10-Q

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



                                        SECURITIES AND EXCHANGE COMMISSION
                                              Washington, D.C. 20549

                                                     Form 10-Q

(Mark One)
                            [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                                          SECURITIES EXCHANGE ACT OF 1934
                                 For the quarterly period ended September 30, 2003

                                                        OR

                           [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                                          SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _________________

Commission file number:    333-31282


                                            O'Sullivan Industries, Inc.
                              (Exact name of registrant as specified in its charter)

                              Delaware                                                    43-0923022
   (State or other jurisdiction of incorporation or organization)            (I.R.S. Employer Identification No.)

                  1900 Gulf Street, Lamar, Missouri                                       64759-1899
              (Address of principal executive offices)                                    (ZIP Code)

                                                  (417) 682-3322
                               (Registrant's telephone number, including area code)


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

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

         As of November 10, 2003, 100 shares of common stock of O'Sullivan Industries Holdings, Inc., par value
$1.00 per share, were outstanding, and held by O'Sullivan Industries Holdings, Inc.



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                                     The Index to Exhibits begins on page 25.

                                                   Page 1 of 30








                                                      PART  I
Item 1.  Financial Statements.


                                    O'SULLIVAN INDUSTRIES, INC. AND SUBSIDIARIES
                         (A wholly owned subsidiary of O'Sullivan Industries Holdings, Inc.)
                                        UNAUDITED CONSOLIDATED BALANCE SHEETS
                                        (in thousands, except for share data)


                                                                                       September 30,       June 30,
                                        Assets                                              2003             2003
                                                                                      ----------------    -----------
Current assets:
   Cash and cash equivalents                                                            $       14,334   $      7,977
   Trade receivables, net of allowance for doubtful accounts
      of $2,768 and $2,978, respectively                                                        33,979         25,032
   Inventories, net                                                                             45,278         52,426
   Prepaid expenses and other current assets                                                     2,508          2,772
                                                                                         -------------    -----------
         Total current assets                                                                   96,099         88,207

Property, plant and equipment, net                                                              68,831         71,867
Other assets                                                                                     9,391          8,982
Goodwill, net of accumulated amortization                                                       38,088         38,088
                                                                                         -------------    -----------
                Total assets                                                            $      212,409   $    207,144
                                                                                         =============    ===========

                        Liabilities and Stockholder's Deficit
Current liabilities:
   Accounts payable                                                                     $       10,752   $     10,006
   Current portion of long-term debt                                                                 -          4,039
   Accrued advertising                                                                           9,110          9,493
   Accrued liabilities                                                                          13,028         11,463
   Payable to parent - tax sharing agreement                                                     6,798          6,798
         Total current liabilities                                                              39,688         41,799

Long-term debt, less current portion                                                           200,846        189,970
Other liabilities                                                                                3,774          2,439
Payable to parent - tax sharing agreement                                                       65,269         65,269
Other payable to parent                                                                          1,444          1,190
                                                                                         -------------    -----------
                Total liabilities                                                              311,021        300,667

Commitments and contingent liabilities (Notes 8, 9 and 10)

Stockholder's deficit:
   Common stock, $1.00 par value; 100 shares authorized, issued and outstanding                      -              -
   Retained deficit                                                                            (99,233)       (93,819)
   Accumulated other comprehensive income                                                          621            296
                                                                                         -------------    -----------
         Total stockholder's deficit                                                           (98,612)       (93,523)
                                                                                         -------------    -----------
                Total liabilities and stockholder's deficit                             $      212,409   $    207,144
                                                                                         =============    ===========

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










                                 O'SULLIVAN INDUSTRIES, INC. AND SUBSIDIARIES
                     (A wholly owned subsidiary of O'Sullivan Industries Holdings, Inc.)
                               UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                (in thousands)

                                                                                      Three months ended
                                                                                         September 30,
                                                                                 -----------------------------
                                                                                     2003             2002
                                                                                 -------------    ------------

Net sales                                                                       $       71,464  $       71,557
Cost of sales                                                                           57,156          51,584
                                                                                 -------------    ------------

Gross profit                                                                            14,308          19,973

Operating expenses:
     Selling, marketing and administrative                                              10,357          11,998
                                                                                 -------------    ------------

Operating income                                                                         3,951           7,975

Other income (expense)
     Interest expense                                                                   (6,094)         (5,775)
     Interest income                                                                        23              52
     Other financing costs                                                              (3,294)              -
                                                                                 -------------    ------------

Income (loss) before income tax provision                                               (5,414)          2,252
Income tax provision                                                                         -               -
                                                                                 -------------    ------------

Net income (loss)                                                               $       (5,414) $        2,252
                                                                                 =============    ============

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









                                   O'SULLIVAN INDUSTRIES, INC. AND SUBSIDIARIES
                       (A wholly owned subsidiary of O'Sullivan Industries Holdings, Inc.)
                                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                  (in thousands)

                                                                                           Three months ended
                                                                                             September 30,
                                                                                      ----------------------------
                                                                                          2003            2002
                                                                                      ------------    ------------

Cash flows provided (used) by operating activities:
     Net income (loss)                                                              $       (5,414)  $       2,252
     Adjustments to reconcile net income (loss) to net cash provided (used)
         by operating activities:
              Depreciation and amortization                                                  3,312           3,264
              Amortization of debt issuance costs                                              431             393
              Amortization of debt discount                                                    103              91
              Interest rate collar                                                               -            (584)
              Bad debt expense                                                                  51             448
              Loss on disposal of assets                                                         1              11
              Debt extinguishment costs                                                      3,108               -
              Accrual of special payment on options to purchase Series A
                  junior preferred stock                                                       343             300
     Changes in assets and liabilities:
              Trade receivables                                                             (8,947)          2,559
              Inventories                                                                    7,148          (4,609)
              Other assets                                                                     425            (693)
              RadioShack payable to parent                                                       -          (3,097)
              Accounts payable and accrued liabilities                                       3,287            (624)
                                                                                      ------------    ------------
Net cash flows provided (used) by operating activities                                       3,848            (289)
                                                                                      ------------    ------------

Cash flows used for investing activities:
     Capital expenditures                                                                     (244)         (1,557)
                                                                                      ------------    ------------

Cash flows provided (used) by financing activities:
     Proceeds from borrowings                                                               95,000               -
     Repayment of borrowings                                                               (88,265)           (886)
     Debt issuance costs                                                                    (4,236)              -
     Advances on intercompany loans                                                            254             282
                                                                                      ------------    ------------
Net cash flows provided (used) by financing activities                                       2,753            (604)

Net increase (decrease) in cash and cash equivalents                                         6,357          (2,450)
Cash and cash equivalents, beginning of period                                               7,977          15,777
                                                                                      ------------    ------------
Cash and cash equivalents, end of period                                            $       14,334   $      13,327
                                                                                      ============    ============

Non-cash investing activities:
     Capital expenditures included in accounts payable                              $           43   $         160
             The accompanying notes are an integral part of these consolidated financial statements.









