ALBECCA INC, S-1/A, 1998-07-02

ALBECCA INC
S-1/A, 1998-07-02
MISCELLANEOUS NONDURABLE GOODS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 2, 1998

REGISTRATION NO. 333-53439

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

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

AMENDMENT NO. 1

FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
ALBECCA INC.
(Exact Name of Registrant as Specified in its Charter)

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<S> <C> <C>
GEORGIA 5199 39-1389732
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>

CRAIG A. PONZIO
CHIEF EXECUTIVE OFFICER
ALBECCA INC.
3900 STEVE REYNOLDS BOULEVARD
NORCROSS, GEORGIA 30093
(770) 279-5200
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices and Agent for Service)
------------------------

COPIES TO:

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<S> <C>
PHILIP H. MOISE, ESQ. ROBERT W. SMITH, ESQ.
JON H. KLAPPER, ESQ. MARK L. HANSON, ESQ.
NELSON MULLINS RILEY & SCARBOROUGH, L.L.P. JONES, DAY, REAVIS & POGUE
FIRST UNION PLAZA, 3500 SUNTRUST PLAZA
SUITE 1400 303 PEACHTREE STREET
999 PEACHTREE STREET, N.E. ATLANTA, GEORGIA 30308
ATLANTA, GEORGIA 30309 (404) 521-3939
(404) 817-6000
</TABLE>

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

Approximate date of commencement of proposed sale to the public: As soon as
practicable after this 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 any offering
pursuant to Rule 462(b) 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 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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
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,
check the following box. [ ]
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CALCULATION OF REGISTRATION FEE

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=================================================================================================================
TITLE OF EACH PROPOSED MAXIMUM
CLASS OF SECURITIES AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED PRICE(1)(2) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A Common Stock, $0.01 par value.......... $125,000,000 $36,875(3)
=================================================================================================================
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457. In accordance with Rule 457(o) under the
Securities Act of 1933, as amended, the number of shares being registered
and the proposed maximum offering price per share are not included in this
table.
(2) Includes shares of Class A Common Stock which the U.S. Underwriters have an
option to purchase from the Company to cover over-allotments, if any.

(3) $22,125 has been previously paid.

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 COMMISSION ACTING PURSUANT TO SAID SECTION 8(A)
MAY DETERMINE.
================================================================================
<PAGE> 2

EXPLANATORY NOTE

This Registration Statement contains two forms of Prospectus: one to be
used in connection with an offering of the Registrant's Class A Common Stock in
the United States and Canada (the "U.S. Prospectus") and one to be used in a
concurrent offering of the Registrant's Class A Common Stock outside the United
States and Canada (the "International Prospectus" and together with the U.S.
Prospectus, the "Prospectuses"). The Prospectuses are identical except for the
front cover page. The U.S. Prospectus is included herein and is followed by the
alternate front cover page to be used in the International Prospectus. The
alternate page for the International Prospectus included herein is labeled
"Alternate Page for International Prospectus." Final forms of each Prospectus
will be filed with the Securities and Exchange Commission under Rule 424(b) of
the General Rules and Regulations under the Securities Act of 1933, as amended.
<PAGE> 3

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.

PROSPECTUS (Subject to Completion)

Issued July 2, 1998

(ALBECCA LOGO)

CLASS A COMMON STOCK
------------------------

OF THE SHARES OF CLASS A COMMON STOCK BEING OFFERED, SHARES ARE BEING
OFFERED INITIALLY IN THE UNITED STATES AND CANADA BY THE U.S. UNDERWRITERS
(THE "U.S. OFFERING") AND SHARES ARE BEING OFFERED INITIALLY OUTSIDE
THE UNITED STATES AND CANADA BY THE INTERNATIONAL UNDERWRITERS (THE
"INTERNATIONAL OFFERING" AND TOGETHER WITH THE U.S. OFFERING, THE
"OFFERING"). ALL OF THE SHARES OF CLASS A COMMON STOCK OFFERED
HEREBY ARE BEING SOLD BY THE COMPANY. PRIOR TO THE OFFERING,
THERE HAS BEEN NO PUBLIC MARKET FOR THE CLASS A COMMON
STOCK OF THE COMPANY. IT IS CURRENTLY ESTIMATED THAT
THE INITIAL PUBLIC OFFERING PRICE PER SHARE WILL BE
BETWEEN $ AND $ . SEE "UNDERWRITERS"
FOR A DISCUSSION OF THE FACTORS CONSIDERED IN
DETERMINING THE INITIAL PUBLIC OFFERING PRICE.

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

APPLICATION HAS BEEN MADE TO LIST THE CLASS A COMMON STOCK ON THE NEW YORK STOCK
EXCHANGE UNDER THE SYMBOL "BEK."

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

SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR INFORMATION THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.

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

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.

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

PRICE $ A SHARE
------------------------

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UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
-------- -------------- -----------
<S> <C> <C> <C>
Per Share.................................... $ $ $
Total (3).................................... $ $ $
</TABLE>

- ------------------------
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriters."
(2) Before deducting expenses payable by the Company estimated at $ .
(3) The Company has granted to the U.S. Underwriters an option, exercisable
within 30 days of the date hereof, to purchase up to an aggregate of
additional Shares of Class A Common Stock at the Price to Public
less Underwriting Discounts and Commissions for the purpose of covering
over-allotments, if any. If the U.S. Underwriters exercise such option
in full, the total Price to Public, Underwriting Discounts and
Commissions and Proceeds to Company will be $ , $ and
$ , respectively. See "Underwriters."

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

The Shares are offered, subject to prior sale, when, as and if accepted by
the Underwriters named herein and subject to approval of certain legal matters
by Jones, Day, Reavis & Pogue, counsel for the Underwriters. It is expected that
delivery of the Shares will be made on or about , 1998 at the office
of Morgan Stanley & Co. Incorporated, New York, N.Y., against payment therefor
in immediately available funds.
------------------------

MORGAN STANLEY DEAN WITTER
DONALDSON, LUFKIN & JENRETTE
Securities Corporation
WHEAT FIRST UNION
, 1998
<PAGE> 4
Inside front cover: Photographs of certain advertisements used by the Company.
These photographs depict individuals in room settings with framed artwork on the
walls. "Albecca" logo appears in the center of this page.

Gate fold: One of the Company's advertisements featuring an individual in a room
setting with framed art work featuring a frame from the "Craig Ponzio Signature
Frame Collection."

Inside back cover depicts a photograph of a piece of custom framed artwork
incorporating one of the Company's wood mouldings along with the "Craig Ponzio"
written signature and the words "Signature Frame Collection."

Gate fold: A map of the world appears in the background with the following
pictures: (i) nine individuals representing Company team members in various
jobs; (ii) a graphic representation of the flag of each country in which the
Company has operations and (iii) a box with the following text: "Worldwide
Operations -- Serving 40,000 retail framers in 20 countries -- 22 manufacturing
plants -- 61 light manufacturing/distribution centers."

Outside back cover: shows the "Albecca" logo.
<PAGE> 5

NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED IN CONNECTION WITH ANY
OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT
CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES OF CLASS A
COMMON STOCK OFFERED HEREBY NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITY TO ANY PERSON IN ANY JURISDICTION
IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION TO SUCH PERSON.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREBY SHALL UNDER ANY
CIRCUMSTANCE IMPLY THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
DATE SUBSEQUENT TO THE DATE HEREOF.

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

UNTIL , 1998 (25 DAYS AFTER THE COMMENCEMENT OF THE OFFERING),
ALL DEALERS EFFECTING TRANSACTIONS IN THE CLASS A COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT 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.
------------------------

TABLE OF CONTENTS

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PAGE
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Prospectus Summary.......................................... 4
Risk Factors................................................ 10
S Corporation Termination................................... 15
Use of Proceeds............................................. 15
Dividend Policy............................................. 16
Dilution.................................................... 16
Capitalization.............................................. 17
Selected Consolidated Financial Data........................ 18
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 19
Business.................................................... 25
Management.................................................. 38
Principal Shareholders...................................... 42
Certain Transactions........................................ 43
Description of Capital Stock................................ 45
Certain United States Federal Tax Considerations
for Non-U.S. Holders of Class A Common Stock.............. 49
Shares Eligible for Future Sale............................. 52
Underwriters................................................ 53
Legal Matters............................................... 56
Experts..................................................... 56
Available Information....................................... 56
Index to Consolidated Financial Statements.................. F-1
</TABLE>

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CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE CLASS A COMMON
STOCK. SPECIFICALLY, THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH THE
OFFERING, AND MAY BID FOR, AND PURCHASE, SHARES OF THE CLASS A COMMON STOCK IN
THE OPEN MARKET. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITERS."
------------------------

LARSON-JUHL(R), CLARK(R) AND ARTIQUE(R) AND THE OTHER NAMES OF ALBECCA'S
PRODUCTS AND BRANDS USED IN THIS PROSPECTUS ARE TRADEMARKS THAT HAVE BEEN OR
WILL BE REGISTERED BY THE COMPANY. IN ADDITION, THE COMPANY HAS BEEN GRANTED THE
PERPETUAL RIGHT TO USE THE NAME CRAIG PONZIO(TM). SEE "MANAGEMENT."

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<PAGE> 6

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements and the related notes thereto
appearing elsewhere in this Prospectus. Unless otherwise indicated, the
information contained in this Prospectus assumes an initial public offering
price of $ per share and no exercise of the U.S. Underwriters'
over-allotment option. Unless specified to the contrary or the context clearly
implies otherwise, all references herein to "Albecca" or the "Company" shall be
deemed to include Albecca Inc. and its subsidiaries on a consolidated basis, as
well as the Company's predecessors. All share numbers in this Prospectus reflect
a 1.7-for-one stock split effected on April 27, 1998. All information herein
concerning the Company's operations gives effect to a reorganization that
occurred on June 26, 1998, in which Larson-Juhl International L.L.C., a Georgia
limited liability company and an affiliate of the Company, became a wholly-owned
subsidiary of the Company. All references herein to industry financial and
statistical information are based on trade articles, industry reports and other
sources that the Company believes to be reliable but has not independently
verified. The Company uses a 52-53 week fiscal year that ends on the last Sunday
in August. All references to a specific year in connection with the Company's
financial results refer to that specific fiscal year.

THE COMPANY

Albecca, which primarily does business under the Larson-Juhl name, is a
worldwide leader in the custom framing industry. Albecca designs, manufactures
and distributes a complete line of high quality, branded custom framing
products, including wood and metal moulding, matboard, foam board, glass,
equipment and other framing supplies. The Company's principal brands include the
"Larson-Juhl Classic Collection" and the "Craig Ponzio Signature Collection."
For over 100 years, the Company has been designing, manufacturing and
distributing custom framing products that enhance the aesthetic qualities of
prints, paintings, drawings and other art and memorabilia. By combining
traditional craftsmanship with modern manufacturing technology, Albecca creates
frames characterized by distinctive design and superior quality. Albecca has
attained its worldwide leadership position by offering a complete selection of
branded products and outstanding service to its retail custom framing customers
and, more recently, by increasing awareness of its products through consumer
advertising.

Albecca has maintained a consistent operating strategy that combines
innovative design of premium branded products, global distribution capabilities,
superior customer service, efficient, low cost manufacturing and distribution
and a complete line of quality products. This strategy has made the Larson-Juhl
brand one of the most globally recognized names in the custom framing industry.
The Company believes that consumers are placing an increased emphasis on the
home, its decor and the expression of individual style, which will contribute to
the growth of the custom framing market. To capitalize on this trend, Albecca's
growth strategy is focused on continuing to introduce premium branded product
collections, increasing sales penetration to retail custom framers, improving
profitability of its operations, increasing product and brand awareness through
consumer advertising and pursuing acquisitions of manufacturers and distributors
of custom framing products. Albecca's consistent operating strategy and focus on
profitable growth are intended to allow the Company to grow operating income
faster than net sales. Net sales increased from $137.8 million in 1993 to $354.1
million in 1997. Over the same period, operating income increased from $13.4
million to $35.6 million. During the first nine months of 1998, net sales and
operating income were $292.9 million and $27.0 million, respectively.

Albecca conducts its operations through 75 locations in 20 countries. North
American operations (United States and Canada) contributed 52% and 76% of the
Company's 1997 net sales and operating income, respectively. International
operations (primarily Europe) contributed 48% and 24% of 1997 net sales and
operating income, respectively. Albecca is a market leader in North America with
an estimated 16% market share and estimates that it holds a leading market
position in the other 18 countries it serves. In North America, Albecca operates
four moulding and frame manufacturing plants and 28 light manufacturing/
distribution centers. Internationally, the Company operates 16 moulding and
frame manufacturing plants and 33 light manufacturing/distribution centers
located in 18 different countries. The Company has completed 12

4
<PAGE> 7

acquisitions in North America since 1988 and 25 international acquisitions
beginning in 1994. In North America, Albecca's primary customers are retail
custom framers. In Europe, the Company primarily serves retail custom framers as
well as home decorating centers.

Craig Ponzio, the Company's Chairman, President, Chief Executive Officer
and principal shareholder, joined Larson Picture Frame, Inc. in 1973 and
purchased that company in 1981, when it had net sales of approximately $3
million. In 1988 Larson Picture Frame, Inc. acquired Juhl-Pacific Corporation,
creating Larson-Juhl. Following the 1981 acquisition, the Company's management
team initiated a program to expand Albecca's product lines, develop an
organizational infrastructure, acquire and consolidate manufacturers and
distributors of custom framing products and instill a culture based on the
Company's six core values. These core values are:

- Customer always comes first
- Fair and honest in all dealings
- Respect for the individual
- Excellence in products and service
- Rewards tie to performance
- Leadership by example

Building a talented management team with extensive experience in key areas
such as design, sourcing, sales, marketing, information systems, finance,
manufacturing, distribution and logistics has been central to the Company's
objective to be the worldwide leader in the custom framing industry. The
Company's seven senior managers have over 75 years of experience in the custom
framing industry. The experience of the Company's management team has been a key
factor in the growth and profitability of the Company.

INDUSTRY OVERVIEW

The Company estimates that the wholesale custom framing industry had 1997
sales to retailers of approximately $1.2 billion in North America. The Company
also estimates that 1997 sales to retailers in the rest of the world
approximated $1.2 billion. There are an estimated 20,000 custom framing retail
store fronts in North America, of which independent, non-franchised stores
represent approximately 85% and national chains, regional chains and franchised
operations comprise the balance. In North America, the Company competes with
over 300 manufacturers and distributors of custom framing products. Albecca is
one of the largest manufacturers and distributors in North America and the only
manufacturer operating a broad-based North American distribution network. The
custom framing industry in Europe is similar to that in North America, although
home decorating center chains, primarily in France and Germany, also sell custom
framing products.

OPERATING STRATEGY

Albecca has maintained a consistent operating strategy which has allowed
the Company to grow operating income faster than net sales in each fiscal year
from 1989 through 1997. The principal elements of Albecca's operating strategy
are:

Leadership in Design and Premium Branded Products. Albecca provides
consistent leadership in design and premium branded products to the custom
framing industry. With operations in 20 countries, Albecca provides products on
a local, regional and national basis that appeal to the style and design tastes
of a broad range of consumers. Albecca's design team creates new collections
with the objective of providing retail custom framers and consumers with better
designed, higher quality products. The design team uses a proprietary database
that analyzes consumer preferences and cost information to assist in developing
high quality, marketable collections. The Company markets its wood mouldings
under the "Larson-Juhl Classic Collection" and the "Craig Ponzio Signature
Collection" brand names. The "Craig Ponzio Signature Collection" contains the
Company's finest lines of wood moulding, allowing the Company to market
differentiated products to multiple segments of the custom framing industry.

5
<PAGE> 8

Global Leadership in Sales and Customer Service. Through an organization
designed to respond immediately to the needs of retail custom framers, Albecca
is a global leader in sales and customer service. The Company employs the
largest direct sales force serving the custom framing industry, with 224 sales
representatives worldwide, 110 of whom serve North American retail custom
framers. The Company's sales force visits retail custom framers regularly to
introduce new moulding collections, assist with in-store displays and provide
information on more effective merchandising, design and selling techniques. With
61 light manufacturing/distribution centers worldwide, Albecca can provide next
day shipping of virtually all customer orders. The Company's proprietary
information systems track inventory on a real-time basis to maximize
availability and optimize distribution of products. Albecca's effective
inventory management, global distribution capabilities and superior customer
service have allowed the Company to become a recognized service leader in the
custom framing industry.

Efficient, Low Cost Manufacturing and Distribution. The Company focuses on
continually reducing the costs and improving the efficiency of its manufacturing
and distribution operations while consistently providing the industry's highest
quality products and services. The Company achieves these efficiencies by
leveraging the use of its information systems, process technology, manufacturing
automation, buying power and select third-party manufacturers in order to
identify and take advantage of cost saving opportunities. As a measure of its
success, the Company's operating income margin, which was 10.1% in 1997,
increased in each fiscal year from 1989 through 1997.

Complete Line of Quality Products. Albecca designs, manufactures and
distributes a complete line of quality branded products to the custom framing
industry and believes it offers the widest variety of custom framing products in
the world. The Company's products include wood and metal moulding, matboard,
foam board, glass, equipment and other framing supplies. The Company offers over
8,000 branded products in North America and over 17,000 additional branded
products in the rest of world. The Company believes a key competitive advantage
is its ability to offer this full line of quality branded products, which
enables it to be a complete source supplier to retail custom framers.

GROWTH STRATEGY

The Company believes that the ongoing implementation of its operating
strategy combined with its growth strategy has positioned the Company to pursue
continued growth in sales and earnings. The principal elements of Albecca's
growth strategy are:

Introduce Premium, Branded Product Collections. To address changing
consumer style and design preferences, Albecca continually develops new lines of
branded custom mouldings, such as the recent introduction of the "Craig Ponzio
Signature Collection." Since 1994, the Company has designed and introduced 27
new moulding lines in North America, which represented over 30% of Albecca's
1997 North American moulding sales. During the first nine months of 1998, the
Company designed and introduced nine new moulding lines in North America.
Albecca believes its ability to design and manufacture premium, branded framing
products that meet consumers' changing tastes enables the Company to grow its
net sales faster than those of other manufacturers and distributors of custom
framing products.

Increase Sales Penetration to Retail Custom Framers. Albecca has sold
framing products to approximately 90% of the estimated 20,000 retail custom
framers in North America. However, the Company believes that approximately 75%
of these customers purchase less than 20% of their products from Albecca.
Although Albecca is a market leader in North America, the Company believes there
is substantial opportunity to increase its sales penetration to these retail
custom framers and that similar opportunities exist in certain international
markets it serves. One method the Company uses in the U.S. to increase sales to
its current customers is its Partnership Program, through which participating
retail custom framers receive a number of incentives, including pricing
discounts for volume purchases, in-store signage and displays, and direct mail
and customized consumer advertising materials, in return for their commitment to
Albecca products. In the first nine months of 1998, net sales to Partnership
Program participants represented approximately 23% of U.S. net sales. Net sales
to Partnership Program participants in the first nine months of 1998 increased
13.4% over net sales to the same participants in the comparable period of 1997.

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Improve Profitability of Operations. The Company's U.S. operations
generated an operating income margin of 15% in 1997 from a sales base of $165.5
million. Outside of the U.S., the Company generated an operating income margin
of 6% in 1997 from a sales base of $188.5 million. To continue to improve these
margins, the Company is (i) increasing the number of branded, proprietary
products it offers; (ii) developing a centralized distribution system in Europe;
(iii) leveraging the Company's buying power to reduce costs; (iv) expanding the
Partnership Program; and (v) leveraging the capabilities of its proprietary
information systems and process technologies. By taking these steps, which have
been successfully applied in its U.S. operations, the Company believes that it
will be able to continue to increase its operating income margins, particularly
in its operations outside of the U.S.

Increase Product and Brand Awareness through Consumer Advertising. Albecca
believes there are substantial benefits for the Company and the industry to
exposing consumers to the warmth and individuality that custom frames can add to
a home. The Company began a consumer advertising program in September 1996 to
build and strengthen awareness of custom framing generally, and the Company's
brands in particular, among retail custom framers, individual consumers and
decorators. This program uses magazine advertising as well as direct mail
materials and in-store promotional displays. The Company's advertisements have
had an estimated 150 million consumer exposures since September 1996 and can be
seen in publications such as Architectural Digest, Elle Decor, Gourmet, House
and Garden, House Beautiful, Metropolitan Home and Traditional Home.

Pursue Acquisitions. A key growth opportunity and core competency of the
Company is the acquisition of manufacturers and distributors of custom framing
products. Albecca's ability to identify and capitalize on cost savings and other
synergies, and to successfully integrate acquisitions, has been a key factor in
growing the Company's operating income faster than net sales in each fiscal year
from 1989 through 1997. Since 1988, Albecca has acquired 37 businesses. Albecca
has a disciplined approach to acquisitions, evaluating certain operating and
financial criteria for each candidate, including product design and quality,
geographic markets and customer segments served, management team strength and
return on invested capital. Albecca has been able to leverage its industry
leadership position, marketing and manufacturing expertise, and emphasis on its
core values to become a leading consolidator of manufacturers and distributors
of custom framing products. There are currently over 300 manufacturers and
distributors of custom framing products in North America and an additional 500
outside North America, with the smallest having estimated annual sales under $1
million and the largest having sales over $150 million. Albecca believes the
fragmented nature of the industry presents opportunities to make further prudent
acquisitions. The Company expects to enter into an agreement for a new credit
facility, which is intended to provide greater flexibility for the Company to
pursue future acquisitions. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

Albecca Inc. is a Georgia corporation whose principal executive offices are
located at 3900 Steve Reynolds Boulevard, Norcross, Georgia 30093, and its
telephone number is (770) 279-5200.

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<PAGE> 10

THE OFFERING

Class A Common Stock to be offered:

U.S. Offering............ shares

International Offering... shares

Total............ shares

Common Stock to be
outstanding after the
Offering(1)(2):

Class A Common Stock..... shares

Class B Common Stock..... shares

Total............ shares

Voting Rights.............. Each share of Class A Common Stock is entitled to
one vote, while each share of Class B Common Stock
is entitled to 10 votes. Holders of Class A Common
Stock and Class B Common Stock generally vote
together as a single class. All of the shares of
Class B Common Stock are owned by the Company's
Chairman, President and Chief Executive Officer.
See "Risk Factors -- Voting Rights of Class A and
Class B Common Stock; Control by Principal
Shareholder," "Principal Shareholders" and
"Description of Capital Stock."

Use of Proceeds............ To repay indebtedness under the Company's credit
facilities (approximately $ million) and to
repay notes payable to the Company's existing
shareholders issued in connection with the
termination of the Company's S corporation status
(approximately $60.0 million). See "S Corporation
Termination," "Use of Proceeds" and "Management's
Discussion and Analysis of Financial Condition and
Results of Operations."

Proposed New York Stock
Exchange symbol.......... BEK

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

(1) Excludes 2,600,000 shares of Class A Common Stock reserved for issuance
pursuant to the Company's stock option plan. See "Management -- 1998 Stock
Option Plan."
(2) Assumes no exercise of the U.S. Underwriters' over-allotment option.

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SUMMARY CONSOLIDATED FINANCIAL DATA

The following summary consolidated financial data is qualified by reference
to, and should be read in conjunction with, the consolidated financial
statements and the related notes thereto and other financial information
included elsewhere in this Prospectus, as well as "Management's Discussion and
Analysis of Financial Condition and Results of Operations." The summary
consolidated financial data of the Company for the fiscal years ended August 27,
1995, August 25, 1996 and August 31, 1997 and the six months ended March 1, 1998
are derived from the Company's audited consolidated financial statements. The
summary consolidated financial data for the six months ended February 23, 1997
and the nine months ended May 25, 1997 and May 31, 1998 have been derived from
the Company's unaudited consolidated financial statements which, in the opinion
of management, contain all adjustments (consisting of only normal and recurring
adjustments) necessary to present fairly the Company's financial position and
results of operations at such dates and for such periods. Historical results are
not necessarily indicative of the results to be expected in the future and
results for interim periods are not necessarily indicative of results for the
entire year.

<TABLE>
<CAPTION>
YEAR ENDED(1) SIX MONTHS ENDED NINE MONTHS ENDED
------------------------------------ ------------------------ -------------------
AUGUST 27, AUGUST 25, AUGUST 31, FEBRUARY 23, MARCH 1, MAY 25, MAY 31,
1995 1996 1997 1997 1998 1997 1998
---------- ---------- ---------- ------------ --------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.................... $225,359 $300,788 $354,058 $186,016 $199,814 $266,695 $292,869
Cost of sales................ 128,341 173,964 200,750 108,401 113,468 152,614 165,817
-------- -------- -------- -------- -------- -------- --------
Gross profit............... 97,018 126,824 153,308 77,615 86,346 114,081 127,052
Operating expenses........... 74,547 96,595 117,707 58,304 67,992 86,905 100,011
-------- -------- -------- -------- -------- -------- --------
Operating income........... $ 22,471 $ 30,229 $ 35,601 $ 19,311 $ 18,354 $ 27,176 $ 27,041
======== ======== ======== ======== ======== ======== ========
Pro forma net income(2)...... $ 10,612 $ 13,262 $ 14,864 $ 8,424 $ 7,554 $ 11,587 $ 10,973
======== ======== ======== ======== ======== ======== ========
Pro forma basic earnings per
common share...............
Pro forma basic weighted
average common shares
outstanding................
OTHER DATA:
Net cash provided by
operating activities....... $ 19,043 $ 30,640 $ 22,150 $ 13,364 $ 11,979 $ 22,496 $ 14,566
Net cash (used in) investing
activities................. (31,084) (38,099) (22,514) (16,300) (23,726) (15,814) (35,239)
Net cash provided by (used
in) financing activities... 14,068 8,282 1,504 3,516 12,390 (2,611) 22,414
EBITDA(3).................... 28,174 35,531 42,486 22,661 22,004 32,187 32,764
</TABLE>

<TABLE>
<CAPTION>
MAY 31, 1998
-------------------------
ACTUAL AS ADJUSTED(4)
-------- --------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital........................................... $ 45,463
Total assets.............................................. 257,406
Long-term debt including current maturities............... 146,141
Shareholders' equity...................................... 31,169
</TABLE>

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

(1) The Company ends its fiscal year on the last Sunday in August. The Company's
fiscal year ended August 31, 1997 was a 53-week year.
(2) On or prior to the date of this Prospectus, Albecca will terminate its
status as an S corporation. Pro forma net income represents net income had
the Company been a C corporation for the periods presented. See "S
Corporation Termination."

(3) EBITDA is defined as income before interest, taxes, depreciation and
amortization and minority interest. EBITDA is presented because the Company
believes it to be a useful indicator of a company's ability to meet debt
service and capital expenditure requirements. It is not, however, intended
as an alternative measure of operating results or cash flow from operations
(as determined in accordance with generally accepted accounting principles).
EBITDA is not necessarily comparable to similarly titled measures for other
companies and does not necessarily represent amounts of funds available for
management's discretionary use.

(4) Adjusted to give effect to the Offering and the application of the net
proceeds therefrom of approximately $ million (assuming an initial public
offering price of $ per share). Also adjusted to give effect to the
estimated final distribution of approximately $60.0 million to the Company's
existing shareholders on or prior to the date of this Prospectus. See "S
Corporation Termination" and "Use of Proceeds."

9
<PAGE> 12

RISK FACTORS

An investment in the shares of Class A Common Stock offered hereby involves
a high degree of risk. In addition to the other information in this Prospectus,
the following factors should be considered carefully in evaluating an investment
in the Class A Common Stock offered hereby. This Prospectus contains statements
which constitute "forward-looking statements" that are based upon assumptions
made by the Company's management as of the date of this Prospectus, including
assumptions about risks and uncertainties faced by the Company. These statements
appear in a number of places in this Prospectus and include all statements that
are not historical statements of fact relating to, without limitation, future
economic performance, plans and objectives of management for future operations
and projections of revenues and other financial items that are based on the
beliefs of, as well as assumptions made by and information currently known to,
the Company's management. The words "may," "would," "could," "will," "expect,"
"estimate," "anticipate," "believe," "intends," "plans" and similar expressions
and variations thereof are intended to identify forward-looking statements. The
cautionary statements set forth in this "Risk Factors" section and elsewhere in
this Prospectus identify important factors with respect to such forward-looking
statements, including certain risks and uncertainties, many of which are beyond
the Company's ability to control, that could cause actual results to differ
materially from those in such forward-looking statements.

ABILITY TO CONTINUE AND MANAGE GROWTH

As part of its growth strategy, the Company seeks to expand its market
presence and increase sales penetration to retail custom framers both in the
North American and international markets. The Company also intends to continue
to grow through strategic acquisitions of manufacturers and distributors of
custom framing products. There can be no assurance that the Company will be able
to continue to expand its market presence in its current locations or
successfully complete future acquisitions. In addition, while the Company has
increased its net sales and operating income significantly since 1993, there can
be no assurance that the Company will be able to maintain such growth. The
Company's ability to continue to grow will depend on a number of factors,
including the demand for the Company's existing and new custom framing products,
the ability to maintain sufficient profit margins and the impact of existing and
emerging competition. To accommodate growth, the Company must also recruit,
retain and develop qualified personnel, manage costs and, when needed, adapt its
infrastructure and modify its information systems and process technologies.
Activities related to the implementation of the Company's growth strategies may
at times divert management's attention from the Company's business operations,
and the costs associated with such activities may adversely affect the Company's
profitability. The Company's failure or inability to continue, or to manage, its
growth strategy successfully may have a material adverse effect on the Company's
business, financial condition and results of operations. See "Business -- Growth
Strategy."

ACQUISITION RISKS

Since 1988, the Company has acquired 37 businesses throughout North America
and the rest of the world. A substantial portion of the Company's growth in net
sales has been the result of these acquisitions. Following the Offering, the
Company intends to continue to pursue acquisitions of manufacturers and
distributors of custom framing products. The Company has a disciplined approach
to acquisitions, evaluating certain operating and financial criteria for each
candidate, including product design and quality, geographic markets and customer
segments served, management team strength and return on invested capital.
Accordingly, there can be no assurance that in the future the Company will be
able to identify acquisition candidates that meet the Company's criteria, to
enter into acquisition agreements on favorable terms, consummate any acquisition
or successfully integrate any acquired business into the Company's operations.
In addition, the Company competes for acquisition candidates with both strategic
and financial buyers, and continued consolidation in the industry may result in
fewer opportunities for acquisitions. There also can be no assurance that
adequate financing for acquisitions on acceptable terms can be arranged;
however, the Company believes that following consummation of the Offering the
Company will be in a better position to obtain such financing. Future
acquisitions may also result in potentially dilutive issuances of equity
securities, the incurrence of additional debt (under existing or new credit
facilities or through the public or private issuance of debt

10
<PAGE> 13

securities), the write-off of in-process product development and capitalized
product costs, integration costs, and the amortization of expenses related to
goodwill and other intangible assets, any of which could have a material adverse
effect on the Company's business, financial condition and results of operations.
The successful integration of acquisitions involves a number of risks, including
difficulties in the assimilation of the operations, products and personnel of
the acquired company, differing corporate cultures, the diversion of
management's attention from other business concerns and the potential loss of
key employees. Any one or more of the foregoing risks may have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business -- Growth Strategy."

DEPENDENCE ON MANAGEMENT

The Company is dependent upon the abilities and expertise of Craig Ponzio,
its Chief Executive Officer, and other key managers. The Company believes it has
developed significant depth and experience within its management; however, no
assurance can be given that the Company's business, financial condition and
results of operations would not be adversely affected if any of these key
managers ceased to be active in the business of the Company. The Company has
entered into an employment agreement with Mr. Ponzio, and maintains key man life
insurance on Mr. Ponzio in the amount of $10.0 million. See "Management."

DEPENDENCE ON THIRD-PARTY MANUFACTURERS AND SUPPLIERS

The Company is dependent upon third parties for the manufacture and supply
of a majority of its custom framing products. While the inability of a
manufacturer to ship orders of the Company's products in a timely manner or to
meet the Company's quality standards has seldom been a problem for the Company,
any increase in untimely shipments or failure to meet quality standards could
affect the Company's ability to maintain adequate inventory to meet its
customers' needs, which could have a material adverse effect on the Company's
business, financial condition and results of operations. No manufacturer or
supplier accounted for more than 8% percent of the Company's total purchases, on
a cost of goods basis, in 1997. The Company does not have supply contracts with
any of its manufacturers or suppliers; however, the Company has long-standing
relationships with many of these third parties and has historically experienced
only limited difficulty in satisfying its inventory requirements. See
"Business -- Manufacturing and Sourcing."

SHORTAGES AND CHANGES IN COSTS OF RAW MATERIALS

The Company's profitability is dependent on its ability to offer quality
custom framing products at competitive prices. Various factors beyond the
Company's control may affect the availability and/or cost of its raw materials.
While management of the Company has been able to anticipate and react to
changing costs and availability of raw materials, particularly wood for its
mouldings, to date through its price adjustments, purchasing practices and
product variation, there can be no assurance that the Company will be able to do
so in the future. The Company does not have supply contracts with any of its
suppliers of raw materials; however, the Company has long-standing relationships
with many of these suppliers and has historically experienced only limited
difficulty in satisfying its raw materials requirements. See
"Business -- Manufacturing and Sourcing."

FOREIGN CURRENCY FLUCTUATION RISKS; RISKS ASSOCIATED WITH CHANGES IN SOCIAL,
POLITICAL, ECONOMIC AND OTHER CONDITIONS AFFECTING FOREIGN OPERATIONS

Outside the U.S., the Company currently manufactures and sells products
primarily in Canada and western Europe. The manufacturing costs, profit margins
and competitive position of the Company are consequently affected by the
strength of the currencies in countries where its products are manufactured
relative to the strength of the currencies in the countries where its products
are sold. The Company's results of operations and financial condition may be
adversely affected by fluctuations in foreign currencies and by translations of
the financial statements of the Company's foreign subsidiaries from local
currencies into U.S. dollars. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources" and Note 1 of notes to the Company's consolidated financial
statements.

11
<PAGE> 14

Other risks inherent in foreign operations include changes in social,
political and economic conditions which could result in the disruption of trade
from the countries in which the Company's operations, manufacturers or suppliers
are located, the imposition of additional regulations relating to imports and
exports, the imposition of additional duties, taxes and other charges on imports
and exports or restrictions on the transfer of funds, any of which could have a
material adverse effect on the Company's business, financial condition and
results of operations.

FACTORS AFFECTING OPERATING RESULTS; POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS

The success of the Company's business depends to a significant extent on a
number of factors relating to discretionary consumer spending, including
economic conditions that affect disposable consumer income, such as employment
levels, business conditions, interest rates and taxation. Any significant
decline in such general economic conditions or uncertainties regarding future
economic prospects that affect consumer spending generally, and spending on home
decorating/improvement products specifically, could have a material adverse
effect on the Company's business, financial condition and results of operations.
Moreover, the success of the Company's business depends on consumer tastes in
custom picture framing products in particular, as well as in home decorating
products in general, which are subject to change over time. A shift in consumer
preferences away from the products, brands or styles that the Company
manufactures and distributes, or has the capability to manufacture and
distribute, could have a material adverse effect on the Company's business,
financial condition and results of operations. The Company's revenues also may
be affected by the introduction of new products by the Company's competitors.
The Company's expense levels are based, in part, on its expectations as to
future revenues. If revenue levels are below expectations, the Company may be
unable or unwilling to reduce expenses proportionately and its operating results
will likely be adversely affected.

The Company's quarterly operating results may vary in the future or
decrease significantly depending on factors such as the timing of new product
announcements or changes in pricing policies by the Company or its competitors.
The Company has limited or no control over many of these factors. As a result,
the Company believes that period-to-period comparisons of its results of
operations are not necessarily meaningful and should not be relied upon as
indicative of future performance. Due to all of the foregoing factors and the
other risks identified herein, it is possible that in some future quarter or
quarters the Company's operating results will be below the expectations of
public market analysts and investors. In such event, the price of the Company's
Class A Common Stock will likely be adversely affected.

