 2000.
(2) Lease expires September 30, 1997. The Company is currently negotiating with
the lessor for extension of this lease through May 31, 1999.

In addition to these properties, the Company is constructing a new 530,000
square foot distribution facility and office in Birmingham, Alabama (Carson
Road), that is expected to be completed in December 1997. The Company is also
expanding the Selma and Wadley plants, which should be completed in December
1997. The Company also leases approximately 9,000 square feet of showroom space
in Chicago, Illinois and approximately 5,400 square feet of showroom space in
High Point, North Carolina.

In September 1997, the Company commenced construction of an approximately
100,000 square foot painting and packing facility and an approximately 500,000
square foot distribution facility in Yuma County, Arizona, and in October 1997
the Company acquired an approximately 175,000 square foot manufacturing facility
in Sonora, Mexico. These facilities will enable the Company to serve mass and
specialty retailers in the western United States.

TRADEMARKS

The Company has registered the trade name "Interior Images by Salterini"
with the United States Patent and Trademark Office ("USPTO"). The Company has
filed applications with the USPTO to register the trade names "Meadowcraft,"
"Plantation Patterns," "Arlington House," "Salterini," and "Home Collection from
Plantation Patterns." In the opinion of management, the Company's trademark
position is adequately protected in all markets in which the Company does
business. The Company believes that its various trade names are generally well
recognized by dealers and distributors and are associated with a high level of
quality and value.

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<PAGE> 33

MANAGEMENT

EXECUTIVE OFFICERS, DIRECTORS AND DIRECTOR NOMINEES

Certain information concerning the executive officers, directors and
director nominees of the Company is set forth below:

<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ---- --- -------------------------
<S> <C> <C>
Samuel R. Blount............................. 50 Chairman of the Board of Directors
William J. McCanna........................... 57 President and Director
T. Morris Hackney(1)......................... 64 Director Nominee
James M. Scott(1)............................ 61 Director Nominee
Reese H. McKinney, Jr.(1).................... 49 Director Nominee
Steven C. Braswell........................... 47 Vice President of Finance, Chief
Financial Officer and Secretary
Timothy M. LeRoy............................. 33 Vice President of Sales and Marketing
(Mass Accounts)
Rory S. Rehmert.............................. 37 Vice President of Sales and Marketing
(Specialty Accounts)
</TABLE>

- ---------------

(1) Messrs. Hackney, Scott, and McKinney have each agreed to serve as a director
and a member of the Audit and Compensation Committees of the Board of
Directors upon completion of the Offering.

Samuel R. Blount. Mr. Blount is Chairman of the Board of Directors of the
Company and has served in such capacity since the Company's formation in 1985.
Mr. Blount has over 18 years of experience with the Company and its predecessor.
Prior to the formation of the Company, Mr. Blount served as President of HBC,
Incorporated, a holding company that owned several manufacturing businesses. Mr.
Blount has also served in various positions at Blount Inc. and Western River
Expeditions, Inc. Mr. Blount presently serves or has served on numerous
educational and civic boards. Mr. Blount attended the University of the South
and served in the U.S. Marine Corps.

William J. McCanna. Mr. McCanna is President and a director of the Company
and has served in such capacities since 1991. Mr. McCanna has over 30 years of
experience in manufacturing, operations and senior management. Prior to joining
the Company, Mr. McCanna served as Chief Operating Officer and Director of
Philips Industries in Dayton, Ohio. Mr. McCanna has also served in a variety of
capacities at General Electric, Emerson Electric and Allis Chalmers. Mr. McCanna
received his BSc. in Electrical Engineering from Penn State University in 1965.
Mr. McCanna is also a graduate of the Advanced Management Program at Harvard
Business School and served in the U.S. Marine Corps.

T. Morris Hackney. Mr. Hackney is the Chairman of the Board and Chief
Executive Officer of Citation Corporation and has served in such capacities
since 1974. Citation Corporation is a publicly-traded metal component supplier
to the capital goods and durable goods industries. Mr. Hackney is also a member
of the Board of Directors of Alabama National Bancorporation and Chairman of the
Board of the Hackney Group, a diversified corporation. Mr. Hackney presently
serves on the board of numerous charitable and business organizations. Mr.
Hackney is a graduate of the Naval Academy in Annapolis, MD and served in the
U.S. Navy.

James M. Scott. Mr. Scott is a partner, past Chairman of the Board of
Governors and past Chairman of the Business and Tax Section of Capell, Howard,
Knabe and Cobbs, P.A., a law firm located in Montgomery, Alabama. Mr. Scott has
held various positions with the firm since 1964. Mr. Scott received his B.A.
from the University of the South, J.D. from the University of Alabama and LLM
from New York University. Mr. Scott is a member of the Board of Trustees of The
University of Alabama Graduate Tax Program and past Chairman of the Tax Section
of the Alabama State Bar Association. Mr. Scott has been listed in Best Lawyers
in America since 1989. Mr. Scott is the author of various articles and handbooks
on tax, partnership and

32
<PAGE> 34

corporate law matters. Mr. Scott is a former lecturer for the Alabama Bar
Review. Mr. Scott served in the U.S. Army, Special Forces.

Reese H. McKinney, Jr. Mr. McKinney is Administrative Assistant to the
Mayor of the City of Montgomery, Alabama and has served in such capacity since
1978. Mr. McKinney has served on the Board of the Central Alabama Aging
Consortium and past Chairman of the Board for the Central Alabama Regional
Planning and Development Commission. Mr. McKinney has also served on the boards
of numerous other political and civic organizations. Mr. McKinney received a
Bachelor of Science degree in Business Administration from Huntingdon College
and a B.F.A. degree in Environmental Design from the New School of Social
Research in New York City.

Steven C. Braswell. Mr. Braswell is Vice President of Finance, Chief
Financial Officer and Secretary of the Company and has served in such capacities
since 1991. Mr. Braswell has over 25 years of experience in finance and
accounting, including thirteen years at Hanson Industries in various financial
positions including Group Controller and Vice President, two years as Manager of
Finance and Accounting at Perkin Elmer Corporation in its Interdata Division and
five years at Price Waterhouse. Mr. Braswell received his BS in Accounting from
Rider College in 1972. Mr. Braswell is a Certified Public Accountant in the
state of New Jersey.

Timothy M. LeRoy. Mr. LeRoy is Vice President of Sales and Marketing (Mass
Accounts) of the Company and has served in such capacity since 1991. Prior to
joining the Company, Mr. LeRoy was with Central Hardware Company for eight years
as Supervisor, Buyer and Merchandiser. Mr. LeRoy received his BS from the
University of Missouri in 1987.

Rory S. Rehmert. Mr. Rehmert is Vice President of Sales and Marketing
(Specialty Accounts) of the Company and has served in such capacity since 1991.
Prior to joining Meadowcraft, Mr. Rehmert served as National Sales Manager for
Lyon Shaw Furniture Company and Special Accounts Manager for Winston Furniture
Company and as Store Manager with Flower City, Inc. Mr. Rehmert received his BS
from Kansas State University in 1981.

BOARD OF DIRECTORS AND COMMITTEES

The members of the Board of Directors are elected annually and serve for
terms of one year until reelected or replaced or until their earlier resignation
or removal. Executive officers of the Company are elected annually by, and serve
at the discretion of, the Board of Directors. Upon consummation of the Offering,
the Company intends to add the three outside director nominees listed in the
table under the caption "-- Executive Officers, Directors and Director
Nominees."

Upon consummation of the Offering, the Board of Directors intends to
designate an Audit Committee and a Compensation Committee and will appoint the
outside directors to each of the committees upon their election to the Board of
Directors. The Audit Committee will be responsible for recommending independent
auditors, reviewing with the independent auditors the scope and results of
audits, monitoring the Company's financial policies and control procedures,
monitoring the nonaudit services provided by the Company's auditors and
reviewing all potential conflict of interest situations. The Compensation
Committee will be responsible for reviewing, determining and establishing the
salaries, bonuses and other compensation of the executive officers of the
Company.

33
<PAGE> 35

EXECUTIVE COMPENSATION

The following table sets forth a summary of the compensation paid or
accrued by the Company for services rendered in all capacities to the Company
during Fiscal 1997, to the Company's Chairman of the Board of Directors and the
four other highest paid executive officers (the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
BASE ALL OTHER
NAME AND PRINCIPAL POSITION HELD SALARY BONUS COMPENSATION(2)
- -------------------------------- -------- -------- ---------------
<S> <C> <C> <C>
Samuel R. Blount................................ $300,000 $ 0 $1,566
Chairman of the Board of Directors
William J. McCanna.............................. $276,242 $584,144(1) $4,050
President
Steven C. Braswell.............................. $108,975 $ 51,962 $1,169
Vice President of Finance, Chief Financial
Officer and Secretary
Timothy M. LeRoy................................ $105,192 $ 89,308 $ 343
Vice President of Sales and Marketing (Mass
Accounts)
Rory S. Rehmert................................. $ 89,167 $ 76,205 $ 351
Vice President of Sales and Marketing
(Specialty Accounts)
</TABLE>

- ---------------

(1) Includes $333,333, which was paid to Mr. McCanna pursuant to an agreement to
pay him a bonus of $1.0 million in three equal annual installments, plus
interest at the average prime rate on the last two installments. Mr. McCanna
received the first installment in Fiscal 1996 and received the last
installment in August 1997. See "-- Employment Agreements; Confidentiality
Agreements."
(2) Represents dollar value of insurance premiums paid with respect to life
insurance for the benefit of the Named Executive Officer.

EMPLOYMENT AGREEMENTS; CONFIDENTIALITY AGREEMENTS

The Company has not entered into any employment agreements or noncompete
agreements with any of its employees. In 1992, the Company agreed to pay William
J. McCanna a bonus of $1.0 million when the Company achieved audited year-end
equity of $10.0 million, provided certain other conditions were satisfied. Mr.
McCanna became eligible to receive the bonus in August 1995. The bonus was
accrued in each of Fiscal 1995, 1996 and 1997 and was paid out in three annual
installments.

The Company maintains a long-term incentive program for certain of its key
employees, excluding the Chairman of the Board of Directors and President. Cash
awards are granted to the key employees as determined by the Chairman of the
Board of Directors and President. The cash bonuses vest at the rate of 20% per
year based on the attainment of goals and objectives by the Company and by the
employee. Once fully vested, the bonuses are payable to the employee at the rate
of 20% per year and the unpaid balance bears interest at the prime rate. The
bonus is subject to forfeiture if the employee voluntarily terminates employment
before the bonus is fully vested. If employment is terminated for any other
reason, the employee is entitled to receive the vested portion of the bonus at
the rate of 20% per year.