                                 O'SULLIVAN INDUSTRIES, INC. AND SUBSIDIARIES
                      (A wholly owned subsidiary of O'Sullivan Industries Holdings, Inc.)
                     UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S DEFICIT
                                 For the three months ended September 30, 2003
                                                (in thousands)

                                                              Accumulated
                                                                 other             Total
                                             Retained        comprehensive     stockholder's    Comprehensive
                                             deficit            income            deficit       income (loss)
                                           ------------     ---------------   ---------------  ----------------

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

Balance, June 30, 2003                   $      (93,819)  $             296 $         (93,523)

  Net loss                                       (5,414)                               (5,414)$          (5,414)

  Cumulative translation adjustments                                    325               325               325
                                           ------------     ---------------   ---------------  ----------------

                                           ------------     ---------------   ---------------  ----------------
Balance, September 30, 2003              $      (99,233)  $             621 $         (98,612)$          (5,089)
                                           ============     ===============   ===============  ================

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














                                           O'SULLIVAN  INDUSTRIES,  INC.
                        (a wholly owned subsidiary of O'Sullivan Industries Holdings, Inc.)
                              NOTES  TO UNAUDITED CONSOLIDATED  FINANCIAL  STATEMENTS
                                                September 30, 2003

Note 1--Basis of Presentation

         The unaudited consolidated financial statements of O'Sullivan Industries, Inc. and subsidiaries
("O'Sullivan"), a wholly owned subsidiary of O'Sullivan Industries Holdings, Inc. ("O'Sullivan Holdings") included
herein have been prepared in accordance with generally accepted accounting principles for interim financial
information and with instructions to Form 10-Q and Article 10 of Regulation S-X.  Certain information and footnote
disclosures normally included in financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and regulations.  In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been
included.  The financial statements should be read in conjunction with the audited financial statements and notes
thereto included in O'Sullivan's Annual Report on Form 10-K for the fiscal year ended June 30, 2003.  The interim
results are not necessarily indicative of the results that may be expected for a full year.

Note 2--Refinancing of Long-Term Debt

         On September 29, 2003, O'Sullivan issued $100.0 million of privately placed, 10.63% senior secured notes
maturing on October 1, 2008.  The notes were issued at a price of 95%, providing $95.0 million in cash proceeds
before expenses related to the issuance, which were about $5 million. The proceeds were used to repay the term
loans under O'Sullivan's senior credit facility.  The notes are secured by a first-priority security interest in and lien
on substantially all of O'Sullivan's assets (and on O'Sullivan Industries' capital stock) other than accounts
receivable, inventory, capital stock of O'Sullivan's subsidiaries, deposit accounts, certain books and records and
certain licenses, and by a second-priority security interest in and lien on substantially all of O'Sullivan's accounts
receivable, inventory, deposit accounts, certain books and records and certain licenses.  The notes are guaranteed by
O'Sullivan Holdings, O'Sullivan Industries-Virginia, Inc. ("O'Sullivan Industries - Virginia") and O'Sullivan
Furniture Factory Outlet, Inc.   O'Sullivan Industries also entered into a registration rights agreement pursuant to
which it is obligated to file a registration statement with respect to an offer to exchange the notes for a new issue of
identical notes registered under the Securities Act of 1933, as amended, within 90 days after the offering closed, and
to use all commercially reasonable efforts to cause the registration statement to be declared effective on or prior to
180 days after the notes were issued.  O'Sullivan Industries may also be required under certain circumstances to
provide a shelf registration statement to cover resales of the notes.

         On September 29, 2003, O'Sullivan, O'Sullivan Industries-Virginia and O'Sullivan Furniture Factory
Outlet, Inc. also entered into a new asset-based credit agreement which permits revolving borrowings of up to
$40.0 million to the extent of availability under a collateral borrowing base.  The credit agreement has a $25.0
million sub-limit for letters of credit, of which O'Sullivan Industries is currently utilizing approximately $14.0
million.  The credit agreement is secured by a first-priority security interest in and lien on substantially all of
O'Sullivan's accounts receivable, inventory, deposit accounts, certain books and records and certain licenses, and a
second-priority security interest in and lien on substantially all of O'Sullivan's assets other than accounts receivable,
inventory, capital stock of O'Sullivan Industries and its subsidiaries, deposit accounts, certain books and records and
certain licenses.  O'Sullivan guaranteed the obligations under the credit agreement.  The interest rate on loans under
the credit agreement is a LIBOR rate plus 2.5% or an index rate plus 1.0%.  A fee equal to 0.5% per annum is paid
on the unused commitment under the credit agreement.  No loans were outstanding under the revolving credit
agreement as of September 30, 2003.

         In connection with the repayment of the term loans and the termination of the revolving credit facility under
the previous senior credit facility, O'Sullivan expensed approximately $3.1 million of unamortized issuance costs
related to the previous senior credit facility in the first quarter of fiscal 2004.



                                                         6





         Long term debt consisted of the following:


                                                 September 30,        June 30,
                                                     2003               2003
                                                ---------------     -------------
                                                         (in thousands)
                                                                    --

Senior term loan, tranche A                     $             -     $      10,593
Senior term loan, tranche B                                   -            77,673
Industrial revenue bonds                                 10,000            10,000
Senior secured notes                                     95,000                 -
Senior subordinated notes                                95,846            95,743
                                                  -------------       -----------
         Total debt                                     200,846           194,009
Less current portion                                          -            (4,039)
                                                  -------------       -----------
         Total long-term debt                   $       200,846     $     189,970
                                                  =============       ===========

         Total debt, including the discount, net of accretion, of $5.0 million on the senior secured notes and $4.2
million on the senior subordinated notes, matures as follows (in thousands):


2004            $           -
2005                        -
2006                        -
2007                        -
2008                        -
Thereafter            210,000
                  -----------
                $     210,000
                  ===========

Note 3--Derivative Financial Instruments

         As required under O'Sullivan's previous senior credit facility, O'Sullivan hedged one-half of its term loans
with an initial notional amount of $67.5 million with a three-year, costless interest rate collar.  The collar, which
expired in March 2003, was based on three-month LIBOR and had a floor of 6.43% and a ceiling of 8.75%.
O'Sullivan recorded reduced interest expense of $584,000 for the quarter ended September 30, 2002.  This amount
represented the change in fair value of the interest rate collar.