COMPETITION

Competition is strong in the segments of the custom framing industry in
which the Company operates. The Company competes with numerous domestic and
foreign manufacturers and distributors of custom framing products. In
particular, the Company estimates that its largest competitor in the manufacture
and distribution of wood mouldings in North America is The Williamson Company.
The principal manufacturers of metal moulding are Esselte Holdings, Inc. and
Cardinal Aluminum Company, which primarily supply their products to custom
framers through distributors. The Company's business depends on its ability to
anticipate and respond to changing consumer tastes and demands by producing
marketable products, as well as on its ability to remain competitive in the
areas of quality, delivery and price. In a broader sense, the Company competes
in the larger home decorating market, where consumers may forego custom framing
and choose ready-made picture frames or framed art works, and in the larger
wholesale contract framing market, where wholesale picture framers produce
framed art works in volume for large accounts such as hotels or office
complexes. There can be no assurance that the Company will be able to maintain
its operating income margins if the competitive environment changes. See
"Business -- Competition."

INTELLECTUAL PROPERTY RISKS

The Company utilizes a number of trademarks to distinguish its brands. The
Company has registered or applied for registration of these trademarks in the
U.S. and Canada and in numerous countries in Europe, Asia and elsewhere. The
Company regards its trademarks and other property rights as valuable assets in
the marketing of its products, and on a worldwide basis, vigorously seeks to
protect them against infringement.

12
<PAGE> 15

There can be no assurance that the actions taken by the Company to establish and
protect its trademarks and other proprietary rights will be adequate to prevent
imitation of its products by others or to prevent others from seeking to block
sales of the Company's products as violative of the trademarks and other
proprietary rights of others. In addition, the laws of certain foreign countries
may not protect proprietary rights to the same extent as do the laws of the
United States. The Company also regards its moulding designs as critical to the
success of its marketing efforts, and seeks to protect those designs prior to
their introduction to the marketplace. However, after such introduction there
are no practical means to prevent others from copying or imitating such designs
or specific design elements. See "Business -- Trademarks."

NO PRIOR PUBLIC MARKET; VOLATILITY OF STOCK PRICE

Before the Offering, there has been no public market for the Class A Common
Stock or Class B Common Stock, and there can be no assurance that an active
trading market for the Class A Common Stock will develop or continue following
the Offering or that the market price of the Class A Common Stock will not
decline below the initial public offering price. The initial public offering
price for the Class A Common Stock was determined by negotiation between the
Company and the U.S. Representatives (as defined herein) based on several
factors and may not be indicative of the market price for the Class A Common
Stock after the Offering. The Company believes that various factors such as
general economic conditions and changes or volatility in the financial markets,
changing conditions in the Company's markets and quarterly or annual variations
in the Company's financial results, some of which are not necessarily related to
the Company's performance, could cause the market price of the Class A Common
Stock to fluctuate substantially. See "Underwriters."

VOTING RIGHTS OF CLASS A AND CLASS B COMMON STOCK; CONTROL BY PRINCIPAL
SHAREHOLDER

Under the Company's Amended and Restated Articles of Incorporation (the
"Articles"), each share of Class A Common Stock is entitled to one vote, while
each share of Class B Common Stock is entitled to 10 votes on all matters with
respect to which the Company's shareholders have a right to vote, including the
election of directors. Except as otherwise required by law or expressly provided
in the Articles, holders of shares of the Class A Common Stock and Class B
Common Stock vote together as a single class. After the Offering, Craig Ponzio,
Chairman and Chief Executive Officer of the Company, will beneficially own all
16,626,000 outstanding shares of Class B Common Stock, representing
approximately % of the total voting power of all classes of voting stock of
the Company. As a result, Mr. Ponzio will be able to control the outcome of
matters requiring a shareholder vote, including the election of directors, the
amendment of the Articles or of the Company's Amended and Restated Bylaws (the
"Bylaws"), and the approval of certain mergers or other significant
transactions, such as sales of substantially all of the Company's assets;
provided, however, that in certain circumstances where a proposed merger or
other significant transaction would provide disparate treatment to the holders
of Class A Common Stock and Class B Common Stock, and is to be voted on by the
Company's shareholders, then each such class of stock would be entitled to vote
on any such proposal as a separate class. Purchasers of the Class A Common Stock
in the Offering will become minority shareholders of the Company and will be
unable to control the management or business policies of the Company. Moreover,
the Company is not prohibited from engaging in transactions with its management
and principal shareholders, or with entities in which such persons are
interested. However, the Company has adopted a policy that following
consummation of the Offering, all transactions with the Company's principal
shareholders, officers or directors, or their affiliates, must be on terms which
are no less favorable to the Company than could be obtained from an unaffiliated
third party in an arm's length transaction, and any such transaction exceeding
$500,000 must be approved by a majority of the Company's independent and
disinterested directors. See "Management," "Principal Shareholders," "Certain
Transactions" and "Description of Capital Stock."

13
<PAGE> 16

MATERIAL BENEFITS TO PRINCIPAL SHAREHOLDERS

The Company intends to use the net proceeds of the Offering to, among other
things, repay approximately $60.0 million of notes payable held by the principal
shareholders. See "S Corporation Termination," "Use of Proceeds," "Principal
Shareholders" and "Certain Transactions."

SHARES ELIGIBLE FOR FUTURE SALE; POSSIBLE ADVERSE EFFECT ON MARKET PRICE

Substantially all of the outstanding shares of Class A Common Stock, as
well as shares of Class A Common Stock issuable on exercise of stock options
granted or to be granted under the Company's stock option plan, are or will be
eligible for future sale in the public market at prescribed times pursuant to
Rule 144 under the Securities Act of 1933, as amended (the "Securities Act").
Sales of such shares in the public market, or the perception that such sales may
occur, could adversely affect the market price of the Class A Common Stock or
impair the Company's ability to raise additional capital in the future through
the sale of equity securities. Upon consummation of the Offering, there will be
outstanding shares of Class A Common Stock, 16,626,000 outstanding
shares of Class B Common Stock that are convertible into an equal number of
shares of Class A Common Stock upon the occurrence of certain events, and stock
options outstanding to purchase an additional shares of Class A Common
Stock. Of the outstanding shares of Class A Common Stock, the shares
sold in the Offering ( shares if the U.S. Underwriters' over-allotment
option is exercised in full) will be freely tradable by persons other than
"affiliates" of the Company without restriction under the Securities Act. The
remaining shares of Class A Common Stock and shares of Class B
Common Stock will be "restricted" securities within the meaning of Rule 144
under the Securities Act and may not be sold in the absence of registration
under the Securities Act unless an exemption from registration is available,
including the exemptions contained in Rule 144. The Company and all current
shareholders of the Company have agreed not to sell, contract to sell, or
otherwise dispose of any shares of the Class A Common Stock or Class B Common
Stock owned by them for a period of 180 days after the date of this Prospectus
without the prior written consent of Morgan Stanley & Co. Incorporated on behalf
of the Underwriters. See "Shares Eligible for Future Sale" and "Underwriters."

POTENTIAL ANTI-TAKEOVER EFFECTS OF ARTICLES AND BYLAW PROVISIONS

The Articles and Bylaws contain certain provisions that could have the
effect of delaying, deferring or preventing a change in the control of the
Company, which may adversely affect the market price of the Class A Common Stock
or the ability of shareholders to participate in a transaction in which they
might otherwise receive a premium for their shares over the then-current market
price. In addition, the Articles authorize the Board of Directors to issue
shares of preferred stock ("Preferred Stock") in one or more series, and to
establish the rights, preferences, privileges and restrictions, including voting
rights, of such Preferred Stock without requiring shareholder approval and on
such terms as the Board of Directors may determine. Although the Company has no
present plans to issue any shares of Preferred Stock, the rights of the holders
of Class A Common Stock will be subject to, and may be adversely affected by,
the rights of holders of any Preferred Stock that may be issued in the future.
See "Description of Capital Stock."

DIVIDEND POLICY; RESTRICTIONS ON PAYMENT

The Company does not intend to declare or pay cash dividends in the
foreseeable future because it intends to retain its earnings, if any, to finance
the expansion of its business and for general corporate purposes, including
acquisitions. Any payment of future dividends will be at the discretion of the
Board of Directors and will depend upon, among other things, the Company's
earnings, financial condition, capital requirements, level of indebtedness,
contractual restrictions with respect to the payment of dividends and other
factors that the Company's Board of Directors deems relevant. In addition, the
Company's credit facilities impose certain restrictions that may limit the
Company's ability to pay dividends. See "Dividend Policy."

IMMEDIATE AND SUBSTANTIAL DILUTION

Purchasers of shares of Class A Common Stock offered hereby will experience
immediate dilution in the net tangible book value per share of Class A Common
Stock of $ per share. See "Dilution."

14
<PAGE> 17

S CORPORATION TERMINATION

In 1986 Albecca Inc. elected, for U.S. income tax purposes, to be treated
as an S corporation under the Internal Revenue Code of 1986, as amended (the
"Code"), and comparable provisions of certain state income tax laws. An S
corporation generally is not subject to income tax at the federal and state
levels (with the exception of certain states' income tax laws). Instead, income
of an S corporation is generally passed through to its shareholders and is taxed
on their personal income tax returns. As a result, since 1987 Albecca Inc.'s
income has generally not been subject to tax at the corporate level.

On or prior to the date of this Prospectus, Albecca Inc. will terminate its
status as an S corporation under the Code (the "Termination Date") and
distribute all undistributed S corporation earnings to its current shareholders.
At April 30, 1998, the undistributed S corporation earnings of Albecca Inc. were
estimated to be $66.2 million. On May 1, 1998, Albecca Inc. distributed
previously undistributed S corporation earnings to its shareholders through the
issuance of promissory notes ("S Corp Notes") in the aggregate amount of $10.5
million, bearing interest at a rate of 11% per annum and payable upon demand. In
June 1998, the S Corp Notes, plus accrued interest thereon, were paid in full.
On May 31, 1998, after giving effect to the issuance and payment of the S Corp
Notes, the undistributed S corporation earnings of Albecca Inc. were estimated
to be $57.0 million. The additional undistributed S corporation earnings
expected to be accumulated from June 1, 1998 through the Termination Date are
estimated to be $3.0 million, although the actual amount of such earnings may
vary. Albecca Inc. expects to distribute the remaining undistributed S
corporation earnings, estimated to be $60.0 million, to its shareholders through
the issuance of additional S Corp Notes prior to the consummation of the
Offering. The additional S Corp Notes are expected to be repaid in full using a
portion of the net proceeds from the Offering. Purchasers of shares of Class A
Common Stock in the Offering will not receive any portion of the distribution of
the previously undistributed S corporation earnings. See "Use of Proceeds."

The Company's shareholders have agreed to indemnify the Company should its
status as an S corporation during any portion of the period for which it claimed
such status in federal or certain state income tax filings ever be successfully
challenged. See "Certain Transactions."

In connection with the termination of its S corporation status, the Company
will report an increase in earnings, which will be recognized in the quarter
during which the Termination Date occurs, through the recognition of net
deferred tax assets (approximately $8.9 million as of May 31, 1998). See Notes
1, 5 and 12 of notes to the Company's consolidated financial statements.

USE OF PROCEEDS

The net proceeds to the Company from the Offering, assuming an initial
public offering price of $ per share and after deducting underwriting
discounts and commissions and estimated expenses, are estimated to be
approximately $ million ($ million if the U.S. Underwriters'
over-allotment option is exercised in full).

From the net proceeds of the Offering, the Company will repay approximately
$ million of the Company's outstanding indebtedness under its credit
facilities and will repay all of the outstanding S Corp Notes, together with
accrued interest thereon, which the Company estimates will in the aggregate be
$60.0 million. The indebtedness under the credit facilities bears interest at
rates ranging from 2.0% to 19.0% (as of May 31, 1998) and matures on dates
ranging from May 1999 to October 2002. Borrowings under these credit facilities
have generally been used for acquisition financing and working capital needs.
See "S Corporation Termination," "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources" and "Certain Transactions."

15
<PAGE> 18

DIVIDEND POLICY

The Company historically has made distributions to its shareholders related
to its S corporation status and the resulting tax payment obligations imposed on
its shareholders. Other than the distribution to be made to the Company's
shareholders described under "S Corporation Termination," the Company does not
intend to declare or pay cash dividends in the foreseeable future because it
intends to retain its earnings, if any, to finance the expansion of its business
and for general corporate purposes, including acquisitions. Any payment of
future dividends will be at the discretion of the Board of Directors and will
depend upon, among other things, the Company's earnings, financial condition,
capital requirements, level of indebtedness, contractual restrictions with
respect to the payment of dividends and other factors that the Company's Board
of Directors deem relevant. In addition, the Company's credit facilities impose
certain restrictions that may limit the Company's ability to pay dividends. See
"Description of Capital Stock."

DILUTION

At May 31, 1998, the net tangible book deficit of the Company was
approximately $(66,000,000) million, or $(3.88) per share of Class A Common
Stock and Class B Common Stock (after giving effect to the distribution of the
estimated $60.0 million in undistributed S corporation earnings and the
recognition of approximately $8.9 million of net deferred tax assets upon the
termination of the Company's S corporation status). See "S Corporation
Termination." The net tangible book value per share represents the amount by
which the Company's net tangible assets exceed the Company's total liabilities
divided by the number of shares of Class A Common Stock and Class B Common Stock
outstanding. After giving effect to the sale of the shares of Class A
Common Stock offered hereby and the application of the net proceeds as set forth
under "Use of Proceeds," the Company's pro forma net tangible book value as of
May 31, 1998 would have been $ million, or $ per share of Class A
Common Stock and Class B Common Stock, representing an immediate increase of
$ in net tangible book value per share to existing shareholders and an
immediate dilution of $ in net tangible book value per share to persons
purchasing shares of Class A Common Stock in the Offering. The following table
illustrates such per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price....................... $
Net tangible book value per share before the Offering..... $
Increase in net tangible book value per share attributable
to new investors.......................................
-------
Pro forma net tangible book value per share after the
Offering..................................................
-------
Dilution in net tangible book value per share to new
investors................................................. $
=======
</TABLE>

The following table sets forth as of May 31, 1998 the number of shares of
Class A Common Stock and Class B Common Stock purchased from the Company, the
total consideration paid and the average price per share paid by existing
shareholders and to be paid by the new investors purchasing shares of Class A
Common Stock offered hereby.

<TABLE>
<CAPTION>
TOTAL
SHARES PURCHASED CONSIDERATION AVERAGE
----------------- ----------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders............................ % $ % $
New investors....................................
------- ------ ------- -----
Total.................................. 100.00% 100.0%
======= ====== ======= =====
</TABLE>

16
<PAGE> 19

CAPITALIZATION

The following table sets forth the capitalization of the Company at May 31,
1998 (i) on an actual basis and (ii) as adjusted to give effect to the sale by
the Company of shares of Class A Common Stock in the Offering at the
assumed initial public offering price of $ per share and the
application of the net proceeds therefrom. See "S Corporation Termination," "Use
of Proceeds" and "Selected Consolidated Financial Data." This table should be
read in conjunction with the Company's consolidated financial statements and the
related notes thereto, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the other financial information
appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AS OF MAY 31, 1998
----------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt, including current maturities................ $146,141
Shareholders' equity:
Preferred Stock, $0.01 par value; 50,000,000 shares
authorized and no shares issued and outstanding
(actual)............................................... --
Class A Common Stock, $0.01 par value; 250,000,000 shares
authorized, 374,000 shares issued and outstanding
(actual)............................................... 4
Class B Common Stock, $0.01 par value; 100,000,000 shares
authorized, 16,626,000 shares issued and outstanding
(actual)............................................... 166
Additional paid-in capital................................ 825
Retained earnings......................................... 38,225
Cumulative foreign currency translation adjustment........ (8,051)
-------- --------
Total shareholders' equity........................ 31,169
-------- --------
Total capitalization.............................. $177,310 $
======== ========
</TABLE>

17
<PAGE> 20

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data is qualified by reference
to, and should be read in conjunction with, the consolidated financial
statements and the related notes thereto and other financial information
included elsewhere in this Prospectus, as well as "Management's Discussion and
Analysis of Financial Condition and Results of Operations." The selected
consolidated financial data of the Company for the fiscal years ended August 29,
1993, August 28, 1994, August 27, 1995, August 25, 1996 and August 31, 1997 and
the six months ended March 1, 1998 are derived from the Company's audited
consolidated financial statements. The selected consolidated financial data for
the six months ended on February 23, 1997 and the nine months ended May 25, 1997
and May 31, 1998 have been derived from the Company's unaudited consolidated
financial statements which, in the opinion of management, contain all
adjustments (consisting of only normal and recurring adjustments) necessary to
present fairly the Company's financial position and results of operations at
such dates and for such periods. Historical results are not necessarily
indicative of the results to be expected in the future and results for interim
periods are not necessarily indicative of results for the entire year.

<TABLE>
<CAPTION>
YEAR ENDED(1)
-------------------------------------------------------------------
AUGUST 29, AUGUST 28, AUGUST 27, AUGUST 25, AUGUST 31,
1993 1994 1995 1996 1997
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.................... $ 137,828 $ 157,346 $ 225,359 $ 300,788 $ 354,058
Cost of sales................ 79,785 90,804 128,341 173,964 200,750
----------- ----------- ----------- ----------- -----------
Gross profit............... 58,043 66,542 97,018 126,824 153,308
Operating expenses........... 44,643 51,008 74,547 96,595 117,707
----------- ----------- ----------- ----------- -----------
Operating income........... 13,400 15,534 22,471 30,229 35,601
Interest expense............. 1,056 1,034 4,008 6,846 9,722
Provision for income taxes... 966 1,165 2,322 3,679 3,243
Minority interest............ -- -- 97 300 146
----------- ----------- ----------- ----------- -----------
Historical net income........ $ 11,378 $ 13,335 $ 16,044 $ 19,404 $ 22,490
=========== =========== =========== =========== ===========
Historical earnings per
common share -- basic and
diluted.................... $ .67 $ .78 $ .94 $ 1.14 $ 1.32
=========== =========== =========== =========== ===========
Historical weighted average
shares outstanding -- basic
and diluted................ 17,000,000 17,000,000 17,000,000 17,000,000 17,000,000
=========== =========== =========== =========== ===========

Income before pro forma
provision for income
taxes...................... $ 11,378 $ 13,335 $ 16,044 $ 19,404 $ 22,490
Pro forma provision for
income taxes............... 4,218 4,925 5,432 6,142 7,626
----------- ----------- ----------- ----------- -----------
Pro forma net income(2)...... $ 7,160 $ 8,410 $ 10,612 $ 13,262 $ 14,864
=========== =========== =========== =========== ===========
Pro forma basic earnings per
common share -- basic and
diluted.................... $
===========
Pro forma basic weighted
average common shares
outstanding -- basic.......
===========
-- diluted........
===========
OTHER DATA:
Net cash provided by
operating activities....... $ 12,044 $ 21,298 $ 19,043 $ 30,640 $ 22,150
Net cash (used in) investing
activities................. (2,422) (12,023) (31,084) (38,099) (22,514)
Net cash (used in) provided
by financing activities.... (9,472) (8,899) 14,068 8,282 1,504
EBITDA(3).................... 15,102 17,807 28,174 35,531 42,486

<CAPTION>
SIX MONTHS ENDED NINE MONTHS ENDED
-------------------------- -------------------------
FEBRUARY 23, MARCH 1, MAY 25, MAY 31,
1997 1998 1997 1998
------------ ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.................... $ 186,016 $ 199,814 $ 266,695 $ 292,869
Cost of sales................ 108,401 113,468 152,614 165,817
----------- ----------- ----------- -----------
Gross profit............... 77,615 86,346 114,081 127,052
Operating expenses........... 58,304 67,992 86,905 100,011
----------- ----------- ----------- -----------
Operating income........... 19,311 18,354 27,176 27,041
Interest expense............. 4,728 4,713 7,051 7,472
Provision for income taxes... 1,657 1,710 2,194 2,575
Minority interest............ 34 358 103 377
----------- ----------- ----------- -----------
Historical net income........ $ 12,892 $ 11,573 $ 17,828 $ 16,617
=========== =========== =========== ===========
Historical earnings per
common share -- basic and
diluted.................... $ .76 $ .68 $ 1.05 $ .98
=========== =========== =========== ===========
Historical weighted average
shares outstanding -- basic
and diluted................ 17,000,000 17,000,000 17,000,000 17,000,000
=========== =========== =========== ===========
Income before pro forma
provision for income
taxes...................... $ 12,892 $ 11,573 $ 17,828 $ 16,617
Pro forma provision for
income taxes............... 4,468 4,019 6,241 5,644
----------- ----------- ----------- -----------
Pro forma net income(2)...... $ 8,424 $ 7,554 $ 11,587 $ 10,973
=========== =========== =========== ===========
Pro forma basic earnings per
common share -- basic and
diluted.................... $ $
=========== ===========
Pro forma basic weighted
average common shares
outstanding -- basic.......
=========== ===========
-- diluted........
=========== ===========
OTHER DATA:
Net cash provided by
operating activities....... $ 13,364 $ 11,979 $ 22,496 $ 14,566
Net cash (used in) investing
activities................. (16,300) (23,726) (15,814) (35,239)
Net cash (used in) provided
by financing activities.... 3,516 12,390 (2,611) 22,414
EBITDA(3).................... 22,661 22,004 32,187 32,764
</TABLE>

<TABLE>
<CAPTION>
AUGUST 29, AUGUST 28, AUGUST 27, AUGUST 25, AUGUST 31, MARCH 1,
1993 1994 1995 1996 1997 1998
----------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.............. $ 22,458 $ 24,615 $ 32,936 $ 39,456 $ 43,302 $ 49,459
Total assets................. 42,739 58,458 122,781 190,168 208,689 243,500
Long-term debt, including
current maturities......... 9,226 14,067 53,969 93,062 108,726 132,627
Shareholders' equity......... 21,619 26,583 29,106 35,343 37,313 39,866

<CAPTION>
MAY 31,
1998
-----------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital.............. $ 45,463
Total assets................. 257,406
Long-term debt, including
current maturities......... 146,141
Shareholders' equity......... 31,169
</TABLE>

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

18
<PAGE> 21

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

The following discussion and analysis should be read in conjunction with
the "Selected Consolidated Financial Data" and the Company's consolidated
financial statements and the related notes thereto which are included elsewhere
in this Prospectus. In this "Management's Discussion and Analysis of Financial
Condition and Results of Operations", all references to the Company's
international operations ("International") include all of Albecca's operations
outside of the U.S. The Company uses a 52-53 week fiscal year ending on the last
Sunday in August. Accordingly, fiscal years 1995, 1996 and 1997 ended on August
27, 1995, August 25, 1996 and August 31, 1997, respectively. Moreover, fiscal
1997 was a 53-week year.

OVERVIEW

Albecca is a worldwide leader in the custom framing industry, designing,
manufacturing and distributing high quality, branded custom framing products,
including wood and metal moulding, matboard, foam board, glass, equipment and
other framing supplies. The Company was purchased by its current Chairman and
Chief Executive Officer, Craig Ponzio, in 1981 and since then has profitably
grown net sales every year. In each fiscal year from 1989 through 1997, Albecca
achieved its goal of growing operating income faster than net sales through
consistent implementation of its operating and growth strategies. Over the last
five years, net sales have increased by a compound annual growth rate of 28.9%,
from $137.8 million in 1993 to $354.1 million in 1997. Operating income
increased by a compound annual growth rate of 30.0% over the same period, from
$13.4 million in 1993 to $35.6 million in 1997. The increase in operating
income, on a percentage basis, was greater than the percentage increase in net
sales primarily as a result of the Company's efforts to manage its product costs
and reduce operating expenses as a percentage of net sales. During the first
nine months of 1998, net sales increased 9.8% to $292.9 million compared to the
first nine months of 1997. Operating income, after excluding non-recurring costs
of $2.9 million, increased 10.2% to $29.9 million in the first nine months of
1998 compared to the same 1997 period. See "-- Results of Operations."

Albecca's net sales consist primarily of sales of branded custom framing
products to independent retail custom framers and franchise operations. With
operations in 20 countries, Albecca's net sales are geographically diversified.
U.S. customers accounted for 68.2%, 54.0%, 46.7% and 47.5% of net sales in 1995,
1996 and 1997 and the first nine months of 1998, respectively. International
customers accounted for 31.8%, 46.0%, 53.3% and 52.5% of net sales in 1995, 1996
and 1997 and the first nine months of 1998, respectively. A key growth
opportunity for Albecca has been the acquisition of other manufacturers and
distributors of custom framing products. The Company has completed nine
acquisitions in the U.S. since 1988 and 28 acquisitions outside of the U.S.
since 1989, 27 of which occurred since 1994. Of these acquisitions, Albecca
completed six in 1995, ten in 1996, six in 1997 (all of which were in the first
nine months), and six in the first nine months of 1998.

Albecca's cost of sales for manufactured goods consists primarily of the
cost of raw materials, primarily lumber, direct labor and the overhead
associated with the manufacturing processes. The Company's cost of sales for
products purchased for resale primarily consists of the cost of the product and
the related freight costs. The cost of the Company's sampling program, through
which it provides moulding samples to retail custom framers, is also included in
cost of sales. Albecca's operating expenses include the expenses associated with
the Company's customer service, marketing, selling, distribution processes and
general and administrative support.

Albecca Inc. has been an S corporation under the Code since 1987 and
Larson-Juhl International L.L.C. has been a limited liability company since
inception. Therefore, neither has been subject to federal and certain state
income taxes. The provision for income taxes that the Company historically has
recorded has been primarily for certain state and foreign income taxes. On or
prior to the date of this Prospectus, the Company will terminate its S
corporation status and thereafter be taxed as a C corporation for federal and
state income tax purposes, as well as for foreign income tax purposes. See "S
Corporation Termination."

19
<PAGE> 22

RESULTS OF OPERATIONS

The following table sets forth certain consolidated statements of
operations data as a percentage of net sales for the periods indicated:

<TABLE>
<CAPTION>
FOR THE NINE MONTHS
FOR THE YEARS ENDED ENDED
------------------------------------ -------------------------
AUGUST 27, AUGUST 25, AUGUST 31, MAY 31, MAY 31,
1995 1996 1997 1997 1998
---------- ---------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales........................ 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales.................... 56.9 57.8 56.7 57.2 56.6
----- ----- ----- ----- ------
Gross profit................... 43.1 42.2 43.3 42.8 43.4
Operating expenses............... 33.1 32.1 33.2 32.6 34.1
----- ----- ----- ----- ------
Operating income............... 10.0 10.1 10.1 10.2 9.3
Interest expense................. 1.8 2.2 2.8 2.7 2.6
----- ----- ----- ----- ------
Income before provision for
income taxes and minority
interest.................... 8.2 7.9 7.3 7.5 6.7
Provision for income taxes....... 1.0 1.2 .9 .8 .9
Minority interest................ .1 .1 -- -- .1
----- ----- ----- ----- ------
Net income before pro forma
provision for income
taxes....................... 7.1 6.6 6.4 6.7 5.7
Pro forma provision for income
taxes.......................... 2.4 2.2 2.1 2.2 1.9
----- ----- ----- ----- ------
Pro forma net income........... 4.7% 4.4% 4.3% 4.5% 3.8%
===== ===== ===== ===== ======
</TABLE>

First Nine Months of 1998 Compared to First Nine Months of 1997

Net Sales. Net sales increased $26.2 million, or 9.8%, to $292.9 million
for the first nine months of 1998 from $266.7 million in the comparable period
in 1997. This increase is primarily a result of the acquisition of six
manufacturers and distributors of custom framing products during the first nine
months of 1998 and the expansion of the Company's lines of premium custom frame
mouldings, offset by changes in currency. Currency fluctuations in the first
nine months of 1998 reduced sales by 2.2%, primarily due to a strengthening of
the U.S. dollar against the French Franc, German Mark and Dutch Guilder. In
constant currency terms, net sales increased by 12.3% in the first nine months
of 1998 compared to the same period in 1997. U. S. net sales increased 11.7% in
the first nine months of 1998 compared with the same period in 1997 and, on a
constant currency basis, International net sales increased 12.8% in the same
period. The increase in U.S. net sales resulted from the acquisition of four
distributors of custom framing products and a 10.3% increase in net sales to
independent custom framing retailers, including a 13.4% increase in sales to
Partnership Program participants. These increases were offset by a decline in
net sales to framing departments of craft chains. The increase in International
net sales resulted from the acquisition of two manufacturers and distributors of
custom framing products.

Gross Profit. Gross profit margin increased to 43.4% for the first nine
months of 1998 from 42.8% in the comparable period in 1997. Gross profit
increased $13.0 million, or 11.4%, to $127.1 million for the first nine months
of 1998 from $114.1 million in the comparable period in 1997. In the U.S., gross
profit margin was 45.4% for both the first nine months of 1998 and the
comparable period in 1997. Gross profit margin remained constant in part because
an improvement in the product mix, with increased sales of products that
comprise the "Craig Ponzio Signature Collection," was offset by a 9.5% increase
in the cost of the Company's sampling program. In addition, gross profit margins
on products sold by acquired businesses were lower than those of the Company's
existing products, thus further offsetting the improvement in product mix.
International's gross profit margin increased to 41.5% for the first nine months
of 1998 from 40.5% in the comparable period in 1997 primarily due to the
Company's success in leveraging its buying power with existing suppliers,
sourcing of products from additional vendors and the consolidation of certain
international activities, including distribution centers and manufacturing
facilities.

20
<PAGE> 23

Operating Expenses. Operating expenses increased $13.1 million, or 15.1%,
to $100.0 million for the first nine months of 1998 from $86.9 million in the
comparable period in 1997. Operating expenses as a percentage of net sales
increased to 34.1% for the first nine months of 1998 from 32.6% in the
comparable period in 1997. The increase in operating expenses is primarily
attributable to the acquisition of six manufacturers and distributors of custom
framing products during the first nine months of 1998 and operating expenses
from the six acquisitions completed during 1997. In the U.S., operating expenses
as a percentage of net sales increased to 33.1% in the first nine months of 1998
from 32.0% in the comparable period in 1997. This increase was primarily due to
a 19.9% increase in spending for marketing programs, including the consumer
advertising program, as well as $1.7 million of non-recurring costs associated
with the integration of the acquisition of three distributors of custom framing
products and with upgrading the Company's information systems (including Year
2000 compliance), offset by improved efficiencies throughout its U.S.
distribution network. International's operating expenses as a percentage of net
sales increased to 35.1% in the first nine months of 1998 from 33.1% in the
comparable period in 1997 primarily due to the acquisitions of two manufacturers
and distributors of custom framing products which had higher operating expenses
as a percentage of net sales, as well as $1.2 million in non-recurring costs
primarily related to the integration of existing and acquired facilities.

Interest Expense. Interest expense increased $.4 million, or 6.0%, to $7.5
million for the first nine months of 1998 from $7.1 million in the comparable
period in 1997. The increase in interest expense is primarily due to $28.0
million of additional indebtedness incurred in connection with the acquisition
of six manufacturers and distributors of custom framing products during the
first nine months of 1998.

Provision for Income Taxes. Provision for income taxes increased $.4
million, or 17.4%, to $2.6 million for the first nine months of 1998 from $2.2
million for the comparable period in 1997. Provision for income taxes as a
percentage of net sales was .9% for the first nine months of 1998 and .8% for
the comparable period in 1997.

Net Income Before Pro Forma Provision for Income Taxes. For the reasons
set forth above, particularly the increase in interest expense, net income
before pro forma provision for income taxes decreased by $1.2 million, or 6.8%,
to $16.6 million for the first nine months of 1998 from $17.8 million for the
comparable period in 1997. Net income before pro forma provision for income
taxes as a percentage of net sales decreased to 5.7% for the first nine months
of 1998 from 6.7% for the comparable period in 1997.

1997 Compared to 1996

Net Sales. Net sales increased $53.3 million, or 17.7%, to $354.1 million
for 1997 from $300.8 million in 1996. This increase is primarily a result of the
acquisition of six manufacturers and distributors of custom framing products in
1997 and the expansion of the Company's lines of premium custom frame mouldings,
offset by changes in currency. Currency fluctuations in 1997 reduced sales by
3.1%, primarily due to a strengthening of the U.S. dollar against the French
Franc and Dutch Guilder. In constant currency terms, excluding the 53-week
impact of 1997, net sales increased by 19.2% in 1997 compared to 1996. U.S. net
sales increased 1.9% in 1997 from 1996 and, on a constant currency basis,
International net sales increased 46.1% in the same period. The increase in U.S.
net sales is primarily due to a 4.8% increase in net sales to independent custom
framing retailers, including a 16.6% increase in sales to Partnership Program
participants, offset by a decline in net sales to framing departments of craft
chains. The increase in International net sales resulted primarily from the
acquisition of six manufacturers and distributors of custom framing products.

Gross Profit. Gross profit margin increased to 43.3% in 1997 from 42.2% in
1996. Gross profit increased $26.5 million, or 20.9%, to $153.3 million in 1997
from $126.8 million in 1996. In the U.S., gross profit margin increased to 46.7%
in 1997 from 44.0% in 1996. This increase was primarily the result of an
improvement in the product mix with increased sales of products that currently
comprise the "Craig Ponzio Signature Collection," offset by a 16.0% increase in
the cost of the Company's sampling program. International's gross profit margin
increased to 40.3% in 1997 from 40.0% in 1996. The six acquisitions completed in
1997 did not have a significant impact on gross margin.

Operating Expenses. Operating expenses increased $21.1 million, or 21.9%,
to $117.7 million in 1997 from $96.6 million in 1996. Operating expenses as a
percentage of net sales increased to 33.2% in 1997 from 32.1% in 1996. The
increase in operating expenses is primarily attributable to the acquisition of
six

21
<PAGE> 24

manufacturers and distributors of custom framing products during 1997, a full
year of operating expenses from the 10 acquisitions completed during 1996 and a
$1.7 million investment in the U.S. consumer advertising program which commenced
in September 1996. In the U.S., operating expenses as a percentage of net sales
increased to 31.9% in 1997 compared to 31.0% in 1996. This increase was
primarily due to the investment in the U.S. consumer advertising program, offset
by improved efficiencies throughout its U.S. distribution network.
International's operating expenses as a percentage of net sales increased to
34.4% in 1997 from 33.4% in 1996 primarily due to acquisition of six
manufacturers and distributors of custom framing products which had higher
operating expenses as a percentage of net sales.

Interest Expense. Interest expense increased $2.9 million, or 42.0%, to
$9.7 million in 1997 from $6.8 million in 1996. The increase in interest expense
is primarily due to $18.4 million of additional indebtedness incurred in
connection with the acquisition of six manufacturers and distributors of custom
framing products during 1997.

Provision for Income Taxes. Provision for income taxes decreased $.4
million, or 11.9%, to $3.2 million in 1997 from $3.7 million in 1996. Provision
for income taxes as a percentage of sales was .9% in 1997 compared to 1.2% in
1996.

Net Income Before Pro Forma Provision for Income Taxes. For the reasons
set forth above, net income before pro forma provision for income taxes
increased $3.1 million, or 15.9%, to $22.5 million in 1997 from $19.4 million in
1996. Net income before pro forma provision for income taxes as a percentage of
net sales decreased to 6.4% in 1997 from 6.5% in 1996.

1996 Compared to 1995

Net Sales. Net sales increased $75.4 million, or 33.5%, to $300.8 million
for 1996 from $225.4 million in 1995. This increase is primarily a result of the
acquisition of 10 manufacturers and distributors of custom framing products in
1996 and the expansion of the Company's lines of premium custom frame mouldings,
offset by changes in currency. Currency fluctuations in 1996 reduced sales by
.5%, primarily due to a strengthening of the U.S. dollar against the French
Franc, British Pound and Dutch Guilder. In constant currency terms, net sales
increased by 34.2% in 1996 compared to 1995. U.S. net sales increased 5.7% in
1996 from 1995 and, on a constant currency basis, International net sales
increased 96.4% in the same period. The increase in U.S. net sales is primarily
due to a 3.4% increase in net sales to independent custom framing retailers. The
increase in International net sales primarily resulted from the acquisition of
10 manufacturers and distributors of custom framing products and the expansion
of its existing customer base.

Gross Profit. Gross profit margin decreased to 42.2% in 1996 from 43.1% in
1995. Gross profit increased $29.8 million, or 30.7%, to $126.8 million in 1996
from $97.0 million in 1995. In the U.S., gross profit margin increased to 44.0%
in 1996 from 42.7% in 1995. This increase was primarily the result of an
improvement in the product mix with increased sales of products that currently
comprise the "Craig Ponzio Signature Collection," as well as the ability to
leverage buying power and sourcing of products. International's gross profit
margin decreased to 40.0% in 1996 from 43.8% in 1995 primarily due to the
acquisition of six manufacturers and distributors of custom framing products
which had lower gross profit margins.