All of the Company's exempt salaried employees, including the executive
officers, have each signed a confidentiality agreement pursuant to which each
has agreed not to disclose any of the Company's confidential information and to
assign to the Company any rights he or she may have in any design, invention,
software, process, trade secret or intellectual property that relates to or
resulted from work performed at the Company.

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<PAGE> 36

1997 STOCK OPTION PLAN

On July 31, 1997, the Board of Directors of the Company adopted the
Company's 1997 Stock Option Plan (the "Plan"), which was approved by the
Stockholders on July 31, 1997. The Plan provides for the grant of stock options
("Options") to participants. The objectives of the Plan are to promote the
success and enhance the value of the Company by providing flexibility in the
Company's ability to motivate, attract and retain the services of employees. A
total of 1,000,000 shares of Common Stock have been reserved for issuance under
the Plan. The Plan authorizes the grant of nonqualified Options and Options
intended to qualify as incentive stock options ("Incentive Options") under
Section 422 of the Code.

The Plan will be administered by the Board of Directors, which has the
exclusive power to (i) designate participants, (ii) determine the number of
Options to be granted, (iii) fix the terms and conditions of any Option, (iv)
prescribe the form of each Option agreement, (v) decide all other matters that
must be determined in connection with an Option, (vi) establish, adopt or revise
any rules and regulations as it may deem necessary or advisable to administer
the Plan, and (vii) make all other decisions and determinations that may be
required under the Plan. The Plan provides that the Board of Directors will
select participants from among employees, officers and directors of the Company
or its future subsidiaries.

The exercise price for each Option granted under the Plan will be
determined by the Board of Directors, but will not be less than the fair market
value of the Common Stock on the date of grant. No Incentive Options may be
granted to any employee who owns, at the date of grant, stock representing in
excess of 10% of the combined voting power of all classes of stock of the
Company or any subsidiary unless the exercise price for stock subject to such
Incentive Options is at least 110% of the fair market value of such stock at the
time of grant and the Incentive Option term does not exceed five years.

The term of each Option will be for the period as determined by the Board
of Directors, provided no Option will exceed a period of 10 years from the date
of grant. If a participant who holds Options ceases, for any reason, to be an
employee of the Company (the "Termination"), the Options expire three months
after such Termination. Notwithstanding the foregoing, in the event of
Termination due to the optionee's death, the Options may be exercised for a
period of 12 months following the date of such optionee's death. Options granted
under the Plan may be exercisable in installments.

Upon the exercise of Incentive Options, the option exercise price must be
paid in full, either in cash or other form acceptable to the Board of Directors,
including delivery of shares of Common Stock already owned by the optionee.
Unless terminated earlier, the Plan will terminate on July 30, 2007. As of the
date hereof, no Options have been granted under the Plan but the Board of
Directors of the Company expects to grant options under the Plan at the initial
public offering price to certain key employees and nonemployee directors
immediately prior to consummation of this Offering. See "-- Compensation of
Directors."

401(K) PLAN

The Company maintains a Section 401(k) Profit Sharing Plan (the "KPlan")
for its salaried employees. The KPlan is a Code Section 401(k) plan which
requires, subject to certain limited exceptions, 12 months of service and
attainment of age 21 to become a participant in the KPlan. The KPlan allows the
employees to make pretax contributions to the KPlan, which are matched at a rate
determined by the Company's Board of Directors (currently 33%) up to a maximum
of 10% of the employee's compensation. The total KPlan expense for Fiscal 1997,
1996 and 1995 was $94,000, $82,000 and $63,000, respectively.

COMPENSATION OF DIRECTORS

Upon election to the Board of Directors, each nonemployee director will be
awarded options to purchase shares of Common Stock under the Plan with an
aggregate exercise price of $100,000 based on the initial public offering price,
subject to vesting at the rate of 20% per year. The chairman of the Audit
Committee will receive additional cash compensation in the amount of $5,000 per
year. No additional compensation will be paid to directors for serving on
committees. All directors will receive reimbursement of travel expenses incurred
in attending meetings of the Board of Directors and committees.

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<PAGE> 37

CERTAIN TRANSACTIONS

TRANSACTION WITH DIRECTOR NOMINEE

On July 1, 1987, the Company entered into an Assignment of Sublease with
Champion International Corporation, a New York corporation ("CIC"), and Pinson
Partners, an Alabama general partnership, with respect to the substitution of
the Company as sublessee under a Sublease dated January 31, 1977 (the
"Sublease") between CIC and Birmingham Ornamental Iron Company, Inc., an Alabama
corporation ("BOIC"). Under the terms of the Sublease, the Company subleases the
Meadowcraft Road property from CIC for use as a manufacturing facility. The
current rental rate is approximately $32,100 per month, of which approximately
$29,500 per month is payable to Pinson Partners. Mr. T. Morris Hackney, a
director nominee, and his wife, Brenda Hackney, own a 40% interest in Pinson
Partners which entitles them to approximately $11,800 per month of the rental
payments made by the Company to Pinson Partners. The Company, as sublessee, is
also required to maintain insurance on the premises and pay all operating
expenses, including utility charges, with respect to the premises. The
Meadowcraft Road property is currently exempt from ad valorem taxes, but the
Company is required to pay all such taxes if and when the premises become
taxable. The underlying lease between BOIC and the City of Tarrant City, a
municipal corporation, expires on August 29, 2000. The Company believes that the
terms of the underlying lease, including the monthly rental rate, are at least
as favorable to the Company as those which could have been negotiated with an
unaffiliated third party.

S CORPORATION TERMINATION

Upon consummation of the Offering, the Company will terminate its S
Corporation election. In connection therewith, the Company intends to declare a
distribution effecting the S Corporation Distribution to its existing
stockholders before the completion of the Offering. The Company expects to pay
approximately $32.7 million of S Corporation Distribution with a portion of the
net proceeds from the Offering. See "Use of Proceeds."

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of July 31, 1997, and as adjusted to
reflect the sale of the Common Stock offered hereby, by: (i) each director of
the Company, (ii) all directors and executive officers as a group, and (iii)
each stockholder known by the Company to be the beneficial owner of more than
five percent of the outstanding Common Stock. Except as otherwise indicated,
each person or entity listed below has sole voting and investment power with
respect to all shares shown to be beneficially owned by such person. Under the
rules of the Securities and Exchange Commission (the "Commission"), a person is
deemed to be a "beneficial owner" of a security if such person has or shares the
power to vote or direct the voting of such security or the power to dispose of
or to direct the disposition of such security. Accordingly, more than one person
may be deemed to be a beneficial owner of the same security.

<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES
BENEFICIALLY OWNED BENEFICIALLY OWNED
NAME OF BENEFICIAL OWNER(1) PRIOR TO THE OFFERING PERCENT AFTER THE OFFERING PERCENT
- --------------------------- --------------------- ------- ------------------ -------
<S> <C> <C> <C> <C>
Samuel R. Blount.............................. 14,400,000(2) 90.0% 14,508,500(3) 75.9%
William J. McCanna............................ 1,600,000 10.0% 1,600,000 8.4%
All Named Executive Officers, directors and
director nominees as a group (8 persons).... 16,000,000 100.0% 16,138,500(4) 84.4%
</TABLE>

- ---------------

(1) The address of the directors and Named Executive Officers set forth in the
table is the address of the Company appearing elsewhere in this Prospectus.
(2) Includes 11,200,000 shares of Common Stock held of record by Mr. Blount and
3,200,000 shares of Common Stock beneficially owned by him.

(3) Includes 108,500 Directed Shares to be beneficially owned by Mr. Blount at
the completion of the Offering.

(4) Includes 138,500 Directed Shares to be beneficially owned by such persons at
the completion of the Offering.

36
<PAGE> 38

DESCRIPTION OF CAPITAL STOCK

GENERAL

The Company's authorized capital stock consists of 100,000,000 shares of
common stock, par value $.01 per share. Immediately prior to the closing of the
Offering, the Company will have 16,000,000 shares of Common Stock outstanding.
Upon the closing of the Offering, assuming no exercise of the Underwriters'
over-allotment option, the Company will have 19,125,000 shares of Common Stock
outstanding. The following summary is qualified in its entirety by reference to
the Amended and Restated Certificate of Incorporation ("Restated Certificate"),
which is included as an exhibit to the Registration Statement of which this
Prospectus is a part.

COMMON STOCK

The issued and outstanding shares of Common Stock are, and the shares of
Common Stock being offered will be, upon payment therefor, validly issued, fully
paid and nonassessable. The holders of outstanding shares of Common Stock are
entitled to receive dividends out of assets legally available therefor at such
times and in such amounts as the Board of Directors may from time to time
determine. The shares of Common Stock are neither redeemable nor convertible,
and the holders thereof have no preemptive or subscription rights to purchase
any securities of the Company. Upon liquidation, dissolution or winding up of
the Company, the holders of Common Stock are entitled to receive pro rata the
assets of the Company which are legally available for distribution, after
payment of all debts and other liabilities. Each outstanding share of Common
Stock is entitled to one vote on all matters submitted to a vote of
stockholders.

STATUTORY BUSINESS COMBINATION PROVISION

The Company is a Delaware corporation and is subject to Section 203 of the
Delaware General Corporation Law ("DGCL"). In general, Section 203 prevents an
"interested stockholder" (defined generally as a person owning 15% or more of a
corporation's outstanding voting stock) from engaging in a "business
combination" (as defined) with a Delaware corporation for three years following
the time such person became an interested stockholder unless (i) before such
person became an interested stockholder, the board of directors of the
corporation approved the transaction in which the interested stockholder became
an interested stockholder or approved the business combination, (ii) upon
consummation of the transaction that resulted in the stockholder's becoming an
interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced (excluding stock held by directors who are also officers of the
corporation and by employee stock plans that do not provide employees with the
rights to determine confidentially whether shares held subject to the plan will
be tendered in a tender or exchange offer) or (iii) following the transaction in
which such person became an interested stockholder, the business combination was
approved by the board of directors of the corporation and authorized at a
meeting of stockholders, and not by written consent, by the affirmative vote of
the holders of two thirds of the outstanding shares of voting stock of the
corporation not owned by the interested stockholder. Under Section 203, the
restrictions described above also do not apply to certain business combinations
proposed by an interested stockholder following the announcement or notification
of one of certain extraordinary transactions involving the corporation and a
person who had not been an interested stockholder during the previous three
years or who became an interested stockholder with the approval of a majority of
the corporation's directors, if such extraordinary transaction is approved or
not opposed by a majority of the directors who were directors prior to any
person's becoming an interested stockholder during the previous three years or
were recommended for election or elected to succeed such directors by a majority
of such directors.