Note 4--Stock Based Compensation

         We account for stock-based compensation for employees under Accounting Principles Board ("APB")
Opinion No. 25, Accounting for Stock Issued to Employees, and have elected the disclosure-only alternative under
SFAS 123.  No stock-based compensation cost is recorded, as all options granted have an exercise price equal to the
market value of the stock on the date of the grant.  In accordance with SFAS 148, the following table presents the
effect on net income (loss) had compensation cost for O'Sullivan's stock plans been determined consistent with
SFAS 123:

                                                                              Three months ended
                                                                                September 30,
                                                                            2003           2002
                                                                         -----------    -----------
                                                                                (in thousands)
                                                                                        -----------
Net income (loss) as reported                                          $      (5,414) $       2,252
Less:      Total stock-based compensation expense determined under fair
      value method for all stock options, net of related income tax               (2)            (2)
                                                                         -----------    -----------
Pro forma net income (loss)                                            $      (5,416) $       2,250




                                                         7





         For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over
the vesting period.  No options were granted during the three months ended September 30, 2003 or 2002.

Note 5--Shipping and Handling Costs

         O'Sullivan reports amounts billed to customers as revenue, the cost for warehousing operations in cost of
sales and freight out costs as part of selling, marketing and administrative expenses.  Freight out costs included in
selling, marketing and administrative expenses in the first quarters of fiscal 2004 and fiscal 2003 were approximately
$1.5 million and $2.1 million, respectively.

Note 6--Inventory

         Inventory, net, consists of the following:

                      September 30,     June 30,
                          2003            2003
                     ---------------   -----------
                             (in thousands)
                                       --
Finished goods       $        29,154   $    37,744
Work in process                4,327         3,923
Raw materials                 11,797        10,759
                       -------------     ---------
                     $        45,278   $    52,426
                       =============     =========

Note 7-Condensed Consolidating Financial Information

         In November 1999 O'Sullivan issued $100 million of 13.375% Senior Subordinated Notes due 2009.
These notes were unsecured obligations of O'Sullivan; however, they were guaranteed on an unsecured basis by its
subsidiary O'Sullivan Industries - Virginia, Inc.  ("O'Sullivan Industries - Virginia").  The guarantee is full and
unconditional.  In fiscal 2000, O'Sullivan exchanged the notes issued in November 1999 for notes with substantially
identical terms and associated guarantees.  The exchange notes have been registered under the Securities Act of
1933, as amended.

         In September 2003 O'Sullivan issued $100 million of 10.64% senior secured notes.  These notes are
secured by substantially all the assets of O'Sullivan and its guarantor subsidiaries O'Sullivan Industries - Virginia
and O'Sullivan Furniture Factory Outlet, Inc.  The senior secured notes are also guaranteed by O'Sullivan Holdings,
O'Sullivan's parent.  The guarantee is full and unconditional.  Security for the senior secured notes includes first
priority liens and security interests in the stock of O'Sullivan.

         The accompanying unaudited condensed consolidating financial information has been prepared and
presented pursuant to SEC rules and regulations.

         The financial information for O'Sullivan Furniture Factory Outlet, Inc. is included in the consolidated
results of O'Sullivan Industries.  O'Sullivan Furniture Factory Outlet, Inc. commenced operations in April 2002.
Net sales for the three months ended September 30, 2003 and 2002 were $557,000 and $203,000, respectively.  Net
income for the three months ended September 30, 2003 and 2002 were $47,000 and $13,000, respectively.  At
September 30, 2003 and June 30, 2003, total assets were $438,000 and $241,000, respectively.  Total liabilities,
excluding payables to affiliates, at September 30, 2003 and June 30, 2003 were $52,000 and $28,000, respectively.



                                                         8





Condensed Consolidating Statements of Income


                                                         Three months ended September 30, 2003
                                                                     (in thousands)
                                             --------------------------------------------------------------
                                                             O'Sullivan
                                              O'Sullivan     ndustries -     Consolidating
                                              Industries    I Virginia        Adjustments     Consolidated
                                             -------------  -------------   ---------------  --------------
Net sales                                  $        53,639$        17,825 $               -$         71,464
Cost of sales                                       41,146         16,010                 -          57,156
                                             -------------  -------------   ---------------  --------------

Gross profit                                        12,493          1,815                 -          14,308

Operating expenses:
      Selling, marketing and administrative          8,774          1,583                 -          10,357
                                             -------------  -------------   ---------------  --------------

Op
Operating income                                     3,719            232                 -           3,951
Other income (expense):
      Interest expense                              (5,878)          (216)                -          (6,094)
      Interest income                                   23              -                 -              23
      Other financing costs                         (3,294)             -                            (3,294)
      Equity in earnings of subsidiary                  16              -              (16)               -
                                             -------------  -------------   ---------------  --------------

Income (loss) before income tax provision           (5,414)            16              (16)          (5,414)
Income tax provision                                     -              -                 -               -
                                             -------------  -------------   ---------------  --------------

Net income (loss)                          $        (5,414$            16 $            (16)$         (5,414)
                                             =============  =============   ===============  ==============



                                                         Three months ended September 30, 2002
                                                                     (in thousands)
                                             -------------------------------------------------------------
                                                             O'Sullivan
                                              O'Sullivan    Industries -    Consolidating
                                              Industries      Virginia       Adjustments     Consolidated
                                             ------------  --------------  ---------------  --------------

Net sales                                  $       52,348$         19,209$               -$         71,557
Cost of sales                                      37,011          14,573                -          51,584
                                             ------------  --------------  ---------------  --------------

Gross profit                                       15,337           4,636                -          19,973

Operating expenses:
      Selling, marketing and administrative        10,039           1,959                -          11,998
                                             ------------  --------------  ---------------  --------------

Op
Operating income                                    5,298           2,677                -           7,975
Other income (expense):
      Interest expense                             (5,644)           (131)               -          (5,775)
      Interest income                                  52               -                -              52
      Equity in earnings of subsidiary              2,546               -          (2,546)               -
                                             ------------  --------------  ---------------  --------------

Income (loss) before income tax provision           2,252           2,546          (2,546)           2,252
Income tax provision (benefit)                          -               -                -               -
                                             ------------  --------------  ---------------  --------------
Net income (loss)                          $        2,252$          2,546$         (2,546)$          2,252
                                             ============  ==============  ===============  ==============