Operating Expenses. Operating expenses increased $22.0 million, or 29.6%,
to $96.6 million in 1996 from $74.5 million in 1995. Operating expenses as a
percentage of net sales decreased to 32.1% in 1996 from 33.1% in 1995. The
increase in operating expenses is primarily attributable to the acquisition of
10 manufacturers and distributors of custom framing products during 1996 and a
full year of operating expenses from six acquisitions completed during 1995. In
the U.S., operating expenses as a percentage of net sales remained relatively
constant at 31.0% in 1996 compared to 30.8% in 1995. International's operating
expenses as a percentage of net sales decreased to 33.4% in 1996 from 38.0% in
1995 due to the lower operating expenses as a percentage of net sales of the 10
acquisitions completed in 1996 and improved efficiencies.

Interest Expense. Interest expense increased $2.8 million, or 70.8%, to
$6.8 million in 1996 from $4.0 million in 1995. The increase in interest expense
is primarily due to $34.1 million of additional indebtedness incurred in
connection with the acquisition of 10 manufacturers and distributors of custom
framing products in 1996.

22
<PAGE> 25

Provision for Income Taxes. Provision for income taxes increased $1.4
million, or 58.4%, to $3.7 million in 1996 from $2.3 million in 1995. Provision
for income taxes as a percentage of net sales was 1.2% in 1996 compared to 1.0%
in 1995.

Net Income Before Pro Forma Provision for Income Taxes. For the reasons
set forth above, net income before pro forma provision for income taxes
increased $3.4 million, or 20.9%, to $19.4 million in 1996 from $16.0 million in
1995. Net income before pro forma provision for income taxes as a percentage of
net sales decreased to 6.5% in 1996 from 7.1% in 1995.

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal funding requirements are to finance working capital
(primarily inventory and receivables), acquisitions of manufacturers and
distributors of custom framing products, and capital expenditures. Historically,
the Company has relied on cash flow from operations and its credit facilities to
fund these requirements.

Operating Activities. Net cash provided by operating activities decreased
to $14.6 million in the first nine months of 1998 from $22.5 million in the
first nine months of 1997. This decrease was due to changes in operating assets
and liabilities, primarily an increase in accounts receivable resulting from
increased net sales, offset by improved operating results during the first nine
months of 1998. Net cash provided by operating activities decreased by $8.5
million to $22.2 million in 1997 compared to 1996. This decrease was a result of
changes in operating assets and liabilities, primarily a decrease in accounts
payable and accrued liabilities and an increase in inventories, offset by
improved operating results during 1997. Net cash provided by operating
activities in 1996 increased by $11.6 million over 1995 to $30.6 million. This
increase is the result of improved operating results and changes in operating
assets and liabilities, primarily a decrease in inventories.

The Company leases most of its manufacturing and distribution facilities
under operating leases. Total rent payments were $6.6 million, $7.4 million,
$6.5 million and $5.9 million for the first nine months of 1998, and for 1997,
1996 and 1995, respectively. Future minimum annual rent under non-cancelable
leases are $1.6 million for the fourth quarter of 1998, $4.6 million for 1999,
$2.8 million for 2000, $1.7 million for 2001 and $672,000 for 2002. See
"Business -- Manufacturing and Sourcing," "-- Distribution," "-- Properties and
Facilities," and Note 9 of notes to the Company's consolidated financial
statements.

Investing Activities. Net cash used in investing activities is primarily
used for the acquisition of manufacturers and distributors of custom framing
products. During the first nine months of 1998, Albecca invested $28.0 million
for the acquisition of six manufacturers and distributors of custom framing
products. In 1997, acquisition expenditures of $18.4 million decreased by $15.7
million from 1996 expenditures, primarily resulting from a lower level of
acquisition activity in 1997. Acquisition expenditures in 1996 were $34.1
million or $9.2 million greater than those in 1995.

Purchases of property, plant and equipment were approximately $6.6 million,
$7.7 million, $5.5 million and $5.3 million for the first nine months of 1998,
and for 1997, 1996 and 1995, respectively. Historically, capital expenditures
have been, and future capital expenditures are anticipated to be, primarily to
support expansion of the Company's operations and management information
systems. The Company's capital expenditures over the next several years, as a
percentage of its net sales, are expected to be generally consistent with those
of the past three fiscal years.

Financing Activities. The Company has generally financed acquisitions of
manufacturers and distributors of custom framing products with cash flow from
operations and borrowings under its credit facilities. Prior to the Offering,
the Company's credit facilities (the "Existing Credit Facilities") consisted of
a $100 million multi-currency credit facility and a series of foreign credit
facilities used to finance working capital needs and acquisitions in the
respective countries. As of May 31, 1998, the Company had an aggregate of
approximately $135 million outstanding under the Existing Credit Facilities. The
Company intends to use approximately $ million of the net proceeds of the
Offering and $ million in borrowings under the new credit facility described
below to repay all of the outstanding amounts under the Existing Credit
Facilities. See "Use of Proceeds."

Albecca has received a commitment letter from a financial institution,
whereby the financial institution has proposed to arrange for a $225 million,
five-year multi-currency senior credit facility (the "New Credit

23
<PAGE> 26

Facility"). The Company expects to enter into the New Credit Facility
simultaneously with or within a short time after the closing of the Offering.
The New Credit Facility is expected to mature on September 1, 2003. Interest
will be payable, at the Company's option, at a base rate or at LIBOR plus an
interest margin. The New Credit Facility will allow the Company to secure senior
subordinated debt. The agreement for the New Credit Facility is expected to
contain customary representations and warranties, covenants and events of
default for bank financings for borrowers similar to the Company, including
covenants regarding maintenance of net worth and leverage ratios, limitations on
indebtedness and incurrences of liens, and restrictions on acquisitions, sale of
assets (outside the normal course of business), and dividends. Mr. Ponzio and
entities related to him will be obligated under the New Credit Facility to
maintain a specified minimum percentage of the voting power of the Common Stock.
The Company believes that cash from ongoing operations and funds available under
its credit facilities will be sufficient to satisfy the Company's capital
requirements for at least the next 18 months.

The Company from time to time reviews and will continue to review
acquisition opportunities as well as changes in the capital markets. If the
Company were to consummate a significant acquisition or elect to take advantage
of favorable opportunities in the capital markets, the Company may supplement
availability or revise the terms under its credit facilities or undertake public
or private offerings of equity or debt securities.

RECENT DEVELOPMENTS

In June 1998, the Company decided to close its plastics moulding
manufacturing facility located in the United Kingdom. The Company's net sales of
plastic mouldings from such plant for the 12 months ended May 31, 1998 were
approximately $3.3 million. The Company anticipates that it will incur a
restructuring charge in the fourth quarter of 1998 associated with this closure
of approximately $2 million to $4 million. Additionally, during the fourth
quarter of 1998, the Company decided to restructure and reorganize its
operations in Greece, which had net sales for the twelve months ended May 31,
1998 of approximately $750,000. The restructuring charge, which will include
writedowns of inventory, accounts receivable and other assets, is expected to be
approximately $800,000.

EXCHANGE RATES

The Company is affected by the movement of currencies in the 19 foreign
countries in which it operates. The Company's results of operations and
financial condition may be adversely affected by fluctuations in foreign
currencies and by translations of the financial statements of the Company's
International operations from local currencies into U.S. dollars. The Company
addresses this exposure by financing most funding needs in the applicable
foreign currencies. In addition, the exposure is further mitigated by each of
the International operations transacting business primarily in its local
currency.

YEAR 2000 COMPLIANCE

Year 2000 compliance concerns the ability of certain computerized
information systems to properly recognize date sensitive information as the year
2000 approaches. Systems that do not recognize or properly treat such
information may cause systems to process critical financial and operational
information incorrectly. The Company believes that substantially all of its
information systems are Year 2000 compliant and plans to replace or upgrade
non-compliant systems prior to February 1999. The Company does not believe that
additional costs to be incurred with Year 2000 compliance will have a material
impact on the Company's financial condition or results of operations.

RECENT ACCOUNTING PRONOUNCEMENTS

For a discussion of the impact of recent accounting pronouncements, see the
Company's consolidated financial statements and the related notes thereto which
are included elsewhere in this Prospectus.

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<PAGE> 27

BUSINESS

OVERVIEW

Albecca, which primarily does business under the Larson-Juhl name, is a
worldwide leader in the custom framing industry. Albecca designs, manufactures
and distributes a full range of high quality, branded custom framing products,
including wood and metal moulding, matboard, foam board, glass, equipment and
other framing supplies. The Company's principal brands include the "Larson-Juhl
Classic Collection" and the "Craig Ponzio Signature Collection." For over 100
years, the Company has been designing, manufacturing and distributing custom
framing products that enhance the aesthetic qualities of prints, paintings,
drawings and other art and memorabilia. By combining traditional craftsmanship
with modern manufacturing technology, Albecca creates frames characterized by
distinctive design and superior quality. Albecca has attained its worldwide
leadership position by offering a complete selection of branded products and
outstanding service to its retail custom framing customers and more recently by
increasing awareness of its products through consumer advertising.

Albecca has maintained a consistent operating strategy that combines
innovative design of premium branded products, global distribution capabilities,
superior customer service, efficient, low cost manufacturing and distribution
and a full line of quality products. This strategy has made the Larson-Juhl
brand one of the most globally recognized names in the custom framing industry.
The Company believes that consumers are placing an increased emphasis on the
home, its decor and the expression of individual style, which will contribute to
the growth of the custom framing market. To capitalize on this trend, Albecca's
growth strategy is focused on continuing to introduce premium branded product
collections, increasing sales penetration to retail custom framers, improving
profitability of its operations, increasing product and brand awareness through
consumer advertising and pursuing acquisitions of manufacturers and distributors
of custom framing products. Albecca's consistent operating strategy and focus on
profitable growth are intended to allow the Company to grow operating income
faster than net sales. Net sales increased from $137.8 million in 1993 to $354.1
million in 1997. Over the same period, operating income has grown from $13.4
million to $35.6million. During the first nine months of 1998, net sales and
operating income were $292.9 million and $27.0 million, respectively.

Albecca conducts its operations through 75 locations in 20 countries. North
American operations (U.S. and Canada) represented 52% and 76% of 1997 sales and
operating income, respectively. International operations (primarily Europe)
represented 48% and 24% of the Company's fiscal 1997 sales and operating income,
respectively. Albecca is the market leader in North America with an estimated
16% market share and estimates that it holds a leading market position in the
other 18 countries it serves. In North America, Albecca operates four moulding
and frame manufacturing plants and 28 light manufacturing/distribution centers.
Internationally, the Company operates 16 moulding and frame manufacturing plants
and 33 light manufacturing/distribution centers located in 18 different
countries. The Company has completed 12 acquisitions in North America since 1988
and 25 international acquisitions beginning in 1994. In North America, Albecca's
primary customers are retail custom picture framers. In Europe, the Company
primarily serves retail custom framers as well as home decorating centers.

Craig Ponzio, the Company's Chairman, President, Chief Executive Officer
and principal shareholder joined Larson Picture Frame, Inc. in 1973 and
purchased that company in 1981, when it had net sales of approximately $3
million. In 1988 Larson Picture Frame, Inc. acquired Juhl-Pacific Corporation
creating Larson-Juhl. Following the 1981 acquisition, the management team
initiated a program to expand Albecca's product lines, develop an organizational
infrastructure, acquire and consolidate manufacturers and distributors of custom
framing products and instill a culture based on the Company's six core values.
These core values are:

- Customer always comes first
- Fair and honest in all dealings
- Respect for the individual
- Excellence in products and service
- Rewards tie to performance
- Leadership by example

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<PAGE> 28

OPERATING STRATEGY

Global Leadership in Sales and Customer Service. Through an organization
designed to respond immediately to the needs of retail custom framers, Albecca
is a global leader in sales and customer service. The Company employs the
largest direct sales force serving the custom framing industry, with 224 sales
representatives worldwide, 110 of whom serve North American retail custom
framers. The Company's sales force visits retail custom framers regularly to
introduce new moulding collections, assist with in-store displays and provide
information on more effective merchandising, design and selling techniques. With
61 light manufacturing/distribution centers worldwide, Albecca can provide next
day shipping of virtually all customer orders. The Company's proprietary
information systems track inventory on a real-time basis to maximize
availability and optimize distribution of products. In 1997, 97% of items
ordered were immediately available from a Company distribution center. In
addition Albecca offers its customers a 100% satisfaction guarantee on every
product sold. Albecca's effective inventory management, global distribution
capabilities and superior customer service have allowed the Company to become a
recognized service leader in the custom framing industry.

Efficient, Low Cost Manufacturing and Distribution. The Company focuses on
continually reducing the costs and improving the efficiency of its manufacturing
and distribution operations while consistently providing the industry's highest
quality products and services. The Company's information systems provide data to
assist the Company in identifying activities and processes that have the
greatest potential for cost reduction. The Company continually strives to
improve its process technology and manufacturing automation to increase product
quality and reduce manufacturing costs. The Company's buying power and its
global sourcing capabilities, including the use of select third-party
manufacturers, allow it to rapidly respond to current market trends and better
manage product costs. As a measure of its success, the Company's operating
income margin, which was 10.1% in 1997, increased in each fiscal year from 1989
through 1997.

Complete Line of Quality Products. Albecca designs, manufactures and
distributes a complete line of quality branded products to the custom framing
industry and believes it offers the widest variety of custom framing products in
the world. The Company's products include wood and metal moulding, matboard,
foam board, glass, equipment and other framing supplies. The Company offers over
8,000 branded products in North America and over 17,000 additional branded
products in the rest of the world. The Company believes that a key competitive
advantage is its ability to offer this full line of quality branded products,
which enables it to be a complete source supplier to retail custom framers.

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<PAGE> 29

GROWTH STRATEGY

Introduce Premium, Branded Product Collections. To address changing
consumer style and design preferences, Albecca continually develops new lines of
branded custom mouldings, such as the recent introduction of the "Craig Ponzio
Signature Collection." Since 1994, the Company designed and introduced 27 new
moulding lines in North America, which represented over 30% of Albecca's 1997
North American moulding sales. During the first nine months of 1998, the Company
designed and introduced nine new moulding lines in North America. Albecca
believes its ability to design and manufacture premium, branded framing products
that meet consumers' changing tastes enables the Company to grow its net sales
faster than those of other manufacturers and distributors of custom framing
products.

Increase Sales Penetration to Retail Custom Framers. Albecca has sold
framing products to approximately 90% of the estimated 20,000 retail custom
framers in North America. However, the Company believes that approximately 75%
of these customers purchase less than 20% of their products from Albecca.
Although Albecca is a market leader in North America, the Company believes there
is substantial opportunity to increase its sales penetration to these retail
custom framers and that similar opportunities exist in certain of the
international markets it serves. One method the Company uses in the U.S. to
increase sales to its current customers is its Partnership Program, through
which participating retail custom framers receive a number of incentives,
including pricing discounts for volume purchases, in-store signage and displays,
and direct mail and customized consumer advertising materials in return for
their commitment to Albecca products. In the first nine months of 1998, net
sales to Partnership Program participants represented approximately 23% of total
U.S. sales. Net sales to Partnership Program participants in the first nine
months of 1998 increased 13.4% over net sales to the same participants in the
comparable period of 1997.

Improve Profitability of Operations. The Company's U.S. operations
generated an operating income margin of 15% in 1997 from a sales base of $165.5
million. Outside of the U.S., the Company generated an operating income margin
of 6% in 1997 from a sales base of $188.6. million. To continue to improve these
margins, the Company is (i) increasing the number of branded, proprietary
products it offers; (ii) developing a centralized distribution system in Europe;
(iii) leveraging the Company's buying power to reduce costs; (iv) expanding the
Partnership Program; and (v) leveraging the capabilities of its proprietary
information systems and process technologies. By taking these steps, which have
been successfully applied in its U.S. operations, the Company believes that it
will be able to continue to increase its operating income margins, particularly
in its operations outside of the U.S.

Increase Product and Brand Awareness through Consumer Advertising. Albecca
believes there are substantial benefits for the Company and the industry to
exposing consumers to the warmth and individuality that custom frames can add to
a home. The Company began a consumer advertising program in September 1996 to
build and strengthen awareness of custom framing generally, and the Company's
brands in particular, among retail custom framers, individual consumers and
decorators. This program uses magazine advertising, direct mail materials and
in-store promotional displays including signage and wall samples that emphasize
the lines that comprise the "Larson-Juhl Classic Collection"and the "Craig
Ponzio Signature Collection." The Company's advertisements have had an estimated
150 million consumer exposures since September 1996 and can be seen in
publications such as Architectural Digest, Elle Decor, Gourmet, House and
Garden, House Beautiful, Metropolitan Home and Traditional Home. The Company
believes it is the only manufacturer and distributor of custom framing products
marketing its products through a national consumer advertising program.

27
<PAGE> 30

operating and financial criteria for each candidate, including product design
and quality, geographic markets and customer segments served, management team
strength and return on invested capital. Albecca has been able to leverage its
industry leadership position, marketing and manufacturing expertise, and
emphasis on its core values to become a leading consolidator of manufacturers
and distributors of custom framing products. There are currently over 300
manufacturers and distributors of custom framing products in North America and
an additional 500 outside North America, with the smallest having estimated
annual sales under $1 million and the largest having sales over $150 million.
Albecca believes the fragmented nature of the industry presents opportunities to
make further prudent acquisitions. The Company expects to enter into an
agreement for the New Credit Facility, which is intended to provide greater
flexibility for the Company to pursue future acquisitions. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

THE CUSTOM FRAMING INDUSTRY

While art work has been framed by hand for centuries, the custom framing
industry began in the 1890s with the development of special clamps, mat cutters
and other framing equipment. The real growth of the industry began in the 1970s
with the advent of technological advances in equipment and distribution
processes, which decreased the custom framer's barrier to entry and allowed an
increasing number of entrepreneurs to start custom framing businesses. These
trends paralleled the continuing growth of an economically strong middle class
seeking to decorate their homes with art work, photographs and other personal
items. Today the industry in North America includes approximately 20,000 retail
custom frame store fronts and over 300 manufacturers and distributors of custom
framing products. Independent custom framers currently account for approximately
85% of custom framing sales in North America. The remaining 15% of sales are
principally generated by custom framing departments of craft chains and
franchise operations. Outside North America, the Company estimates there are
over 20,000 retail custom frame store fronts and over 500 manufacturers and
distributors of custom framing products. Albecca estimates that sales to retail
custom framers in 1997 were approximately $1.2 billion in North America and
approximately $1.2 billion in the rest of the world. In addition, a separate
market for wholesale framing products for commercial framers and manufacturers
of pre-assembled frames, framed art and framed mirrors is estimated to be
approximately $700 million in North America and approximately $700 million in
the rest of the world. Albecca's net sales to this separate market have not been
material to date.

The Company believes that the custom framing industry has been growing at a
rate of 2% to 3% per year. However, the Company believes that this growth rate
is accelerating due in part to consumers placing greater emphasis on the home
and its decor. The Company believes this trend is contributing to the growth of
the custom framing industry and, when combined with the Company's consumer
advertising program, will allow the Company to help generate increased consumer
awareness and sales of custom framing products.

Historically, due to inventory and cost limitations, retail custom framers
were unable to offer a wide selection of products and instead marketed
themselves as craftsmen. Today, with advances in technology and distribution
processes, the retail custom framer is able to rely on manufacturers and
distributors to provide a wide assortment of framing products and supplies on a
just-in-time basis. Because custom framers are now able to offer a full line of
branded products without inventory limitations, the retail custom framing
industry is less dependent on technical ability than on design and marketing
skills. The Company believes this shift will continue to benefit manufacturers
and distributors, such as Albecca, that are able to provide fast delivery of a
complete line of custom framing products as well as assist retail custom framers
with merchandising, design and selling strategies.

PRODUCTS

Albecca designs, manufactures and distributes a complete line of quality
branded custom framing products, including wood and metal moulding, matboard,
foam board, glass, equipment and other framing supplies. This product offering
allows the Company to be a complete source supplier to retail custom framers.
Albecca offers over 8,000 branded products in North America and over 17,000
additional branded products in the rest of the world. Of the Company's products,
over 12,000 are branded custom frame wood moulding products. The Company
believes it offers the widest variety of products for the retail custom framer
in the industry.

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<PAGE> 31

The following illustration depicts a completed custom frame, utilizing a
variety of framing products sold by the Company:

(Illustration representing a custom framed piece of artwork as well as a cross
section of the components indicating the products sold by the Company
including: wood moulding, matboard, foam board and glass.)

Wood Moulding

Albecca is one of the world's largest manufacturers and suppliers of wood
moulding to the custom framing industry, based upon sales. Wood moulding
accounted for approximately 50% of the Company's 1997 net sales and is its
fastest growing product category. Albecca provides branded custom moulding in a
variety of shapes, sizes, finishes and forms to meet each customer's specific
needs. The Company's finishes include water gilded gold leaf, naturally stained
North American hardwoods, genuine European burlwood and hand applied beeswax, as
well as a variety of finishes inspired by antique frames or furniture. The
styles of these wood mouldings range from contemporary geometric shapes to
heavily embossed Baroque patterns. With a variety of widths and styles
available, multiple mouldings can be used within a single frame to create
thousands of framing combinations. Custom framers purchase moulding from the
Company in a variety of formats including: (i) long lengths of moulding which
the framers cut to size; (ii) moulding cut to specific lengths (chop service);
and (iii) moulding assembled as a completed frame (join service). Approximately
50% of the Company's wood moulding sales include value added services such as
the cutting or joining of the frame.

Albecca's design team has created each of its over 1,100 branded wood
mouldings in North America. Most of the Company's wood moulding products are
produced either in the Company's plants in the U.S., Canada, Europe and South
Africa, or by third-party manufacturers in Europe and Asia that have devoted a
significant amount of their capacity to producing Albecca's high quality,
proprietary moulding products. See "-- Manufacturing and Sourcing."

The Company markets its wood mouldings under the "Larson-Juhl Classic
Collection" and the "Craig Ponzio Signature Collection" brand names. Each
collection consists of a series of lines designed to evoke a particular era,
location, style or culture. The "Craig Ponzio Signature Collection" contains the
Company's finest lines of wood moulding, allowing the Company to market
differentiated products to multiple segments of the custom framing industry. See
"-- Design."

Metal Moulding

Albecca distributes approximately 1,000 different branded metal mouldings
worldwide. Sales of these mouldings predominantly require chop service, as
retail custom framers generally do not have the equipment necessary to cut metal
moulding. The Company markets one proprietary line of metal moulding, Clark,
which has been recognized as one of the leaders in metal moulding since its
introduction in 1974. To maintain and
29
<PAGE> 32

improve Clark's market position, the Company's design team continually studies
current and predicted future design trends to develop new finishes and colors
for metal moulding. In addition, the Company distributes three other leading
brands of metal moulding.

Matboard and Foam Board

The Company sells matboard, which is cut to surround the art work and used
inside the frame, and foam board, which is used as a firm backing for certain
art work and other items to be framed. The Company sells all major brands of
matboard and foam board to meet the preferences of retail custom framers. As
consumers have become increasingly concerned about preserving framed items
against discoloration and damage, certain premium conservation types of matboard
and foam board have been developed. In 1997, the Company launched its own
proprietary line of premium conservation matboard, under the Artique brand name,
in an effort to promote this trend of preservation framing.

Glass, Equipment and Other Framing Supplies

Albecca supplies a variety of glass types, generally priced based on
differing levels of ultraviolet filtering properties and reflectivity. The
Company also sells a full complement of custom framing equipment and supplies as
a convenience to its customers. This selection includes joining machines,
matboard cutters and framing hardware. The Company's net sales of custom framing
equipment have not been material. All of the glass, equipment and other framing
supplies sold by the Company are produced by third-party manufacturers.

SALES AND MARKETING

The Company markets its products to custom frame shops principally through
Company-employed sales representatives, advertisements in trade magazines and
attendance at industry trade shows. The Company also markets to consumers by
advertising in widely-distributed magazines that the Company considers
influential among consumers and decorators, as well as through the use of direct
mail materials and in-store promotional displays. Through educational seminars
and consultations with the Company's sales team, Albecca also provides
technical, marketing and other business advice both to established retail custom
framers and to prospective customers establishing new custom framing businesses.

The Company employs 224 sales representatives (110 in North America)
operating out of Albecca's 61 light manufacturing/distribution centers, with
each representative generally calling on 150 to 200 customers between six and
eight times a year. In addition to generating sales orders, these
representatives update customers on the Company's product lines, advise
customers on framing design and provide information on more effective
merchandising, design and selling techniques. All North American sales
representatives travel with portable computers and are able to provide retail
custom framers with updated information on sales trends and, in the U.S.,
information on product availability. Additionally, sales representatives assist
retail custom framers in redesigning their frame sample display walls. Albecca's
direct sales force also works with retail custom framers to help them create and
sell more sophisticated custom frames, and thereby increase the average price
per frame. The sales representatives also listen carefully to the retail custom
framers in order to understand and respond to issues concerning the Company's
products, trends in consumer demand and competitive activities in the
marketplace. Sales representatives are employed by the Company and compensated
principally by salary, with commission and bonus components available based on
sales and other performance criteria.

The Company establishes a local presence by consolidating both the sales
and operations functions in each distribution center under the supervision of a
general manager. This decentralization of management has allowed most sales and
distribution issues to be decided at the local level, thereby improving the
level and speed of service provided to customers. The Company believes the skill
and experience of its general managers has contributed significantly to the
Company's ability to build strong personal relationships with its retail custom
framers and provide a superior level of customer service.

The Company markets to the retail custom framer directly through catalogs
and sales literature and through publicity and advertising in trade publications
such as Art Business News, Art World News, Art
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<PAGE> 33

Expressions, Decor, der Kunsthandel, Picture Framing Magazine and The Picture
Business. These advertisements generally focus on the Company's image and the
introduction of new premium branded products.

Albecca has embarked on an aggressive plan to increase consumer awareness
and appreciation of the value of custom framing in general, and specifically,
the Company's premium branded products. The Company believes that in a
fragmented market served by hundreds of suppliers from around the world,
consumers are more likely to perceive value in premium branded products. In
1996, the Company began to extensively advertise its branded products in
well-known publications that the Company considers influential among consumers
and decorators in the home furnishing industry, such as Architectural Digest,
Elle Decor, House and Garden, House Beautiful, Metropolitan Home and Traditional
Home. The Company believes it is the only manufacturer and distributor of custom
framing products marketing its products through a national consumer advertising
program. These advertisements portray the warmth and individuality custom frames
can add to a home. Through these advertisements, the Company targets
sophisticated consumers with the economic power to purchase its high quality,
premium branded products. In addition, the Company provides its customers with
direct mail literature as well as advertisements suitable for inclusion in local
publications.

To increase sales to its current customers in the U.S., the Company has
established the Partnership Program, through which participating retail custom
framers receive a number of financial and promotional incentives in return for
their commitment to Albecca products. In the first nine months of 1998, net
sales to Partnership Program participants represented approximately 23% of U.S.
net sales. Net sales to Partnership Program participants in the first nine
months of 1998 increased more than 16% over sales to the same participants in
the comparable period of 1997. Based on the success of the Partnership Program
in the U.S., the Company intends to implement similar programs in the other
markets it serves.

DESIGN

The Company's goal is to develop and produce the best-designed products in
the industry. The Company believes that quality designs not only will increase
consumer interest in its own products, but will also help to lead the entire
industry to improve design quality and thereby attract more consumers to custom
framing. Led by Mr. Ponzio, the Company's design team extensively researches and
studies furniture, architectural and historical design elements and art and
decorating trends from around the world. The Company incorporates these elements
into branded product lines introduced under one of the Company's moulding
collections.

Mr. Ponzio is the Company's chief designer and provides leadership in all
aspects of the design process. Mr. Ponzio's 25 years of design experience are
complemented by the other members of the corporate design team, who have an
average of 17 years of design experience in the custom framing industry. The
corporate design team works in collaboration with designers in each of the
Company's manufacturing facilities to create mouldings that bring together the
best in design with the manufacturing strengths of a particular facility. By
combining their creative vision with the Company's commitment to developing
high-quality products, the entire design team strives to understand what
consumers desire and which designs are most likely to be commercially viable.
The Company believes that its future success will be enhanced by its ability to
originate and define design trends, as well as to anticipate and react to
changing consumer demands in a timely manner.

Albecca designs all of its wood moulding collections and the Clark
collection of metal moulding. In addition, the Company has recently introduced
its first proprietary matboard design. The team creates products which are
manufactured both by Albecca as well as by third-party manufacturers.
Traditionally, the time involved from design and conception to production of a
new product line is approximately six months. Since 1994, the Company has
designed and introduced 27 new wood moulding product lines in North America.
During the first nine months of 1998, the Company designed and introduced nine
new wood moulding product lines in North America.

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<PAGE> 34

Listed below is a brief description from the Company's marketing materials
of recent introductions of wood moulding lines under the "Craig Ponzio Signature
Collection":

<TABLE>
<CAPTION>
NAME DESCRIPTION YEAR INTRODUCED
- ---- ----------- ---------------
<S> <C> <C>
Aubusson............... Inspired by artfully woven French rugs, Aubusson 1998
reflects the delicate detail, carefully crafted color
and design of antique French tapestries.
Castillano............. The splendor of Spain is captured in this rich, bold, 1996
distinctive moulding. The pleasing proportions and
beautifully embossed patterns exude tradition and
fine quality.
Cortona................ Like a comfortable piece of antique furniture or an 1998
heirloom passed down from generation to generation,
this collection of beautifully patterned genuine
burlwood evokes the same feelings of antiquity.
Couleurs Provence...... Harvested from the French countryside, this moulding 1998
captures the authentic detailing of aged wormwood,
the classic colors of Provence and the beauty of a
natural beeswax finish.
El Greco............... This majestic, deeply embossed Spanish moulding is 1998
designed in the style of the royal court during the
15th century. Our artisans meticulously recapture the
bold, strong distinction of this regal age.
Imperial............... The grace and stately detail of 17th century France 1996
lives again in this collection of delicately embossed
profiles.
Kensington............. The natural beauty and unique characteristics of 1997
authentic mahogany and European burlwood veneers give
this collection a sense of warmth and character that
stands the test of time.
Musee.................. Our Master Guilders create this distinctive 1996
collection of beautiful mouldings using the same
time-honored techniques of hand-finished
waterguilding that began centuries ago.
Prado.................. Seemingly lit from within, the dark, rich glow of 1997
this moulding collection reflects the accumulated age
of the beautiful monasteries of Old World Europe.
Stradivarius........... The graceful shapes and rich finishes of the 1997
Stradivarius violin served as the inspiration for
this exquisitely designed moulding collection.
Vermeer................ Named in honor of the Dutch master, Vermeer, these 1998
elegant, smooth mouldings bring together classic and
modern influences to create a collection that is the
true work of a master.
</TABLE>

MANUFACTURING AND SOURCING

Albecca produces approximately 40% of its wood moulding in three
manufacturing plants in North America and 10 plants in Austria, Czech Republic,
Finland, France, Italy, South Africa and Sweden. The remaining 60% of its wood
moulding is produced by third-party manufacturers. As an industry leader in
design, and as one of the largest distributors of wood moulding to retail custom
framers, the Company has developed close working relationships with many
third-party manufacturers who produce Albecca's proprietary products to its
designs and specifications. Many of these manufacturers have devoted a
significant amount of their capacity to the production of Albecca's high quality
products. In addition to moulding manufacturing plants, the Company has seven
pre-assembled frame manufacturing plants in Europe and the U.S. The Company
distributes its products from its light manufacturing/distribution centers. See
"-- Distribution."

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<PAGE> 35

The following lists certain information regarding the Company's
manufacturing facilities:

<TABLE>
<CAPTION>
NUMBER OF
COUNTRY PRODUCTS FACILITIES
------- -------- ----------
<S> <C> <C>
Austria............................................ Mouldings 1
Canada............................................. Mouldings 2
Czech Republic..................................... Mouldings and Frames 2
Finland............................................ Mouldings 1
France............................................. Mouldings and Frames 4
Germany............................................ Frames 1
Italy.............................................. Mouldings 1
Netherlands........................................ Frames 1
Russia............................................. Frames 1
South Africa....................................... Mouldings 2
Sweden............................................. Mouldings 2
United States...................................... Mouldings and Frames 2
--
Total.................................... 20
</TABLE>

The wood moulding manufacturing process begins with raw board lumber, from
which the moulding is milled and then sanded to produce the finished profile.
Then a variety of staining, distressing and hand-applied finishing techniques
are used to produce the completed moulding. There are typically between eight
and 25 process steps involved in producing the Company's high-quality wood
moulding products.

Wood, the principal raw material used in the Company's manufacturing
processes, is purchased from a variety of suppliers in the U.S., Canada, Asia
and Africa as kiln-dried blanks or as raw lumber that is then dried by the
Company. The primary types of wood used by the Company are North American oak
and ash, as well as European pine. The Company has long-standing relationships
with many of its suppliers and has experienced only limited difficulty in
satisfying its raw materials requirements. Although the loss of any supplier may
have an adverse effect on the Company's short-term operating results, the
Company believes it could replace suppliers without having a material adverse
effect on the Company. Over the past three years, prices of the Company's
primary types of wood have remained relatively stable.

The Company does not manufacture any other products, but instead purchases
them from numerous other manufacturers and distributors. As a result of the
Company's high volume of purchases from these manufacturers, the Company
believes it is generally able to achieve a cost advantage over its competitors.
The Company works with one manufacturer to produce its proprietary line of Clark
metal moulding. The Company is the only purchaser of metal picture frame
moulding from this manufacturer. The Company also works with one manufacturer to
produce its Artique brand of matboard.

The Company's manufacturing and sourcing staff oversees manufacturing and
production, negotiates purchases of raw materials and researches and identifies
new suppliers and third-party manufacturers. The Company's products are
manufactured according to plans prepared each year which reflect prior years'
experience, current industry trends, economic conditions and the Company's
estimates of a particular line's performance. The Company separately negotiates
with suppliers for the purchase of required raw materials in accordance with the
Company's specifications and limits its exposure to holding excess raw material
inventory by purchasing based on demand. The Company believes that its policy of
limiting its commitments for purchases reduces its exposure to excess inventory
and obsolescence. The Company is not responsible for procuring raw materials
used by its third-party manufacturers.

DISTRIBUTION

Albecca believes its success to date is based in large part on consistently
providing a complete line of framing materials and supplies, and filling orders
rapidly and dependably. By supplying a broad line of quality products, Albecca
offers retail custom framers numerous alternatives to meet the individual tastes
of consumers. The Company has developed a user-friendly order and fulfillment
system in North America that

33
<PAGE> 36

includes features such as toll-free telephone and fax ordering, highly-trained
customer service and technical representatives, extended customer service hours,
instant stocking information and next-day shipping on most orders from the
Company's distribution centers. This system, and advancements in framing
technology, allow retail custom framers to offer fast, dependable service to
their customers without requiring significant amounts of capital to be tied up
in inventory and equipment. This, in turn, allows Albecca's customers to enhance
their marketing by committing more of their shop space to retail display and
more of their time to designing and selling, and less to back-room operations.

North America

A typical custom framing transaction in North America begins with an
Albecca retail custom framing customer helping a consumer determine the best way
to preserve, mount and display a work of art or personal item. Consumers select
the style and color of framing materials to suit their individual taste, aided
by displays of moulding samples ("corners") and other framing materials. Then,
the retail custom framer determines the proper amount and dimensions of each
kind of material needed to complete the framing (e.g., moulding, matboard and
glass) and contacts Albecca's customer service center by telephone or fax to
place the order. After confirming the order and the customer's credit
availability on Albecca's integrated management information system, the order is
automatically printed or displayed at the distribution center closest to the
customer. Upon receiving the order, personnel in the distribution center pull
the required materials, cut the moulding to its required dimensions (if chop
service is requested), join the frame, if necessary, inspect and package the
order. Depending on the location of the customer, orders are either delivered by
one of Albecca's delivery trucks or by a package delivery company, such as UPS,
with the goal of shipping the order for delivery the next business day. After
receiving the order, the retail custom framer completes the preparation of the
materials and assembles the finished frame using matboard cutters, glass cutters
and moulding joiners.