CERTAIN PROVISIONS OF RESTATED CERTIFICATE AND BYLAWS

Delaware law authorizes corporations to limit or eliminate the personal
liability of directors to corporations and their stockholders for monetary
damages for breach of a director's fiduciary duty of care. The duty of care
requires that, when acting on behalf of the corporation, directors must exercise
an informed

37
<PAGE> 39

business judgment based on all material information reasonably available to
them. Absent the limitations authorized by Delaware law, directors are
accountable to corporations and their stockholders for monetary damages for
conduct constituting gross negligence in the exercise of their duty of care.
Delaware law enables corporations to limit available relief to equitable
remedies such as injunction or rescission. The Restated Certificate limits the
liability of directors of the Company to the Company or its stockholders to the
fullest extent permitted by Delaware law. Specifically, directors of the Company
will not be personally liable for monetary damages for breach of a director's
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Company or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) for unlawful payments of dividends or unlawful stock
repurchases or redemptions as provided in Section 174 of the DGCL or (iv) for
any transaction from which the director derived an improper personal benefit.

The inclusion of this provision in the Restated Certificate may have the
effect of reducing the likelihood of derivative litigation against directors and
may discourage or deter stockholders or management from bringing a lawsuit
against directors for breach of their duty of care, even though such an action,
if successful, might otherwise have benefitted the Company and its stockholders.
The Restated Certificate provides indemnification to the Company's officers and
directors and certain other persons with respect to certain matters.

The Restated Certificate provides that the number of directors will be
fixed from time to time by, or in the manner provided in, the bylaws of the
Company. The Amended and Restated Bylaws of the Company provide that the number
of directors constituting the whole Board of Directors of the Company will be
fixed by the affirmative vote of a majority of the members at any time
constituting the Board of Directors, and such number may be increased or
decreased from time to time; provided, however, that no such decrease may
shorten the term of any incumbent director. The Restated Certificate also
provides that directors may be removed only for cause. These provisions, in
conjunction with provisions of the Restated Certificate authorizing the Board of
Directors to fill vacant directorships, will prevent stockholders from removing
incumbent directors without cause and filling the resulting vacancies with their
own nominees.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Company's Common Stock is AmSouth
Bank.

SHARES ELIGIBLE FOR FUTURE SALE

Upon consummation of the Offering, the Company will have outstanding
19,125,000 shares of Common Stock (19,593,750 if the Underwriters'
over-allotment option is exercised in full) of which the 3,125,000 shares sold
in the Offering (3,593,750 if the Underwriters' over-allotment option is
exercised in full) will be freely tradeable without restriction or further
registration under the Securities Act, except for those held by "affiliates" (as
defined in the Securities Act) of the Company, which shares will be subject to
the resale limitations of Rule 144 under the Securities Act. The remaining
16,000,000 shares of Common Stock are deemed "restricted securities" under Rule
144 in that they were originally issued and sold by the Company in private
transactions in reliance upon exemptions under the Securities Act, and may be
publicly sold only if registered under the Securities Act or sold in accordance
with an applicable exemption from registration, such as those provided by Rule
144 promulgated under the Securities Act as described below.

In general, under Rule 144, if a minimum of one year has elapsed since the
later of the date of acquisition of restricted securities from the issuer or
from an affiliate of the issuer, the acquirer or subsequent holder would be
entitled to sell within any three-month period a number of those shares that
does not exceed the greater of one percent of the number of shares of such class
of stock then outstanding or the average weekly trading volume of the shares of
such class of stock during the four calendar weeks preceding the filing of a
Form 144 with respect to such sale. Sales under Rule 144 are also subject to
certain manner of sale provisions and notice requirements and to the
availability of current public information about the issuer. In addition, if a
period of at least two years has elapsed since the later of the date of
acquisition of restricted securities from the issuer or from any affiliate of
the issuer, and the acquirer or subsequent holder thereof is deemed not to have

38
<PAGE> 40

been an affiliate of the issuer of such restricted securities at any time during
the 90 days preceding a sale, such person would be entitled to sell such
restricted securities under Rule 144(k) without regard to the requirements
described above. Rule 144 does not require the same person to have held the
securities for the applicable periods. The foregoing summary of Rule 144 is not
intended to be a complete description thereof.

As of July 31, 1997, 1,000,000 shares of Common Stock were reserved for
issuance upon the exercise of options to be granted under the Plan. See
"Management -- 1997 Stock Option Plan." In general, pursuant to Rule 701 under
the Securities Act, any employee, officer or director of the Company who
purchases his or her shares of Common Stock pursuant to a written compensatory
plan or contract is entitled to rely on the resale provisions of Rule 701, which
permit non-affiliates to sell such shares without compliance with the public
information, holding period, volume limitation or notice provisions of Rule 144,
and permit affiliates to sell such shares without compliance with the holding
period provisions of Rule 144, in each case commencing 90 days after the date of
this Prospectus. As of the date of this Prospectus, no options have been granted
under the Plan, but the Board of Directors of the Company expects to grant
options under the Plan at the initial public offering price to certain key
employees and nonemployee directors immediately prior to consummation of this
Offering. See "Management -- 1997 Stock Option Plan" and "-- Compensation of
Directors."

The Company, its existing stockholders, certain officers and its directors
have agreed not to issue, sell, offer or agree to sell, grant any option (other
than pursuant to the Plan) or other right for the sale of, or otherwise dispose
of, directly or indirectly, any shares of Common Stock (or any securities
convertible into, exercisable for or exchangeable for Common Stock) during the
270-day period after the date of this Prospectus without the prior written
consent of A.G. Edwards & Sons, Inc., with certain limited exceptions.

Prior to the Offering, there has been no established public market for the
Common Stock. No prediction can be made of the effect, if any, that sales of
shares under Rule 144, or otherwise, or the availability of shares for sale will
have on the market price of the Common Stock prevailing from time to time after
the Offering. The Company is unable to estimate the number of shares that may be
sold in the public market under Rule 144, or otherwise, because such amount will
depend on the trading volume in, and market price for, the Common Stock and
other factors. Nevertheless, sales of substantial amounts of shares in the
public market, or the perception that such sales could occur, could adversely
affect the market price of the Common Stock of the Company. See "Underwriting."

39
<PAGE> 41

UNDERWRITING

Subject to the terms and conditions of an Underwriting Agreement among the
Company and A.G. Edwards & Sons, Inc. (the "Representative"), the underwriters
listed below (the "Underwriters") have severally agreed to purchase from the
Company the aggregate number of shares of the Company's Common Stock set forth
opposite their respective names below:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
A.G. Edwards & Sons, Inc....................................
---------
Total............................................. 3,125,000
=========
</TABLE>

Pursuant to the terms of the Underwriting Agreement, the Underwriters will
acquire the shares of Common Stock offered hereby from the Company at the public
offering price set forth on the cover page hereof less the underwriting
discounts and commissions set forth on the cover page. The Underwriters propose
to offer the shares to the public at the public offering price set forth on the
cover page. Some of the shares offered to the public will be sold to certain
dealers at the public offering price less a dealers' concession not in excess of
$ per share. The Underwriters and such dealers may allow a discount not in
excess of $ per share to other dealers. After the shares are released for
sale to the public, the public offering price and other terms may be varied by
the Representative.

The nature of the obligations of the Underwriters is such that if any of
the shares offered hereby are purchased, all of such shares must be purchased.

The Company has granted to the Underwriters an option for 30 days to
purchase (at the public offering price less the underwriting discounts and
commissions shown on the cover page of this Prospectus) up to 468,750 additional
shares. The Underwriters may exercise such option only to cover over-allotments
of shares made in connection with the sale of the shares offered hereby. To the
extent the Underwriters exercise such option, each of the Underwriters will have
a firm commitment, subject to certain conditions, to purchase approximately the
same percentage of the option shares that the number of shares of Common Stock
to be purchased by it shown in the above table bears to 3,125,000, and the
Company will be obligated, pursuant to the option, to sell such shares to the
Underwriters.

The Company, its existing stockholders, certain officers and its directors
have agreed to enter into lock-up agreements pursuant to which they will agree
that they will not, for 270 days from and after the date of this Prospectus,
sell, offer to sell, or otherwise dispose of, directly or indirectly, any shares
of capital stock of the Company (other than shares offered hereby, shares
issuable pursuant to a plan for employees or shareholders in effect on the date
of this Prospectus, and Common Stock issuable on conversion of securities or
exercise of warrants or options outstanding on the date of this Prospectus)
without the prior written consent of A.G. Edwards & Sons, Inc.

Prior to the Offering, there has been no public market for the Common
Stock. The initial public offering price of the shares of Common Stock will be
negotiated among the Company and the Representative. In addition to prevailing
market conditions, among the factors that may be considered in determining the
initial public offering price of the shares of Common Stock are the Company's
historical financial performance, estimates of the business potential and
earning prospects of the Company, an assessment of the Company's management and
the consideration of the above factors in relation to the market valuations of
companies in similar business.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to contribute to payments the Underwriters may be required to make in respect
thereof.

In connection with the Offering, certain Underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the

40
<PAGE> 42

Common Stock. Such transactions may include stabilization transactions effected
in accordance with Rule 104 of Regulation M, pursuant to which such persons may
bid for or purchase Common Stock for the purpose of stabilizing its market
price. The Underwriters also may create a short position for the account of the
Underwriters by selling more Common Stock in connection with the Offering than
they are committed to purchase from the Company, and in such case may purchase
Common Stock in the open market following completion of the Offering to cover
all or a portion of such short position. The Underwriters may also cover all or
a portion of such short position, up to 468,750 shares of Common Stock, by
exercising the Underwriters' over-allotment option referred to above. In
addition, A.G. Edwards & Sons, Inc., on behalf of the Underwriters, may impose
"penalty bids" under contractual arrangements with the Underwriters whereby it
may reclaim from an Underwriter (or dealer participating in the offering) for
the account of the other Underwriters, the selling concession with respect to
Common Stock that is distributed in the Offering but subsequently purchased for
the account of the Underwriters in the open market. Any of the transactions
described in this paragraph may result in the maintenance of the price of the
Common Stock at a level above that which might otherwise prevail in the open
market. None of the transactions described in this paragraph is required, and,
if they are undertaken, they may be discontinued at any time.

The Representative has informed the Company that the Underwriters do not
intend to confirm sales to any accounts over which they exercise discretionary
authority.

At the Company's request, the Underwriters will reserve for sale at the
initial public offering price up to 357,143 Directed Shares which may be sold to
directors, officers or employees of the Company and other persons associated
with the Company's directors or officers, including up to 294,214 Directed
Shares for sale to members of the immediate family of the existing stockholders.
The number of shares available for sale to the general public will be reduced to
the extent any Directed Shares are purchased. Any Directed Shares not so
purchased will be offered by the Underwriters on the same basis as the other
shares offered hereby. Each purchaser of Directed Shares will be required to
agree to restrictions on resale similar to those described above. See "Principal
Stockholders."