                                                         9






Condensed Consolidating Balance Sheets
                                                                         September 30, 2003
                                                                           (in thousands)
                                                  ----------------------------------------------------------------
                                                                  O'Sullivan      onsolidating
                                                   O'Sullivan     ndustries -     Adjustments
                                                   Industries    I Virginia      C                  Consolidated
                                                  -------------  -------------   --------------   ----------------
ASSETS:
      Current assets                            $        88,622$         7,477 $              - $           96,099
      Property, plant and equipment, net                 38,426         30,405                -             68,831
      Other assets                                        9,312             79                -              9,391
      Investment in subsidiaries                         33,642              -          (33,642)                 -
      Goodwill                                           38,088              -                -             38,088
      Receivable from parent                                  -         40,289          (40,289)                 -
                                                  -------------  -------------   --------------   ----------------
           Total assets                         $       208,090$        78,250 $        (73,931)$          212,409
                                                  =============  =============   ==============   ================

LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT):
      Current liabilities                       $        18,806$        20,882 $              - $           39,688
      Long-term debt                                    190,846         10,000                -            200,846
      Other liabilities                                   3,774              -                -              3,774
      Payable to parent - tax sharing agreement          51,543         13,726                -             65,269
      Other payable to parent                            41,733              -          (40,289)             1,444
      Stockholder's equity (deficit)                    (98,612)        33,642          (33,642)           (98,612)
                                                  -------------  -------------   --------------   ----------------
           Total liabilities and stockholder's  $       208,090$        78,250 $        (73,931)$          212,409
                equity (deficit)
                                                  =============  =============   ==============   ================



                                                                            June 30, 2003
                                                                           (in thousands)
                                                   ---------------------------------------------------------------
                                                                  O'Sullivan
                                                    O'Sullivan    ndustries -     Consolidating
                                                    Industries   I Virginia        Adjustments      Consolidated
                                                   ------------  -------------   ---------------  ----------------
ASSETS:
      Current assets                             $       75,142$        13,065 $               -$           88,207
      Property, plant and equipment, net                 40,385         31,482                 -            71,867
      Other assets                                        8,896             86                 -             8,982
      Investment in subsidiaries                         33,626              -           (33,626)                -
      Goodwill                                           38,088              -                 -            38,088
      Receivable from parent                                  -         33,540           (33,540)                -
                                                   ------------  -------------   ---------------  ----------------
           Total assets                          $      196,137$        78,173 $         (67,166$          207,144
                                                   ============  =============   ===============  ================

LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT):
      Current liabilities                        $       20,978$        20,821 $               -$           41,799
      Long-term debt                                    179,970         10,000                 -           189,970
      Other liabilities                                   2,439              -                 -             2,439
      Payable to parent - tax sharing agreement          51,543         13,726                 -            65,269
      Other payable to parent                            34,730              -           (33,540)            1,190
      Stockholder's equity (deficit)                    (93,523)        33,626           (33,626)          (93,523)
                                                   ------------  -------------   ---------------  ----------------
           Total liabilities and stockholder's   $      196,137$        78,173 $         (67,166$          207,144
                 equity (deficit)
                                                   ============  =============   ===============  ================



                                                        10






Condensed Consolidating Statements of Cash Flows
                                                                   Three months ended September 30, 2003
                                                                               (in thousands)
                                                        -----------------------------------------------------------
                                                         'Sullivan     O'Sullivan    onsolidating
                                                        Ondustries     ndustries -   Adjustments
                                                        I             I Virginia    C                Consolidated
                                                        -----------   ------------  --------------  ---------------
Net cash flows provided (used) by operating                         $
      activities:                                     $      (2,916)         6,764$              -$           3,848
                                                        -----------   ------------  --------------  ---------------
Investing activities:
      Capital expenditures                                     (229)           (15)              -             (244)
      Repayment of loans to affiliates                        6,749              -          (6,749)               -
                                                        -----------   ------------  --------------  ---------------
           Net                                                6,520            (15)         (6,749)            (244)
                                                        -----------   ------------  --------------  ---------------

Op
Financing activities:
      Advances (repayment) of loans from affiliates             254         (6,749)          6,749              254
      Proceeds from borrowings                               95,000              -               -           95,000
      Repayment of borrowings                               (88,265)             -               -          (88,265)
      Debt issuance costs                                    (4,236)             -               -           (4,236)
                                                        -----------   ------------  --------------  ---------------
           Net                                                2,753         (6,749)          6,749            2,753
                                                        -----------   ------------  --------------  ---------------

Cash and cash equivalents:
      Net increase in cash and cash
           equivalents                                        6,357              -               -            6,357
      Cash and cash equivalents, beginning of
           period                                             7,973              4               -            7,977
                                                        -----------   ------------  --------------  ---------------
      Cash and cash equivalents, end of  period       $      14,330 $            4$              -$          14,334
                                                        ===========   ============  ==============  ===============


                                                                   Three months ended September 30, 2002
                                                                               (in thousands)
                                                        -----------------------------------------------------------
                                                                        'Sullivan
                                                         O'Sullivan    Ondustries    onsolidating
                                                         Industries    IVirginia  - CAdjustments     Consolidated
                                                        -------------  -----------  --------------  ---------------

Net cash flows provided (used) by operating
      activities:                                     $        (1,589$       1,300$              -$            (289)
                                                        -------------  -----------  --------------  ---------------
Investing activities:
      Capital expenditures                                       (834)        (723)              -           (1,557)
      Repayment of loans to affiliates                            577            -            (577)               -
                                                        -------------  -----------  --------------  ---------------
           Net                                                   (257)        (723)           (577)          (1,557)
                                                        -------------  -----------  --------------  ---------------
Financing activities:
      Advances (repayment) of loans from affiliates               282         (577)            577              282
      Repayment of borrowings                                    (886)           -               -             (886)
                                                        -------------  -----------  --------------  ---------------
           Net                                                   (604)        (577)            577             (604)
                                                        -------------  -----------  --------------  ---------------

Cash and cash equivalents:
      Net decrease in cash and cash equivalents                (2,450)           -               -           (2,450)
      Cash and cash equivalents, beginning of
           period                                              15,773            4               -           15,777
                                                        -------------  -----------  --------------  ---------------
      Cash and cash equivalents, end of period        $        13,323$           4$              -$          13,327
                                                        =============  ===========  ==============  ===============



                                                        11





Note 8--Income Taxes

         O'Sullivan recorded no tax expense for the three months ended September 30, 2003 and 2002 because of
the valuation allowance recorded in the quarter ended March 31, 2002.

Note 9--Related Party Transactions

         O'Sullivan entered into a management services agreement with Bruckmann, Rosser, Sherrill & Co., LLC
("BRS") for strategic and financial advisory services on November 30, 1999.  The fee for these services is the greater
of (a) 1% of O'Sullivan's consolidated cash flow (as defined in the indenture related to the O'Sullivan Industries
senior subordinated notes) or (b) $300,000 per year.  Under the management services agreement, BRS can also
receive reimbursement for expenses.