Albecca distributes its products in North America through 28 distribution
centers. The number and location of these distribution centers make Albecca the
only manufacturer with a broad-based North American distribution network. The
Company operates a fleet of over 100 delivery trucks in North America, which in
1997 delivered approximately 80% of its total North American orders. In the
U.S., the Company's distribution centers are located, on average, within a 200
mile radius of approximately 85% of its customers.

The Company's Chicago and Los Angeles distribution centers also serve as
distribution hubs that receive and process container-size deliveries of the
Company's products and ship smaller quantities of products, generally weekly, to
the other distribution centers based on customer demand. This "just-in-time"
system has allowed the more efficient flow of products while avoiding the costly
build-up of inventory at any one location.

Coupled with the Company's efficient order and fulfillment process, this
distribution system resulted in approximately 97% of items ordered being
immediately available from a distribution center in 1997 and the shipment of
virtually all orders the next business day.

In North America, the Company operates distribution centers in the
following metropolitan areas:

<TABLE>
<S> <C>
Atlanta, Georgia Los Angeles, California
Baltimore, Maryland Miami, Florida
Boston, Massachusetts Minneapolis, Minnesota
Calgary, Alberta Montreal, Quebec
Chicago, Illinois New Orleans, Louisiana
Cincinnati, Ohio Newark, New Jersey
Cleveland, Ohio Philadelphia, Pennsylvania
Dallas, Texas Phoenix, Arizona
Denver, Colorado San Diego, California
Detroit, Michigan San Francisco, California
Greensboro, North Carolina Seattle, Washington
Houston, Texas St. Louis, Missouri
Huntsville, Alabama Toronto, Ontario
Lakeland, Florida Vancouver, British Columbia
</TABLE>

34
<PAGE> 37

International

Outside North America, the Company has relied to date on the distribution
systems in place for the companies it has acquired, and is in the process of
integrating and rationalizing these systems. The Company's goal for its
international operations is to develop a fast, user-friendly order-fulfillment
system that operates through a logistical network similar to the one existing in
North America. In order to realize this goal, the Company is developing a
central distribution center in Germany to improve response to European framers
as well as to better control distribution costs. This center is expected to be
operational by August 1998.

The Company operates distribution centers from the following countries
outside of North America:

<TABLE>
<CAPTION>
NUMBER OF
COUNTRY FACILITIES
- ------- ----------
<S> <C>
Australia................................................... 6
Austria..................................................... 2
Belgium..................................................... 1
Czech Republic.............................................. 1
Finland..................................................... 1
France...................................................... 2
Germany..................................................... 1
Greece...................................................... 1
Japan....................................................... 1
Korea....................................................... 1
Netherlands................................................. 3
New Zealand................................................. 2
Norway...................................................... 1
Russia...................................................... 1
South Africa................................................ 2
Sweden...................................................... 5
United Kingdom.............................................. 2
--
Total............................................. 33
</TABLE>

CUSTOMERS

In North America, Albecca's target customers are the approximately 20,000
custom framing retail store fronts that serve middle to upper income consumers.
To date, the Company has served approximately 90% of these retail store fronts.
Outside North America, the Company targets the over 20,000 retail custom frame
store fronts and home decorating centers. No one customer represented more than
5% of the Company's 1997 net sales.

MANAGEMENT INFORMATION SYSTEMS

The Company believes that information and technology are essential to
maintaining its competitive position. The Company's management information
system is designed to provide responsive and efficient order processing,
inventory control, financial reporting and management information for the
Company's sales, marketing, procurement, distribution and financial analysis
functions. The Company's management information system allows it to track
inventory on a real time basis throughout its North American distribution
network. The Company's North American operations utilize J.D. Edwards'
WorldSoftware release 7.3 software and IBM Series 640-2239 hardware (AS400
series) which are supported at the Company's headquarters in Norcross, Georgia.
In addition, the Company has introduced an electronic data interchange ("EDI")
system to facilitate processing customer orders and inventory replenishment. The
Company believes that substantially all of its information systems are Year 2000
compliant and plans to replace or upgrade non-compliant systems prior to
February 1999. The Company believes that additional costs incurred in connection
with these replacements and upgrades will not have a material impact on the
Company's financial condition or results of operations.

35
<PAGE> 38

CREDIT ANALYSIS AND CONTROL

Albecca manages its credit and collection functions regionally in the U.S.
Outside of the U.S., credit and collection functions are managed separately in
each country in which the Company operates. The Company extends credit based on
an evaluation of the customer's financial condition and history with the
Company. Albecca monitors credit levels on an ongoing basis to minimize credit
risk. The Company does not factor its accounts receivable or maintain credit
insurance.

INVENTORY MANAGEMENT

Albecca believes that a key competitive advantage is its complete line of
quality branded products, which allows the Company to be a complete source
supplier to retail custom framers. In the U.S., the Company's sales information
system is integrated into its inventory procurement system in order to provide
current demand trends and to optimize inventory stocking levels. This demand
information is reviewed on an ongoing, location-by-location basis in order to
more effectively control the Company's inventory investment.

QUALITY CONTROL

A key factor in the Company's success in maintaining the high quality of
its products has been to ensure that through the careful design of such
products, they can be manufactured consistently over a long period of time. The
Company monitors the quality of its raw materials prior to the manufacture of
products and inspects prototypes of each product before production runs are
commenced. The Company also performs in-line quality control checks during and
after production. Final inspections occur when the products are processed for
final shipment at each of the Company's distribution centers. The Company
believes that its careful inspection policy is an important element in
maintaining the quality and reputation of its products. In addition, the Company
conducts quarterly reviews with each of its manufacturers and suppliers to
assess and improve performance levels.

Albecca offers its customers a 100% satisfaction guarantee on every product
sold. Less than 1% of the products shipped by the Company in the U.S. during
each of the last three fiscal years have been returned under this policy.

COMPETITION

Albecca competes with over 300 North American and over 500 international
manufacturers and distributors of custom framing products. The Company competes
primarily on the basis of product design and quality, on-time delivery,
inventory availability and price. Albecca is one of the largest manufacturers
and distributors of wood mouldings in North America, where it estimates its
largest competitor is The Williamson Company. The principal manufacturers of
metal moulding are Esselte Holdings, Inc. and Cardinal Aluminum Company, which
primarily supply their products to custom framers through distributors. Albecca
believes it is one of the largest metal moulding customers of both companies.
The principal manufacturers of matboard are Crescent Cardboard Company and
Esselte Holdings, Inc. which primarily supply their products to custom framers
through distributors. Albecca believes it is the largest single matboard
customer of both companies.

In the broader sense, the Company competes in the larger home decorating
market, where consumers may forego custom framing and choose ready-made picture
frames or framed art works, and in the larger wholesale contract framing market,
where wholesale picture framers produce framed art works in volume for large
accounts such as hotels or office complexes. Albecca believes that other home
furnishing items such as furniture, floor and wall coverings and window
treatments compete with custom framing for consumer dollars, and the Company's
biggest challenge is to enable the custom framing industry to capture more of
those sales.

TRADEMARKS

The Company utilizes a number of trademarks to distinguish its brands,
principally, Larson-Juhl, Clark and Artique. The Company has registered or
applied for registration of these trademarks in the U.S. and Canada and in
numerous countries in Europe, Asia and elsewhere. Mr. Ponzio has granted the
Company a perpetual right to use the name "Craig Ponzio" to identify and brand
the Company's premium custom framing products. The Company regards its
trademarks and other proprietary rights as valuable assets in the marketing of
its products, and on a worldwide basis, vigorously seeks to protect them against
infringement. There can be

36
<PAGE> 39

no assurance that the actions taken by the Company to establish and protect its
trademarks and other proprietary rights will be adequate to prevent imitation of
its products by others or to prevent others from seeking to block sales of the
Company's products as violative of the trademarks and other proprietary rights
of others. In addition, the laws of certain foreign countries may not protect
proprietary rights to the same extent as do the laws of the United States. The
Company also regards its moulding designs as critical to the success of its
marketing efforts, and seeks to protect those designs prior to their
introduction to the marketplace. However, after such introduction there are no
practical means to prevent others from copying or imitating such designs or
specific design elements.

EMPLOYEES

At April 30, 1998, the Company had 2,979 full-time team members
(employees), of which 2,421 were in operations, 256 were in sales and marketing
and 302 were in corporate and general administrative positions. None of the
Company's North American team members are represented by unions. In certain of
the European countries in which the Company operates, team members may be
represented by unions (as mandated by such countries' laws) or covered by social
legislation governing employment practices. Management believes that the
Company's relationship with its team members is good.

ENVIRONMENTAL MATTERS

The Company is subject to various federal, state, local and foreign
environmental laws and regulations relating to the handling and management of
certain chemicals used and generated in manufacturing its products. The Company
believes that its operations currently comply in all material respects with
these laws and regulations. Based on the annual costs incurred by the Company
over the past several years, management does not believe that compliance with
these laws and regulations will have a material adverse effect upon the
Company's business, financial condition and results of operations. The Company
believes, however, that it is reasonably likely that the trend in environmental
litigation and regulation will continue to be toward stricter standards. Such
changes in the law and regulations may require the Company to make additional
capital expenditures which, while not presently estimable with certainty, are
not presently expected to have a material adverse effect on the Company's
business, financial condition and results of operations.

PROPERTIES AND FACILITIES

The Company's principal executive offices are located in a 65,000 square
foot office building located in Norcross, Georgia owned by L-J Properties Inc.,
a company owned by Messrs. Ponzio, Trimarco and Scheppmann, each of whom is an
executive officer and director of the Company. The Company's lease for this
facility terminates in August 2001 and the annual rent currently is $678,000.
See "Certain Transactions."

The Company owns two facilities in Ashland, Wisconsin containing
approximately 58,000 and 54,000 square feet each. These facilities are used in
the manufacture of moulding, sample frames and ready-made frames. The Company
also owns facilities in Denver, Colorado and Waldorf, Maryland which are used as
light manufacturing/distribution centers. The Company leases 27 other facilities
in North America which are used to manufacture and/or distribute the Company's
products. These facilities vary in size from approximately 7,000 to 103,500
square feet and have lease termination dates ranging from September 1998 to May
2006. See "-- Manufacturing and Sourcing" and "-- Distribution."

The Company owns 15 facilities and leases 32 facilities in 18 countries
outside of North America which are used to manufacture and/or distribute the
Company's products. The leased facilities vary in size from approximately 1,350
to 105,000 square feet and have lease termination dates ranging from October
1998 to December 2003. See "-- Manufacturing and Sourcing" and
"-- Distribution."

The Company believes that its properties and facilities are adequate for
its current needs. The Company does not anticipate any material difficulty in
replacing such facilities or securing new facilities.

LEGAL PROCEEDINGS

The Company is a party from time to time in actions incidental to its
business. The Company believes that any currently pending proceedings are of a
routine nature and will not, individually or in the aggregate, have a material
adverse effect upon the Company.

37
<PAGE> 40

MANAGEMENT

The following table sets forth the names, ages and principal positions of
the Company's executive officers and directors:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Craig A. Ponzio........................ 47 Chairman of the Board, President, Chief
Executive Officer and Director
June R. Ponzio......................... 36 Vice Chairman of the Board and Director
William P. Trimarco.................... 39 President, U.S. Operations and Director
Stephen M. Scheppmann.................. 42 Senior Vice President, Chief Financial
Officer and Director
Stephen E. McKenzie.................... 36 Vice President, Marketing
Patrick R. Cronin...................... 51 Vice President, Human Resources
R. Bradley Goodson..................... 38 Vice President, Business Development and
Secretary
</TABLE>

Following the Offering, the Company will appoint two independent directors,
one of whom is expected to be appointed within three months of the consummation
of the Offering and the other of whom will be appointed within 12 months of the
consummation of the Offering.

Craig A. Ponzio has served as the Company's Chairman of the Board,
President, Chief Executive Officer and a Director since 1981. He has been
actively involved with the Company since 1973 and acquired the Company in 1981.
Mr. Ponzio oversees the Company's operations, including the development and
execution of its growth strategy, and is active in the identification and
consummation of acquisitions. Mr. Ponzio is the Company's chief designer and
provides leadership in all aspects of the design process.

June R. Ponzio has served as the Company's Vice Chairman of the Board and a
Director since May 1998. She served as Corporate Secretary from October 1993
until May 1998. She participates in corporate strategic planning, with
particular experience in acquisitions, vendor relationships and team member
relations. Prior to joining Albecca in 1992, she held a management position with
Freshens Yogurt.

William P. Trimarco has served as the Company's President, U.S. Operations
since July 1997 and has been a Director since May 1998. Mr. Trimarco joined the
Company in 1982 as Distribution Coordinator. He served as Vice President of
Operations from 1987 to 1995, and Senior Vice President, U.S. Operations from
1995 to 1997.

Stephen M. Scheppmann has served as the Company's Senior Vice President and
Chief Financial Officer since December 1997 and has been a Director since May
1998. Mr. Scheppmann joined the Company in December 1988 as its Vice President
and Chief Financial Officer. From 1978 to 1988, he was employed by Arthur
Andersen & Co.

Stephen E. McKenzie has served as the Company's Vice President, Marketing
since September 1995. From 1991 until 1995, Mr. McKenzie held the positions of
Product Manager and Marketing Manager. Before joining the Company in August
1991, he was the buyer for framing and import products for a national retailer.

Patrick R. Cronin has served as the Company's Vice President, Human
Resources since March 1991. Prior to joining the Company, Mr. Cronin was Vice
President, Human Resources for the Great Atlantic & Pacific Tea Co., Inc.

R. Bradley Goodson has served as the Company's Vice President, Business
Development and Secretary since May 1998. Mr. Goodson joined the Company in
August 1994 and held the positions of Finance Manager and Business Development
Manager. His primary focus is the Company's acquisition activity. From 1983
until August 1994, Mr. Goodson was employed by Arthur Andersen & Co.

Craig Ponzio and June Ponzio are married. There are no other family
relationships among the Company's directors and executive officers.

38
<PAGE> 41

BOARD OF DIRECTORS

The Bylaws provide that the size of the Board of Directors shall be
determined by the Board of Directors or by the shareholders of the Company. The
size of the Board of Directors is currently fixed at four members, all of whom
are members of the Company's management. Following the Offering, the Company
intends to elect two additional directors, both of whom will be independent
directors in accordance with the requirements of the New York Stock Exchange.
The Company anticipates that one of the these directors will be appointed within
three months of the consummation of the Offering and the other director will be
appointed within 12 months of the consummation of the Offering. Directors of the
Company are generally elected at the annual meeting of shareholders. Directors
of the Company are elected or appointed to serve until they resign or are
removed, or until their successors are elected and have qualified.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors intends to establish an Audit Committee within three
months of the consummation of the Offering and a Compensation Committee within
12 months of the consummation of the Offering. The Audit Committee will consist
solely of independent non-employee directors and the Company anticipates that
the Compensation Committee will consist of the Company's two independent
non-employee directors and Mr. Ponzio.

The Audit Committee will be responsible for reviewing and monitoring the
Company's financial reports and accounting practices and will recommend the
appointment of independent public accountants to conduct audits of the Company's
financial statements and review with the independent accountants the plan and
results of the auditing engagement. The Audit Committee will also be responsible
for reviewing related party transactions and potential conflicts of interest
involving officers, directors, employees or affiliates of the Company. The
Compensation Committee will be responsible for determining the compensation
arrangements for the Company's executive officers and administration of the
Company's 1998 Stock Option Plan.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Board of Directors intends to establish a Compensation Committee within
12 months of the consummation of the Offering. The Board of Directors has not
previously had a Compensation Committee, and the functions of the Compensation
Committee historically have been performed by Mr. Ponzio, the Company's Chief
Executive Officer, as the sole member of the Board of Directors. The Company
anticipates that following the Offering, Mr. Ponzio will serve on the
Compensation Committee. See "-- Committees of the Board of Directors" and
"Certain Transactions."

DIRECTOR COMPENSATION

Prior to the Offering, the Company's directors did not receive compensation
for their services as directors. Following the consummation of the Offering,
each director who is not an employee of the Company will receive a fee of $2,000
for attendance at each Board of Directors meeting and for each committee meeting
(unless held on the same day as a Board of Directors meeting). In addition,
non-employee directors are eligible to receive stock option grants for 1,000
shares of Class A Common Stock each year under the Company's 1998 Stock Option
Plan. All directors will be reimbursed for out-of-pocket expenses incurred in
attending meetings of the Board of Directors or committees thereof and for other
expenses incurred in their capacity as directors. Directors who are employees of
the Company will not receive additional compensation for serving as directors.

39
<PAGE> 42

EXECUTIVE COMPENSATION

The following table summarizes the compensation paid or accrued for
services rendered to the Company by the Company's Chief Executive Officer and
the four most highly compensated other executive officers whose total salary and
bonus exceeded $100,000 (collectively, the "Named Executive Officers") during
the year ended August 31, 1997. The Company did not grant any stock appreciation
rights or make any long-term incentive plan payouts during that period.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------
NAME AND PRINCIPAL POSITION SALARY BONUS
- --------------------------- -------- --------
<S> <C> <C>
Craig A. Ponzio, Chairman of the Board, President and Chief
Executive Officer.........................................
William P. Trimarco, President, U.S. Operations.............
Stephen M. Scheppmann, Senior Vice President and Chief
Financial Officer.........................................
Stephen E. McKenzie, Vice President, Marketing..............
Patrick J. Cronin, Vice President, Human Resources..........
</TABLE>

EMPLOYMENT AGREEMENT

The Company has entered into an employment agreement with Mr. Ponzio
effective July 1, 1998. Pursuant to such employment agreement, Mr. Ponzio shall
be paid an annual base salary of $ , and will be eligible for an annual
bonus in an amount, and based on achieving corporate performance objectives,
determined by the Compensation Committee. The initial term of employment shall
extend through September 1, 2001, and shall continue thereafter for additional
one year terms unless either the Company or Mr. Ponzio terminates or elects not
to renew the agreement. The employment agreement also contains an agreement by
Mr. Ponzio not to compete with the Company for a period of two years immediately
following termination of his employment. If the employment agreement is
terminated for any reason other than for cause, as defined in the agreement, the
Company will pay Mr. Ponzio a lump sum amount equal to two times the sum of the
annual base salary plus the annual bonus available for the year of termination,
plus the amount of any deferred but unpaid compensation. See "Certain
Transactions" and Note 3 to notes to the Company's consolidated financial
statements. If his employment is terminated by his death or disability, the
Company will pay a lump sum equal to the amount of base salary he would have
received through the end of the term, plus all deferred but unpaid compensation.

In addition, Mr. Ponzio has granted the Company a perpetual right to use
the name "Craig Ponzio" to identify and brand the Company's premium custom
framing products.

1998 STOCK OPTION PLAN

In May 1998, the Board of Directors and the Company's shareholders approved
the Company's 1998 Stock Option Plan (the "Plan"). The purpose of the Plan is to
advance the interests of the Company and its shareholders by affording certain
employees and directors of the Company, as well as key consultants and advisors
to the Company, an opportunity to acquire or increase their proprietary
interests in the Company. The objective of the issuance of stock options under
the Plan is to promote the growth and profitability of the Company because the
optionees will be provided with an additional incentive to achieve the Company's
objectives through participation in its success and growth and by encouraging
their continued association with or service to the Company.

Options under the Plan will be granted by the Compensation Committee of the
Board of Directors and may include incentive stock options ("ISOs") and/or
non-incentive stock options ("non-ISOs"). The Compensation Committee will
administer the Plan and generally will have discretion to determine the terms

40
<PAGE> 43

of an option grant, including the number of option shares, option price, term,
vesting schedule, the post-termination exercise period and whether the grant
will be an ISO or non-ISO. Notwithstanding this discretion: (i) if an option is
intended to be an ISO, the option price per share of Class A Common Stock may
not be less than 100% of the fair market value of such share at the time of
grant, and the fair market value at the time of grant of shares first
purchasable under the option in any one year cannot exceed $100,000; (ii) if an
option is intended to be an ISO and is granted to a shareholder holding more
than 10% of the combined voting power of all classes of the Company's stock or
of its parent or subsidiary on the date of the grant of the option, the option
price per share of Class A Common Stock may not be less than 110% of the fair
market value of such shares at the time of grant; and (iii) the term of any
option may not exceed 10 years, or five years if the option is intended to be an
ISO and is granted to a shareholder owning more than 10% of the total combined
voting power of all classes of stock on the date of the grant of the option.

A maximum of 2,600,000 shares of Class A Common Stock may be granted under
the Plan, unless it is amended to increase that number. Shares of Class A Common
Stock which are attributable to options that have expired, terminated or been
canceled are available in connection with future option grants. The Company
intends to grant, as of the date of this Prospectus, options to purchase at the
initial public offering price an aggregate of 1,050,000 shares of Class A Common
Stock to key North American and international managers and to its North American
team members (employees) who have worked with the Company for six months or
more. Options covering 97,000 of those shares are intended to be granted to the
Company's executive officers as a group, of which 30,000, 30,000 and 12,000 will
be granted to Messrs. Scheppmann, McKenzie and Cronin, respectively.

The Plan will remain in effect until terminated by the Board of Directors.
No ISO may be granted after May 1, 2008. The Plan may be amended by the Board of
Directors without the consent of the shareholders of the Company, except that
for any amendment to be effective as to ISOs, it must be approved by the
Company's shareholders within one year after approval by the Board of Directors
if the amendment increases the total number of shares issuable pursuant to ISOs
or changes the class of employees eligible to receive ISOs that may participate
in the Plan.

The Omnibus Budget Reconciliation Act of 1993 added Section 162(m) to the
Code. Section 162(m) generally disallows a public company's tax deduction for
compensation to the chief executive officer and four other most highly
compensated executive officers in excess of $1,000,000 per person in any tax
year beginning on or after January 1, 1994. Compensation that qualifies as
"performance-based compensation" is excluded from the $1,000,000 deductibility
cap, and therefore remains fully deductible by the company that pays it. The
Company intends that options granted with an exercise price at least equal to
100% of fair market value of the underlying stock at the date of grant will
qualify as such "performance-based compensation," although other options granted
under the Plan may not so qualify.

41
<PAGE> 44

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's two classes of Common Stock as of the date of this
Prospectus and as adjusted to reflect the sale of the shares of Class A Common
Stock offered hereby with respect to: (i) each of the Company's Named Executive
Officers and directors; (ii) each person known by the Company to own
beneficially more than 5% of the Common Stock; and (iii) all executive officers
and directors of the Company as a group. Except as otherwise indicated, the
persons or entities listed below have sole voting and investment power with
respect to such shares.

<TABLE>
<CAPTION>
SHARES OWNED SHARES TO BE OWNED
PRIOR TO THE OFFERING(1)(2) AFTER THE OFFERING(1)(2)
----------------------------------- ------------------------------------ TOTAL
CLASS A CLASS B CLASS A CLASS B VOTING POWER
COMMON STOCK COMMON STOCK COMMON STOCK COMMON STOCK AFTER THE OFFERING
---------------- ---------------- ---------------- ----------------- ------------------
NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT PERCENT
------ ------- ------ ------- ------ ------- ------- ------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Craig A. Ponzio(3).........
June R. Ponzio(3)..........
William P. Trimarco........
Stephen M. Scheppmann......
Stephen E. McKenzie........
Patrick R. Cronin..........
All executive officers and
directors as a group
(7 persons)..............
</TABLE>

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

* Less than 1%.
(1) For purposes of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares that such person or group has the right
to acquire within 60 days after the date of this Prospectus or with respect
to which such person has or shares voting or investment power. For purposes
of computing the percentages of outstanding shares held by each person or
group of persons, shares which such person or group has the right to acquire
within 60 days after such date are deemed to be outstanding for purposes of
computing the percentage for such person or group but are not deemed to be
outstanding for the purpose of computing the percentage of any other person
or group.
(2) Each share of Class B Common Stock is convertible at the option of the
holder into one share of Class A Common Stock. The number of shares of Class
A Common Stock and percentages contained under this heading do not account
for such conversion rights. See "Description of Capital Stock."
(3) The address for Craig Ponzio and June Ponzio is 3900 Steve Reynolds
Boulevard, Norcross, Georgia 30093.

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CERTAIN TRANSACTIONS

The Company leases its corporate headquarters in Norcross, Georgia from L-J
Properties Inc. ("L-J Properties"), a company owned by Messrs. Ponzio, Trimarco
and Scheppmann. L-J Properties is owned 80% by Mr. Ponzio and 10% by each of
Messrs. Trimarco and Scheppmann. The lease commenced in August 1991 and
terminates in August 2001, subject to the Company's option to extend the lease
for two 36-month periods. The Company currently pays L-J Properties $678,000 per
year in rent, with certain annual increases determined by a formula set forth
therein. The Company believes that the lease with L-J Properties is on terms at
least as favorable to the Company as those obtainable from unaffiliated third
parties in the Company's area of operations. In fiscal years 1995, 1996 and
1997, and for the first nine months of 1998 the Company made payments of
$623,000, $642,000, $661,000 and $507,000, respectively, to L-J Properties under
this lease.

On May 1, 1998, the Company distributed $10.5 million of previously
undistributed S corporation earnings to its shareholders as of that date,
through the issuance of S Corp Notes payable in full upon demand and bearing
interest at 11%, with interest payable quarterly until the notes are paid in
full. On June 10, 1998, Albecca Inc. repaid, using borrowings under the Existing
Credit Facility, $4.0 million of the S Corp Notes plus accrued interest. On June
24, 1998, the holders of the S Corp Notes, who constitute all of the existing
shareholders and members of Albecca Inc. and Larson-Juhl International LLC ("L-J
International"), respectively, contributed the then outstanding $6.5 million
balance on such S Corp Notes to L-J International in satisfaction of a $6.5
million capital call made by L-J International on June 5, 1998. L-J
International demanded repayment of the S Corp Notes on June 24, 1998. Albecca
Inc. repaid the S Corp Notes, plus accrued interest, on June 24, 1998, using
borrowings under the Existing Credit Facilities. On June 26, 1998, the members
of L-J International contributed their respective membership interests in L-J
International to Albecca Inc., at which time L-J International became a
wholly-owned subsidiary of Albecca Inc. No consideration was given to the
members for their contribution since the shareholders of Albecca Inc. also
constitute all of the members of L-J International.

Upon the Termination Date, the Company will terminate its status as an S
corporation under the Code. The Company expects to distribute an additional
$60.0 million of undistributed S corporation earnings to its shareholders
through the issuance of additional S Corp Notes prior to consummation of the
Offering. The Company estimates that the interest payable on these additional S
Corp Notes will be $127,000. From the net proceeds of the Offering, the Company
intends to repay the entire unpaid balance of the S Corp Notes, together with
accrued interest thereon. The principal amount of S Corp Notes expected to be
outstanding for each current shareholder as of the consummation of the Offering,
and the estimated amount of interest accrued thereon, are: for Mr. Ponzio $58.7
million and $124,206, respectively; for Mr. Trimarco $720,000 and $1,524,
respectively; and for Mr. Scheppmann $600,000 and $1,270, respectively. See "S
Corporation Termination" and "Use of Proceeds."

The Company and the current shareholders plan to enter into tax
indemnification agreements prior to the Offering providing for, among other
things, the indemnification of the Company by such shareholders for any federal
and certain state income taxes (including interest and penalties) incurred by
the Company arising as a result of the Company being deemed to have been a C
corporation during any period for which it reported its earnings to the taxing
authorities as an S corporation. The separate indemnification obligation of each
shareholder as to each tax period will be calculated in a manner consistent with
the allocation of the S corporation income for such period and will be limited
to the distributions made to such shareholder during such period. The tax
indemnification agreements are also expected to provide for the
cross-indemnification of the Company and of each existing shareholder for
certain additional taxes (including interest and, in the case of existing
shareholders, penalties) resulting from the Company's operations during the
period in which it was an S corporation.

In contemplation of the Offering, in May 1998 the Company amended existing
arrangements with certain of the Company's executive officers relating to the
payment of deferred compensation amounts previously accrued in prior years. The
aggregate amount of such deferred payments was $3,040,000 at May 31, 1998.
Subject to certain exceptions, payment of these amounts will be deferred and
paid in annual installments of

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<PAGE> 46

$450,000 through 2002, $570,000 in 2003 and $670,000 in 2004. Of the accrued
amount, Messrs. Ponzio, Scheppmann, McKenzie, Cronin and Goodson are entitled to
aggregate payments of $2,770,000, $120,000, $120,000, $100,000 and $100,000,
respectively.

The Board of Directors of the Company has adopted a policy that following
the Offering any transaction with the Company's principal shareholders, officers
or directors or their affiliates must be on terms no less favorable to the
Company than could be obtained from an unaffiliated third party in an arm's
length transaction, and any such transaction exceeding $500,000 must also be
approved by a majority of the Company's independent and disinterested directors.

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<PAGE> 47

DESCRIPTION OF CAPITAL STOCK

GENERAL

The authorized capital stock of the Company consists of 250,000,000 shares
of Class A Common Stock, $0.01 par value per share, 100,000,000 shares of Class
B Common Stock, $0.01 par value per share and 50,000,000 shares of Preferred
Stock, $0.01 par value per share. The following description of the terms and
provisions of the shares of stock of the Company and certain other matters does
not purport to be complete and is subject to and qualified in its entirety by
reference to the applicable provisions of the Georgia Business Corporation Code,
as amended (the "GBCC") and the Articles and Bylaws.

CLASS A AND CLASS B COMMON STOCK

Voting. Holders of Class A Common Stock are entitled to one vote per
share. Holders of Class B Common Stock are entitled to 10 votes per share. All
actions submitted to a vote of shareholders are voted on by holders of Class A
Common Stock and Class B Common Stock voting together as a single class, except
as otherwise set forth below or provided by law.

Conversion. Class A Common Stock has no conversion rights. A holder of
Class B Common Stock may convert Class B Common Stock into Class A Common Stock,
in whole or in part, at any time and from time to time on the basis of one share
of Class A Common Stock for each share of Class B Common Stock. If at any time
any shares of Class B Common Stock are beneficially owned by any person other
than Mr. Ponzio or certain permitted transferees, such shares shall
automatically be converted into an equal number of shares of Class A Common
Stock.

Dividends. Holders of Class A Common Stock are entitled to receive cash
dividends on an equal per share basis as holders of Class B Common Stock if and
when such dividends are declared by the Board of Directors of the Company from
funds legally available therefor. In the case of any dividends paid in stock,
holders of Class A Common Stock are entitled to receive dividends (payable in
shares of Class A Common Stock) equal in number to the dividends (payable in
shares of Class B Common Stock) received by the holders of Class B Common Stock.

Liquidation. Holders of Class A Common Stock and Class B Common Stock
share with each other on a ratable basis as a single class in the net assets of
the Company available for distribution in respect of Class A Common Stock and
Class B Common Stock in the event of liquidation.

Limitation on Issuances of Additional Shares of Class B Common Stock. The
Articles limit the Company's authority to issue additional Class B Common Stock
to dividends or distributions payable in stock. The foregoing restriction may be
altered, amended or modified only with the approval of the holders of 66 2/3% of
both the Class A Common Stock and Class B Common Stock, voting separately as
classes.

Certain Class Voting Rights. In the event the Company proposes to engage
in any business transaction, including a merger, sale of substantially all of
its assets, tender or exchange offer, or other similar business combination, or
proposes to adopt a plan of liquidation, dissolution or reorganization, or
entertain any proposal for acquisition of a substantial equity interest in the
Company (any such event or combination of events being referred to as a
"Proposal"), and the Proposal is to be submitted to a vote of the Company's
shareholders, and either (i) the consideration per share proposed to be paid to
the holders of the Class A Common Stock is less than or otherwise different in
any respect from the consideration per share proposed to be paid to the holders
of the Class B Common Stock, or (ii) the respective rights of the Class A Common
Stock are proposed to be diminished or otherwise adversely altered relative to
the respective rights of the Class B Common Stock, then approval of the Proposal
shall require the affirmative vote of a majority of the outstanding shares of
each of the Class A Common Stock and the Class B Common Stock, voting as
separate voting groups.

Other Terms. Neither the Class A Common Stock nor the Class B Common Stock
may be subdivided, consolidated, reclassified or otherwise changed unless
contemporaneously therewith the other class of shares is subdivided,
consolidated, reclassified or otherwise changed in the same proportion and in
the same manner.

The rights, preferences and privileges of holders of both classes of Common
Stock are subject to, and may be adversely affected by, the rights of the
holders of shares of any series of preferred stock which the Company may
designate and issue in the future.

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<PAGE> 48

PREFERRED STOCK

Under the Articles, the Board of Directors may issue, without any further
action by the shareholders, up to 50,000,000 shares of Preferred Stock of one or
more series that include any preferences, conversion and other rights, voting
powers, restrictions, limitations, qualifications and terms and conditions of
redemption as shall be set forth in resolutions duly adopted by the Board of
Directors. The designation of any Preferred Stock with greater rights,
privileges and preferences than those applicable to both classes of Common Stock
may adversely affect the voting power, market price and other rights and
privileges of the Class A Common Stock, and may hinder or delay the removal of
directors, attempted tender offers, proxy contests or takeovers, or other
attempts to change control of the Company, some or all of which may be desired
by holders of the Class A Common Stock. Articles of amendment must be filed with
the Georgia Secretary of State prior to the issuance of any shares of Preferred
Stock of the applicable series.

REMOVAL OF THE BOARD OF DIRECTORS; NO CLASSIFICATION OF THE BOARD

The entire Board of Directors or any individual director may be removed
with or without cause by the shareholders. The Board of Directors is not divided
into classes, and the terms of office of all of the Directors expire at the next
annual meeting of shareholders.

SPECIAL MEETINGS

Under the Bylaws, special meetings of the shareholders may be called by the
Chairman of the Board or the Chief Executive Officer or by the shareholders only
if such shareholders hold outstanding shares representing at least two-thirds
( 2/3) of all votes entitled to be cast on any issue proposed to be considered
at any such special meeting.

CERTAIN PROVISIONS OF GEORGIA LAW

Georgia Business Combination Statute. The Company has elected in its
Bylaws to be subject to provisions of the GBCC prohibiting various "business
combinations" involving "interested shareholders" for a period of five years
after the shareholder becomes an interested shareholder of the Company. Such
provisions prohibit any business combination with an interested shareholder
unless either (i) prior to such time, the Board of Directors approves either the
business combination or the transaction by which such shareholder became an
interested shareholder, (ii) in the transaction that resulted in the shareholder
becoming an interested shareholder, the interested shareholder became the
beneficial owner of at least 90% of the outstanding voting stock of the Company
which was not held by directors, officers, affiliates thereof, subsidiaries or
certain employee stock option plans of the Company, or (iii) subsequent to
becoming an interested shareholder, such shareholder acquired additional shares
resulting in such shareholder owning at least 90% of the outstanding voting
stock of the Company and the business combination is approved by a majority of
the disinterested shareholders' shares not held by directors, officers,
affiliates thereof, subsidiaries or certain employee stock option plans of the
Company. Under the relevant provisions of the GBCC, a "business combination" is
defined to include, among other things, (i) any merger, consolidation, share
exchange or any sale, transfer or other disposition (or series of related sales
or transfers) of assets of the Company having an aggregate book value of 10% or
more of the Company's net assets (measured as of the end of the most recent
fiscal quarter), with an interested shareholder of the Company or any other
corporation which is or, after giving effect to such business combination,
becomes an affiliate of any such interested shareholder, (ii) the liquidation or
dissolution of the Company, (iii) the receipt by an interested shareholder of
any benefit from any loan, advance, guarantee, pledge, tax credit or other
financial benefit from the Company, other than in the ordinary course of
business and (iv) certain other transactions involving the issuance or
reclassification of securities of the Company which produce the result that 5%
or more of the total equity shares of the Company, or of any class or series
thereof, is owned by an interested shareholder. An "interested shareholder" is
defined by the GBCC to include any person or entity that, together with its
affiliates, beneficially owns or has the right to own 10% or more of the
outstanding voting shares of the Company, or any person that is an affiliate of
the Company and has, at any time within the preceding two-year period, been the
beneficial owner of 10% or more of the outstanding voting shares of the Company.
The

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<PAGE> 49

restrictions on business combinations shall not apply to any person who was an
interested shareholder before the adoption of the Bylaw which made the
provisions applicable to the Company nor to any persons who subsequently become
interested shareholders inadvertently, subsequently divest sufficient shares so
that the shareholder ceases to be an interested shareholder and would not, at
any time within the five-year period immediately before a business combination
involving the shareholder, have been an interested shareholder but for the
inadvertent acquisition.