EXPERTS

The audited balance sheets of the Company as of April 28, 1996, May 3,
1997, and July 31, 1997 and the related statements of income, stockholders'
equity, and cash flows for each of the three fiscal years in the period ended
May 3, 1997, and the thirteen weeks ended July 31, 1997, included in this
Prospectus and the Registration Statement of which this Prospectus is a part,
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.

LEGAL MATTERS

The legality of the Common Stock offered hereby will be passed upon for the
Company by Sirote & Permutt, P.C., Birmingham, Alabama. Certain legal matters
related to the Offering will be passed upon for the Underwriters by Debevoise &
Plimpton, New York, New York.

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-1 (together with all exhibits, schedules and amendments relating thereto, the
"Registration Statement") with respect to the Common Stock offered hereby. This
Prospectus, filed as part of the Registration Statement, does not contain all
the information contained in the Registration Statement, certain portions of
which have been omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company and the Common
Stock offered hereby, reference is made to the Registration Statement including
the exhibits thereto. Statements contained in this Prospectus as to the contents
of any contract or other document filed as an exhibit to the Registration
Statement accurately describe the material provisions of such document and are
qualified in their entirety by reference to such exhibits for complete
statements of their

41
<PAGE> 43

provisions. All of these documents may be inspected without charge at the Public
Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, and at the following regional offices of the
Commission: Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and 7 World Trade Center, 13th Floor, New York, New York 10048.
Copies can also be obtained from the Commission at prescribed rates. The
Commission maintains a Web site (http://www.sec.gov) that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. Upon completion of the Offering,
the Company will be subject to the information reporting requirements of the
Securities Exchange Act of 1934 and, in accordance therewith, will file reports,
proxy statements and other information with the Commission.

The Company intends to furnish its stockholders with annual reports
containing financial statements audited by the Company's independent accountants
and quarterly reports for the first three fiscal quarters of each fiscal year
containing unaudited interim financial information after the completion of the
Offering.

42
<PAGE> 44

INDEX TO FINANCIAL STATEMENTS

MEADOWCRAFT, INC.

<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
Report of Independent Public Accountants.................... F-2
Balance Sheets as of April 28, 1996, May 3, 1997, July 31,
1996 (unaudited) and July 31, 1997........................ F-3
Statements of Income for the years ended April 30, 1995,
April 28, 1996, May 3, 1997 and the thirteen weeks ended
July 31, 1996 (unaudited) and July 31, 1997............... F-4
Statements of Stockholders' Equity for the years ended April
30, 1995, April 28, 1996, May 3, 1997 and the thirteen
weeks ended July 31, 1997................................. F-5
Statements of Cash Flows for the years ended April 30, 1995,
April 28, 1996, May 3, 1997 and the thirteen weeks ended
July 31, 1996 (unaudited) and July 31, 1997............... F-6
Notes to Financial Statements............................... F-7
</TABLE>

F-1
<PAGE> 45

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Meadowcraft, Inc.:

We have audited the accompanying balance sheets of Meadowcraft, Inc. (a
Delaware corporation) as of April 28, 1996, May 3, 1997 and July 31, 1997 and
the related statements of income, stockholders' equity, and cash flows for each
of the three fiscal years in the period ended May 3, 1997 and the thirteen weeks
ended July 31, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 financial position of Meadowcraft, Inc. as of
April 28, 1996, May 3, 1997, and July 31, 1997 and the results of its operations
and its cash flows for each of the three fiscal years in the period ended May 3,
1997, and the thirteen weeks ended July 31, 1997 in conformity with generally
accepted accounting principles.

/s/ ARTHUR ANDERSEN LLP
--------------------------------------
Arthur Andersen LLP

Birmingham, Alabama
August 22, 1997

F-2
<PAGE> 46

MEADOWCRAFT, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
PRO FORMA
STOCKHOLDERS'
EQUITY AT
APRIL 28, 1996 MAY 3, 1997 JULY 31, 1996 JULY 31, 1997 JULY 31, 1997
-------------- ------------ ------------- ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Due from factor.............. $ 41,067,000 $ 35,549,000 $10,365,000 $ 10,758,000
Accounts receivable.......... 22,938,000 27,915,000 3,565,000 5,700,000
Inventories.................. 19,240,000 21,472,000 10,843,000 11,590,000
Prepaid expenses and other... 319,000 330,000 288,000 293,000
------------ ------------ ----------- ------------
83,564,000 85,266,000 25,061,000 28,341,000
------------ ------------ ----------- ------------
PROPERTY, PLANT, AND
EQUIPMENT:
Land......................... 4,183,000 4,801,000 4,183,000 4,966,000
Buildings.................... 21,996,000 22,459,000 21,996,000 22,459,000
Machinery and equipment...... 24,828,000 26,141,000 24,829,000 26,141,000
Leasehold improvements....... 1,287,000 1,287,000 1,287,000 1,287,000
Furniture and fixtures....... 1,698,000 2,707,000 2,490,000 2,707,000
Construction in process...... 208,000 403,000 1,043,000 2,309,000
------------ ------------ ----------- ------------
54,200,000 57,798,000 55,828,000 59,869,000
Less accumulated depreciation
and amortization........... (12,123,000) (16,670,000) (13,326,000) (17,908,000)
------------ ------------ ----------- ------------
42,077,000 41,128,000 42,502,000 41,961,000
------------ ------------ ----------- ------------
OTHER ASSETS................. 838,000 667,000 797,000 770,000
------------ ------------ ----------- ------------
$126,479,000 $127,061,000 $68,360,000 $ 71,072,000
============ ============ =========== ============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term
debt....................... $ 4,790,000 $ 4,750,000 $ 5,089,000 $ 4,550,000
Notes payable................ 60,528,000 48,896,000 15,009,000 10,226,000
Accounts payable............. 11,488,000 9,331,000 3,792,000 2,847,000
Accrued expenses............. 7,047,000 6,720,000 5,051,000 5,602,000
Warranty and other
reserves................... 3,007,000 2,716,000 1,812,000 1,311,000
------------ ------------ ----------- ------------
86,860,000 72,413,000 30,753,000 24,536,000
------------ ------------ ----------- ------------
LONG-TERM DEBT............... 19,419,000 15,320,000 18,812,000 13,392,000
------------ ------------ ----------- ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value,
100,000,000 shares
authorized, 16,000,000
shares issued and
outstanding................ 160,000 160,000 160,000 160,000 160,000
Additional paid-in capital... 340,000 340,000 340,000 340,000 340,000
Retained earnings............ 19,700,000 38,828,000 18,295,000 32,644,000 2,674,000
------------ ------------ ----------- ------------ -----------
20,200,000 39,328,000 18,795,000 33,144,000 $ 3,174,000
------------ ------------ ----------- ------------ ===========
$126,479,000 $127,061,000 $68,360,000 $ 71,072,000
============ ============ =========== ============
</TABLE>

The accompanying notes are an integral part of these balance sheets.

F-3
<PAGE> 47

MEADOWCRAFT, INC.

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
FISCAL YEAR ENDED THIRTEEN WEEKS ENDED
------------------------------------------ -------------------------
APRIL 30, APRIL 28, MAY 3, JULY 31, JULY 31,
1995 1996 1997 1996 1997
------------ ------------ ------------ ----------- -----------
(52 WEEKS) (52 WEEKS) (53 WEEKS) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET SALES........................ $120,767,000 $117,419,000 $141,945,000 $32,233,000 $35,368,000
COST OF SALES.................... 88,587,000 87,849,000 98,315,000 24,270,000 25,932,000
------------ ------------ ------------ ----------- -----------
Gross Profit..................... 32,180,000 29,570,000 43,630,000 7,963,000 9,436,000
------------ ------------ ------------ ----------- -----------
OPERATING EXPENSES:
Selling.......................... 6,101,000 6,092,000 6,939,000 1,232,000 1,517,000
General and administrative....... 5,165,000 5,906,000 6,039,000 1,332,000 1,442,000
------------ ------------ ------------ ----------- -----------
11,266,000 11,998,000 12,978,000 2,564,000 2,959,000
------------ ------------ ------------ ----------- -----------
Operating Income....... 20,914,000 17,572,000 30,652,000 5,399,000 6,477,000
INTEREST EXPENSE................. 4,881,000 5,018,000 5,274,000 1,304,000 1,161,000
------------ ------------ ------------ ----------- -----------
Net
income -- historical............. $ 16,033,000 $ 12,554,000 $ 25,378,000 $ 4,095,000 $ 5,316,000
============ ============ ============ =========== ===========
PRO FORMA PRESENTATION:
Net income -- historical......... $ 16,033,000 $ 12,554,000 $ 25,378,000 $ 4,095,000 $ 5,316,000
Pro forma provision for income
taxes (Notes 2 and 7).......... 6,071,000 4,685,000 9,439,000 1,523,000 1,978,000
------------ ------------ ------------ ----------- -----------
Pro forma net income
(Notes 2 and 7)................ $ 9,962,000 $ 7,869,000 $ 15,939,000 $ 2,572,000 $ 3,338,000
============ ============ ============ =========== ===========
Pro forma net income per share (Notes 2 and 7)................ $ .96 $ .20
============ ===========
Pro forma weighted average shares outstanding (Note 2)........ 16,521,000 16,521,000
============ ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-4
<PAGE> 48

MEADOWCRAFT, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK
--------------------- ADDITIONAL
SHARES PAID-IN RETAINED
ISSUED AMOUNT CAPITAL EARNINGS TOTAL
---------- -------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
BALANCE, MAY 1, 1994................ 16,000,000 $160,000 $340,000 $ 4,551,000 $ 5,051,000
Net income for the year........... 0 0 0 16,033,000 16,033,000
S corporation distributions....... 0 0 0 (5,100,000) (5,100,000)
---------- -------- -------- ------------ ------------
BALANCE, APRIL 30, 1995............. 16,000,000 160,000 340,000 15,484,000 15,984,000
Net income for the year........... 0 0 0 12,554,000 12,554,000
S corporation distributions....... 0 0 0 (8,338,000) (8,338,000)
---------- -------- -------- ------------ ------------
BALANCE, APRIL 28, 1996............. 16,000,000 160,000 340,000 19,700,000 20,200,000
Net income for the year........... 0 0 0 25,378,000 25,378,000
S corporation distributions....... 0 0 0 (6,250,000) (6,250,000)
---------- -------- -------- ------------ ------------
BALANCE, MAY 3, 1997................ 16,000,000 160,000 340,000 38,828,000 39,328,000
Net income for period............. 0 0 0 5,316,000 5,316,000
S corporation distributions....... 0 0 0 (11,500,000) (11,500,000)
---------- -------- -------- ------------ ------------
BALANCE, JULY 31, 1997.............. 16,000,000 $160,000 $340,000 $ 32,644,000 $ 33,144,000
========== ======== ======== ============ ============
</TABLE>

The accompanying notes are an integral part of these statements.