         The credit agreement, the indenture for the senior secured notes and the management services agreement all
contain certain restrictions on the payment of the management fee.  The management services agreement provides
that no cash payment for the management fee can be made unless the fixed charge coverage ratio (as defined in the
indenture for the senior subordinated notes) for O'Sullivan's most recently ended four full fiscal quarters would have
been greater than 2.0 to 1.0.  Similarly, the indenture for the senior secured notes provides that payments under the
management services agreement are conditional and contingent upon the fixed charge coverage ratio (as defined in
the indenture for the senior secured notes) for the four most recently ended full fiscal quarters immediately preceding
any payment date being at least 2.0 to 1.  The credit agreement prevents O'Sullivan from paying fees and expenses
under the management services agreement if a default or event of default exists or if one would occur as a result of
the payment.  All fees and expenses under the management services agreement are subordinated to the senior
subordinated notes.

         The management fees and reimbursable expenses of $75,000 and $110,000 recognized in the first quarter of
fiscal years 2004 and 2003, respectively, are included in selling, marketing and administrative expense in the
accompanying consolidated statements of operations.  O'Sullivan Industries paid BRS $713,000 in the first quarter
of fiscal 2003 for the balance owed through June 30, 2002 and $305,000 as a prepayment of the fiscal 2003
management fee.  An additional prepayment of $285,000 for fiscal 2003 management fees was made in January,
2003.  The prepaid balance at September 30, 2003 and June 30, 2003 was $72,000 and $147,000, respectively, and
is included in prepaid expenses and other current assets on the consolidated balance sheet.

Note 10--Commitments and Contingencies

         Tax Sharing Agreement between O'Sullivan Holdings and RadioShack.  Future tax sharing agreement
payments are contingent on taxable income.  The maximum payments are fiscal 2004--$11.6 million; fiscal
2005--$10.5 million; fiscal 2006--$11.3 million; and thereafter--$38.7 million.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

Overview

         We are a leading ready-to-assemble furniture manufacturer in North America with over 45 years of
experience.  We design, manufacture and distribute a broad range of RTA furniture products--computer
workcenters, desks, entertainment centers, audio stands, bookcases and cabinets.

Recent Trends

          Our net sales for the first quarter of fiscal 2004 were about even with sales for the same quarter in fiscal
2003.  Our sales remained at a low level for several reasons:



                                                        12





         o        increasing competition from imported furniture, particularly from China;

         o        substantial competition from U.S. and Canadian manufacturers, several of whom have additional
                  manufacturing capacity;

         o        the lack of growth in sales of personal computers, which reduced the need for computer desks and
                  workcenters;

         o        liquidations and bankruptcies by a number of customers, including Montgomery Ward, Ames and
                  Kmart;

         o        inventory reductions by our customers; and

         o        the retrenchment in business capital outlays, which reduced purchases of office furniture.

These factors will continue to affect our business throughout the remainder of fiscal 2004.

         Due to the low sales levels, we decreased production levels at our manufacturing facilities, which adversely
affected our fixed cost absorption.  We also increased promotional activities with several of our major retail partners.
As a result, our operating income fell to $4.0 million for the quarter ended September 30, 2003, compared with
$8.0 million for the quarter ended September 30, 2002.  Net loss for the quarter ended September 30, 2003 was
$5.4 million compared to net income of $2.3 million in the comparable period of fiscal 2003.  The net loss for the
fiscal 2004 quarter reflects the reduction in operating income, as well as the write-off of unamortized debt issuance
costs related to our previous senior credit facility.

Refinancing Transactions

         On September 29, 2003, we issued $100 million of senior secured notes and executed a new $40 million
senior secured revolving credit facility.  The proceeds of the senior secured notes were used to repay our existing
$88.3 million senior credit facility and related fees and expenses.  The senior secured notes were sold at 95% of their
face value, bear interest at 10.63% and mature on October 1, 2008.  As of September 30, 2003, we had no
borrowings under the new revolving credit agreement, although $14.0 million of letters of credit were outstanding.

Raw Materials

          We purchase large quantities of raw materials, including particleboard and fiberboard.  We are dependent
on our outside suppliers for all of our raw materials.  Therefore, we are subject to changes in the prices charged by
our suppliers.

         Due to the nature of our product lines, we have material sensitivity to some commodities, including
particleboard, fiberboard, corrugated cardboard and hardware.  We manage commodity price exposures primarily
through the duration and terms of our vendor agreements.  A 1.0% change in our raw material prices would affect
our cost of sales by approximately $1.4 million annually.

         In fiscal 2000, certain particleboard and fiberboard suppliers imposed price increases, which increased our
cost of sales in fiscal 2000 and the first half of fiscal 2001.  We were able to reduce the effect of the increases
somewhat through our value analysis program and productivity gains in manufacturing.  In fiscal 2001, particleboard
and fiberboard prices declined, increasing our operating income in the later portion of the year.  Industry pricing for
particleboard was flat to slightly lower in fiscal 2002 and the first half of fiscal 2003.  We saw small increases in
particleboard pricing in the third quarter of fiscal 2003 and another increase in the first quarter of fiscal 2004.  Prices
for fiberboard increased in the fourth quarter of fiscal 2002, but declined slightly during fiscal 2003.  We cannot
assure you that raw materials prices will not increase further in the future.



                                                        13





         If the demand for particleboard increases or the supply decreases, prices may also increase.  We believe that
we can continue to partially offset the effect of such increases through the programs mentioned above and through
the eventual inclusion of the higher costs in the selling price of our products.  However, there can be no assurance
that we will be successful in offsetting these or future potential price increases.

         Several manufacturers, including O'Sullivan, have excess manufacturing capacity due to the current decline
in sales in the RTA furniture segment and increasing imports.  This excess capacity is causing increased competition
that is expected to continue, and perhaps to intensify, through the remainder of fiscal 2004.  This adversely affected
our margins and results of operations in fiscal 2003, and is continuing to affect sales, margins and results of
operations in fiscal 2004.

RadioShack Arbitration and Accounting for Tax Sharing Agreement with RadioShack

         In 1994, RadioShack, then Tandy Corporation, completed an initial public offering of O'Sullivan Holdings.
In connection with the offering, O'Sullivan Holdings entered into a tax sharing and tax benefit reimbursement
agreement with RadioShack.  RadioShack and O'Sullivan Holdings made elections under Sections 338(g) and
338(h)(10) of the Internal Revenue Code with the effect that the tax basis of our assets was increased to the deemed
purchase price of the assets, and an equal amount of such increase was included as taxable income in the
consolidated federal tax return of RadioShack.  The result was that the tax basis of our assets exceeded the historical
book basis we used for financial reporting purposes.