Georgia Fair Price Statute. The Company has elected in its Bylaws to be
subject to the "Fair Price" provisions of the GBCC. These provisions require
that a "business combination" with an "interested shareholder" be (a)
unanimously approved by "continuing directors" who must constitute at least
three members of the board of directors at the time of such approval, or (b)
recommended by at least two-thirds of the "continuing directors" and approved by
a majority of the shareholders excluding the "interested shareholder," unless
certain standards regarding the consideration paid to shareholders in the
transaction are met. Subject to certain exceptions, a "business combination"
includes (i) any merger or consolidation of the corporation or a subsidiary of
the Company; (ii) any share exchange; (iii) any sale, lease, transfer, or other
disposition of assets of the Company or its subsidiaries occurring within a 12
month period and having an aggregate book value equal to 10% or more of the net
assets of the Company; (iv) any transaction that results in the issuance or
transfer by the Company of any stock of the Company or its subsidiaries
representing 5% or more of the total market value of the outstanding stock of
the Company to any interested shareholder within a 12 month period, except
pursuant to a transaction that effects a pro rata distribution to all
shareholders of the Company; (v) the adoption of any plan or proposal for the
liquidation or dissolution of the Company in which anything other than cash will
be received by an interested shareholder; and (vi) any transaction occurring
within a 12 month period involving the Company or a subsidiary of the Company
that has the effect of increasing by 5% or more the proportionate share of the
stock of any class or series of the Company or its subsidiaries that is directly
or beneficially owned by the interested shareholder. An "interested shareholder"
is defined the same as it is defined in the Georgia Business Combination Statute
described above. A "continuing director" includes any director who is not an
affiliate or associate of an interested shareholder or any board approved
successor of such a director who is not an affiliate or associate of an
interested shareholder.

The Fair Price provisions do not restrict a business combination if: (a)
the aggregate amount of the cash, and fair market value of any non-cash
property, measured five days before the consummation date, to be received per
share by the shareholders is at least equal to the highest of: (i) the highest
per share price, including brokerage commissions, transfer taxes, and soliciting
dealers' fees, paid by the interested shareholder for any shares of the same
class or series acquired by it within two years preceding the announcement date
or in the transaction in which it became an interested shareholder; (ii) the
higher of the fair market value per share as determined on the announcement date
or the determination date; or (iii) in the case of shares other than common
shares, the highest amount per share to which preferred shareholders are
entitled in the event of liquidation, dissolution, or winding up of the
corporation, provided that subparagraph (iii) shall only be applicable if the
interested shareholder acquired the shares within the two year period
immediately preceding the announcement date; and (b) shareholders receive cash
or the form of consideration used in the past by the interested shareholder to
purchase the largest number of shares of such class or series. Further, subject
to exceptions, prior to the time the business combination with the interested
shareholder takes place, without the approval of the board of directors, there
must have been: (i) no failure to declare and pay full dividends on the
Company's outstanding preferred shares; (ii) no reduction in the annual rate of
dividends paid on common shares except as to reflect any subdivision of the
shares; (iii) an increase in the annual rate of dividends to reflect any
reclassification of shares; and (iv) not more than a 1% increase in the
interested shareholder's ownership of any of the Company's stock in any 12 month
period. An interested shareholder may not receive a direct or indirect benefit,
except proportionately as a shareholder, of any loans, advances, guarantees,
pledges, or other financial assistance or any tax credits or other tax
advantages provided by the corporation or its subsidiaries, either in
anticipation of or in connection with such business combination or otherwise.

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INDEMNIFICATION AND LIMITATION OF LIABILITY

The Articles and Bylaws eliminate, subject to certain exceptions, the
personal liability of a director to the Company or its shareholders for monetary
damage for breaches of such director's duty of care or other duties as a
director. Neither the Articles nor the Bylaws provide for the elimination of or
any limitation on the personal liability of a director for (i) any
appropriation, in violation of the director's duties, of any business
opportunity of the Company, (ii) acts or omissions that involve intentional
misconduct or a knowing violation of law, (iii) unlawful corporate
distributions, or (iv) any transactions from which the director derived an
improper personal benefit. The Articles further provide that if the GBCC is
amended to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the Company
shall be eliminated or limited to the fullest extent permitted by the GBCC, as
amended, without further action by the shareholders. These provisions of the
Articles will limit the remedies available to a shareholder in the event of
breaches of any director's duties to such shareholder or the Company.

The Bylaws require the Company to indemnify and hold harmless any director,
and give the Board of Directors discretion to indemnify and hold harmless any
officer or other identified individual, 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 (including
any action or suit by or in the right of the Company) because he or she is or
was a director of the Company, against expenses (including, but not limited to,
attorney's fees and disbursements, court costs and expert witness fees), and
against judgments, fines, penalties, and amounts paid in settlement incurred by
him or her in connection with the action, suit or proceeding.

The Company may enter into separate indemnification agreements with each of
its executive officers and directors, to provide for indemnification and
advancement of expenses in a manner and subject to terms and conditions similar
to those set forth in the Bylaws. The Company also may purchase and maintain
liability insurance for the benefit of its directors and executive officers.
There is no pending litigation or proceeding involving a director, officer,
employee or other agent of the Company as to which indemnification is being
sought, nor is the Company aware of any pending or threatened litigation that
may result in claims for indemnification by any director, officer, employee or
other agent. The Company will also agree to hold the shareholders harmless from,
against and in respect of federal income tax liabilities, including interest and
penalties imposed thereon (and any state and local income tax liabilities as
provided by applicable law), if any, incurred by the shareholders as a result of
a final determination of an adjustment (by reason of an amended return, claim
for refund, audit, judicial decision or otherwise) to the taxable income of the
Company for any period during the time the Company was treated as an S
corporation for federal and state income tax purposes which results in a
decrease for any such period in the Company's taxable income and a corresponding
increase for any such period in the taxable income of the shareholders. See "S
Corporation Termination."

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is .

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CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
FOR NON-U.S. HOLDERS OF CLASS A COMMON STOCK

GENERAL

The following is a general discussion of certain material United States
federal income and estate tax consequences of the ownership and disposition of
shares of Class A Common Stock applicable to Non-U.S. Holders of such shares of
Class A Common Stock. As used herein, the term "Non-U.S. Holder" means a
beneficial owner other than (i) an individual citizen or income tax resident of
the United States, (ii) a corporation created or organized in or under the laws
of the United States or of any State thereof, (iii) an estate the income of
which is subject to United States federal income tax regardless of its source,
(iv) a trust over which a court within the United States is able to exercise
primary supervision and as to which one or more United States persons have the
authority to control all the substantial decisions of trust, or (v) a
partnership or other entity created or organized in or under the laws of the
United States or of any State thereof and properly classified as a United States
entity. The discussion is based on current law, which is subject to change
retroactively or prospectively, and is for general information only. The
discussion does not address all aspects of United States federal income and
estate taxation and does not address any aspects of state, local or foreign tax
laws. The discussion does not consider any specific facts or circumstances that
may apply to a particular Non-U.S. Holder. Accordingly, prospective investors
are urged to consult their tax advisors regarding the current and possible
future United States federal, state, local and non-U.S. income and other tax
consequences of holding and disposing of shares of Class A Common Stock.

DIVIDENDS

In the event that dividends are paid to a Non-U.S. Holder, such dividends
will be subject to United States withholding tax at a 30% rate (or a lower rate
as may be specified by an applicable tax treaty) unless the dividends are (i)
effectively connected with a trade or business carried on by the Non-U.S. Holder
within the United States or (ii) if a tax treaty applies, attributable to a
United States permanent establishment or, in the case of an individual, a fixed
base in the United States, maintained by the Non-U.S. Holder. Dividends
effectively connected with such a trade or business or, if a tax treaty applies,
attributable to such permanent establishment or fixed base will generally not be
subject to withholding (if the Non-U.S. Holder files certain forms as required
with the payor of the dividend) but generally will be subject to United States
federal income tax on a net income basis at regular graduated individual or
corporate rates. In the case of a Non-U.S. Holder that is a corporation, such
effectively connected income also may be subject to the branch profits tax
(which is generally imposed on a foreign corporation on the deemed repatriation
from the United States of effectively connected earnings and profits) at a 30%
rate or such lower rate as may be specified by an applicable income tax treaty.
The branch profits tax may not apply if the recipient is a qualified resident of
certain countries with which the United States has an income tax treaty.

To determine the applicability of a tax treaty providing for a lower rate
of withholding, dividends paid to an address in a foreign country are currently
presumed to be paid to a resident of that country, unless the payor has definite
knowledge that such presumption is not warranted or an applicable tax treaty (or
United States Treasury Department Regulations thereunder) requires some other
method for determining a Non-U.S. Holder's residence. However, under recently
finalized United States Treasury Department Regulations, in the case of
dividends paid after December 31, 1999, a Non-U.S. Holder generally will be
unable to claim the benefits of a reduced rate under an income tax treaty,
unless certain certification procedures are complied with, directly or through
an intermediary. The Company must report annually to the IRS and to each Non-
U.S. Holder the amount of dividends paid to, and the tax withheld with respect
to, each Non-U.S. Holder. These reporting requirements apply regardless of
whether withholding was reduced or eliminated by an applicable tax treaty.
Copies of these information returns also may be made available under the
provisions of a specific treaty or agreement with the tax authorities of the
country in which the Non-U.S. Holder resides.

A Non-U.S. Holder that is eligible for a reduced rate of United States
withholding tax pursuant to an income tax treaty may obtain a refund of any
excess amounts withheld by filing an appropriate claim for refund with the IRS.
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SALE OF COMMON STOCK

Generally, a Non-U.S. Holder will not be subject to United States federal
income tax on any gain realized upon the sale or other disposition of such
holder's shares of Class A Common Stock unless: (i) the gain is effectively
connected with a trade or business carried on by the Non-U.S. Holder within the
United States and, if a tax treaty applies, the gain is attributable to a
permanent establishment or a fixed base maintained by the Non-U.S. Holder in the
United States; (ii) the Non-U.S. Holder is an individual who holds the shares of
Class A Common Stock as a capital asset and is present in the United States for
183 days or more in the taxable year of the disposition, and either (a) such
Non-U.S. Holder has a "tax home" (as specifically defined for United States
federal income tax purposes) in the United States (unless the gain from
disposition is attributable to an office or other fixed place of business
maintained by such non-U.S. Holder in a foreign country and a foreign tax equal
to at least 10% of such gain has been paid to a foreign country), or (b) the
gain from the disposition is attributable to an office or other fixed place of
business maintained by such Non-U.S. Holder in the United States; (iii) the
Non-U.S. Holder is subject to tax pursuant to the provisions of United States
tax law applicable to certain United States expatriates; or (iv) the Company is
or has been during certain periods a "United States real property holding
corporation" for United States federal income tax purposes (which the Company
does not believe that it has been, currently is or is likely to become) and,
assuming that the Class A Common Stock is deemed for tax purposes to be
"regularly traded on an established securities market," the Non-U.S. Holder
held, at any time during the five-year period ending on the date of disposition
(or such shorter period that such shares were held), directly or indirectly,
more than five percent of the Class A Common Stock.

ESTATE TAX

Shares of Class A Common Stock owned or treated as owned by an individual
who is not a citizen or resident (as specially defined for United States federal
estate tax purposes) of the United States at the time of death will be included
in the individual's gross estate for United States federal estate tax purposes,
unless an applicable tax treaty provides otherwise, and may be subject to United
States federal estate tax.

BACKUP WITHHOLDING AND INFORMATION REPORTING

As a general rule, under current United States federal income tax law,
backup withholding tax (which generally is a withholding tax imposed at the rate
of 31% on certain payments to persons that fail to furnish the information
required under the United States information reporting requirements) and
information reporting requirements apply to the actual and constructive payment
of dividends. The United States backup withholding tax and information reporting
requirements generally, under current regulations, will not apply to dividends
paid on Class A Common Stock to a Non-U.S. Holder at an address outside the
United States, unless the payor has knowledge that the payee is a United States
person. Backup withholding and information reporting generally will apply to
dividends paid on Class A Common Stock to addresses inside the United States to
beneficial owners that are not entitled to an exemption, as discussed above and
that fail to provide in the manner required certain identifying information.
However, under recently finalized United States Treasury Department Regulations,
in the case of dividends paid after December 31, 1999, a Non-U.S. Holder
generally will be subject to backup withholding at a 31% rate, unless certain
certification procedures (or, in the case of payments made outside the United
States with respect to an offshore account, certain documentary evidence
procedures) are complied with, directly or through an intermediary.

The payment of the proceeds from the disposition of shares of Class A
Common Stock to or through the United States office of a broker will be subject
to information reporting and backup withholding unless the holder, under
penalties of perjury, certifies, among other things, its status as a Non-U.S.
Holder, or otherwise establishes an exemption. Generally, the payment of the
proceeds from the disposition of shares of Class A Common Stock to or through a
non-U.S. office of a non-U.S. broker will not be subject to backup withholding
and will not be subject to information reporting. In the case of the payment of
proceeds from the disposition of shares of Class A Common Stock to or through a
non-U.S. office of a broker that is a United States person or a "U.S.-related
person," United States Treasury Department Regulations require (i) backup
withholding if the broker has actual knowledge that the owner is not a Non-U.S.
Holder, and (ii) information reporting on
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the payment unless the broker receives a statement from the owner, signed under
penalties of perjury, certifying, among other things, its status as a Non-U.S.
Holder, or the broker has documentary evidence in its files that the owner is a
Non-U.S. Holder and the broker has no actual knowledge to the contrary. For this
purpose, a "U.S.-related person" is (i) a "controlled foreign corporation" for
United States federal income tax purposes, (ii) a foreign person 50% or more of
whose gross income from all sources for the three-year period ending with the
close of its taxable year preceding the payment (or for such part of the period
that the broker has been in existence) is derived from activities that are
effectively connected with the conduct of a United States trade or business, or
(iii) in the case of payments made after December 31, 1999, a foreign
partnership with certain connections to the United States.

Backup withholding is not an additional tax. Any amounts withheld from a
payment to a Non-U.S. Holder under the backup withholding rules will be allowed
as a credit against such holder's United States federal income tax liability, if
any, provided that such holder files the required information or appropriate
claim for refund with the IRS.

51
<PAGE> 54

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have shares of
Class A Common Stock and shares of Class B Common Stock outstanding. The
shares of Class A Common Stock sold in the Offering ( shares if the
U.S. Underwriters' over-allotment option is exercised in full) will be freely
tradable by persons other than affiliates of the Company, without restriction.
The remaining shares of Class A Common Stock and all shares of
Class B Common Stock will be "restricted" securities within the meaning of Rule
144 under the Securities Act and may not be sold in the absence of registration
under the Securities Act unless an exemption from registration is available,
including exemptions contained in Rule 144. Of this amount, shares will
be beneficially owned by persons who are affiliates of the Company and,
commencing 90 days after the date of this Prospectus, would be eligible for
public sale pursuant to Rule 144, subject to the volume restrictions discussed
below.

Subject to certain exceptions, each of the Company and the directors,
executive officers and existing shareholders of the Company has agreed that,
without the prior written consent of Morgan Stanley & Co. Incorporated on behalf
of the Underwriters, it will not, during the period ending 180 days after the
date of this Prospectus, (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase or otherwise transfer, lend or dispose
of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or (ii) enter
into any swap or other arrangements that transfers to another, in whole or in
part, any of the economic consequences of ownership of the Common Stock, whether
any such transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or other securities, in cash or otherwise. See
"Underwriters."

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned his or her shares of
Common Stock for at least one year (including the prior holding period of any
prior owner other than an affiliate) is entitled to sell within any three-month
period that number of shares which does not exceed the greater of (i) 1% of the
outstanding shares of Class A Common Stock or (ii) the average weekly trading
volume during the four calendar weeks preceding each such sale. Sales under Rule
144 are also subject to certain manner of sale provisions, notice requirements
and the availability of current public information about the Company. A person
(or persons whose shares are aggregated) who is not deemed an "affiliate" of the
Company for at least three months and who has beneficially owned shares for at
least two years (including the holding period of any prior owner other than an
affiliate) would be entitled to sell such shares under Rule 144 without regard
to the limitations described above. Rule 144 defines "affiliate" of a company as
a person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, such company.
Affiliates of a company generally include its directors, executive officers and
principal shareholders.

The Company intends to issue under the Plan options to purchase up to an
aggregate of shares of Class A Common Stock as of the date of this
Prospectus. The Company intends to file a registration statement on Form S-8
under the Securities Act to register the shares reserved or to be available for
issuance pursuant to the Plan. Upon such registration, such shares will be
eligible for resale in the public market without restrictions by persons who are
not affiliates of the Company, and, to the extent they are held by affiliates,
pursuant to Rule 144 without observance of the holding period requirements.

Prior to the Offering, there has been no public market for the Class A
Common Stock, and no prediction can be made as to the effect, if any, that the
sale of shares or the availability of shares for sale will have on the market
price prevailing from time to time. Nevertheless, sales of substantial amounts
of Class A Common Stock in the public market could adversely affect prevailing
market price and the ability of the Company to raise equity capital in the
future.

52
<PAGE> 55

UNDERWRITERS

Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date hereof (the "Underwriting Agreement"), the U.S.
Underwriters named below for whom Morgan Stanley & Co. Incorporated, Donaldson,
Lufkin & Jenrette Securities Corporation and Wheat First Union, a division of
Wheat First Securities, Inc., are acting as U.S. representatives (the "U.S.
Representatives"), and the International Underwriters named below for whom
Morgan Stanley & Co. International Limited, Donaldson, Lufkin & Jenrette
International and Wheat First Union, a division of Wheat First Securities, Inc.,
are acting as international representatives (the "International
Representatives"), have severally agreed to purchase, and the Company has agreed
to sell to them, severally, the respective number of shares of Common Stock set
forth opposite the names of such Underwriters below:

<TABLE>
<CAPTION>
NUMBER
NAME OF SHARES
- ---- ---------
<S> <C>
U.S. Underwriters:
Morgan Stanley & Co. Incorporated.........................
Donaldson, Lufkin & Jenrette Securities Corporation.......
Wheat First Securities, Inc. .............................

Subtotal...............................................
International Underwriters:
Morgan Stanley & Co. International Limited................
Donaldson, Lufkin & Jenrette International................
Wheat First Securities, Inc. .............................

Subtotal...............................................
Total.............................................
=======
</TABLE>

The U.S. Underwriters and the International Underwriters, and the U.S.
Representatives and the International Representatives, are collectively referred
to as the "Underwriters" and the "Representatives", respectively. The
Underwriting Agreement provides that the obligations of the several Underwriters
to pay for and accept delivery of the shares of Common Stock offered hereby are
subject to the approval of certain legal matters by their counsel and to certain
other conditions. The Underwriters are obligated to take and pay for all of the
shares of Common Stock offered hereby (other than those covered by the U.S.
Underwriters' overallotment option described below) if any such shares are
taken.

Pursuant to the Agreement between U.S. and International Underwriters, each
U.S. Underwriter has represented and agreed that, with certain exceptions: (i)
it is not purchasing any Shares (as defined herein) for the account of anyone
other than a United States or Canadian Person (as defined herein) and (ii) it
has not offered or sold, and will not offer or sell, directly or indirectly, any
Shares or distribute any prospectus relating to the Shares outside the United
States or Canada or to anyone other than a United States or Canadian Person.
Pursuant to the Agreement between U.S. and International Underwriters, each
International Underwriter has represented and agreed that, with certain
exceptions: (i) it is not purchasing any Shares for the account of any United
States or Canadian Person and (ii) it has not offered or sold, and will not
offer or sell, directly or indirectly, any Shares or distribute any prospectus
relating to the Shares in the United States or Canada or to any United States or
Canadian Person. With respect to any Underwriter that is a U.S. Underwriter and
an International Underwriter, the foregoing representations and agreements (i)
made by it in its capacity as a U.S. Underwriter apply only to it in its
capacity as a U.S. Underwriter and (ii) made by it in

53
<PAGE> 56

its capacity as an International Underwriter apply only to it in its capacity as
an International Underwriter. The foregoing limitations do not apply to
stabilization transactions or to certain other transactions specified in the
Agreement between U.S. and International Underwriters. As used herein, "United
States or Canadian Person" means any national or resident of the United States
or Canada, or any corporation, pension, profit-sharing or other trust or other
entity organized under the laws of the United States or Canada or of any
political subdivision thereof (other than a branch located outside the United
States and Canada of any United States or Canadian Person), and includes any
United States or Canadian branch of a person who is otherwise not a United
States or Canadian Person. All shares of Common Stock to be purchased by the
Underwriters under the Underwriting Agreement are referred to herein as the
"Shares".

Pursuant to the Agreement between U.S. and International Underwriters,
sales may be made between the U.S. Underwriters and International Underwriters
of any number of Shares as may be mutually agreed. The per share price of any
Shares so sold shall be the public offering price set forth on the cover page
hereof, in United States dollars, less an amount not greater than the per share
amount of the concession to dealers set forth below.

Pursuant to the Agreement between U.S. and International Underwriters, each
U.S. Underwriter has represented that it has not offered or sold, and has agreed
not to offer or sell, any Shares, directly or indirectly, in any province or
territory of Canada or to, or for the benefit of, any resident of any province
or territory of Canada in contravention of the securities laws thereof and has
represented that any offer or sale of Shares in Canada will be made only
pursuant to an exemption from the requirement to file a prospectus in the
province or territory of Canada in which such offer or sale is made. Each U.S.
Underwriter has further agreed to send to any dealer who purchases from it any
of the Shares a notice stating in substance that, by purchasing such Shares,
such dealer represents and agrees that it has not offered or sold, and will not
offer or sell, directly or indirectly, any of such Shares in any province or
territory of Canada or to, or for the benefit of, any resident of any province
or territory of Canada in contravention of the securities laws thereof and that
any offer or sale of Shares in Canada will be made only pursuant to an exemption
from the requirement to file a prospectus in the province or territory of Canada
in which such offer or sale is made, and that such dealer will deliver to any
other dealer to whom it sells any of such Shares a notice containing
substantially the same statement as is contained in this sentence.

Pursuant to the Agreement between U.S. and International Underwriters, each
International Underwriter has represented and agreed that (i) it has not offered
or sold and, prior to the date six months after the closing date for the sale of
the Shares to the International Underwriters, will not offer or sell, any Shares
to persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Shares in, from or otherwise involving
the United Kingdom; and (iii) it has only issued or passed on and will only
issue or pass on in the United Kingdom any document received by it in connection
with the offering of the Shares to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 or is a person to whom such document may otherwise
lawfully be issued or passed on.

Pursuant to the Agreement between U.S. and International Underwriters, each
International Underwriter has further represented that it has not offered or
sold, and has agreed not to offer or sell, directly or indirectly, in Japan or
to or for the account of any resident thereof, any of the Shares acquired in
connection with the distribution contemplated hereby, except for offers or sales
to Japanese International Underwriters or dealers and except pursuant to any
exemption from the registration requirements of the Securities and Exchange Law
and otherwise in compliance with applicable provisions of Japanese law. Each
International Underwriter has further agreed to send to any dealer who purchases
from it any of the Shares a notice stating in substance that, by purchasing such
Shares, such dealer represents and agrees that it has not offered or sold, and
will not offer or sell, any of such Shares, directly or indirectly, in Japan or
to or for the account of any resident thereof except for offers or sales to
Japanese International Underwriters or dealers and except pursuant to any
54
<PAGE> 57

exemption from the registration requirements of the Securities and Exchange Law
and otherwise in compliance with applicable provisions of Japanese law, and that
such dealer will send to any other dealer to whom it sells any of such Shares a
notice containing substantially the same statement as is contained in this
sentence.

The Underwriters initially propose to offer part of the shares of Common
Stock directly to the public at the public offering price set forth on the cover
page hereof and part to certain dealers at a price that represents a concession
not in excess of $ a share under the public offering price. Any
Underwriter may allow, and such dealers may reallow, a concession not in excess
of $ a share to other Underwriters or to certain dealers. After the
initial offering of the shares of Common Stock, the offering price and other
selling terms may from time to time be varied by the Representatives.

The Company has granted to the U.S. Underwriters an option, exercisable for
30 days from the date of this Prospectus, to purchase up to an aggregate of
additional shares of Common Stock at the public offering
price set forth on the cover page hereof, less underwriting discounts and
commissions. The U.S. Underwriters may exercise such option solely for the
purpose of covering overallotments, if any, made in connection with the offering
of the shares of Common Stock offered hereby. To the extent such option is
exercised, each U.S. Underwriter will become obligated, subject to certain
conditions, to purchase approximately the same percentage of such additional
shares of Common Stock as the number set forth next to such U.S. Underwriter's
name in the preceding table bears to the total number of shares of Common Stock
set forth next to the names of all U.S. Underwriters in the preceding table.

The Underwriters have informed the Company that they do not intend sales to
discretionary accounts to exceed five percent of the total number of shares of
Common Stock offered by them.

The Company has applied to have the Common Stock listed on the New York
Stock Exchange under the symbol "BEK."

Each of the Company and the directors, executive officers and all of the
shareholders of the Company have agreed that, without the prior written consent
of Morgan Stanley & Co. Incorporated on behalf of the Underwriters, it will not,
during the period ending 180 days after the date of this Prospectus, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The restrictions described in this
paragraph do not apply to (x) the sale of Shares to the Underwriters, (y) the
issuance by the Company of shares of Common Stock upon the exercise of an option
or a warrant or the conversion of a security outstanding on the date of this
Prospectus of which the Underwriters have been advised in writing or (z)
transactions by any person other than the Company relating to shares of Common
Stock or other securities acquired in open market transactions after the
completion of the offering of the Shares.

In order to facilitate the offering of the Common Stock, the Underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the Common Stock. Specifically, the Underwriters may overallot in
connection with the offering, creating a short position in the Common Stock for
their own account. In addition, to cover overallotments or to stabilize the
price of the Common Stock, the Underwriters may bid for, and purchase, shares of
Common Stock in the open market. Finally, the underwriting syndicate may reclaim
selling concessions allowed to an Underwriter or a dealer for distributing the
Common Stock in the offering, if the syndicate repurchases previously
distributed Common Stock in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the Common Stock above independent market
levels. The Underwriters are not required to engage in these activities, and may
end any of these activities at any time.

55
<PAGE> 58

The Company and the Underwriters have agreed to indemnify each other
against certain liabilities, including liabilities under the Securities Act.

PRICING OF THE OFFERING

Prior to the Offering, there has been no public market for the Common
Stock. The initial public offering price will be determined by negotiations
between the Company and the U.S. Representatives. Among the factors to be
considered in determining the initial public offering price will be the future
prospects of the Company and its industry in general, sales, earnings and
certain other financial operating information of the Company in recent periods,
and the price-earnings ratios, price-sales ratios, market prices of securities
and certain financial and operating information of companies engaged in
activities similar to those of the Company. The estimated initial public
offering price range set forth on the cover page of this Preliminary Prospectus
is subject to change as a result of market conditions and other factors.

Of the shares of Class A Common Stock being offered, shares are
being offered initially in the United States and Canada by the U.S. Underwriters
and shares are being offered initially outside the United States and Canada
by the International Underwriters.

LEGAL MATTERS

The validity of shares of Class A Common Stock offered hereby is being
passed upon for the Company by Nelson Mullins Riley & Scarborough, L.L.P.,
Atlanta, Georgia. Certain legal matters related to the Offering will be passed
upon for the Underwriters by Jones, Day, Reavis & Pogue, Atlanta, Georgia.

EXPERTS

The consolidated financial statements included in this Prospectus have been
audited by Arthur Andersen LLP, independent public accountants, as set forth in
their report. In that report, that firm states that with respect to Larson-Juhl
Netherlands B.V. its opinion is based on the report of other independent public
accountants, BDO CampsObers. The financial statements referred to above have
been included herein in reliance upon the authority of those firms as experts in
giving said reports.

AVAILABLE INFORMATION

The Company has filed with the Commission through the Electronic Data
Gathering and Retrieval ("EDGAR") system a registration statement on Form S-1
(together with all amendments, exhibits and schedules thereto, the "Registration
Statement") under the Securities Act with respect to the Securities offered by
this Prospectus. This Prospectus does not contain all of the information set
forth in such Registration Statement, certain parts of which have been omitted
in accordance with the rules and regulations of the Commission. Statements
contained in this Prospectus as to the contents of any contract or other
document referred to are not necessarily complete and in each instance reference
is made to the copy of such contract or other document filed as an exhibit to
the Registration Statement of which this Prospectus forms a part. For further
information, reference is made to such registration statement, including the
exhibits thereto, which may be inspected without charge at the Commission's
principal office at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549;
and at the following Regional Offices of the Commission, except that copies of
the exhibits may not be available at certain of the Regional Offices: Chicago
Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661;
and New York Regional Office, 7 World Trade Center, Suite 1300, New York, New
York 10048. Copies of all or any part of such material may be obtained from the
Commission at 450 Fifth Street, N.W. Room 1024, Washington, D.C. 20549, upon
payment of certain fees prescribed by the Commission. The Commission maintains a
World Wide Web site on the Internet at http://www.sec.gov that contains reports,
proxy, information statements, and registration statements and other information
filed with the Commission through the EDGAR system.

56
<PAGE> 59

The Company is not presently a reporting company and does not file reports
or other information with the Commission. On the effective date of the
Registration Statement, however, the Company will become a reporting company.
Further, the Company will register its securities under the Exchange Act.
Accordingly, the Company will become subject to the additional reporting
requirements of the Exchange Act and in accordance therewith will file reports,
proxy statements and other information with the Commission. In addition, after
the completion of the Offering, the Company intends to furnish its shareholders
with annual reports containing audited financial statements.

57
<PAGE> 60

ALBECCA INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Consolidated Financial Statements:
Report of Independent Public Accountants -- Arthur Andersen
LLP....................................................... F-2
Report of the Auditors -- BDO CampsObers.................... F-3
Consolidated Balance Sheets as of August 25, 1996, August
31, 1997, March 1, 1998 and May 31, 1998 (unaudited) and
pro forma May 31, 1998 (Note 12) (unaudited).............. F-4
Consolidated Statements of Operations for each of the three
years in the period ended August 31, 1997, for the six
months ended February 23, 1997 (unaudited) and March 1,
1998 and for the nine months ended May 25, 1997
(unaudited) and May 31, 1998 (unaudited).................. F-5
Consolidated Statements of Shareholders' Equity for each of
the three years in the period ended August 31, 1997, for
the six months ended March 1, 1998 and for the three
months ended May 31, 1998 (unaudited)..................... F-6
Consolidated Statements of Cash Flows for each of the three
years in the period ended August 31, 1997, for the six
months ended February 23, 1997 (unaudited) and March 1,
1998 and for the nine months ended May 25, 1997
(unaudited) and May 31, 1998 (unaudited).................. F-7
Notes to Consolidated Financial Statements.................. F-8
</TABLE>

F-1
<PAGE> 61

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Albecca Inc.:

We have audited the accompanying consolidated balance sheets of ALBECCA
INC. (a Georgia corporation) and subsidiaries as of March 1, 1998, August 31,
1997 and August 25, 1996, and the related consolidated statements of operations,
shareholders' equity and cash flows for the six months ended March 1, 1998 and
for each of the three years in the period ended August 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 did not audit the financial statements of Larson-Juhl Netherlands
B.V. and subsidiaries, which statements reflect total assets of 4%, 5%, and 7%
at March 1, 1998, August 31, 1997 and August 25, 1996, respectively, and total
revenues of 6%, 6%, 7%, and 4% for the six months ended March 1, 1998 and for
each of the three years in the period ended August 31, 1997. Those statements
were audited by other auditors whose report has been furnished to us, and our
opinion, insofar as it relates to the amounts included for that entity, is based
solely on the report of other auditors.

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 the our audits provide a reasonable basis for our opinion.

In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of Albecca Inc. and subsidiaries as of March 1, 1998,
August 31, 1997 and August 25, 1996, and the results of their operations and
their cash flows for the six months ended March 1, 1998 and for each of the
three years in the period ended August 31, 1997 in conformity with generally
accepted accounting principles.

ARTHUR ANDERSEN LLP

/s/ ARTHUR ANDERSEN LLP

Atlanta, Georgia

May 6, 1998 (except with respect

to the matter discussed in

Note 13, as to which the

date is June 26, 1998)

F-2
<PAGE> 62

LARSON-JUHL NETHERLANDS B.V.

REPORT OF THE AUDITORS

To the shareholders of Larson-Juhl Netherlands B.V.:

We have audited the financial statements of Larson-Juhl Netherlands B.V. at
Barneveld for the three years and two months period ended March 1, 1998.

The company's management is responsible for the preparation of these
financial statements. It is our responsibility to form an independent opinion,
based on our audit, on those statements and to report our opinion to you.

We conducted our audit in accordance with auditing standards generally
accepted in the Netherlands. The results of the audit would not have been
materially different had the audit been conducted in accordance with generally
accepted auditing standards in the United States. The standards in the
Netherlands 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
accessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion the financial statements for the period September 1, 1997 up
to and including March 1, 1998 and including those for the fiscal year 1995 (for
the period January 2, 1995 up to and including August 27, 1995), the fiscal year
1996 (for the period August 28, 1995 up to and including August 25, 1996) and
the fiscal year 1997 (for the period August 26, 1996 up to and including August
31, 1997) as previously audited by us, give a true and fair view of the state of
the Company's affairs as at March 1, 1998 and of the results of its operations
for the three years and two months period ended March 1, 1998 and have been
properly prepared in accordance with accounting principles generally accepted in
The Netherlands and comply with the financial reporting requirements included in
Part 9, Book 2 of the Dutch Civil Code.