F-5
<PAGE> 49

MEADOWCRAFT, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FISCAL YEAR ENDED THIRTEEN WEEKS ENDED
------------------------------------------ ---------------------------
APRIL 30, APRIL 28, MAY 3, JULY 31, JULY 31,
1995 1996 1997 1996 1997
------------ ------------ ------------ ------------ ------------
(52 WEEKS) (52 WEEKS) (53 WEEKS) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income........................... $ 16,033,000 $ 12,554,000 $ 25,378,000 $ 4,095,000 $ 5,316,000
------------ ------------ ------------ ------------ ------------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization........ 2,340,000 4,006,000 5,099,000 1,235,000 1,237,000
Changes in assets and liabilities:
Due from factor.................... (25,462,000) 22,736,000 5,518,000 30,702,000 24,791,000
Accounts receivable, net........... 12,410,000 (22,938,000) (4,977,000) 19,373,000 22,215,000
Inventories........................ (5,094,000) 496,000 (2,232,000) 8,397,000 9,882,000
Prepaid expenses and other......... 93,000 4,000 (11,000) 0 37,000
Other assets....................... (94,000) (44,000) 102,000 41,000 (103,000)
Accounts payable................... 4,624,000 (4,064,000) (2,157,000) (7,696,000) (6,484,000)
Accrued expenses................... 422,000 1,603,000 (327,000) (1,996,000) (1,118,000)
Warranty and other reserves........ 865,000 8,000 (291,000) (1,195,000) (1,405,000)
------------ ------------ ------------ ------------ ------------
Total adjustments........... (9,896,000) 1,807,000 724,000 48,861,000 49,052,000
------------ ------------ ------------ ------------ ------------
Net cash provided by
operating activities...... 6,137,000 14,361,000 26,102,000 52,956,000 54,368,000
------------ ------------ ------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures................. (16,034,000) (15,676,000) (3,406,000) (1,628,000) (2,070,000)
------------ ------------ ------------ ------------ ------------
Net cash used in investing
activities................ (16,034,000) (15,676,000) (3,406,000) (1,628,000) (2,070,000)
------------ ------------ ------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (payments) on notes
payable............................ 11,704,000 2,656,000 (11,632,000) (45,519,000) (38,670,000)
Proceeds from issuance of long-term
debt............................... 8,720,000 10,500,000 0 974,000 0
Principal payments of long-term
debt............................... (5,374,000) (3,255,000) (4,814,000) (1,283,000) (2,128,000)
Payment of loan costs................ (53,000) (248,000) 0 0 0
Payment of S corporation
distributions...................... (5,100,000) (8,338,000) (6,250,000) (5,500,000) (11,500,000)
------------ ------------ ------------ ------------ ------------
Net cash provided by (used
in) financing
activities................ 9,897,000 1,315,000 (22,696,000) (51,328,000) (52,298,000)
------------ ------------ ------------ ------------ ------------
Net change in cash.......... 0 0 0 0 0
CASH, BEGINNING OF YEAR.............. 0 0 0 0 0
------------ ------------ ------------ ------------ ------------
CASH, END OF YEAR.................... $ 0 $ 0 $ 0 $ 0 $ 0
============ ============ ============ ============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for
interest........................... $ 4,886,000 $ 4,736,000 $ 5,395,000 $ 1,059,000 $ 1,207,000
============ ============ ============ ============ ============
NONCASH INVESTING AND FINANCING
ACTIVITIES:
Capital leases originated............ $ 0 $ 3,000,000 $ 0 $ 0 $ 0
============ ============ ============ ============ ============
Capital expenditures financed with
debt............................... $ 0 $ 0 $ 675,000 $ 0 $ 0
============ ============ ============ ============ ============
</TABLE>

The accompanying notes are an integral part of these statements.

F-6
<PAGE> 50

MEADOWCRAFT, INC.

NOTES TO FINANCIAL STATEMENTS

1. BUSINESS

Meadowcraft, Inc. (the "Company") designs, manufactures and distributes a
variety of wrought iron consumer products, including outdoor and indoor
furniture and accessories, outdoor cushions and umbrellas, and garden products,
which it markets to mass merchandisers and specialty stores primarily in the
United States.

Revenue and expenses are subject to material seasonal variations. The
seasonal nature of the Company's business requires an inventory build-up during
the fall and winter months in order to meet customer demand during the spring
and summer selling seasons. The Company relies upon bank borrowings and cash
flow from operations to finance this production (see Note 3).

The Company is proceeding with an initial public offering of Common Stock
(the "Offering"). A portion of the estimated net proceeds to the Company will be
used to make an S corporation distribution, which will be declared, but not
paid, prior to the Offering. The S corporation distribution will be equal to the
amount of the Company's undistributed earnings from October 1, 1986 to May 3,
1997 which were previously taxed to its existing stockholders plus the Company's
S Corporation earnings attributable to the period from May 4, 1997 to the date
of termination of the S corporation election. This amount has not been accrued
as of May 3, 1997. The Company intends to use the balance of the net proceeds
for capital expenditures.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

FISCAL YEAR END

Prior to Fiscal 1997, the Company was on a 52/53 week year with the fiscal
year ending on the Sunday closest to the last day of April. During fiscal 1997,
the Company changed its reporting period to a fiscal year ending on the Saturday
closest to the last day of April. As a result of this change, fiscal 1997
includes 53 weeks of operations versus 52 weeks in each of fiscal 1996 and 1995.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect (1) the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and (2) the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

DUE FROM FACTOR

The Company maintains agreements with two financial institutions under
which a substantial portion of its trade accounts receivable are factored. Such
agreements provide for the factoring of accounts receivables without recourse;
therefore, the financial institutions assume all credit risk with respect to
factored customer accounts. The vast majority of the Company's factored accounts
receivable are factored with the bank which provides its $80,000,000 revolving
line of credit (see Note 3). The Company does not factor the receivables related
to four of its customers, and the related amounts are reflected in accounts
receivable in the accompanying balance sheets (see Note 10).

F-7
<PAGE> 51

MEADOWCRAFT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

INVENTORIES

Inventories are valued at first-in, first-out ("FIFO") cost which is not in
excess of market. An analysis of inventories at April 28, 1996, May 3, 1997 and
July 31, 1997 follows:

<TABLE>
<CAPTION>
APRIL 28, 1996 MAY 3, 1997 JULY 31, 1996 JULY 31, 1997
-------------- ----------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Raw materials and purchased parts... $ 7,405,000 $ 8,207,000 $ 4,680,000 $ 6,273,000
Work-in-process..................... 422,000 610,000 493,000 569,000
Finished goods...................... 11,413,000 12,655,000 5,670,000 4,748,000
----------- ----------- ----------- -----------
$19,240,000 $21,472,000 $10,843,000 $11,590,000
=========== =========== =========== ===========
</TABLE>

PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment are recorded at cost less accumulated
depreciation and amortization and include expenditures for major renewals and
betterments that substantially increase the useful lives of existing assets as
well as the net amount of interest cost associated with significant capital
additions. Interest cost incurred during fiscal 1996 and 1997 amounted to
$5,456,000 and $5,274,000, respectively, of which $438,000 and $0, respectively,
was capitalized. Maintenance and repairs are charged to expense as incurred.
Upon sale, retirement, or other disposition of these assets, the cost and
related accumulated depreciation are removed from the respective accounts, and
the related gain or loss is credited or charged to income.

Depreciation is computed using the straight-line method over the estimated
service lives of the depreciable assets as follows:

<TABLE>
<S> <C>
Buildings................................ 13 to 28 years
Machinery and equipment.................. 5 to 13 years
Furniture and fixtures................... 3 to 5 years
Leasehold improvements................... Shorter of lease term or 13 years
</TABLE>

REVENUE RECOGNITION/WARRANTY AND OTHER RESERVES

The Company recognizes sales when products are shipped. As the Company
offers up to a 36-month limited warranty on certain products, estimated warranty
costs are accrued at the time products are sold based on a historical percentage
of warranty costs to gross sales. The charge for such accrual is reflected as
returns and allowances, which reduces gross sales to net sales. Included in the
warranty reserve is an estimate for customer credits arising from co-op
advertising programs and purchased volume discounts. These amounts are accrued
based on individual customer agreements or Company rebate programs.

SELF-INSURANCE ACCRUAL

The Company is substantially self insured for workers' compensation and
health care claims. The Company purchases insurance for all workers'
compensation claims in excess of $250,000 per occurrence with an annual
aggregate stop loss limit of $1,440,000 and for all employee health care claims
in excess of $100,000 per occurrence. As self insurance claims become probable
and reasonably estimable, the estimated cost of such claims are accrued,
including related expenses. Management considers the accrued liabilities for
unsettled claims to be adequate; however, there is no assurance that the amounts
accrued will not vary from the ultimate amounts incurred upon final disposition
of all outstanding claims. As a result, periodic adjustments to the reserves
will be made as events occur which indicate changes are necessary. In the
opinion of management, based on current information, these periodic adjustments
will not be material to the Company's financial condition or results of
operations.

F-8
<PAGE> 52

MEADOWCRAFT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

DERIVATIVE FINANCIAL INSTRUMENTS

The Company, from time to time, uses interest rate swap contracts ("Swaps")
and interest rate caps ("Caps") to manage interest rate risks arising from
certain of the Company's financing sources, such as the revolving credit line
and certain long-term debt. All Swaps and Caps employed by the Company represent
end-user activities designed as hedges, and, therefore, changes in fair values
of such derivatives are not included in the results of operations. Interest
receivable or payable from such contracts is accrued and recognized as an
adjustment to interest expense related to the specific financing source being
hedged.

FAIR VALUE OF FINANCIAL INSTRUMENTS

In preparing disclosures about the fair value of financial instruments,
management has assumed that the carrying amount approximates fair value for
current financial instruments due to the short maturities of those instruments.
The estimated fair values of long-term debt instruments are based upon the
current interest rate environment and remaining term to maturity.

PRO FORMA INFORMATION

Pro forma stockholders' equity at July 31, 1997 reflects (i) $32,670,000 of
the S corporation distribution, which represents undistributed earnings from
October 1, 1986 through May 3, 1997 that were previously taxed to the existing
stockholders, and (ii) the effect of recording net deferred tax assets which
will result from the termination of the Company's S Corporation election,
amounting to approximately $2,700,000 at July 31, 1997. (See Note 7).