         The increased tax basis of our assets results in increased tax deductions and, accordingly, reduced our
taxable income or increased our net operating loss.  Under the tax sharing agreement, O'Sullivan Holdings is
contractually obligated to pay RadioShack nearly all of the federal tax benefit expected to be realized with respect to
such additional basis.  The payments under the agreement represent additional consideration for the stock of
O'Sullivan Industries, Inc. and further increase the tax basis of our assets from the 1994 initial public offering when
payments are made to RadioShack.

         To the extent the benefit of these basis step-up deductions caused us to have a federal taxable loss,
O'Sullivan Holdings was only obligated to pay RadioShack to the extent that the benefits were used to reduce
taxable income to zero.  Any additional tax deductions resulting from the step-up create a net operating loss ("NOL")
carryforward on O'Sullivan Holdings' federal income tax return.  Under the terms of the tax sharing agreement, if we
utilized this NOL carryforward to generate future tax savings, O'Sullivan Holdings was also obligated to remit that
benefit received to RadioShack.

         O'Sullivan recorded the deferred tax asset created by the step-up in basis and the additional basis from the
probable future payments to RadioShack as of February 1994.  At the same time, we recorded our obligation to
RadioShack.  The amounts of the deferred tax asset and obligation to RadioShack were each $147.9 million at
February 1994.  From 1994 through 2001, we reduced the amount of the deferred tax asset and the obligation to
RadioShack as we realized the benefits of the deferred tax asset and paid RadioShack amounts due under the tax
sharing agreement.

         In November 1999, O'Sullivan Holdings completed a leveraged recapitalization and merger transaction
which significantly increased our debt.  As a result of the higher debt levels, we also experienced increased interest
expense, which reduced our taxable income and also reduced the tax benefits used from the deductions arising from
the step-up in basis.  O'Sullivan Holdings reduced its payments to RadioShack accordingly.  RadioShack claimed
that the deductions arising from the increased interest payments should not impact tax benefit payments due
RadioShack under the tax agreement.  RadioShack pursued this matter and prevailed in an arbitration ruling in
March 2002.  O'Sullivan Holdings reached a settlement agreement with RadioShack in May 2002.  Pursuant to the
settlement agreement, we paid RadioShack $24.6 million in May 2002 and an additional $3.1 million in June 2002.
The sum of these two payments ($27.7 million) represented the amount due RadioShack under the settlement
agreement through June 30, 2002.  These amounts represent the calculation of what benefits we would have realized
had we not had the additional interest expense from the 1999 recapitalization and merger.  The settlement agreement


                                                        14





requires calculations into the future and quarterly payments to RadioShack if our taxable income adjusted for the
additional interest expense shows that we would have realized the benefits had we not incurred the additional interest
expense.  If on this basis, we could have used the deductions from the step-up in basis, O'Sullivan Holdings is
required to make a payment to RadioShack even though we may not be receiving any current tax benefit from these
deductions.

         The remaining maximum obligation to RadioShack was $109.1 million at March 31, 2002.  O'Sullivan
Holdings reduced the obligation by subsequent payments; the balance was $81.4 million at June 30, 2002 and $72.1
million at June 30, 2003 and September 30, 2003.

         Under Statement of Financial Accounting Standards ("SFAS") 109, we must determine if it is more likely
than not that we will realize the net deferred tax asset as a reduction in our tax liabilities in the future.  SFAS 109
requires objective evidence to support the more likely than not conclusion.  The arbitration decision dramatically
affected our liquidity, which reduced the amounts we could invest in sales efforts or cost improvements, as most free
cash flow would now be used for O'Sullivan Holdings' payments to RadioShack or to repay our indebtedness.  In
addition, it became evident to us by March 2002 that the prolonged economic slowdown that started prior to
September 11, 2001 was continuing.  This, coupled with the adverse effect on our liquidity of the settlement, caused
us to lower our projections of future taxable income.  Accordingly, we projected our expected future taxable income
utilizing operating performance we achieved in fiscal 2002 assuming our performance would be no better or worse
over an extended period of time.  Such projections indicate that we would not have taxable income until 2009 when
substantially all the tax benefit deductions had been taken.  At that point, the projections indicated that our net
operating losses existing at that time would be utilized before they expire.  However, we currently have and expect to
have taxable losses for a number of years in the future.  Projections over a long time are inherently uncertain, and we
cannot provide objective evidence that our operations in 2009 and beyond will produce sufficient taxable income.
As a result, we provided a full valuation allowance on our net deferred tax assets in fiscal 2002 with a corresponding
charge to income tax expense.

         As a result of providing a full valuation allowance on our net deferred tax assets in fiscal 2002, we did not
record a tax provision in the first quarter of fiscal 2003 or 2004.  We do not expect to record a tax provision or
benefit in the foreseeable future.  If at a future date we determine that some or all of the deferred tax asset will more
likely than not be realized, we will reverse the appropriate portion of the valuation allowance and credit income tax
expense.

         See "Cautionary Statement Regarding Forward Looking Information."

Results of Operations

         Net Sales.  Net sales for the quarter ended September 30, 2003 decreased by $93,000, or 0.1%, to
$71.5 million from $71.6 million for the quarter ended September 30, 2002.  During the quarter, sales declined in the
office superstore, mass merchant and electronic superstore channels while sales to home centers rose.  Our average
price per unit increased slightly, while the number of units sold declined.

         Gross Profit.  Gross profit decreased to $14.3 million, or 20.0% of sales, for the three month period ended
September 30, 2003, from $20.0 million, or 27.9% of sales, for the comparable prior year quarter.  Fiscal 2004 first
quarter gross profit dollars and margin declined because lower production levels adversely affected our fixed cost
absorption as well as increased promotional activity with several of our major retail partners.

         Selling, Marketing and Administrative Expenses.  Selling, marketing and administrative expenses decreased
to $10.4 million, or 14.5% of sales, for the three month period ended September 30, 2003, from $12.0 million, or
16.8% of sales, for the quarter ended September 30, 2002.  In fiscal 2004, incentive compensation and profit sharing
expenses decreased because of our lower sales and financial performance.  Freight out expense, advertising
allowances and store display expense were also lower in fiscal 2004 compared to the prior year.



                                                        15





         Depreciation and Amortization.  Depreciation and amortization expenses increased slightly to $3.3 million
for the first quarter of fiscal 2004 compared to the first quarter of fiscal 2003.

         Operating Income.  Operating income decreased $4.0 million to $4.0 million for the quarter ended
September 30, 2003 from $8.0 million in the quarter ended September 30, 2002.  Our operating income declined in
fiscal 2004 because our gross profit was lower in fiscal 2004 as described above.