Arnhem, May 6, 1998

/s/ BDO CampsObers

BDO CampsObers
Registered accountants

F-3
<PAGE> 63

ALBECCA INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
PRO FORMA
AUGUST 25, AUGUST 31, MARCH 1, MAY 31, MAY 31,
1996 1997 1998 1998 1998 (NOTE 12)
---------- ---------- --------- ----------- --------------
(AUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash............................................ $ 4,363 $ 5,301 $ 5,588 $ 6,694 $ 6,694
Accounts receivable, less allowances for
doubtful accounts of $3,891, $5,378, $5,375
and $5,618, at August 25, 1996, August 31,
1997, March 1, 1998 and May 31, 1998
(unaudited)................................... 46,179 49,270 56,104 55,870 55,870
Inventories..................................... 60,083 68,209 74,787 75,431 75,431
Deferred income taxes (Note 5).................. -- -- -- -- 10,253
Other current assets............................ 4,954 4,879 7,692 7,652 7,652
-------- -------- -------- -------- --------
Total current assets...................... 115,579 127,659 144,171 145,647 155,900
PROPERTY, PLANT AND EQUIPMENT, net................ 52,854 52,675 59,377 62,491 62,491
OTHER LONG-TERM ASSETS............................ 21,735 28,355 39,952 49,268 49,268
-------- -------- -------- -------- --------
$190,168 $208,689 $243,500 $257,406 $267,659
======== ======== ======== ======== ========

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt............ $ 18,925 $ 28,079 $ 31,839 $ 31,827 $ 31,827
Accounts payable................................ 30,511 28,296 31,146 28,338 28,338
Accrued liabilities............................. 26,687 27,982 31,727 29,519 29,519
Notes payable to shareholders (Note 12)......... -- -- -- 10,500 67,500
-------- -------- -------- -------- --------
Total current liabilities................. 76,123 84,357 94,712 100,184 157,184
-------- -------- -------- -------- --------
LONG-TERM DEBT, less current maturities (Note 4).. 74,137 80,647 100,788 114,314 114,314
-------- -------- -------- -------- --------
DEFERRED INCOME TAXES (Note 5).................... -- -- -- -- 1,397
-------- -------- -------- -------- --------
OTHER LONG-TERM LIABILITIES....................... 4,565 6,372 8,134 11,739 11,739
-------- -------- -------- -------- --------
COMMITMENTS AND CONTINGENCIES (Note 9)
SHAREHOLDERS' EQUITY (DEFICIT) (Notes 7 and 12):
Preferred stock, $0.01 par value; no shares
authorized and outstanding at August 25, 1996,
August 31, 1997 and March 1, 1998, 50,000,000
shares authorized and no shares issued and
outstanding at May 31, 1998................... -- -- -- -- --
Common stock, $0.01 par value; 20,000,000 shares
authorized, 17,000,000 shares issued and
outstanding at August 25, 1996, August 31,
1997 and March 1, 1998 and no shares issued
and outstanding at May 31, 1998............... 170 170 170 -- --
Class A common stock, $0.01 par value; no shares
authorized and outstanding at August 25, 1996,
August 31, 1997 and March 1, 1998, 250,000,000
shares authorized, 374,000 shares issued and
outstanding at May 31, 1998................... -- -- -- 4 4
Class B common stock, $0.01 par value; no shares
authorized and outstanding at August 25, 1996,
August 31, 1997 and March 1, 1998, 100,000,000
shares authorized, 16,626,000 shares issued
and outstanding at May 31, 1998............... -- -- -- 166 166
Additional paid-in capital...................... 566 582 682 825 825
Retained earnings (deficit)..................... 36,002 42,408 46,681 38,225 (9,919)
Cumulative foreign currency translation
adjustment.................................... (1,395) (5,847) (7,667) (8,051) (8,051)
-------- -------- -------- -------- --------
Total shareholders' equity (deficit)...... 35,343 37,313 39,866 31,169 (16,975)
-------- -------- -------- -------- --------
$190,168 $208,689 $243,500 $257,406 $267,659
======== ======== ======== ======== ========
</TABLE>

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

F-4
<PAGE> 64

ALBECCA INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
FOR THE SIX FOR THE NINE
FOR THE YEARS ENDED MONTHS ENDED MONTHS ENDED
------------------------------------ ------------------------- -------------------------
AUGUST 27, AUGUST 25, AUGUST 31, FEBRUARY 23, MARCH 1, MAY 25, MAY 31,
1995 1996 1997 1997 1998 1997 1998
---------- ---------- ---------- ------------ ---------- ----------- -----------
(UNAUDITED) (AUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales................ $ 225,359 $ 300,788 $ 354,058 $ 186,016 $ 199,814 $ 266,695 $ 292,869
Cost of sales............ 128,341 173,964 200,750 108,401 113,468 152,614 165,817
---------- ---------- ---------- ---------- ---------- ---------- ----------
Gross profit......... 97,018 126,824 153,308 77,615 86,346 114,081 127,052
Operating expenses....... 74,547 96,595 117,707 58,304 67,992 86,905 100,011
---------- ---------- ---------- ---------- ---------- ---------- ----------
Operating income..... 22,471 30,229 35,601 19,311 18,354 27,176 27,041
Interest expense......... 4,008 6,846 9,722 4,728 4,713 7,051 7,472
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before
provision for
income taxes and
minority
interest........... 18,463 23,383 25,879 14,583 13,641 20,125 19,569
Provision for income
taxes.................. 2,322 3,679 3,243 1,657 1,710 2,194 2,575
Minority interest........ 97 300 146 34 358 103 377
---------- ---------- ---------- ---------- ---------- ---------- ----------
Historical net income.... $ 16,044 $ 19,404 $ 22,490 $ 12,892 $ 11,573 $ 17,828 $ 16,617
========== ========== ========== ========== ========== ========== ==========
Historical earnings per
common share -- basic
and diluted............ $ 0.94 $ 1.14 $ 1.32 $ 0.76 $ 0.68 $ 1.05 $ 0.98
========== ========== ========== ========== ========== ========== ==========
Historical weighted
average shares
outstanding -- basic
and diluted............ 17,000,000 17,000,000 17,000,000 17,000,000 17,000,000 17,000,000 17,000,000
========== ========== ========== ========== ========== ========== ==========

Income before pro forma
provision for income
taxes.................. $ 16,044 $ 19,404 $ 22,490 $ 12,892 $ 11,573 $ 17,828 $ 16,617
Pro forma provision for
income taxes........... 5,432 6,142 7,626 4,468 4,019 6,241 5,644
---------- ---------- ---------- ---------- ---------- ---------- ----------
Pro forma net income..... $ 10,612 $ 13,262 $ 14,864 $ 8,424 $ 7,554 $ 11,587 $ 10,973
========== ========== ========== ========== ========== ========== ==========
Pro forma earnings
per common share:
basic........... $ $ $
========== ========== ==========
diluted......... $ $ $
========== ========== ==========
Pro forma weighted
average shares
outstanding:
basic...........
========== ========== ==========
diluted.........
========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-5
<PAGE> 65

ALBECCA INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(IN THOUSANDS, EXCEPT SHARE DATA)

CLASS A CLASS B
COMMON STOCK COMMON STOCK COMMON STOCK ADDITIONAL
-------------------- ----------------- ------------------- PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS
----------- ------ -------- ------ ---------- ------ ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, August 28, 1994...... 17,000,000 $170 -- $ -- -- $ -- $543 $ 26,412
Capital contributions....... -- -- -- -- -- -- 23 --
Historical net income....... -- -- -- -- -- -- -- 16,044
Distributions to
shareholders.............. -- -- -- -- -- -- -- (13,608)
Currency translation
adjustment................ -- -- -- -- -- -- -- --
----------- ---- -------- ----- ---------- ---- ---- --------
BALANCE, August 27, 1995...... 17,000,000 170 -- -- -- -- 566 28,848
Historical net income....... -- -- -- -- -- -- -- 19,404
Distributions to
shareholders.............. -- -- -- -- -- -- -- (12,250)
Currency translation
adjustment................ -- -- -- -- -- -- -- --
----------- ---- -------- ----- ---------- ---- ---- --------
BALANCE, August 25, 1996...... 17,000,000 170 -- -- -- -- 566 36,002
Capital contributions....... -- -- -- -- -- -- 16 --
Historical net income....... -- -- -- -- -- -- -- 22,490
Distributions to
shareholders.............. -- -- -- -- -- -- -- (16,084)
Currency translation
adjustment................ -- -- -- -- -- -- -- --
----------- ---- -------- ----- ---------- ---- ---- --------
BALANCE, August 31, 1997...... 17,000,000 170 -- -- -- -- 582 42,408
Compensation related to
nonqualified stock
options................... -- -- -- -- -- -- 100 --
Historical net income....... -- -- -- -- -- -- -- 11,573
Distributions to
shareholders.............. -- -- -- -- -- -- -- (7,300)
Currency translation
adjustment................ -- -- -- -- -- -- -- --
----------- ---- -------- ----- ---------- ---- ---- --------
BALANCE, March 1, 1998........ 17,000,000 170 -- -- -- -- 682 $ 46,681
Compensation related to
nonqualified stock
options................... -- -- -- -- -- -- 143 --
Conversion of common stock
for Class A and Class B
common stock.............. (17,000,000) (170) 374,000 4 16,626,000 166 -- --
Historical net income....... -- -- -- -- -- -- -- 5,044
Distributions to
shareholders.............. -- -- -- -- -- -- -- (13,500)
Currency translation
adjustment................ -- -- -- -- -- -- -- --
----------- ---- -------- ----- ---------- ---- ---- --------
BALANCE, May 31, 1998
(unaudited)................. -- $ -- 374,000 $ 4 16,626,000 $166 $825 $ 38,225
=========== ==== ======== ===== ========== ==== ==== ========

<CAPTION>
CUMULATIVE
FOREIGN
CURRENCY
TRANSLATION
ADJUSTMENT TOTAL
----------- --------
<S> <C> <C>
BALANCE, August 28, 1994...... $ (542) $ 26,583
Capital contributions....... -- 23
Historical net income....... -- 16,044
Distributions to
shareholders.............. -- (13,608)
Currency translation
adjustment................ 64 64
------- --------
BALANCE, August 27, 1995...... (478) 29,106
Historical net income....... -- 19,404
Distributions to
shareholders.............. -- (12,250)
Currency translation
adjustment................ (917) (917)
------- --------
BALANCE, August 25, 1996...... (1,395) 35,343
Capital contributions....... -- 16
Historical net income....... -- 22,490
Distributions to
shareholders.............. -- (16,084)
Currency translation
adjustment................ (4,452) (4,452)
------- --------
BALANCE, August 31, 1997...... (5,847) 37,313
Compensation related to
nonqualified stock
options................... -- 100
Historical net income....... -- 11,573
Distributions to
shareholders.............. -- (7,300)
Currency translation
adjustment................ (1,820) (1,820)
------- --------
BALANCE, March 1, 1998........ (7,667) 39,866
Compensation related to
nonqualified stock
options................... -- 143
Conversion of common stock
for Class A and Class B
common stock.............. -- --
Historical net income....... -- 5,044
Distributions to
shareholders.............. (13,500)
Currency translation
adjustment................ (384) (384)
------- --------
BALANCE, May 31, 1998
(unaudited)................. $(8,051) $ 31,169
======= ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-6
<PAGE> 66

ALBECCA INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE SIX MONTHS ENDED FOR THE NINE MONTHS ENDED
------------------------------------ ------------------------- --------------------------
AUGUST 27, AUGUST 25, AUGUST 31, FEBRUARY 23, MARCH 1, MAY 25, MAY 31,
1995 1996 1997 1997 1998 1997 1998
---------- ---------- ---------- ------------ --------- ----------- -----------
(UNAUDITED) (AUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Pro forma net income.......... $ 10,612 $ 13,262 $ 14,864 $ 8,424 $ 7,554 $ 11,587 $ 10,973
Adjustments to reconcile pro
forma net income to net cash
provided by operating
activities:
Pro forma provision for
income taxes.............. 5,432 6,142 7,626 4,468 4,019 6,241 5,644
Minority interest........... 97 300 146 34 358 103 377
Depreciation and
amortization.............. 5,703 5,302 6,885 3,350 3,650 5,011 5,723
Loss on disposal of
property, plant and
equipment................. 177 199 393 369 40 (82) 16
Changes in operating assets
and liabilities:
Accounts receivable......... (2,791) (568) 1,227 (8,004) (4,772) (24) (2,942)
Inventories................. (9,327) 2,138 (1,218) 2,429 1,487 738 2,224
Other current assets........ (1,426) 1,155 (337) 865 (1,675) 395 (1,443)
Accounts payable............ (1,160) 6,403 (1,909) (2,910) 1,095 (3,851) (5,803)
Accrued liabilities......... 6,297 (5,703) (2,846) (314) (267) (1,459) 424
Other....................... 5,429 2,010 (2,681) 4,653 490 3,837 (627)
-------- -------- -------- -------- -------- -------- --------
Net cash provided by
operating
activities............ 19,043 30,640 22,150 13,364 11,979 22,496 14,566
-------- -------- -------- -------- -------- -------- --------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property, plant
and equipment............... (5,291) (5,461) (7,746) (5,514) (4,757) (5,673) (6,642)
Acquisitions of businesses.... (24,917) (34,062) (18,408) (13,600) (19,042) (13,862) (28,062)
Proceeds from sales of
property, plant and
equipment................... 753 658 3,455 2,802 175 3,257 404
Changes in other long-term
assets...................... (1,629) 766 185 12 (102) 464 (939)
-------- -------- -------- -------- -------- -------- --------
Net cash used in
investing
activities............ (31,084) (38,099) (22,514) (16,300) (23,726) (15,814) (35,239)
-------- -------- -------- -------- -------- -------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from revolving credit
facilities.................. 77,072 76,849 68,249 39,802 47,945 51,122 83,372
Repayments of revolving credit
facilities.................. (72,361) (68,005) (52,951) (28,228) (28,538) (42,535) (50,763)
Proceeds from long-term
debt........................ 24,447 19,706 11,171 7,522 3,907 9,695 13,318
Repayments of long-term
debt........................ (1,505) (8,018) (8,897) (7,580) (3,624) (8,011) (13,213)
Capital contribution.......... 23 -- 16 -- -- -- --
Distributions to
shareholders................ (13,608) (12,250) (16,084) (8,000) (7,300) (12,882) (10,300)
-------- -------- -------- -------- -------- -------- --------
Net cash provided by
(used in) financing
activities............ 14,068 8,282 1,504 3,516 12,390 (2,611) 22,414
-------- -------- -------- -------- -------- -------- --------
EFFECT OF EXCHANGE RATE ON
CASH.......................... (13) 164 (202) (496) (356) (370) (348)
-------- -------- -------- -------- -------- -------- --------
NET INCREASE IN CASH............ 2,014 987 938 84 287 3,701 1,393
CASH, beginning of period....... 1,362 3,376 4,363 4,363 5,301 4,363 5,301
-------- -------- -------- -------- -------- -------- --------
CASH, end of period............. $ 3,376 $ 4,363 $ 5,301 $ 4,447 $ 5,588 $ 8,064 $ 6,694
======== ======== ======== ======== ======== ======== ========
SUPPLEMENTAL INFORMATION
Interest paid................. $ 4,013 $ 7,144 $ 9,282 $ 4,578 $ 6,027 $ 6,962 $ 7,204
======== ======== ======== ======== ======== ======== ========
Income taxes paid............. $ 2,132 $ 2,378 $ 3,858 $ 2,586 $ 1,155 $ 2,894 $ 2,000
======== ======== ======== ======== ======== ======== ========
Details of acquisitions (Note
2):
Fair value of assets
acquired.................. $(35,637) $(49,814) $(35,611) $(18,705) $(31,624) $(29,349) $(47,179)
Liabilities assumed......... 9,395 12,205 17,149 5,061 12,559 15,434 18,216
-------- -------- -------- -------- -------- -------- --------
Cash paid................... (26,242) (37,609) (18,462) (13,644) (19,065) (13,915) (28,963)
Less cash acquired.......... 1,325 3,547 54 44 23 53 901
-------- -------- -------- -------- -------- -------- --------
Net cash paid for
acquisitions.......... $(24,917) $(34,062) $(18,408) $(13,600) $(19,042) $(13,862) $(28,062)
======== ======== ======== ======== ======== ======== ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-7
<PAGE> 67

ALBECCA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

Albecca Inc. (the "Company," formerly Larson-Juhl Inc.) primarily does
business under the Larson-Juhl name. The Company designs, manufactures and
distributes a complete line of branded custom framing products. The Company
operates in 20 countries, primarily in North America and Europe.

The Company is planning an initial public offering (the "Offering") of its
Class A common stock. At the time of closing, the Company will have converted
from an S corporation to a C corporation.

FISCAL PERIOD

The Company ends its fiscal year on the last Sunday in August. The
Company's fiscal years ended August 27, 1995 and August 25, 1996 were 52-week
years. The fiscal year ended August 31, 1997 was a 53-week year.

PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of
Albecca Inc. and its subsidiaries. All significant intercompany transactions are
eliminated. Minority interest represents minority shareholders' interest in
certain majority-owned subsidiaries.

USE OF ESTIMATES

The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from these estimates.

INVENTORIES

Inventories consist primarily of finished goods and are stated at the lower
of cost or market. Cost is determined by using the last-in, first-out method for
inventories within the U.S. (approximately 31.3%, 28.9% and 35.0% at August 25,
1996, August 31, 1997 and March 1, 1998) and the first-in, first-out method for
inventories within foreign countries. Additionally, cost includes material,
direct and indirect labor and capitalizable overhead. If the first-in, first-out
method of valuing inventories had been used exclusively, inventories of the
Company would have been $3,677,000, $3,608,000 and $3,609,000 higher at August
25, 1996, August 31, 1997 and March 1, 1998.

Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>
AUGUST 25, AUGUST 31, MARCH 1,
1996 1997 1998
---------- ---------- --------
<S> <C> <C> <C>
Raw materials........................................... $13,046 $11,991 $12,887
Work in process......................................... 3,026 3,028 2,778
Finished goods.......................................... 44,011 53,190 59,122
------- ------- -------
$60,083 $68,209 $74,787
======= ======= =======
</TABLE>

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are recorded at cost. Depreciation is
provided over the estimated useful lives of the assets (buildings -- 15-35
years, machinery and equipment -- 7-15 years, and furniture and fixtures -- 3-7
years) using primarily the straight-line method.

F-8
<PAGE> 68

ALBECCA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Property, plant and equipment consist of the following (in thousands):

<TABLE>
<CAPTION>
AUGUST 25, AUGUST 31, MARCH 1,
1996 1997 1998
---------- ---------- --------
<S> <C> <C> <C>
Land and buildings...................................... $27,372 $29,251 $36,253
Machinery and equipment................................. 29,231 31,433 33,052
Furniture and fixtures.................................. 9,573 8,402 9,182
------- ------- -------
66,176 69,086 78,487
Less accumulated depreciation........................... 13,322 16,411 19,110
------- ------- -------
$52,854 $52,675 $59,377
======= ======= =======
</TABLE>

Depreciation expense included in the accompanying statements of operations
for the years ended August 27, 1995, August 25, 1996 and August 31, 1997 and the
six months ended March 1, 1998 was approximately $3,801,000, $4,744,000,
$5,900,000 and $2,925,000.

OTHER LONG-TERM ASSETS

Goodwill is amortized over 40 years using the straight-line method.
Trademarks and tradenames are stated at cost, less accumulated amortization, and
are amortized over 15 years using the straight-line method. On a periodic basis
the Company reviews the impairment of long-term assets based primarily upon an
analysis of undiscounted cash flows from the acquired businesses.

Other long-term assets consist of the following (in thousands):

<TABLE>
<CAPTION>
AUGUST 25, AUGUST 31, MARCH 1,
1996 1997 1998
---------- ---------- --------
<S> <C> <C> <C>
Goodwill................................................ $14,989 $23,584 $35,896
Trademarks and tradenames............................... 6,998 5,880 5,796
Other................................................... 1,044 936 1,139
------- ------- -------
23,031 30,400 42,831
Less accumulated amortization........................... 1,296 2,045 2,879
------- ------- -------
$21,735 $28,355 $39,952
======= ======= =======
</TABLE>

INCOME TAXES

Albecca Inc. is an S corporation and Larson-Juhl International L.L.C. is a
limited liability company. Each is treated as a pass-through entity under the
Internal Revenue Code. Neither is subject to federal and certain state income
taxes. As a result, the related taxable income is included in the tax returns of
the shareholders and members of the Company. The provision for income taxes
included in the accompanying financial statements primarily relates to certain
state and foreign income taxes.

The accompanying financial statements reflect a provision for income taxes
on a pro forma basis as if the Company were liable for the income taxes as a
taxable corporate entity throughout the years presented. The pro forma income
tax provision has been computed by applying the anticipated statutory tax rate
to pretax income, adjusted for permanent differences (Note 5).

FOREIGN CURRENCY TRANSLATION AND EXPOSURE

The asset and liability accounts of foreign subsidiaries have been
translated into U.S. dollars at the rate of exchange in effect at each balance
sheet date. Shareholders' equity is translated at historical rates. All the
accounts of foreign subsidiaries' statements of operations are translated at
average exchange rates during the year. Resulting translation adjustments
arising from these translations are reflected as a separate component in

F-9
<PAGE> 69

ALBECCA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

shareholders' equity. Gains or losses on foreign currency transactions are
included in income as incurred and are not material to the Company's statement
of operations for the years presented. The denomination of foreign subsidiaries'
account balances in their local currency exposes the Company to certain foreign
exchange rate risks. The Company addresses the exposure by financing most
working capital needs in the applicable foreign currencies. Management does not
believe the remaining risks to be significant.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of the Company's long-term debt is estimated based on
current rates offered for debt of similar terms and maturities. Under this
method, the Company's fair value of long-term debt was not significantly
different than the stated value at August 25, 1996, August 31, 1997 and March 1,
1998.

REVENUE RECOGNITION

The Company recognizes revenue at the time of shipment of products or the
performance of services.

ADVERTISING

All costs associated with advertising and promoting products are expensed
in the period incurred.

BASIC AND DILUTED EARNINGS PER SHARE

Historical basic and diluted earnings per share is computed using
historical or pro forma net income divided by the weighted average number of
shares of common stock outstanding for the periods presented.

Pro forma basic and diluted earnings per share also includes the number of
shares pursuant to Securities and Exchange Commission Staff Accounting Bulletin
No. 98 that at the assumed public offering price would yield proceeds in the
amount necessary to pay the notes payable to shareholders (Note 12) that are not
covered by the earnings for the year ("Distribution Shares").

No adjustment is necessary for historical and pro forma net income for
earnings per share presentation.

The following is a reconciliation of the shares used in the computation of
pro forma basic and diluted earnings per share:

<TABLE>
<CAPTION>
NINE-MONTHS
SIX-MONTHS ENDED
YEAR ENDED ENDED MAY 31,
AUGUST 31, MARCH 1, 1998
1997 1998 (UNAUDITED)
---------- ---------- -----------
<S> <C> <C> <C>
Weighted average common shares outstanding........ 17,000,000 17,000,000 17,000,000
Pro forma Distribution Shares.....................
---------- ---------- ----------
Pro forma weighted average common shares
outstanding -- basic
Common stock equivalents..........................
---------- ---------- ----------
Pro forma weighted average common shares
outstanding -- diluted..........................
========== ========== ==========
</TABLE>

RECENT ACCOUNTING PRONOUNCEMENTS

In July 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"), which establishes
standards for reporting and display of "comprehensive income," which is the
total of net income and all other non-owner changes in shareholder's

F-10
<PAGE> 70

ALBECCA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

equity, and its components. The Company is in the process of evaluating SFAS No.
130 and its impact and will adopt the standard for its 1999 fiscal year.

In July 1997, the FASB issued SFAS No. 131, "Disclosures About Segments of
an Enterprise and Related Information" ("SFAS No. 131"). SFAS No. 131, which
supersedes SFAS Nos. 14, 18, 24 and 30, establishes new standards for segment
reporting, using the "management approach," in which reportable segments are
based on the same criteria on which management disaggregates a business for
making operating decisions and assessing performance. The Company is in the
process of evaluating SFAS No. 131 and its impact and will adopt the standard
for its 1999 fiscal year.

INTERIM UNAUDITED FINANCIAL INFORMATION

The financial statements for the six months ended February 23, 1997 and the
nine months ended May 24, 1997 and May 31, 1998 are unaudited; however, in the
opinion of management, all adjustments (consisting of normal recurring
adjustments) necessary for a fair presentation of the unaudited financial
statements for this interim period have been included. The results of this
interim period are not necessarily indicative of the results to be obtained for
a full year.

RECLASSIFICATIONS

Certain prior period amounts have been reclassified to conform to the
current period presentation.

2. ACQUISITIONS

The following acquisitions were accounted for under the purchase method of
accounting, applying the provisions of Accounting Principles Board ("APB")
Opinion No. 16, and as a result, the Company has recorded the tangible and
identifiable intangible assets and liabilities of the acquired businesses at
their estimated fair values with the excess of the purchase price over these
amounts being recorded as goodwill which is amortized over 40 years. The
acquisitions were primarily financed with borrowings under the Company's
revolving credit facility and other debt instruments (Note 4). The accompanying
financial statements reflect the operations of the acquired businesses for the
periods after their respective date of acquisition.

During the six months ended March 1, 1998, the Company acquired all of the
outstanding stock of a distributor of custom framing products for approximately
$8,000,000 in cash. Goodwill and intangible assets of approximately $4,400,000
were recorded in connection with the acquisition. The Company also acquired,
during the six month period ended March 1, 1998, the outstanding stock of four
U.S. and international manufacturers and distributors of custom framing products
for aggregate consideration of approximately $11,000,000 in cash resulting in
goodwill and intangible assets of approximately $8,100,000.

During fiscal year 1997, the Company acquired all of the outstanding stock
of an international distributor of custom framing products for approximately
$9,600,000 in cash. Goodwill and intangible assets of approximately $5,200,000
were recorded in connection with this acquisition. The Company also acquired,
during fiscal year 1997, the outstanding stock of five international
manufacturers and distributors of custom framing products for aggregate
consideration of approximately $8,800,000 in cash resulting in goodwill and
intangible assets of approximately $4,600,000.

The following unaudited pro forma summary results of operations are
presented assuming that the acquisitions completed during the year ended August
31, 1997 and the six months ended March 1, 1998 had been consummated on August
26, 1996. The pro forma information is presented for information purposes only
and is not necessarily indicative of the results of operations which would have
actually been obtained. Pro forma adjustments were recorded to include increased
depreciation and amortization of fixed assets and

F-11
<PAGE> 71

ALBECCA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

intangible assets, additional interest expense on financing required for the
acquisitions and pro forma provision for income taxes (Note 5) (in thousands).

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
AUGUST 31, MARCH 1,
1997 1998
------------ ----------------
<S> <C> <C>
Pro forma revenue........................................... $392,646 $202,420
======== ========
Pro forma net income........................................ $ 15,140 $ 7,850
======== ========
Pro forma earnings per common share -- basic and diluted.... $ $
======== ========
</TABLE>

During fiscal year 1996, the Company acquired all of the outstanding stock
of a French manufacturer and distributor of custom framing products for
approximately $6,600,000 in cash. No goodwill resulted from this acquisition.
During fiscal year 1996, the Company acquired all of the outstanding stock of a
United Kingdom manufacturer and distributor of custom framing products for
approximately $13,300,000 in cash. Goodwill and intangible assets of
approximately $4,700,000 were recorded in connection with this acquisition. The
Company also acquired, during fiscal year 1996, the outstanding stock or
substantially all of the operating assets and liabilities of eight international
manufacturers and distributors of custom framing products for aggregate
consideration of approximately $17,700,000 in cash resulting in goodwill and
intangible assets of approximately $7,400,000.

During fiscal year 1995, the Company acquired all of the outstanding stock
of a French manufacturer and distributor of custom framing products for
approximately $12,900,000 in cash. No goodwill resulted from this acquisition.
The Company also acquired, during fiscal year 1995, all of the outstanding stock
or substantially all of the operating assets and liabilities of five
international manufacturers and distributors of custom framing products for
aggregate consideration of approximately $13,300,000 in cash resulting in
goodwill and intangible assets of approximately $2,400,000.

The acquisitions during fiscal years 1996 and 1995 individually and in the
aggregate did not have a material pro forma impact on the Company's results of
operations.

3. ACCRUED LIABILITIES AND OTHER LONG-TERM LIABILITIES

Accrued liabilities consist of the following (in thousands):

<TABLE>
<CAPTION>
AUGUST 25, AUGUST 31, MARCH 1,
1996 1997 1998
---------- ---------- --------
<S> <C> <C> <C>
Accrued operating expenses.............................. $ 9,563 $ 9,495 $10,876
Accrued payroll and benefits............................ 9,310 12,606 13,254
Accrued income taxes.................................... 1,243 627 976
Accrued interest........................................ 312 532 823
Accrued taxes (other than income)....................... 1,876 1,257 1,521
Other................................................... 4,383 3,465 4,277
------- ------- -------
$26,687 $27,982 $31,727
======= ======= =======
</TABLE>

May 31, 1998 (Unaudited)

In contemplation of the offering, the Company amended during May 1998
certain bonus arrangements with shareholders and certain members of management
whereby the payment of accrued amounts aggregating $3,500,000 would be deferred
and paid in varying increments of $50,000 to $450,000 through fiscal year 2004.
Accruals related to these compensation arrangements of approximately $355,000
and $3,145,000 as of May 31, 1998, are included as a component of accrued
payroll and benefits and other long-term liabilities, respectively. As of March
1, 1998, such amounts were included as a component of accrued payroll and
benefits.

F-12
<PAGE> 72

ALBECCA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. LONG-TERM DEBT

Long-term debt consists of the following (in thousands):

<TABLE>
<CAPTION>
AUGUST 25, AUGUST 31, MARCH 1,
1996 1997 1998
---------- ---------- --------
<S> <C> <C> <C>
Credit facility ("Credit Facility"), as amended, due
September 1999, payable in U.S. dollars, British
Pounds, Deutsche Marks and Australian dollars,
interest paid periodically at rates ranging from
LIBOR plus .75% to the prime rate less .50% (7.5% at
March 1, 1998 -- weighted average rate).............. $34,322 $49,507 $ 67,897
Demand note payable in French Francs, interest paid
quarterly at a rate of 3.6% to 4.0%, secured by a
standby letter of credit............................. 8,954 3,446 3,448
Mortgage note due September 2017, payable in Deutsche
Marks, principal paid semi-annually in equal
installments, interest paid quarterly at a rate of
5.2%, secured by certain property.................... -- -- 3,085
Demand note payable in British Pounds, interest paid
quarterly at a base rate plus 2.0% (9.5% as of March
1, 1998), secured by certain accounts receivable,
inventory and equipment.............................. 3,559 3,374 3,074
Demand note payable in Dutch Guilders, interest paid
quarterly at a base rate plus 1.25% (5.0% as of March
1, 1998) secured by certain accounts receivable,
inventory and property............................... 3,668 3,521 2,691
Other long-term notes, interest payable at a weighted
average rate of 7.34%, maturing at various dates
through 2010, no individual amounts exceeding
$2,500............................................... 42,559 48,878 52,432
------- ------- --------
93,062 108,726 132,627
Less current maturities................................ 18,925 28,079 31,839
------- ------- --------
Long-term portion...................................... $74,137 $80,647 $100,788
======= ======= ========
</TABLE>

The above facilities are subject to certain financial covenants related to
adjusted tangible net worth and cash flow (as defined). Certain revolving
facilities provide the Company with additional borrowings of up to $28,763,000
as of March 1, 1998. The Company had outstanding letters of credit totaling
$3,742,000 as of March 1, 1998.

A commitment fee at an annual rate equal to 0.25% of the average daily
unused amount of the Credit Facility is payable quarterly. On April 30, 1998,
the Credit Facility's commitment amount was amended to increase from $90,000,000
to $100,000,000. The Credit Facility included borrowings denominated in foreign
currencies in the aggregate amounts of $18,910,000, $26,180,000 and $26,126,000
as of August 25, 1996, August 31, 1997 and March 1, 1998.

Other long-term notes included borrowings denominated in foreign currencies
in the aggregate amounts of $29,746,000, $35,402,000 and $51,459,000 as of
August 25, 1996, August 31, 1997 and March 1, 1998.

Aggregate maturities of long-term debt, as amended, for the remaining six
months of fiscal year 1998 and the fiscal years are as follows: 1998,
$31,839,000; 1999, $7,770,000; 2000, $57,423,000; 2001, $23,930,000; 2002,
$3,155,000; thereafter, $8,510,000.

F-13
<PAGE> 73

ALBECCA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. INCOME TAXES

In connection with the Offering, the Company will convert from an S
corporation to a C corporation and, accordingly, will be subject to future
federal and state income taxes. Upon conversion to C corporation status, the
Company will record deferred taxes for which it will be responsible following
termination of S corporation status. The assets and liabilities below will be
reflected on the balance sheet of the Company with a corresponding non-recurring
income amount in the statement of operations at the completion of the Offering.
The components of the pro forma total deferred tax assets and deferred tax
liabilities as of March 1, 1998 consist of the following (in thousands):

<TABLE>
<S> <C>
Deferred tax assets:
Inventories............................................... $ 1,911
Accrued payroll and benefits.............................. 2,877
Other accrued liabilities................................. 4,320
Allowance for doubtful accounts........................... 1,074
-------
$10,182
=======
Deferred tax liabilities:
Property, plant and equipment............................. $ 1,498
Other..................................................... 105
-------
$ 1,603
=======
</TABLE>

The following summarizes the components of the pro forma income tax
provision and provision for income taxes (in thousands):

The following is a reconciliation from the federal statutory rate to the
pro forma income tax provision and provision for income taxes for the years
ended August 27, 1995, August 25, 1996 and August 31, 1997 and the six months
ended March 1, 1998:

<TABLE>
<S> <C>
Statutory federal tax rate.................................. 35.0%
State income taxes.......................................... 3.9
Foreign operations.......................................... 0.2
Other....................................................... 2.9
----
42.0%
====
</TABLE>

F-14
<PAGE> 74

ALBECCA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. GEOGRAPHIC INFORMATION

The following table presents information regarding the Company's different
geographical regions based on the historical operations of the Company (in
thousands):

<TABLE>
<CAPTION>
SIX
YEARS ENDED MONTHS
------------------------------------ ENDED
AUGUST 27, AUGUST 25, AUGUST 31, MARCH 1,
1995 1996 1997 1998
---------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Revenue
United States............................... $153,725 $162,429 $165,514 $ 94,183
United Kingdom.............................. 4,385 25,021 47,806 24,934
France...................................... 21,241 41,937 37,698 19,543
Other International......................... 46,008 71,401 103,040 61,154
-------- -------- -------- --------
$225,359 $300,788 $354,058 $199,814
======== ======== ======== ========
Operating income (loss)
United States............................... $ 18,357 $ 21,022 $ 24,425 $ 10,458
United Kingdom.............................. (361) 880 4,227 2,465
France...................................... 944 2,948 2,391 719
Other International......................... 3,531 5,379 4,558 4,712
-------- -------- -------- --------
$ 22,471 $ 30,229 $ 35,601 $ 18,354
======== ======== ======== ========
</TABLE>

Assets by geographical region consist of the following (in thousands):

<TABLE>
<CAPTION>
AUGUST 25, AUGUST 31, MARCH 1,
1996 1997 1998
---------- ---------- --------
<S> <C> <C> <C>
United States.......................................... $ 39,591 $ 37,518 $ 54,539
United Kingdom......................................... 42,331 45,166 46,320
France................................................. 42,906 37,686 39,096
Other International.................................... 65,340 88,319 103,545
-------- -------- --------
$190,168 $208,689 $243,500
======== ======== ========
</TABLE>

7. SHAREHOLDERS' EQUITY

STOCK SPLIT

On April 27, 1998, the Company effected a 1.7-for-1 stock split of its
common stock. The accompanying financial statements and notes hereof reflect
this stock split as if it had occurred at the beginning of each period.

STOCK OPTIONS

In July 1990, the Company's sole shareholder granted an option to a key
employee to acquire 170,000 shares of common stock from the shareholder for
$7.65 per share which represented the fair value, as estimated by management, at
the date of grant. This option was exercised in January 1995.

In November 1996, the Company's majority shareholder established a stock
performance program whereby a certain key employee could receive annually an
option to acquire 0.2% of the then outstanding shares of Albecca Inc.'s common
stock and 0.2% of member interest in Larson-Juhl International L.L.C. from the
Company's majority shareholder for $300,000, contingent upon the Company
achieving its performance goals, including, sales, profits, asset management and
future positioning, for each fiscal year through fiscal year 2000. In November
1996, the key employee was awarded the option to acquire 34,000 shares of
Albecca Inc.'s

F-15
<PAGE> 75

ALBECCA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

common stock and 0.2% of member interest in Larson-Juhl International L.L.C.
from the Company's majority shareholder for $300,000. No compensation expense
was recognized for this award as the exercise price, in the opinion of
management, exceeded its fair value at the date of grant. On April 17, 1998,
this option was exercised. No award was earned or granted to the key employee
for fiscal year 1997. The Company's majority shareholder extended the program
through fiscal year 2001, under the same terms and conditions as the original
stock performance program. Compensation expense related to this program will be
recorded as a component of expenses.

In November 1996, the Company's majority shareholder granted another key
employee the right to acquire 42,500 shares of Albecca Inc.'s common stock and
.25% of member interest in Larson-Juhl International L.L.C. from the Company's
majority shareholder for $200,000, representing, in management's opinion, the
fair value at the date of grant. On April 19, 1997, this right was exercised. On
December 1, 1997, this key employee acquired 85,000 shares of Albecca Inc.'s
common stock and 0.5% of member interest in Larson-Juhl International L.L.C.
from the Company's majority shareholder for $300,000. The Company recorded a
compensation charge of $100,000, representing the difference between the
exercise price and the fair value, based on management's estimate, at the date
of grant. On January 5, 1998, the Company's majority shareholder granted this
key employee the right to acquire 42,500 shares of Albecca Inc.'s common stock
and .25% of member interest in Larson-Juhl International L.L.C. from the
Company's majority shareholder for $500,000, representing, in management's
opinion, the fair value at the date of grant. On April 17, 1998, this right was
exercised.

On May 1, 1998, the Company adopted the Albecca Inc. 1998 Stock Option Plan
(the "Stock Option Plan") for which 2,600,000 shares of common stock were
authorized for issuance in connection with stock options granted under such
plan. The Stock Option Plan provides for non-qualified and incentive stock
options. Additionally, as of May 1, 1998, the provisions of the stock
performance program discussed above were amended whereby any option grant under
such program would be granted by the Company under the Stock Option Plan. On May
1, 1998, the Company granted to a certain key employee, under the stock
performance program, a non-qualified option to acquire 34,062 shares of common
stock at $8.80 per share, expiring May 1, 2003. As a result of this grant, the
Company will record a compensation charge of $143,000 in the third quarter of
fiscal year 1998 representing the difference between the exercise price and the
fair value, based on management's estimate, at the date of grant.