Prior to the Offering, the Company was taxed under the provisions of
Subchapter S of the Internal Revenue Code. As such, the taxable income of the
Company had been included in the individual income tax returns of the Company's
stockholders for income tax purposes. Accordingly, no provision for income taxes
had been provided in the Company's financial statements. Upon consummation of
the Offering, the Company intends to terminate its S Corporation election and,
as a result, the Company will become a taxable C corporation. The pro forma net
income shown on the statements of income presented herein gives effect to the
application of pro forma income taxes that would have been reported had the
Company been a C corporation subject to federal and state income taxes for all
periods presented.

Pro forma net income per share for the year ended May 3, 1997 and for the
thirteen weeks ended July 31, 1997, is calculated by dividing pro forma net
income by the sum of the weighted average number of shares of common stock
outstanding (16,000,000) and 521,000 shares of common stock that would be
required to be sold, at an assumed initial public offering price of $14.00 per
share, to pay the portion of the S corporation distribution to be paid out of
the net proceeds of the Offering in excess of fiscal 1997 earnings. Share
information reflects the 16,000-for-1 stock split described in Note 11.
Historical per share information has not been presented in view of the Company's
S Corporation status and the anticipated change in capital structure upon
completion of the Offering.

3. NOTES PAYABLE

In order to meet working capital needs, the Company maintains a variable
rate (7.48%, 7.73% and 7.71% at April 28, 1996, May 3, 1997 and July 31, 1997
respectively) revolving line of credit in the amount of $80,000,000 (see Note
12). The revolving line bears interest at the prime rate. However, the Company
has the option of converting the borrowing rate to LIBOR plus 2.04% for all or a
portion of the outstanding balance. At May 3, 1997 and July 31, 1997,
$46,196,000 and $7,526,000 were outstanding under the line of credit. Of the
amounts outstanding at May 3, 1997 and July 31, 1997, $2,196,000 and $3,526,000,
respectively, were based on the prime rate, and $44,000,000 and $4,000,000,
respectively, were based on the LIBOR rate. At May 3, 1997 and July 31, 1997,
$14,478,000 and $17,145,000, respectively, were available to be borrowed. The

F-9
<PAGE> 53

MEADOWCRAFT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

average borrowings outstanding were $33,305,000, 30,945,000, and $24,600,000,
and the maximum borrowings outstanding were $58,276,000, $59,460,000, and
$42,257,000, in fiscal 1996, 1997, and the thirteen weeks ended July 31, 1997,
respectively. The weighted average interest rate on these borrowings was
approximately 7.79%, 7.53%, and 7.87% in fiscal 1996, 1997, and the thirteen
weeks ended July 31, 1997, respectively. All bank borrowings are collateralized
by all assets of the Company, except for preexisting pledged assets.

The Company also maintains a $3,000,000 variable rate (7.75%, 8.0%, and
8.0% at April 28, 1996, May 3, 1997, and July 31, 1997, respectively) line of
credit (see Note 12). Of this amount, $3,000,000, $2,700,000, and $2,700,000
were outstanding at April 28, 1996, May 3, 1997, and July 31, 1997,
respectively. The average borrowings outstanding were $3,000,000, $2,986,000,
and $2,700,000 in fiscal 1996, 1997, and the thirteen weeks ended July 31, 1997,
respectively, and the maximum borrowings outstanding were $3,000,000 in each
fiscal year and $2,700,000 in the thirteen weeks ended July 31, 1997. The
weighted average interest rate on these borrowings was approximately 8.17%,
7.78%, and 7.73% in fiscal 1996, 1997, and the thirteen weeks ended July 31,
1997, respectively. The $3,000,000 line of credit is guaranteed by the Company's
principal stockholder.

The Company maintains an interest rate cap as a hedge against the variable
interest rate exposure on the $80,000,000 line of credit. This interest rate
cap, which expires June 1, 1999, establishes the maximum prime interest rate at
8.0% for all periods presented on varying notional amounts, which range from $0
to $30,000,000, and have been based on expected seasonal borrowings. At April
28, 1996, May 3, 1997, and July 31, 1997, the notional amounts amounted to
$30,000,000, $15,000,000 and $0, respectively. The counter-party to the interest
rate cap is the Company's primary bank. The Company believes the credit and
liquidity risk of the counter-party failing to meet its obligations is remote as
the Company settles its interest position with the bank on a current basis.
During fiscal years ended April 30, 1995, April 28, 1996, and May 3, 1997 as
well as the thirteen weeks ended July 31, 1997, the interest rate cap had no
material effect on interest expense.

F-10
<PAGE> 54

MEADOWCRAFT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. LONG-TERM DEBT

Long-term debt consists of the following at April 28, 1996, May 3, 1997 and
July 31, 1997:

<TABLE>
<CAPTION>
APRIL 28, 1996 MAY 3, 1997 JULY 31, 1997
-------------- ----------- -------------
<S> <C> <C> <C>
Term note, 8.33%, due in quarterly installments
of $450,000, plus interest, until February 28,
2001, secured by building and equipment with a
net book value of $14,074,000................. $ 8,550,000 $ 6,750,000 $ 6,300,000
Term note, 8.89%, due in quarterly installments
of $146,875, plus interest, until August 16,
2005, secured by building and equipment with a
net book value of $6,960,000.................. 5,434,000 4,847,000 4,700,000
Capitalized lease obligation, variable rates
(4.75% and 3.9% at May 3, 1997 and July 31,
1997, respectively), subject to an interest
rate swap (see below) due in semiannual
installments of $100,000 until February 1,
2011, secured by building and equipment with a
net book value of $3,817,000.................. 3,000,000 2,800,000 2,700,000
Promissory notes, variable rates (8.09% and
7.94% at May 3, 1997 and July 31, 1997,
respectively), due in quarterly installments
of $250,000 until January 1, 1999,
cross-collateralized by all assets except
preexisting pledged assets.................... 2,750,000 1,750,000 1,500,000
Term note, 7.90%, due in quarterly installments
of $200,000, plus interest, until June 30,
1999, secured by building and equipment with a
net book value of $5,570,000.................. 2,400,000 1,600,000 1,400,000
Promissory notes, 7.73% repaid in July 1997..... 1,156,000 953,000 0
Promissory note, 8.50%, due in monthly
installments through June 2, 1999, guaranteed
by the principal stockholder.................. 833,000 733,000 717,000
Promissory note, 8.00%, due in monthly
installments through May 29, 2006, secured by
equipment with a net book value of $710,000... 0 637,000 625,000
Various capital leases, repaid in fiscal 1997... 86,000 0 0
----------- ----------- -----------
24,209,000 20,070,000 17,942,000
Less amounts due within one year................ (4,790,000) (4,750,000) (4,550,000)
----------- ----------- -----------
$19,419,000 $15,320,000 $13,392,000
=========== =========== ===========
</TABLE>

During fiscal 1996, the Company entered into an interest rate swap
agreement which expires in 2011 related to its capital lease obligation covering
the entire principal balance outstanding on such obligation. The agreement is
designed to fix the interest rate at 5.85%.

The Company's debt agreements contain, among other things, certain
restrictions relating to net worth, capital expenditures, the current ratio, and
the debt service ratio. The Company was in compliance with all covenants at May
3, 1997 and July 31, 1997.

The Company's total debt obligations maturing in each of the next five
fiscal years at May 3, 1997 are as follows: $4,750,000 in 1998, $4,479,000 in
1999, $3,367,000 in 2000, $2,388,000 in 2001, $1,009,000 in 2002, and $4,077,000
thereafter.

F-11
<PAGE> 55

MEADOWCRAFT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

5. OPERATING LEASES

The Company has operating leases for office, plant, and warehouse
facilities and manufacturing and office equipment. Minimum future rental
payments for all operating leases having remaining terms in excess of one year
at May 3, 1997 are as follows:

<TABLE>
<CAPTION>
FISCAL YEAR ENDING IN:
- ----------------------
<S> <C>
1998........................................................ $ 862,000
1999........................................................ 646,000
2000........................................................ 644,000
2001........................................................ 308,000
2002........................................................ 180,000
Thereafter.................................................. 60,000
----------
$2,700,000
==========
</TABLE>

Total rental expense amounted to $1,746,000, $1,400,000, and $1,361,000 for
the years ended April 30, 1995, April 28, 1996, and May 3, 1997, respectively,
and $297,000 for the thirteen weeks ended July 31, 1997.

6. EMPLOYEE BENEFIT PLANS

The Company maintains a 401(k) Profit Sharing Plan (the "Plan") for its
salaried employees which allows these employees to make pretax contributions to
the Plan. The Plan covers all full-time salaried employees who have completed
one year of service and who are at least 21 years of age. Participants in the
Plan may voluntarily contribute from 3% to 10% of their annual compensation
within certain dollar limits as allowed by law. Company contributions to the
Plan are determined by the Company's Board of Directors and are limited to a
maximum of 10% of the employee's compensation. Contribution expense for the
years ended April 30, 1995, April 28, 1996, and May 3, 1997 amounted to $63,000,
$82,000, and $94,000, respectively and $26,000 for the thirteen weeks ended July
31, 1997.

The Company also maintains a defined benefit pension plan covering the
hourly employees of the Birmingham plants. The benefits are based on certain
Company monthly contributions for each year of credited service. The Company's
funding policy is to contribute annually no less than the minimum amount
required by ERISA and no more than the maximum amount that can be deducted for
federal income tax purposes. Contributions are intended to provide not only for
benefits attributed to service to date but also for those expected to be earned
in the future.