         Net Interest Expense.  Net interest expense increased from $5.7 million in the first quarter of fiscal 2003 to
$6.1 million in the first quarter of fiscal 2004. Interest expense increased due to the credit to interest expense of
$584,000 in the first quarter of fiscal 2003 resulting from the change in fair value of our interest rate collar that
expired in March 2003.  The following table describes the components of net interest expense.


                                                        Three months ended
                                                           September 30,
                                                    ---------------------------
                                                          (in thousands)
                                                         2003           2002
                                                      ----------     ----------
Interest expense on senior credit facility,
    industrial revenue bonds and senior
    subordinated notes                               $     5,560   $      5,876
Interest income                                              (24)           (52)
        Non-cash items:
Interest rate collar                                           -           (584)
Amortization of debt discount                                104             90
Amortization of loan fees                                    431            393
                                                      ----------     ----------
Net interest expense                                 $     6,071   $      5,723
                                                      ==========     ==========


         Net Loss.  Net loss increased $7.7 million from net income of $2.3 million in the first quarter of fiscal 2003
to a loss of $5.4 million in the first quarter of fiscal 2004 due to lower production levels, promotional activities with
our retail partners and increased interest expense and other financing costs.

Liquidity and Capital Resources

         We are highly leveraged and have a stockholder's deficit of approximately $98.6 million at September 30,
2003.  Our liquidity requirements will be to pay our debt, including interest expense under our credit agreement and
notes, to pay RadioShack amounts due under the tax sharing agreement and to provide for working capital and
capital expenditures.  Our primary sources of liquidity are cash flows from operating activities and borrowings under
our credit agreement, which is discussed below.  Decreased demand for our products could decrease our cash flows
from operating activities, our inventory and accounts receivable balances and the availability of borrowings under
our credit agreement.

         Working Capital.  As of September 30, 2003, cash and cash equivalents totaled $14.3 million.  Net working
capital was $56.4 million at September 30, 2003 compared to $46.4 million at June 30, 2003.

         Operating Activities.  Net cash provided by operating activities for the three months ended September 30,
2003 was $3.8 million compared to net cash used of $289,000 for the three months ended September 30, 2002.  Cash
flow from operations increased year-over-year for the following reasons.

      o    Reduced operating profits reduced cash provided by operating activities in fiscal 2004 by about
           $7.7 million.

      o    Accounts receivable increased $8.9 million in the first quarter of fiscal 2004 compared with a decrease of
           $2.6 million in the first quarter of fiscal 2003.  In fiscal 2004, the increase was due to low sales in the


                                                        16





           fourth quarter of fiscal 2003 which resulted in a low receivables balance at June 30, 2003.  In fiscal 2003,
           trade receivables declined because of lower sales levels.

      o    Inventories declined $7.1 million in the quarter ended September 30, 2003 compared with an increase in
           the quarter ended September 30, 2002 of $4.6 million.

      o    In the fiscal 2003 first quarter, we paid RadioShack $3.1 million under the tax sharing agreement; we
           made no payment in the fiscal 2004 first quarter.

      o    Accounts payable, accrued advertising and accrued liabilities increased $3.3 million during the first
           quarter of fiscal 2004 compared to a  decrease of $624,000 during the first quarter of fiscal 2003.  The
           change in payables was due to higher production levels during the first quarter of fiscal 2004 compared to
           the last quarter of fiscal 2003 and the timing of the shutdown of our manufacturing facilities between
           fiscal 2004 and 2003.

      o    We expensed $3.1 million of unamortized debt issuance costs in fiscal 2004 in connection with the
           refinancing of our previous senior credit facility.

         Investing Activities.  We invested $244,000 for capital expenditures for the three months ended September
30, 2003 compared to $1.6 million for the prior year three month period.  We currently estimate that the total capital
expenditure requirements for the remainder of the fiscal year will be approximately $4 million, which we expect to
fund from cash flow from operations or cash on hand.  Our ability to make future capital expenditures is subject to
certain restrictions under the indenture governing our senior secured notes.

         Financing Activities.  On September 29, 2003 we refinanced our old senior credit facility with $100.0
million of new privately placed senior secured notes and an asset-based credit agreement.

         The $100.0 million senior secured notes mature on October 1, 2008 and bear interest at 10.63%.  We issued
the notes at a price of 95%, providing $95.0 million in cash proceeds before expenses related to the issuance of about
$5 million.  The notes are secured by a first-priority security interest in and lien on substantially all of our assets (and
on our capital stock) other than accounts receivable, inventory, capital stock of our subsidiaries, deposit accounts,
certain books and records and certain licenses, and by a second-priority security interest in and lien on substantially
all of our accounts receivable, inventory, deposit accounts, certain books and records and certain licenses.  The notes
are guaranteed by O'Sullivan Holdings, O'Sullivan Industries - Virginia and O'Sullivan Furniture Factory Outlet,
Inc.  We also entered into a registration rights agreement pursuant to which we are obligated to file a registration
statement with respect to an offer to exchange the notes for a new issue of identical notes registered under the
Securities Act of 1933, as amended, within 90 days after this offering closes, and to use all commercially reasonable
efforts to cause the registration statement to declared effective on or prior to 180 days after the notes were issued.
We may also be required under certain circumstances to provide a shelf registration statement to cover resales of the
notes.

         The asset-based credit agreement permits revolving borrowings of up to $40.0 million to the extent of
availability under a collateral borrowing base.  The credit agreement has a $25.0 million sub-limit for letters of
credit, of which we are currently utilizing approximately $14.0 million.  The credit agreement is secured by a first-
priority security interest in and lien on substantially all of our accounts receivable, inventory, deposit accounts,
certain books and records and certain licenses, and a second-priority security interest in and lien on substantially all
of our assets other than accounts receivable, inventory, capital stock of our subsidiaries, deposit accounts, certain
books and records and certain licenses. The interest rate on loans under the credit agreement is a LIBOR rate plus
2.5% or an index rate plus 1.0%.  We also pay a quarterly fee equal to 0.5% per annum of the unused commitment
under the credit agreement.  O'Sullivan Industries - Virginia. and O'Sullivan Furniture Factory Outlet, Inc. are also
parties to the credit agreement.  No loans were outstanding under the credit agreement as of September 30, 2003.



                                                        17





         In connection with the repayment of the term loans and the termination of the revolving credit facility under
the senior credit facility, we expensed approximately $3.1 million of unamortized issuance costs related to the
facility in the first quarter of fiscal 2004.