SFAS No. 123, "Accounting for Stock-Based Compensation" defines a fair
value-based method of accounting for an employee stock option plan or similar
equity instrument and allows an entity to continue to measure compensation cost
for those plans using the method of accounting prescribed by APB Opinion No. 25,
"Accounting for Stock Issued to Employees." Entities electing to remain with the
accounting in APB No. 25 must make pro forma disclosures of net income and, if
presented, earnings per share, as if the fair value-based method of accounting
defined in the statement had been applied.

The Company has elected to account for its stock-based compensation plans
under APB No. 25; however, the Company has computed for pro forma disclosure
purposes the value of all options granted during the year ended August 31, 1997
and the six months ended March 1, 1998 using the minimum value method as
prescribed by SFAS No. 123 using the following assumptions:

<TABLE>
<S> <C>
Risk-free interest rate..................................... 6%
Expected dividend yield..................................... --
Expected lives.............................................. 5 years
Expected volatility......................................... --
</TABLE>

F-16
<PAGE> 76

ALBECCA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

If the Company had accounted for these grants in accordance with SFAS No.
123, the Company's reported pro forma net income and pro forma earnings per
share for the year ended August 31, 1997 and the six months ended March 1, 1998
would have decreased to the following pro forma amounts (in thousands, except
per share data):

<TABLE>
<CAPTION>
YEAR SIX MONTHS
ENDED ENDED
AUGUST 31, MARCH 1,
1997 1998
---------- ----------
<S> <C> <C>
Pro forma net income:
As reported in the financial statements................... $14,864 $7,554
======= ======
Pro forma in accordance with SFAS No. 123................. $14,812 $7,425
======= ======
Pro forma earnings per common share -- basic and diluted:
As reported in the financial statements...................
======= ======
Pro forma in accordance with SFAS No. 123.................
======= ======
</TABLE>

8. RELATED PARTY TRANSACTIONS

The Company's principal executive offices are located in a 65,000 square
foot office building located in Norcross, Georgia owned by L-J Properties Inc.,
a company owned by the existing shareholders of the Company. The Company's lease
for this facility terminates in August 2001. The total rent payments for the
years ended August 27, 1995, August 25, 1996 and August 31, 1997 and the six
months ended March 1, 1998 were approximately $623,000, $642,000, $661,000 and
$339,000.

9. COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

The Company leases certain operating facilities and equipment under
operating leases. Future minimum annual rentals under non-cancelable leases as
of March 1, 1998 are as follows: 1998 -- $3,231,000; 1999 -- $4,589,000;
2000 -- $2,828,000; 2001 -- $1,698,000; 2002 -- $672,000; and after
2002 -- $570,000.

The total rent payments for the years ended August 27, 1995, August 25,
1996 and August 31, 1997, and the six months ended March 1, 1998 were
approximately $5,850,000, $6,462,000, $7,368,000 and $4,410,000.

LITIGATION

The Company is involved in certain litigation arising in the ordinary
course of business. In the opinion of management, the ultimate resolution of
these matters will not have a material adverse effect on the Company's financial
position or results of operations.

10. BENEFIT PLANS

The Company sponsors a defined contribution 401(k) retirement investment
plan (the "Plan") for all its U.S. employees with more than one year of service.
The Company makes discretionary contributions to the plan including a 50%
matching contribution. Under the terms of the Plan, a participant is 100% vested
in the Company's matching and discretionary contributions after six years of
service. Discretionary contributions made by the Company for the years ended
August 27, 1995, August 25, 1996 and August 31, 1997 and the six months ended
March 1, 1998 were approximately $333,000, $409,000, $419,000 and $191,000.

F-17
<PAGE> 77

ALBECCA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. QUARTERLY DATA (UNAUDITED)

The following table presents quarterly information regarding the Company's
historical operations for each quarter in the fiscal years 1996 and 1997 and the
six months ended March 1, 1998 (in thousands):

<TABLE>
<CAPTION>
FOR THE QUARTERS ENDED
-------------------------------------------------------------------------------------------------------
NOVEMBER 26, FEBRUARY 25, MAY 26, AUGUST 25, NOVEMBER 24, FEBRUARY 23, MAY 25, AUGUST 31,
1995 1996 1996 1996 1996 1997 1997 1997
------------ ------------ ------- ---------- ------------ ------------ ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales................. $72,456 $72,914 $80,620 $74,798 $93,217 $92,799 $80,679 $87,363
Cost of sales............. 41,371 41,878 47,053 43,662 54,275 54,126 44,213 48,136
------- ------- ------- ------- ------- ------- ------- -------
Gross profit........... 31,085 31,036 33,567 31,136 38,942 38,673 36,466 39,227
Operating expenses........ 22,882 23,400 26,429 23,884 28,395 29,909 28,601 30,802
------- ------- ------- ------- ------- ------- ------- -------
Operating income....... 8,203 7,636 7,138 7,252 10,547 8,764 7,865 8,425
Interest expense.......... 1,302 1,592 1,711 2,241 2,262 2,466 2,323 2,671
------- ------- ------- ------- ------- ------- ------- -------
Income before provision
for income taxes and
minority interest..... 6,901 6,044 5,427 5,011 8,285 6,298 5,542 5,754
Provision for income
taxes.................... 821 573 986 1,299 922 735 537 1,049
Minority interest......... 202 (2) 62 38 57 (23) 69 43
------- ------- ------- ------- ------- ------- ------- -------
Net income before pro
forma provision for
income taxes.......... 5,878 5,473 4,379 3,674 7,306 5,586 4,936 4,662
Pro forma provision for
income taxes............. 2,076 1,964 1,294 808 2,536 1,932 1,773 1,385
------- ------- ------- ------- ------- ------- ------- -------
Pro forma net income...... $ 3,802 $ 3,509 $ 3,085 $ 2,866 $ 4,770 $ 3,654 $ 3,163 $ 3,277
======= ======= ======= ======= ======= ======= ======= =======
Pro forma earnings per
share basic and diluted
======= ======= ======= =======

<CAPTION>
FOR THE QUARTERS ENDED
---------------------------------
NOVEMBER 30, MARCH 1, MAY 31,
1997 1998 1998
------------ -------- -------
<S> <C> <C> <C>
Net sales................. $102,985 $96,829 $93,055
Cost of sales............. 58,976 54,492 52,349
-------- ------- -------
Gross profit........... 44,009 42,337 40,706
Operating expenses........ 33,236 34,756 32,019
-------- ------- -------
Operating income....... 10,773 7,581 8,687
Interest expense.......... 2,343 2,370 2,759
-------- ------- -------
Income before provision
for income taxes and
minority interest..... 8,430 5,211 5,928
Provision for income
taxes.................... 896 814 865
Minority interest......... 166 192 19
-------- ------- -------
Net income before pro
forma provision for
income taxes.......... 7,368 4,205 5,044
Pro forma provision for
income taxes............. 2,644 1,375 1,625
-------- ------- -------
Pro forma net income...... $ 4,724 $ 2,830 $ 3,419
======== ======= =======
Pro forma earnings per
share basic and diluted
======== ======= =======
</TABLE>

12. SUBSEQUENT EVENTS

ACQUISITIONS

On April 30, 1998, the Company acquired all of the outstanding stock of a
U.S. distributor of custom framing products for approximately $9,900,000 in
cash. Goodwill and intangible assets of approximately $8,600,000 were recorded
in connection with the acquisition.

INITIAL PUBLIC OFFERING

In the fourth quarter of fiscal year 1998, the Company is planning an
initial public offering of its Class A common stock. There can be no assurance
that the Offering will be completed. Prior to the Offering, the Company will pay
a distribution to its existing shareholders equal to the amount of previously
undistributed S corporation earnings of the Company.

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

The accompanying unaudited pro forma consolidated balance sheet as of May
31, 1998 is based on the Company's historical balance sheet as of May 31, 1998,
as adjusted to reflect the following proposed transactions: (i) the issuance of
notes payable to shareholders of approximately $57,000,000, in connection with
the previously undistributed S corporation earnings and related effects on
historical retained earnings and (ii) the recording of net deferred tax assets
of approximately $8,856,000 as a result of the change in corporate tax filing
status upon the consummation of the Offering discussed in Note 5. The pro forma
information does not give effect to the proceeds of the Offering.

OTHER

On May 1, 1998, Albecca Inc. made a partial distribution of its previously
undistributed S corporation earnings to its shareholders in the form of demand
promissory notes payable to its shareholders in the aggregate amount of
$10,500,000, bearing interest at a rate of 11% per annum. Additionally, on April
14, 1998,

F-18
<PAGE> 78

ALBECCA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the Company made a cash distribution of part of its previously undistributed S
corporation earnings to its shareholders in the amount of $3,000,000.

13. COMBINATION AND REORGANIZATION

Through June 25, 1998, Albecca Inc. and Larson-Juhl International L.L.C.
were owned and controlled by the same shareholders. Effective June 26, 1998, the
members of Larson-Juhl International L.L.C. contributed their respective equity
interests to Albecca Inc., whereby Larson-Juhl International L.L.C. became a
wholly owned subsidiary of the Company. The combination has been treated in a
manner similar to a pooling-of-interests and, as such, the accompanying
financial statements have been restated to include the results of Larson-Juhl
International L.L.C. for all periods presented.

F-19
<PAGE> 79

<TABLE>
<S> <C>
ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS
PROSPECTUS (Subject to Completion)
Issued July 2, 1998
</TABLE>

(ALBECCA LOGO)

CLASS A COMMON STOCK
------------------------

OF THE SHARES OF CLASS A COMMON STOCK BEING OFFERED, SHARES ARE BEING
OFFERED INITIALLY OUTSIDE THE UNITED STATES AND CANADA BY THE INTERNATIONAL
UNDERWRITERS (THE "INTERNATIONAL OFFERING") AND SHARES ARE BEING OFFERED
INITIALLY IN THE UNITED STATES AND CANADA BY THE U.S. UNDERWRITERS (THE "U.S.
OFFERING" AND TOGETHER WITH THE INTERNATIONAL OFFERING, THE "OFFERING"). ALL OF
THE SHARES OF CLASS A COMMON STOCK OFFERED HEREBY ARE BEING SOLD BY THE COMPANY.
PRIOR TO THE OFFERING, THERE HAS BEEN NO PUBLIC MARKET FOR THE CLASS A COMMON
STOCK OF THE COMPANY. IT IS CURRENTLY ESTIMATED THAT THE INITIAL PUBLIC OFFERING
PRICE PER SHARE WILL BE BETWEEN $ AND $ . SEE "UNDERWRITERS" FOR A
DISCUSSION OF THE FACTORS CONSIDERED IN DETERMINING THE INITIAL PUBLIC OFFERING
PRICE.

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

APPLICATION HAS BEEN MADE TO LIST THE CLASS A COMMON STOCK ON THE NEW YORK STOCK
EXCHANGE UNDER THE SYMBOL "BEK."

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

SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR INFORMATION THAT

SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
------------------------

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

PRICE $ A SHARE
------------------------

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

MORGAN STANLEY DEAN WITTER
DONALDSON, LUFKIN & JENRETTE
International
WHEAT FIRST UNION
, 1998
<PAGE> 80

PART II. INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the estimated expenses in connection with
the Offering described in the Registration Statement:

<TABLE>
<S> <C>
SEC Registration Fee........................................ $36,875
NASD fees................................................... 13,000
NYSE fees................................................... **
Blue Sky Fees and Expenses.................................. **
Printing and Engraving...................................... **
Legal Fees and Expenses..................................... **
Accounting Fees and Expenses................................ **
Transfer Agent Fees......................................... **
Miscellaneous Expenses...................................... **
-------
Total............................................. $ *
=======
</TABLE>

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

* All amounts other than the SEC Registration Fee and NASD Fees reflect Company
estimates.

** To be provided in a future amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company's Articles of Incorporation eliminate, subject to certain
limited exceptions, the personal liability of a director to the Company or its
shareholders for monetary damage for any breach of duty as a director. There is
no elimination of liability for (i) a breach of duty involving appropriation of
a business opportunity of the Company; (ii) an act or omission which involves
intentional misconduct or a knowing violation of law; (iii) any transaction from
which the director derives an improper personal benefit; or (iv) as to any
payments of a dividend or any other type of distribution that is illegal under
Section 14-2-832 of the Georgia Business Corporation Code (the "Code"). In
addition, if at any time the Code is amended to authorize further elimination or
limitation of the personal liability of a director, then the liability of each
director of the Company shall be eliminated or limited to the fullest extent
permitted by such provisions, as so amended, without further action by the
shareholders, unless the provisions of the Code require such action. The
provision does not limit the right of the Company or its shareholders to seek
injunctive or other equitable relief not involving payments in the nature of
monetary damages.

The Company's bylaws contain certain provisions which provide
indemnification to directors of the Company that is broader than the protection
expressly mandated in Sections 14-2-852 and 14-2-857 of the Code. To the extent
that a director or officer of the Company has been successful, on the merits or
otherwise, in the defense of any action or proceeding brought by reason of the
fact that such person was a director or officer of the Company, Sections
14-2-852 and 14-2-857 of the Code would require the Company to indemnify such
persons against expenses (including attorney's fees) actually and reasonably
incurred in connection therewith. The Code expressly allows the Company to
provide for greater indemnification rights to its officers and directors,
subject to shareholder approval.

The indemnification provisions in the Company's bylaws require the Company
to indemnify and hold harmless any director 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
(including any action or suit by or in the right of the Company) because he or
she is or was a director of the Company, against expenses (including, but not
limited to, attorney's fees and disbursements, court costs and expert witness
fees), and against judgments, fines, penalties, and amounts paid in settlement
incurred by him or her in connection with the action, suit or proceeding.
Indemnification would be disallowed under any circumstances where
indemnification may not be authorized by action of the Board of Directors, the
shareholders or otherwise. The Board of Directors of the Company also has the
authority to extend to officers, employees and

II-1
<PAGE> 81

agents the same indemnification rights held by directors, subject to all the
accompanying conditions and obligations. Indemnified persons would also be
entitled to have the Company advance expenses prior to the final disposition of
the proceeding. If it is ultimately determined that they are not entitled to
indemnification, however, such amounts would be repaid. Insofar as
indemnification for liability arising under the Securities Act may be permitted
to officers and directors of the Company pursuant to the foregoing provisions,
the Company has been informed 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.

There is no pending litigation or proceeding involving a director, officer,
employee or other agent of the Company as to which indemnification is being
sought, nor is the Company aware of any pending or threatened litigation that
may result in claims for indemnification by any director, officer, employee or
other agent.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

The Company did not sell any unregistered securities within the past three
years.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S> <C>
1.1 -- Form of Underwriting Agreement*
3.1 -- Amended and Restated Articles of Incorporation of the
Company+
3.2 -- Amended and Restated Bylaws of the Company+
4.1 -- Specimen Class A Common Stock Certificate*
5.1 -- Opinion of Nelson Mullins Riley & Scarborough, L.L.P.*
10.1 -- 1998 Stock Option Plan
10.2 -- Credit Agreement by and among Larson-Juhl Inc., Larson-Juhl
International L.L.C., Norwest Bank Minnesota, National
Association, SunTrust Bank Atlanta, and the other financial
institutions party thereto, dated July 16, 1996+
10.3 -- First Amendment to Credit Agreement by and among Larson-Juhl
Inc., Larson-Juhl International L.L.C., Norwest Bank
Minnesota, National Association, SunTrust Bank Atlanta, The
Sumitomo Bank, Limited and Southtrust Bank of Georgia, N.A.,
dated November 14, 1992+
10.4 -- Second Amendment to Credit Agreement by and among
Larson-Juhl Inc., Larson-Juhl International L.L.C., Norwest
Bank Minnesota, National Association and SunTrust Bank
Atlanta, dated April 30, 1998+
10.5 -- Lease Agreement, dated August 8, 1991, by and between L-J
Properties Inc. and Larson-Juhl Inc.+
10.6 -- Amendment No. 1 to Lease Agreement dated October 26, 1993,
by and between L-J Properties Inc. and Larson-Juhl Inc.+
10.7 -- Form of S Corp Note issued by the Company in favor of its
existing shareholders+
10.8 -- Form of Employment Agreement to be entered into by and
between the Company and Craig A. Ponzio*
10.9 -- Form of Tax Indemnification Agreement between the Company
and its existing shareholders*
11.1 -- Statement re: Computation of Per Share Earnings*
</TABLE>

II-2
<PAGE> 82

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S> <C>
21.1 -- Subsidiaries of the Company
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of BDO CampsObers
23.3 -- Consent of Nelson Mullins Riley & Scarborough, L.L.P. (filed
as part of Exhibit 5.1)*
24.1 -- Power of Attorney+
27.1 -- Restated Financial Data Schedule for the fiscal year ended
August 31, 1997 (for SEC use only)
27.2 -- Financial Data Schedule for nine months ended May 31, 1998
(for SEC use only)
</TABLE>

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

* To be filed by amendment.

+ Previously filed.

(b) Financial Statement Schedules.

Schedule II -- Valuation and Qualifying Accounts.

ITEM 17. UNDERTAKINGS.

The Company hereby undertakes to provide to the underwriter at the closing
specified in the underwriting agreement, certificates in such denominations and
registered in such names as required by the underwriter to permit prompt
delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company 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 Company 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 whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

The Company hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, 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 Company 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 of 1933, 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-3
<PAGE> 83

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Atlanta, State of Georgia, on July 1, 1998.

ALBECCA INC.

By: /s/ CRAIG A. PONZIO
------------------------------------
Craig A. Ponzio
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities listed and on the dates indicated.

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

/s/ CRAIG A. PONZIO Chairman of the Board, President, July 1, 1998
- ----------------------------------------------------- Chief Executive Officer and
Craig A. Ponzio Director (Principal Executive
Officer)

* Senior Vice President, Chief July 1, 1998
- ----------------------------------------------------- Financial Officer and Director
Stephen M. Scheppmann (Principal Financial and
Accounting Officer)

* President, U.S. Operations and July 1, 1998
- ----------------------------------------------------- Director
William P. Trimarco

* Vice Chairman of the Board and July 1, 1998
- ----------------------------------------------------- Director
June R. Ponzio

*By: /s/ CRAIG A. PONZIO
------------------------------------------------
Craig A. Ponzio, as
attorney-in-fact
</TABLE>

II-4
<PAGE> 84

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE

To Albecca Inc.:

We have audited, in accordance with generally auditing standards, the
consolidated financial statements of ALBECCA INC. (a Georgia corporation)
included in this registration statement and have issued our report thereon dated
May 6, 1998. Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. Item 16(b) of the Registration
Statement is the responsibility of the Company's management and presented for
purposes of complying with the Securities and Exchange Commission 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 states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.

ARTHUR ANDERSEN LLP

/s/ Arthur Andersen LLP

Atlanta, Georgia
May 6, 1998
<PAGE> 85

SCHEDULE II

ALBECCA

VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND AT END OF
OF YEAR EXPENSES DEDUCTIONS* OTHER** YEAR
---------- ---------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C>
For the fiscal year ended:
August 27, 1995: Allowance
for doubtful accounts.... $2,255,000 $ 909,000 $ 731,000 $358,000 $2,791,000
---------- ---------- ---------- -------- ----------
August 25, 1996: Allowance
for doubtful accounts.... $2,791,000 $2,643,000 $1,825,000 $282,000 $3,891,000
---------- ---------- ---------- -------- ----------
August 31, 1997: Allowance
for doubtful accounts.... $3,891,000 $4,526,000 $3,149,000 $110,000 $5,378,000
---------- ---------- ---------- -------- ----------
For the six months ended:
March 1, 1998: Allowance for
doubtful accounts........ $5,378,000 $1,465,000 $1,567,000 $ 99,000 $5,375,000
---------- ---------- ---------- -------- ----------
</TABLE>

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

* Principally charges for which reserves were provided, net of recoveries.
** Acquired through acquisition of businesses.
<PAGE> 86

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
1.1 -- Form of Underwriting Agreement*
3.1 -- Amended and Restated Articles of Incorporation of the
Company+
3.2 -- Amended and Restated Bylaws of the Company+
4.1 -- Specimen Common Stock Certificate*
5.1 -- Opinion of Nelson Mullins Riley & Scarborough, L.L.P.*
10.1 -- 1998 Stock Option Plan
10.2 -- Credit Agreement by and among Larson-Juhl Inc., Larson-Juhl
International L.L.C., Norwest Bank Minnesota, National
Association, SunTrust Bank Atlanta, and the other financial
institutions party thereto, dated July 16, 1996+
10.3 -- First Amendment to Credit Agreement by and among Larson-Juhl
Inc., Larson-Juhl International L.L.C., Norwest Bank
Minnesota, National Association, SunTrust Bank Atlanta, the
Sumitomo Bank, Limited and Southtrust Bank of Georgia, N.A.,
dated November 14, 1992+
10.4 -- Second Amendment to Credit Agreement by and among
Larson-Juhl Inc., Larson-Juhl International L.L.C., Norwest
Bank Minnesota, National Association, SunTrust Bank Atlanta,
The Sumitomo Bank, Limited and Southtrust Bank of Georgia,
N.A., dated April 30, 1998+
10.5 -- Lease Agreement, dated August 8, 1991, by and between L-J
Properties Inc. and Larson-Juhl Inc.+
10.6 -- Amendment No. 1 to Lease Agreement dated October 26, 1993,
by and between L-J Properties Inc. and Larson-Juhl Inc.+
10.7 -- Form of S Corp Note issued by the Company in favor of its
existing shareholders+
10.8 -- Form of Employment Agreement to be entered into by and
between the Company and Craig A. Ponzio*
10.9 -- Form of Tax Indemnification Agreement between the Company
and its existing shareholders*
11.1 -- Statement re: Computation of Per Share Earnings*
21.1 -- Subsidiaries of the Company
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of BDO CampsObers
23.3 -- Consent of Nelson Mullins Riley & Scarborough, L.L.P. (filed
as part of Exhibit 5.1)*
24.1 -- Power of Attorney+
27.1 -- Restated Financial Data Schedule for the fiscal year ended
August 31, 1997 (for SEC use only)
27.2 -- Financial Data Schedule for nine months ended May 31, 1998
(for SEC use only)
</TABLE>

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

* To be filed by amendment.

+ Previously filed.

<PAGE> 1
EXHIBIT 10.1

ALBECCA INC.

1998 STOCK OPTION PLAN

As of May 1, 1998,
unless otherwise noted

<PAGE> 2

ALBECCA INC.
1998 STOCK OPTION PLAN

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I.........................................................................................................1

ARTICLE II........................................................................................................4
2.1 Name............................................................................................4
2.2 Purpose.........................................................................................4
2.3 Effective Date..................................................................................4

ARTICLE III.......................................................................................................4

ARTICLE IV........................................................................................................4
4.1 Duties and Powers of the Committee..............................................................4
4.2 Interpretation; Rules...........................................................................5
4.3 No Liability....................................................................................5
4.4 Majority Rule...................................................................................5
4.5 Company Assistance..............................................................................5

ARTICLE V.........................................................................................................5
5.1 Limitations.....................................................................................5
5.2 Adjustment and Ownership Changes................................................................6

ARTICLE VI........................................................................................................7
6.1 Types of Options Granted........................................................................7
6.2 Option Grant and Agreement......................................................................7
6.3 Optionee Limitations............................................................................7
6.4 $100,000 Limitation.............................................................................7
6.5 Exercise Price..................................................................................8
6.6 Exercise Period.................................................................................8
6.7 Option Exercise.................................................................................8
6.8 Nontransferability of Option....................................................................9
6.9 Termination of Employment or Service............................................................9
6.10 Employment Rights...............................................................................9
6.11 Certain Successor Options.......................................................................9
6.12 Right Not To Issue.............................................................................10
</TABLE>

- i -
<PAGE> 3

<S> <C>
6.13 Restrictive Legends............................................................................10

ARTICLE VII......................................................................................................10
7.1 Termination and Amendment......................................................................10
7.2 Effect on Optionee's Rights....................................................................10

ARTICLE VIII.....................................................................................................11

ARTICLE IX.......................................................................................................11
9.1 Replacement or Amended Grants..................................................................11
9.2 Forfeiture for Competition.....................................................................11
9.3 Plan Binding on Successors.....................................................................11
9.4 Singular, Plural; Gender.......................................................................11
9.5 Headings, etc., No Part of Plan................................................................11

Exhibit A.........................................................................................................1

SCHEDULE A........................................................................................................1

SCHEDULE B........................................................................................................3
</TABLE>

Amendments

May 20, 1998 "Larson-Juhl Inc." changed to "Albecca Inc."
to reflect name change and references to "Common
Stock" changed to "Class A Common Stock" to reflect
recapitalization, effective May 21, 1998.

- ii -

<PAGE> 4

ALBECCA INC.
1998 STOCK OPTION PLAN

ARTICLE I
DEFINITIONS

As used herein, the following terms have the following meanings unless
the context clearly indicates to the contrary:

"Board" shall mean the Board of Directors of the Company.

"Cause" shall mean theft or destruction of property of the
Company, a Parent, or a Subsidiary, refusal or continuing
inability to perform reasonably assigned duties, disregard of
Company rules or policies, conduct evidencing willful or
reckless disregard of the interests of the Company, or the
breach of a material provision of a Stock Option Agreement.
Such determination shall be made by the Committee and shall be
final and binding on all parties hereto.

"Code" shall mean the United States Internal Revenue Code of
1986, as amended, including effective date and transition
rules (whether or not codified). Any reference herein to a
specific section of the Code shall be deemed to include a
reference to any corresponding provision of future law.

"Committee" shall mean a committee of at least one Director
appointed from time to time by the Board, having the duties
and authority set forth herein in addition to any other
authority granted by the Board. At any time that the Board
shall not have appointed a committee as described above, any
reference herein to the Committee shall mean the Board.

"Company" shall mean Albecca Inc., a Georgia corporation.

"Director" shall mean a member of the Board.

"Employee" shall mean an employee of the Employer.

"Employer" shall mean the entity that employs an Optionee.

"Exchange Act" shall mean the Securities Exchange Act of 1934.
Any reference herein to a specific section of the Exchange Act
shall be deemed to include a reference to any corresponding
provision of future law.

"Exercise Price" shall mean the price at which an Optionee may
purchase a share of Stock under a Stock Option Agreement.

"Fair Market Value" on any date shall mean (i) the closing
sales price of the Stock, regular way, on such date on the
national securities exchange having the greatest volume of
trading in the Stock during the thirty-day period preceding
the day the

<PAGE> 5

value is to be determined or, if such exchange was not open
for trading on such date, the next preceding date on which it
was open; (ii) if the Stock is not traded on any national
securities exchange, the average of the closing high bid and
low asked prices of the Stock on the over-the-counter market
on the day such value is to be determined, or in the absence
of closing bids on such day, the closing bids on the next
preceding day on which there were bids; or (iii) if the Stock
also is not traded on the over-the-counter market, the fair
market value as determined in good faith by the Committee
based on such relevant facts as may be available to the
Committee, which may include opinions of independent experts,
the price at which recent sales have been made, the book value
of the Stock, and the Company's current and future earnings.

"Incentive Stock Option" shall mean an option to purchase any
stock of the Company, which complies with and is subject to
the terms, limitations and conditions of Section 422 of the
Code and any regulations promulgated with respect thereto.

"Non-Employee Director" shall have the meaning set forth in
Rule 16b-3 under the Exchange Act, as the same may be in
effect from time to time, or in any successor rule thereto,
and shall be determined for all purposes under the Plan
according to interpretive or "no-action" positions with
respect thereto issued by the Securities and Exchange
Commission.

"Officer" shall mean a person who constitutes an officer of
the Company for the purposes of Section 16 of the Exchange
Act, as determined by reference to such Section 16 and to the
rules, regulations, judicial decisions, and interpretative or
"no-action" positions with respect thereto of the Securities
and Exchange Commission, as the same may be in effect or set
forth from time to time.

"Option" shall mean an option, whether or not an Incentive
Stock Option, to purchase Stock granted pursuant to the
provisions of Article VI hereof.

"Optionee" shall mean a person to whom an Option has been
granted hereunder.

"Parent" shall mean any corporation or limited liability
company (other than the Employer) in an unbroken chain of
corporations and limited liability companies ending with the
Employer if, at the time of the grant (or modification) of the
Option, each of the entities other than the Employer owns
either (i) stock possessing 50 percent or more of the total
combined voting power of the classes of stock one of the other
corporations or (ii) 50 percent or more of the total combined
voting power of the membership interests in one of the other
limited liability companies, in such chain.

"Plan" shall mean the Company's 1998 Stock Option Plan, the
terms of which are set forth herein.

"Purchasable" shall refer to Stock which may be purchased by
an Optionee under the terms of this Plan on or after a certain
date specified in the applicable Stock Option Agreement.

2
<PAGE> 6

"Qualified Domestic Relations Order" shall have the meaning
set forth in the Code or in the Employee Retirement Income
Security Act of 1974, or the rules and regulations promulgated
under the Code or such Act.

"Section 16 Insider" shall mean any person who is subject to
the provisions of Section 16 of the Exchange Act, as provided
in Rule 16a-2 promulgated pursuant to the Exchange Act.

"Stock" shall mean the Class A Common Stock, $0.01 par value,
of the Company or, in the event that the outstanding shares of
Stock are hereafter changed into or exchanged for shares of a
different stock or securities of the Company or some other
entity, such other stock or securities.

"Stock Option Agreement" shall mean an agreement between the
Company and an Optionee under which the Optionee may purchase
Stock hereunder, a sample form of which is attached hereto as
Exhibit A (which form may be varied or replaced by the
Committee in granting an Option).

"Subsidiary" shall mean any corporation or limited liability
company (other than the Employer) in an unbroken chain of
corporations and limited liability companies beginning with
the Employer if, at the time of the grant (or modification) of
the Option, each of the corporations and limited liability
companies other than the last corporation in the unbroken
chain owns either (i) stock possessing 50 percent or more of
the total combined voting power of all classes of stock in one
of the other corporations or (ii) 50 percent or of the total
combined voting power of all membership interests in one of
the other limited liability companies, in such chain.

3
<PAGE> 7

ARTICLE II
THE PLAN

2.1 Name. This Plan shall be known as the Company's "1998 Stock
Option Plan."

2.2 Purpose. The purpose of the Plan is to advance the
interests of the Company, its Subsidiaries and its shareholders by affording
certain employees and Directors of the Company and its Subsidiaries, as well as
key consultants and advisors to the Company or any Subsidiary, an opportunity to
acquire or increase their proprietary interests in the Company. The objective of
the issuance of Options is to promote the growth and profitability of the
Company and its Subsidiaries because the Optionees will be provided with an
additional incentive to achieve the Company's objectives through participation
in its success and growth and by encouraging their continued association with or
service to the Company.

2.3 Effective Date. The Plan shall become effective on May 1,
1998; provided, however, that if the shareholders of the Company have not
approved the Plan on or prior to the first anniversary of such effective date,
then all options granted under the Plan shall be non-Incentive Stock Options.

ARTICLE III
PARTICIPANTS

The class of persons eligible to participate in the Plan shall consist
of all persons whose participation in the Plan the Committee determines to be in
the best interests of the Company which may include, but not be limited to, all
Directors and employees, of the Company or any Subsidiary, as well as key
consultants and advisors to the Company or any Subsidiary.

ARTICLE IV
ADMINISTRATION

4.1 Duties and Powers of the Committee. The Plan shall be
administered by the Committee. The Committee shall select one of its members as
its Chairman and shall hold its meetings at such times and places as it may
determine. The Committee shall keep minutes of its meetings and shall make such
rules and regulations for the conduct of its business as it may deem necessary,
if any. The Committee shall have the power to act by unanimous written consent
in lieu of a meeting, and to meet telephonically. In administering the Plan, the
Committee's actions and determinations shall be binding on all interested
parties. The Committee shall have the power to grant Options in accordance with
the provisions of the Plan and may grant Options singly, in combination, or in
tandem. Subject to the provisions of the Plan, the Committee shall have the
discretion and authority to determine those individuals to whom Options will be
granted, the number of shares of Stock subject to each Option, such other
matters as are specified herein, and any other terms and conditions of a Stock
Option Agreement. Without limitation of the foregoing, Options may be granted
subject to conditions based on the financial performance of the Company or any
other factor the Committee deems relevant. The Committee shall also have the
discretion and

4
<PAGE> 8

authority to delegate to any Officer its powers to grant Options under the Plan
to any person who is an employee of the Company but not an Officer or Director.
To the extent not inconsistent with the provisions of the Plan, the Committee
may give an Optionee an election to surrender an Option in exchange for the
grant of a new Option, and shall have the authority to amend or modify an
outstanding Stock Option Agreement, or to waive any provision thereof, provided
that the Optionee consents to such action.

4.2 Interpretation; Rules. Subject to the express provisions of
the Plan, the Committee also shall have complete authority to interpret the
Plan, to prescribe, amend, and rescind rules and regulations relating to it, to
determine the details and provisions of each Stock Option Agreement, and to make
all other determinations necessary or advisable for the administration of the
Plan, including, without limitation, the amending or altering of the Plan and
any Options granted hereunder as may be required to comply with or to conform to
any federal, state, or local laws or regulations.

4.3 No Liability. Neither any member of the Board nor any member
of the Committee shall be liable to any person for any act or determination made
in good faith with respect to the Plan or any Option granted hereunder.

4.4 Majority Rule. A majority of the members of the Committee
shall constitute a quorum, and any action taken by a majority at a meeting at
which a quorum is present, or any action taken without a meeting evidenced by a
writing executed by all the members of the Committee, shall constitute the
action of the Committee.

4.5 Company Assistance. The Company shall supply full and timely
information to the Committee on all matters relating to eligible persons, their
employment, death, retirement, disability, or other termination of employment,
and such other pertinent facts as the Committee may require. The Company shall
furnish the Committee with such clerical and other assistance as is necessary in
the performance of its duties.

ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN

5.1 Limitations. Subject to any adjustment pursuant to the
provisions of Section 5.2 hereof, the maximum number of shares of Stock that may
be issued hereunder shall be 2,600,000. Any or all shares of Stock subject to
the Plan may be issued in any combination of Incentive Stock Options or
non-Incentive Stock Options, and the amount of Stock subject to the Plan may be
increased from time to time in accordance with Article VIII. Shares subject to
an Option may be either authorized and unissued shares or shares issued and
later acquired by the Company. The shares covered by any unexercised portion of
an Option that has terminated for any reason (except as set forth in the
following paragraph), shall not be considered as having been optioned or issued
in computing the number of shares of Stock remaining available for option
hereunder and such shares may again be optioned under the Plan.

If Options are issued in respect of options to acquire stock of any
entity acquired, by merger or otherwise, by the Company (or any Subsidiary of
the Company), to the extent that such issuance

5
<PAGE> 9

shall not be inconsistent with the terms, limitations and conditions of Code
Section 422 or Rule 16b-3 under the Exchange Act, the aggregate number of shares
of Stock for which Options may be granted hereunder shall automatically be
increased by the number of shares subject to the Options so issued; provided,
however, that the aggregate number of shares of Stock for which Options may be
granted hereunder shall automatically be decreased by the number of shares
covered by any unexercised portion of an Option so issued that has terminated
for any reason, and the shares subject to any such unexercised portion may not
be optioned to any other person.

5.2 Adjustment and Ownership Changes5.2Adjustment and Ownership
Changes.

(a) If (i) the outstanding shares of Stock are changed
into or exchanged for a different number or kind of shares or other securities
of the Company by reason of merger, consolidation, reorganization,
recapitalization, reclassification, combination or exchange of shares, or stock
split (ii) there is an increase in the number of issued and outstanding shares
through the declaration of a stock dividend, (iii) any spin-off, split-off or
other distribution of assets materially affects the price of the Company's
stock, or (iv) there is any assumption and conversion to the Plan by the Company
of an acquired company's outstanding option grants, then the terms of any
outstanding option shall be adjusted accordingly by the Committee.

(b) If the Company shall be a party to any reorganization
in which it does not survive, including a merger, consolidation, or acquisition
of the stock or substantially all the assets of the Company, the Committee shall
have the right, at its discretion, declare that all Options granted under the
Plan shall become exercisable immediately, notwithstanding the provisions of the
respective Stock Option Agreements regarding exercisability or to notify all
Optionees that all Options granted under the Plan shall be assumed by the
successor corporation or substituted on an equitable basis with options issued
by such successor corporation.