Net pension expense for the years ended April 30, 1995, April 28, 1996, and
May 3, 1997, and the thirteen weeks ended July 31, 1997, includes the following
components:

<TABLE>
<CAPTION>
APRIL 30, APRIL 28, MAY 3, JULY 31,
1995 1996 1997 1997
-------------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
Service cost of the current period.......... $113,000 $130,000 $158,000 $ 40,000
Interest cost on the projected benefit
obligation................................ 75,000 98,000 115,000 32,000
Actual return on assets held in the plan.... (58,000) (52,000) (64,000) (29,000)
Net amortization and deferral of prior
service cost, transition liability, and
net gain.................................. (8,000) (11,000) 4,000 7,000
-------- -------- -------- --------
Net pension expense......................... $122,000 $165,000 $213,000 $ 50,000
======== ======== ======== ========
</TABLE>

F-12
<PAGE> 56

MEADOWCRAFT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The following sets forth the funded status of the pension plan at April 30,
1995, April 28, 1996, May 3, 1997, and July 31, 1997:

<TABLE>
<CAPTION>
APRIL 30, APRIL 28, MAY 3, JULY 31,
1995 1996 1997 1997
-------------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
Accumulated benefit obligation.............. $1,201,000 $1,360,000 $1,529,000 $1,569,000
========== ========== ========== ==========
Vested accumulated benefit obligation....... 1,144,000 1,283,000 1,452,000 1,493,000
========== ========== ========== ==========
Projected benefit obligation................ 1,289,000 1,473,000 1,726,000 1,786,000
Fair value of assets held in the plan....... 1,067,000 1,040,000 1,453,000 1,515,000
---------- ---------- ---------- ----------
Excess of projected benefit obligation over
fair value of plan assets................. (222,000) (433,000) (273,000) (271,000)
Unrecognized net loss....................... 152,000 205,000 210,000 210,000
Unrecognized initial obligation............. 62,000 53,000 44,000 42,000
Unrecognized prior service cost............. 57,000 83,000 149,000 145,000
---------- ---------- ---------- ----------
Prepaid (accrued) pension cost.......... $ 49,000 $ (92,000) $ 130,000 $ 126,000
========== ========== ========== ==========
</TABLE>

Pension plan assets consist primarily of group annuity policies at April
30, 1995, April 28, 1996, May 3, 1997 and July 31, 1997. The weighted average
discount rate used to measure the projected benefit obligation and the expected
long-term rate of return on assets was 7.50% at April 30, 1995, April 28, 1996,
May 3, 1997 and July 31, 1997. The Company uses the straight-line method of
amortization for prior service cost and unrecognized gains and losses.

The Company contributes to the Retail, Wholesale, and Department Store
Union Industry Pension Plan on behalf of each employee of the plants not covered
by the aforementioned pension plan as prescribed in the Company's collective
bargaining agreements. The Company contributes $2.40 to $3.40 per week for each
full-time employee on the active payroll subject to these agreements. Pension
expense under these plans amounted to approximately $67,000, $70,000, and
$88,000 for the years ended April 30, 1995, April 28, 1996, and May 3, 1997,
respectively, and $15,000 for the thirteen weeks ended July 31, 1997.

The Company also maintains discretionary performance compensation plans
covering certain management employees as approved by the Chairman and President
of the Company. The Company's discretionary provision for these plans amounted
to $1,340,000, $1,143,000, and $1,653,000 for the years ended April 30, 1995,
April 28, 1996, and May 3, 1997, respectively, and $300,000 for the thirteen
weeks ended July 31, 1997.

The Company does not provide any additional post-retirement or
post-employment benefits to its employees.

7. INCOME TAXES

Upon consummation of the Offering, the Company intends to terminate its S
corporation election and, accordingly, will become a taxable C corporation. Upon
termination of its S corporation election, the Company will record net deferred
tax assets which at July 31, 1997 the pro forma components are as follows:

<TABLE>
<S> <C>
Depreciation................................................ $ (833,000)
Inventory................................................... 260,000
Warranty reserve............................................ 1,432,000
Payroll-related accrued expenses............................ 893,000
Other accrued expenses...................................... 912,000
----------
Pro forma deferred tax assets, net.......................... $2,664,000
==========
</TABLE>

F-13
<PAGE> 57

MEADOWCRAFT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

A summary of the components of the pro forma provision for income taxes is
as follows:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED THIRTEEN WEEKS ENDED
------------------------------------ -------------------------
APRIL 30, APRIL 28, MAY 3, JULY 31, JULY 31,
1995 1996 1997 1996 1997
---------- ---------- ---------- ------------ ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Federal:
Current.................... $6,316,000 $4,580,000 $7,658,000 $1,134,000 $1,453,000
Deferred................... (780,000) (312,000) 941,000 253,000 349,000
---------- ---------- ---------- ---------- ----------
5,536,000 4,268,000 8,599,000 1,387,000 1,802,000
---------- ---------- ---------- ---------- ----------
State:
Current.................... 611,000 448,000 748,000 111,000 144,000
Deferred................... (76,000) (31,000) 92,000 25,000 32,000
---------- ---------- ---------- ---------- ----------
535,000 417,000 840,000 136,000 176,000
---------- ---------- ---------- ---------- ----------
Pro forma provision for
income taxes............... $6,071,000 $4,685,000 $9,439,000 $1,523,000 $1,978,000
========== ========== ========== ========== ==========
</TABLE>

The provision for income taxes differs from the amounts computed by
applying federal statutory rates due to the following:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED THIRTEEN WEEKS ENDED
------------------------------------ -------------------------
APRIL 30, APRIL 28, MAY 3, JULY 31, JULY 31,
1995 1996 1997 1996 1997
---------- ---------- ---------- ------------ ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Tax provision computed at the
federal statutory rate
(35%)...................... $5,612,000 $4,394,000 $8,882,000 $1,433,000 $1,861,000
Effect of state income taxes,
net of benefits............ 348,000 271,000 546,000 88,000 114,000
Other........................ 111,000 20,000 11,000 2,000 3,000
---------- ---------- ---------- ---------- ----------
$6,071,000 $4,685,000 $9,439,000 $1,523,000 $1,978,000
========== ========== ========== ========== ==========
</TABLE>

8. CONTINGENCIES

The Company is a party to various legal proceedings incidental to its
business. In the opinion of management, after consultation with legal counsel,
the ultimate liability, if any, with respect to these proceedings will not
materially affect the financial position or results of operations of the
Company.

9. FAIR VALUE OF FINANCIAL INSTRUMENTS AND DERIVATIVE FINANCIAL
INSTRUMENTS

Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosure
About Fair Value of Financial Instruments," requires all businesses to disclose
the fair value of financial instruments, both assets and liabilities recognized
and not recognized on the balance sheet, for which it is practicable to estimate
fair value. The estimated fair value of the Company's on-balance sheet financial
instruments at July 31, 1997, approximated their carrying value at that date.

As of May 3, 1997 and July 31, 1997, and as discussed in Notes 3 and 4, the
Company is party to an interest rate cap agreement and an interest rate swap
agreement, both of which are considered derivative financial instruments. The
fair value of these instruments, which are specifically used for hedging
purposes, is the estimated amount that the Company would pay or receive if these
agreements were terminated as of May 3, 1997 and July 31, 1997. Such estimates
of fair value take into account current interest rates and the

F-14
<PAGE> 58

MEADOWCRAFT, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

present creditworthiness of the counterparties. Under the restrictions of the
bank credit agreements, the Company does not expect to cancel these agreements,
and expects them to expire as originally contracted. As of May 3, 1997 and July
31, 1997, the carrying amount of these financial instruments, which represents
amounts paid to obtain such instruments, exceeds the estimated fair value by
$127,000 and $203,000, respectively.

10. MAJOR CUSTOMERS

During the thirteen weeks ended July 31, 1997, three major customers
accounted for sales of approximately $17,146,000 of total net sales. During the
years ended April 30, 1995, April 28, 1996, and May 3, 1997 three major
customers accounted for sales of approximately $56,319,000, $55,266,000, and
$72,133,000, respectively, of total net sales. As of April 28, 1996, May 3,
1997, and July 31, 1997, the outstanding balance, included in accounts
receivable on the respective balance sheets, related to these customers was
$18,389,000, $24,615,000, and $5,700,000, respectively.

11. STOCKHOLDERS' EQUITY

On July 31, 1997, the Board of Directors approved a 16,000-for-1 stock
split of the Company's Common Stock. All share information presented herein
reflects this stock split.

On July 31, 1997, the Company adopted a Stock Option Plan reserving
1,000,000 shares of the Company's common stock for grants to executive officers,
directors, and key employees. Options to be granted will expire within ten years
after the date of grant and the option exercise price will equal the fair market
value of the common stock on the date of the grant. As of July 31, 1997, no
options had been granted under the plan.

12. SUBSEQUENT EVENTS

Effective August 1, 1997, the Company entered into an asset purchase
agreement with Virco Manufacturing Corporation to acquire all of the assets
located and in possession of Virsan, a Mexican Company and a subsidiary of
Virco, in Sonora, Mexico. The agreement stipulates cash payments for the
purchase of assets, in the amount of $2,175,000 and is expected to be primarily
funded under the Company's revolving credit agreement. Pro forma financial
information has not been provided as it would not be meaningful since customers,
products and operations of the Company will differ significantly from that of
Virsan.

On August 5, 1997, the Company revised the terms on its existing credit
agreement with its primary lender. The revised agreement allows the Company to
borrow up to an amount not to exceed $126,350,000. This credit facility is
comprised of a $90,000,000 revolving credit facility and $36,350,000 of term
loans. Interest rates on the revolving credit facility remain variable and all
borrowings continue to be collateralized by all assets of the Company, except
for preexisting pledged assets. Additionally, the Bank extended four new term
loans in the aggregate of $19,750,000 to mature August 31, 2004. These loans are
collateralized by the assets that are being constructed and acquired with the
funds provided by the Bank.

F-15
<PAGE> 59

======================================================

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY ANY SECURITY
OTHER THAN THE SHARES OF COMMON STOCK OFFERED BY THIS PROSPECTUS, NOR DOES IT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY THE SHARES OF
COMMON STOCK BY ANYONE IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR
SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF.

---------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................... 3
Risk Factors......................... 7
Use of Proceeds...................... 10
Dividend Policy...................... 11
Dilution............................. 11
Capitalization....................... 13
Selected Financial Data.............. 14
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 16
Business............................. 25
Management........................... 32
Certain Transactions................. 36
Principal Stockholders............... 36
Description of Capital Stock......... 37
Shares Eligible for Future Sale...... 38
Underwriting......................... 40
Experts.............................. 41
Legal Matters........................ 41
Additional Information............... 41
Index to Financial Statements........ F-1
</TABLE>

---------------------
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
======================================================
======================================================
3,125,000 SHARES

[LOGO]
MEADOWCRAFT, INC.
COMMON STOCK
----------------------------------
PROSPECTUS
----------------------------------
[A.G. EDWARDS & SONS, INC. LOGO]
, 1997
======================================================
<PAGE> 60

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Set forth below is an estimate of the fees and expenses to be incurred in
connection with the issuance and distribution of the shares of Common Stock, par
value $.01 per share, offered hereby.