(c) If the Company is to be liquidated or dissolved in
connection with a reorganization described in Section 5.2(b), the provisions of
such Section shall apply. In all other instances, the adoption of a plan of
dissolution or liquidation of the Company may, at its discretion, accelerate the
exercisability of any one or more Options. Whether or not such an acceleration
occurs, all outstanding Options shall be canceled to the extent they remain
unexercised at the time such transaction is consummated.

(d) The adjustments described in paragraphs (a) through
(c) of this Section 5.2, and the manner of their application, shall be
determined solely by the Committee, and any such adjustment may provide for the
elimination of fractional share interests; provided, however, that any
adjustment made by the Committee shall be made in a manner that will not cause
an Incentive Stock Option to be other than an Incentive Stock Option under
applicable statutory and regulatory provisions. The adjustments required under
this Article V shall apply to any successors of the Company and shall be made
regardless of the number or type of successive events requiring such
adjustments.

6
<PAGE> 10

ARTICLE VI
OPTIONS

6.1 Types of Options Granted. The Committee may, under this Plan,
grant either Incentive Stock Options or Options which do not qualify as
Incentive Stock Options. Within the limitations provided in this Plan, both
types of Options may be granted to the same person at the same time, or at
different times, under different terms and conditions, as long as the terms and
conditions of each Option are consistent with the provisions of the Plan. No
Incentive Stock Option may be granted more than ten years after the earlier to
occur of the effective date of the Plan or the date the Plan is approved by the
Company's shareholders.

6.2 Option Grant and Agreement. Each Option granted hereunder
shall be evidenced by minutes of a meeting or the written consent of the
Committee and by a written Stock Option Agreement executed by the Company and
the Optionee. The terms of the Option shall be stated in the Stock Option
Agreement, including the Option's duration, time or times of exercise, exercise
price and whether the Option is intended to be an Incentive Stock Option.
Separate Stock Option Agreements may be used for Options intended to be
Incentive Stock Options and those not so intended, but any failure to use such
separate agreements shall not invalidate, or otherwise adversely affect the
Optionee's interest in, the Options evidenced thereby.

6.3 Optionee Limitations. The Committee shall not grant an
Incentive Stock Option to any person who, at the time the Incentive Stock Option
is granted:

(a) is not an employee of the Company or any of its
Subsidiaries; or

(b) owns or is considered to own stock possessing at
least 10% of the total combined voting power of all classes of stock of the
Company or any of its Parent or Subsidiary corporations; provided, however, that
this limitation shall not apply if at the time an Incentive Stock Option is
granted the Exercise Price is at least 110% of the Fair Market Value of the
Stock subject to such Option and such Option by its terms would not be
exercisable after five years from the date on which the Option is granted. For
the purpose of this subsection (b), a person shall be considered to own: (i) the
stock owned, directly or indirectly, by or for his or her brothers and sisters
(whether by whole or half blood), spouse, ancestors and lineal descendants; (ii)
the stock owned, directly or indirectly, by or for a corporation, partnership,
estate, or trust in proportion to such person's stock interest, partnership
interest or beneficial interest therein; and (iii) the stock which such person
may purchase under any outstanding options of the Employer or of any Parent or
Subsidiary of the Employer.

6.4 $100,000 Limitation. Except as provided below, the
Committee shall not grant an Incentive Stock Option to, or modify the exercise
provisions of outstanding Incentive Stock Options held by, any person who, at
the time the Incentive Stock Option is granted (or modified), would thereby
receive or hold any Incentive Stock Options of the Employer and any Parent or
Subsidiary of the Employer, such that the aggregate Fair Market Value
(determined as of the respective dates of grant or modification of each option)
of the stock with respect to which such Incentive Stock Options are exercisable
for the first time during any calendar year is in excess of $100,000 (or such
other limit as may be prescribed by the Code from time to time); provided that
the foregoing restriction on modification of outstanding Incentive Stock Options
shall not preclude the Committee from

7
<PAGE> 11

modifying an outstanding Incentive Stock Option if, as a result of such
modification and with the consent of the Optionee, such Option no longer
constitutes an Incentive Stock Option; and provided that, if the $100,000
limitation (or such other limitation prescribed by the Code) described in this
Section 6.4 is exceeded, the Incentive Stock Option, the granting or
modification of which resulted in the exceeding of such limit, shall be treated
as an Incentive Stock Option up to the limitation and the excess shall be
treated as an Option not qualifying as an Incentive Stock Option.

6.5 Exercise Price. The Exercise Price of the Stock subject to
each Option shall be determined by the Committee. Subject to the provisions of
Section 6.3(b) hereof, the Exercise Price of an Incentive Stock Option shall not
be less than the Fair Market Value of the Stock as of the date the Option is
granted (or in the case of an Incentive Stock Option that is subsequently
modified, on the date of such modification).

6.6 Exercise Period. The period for the exercise of each Option
granted hereunder shall be determined by the Committee, but the Stock Option
Agreement with respect to each Option intended to be an Incentive Stock Option
shall provide that such Option shall not be exercisable after the expiration of
ten years from the date of grant (or modification) of the Option.

6.7 Option Exercise.

(a) Unless otherwise provided in the Stock Option
Agreement or Section 6.6 hereof, an Option may be exercised at any time or from
time to time during the term of the Option as to any or all full shares which
have become Purchasable under the provisions of the Option, but not at any time
as to fewer than 100 shares unless the remaining shares that have become so
Purchasable are fewer than 100 shares. The Committee shall have the authority to
prescribe in any Stock Option Agreement that the Option may be exercised only in
accordance with a vesting schedule during the term of the Option.

(b) An Option shall be exercised by (i) delivery to the
Company at its principal office of a written notice of exercise with respect to
a specified number of shares of Stock and (ii) payment to the Company at that
office of the full amount of the Exercise Price for such number of shares in
accordance with Section 6.7(c). In the discretion of the Committee, a Stock
Option Agreement may allow an Option to be exercised with the involvement of a
stockbroker in accordance with the federal margin rules set forth in Regulation
T (in which case the certificates representing the underlying shares will be
delivered by the Company directly to the stockbroker).

(c) The Exercise Price is to be paid in full in cash upon
the exercise of the Option and the Company shall not be required to deliver
certificates for the shares purchased until such payment has been made;
provided, however, that the Committee may provide in a Stock Option Agreement
(or may otherwise determine in its sole discretion at the time of exercise) that
in lieu of cash, if the Stock is publicly traded, all or any portion of the
Exercise Price may be paid by tendering to the Company shares of Stock duly
endorsed for transfer and owned by the Optionee, or by authorization to the
Company to withhold shares of Stock otherwise issuable upon exercise of the
Option, in each case to be credited against the Exercise Price at the Fair
Market Value of such shares on the date of exercise (however, no fractional
shares may be so transferred, and the Company shall not be obligated to make any
cash payments in consideration of any excess of the aggregate Fair Market Value
of shares transferred over the aggregate Exercise Price); provided

8
<PAGE> 12

further that the Committee may provide in a Stock Option Agreement (or may
otherwise determine in its sole discretion at the time of exercise), that in
lieu of cash or shares, all or a portion of the Exercise Price may be paid by
the Optionee's execution of a recourse note equal to the Exercise Price or
relevant portion thereof, subject to compliance with applicable state and
federal laws, rules and regulations.

(d) In addition to and at the time of payment of the
Exercise Price, the Optionee shall pay to the Company in cash the full amount of
any federal, state, and local income, employment, or other withholding taxes
applicable to the taxable income of such Optionee resulting from such exercise;
provided, however, that in the discretion of the Committee any Stock Option
Agreement may provide that all or any portion of such tax obligations, together
with additional taxes not exceeding the actual additional taxes to be owed by
the Optionee as a result of such exercise, may, upon the irrevocable election of
the Optionee, be paid by tendering to the Company whole shares of Stock duly
endorsed for transfer and owned by the Optionee, or by authorization to the
Company to withhold shares of Stock otherwise issuable upon exercise of the
Option, in either case in that number of shares having a Fair Market Value on
the date of exercise equal to the amount of such taxes thereby being paid, and
subject to such restrictions as to the approval and timing of any such election
as the Committee may from time to time determine to be necessary or appropriate
to satisfy the conditions of the exemption set forth in Rule 16b-3 under the
Exchange Act, if such rule is applicable.

(e) The holder of an Option shall not have any of the
rights of a shareholder with respect to the shares of Stock subject to the
Option until such shares have been issued and transferred to the Optionee upon
the exercise of the Option.

6.8 Nontransferability of Option. No Option under the Plan shall
be transferable by an Optionee other than by will or the laws of descent and
distribution or, in the case of non-Incentive Stock Options, pursuant to a
Qualified Domestic Relations Order, and no Option shall be transferable by an
Optionee who is Section 16 Insider prior to shareholder approval of the Plan.
During the lifetime of an Optionee, Options shall be exercisable only by such
Optionee (or by such Optionee's guardian or legal representative, should one be
appointed).

6.9 Termination of Employment or Service. The Committee shall have
the power to specify, with respect to the Options granted to a particular
Optionee, the effect upon such Optionee's right to exercise an Option of
termination of such Optionee's employment or service under various
circumstances, which effect may include immediate or deferred termination of
such Optionee's rights under an Option, or acceleration of the date at which an
Option may be exercised in full; provided, however, that in no event may an
Incentive Stock Option be exercised after the expiration of ten years from the
date of grant thereof.

6.10 Employment Rights. Nothing in the Plan or in any Stock Option
Agreement shall confer on any person any right to continue in the employ of the
Company or any of its Subsidiaries, or shall interfere in any way with the right
of the Company or any of its Subsidiaries to terminate such person's employment
at any time.

6.11 Certain Successor Options. To the extent not inconsistent with
the terms, limitations and conditions of Code Section 422 and any regulations
promulgated with respect thereto, an Option

9
<PAGE> 13

issued in respect of an option held by an employee to acquire stock of any
entity acquired, by merger or otherwise, by the Company (or any Subsidiary of
the Company) may contain terms that differ from those stated in this Article VI,
but solely to the extent necessary to preserve for any such employee the rights
and benefits contained in such predecessor option, or to satisfy the
requirements of Code Section 424(a).

6.12 Right Not To Issue. The Company shall not be required to issue
shares of Stock purchased upon the exercise of any Option granted hereunder or
any portion thereof, prior to fulfillment of all of the following conditions:

(a) The admission of such shares to listing on all stock exchanges
on which the Stock is then listed;

(b) The completion of any registration or other qualification of
such shares which the Committee shall deem necessary or advisable under any
federal or state law or under the rulings or regulations of the Securities and
Exchange Commission or any other governmental regulatory body;

(c) The obtaining of any approval or other clearance from any
federal or state governmental agency or body which the Committee shall determine
to be necessary or advisable; and

(d) The lapse of such reasonable period of time following the
exercise of the Option as the Board from time to time may establish for reasons
of administrative convenience.

6.13 Restrictive Legends. Stock certificates issued and delivered
to the Optionees shall bear such restrictive legends as the Company shall deem
necessary or advisable pursuant to applicable federal and state securities laws,
or for purposes of the Plan and any applicable Stock Option Agreement.

ARTICLE VII
TERMINATION AND AMENDMENT

7.1 Termination and Amendment. The Board may at any time amend or
terminate the Plan; provided, however, that the Board (unless its actions are
approved or ratified by the shareholders of the Company within twelve months of
the date that the Board amends the Plan) may not amend the Plan to:

(a) Increase the total number of shares of Stock issuable
pursuant to Incentive Stock Options under the Plan, except as contemplated in
Section 5.2 hereof; or

(b) Change the class of employees eligible to receive
Incentive Stock Options that may participate in the Plan.

7.2 Effect on Optionee's Rights. No such amendment or termination
of the Plan shall affect adversely an Optionee's rights under a Stock Option
Agreement without the consent of the Optionee or his legal representative.

10
<PAGE> 14

ARTICLE VIII
RELATIONSHIP TO OTHER COMPENSATION PLANS

The adoption of the Plan shall not affect any other stock option,
incentive, or other compensation plans in effect for the Company or any of its
Subsidiaries; nor shall the adoption of the Plan preclude the Company or any of
its Subsidiaries from establishing any other form of incentive or other
compensation plan for employees or Directors of the Company or any of its
Subsidiaries.

ARTICLE IX
MISCELLANEOUS

9.1 Replacement or Amended Grants. At the sole discretion of the
Committee, and subject to the terms of the Plan, the Committee may modify
outstanding Options or accept the surrender of outstanding Options and grant new
Options in substitution for them. No modification of an Option shall adversely
affect an Optionee's rights under a Stock Option Agreement, however, without the
consent of the Optionee or his legal representative.

9.2 Forfeiture for Competition. If an Optionee provides services
to a competitor of the Company or any of its Subsidiaries, whether as an
employee, officer, director, independent contractor, consultant, agent,
investor, financier or otherwise, as determined in the sole discretion of the
Committee, then that Optionee's rights under any Options outstanding hereunder
shall be forfeited and terminated, subject in each case to a determination to
the contrary by the Committee.

9.3 Plan Binding on Successors. The Plan shall be binding upon the
successors and assigns of the Company.

9.4 Singular, Plural; Gender. Whenever used herein, nouns in the
singular shall include the plural, and the masculine pronoun shall include the
feminine gender.

9.5 Headings, etc., No Part of Plan. Headings of Articles and
Sections hereof are inserted for convenience and reference; they do not
constitute part of the Plan.

* * * * *

11
<PAGE> 15

Exhibit A to
Albecca Inc.
1998 Stock Option Plan -
Form of Stock Option Agreement

ALBECCA INC.
STOCK OPTION AGREEMENT

THIS STOCK OPTION AGREEMENT (this "Agreement"), entered into as of this
___ day of _____, ____, is by and between Albecca Inc., a Georgia corporation
(the "Company"), and _______________________________ (the "Optionee").

WHEREAS, on May 1, 1998, the Board of Directors of the Company adopted,
and the shareholders of the Company approved, a stock option plan known as the
Company's "1998 Stock Option Plan" (the "Plan"); and

WHEREAS, the Committee has granted the Optionee a stock option to
purchase the number of shares of the Company's Class A Common Stock as set forth
below, and in consideration of the granting of that stock option the Optionee
intends to remain in the employ of the Company; and

WHEREAS, the Company and the Optionee desire to enter into a written
agreement with respect to such option in accordance with the Plan.

NOW, THEREFORE, as an employment incentive and to encourage stock
ownership, and also in consideration of the mutual covenants contained herein,
the parties hereto agree as follows.

1. Incorporation of Plan. This option is granted pursuant to the
provisions of the Plan and the terms and definitions of the Plan are
incorporated herein by reference and made a part hereof. A copy of the Plan has
been delivered to, and receipt is hereby acknowledged by, the Optionee.

2. Grant of Option. Subject to the terms, restrictions, limitations and
conditions stated herein, the Company hereby evidences its grant to the
Optionee, not in lieu of salary or other compensation, of the right and option
(the "Option") to purchase all or any part of the number of shares of the
Company's Class A Common Stock (the "Stock"), set forth on Schedule A attached
hereto and incorporated herein by reference. The Option shall be exercisable in
the amounts and at the time specified on Schedule A. The Option shall expire and
shall not be exercisable on and after the date specified on Schedule A or on
such earlier date as determined pursuant to Section 8, 9, or 10 hereof. Schedule
A states whether the Option is intended to be an Incentive Stock Option.

1
<PAGE> 16

3. Purchase Price. The price per share to be paid by the Optionee for the
shares subject to this Option (the "Exercise Price") shall be as specified on
Schedule A, which price shall be an amount not less than the Fair Market Value
of a share of Stock as of the Date of Grant (as defined in Section 11 below) if
the Option is an Incentive Stock Option.

4. Exercise Terms. The Optionee must exercise the Option for at least the
lesser of 100 shares or the number of shares of Purchasable Stock as to which
the Option remains unexercised, except as provided on Schedule A hereto. If this
Option is not exercised with respect to all or any part of the shares subject to
this Option prior to its expiration, the shares with respect to which this
Option was not exercised shall no longer be subject to this Option.

5. Option Non-Transferable. No Option shall be transferable by an
Optionee other than by will or the laws of descent and distribution or, in the
case of non-Incentive Stock Options, pursuant to a Qualified Domestic Relations
Order. During the lifetime of an Optionee, Options shall be exercisable only by
such Optionee (or by such Optionee's guardian or legal representative, should
one be appointed).

6. Notice of Exercise of Option. This Option may be exercised by the
Optionee (or by the Optionee's administrators, executors or personal
representatives under Section 9 or 10 hereof), by a written notice (in
substantially the form of the Notice of Exercise attached hereto as Schedule B)
signed by the Optionee, or by such administrators, executors or personal
representatives, and delivered or mailed to the Company as specified in Section
16 hereof. Any such notice shall (a) specify the number of shares of Stock which
the Optionee or the Optionee's administrators, executors or personal
representatives, as the case may be, then elects to purchase hereunder, (b)
contain such information as may be reasonably required pursuant to Section 12
hereof, and (c) be accompanied by (i) a certified or cashier's check payable to
the Company in payment of the total Exercise Price applicable to such shares as
provided herein, or (ii) if the Stock is then traded on a national securities
exchange or on the over-the-counter market, shares of Stock owned by the
Optionee, and duly endorsed or accompanied by stock transfer powers, having a
Fair Market Value equal to the total Exercise Price applicable to the shares
then being purchased hereunder, or (iii) if the Stock is then traded on a
national securities exchange or on the over-the-counter market, a certified or
cashier's check accompanied by the number of shares of Stock whose Fair Market
Value when added to the amount of the check equals the total Exercise Price
applicable to the shares then being purchased hereunder. Upon receipt of any
such notice and accompanying payment, and subject to the terms hereof, the
Company agrees to issue to the Optionee or the Optionee's administrators,
executors or personal representatives, as the case may be, stock certificates
for the number of shares specified in such notice registered in the name of the
person exercising this Option.

7. Adjustment in Option. The number of Shares subject to this Option, the
Exercise Price and other matters are subject to adjustment during the term of
this Option in accordance with Section 5.2 of the Plan.

2
<PAGE> 17

8. Termination of Employment.

(a) Except as otherwise specified in Schedule A hereto, in the event
of the termination of the Optionee's employment with the Company or any of its
Subsidiaries, other than a termination that is either (i) for Cause, (ii)
voluntary on the part of the Optionee and without written consent of the
Company, or (iii) for reasons of death or disability, the Optionee may exercise
this Option at any time within three months after such termination to the extent
of the number of shares which were Purchasable hereunder at the date of such
termination.

(b) Except as specified in Schedule A attached hereto, in the event of
a termination of the Optionee's employment that is either (i) for Cause or (ii)
voluntary on the part of the Optionee and without the written consent of the
Company, this Option, to the extent not previously exercised, shall terminate
immediately and shall not thereafter be or become exercisable.

9. Disabled Optionee. In the event of termination of employment by reason
of the Optionee's mental or physical disability determined by a medical doctor
satisfactory to the Company, the Optionee (or his or her personal
representative) may exercise this Option, within a period ending on the earlier
of (a) the last day of the one year period following the Optionee's termination
or (b) the expiration date of this Option, to the extent of the number of shares
which were Purchasable hereunder at the date of such termination.

10. Death of Optionee. Except as otherwise set forth in Schedule A with
respect to the rights of the Optionee upon termination of employment under
Section 8(a) above, in the event of the Optionee's death while employed by the
Company or any of its Subsidiaries or within three months after a termination of
such employment (if such termination was neither (i) for cause nor (ii)
voluntary on the part of the Optionee and without the written consent of the
Company), the appropriate persons described in Section 6 hereof or persons to
whom all or a portion of this Option is transferred in accordance with Section 5
hereof may exercise this Option at any time within a period ending on the
earlier of (a) the last day of the one year period following the Optionee's
death or (b) the expiration date of this Option. If the Optionee was an employee
of the Company or any of its Subsidiaries at the time of death, this Option may
be so exercised to the extent of the number of shares that were Purchasable
hereunder at the date of death. If the Optionee's employment terminated prior to
his or her death, this Option may be exercised only to the extent of the number
of shares covered by this Option which were Purchasable hereunder at the date of
such termination.

11. Date of Grant. This Option was granted by the Board of Directors of
the Company on the date set forth in Schedule A (the "Date of Grant").

12. Compliance with Regulatory Matters. The Optionee acknowledges that the
issuance of capital stock of the Company is subject to limitations imposed by
federal and state law and the Optionee hereby agrees that the Company shall not
be obligated to issue any shares of Stock upon exercise of this Option that
would cause the Company to violate a law or any rule, regulation, order or
consent decree of any regulatory authority (including without limitation the
Securities and Exchange Commission) having jurisdiction over the affairs of the

3
<PAGE> 18

Company. The Optionee agrees that the Optionee will provide the Company with
such information as is reasonably requested by the Company or its counsel to
determine whether the issuance of Stock complies with the provisions described
by this Section 12.

13. Restriction on Disposition of Shares. In order to obtain certain tax
benefits afforded to Incentive Stock Options under Section 422 of the Code, the
shares purchased pursuant to the exercise of an Incentive Stock Option must not
be transferred by the Optionee except pursuant to the Optionee's will, or the
laws of descent and distribution, until the later of two years after the grant
of such Incentive Stock Option or one year after the transfer of the shares to
the Optionee upon exercise of such Incentive Stock Option.

14. Confidentiality. The Optionee shall not during his employment with the
Company, or for a period of two years after his employment in the case of
Confidential Information, or at any time after his employment in the case of
Trade Secrets, for whatever reason use personally (except in the proper
performance of his duties with the Company) or divulge or communicate to any
corporation, partnership, trust, limited liability company, or other business
entity or individual, except to those officers and employees of the Company
whose responsibility it is to know the same, or as specifically directed by the
Board or a court or other governmental authority, any Confidential Information
or Trade Secrets which may have been disclosed to the Optionee or which may
otherwise have come to his attention after execution of this Agreement.

"Confidential Information" means all competitively sensitive information
relating to the Company's business past, current or future, (other than other
than Trade Secrets and other than information in the public domain at the date
hereof or that enters the public domain after the date hereof through no fault
of the Optionee), including, without limitation: all technical data; research
and development information; engineering or other data; designs, specifications,
processes and formulae; manufacturing or planning procedures, techniques or
information; marketing plans, strategies and forecasts; business and product
development plans, strategies and forecasts; financial statements, budgets,
prices, costs and financial projections; accounting procedures or financial
information; names and details of consumers, customers, suppliers and agents;
employee details; and secret information; together with the possible or likely
function, purpose or application of that information whether in the current
activities of the Company or any of its Subsidiaries or fields to which the
activities of the Company or any of its Subsidiaries may reasonably extend from
time to time; any part of or improvements to that information, and any
recommendation, test or report of the Company or any of its Subsidiaries or any
consultant or agent in connection with that information; and whether such
information is oral, written, recorded or stored by electronic, magnetic,
electromagnetic or other form or process or otherwise in a machine readable
form, translated from the original form, recompiled, made into a compilation,
wholly or partially copied, modified, updated or otherwise altered, or
originated or obtained by, or coming into the possession, custody, control or
knowledge of the Company or any of its Subsidiaries either alone or jointly.

"Trade Secrets" means any information pertaining to the past, current or future
business of the Company or any of its Subsidiaries which (i) derives economic
value, actual or potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can obtain economic
value from its disclosure or use, and (ii) is the subject of

4
<PAGE> 19

efforts that are reasonable under the circumstances to maintain its secrecy.

15. Nonsolicitation. Optionee acknowledges and recognizes the highly
competitive nature of the Company's business and accordingly agrees that, to
induce the Company to consummate the transactions contemplated by this
Agreement, Optionee shall not, without the prior written consent of the Company,
during Optionee's employment and for a period of two (2) years thereafter: (i)
solicit business substantially similar to the business of the Company from
anyone who is or becomes an active or prospective customer of the Company or any
of its Subsidiaries with whom Optionee had direct, material contact with during
the last twelve (12) months of Optionee's employment with the Company or its
Subsidiaries; or (ii) solicit for employment any employee of the Company or its
Subsidiaries; and Optionee shall not attempt to do any of the things (or
directly or indirectly assist anyone else in doing or attempting to do any of
the things) specified in subsections (i) or (ii) above. The parties agree that
the restrictions set forth in this Section 15 are fair and reasonable in light
of the consideration provided to Optionee, and that the restrictions are
necessary to protect the Company's legitimate business interests.

16. Severability. The provisions of this Agreement are intended to be
reasonable and not to violate the public policies of the jurisdictions in which
it is to be enforced. If a judicial determination is made that any of the
provisions of this Agreement constitutes an unreasonable or otherwise
unenforceable restriction against the Optionee, such provision shall be modified
to the extent necessary to render such provision reasonable and enforceable.
Further, the provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.

17. Miscellaneous.

(a) This Agreement shall be binding upon the parties hereto and their
representatives, successors and assigns.

(b) This Agreement is executed and delivered in, and shall be governed
by the laws of, the State of Georgia.

(c) Any requests or notices to be given hereunder shall be deemed
given, and any elections or exercises to be made or accomplished
shall be deemed made or accomplished when personally delivered or,
if given by telecopy or telex, when sent, or if mailed, five days
after the date when sent by registered or certified mail, postage
prepaid, return receipt requested, addressed, if to the Optionee,
at the address set forth below and, if to the Company, to the
executive offices of the Company at 3900 Steve Reynolds Boulevard,
Norcross, Georgia 30092.

(d) This Agreement may not be modified except in a writing executed by
each of the parties hereto, except as provided in the last
sentence of Section 15.

5
<PAGE> 20

(e) Optionee agrees that the remedy of the Company and its
Subsidiaries at law for breach of any of the covenants set forth
in Sections 14 and 15 hereof will be inadequate. In the event of
such a breach or threatened breach by Optionee, in addition to any
other rights or remedies that the Company or its Subsidiaries may
have, the Company or its Subsidiaries shall be entitled to
temporary and permanent injunctive relief without the necessity of
proving actual or likely damages or harm and without waiting for
actual damages or harm to be incurred.

IN WITNESS WHEREOF, the Board of Directors of the Company has caused this Stock
Option Agreement to be executed on behalf of the Company, and the Optionee has
executed this Stock Option Agreement, all as of the day and year first above
written.

Albecca Inc. OPTIONEE

By:
------------------------------ -----------------------------------
Name: Name:
---------------------------- ------------------------------
Title: Address:
--------------------------- ---------------------------

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

6
<PAGE> 21

SCHEDULE A
TO STOCK OPTION AGREEMENT
BETWEEN ALBECCA INC.
AND

----------------------------
Dated:

1. Number of Shares Subject to Option: Shares.
------------------------
2. This Option (Check one) [ ] is [ ] is not an Incentive Stock Option.

3. Option Exercise Price: $ per Share.
---------------
4. Date of Grant:
-------------------
5. Option Vesting Schedule:

Check one:

( ) Options are exercisable with respect to all shares
on or after the date hereof.

( ) Options are exercisable with respect to the number
of shares indicated below on or after the date
indicated next to the number of shares:

No. of Shares Vesting Date

6. Option Exercise Period:

Check One:

( ) All options expire and are void unless exercised on
or before .
---------------- ----, ------

( ) Options expire and are void unless exercised on or
before the date indicated next to the number of
shares:

No. of Shares Expiration Date

<PAGE> 22

7. Special Terms (if any):

Prior to an Initial Public Offering (as defined herein):
notwithstanding Section 4 of the Plan, If Optionee exercises the
Option, Optionee must exercise the Option for all, and not less than
all, shares of Stock then Purchasable under the Option; and Optionee
shall only be permitted to transfer the shares purchased pursuant to
the exercise of this Option by sale or transfer to the Company or to
Craig A. Ponzio, provided, however that nothing herein shall be
construed as an obligation of the Company or Mr. Ponzio to purchase
such shares. For purposes hereof, an "Initial Public Offering" shall
mean an underwritten public offering of the Company's common stock on a
firm commitment basis that results in gross proceeds to the Company of
at least $15,000,000.

Notwithstanding anything in Section 5.2(d) of the Plan, if the Company
effects a recapitalization of its Common Stock, after which
recapitalization there exists more than one class of common stock with
different voting rights, then this Option shall be deemed to apply to
that class or series of common stock with one vote per share or such
number of votes per share as is closest to one vote per share.

[Special termination, disability or death provisions in lieu of
Sections 8, 9 and 10]

[Specially tailored noncompetition and nonsolicitation provisions in
lieu of Section 15.]

[Other special terms.]

<PAGE> 23

SCHEDULE BSCHEDULE B

NOTICE OF EXERCISE

The undersigned hereby notifies Albecca Inc. (the "Company")
of this election to exercise the undersigned's stock option to purchase
_____________ shares of the Company's Class A Common Stock (the "Common Stock"),
pursuant to the Stock Option Agreement (the "Agreement") between the undersigned
and the Company dated__________, _______. Accompanying this Notice is (1) a
certified or a cashier's check in the amount of $ payable to the Company, and/or
(2) _________ shares of the Company's Common Stock presently owned by the
undersigned and duly endorsed or accompanied by stock transfer powers, having an
aggregate Fair Market Value (as defined in the Company's 1998 Stock Option Plan)
as of the date hereof of $___________, such amounts being equal, in the
aggregate, to the purchase price per share set forth in Section 3 of the
Agreement multiplied by the number of shares being purchased hereby (in each
instance subject to appropriate adjustment pursuant to Section 5.2 of the Plan).

IN WITNESS WHEREOF, the undersigned has set his hand and seal,
this______ day of ________, _______.

OPTIONEE [OR OPTIONEE'S
ADMINISTRATOR, EXECUTOR
OR PERSONAL REPRESENTATIVE]

-------------------------------------------
Signature

-------------------------------------------
Name and Position (if other than Optionee)

<PAGE> 1
EXHIBIT 21.1

<TABLE>
<CAPTION>
SUBSIDIARY JURISDICTION
---------- ------------
<S> <C>
Larson-Juhl U.S., L.L.C. Georgia
Larson-Juhl International, L.L.C. Georgia
Art Materials, Frames and Moulding Company, Inc. Alabama
Robert F. de Castro, Inc. Louisiana
Glass Corporation of America, Inc. Louisiana
Art West, Inc. Arizona
Eastern Moulding, Inc. Maryland
Eastern Mouldings, Inc. New Jersey
Larson-Juhl Canada Ltd. Canada
Multico Manufacturing, Inc. Canada
Larson-Juhl Wels GmbH Austria
Nottling Larson-Juhl GmbH Austria
Larson-Juhl Germany GmbH Germany
Larson-Juhl Rahman GmbH & Co. Handels-KG Germany
Larson-Juhl Rahman GmbH Germany
Mersch Design GmbH Germany
Larson-Juhl SA France
Brio SA France
SAB SA France
ARCAD SA France
Senelar Larson-Juhl SA France
Frimpex SA France
SM SARL France
Larson-Juhl France S.A.R.L. France
Larson-Juhl Hellas Picture Frames S.A. Greece
LAC-ART Larson-Juhl Single Partner L.L.C. Greece
Larson-Juhl Netherlands B.V. Netherlands
Dutch Frame Company B.V. Netherlands
Styling Design Barneveld B.V. Netherlands
Lever's Lijstenfabrieck B.V. Netherlands
Lever Onroerond Goed Opperduit B.V. Netherlands
Larson-Juhl Training and Equipment B.V. Netherlands
Erijko Beheer Exploitatiernaatschappij B.V. Netherlands
Barth Lijsten Beheer B.V. Netherlands
Erijko Lijsten B.V. Netherlands
Barth Lijsten Boxtel B.V. Netherlands
Barth Lijsten Nederland B.V. Netherlands
Larson-Juhl Australia L.L.C. Georgia
Larson-Juhl Korea Limited Korea
Lira, A.S. Czech Republic
The Moulding Group Limited U.K.
Northampton Acquisition Limited U.K.
Magnolia Group Limited U.K.
ARQ-DM Limited U.K.
Arquati U.K. Limited U.K.
Larson-Juhl (UK) Limited U.K.
IMALC (Pty.) Ltd. South Africa
Atlanta Mouldings Company (Pty.) Ltd. South Africa
Supreme Larson-Juhl (Pty.) Ltd. South Africa
Larson-Juhl Sweden A.B. Sweden
Guldlist Larson-Juhl AB Sweden
AB Edenholms Guldlistfabrik Sweden
G. Lundrens Effr A.B. Sweden
Tranaslist, A.B. Sweden
Heinonsalo Larson-Juhl Oy Finland
Dekotukku Oy Finland
Larson-Juhl Russia Russia
Larson-Juhl Baltic Latvia
Halvorsens Larson-Juhl, A.S. Norway
Larson-Juhl (NZ) Limited New Zealand
Larson-Juhl France, L.L.C. Georgia
Larson-Juhl Nippon Corporation Japan
Larson-Juhl Italia s.r.l. Italy
Arcobalegno s.r.l. Italy
Larson-Juhl Australia Pty Ltd. Australia
Larson-Juhl South Africa L.L.C. Georgia
Larson-Juhl Korea L.L.C. Georgia
Larson-Juhl Seoul L.L.C. Georgia
Larson-Juhl Netherlands L.L.C. Georgia
</TABLE>

<PAGE> 1
EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
(and to all references to our firm) included in or made part of this
Registration Statement.

/s/ ARTHUR ANDERSEN LLP

ARTHUR ANDERSEN LLP

Atlanta, Georgia

July 1, 1998

<PAGE> 1
EXHIBIT 23.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting a part of this
Registration Statement on Form S-1 of our report dated May 6, 1998 on the
financial statements of Larson-Juhl Netherlands B.V. for the period September
1, 1997 up to and including March 1, 1998 as well as our reports on the
financial statements of Larson-Juhl Netherlands B.V. for the fiscal years 1995
(for the period January 2, 1995 up to and including August 27, 1995), 1996 (for
the period August 28, 1995 up to and including August 25, 1996) and 1997 (for
the period August 26, 1996 up to and including August 31, 1997).

We also consent to the reference to us under the caption "Experts" in the
Prospectus.

/s/ BDO CampsObers
- -------------------
BDO CampsObers
Registeraccountants

July 1, 1998

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF ALBECCA INC. FOR THE YEAR ENDED AUGUST 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> AUG-26-1996
<PERIOD-END> AUG-31-1997
<CASH> 5,301
<SECURITIES> 0
<RECEIVABLES> 54,648
<ALLOWANCES> 5,378
<INVENTORY> 68,209
<CURRENT-ASSETS> 127,659
<PP&E> 69,086
<DEPRECIATION> 16,411
<TOTAL-ASSETS> 208,689
<CURRENT-LIABILITIES> 84,357
<BONDS> 108,726
0
0
<COMMON> 170
<OTHER-SE> 37,143
<TOTAL-LIABILITY-AND-EQUITY> 208,689
<SALES> 354,058
<TOTAL-REVENUES> 354,058
<CGS> 200,750
<TOTAL-COSTS> 200,750
<OTHER-EXPENSES> 117,707
<LOSS-PROVISION> 4,485
<INTEREST-EXPENSE> 9,722
<INCOME-PRETAX> 25,879
<INCOME-TAX> 3,243
<INCOME-CONTINUING> 22,490
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,490
<EPS-PRIMARY> 1.32
<EPS-DILUTED> 1.32

</TABLE>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF ALBECCA INC. FOR THE NINE MONTH PERIOD ENDED MAY 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-30-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> MAY-31-1998
<CASH> 6,694
<SECURITIES> 0
<RECEIVABLES> 61,488
<ALLOWANCES> 5,618
<INVENTORY> 75,431
<CURRENT-ASSETS> 145,647
<PP&E> 62,491
<DEPRECIATION> 20,222
<TOTAL-ASSETS> 257,406
<CURRENT-LIABILITIES> 100,184
<BONDS> 146,141
0
0
<COMMON> 0
<OTHER-SE> 31,169
<TOTAL-LIABILITY-AND-EQUITY> 257,406
<SALES> 266,695
<TOTAL-REVENUES> 266,695
<CGS> 152,614
<TOTAL-COSTS> 152,614
<OTHER-EXPENSES> 86,905
<LOSS-PROVISION> 1,972
<INTEREST-EXPENSE> 7,051
<INCOME-PRETAX> 20,125
<INCOME-TAX> 2,194
<INCOME-CONTINUING> 17,828
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,828
<EPS-PRIMARY> 1.05
<EPS-DILUTED> 1.05

</TABLE>