<TABLE>
<CAPTION>
TO BE PAID
BY THE
COMPANY
----------
<S> <C>
Securities and Exchange Commission Registration Fee......... $ 16,336
NASD Filing Fee............................................. 5,890
NYSE Original Listing Fee................................... 81,100
Blue Sky Fees and Expenses.................................. 1,500
Legal Fees and Expenses..................................... 125,000
Accounting Fees............................................. 110,000
Printing and Engraving Costs................................ 75,000
Transfer Agent's Fee........................................ 2,000
Miscellaneous Expenses...................................... 8,174
--------
Total............................................. $425,000
========
</TABLE>

- ---------------

* To be filed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

DELAWARE GENERAL CORPORATION LAW

Section 145(a) of the General Corporation Law of the State of Delaware (the
"DGCL") provides that a corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorney's
fees), judgements, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.

Section 145(b) of the DGCL states that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorney's fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances

II-1
<PAGE> 61

of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.

Section 145(c) of the DGCL provides that to the extent that a director,
officer, employee or agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
subsections (a) and (b) of Section 145, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorney's
fees) actually and reasonably incurred by him in connection therewith.

Section 145(d) of the DGCL states that any indemnification under
subsections (a) and (b) of Section 145 (unless ordered by a court) shall be made
by the corporation only as authorized in the specific case upon a determination
that indemnification of the director, officer, employee or agent is proper in
the circumstances because he has met the applicable standard of conduct set
forth in subsections (a) and (b). Such determination shall be made (1) by a
majority vote of the directors who are not parties to such action, suit or
proceeding, even though less than a quorum, or (2) if there are no such
directors, or, if such directors so direct, by independent legal counsel in a
written opinion, or (3) by the stockholders.

Section 145(e) of the DGCL provides that expenses (including attorneys'
fees) incurred by an officer or director in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the corporation as authorized in Section 145. Such
expenses (including attorneys' fees) incurred by other employees and agents may
be so paid upon such terms and conditions, if any, as the board of directors
deems appropriate.

Section 145(f) of the DGCL states that the indemnification and advancement
of expenses provided by, or granted pursuant to, the other subsections of
Section 145 shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office.

Section 145(g) of the DGCL provides that a corporation shall have the power
to purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would have the power to indemnify him against such liability under the
provisions of Section 145.

Section 145(j) of the DGCL states that the indemnification and advancement
of expenses provided by, or granted pursuant to, Section 145 shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent, and shall inure to the
benefit of the heirs, executors and administrators of such a person.

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

The Amended and Restated Certificate of Incorporation (the "Restated
Certificate") of the Company provides that a director of the Company shall not
be personally liable to the Company or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i) for any breach
of the director's duty of loyalty to the Company or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL or (iv) for any
transaction from which the director derived an improper personal benefit. If the
DGCL is amended to authorize the further elimination or limitation of the
liability of directors, then the liability of a director of the Company, in
addition to the limitation on personal liability described above, shall be
eliminated or limited to the fullest extent permitted by the amended DGCL.
Further, any repeal or modification of such provision of the Restated
Certificate by the stockholders of the Company shall be prospective only, and
shall

II-2
<PAGE> 62

not adversely affect any limitation on the personal liability of a director of
the Company existing at the time of such repeal or modification.

The Restated Certificate also provides that each person who was or is made
a party or is threatened to be made a party or is involved in any threatened,
pending or completed action, suit or proceeding, whether formal or informal,
whether of a civil, criminal, administrative or investigative nature
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Company, whether the basis of such proceeding is an alleged action or
inaction in an official capacity or in any other capacity while serving as a
director or officer, shall be indemnified and held harmless by the Company to
the fullest extent permissible under Delaware law, as in effect on the date of
filing of the Restated Certificate or to such greater extent as applicable law
may thereafter permit, against all costs, charges, expenses, liabilities and
losses (including, without limitation, attorneys' fees, judgments, fines,
Employee Retirement Income Security Act of 1974 excise taxes, or penalties and
amounts paid or to be paid in settlement) reasonably incurred or suffered by
such person in connection therewith and such indemnification shall continue as
to a person who has ceased to be a director or officer and shall inure to the
benefit of his or her heirs, executors and administrators. The Restated
Certificate further provides that the Company shall pay expenses actually
incurred in connection with any proceeding in advance of its final disposition;
provided, however, that if Delaware law then requires, the payment of such
expenses incurred in advance of the final disposition of a proceeding shall be
made only upon delivery to the Company of an undertaking, by or on behalf of
such director or officer, to repay all amounts so advanced if it shall
ultimately be determined that such director or officer is not entitled to be
indemnified.

The Company may, but is not required to, provide indemnification to
employees and agents of the Company to the fullest extent permissible under
Delaware law.

The foregoing rights to indemnification conferred on directors, officers,
employees and agents are contract rights and any repeal or amendment of the
provisions in the Restated Certificate granting such rights shall not adversely
affect any right thereunder of any person existing at the time of such repeal or
amendment with respect to any act or omission occurring prior to the time of
such repeal or amendment, and, further, shall not apply to any proceeding,
irrespective of when the proceeding is initiated, arising from service of such
person prior to such repeal or amendment.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

None.

II-3
<PAGE> 63

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
*1 -- Form of Underwriting Agreement
*3.1 -- Amended and Restated Certificate of Incorporation of the
Registrant
*3.2 -- Amended and Restated Bylaws of the Registrant
*4 -- Form of Stock Certificate
*5 -- Opinion of Sirote & Permutt, P.C. regarding legality
*10.1 -- Assignment of Sublease between Champion International
Corporation, Pinson Partners and the Company, dated July 1,
1997
*10.2 -- Sublease Agreement between The Uniroyal Goodrich Tire
Company and the Company, dated September 30, 1993
*10.3 -- Amended and Restated Loan and Security Agreement, dated
August 28, 1997
*10.4 -- 1997 Stock Option Plan of the Registrant
23.1 -- Consent of Arthur Andersen LLP
*23.2 -- Consent of Sirote & Permutt, P.C. (included in Exhibit 5
above)
*24 -- Powers of Attorney (included in Page II-6)
*27 -- Financial Data Schedule
*99.1 -- Consent of T. Morris Hackney (Director Nominee)
*99.2 -- Affidavit of Registrant regarding consent of James M. Scott
(Director Nominee)
*99.3 -- Consent of Reese H. McKinney, Jr. (Director Nominee)
</TABLE>

- ---------------

* Previously filed.

(b) Financial Statements Schedules:

Schedule II -- Valuation and Qualifying Accounts

All other schedules are omitted because they are not applicable or the
requested information is shown in the Financial Statements of the Registrant or
the Notes thereto.

ITEM 17. UNDERTAKINGS

The undersigned Registrant undertakes hereby to provide to the Underwriters
at the Closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers and controlling persons of the Registrant pursuant to Item 14 hereof,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

II-4
<PAGE> 64

The undersigned Registrant further undertakes that:

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-5
<PAGE> 65

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 2 to its Registration Statement to
be signed on its behalf by the undersigned, hereunto duly authorized in the City
of Birmingham, State of Alabama, on the 22nd day of October, 1997.

MEADOWCRAFT, INC.

By: /s/ SAMUEL R. BLOUNT
------------------------------------
Samuel R. Blount
Chairman of the Board

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ SAMUEL R. BLOUNT Chairman of the Board October 22, 1997
- -----------------------------------------------------
Samuel R. Blount

/s/ WILLIAM J. MCCANNA President and Director October 22, 1997
- ----------------------------------------------------- (Principal Executive
William J. McCanna Officer)

/s/ STEVEN C. BRASWELL Vice President of October 22, 1997
- ----------------------------------------------------- Finance,
Steven C. Braswell Chief Financial
Officer and Secretary
(Principal Financial
and Accounting
Officer)
</TABLE>

II-6
<PAGE> 66
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON SUPPLEMENTAL SCHEDULE

To Meadowcraft, Inc.:

We have audited in accordance with generally accepted auditing standards, the
financial statements of Meadowcraft, Inc. (a Delaware corporation), included
in this registration statement and have issued our report dated August 22,
1997. Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedule II included in Part II of the
registration statement is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly state in all material respects the financial data required to
be set forth therin in relation to the basic financial statements taken as a
whole.

/s/ Arthur Andersen LLP
-----------------------

Birmingham, Alabama
August 22, 1997
<PAGE> 67
SCHEDULE II

MEADOWCRAFT, INC.

VALUATION AND QUALIFYING ACCOUNTS

FOR THE YEARS ENDED APRIL 30, 1995, APRIL 28, 1996,
AND MAY 3, 1997 AND THE 13-WEEKS ENDED JULY 31, 1997

<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
DESCRIPTION OF YEAR EXPENSES DEDUCTIONS YEAR

<S> <C> <C> <C> <C>
For the year ended April 30, 1995:
Warranty and other reserves $2,134,000 $6,338,000 ($5,473,000) $2,999,000

For the year ended April 28, 1996:
Warranty and other reserves $2,999,000 $6,473,000 ($6,465,000) $3,007,000

For the year ended May 3, 1997:
Warranty and other reserves $3,007,000 $4,667,000 ($4,958,000) $2,716,000

For the 13-weeks ended July 31, 1997:
Warranty and other reserves $2,716,000 $1,674,000 ($3,079,000) $1,311,000
</TABLE>

<PAGE> 68

EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C> <C> <C>
*1 -- Form of Underwriting Agreement
*3.1 -- Amended and Restated Certificate of Incorporation of the
Registrant
*3.2 -- Amended and Restated Bylaws of the Registrant
*4 -- Form of Stock Certificate
*5 -- Opinion of Sirote & Permutt, P.C. regarding legality
*10.1 -- Assignment of Sublease between Champion International
Corporation, Pinson Partners and the Company, dated July 1,
1997
*10.2 -- Sublease Agreement between The Uniroyal Goodrich Tire
Company and the Company, dated September 30, 1993
*10.3 -- Amended and Restated Loan and Security Agreement, dated
August 28, 1997
*10.4 -- 1997 Stock Option Plan of the Registrant
23.1 -- Consent of Arthur Andersen LLP
*23.2 -- Consent of Sirote & Permutt, P.C. (included in Exhibit 5
above)
*24 -- Powers of Attorney (included in Page II-6)
*27 -- Financial Data Schedule
*99.1 -- Consent of T. Morris Hackney (Director Nominee)
*99.2 -- Affidavit of Registrant regarding consent of James M. Scott
(Director Nominee)
*99.3 -- Consent of Reese H. McKinney, Jr. (Director Nominee)

(b) Financial Statements Schedules:

Schedule II - Valuation and Qualifying Accounts

All other schedules are omitted because they are not applicable or
the requested information is shown in the Financial Statements of
the Registrant or the Notes thereto.
</TABLE>

- ----------------------
* Previously filed.

<PAGE> 1
EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our reports
dated August 22, 1997 and to all references to our Firm included in or made a
part of this Registration Statement.

/s/ Arthur Andersen LLP

Birmingham, Alabama
October 21, 1997