         Our consolidated indebtedness at September 30, 2003 was $200.8 million consisting of:

        o         a senior credit agreement providing for asset-based revolving credit of up $40.0 million.  At
                  September 30, 2003, no borrowings were outstanding under the credit agreement, although letters
                  of credit aggregating approximately $14.0 million were outstanding under the credit agreement.

        o         $100.0 million in 10.63% senior secured notes due October 1, 2008.  These notes were issued at a
                  price of 95% providing $95.0 million in cash proceeds before expenses related to the issuance.

        o         $100.0 million in 13-3/8% senior subordinated notes due 2009 issued with warrants to purchase
                  6.0% of our common and Series B junior preferred stock on a fully diluted basis.  These warrants
                  were assigned a value of $3.5 million.  These notes were issued at a price of 98.046% providing
                  $98.0 million in cash proceeds before expenses related to the issuance.

        o         $10.0 million in variable rate industrial revenue bonds.


The reconciliation of consolidated indebtedness to recorded book value at September 30, 2003 is as follows:


                               onsolidated      Original
                               ndebtedness        Issue
                                                Discount        Warrants
                              C                  Net of           Net of       Recorded
                              I                 Accretion       Accretion     Book Value
                              -------------  ---------------  -------------  ------------
                                                    (in thousands)
                                             ----             --             ---

                                             ----             --             ---
Senior secured notes          $     100,000     $    (5,000)   $          -    $   95,000
Senior subordinated notes           100,000          (1,488)        (2,666)        95,846
Industrial revenue bonds             10,000                -              -        10,000
                                -----------      -----------    -----------     ---------
Total                         $     210,000     $    (6,488)   $    (2,666)    $200,846
                                ===========      ===========    ===========     =========

         With the refinancing of our old senior credit facility, we have no principal payments due on our debt until
2008.  We expect to fund interest payments on our debt from cash flow from operations, cash on hand or borrowings
under our credit agreement.  We expect our borrowing availability under our credit agreement will approximate
$40.0 million.  Decreased demand for our products could decrease our inventory and accounts receivable levels and
the availability of borrowings under our credit facility.

         As required under our old senior credit facility, we hedged one-half of our term loans with an initial
notional amount of $67.5 million with a costless interest rate collar.  The collar, which expired on March 31, 2003,
was based on three-month LIBOR with a floor of 6.43% and a ceiling of 8.75%.   The counter-party to our interest
rate collar provided us with the payment amount that would have been required to terminate the collar as of the end
of each quarter.  We recorded the change in fair value of the collar as increased or decreased interest expense in the
consolidated statements of operations and included the resulting liability in accrued liabilities on the consolidated
balance sheets.

         See the overview section of this Management's Discussion and Analysis of Financial Condition and Results
of Operations for a discussion of the impact of the Settlement Agreement with RadioShack on our liquidity and
financial condition.



                                                        18





         Off-balance Sheet Arrangements.    At September 30, 2003, we had no off-balance sheet arrangements that
have or are likely to have a material current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

         Contractual Obligations.  The following table illustrates our contractual obligations due in the future:


                                                                           Payments Due by Period
                                                       ---------------------------------------------------------------
                                                                               (in thousands)
                                                           Less
                                                          than 12           12-36            36-60           After
       Contractual Obligations            Total           months            months          months          60 months
- -------------------------------------  -----------     ------------      ------------     -----------     ------------
Long-term debt                       $     210,000   $            -    $            -   $           -   $      210,000
Payable to parent-tax sharing
agreement to RadioShack 1                   72,067           11,644            21,820          26,770           11,833
Capital lease obligations                        -                -                 -               -                -
Operating leases--unconditional               4,386            1,657             2,176             553                -
Other long-term obligations2                   378               93               285               -                -
                                       -----------     ------------      ------------     -----------     ------------
Total contractual cash obligations   $     286,831   $       13,394    $       24,281   $      27,323   $      221,833
                                       ===========     ============      ============     ===========     ============

         1Timing and amounts of payments to RadioShack are contingent on actual taxable income adjusted to
exclude the increased interest expense arising from the 1999 recapitalization and merger.  The amounts in the table
above represent the maximum amounts payable by O'Sullivan Holdings to  RadioShack.
                                       ===========     ============      ============     ===========     ============
         2Represents payments due under a retirement agreement.
                                       ===========     ============      ============     ===========     ============

Critical Accounting Policies and Estimates

         Our discussion and analysis of our financial condition and results of operations are based upon our
consolidated financial statements, which have been prepared in accordance with accounting principles generally
accepted in the U.S.  The preparation of these financial statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities.

         On an on-going basis, we evaluate our estimates, including those related to customer programs and
incentives, bad debts, inventories, intangible assets, income taxes, restructuring, asset impairments, contingencies
and litigation.  We base our estimates on historical experience and on various other assumptions that we believe are
reasonable under the circumstances.  The results of these estimates form the basis for making judgments about the
carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ
from these estimates under different assumptions or conditions.

         We believe the following critical accounting policies affect our more significant judgments and estimates
used in the preparation of our consolidated financial statements.

      o      We derive our revenue from product sales.  We recognize revenue from the sale of products when
             persuasive evidence of an arrangement exists, the product has been delivered, the price is fixed or
             determinable and collection of the resulting receivable is reasonably assured.  For all sales, we use
             purchase orders from the customer, whether oral, written or electronically transmitted, as evidence that a
             sales arrangement exists.  Generally, delivery occurs when product is delivered to a common carrier or
             private carrier, with standard terms being FOB shipping point.  We assess whether the price is fixed or
             determinable based upon the payment terms associated with the transaction.  We assess collection based
             on a number of factors, including past transaction history with the customer and the creditworthiness of
             the customer.  Collateral generally is not requested from customers.



                                                        19





      o      We record estimated reductions to revenue for customer programs and incentive offerings including
             special pricing agreements, price protection, promotions and other volume-based incentives.  Market
             conditions could require us to take actions to increase customer incentive offerings.  These offerings
             could result in our estimates being too small and reduce our revenues when the incentive is offered.

      o      We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our
             customers to make required payments.  If the financial condition of our customers were to deteriorate,
             resulting in an impairment of their ability to make payments, additional allowances may be required.

      o      We write down our inventory for estimated obsolescence or unmarketable inventory equal to the
             difference between the cost of inventory and its estimated market value based upon assumptions about
             future demand and market conditions.  If actual market conditions are less favorable than those
             projected by us, additional inventory write-downs may be required.  Obsolete and slow-moving
             inventory reserves were approximately $3.3 million and $4.3 million at September 30, 2003 and
             June 30, 2003, respectively.

      o      We record our deferred tax assets at the amount that the asset is more likely than not to be realized.  As
             of September 30, 2003, we have provided a valuation allowance against our total net deferred tax asset.
             While we have considered future taxable income and ongoing prudent and feasible tax planning
             strategies in assessing the need for a valuation allowance, our determinations can change.  If we
             objectively determine it was more likely than not we would be able to realize our deferred tax assets in
             the future in excess of our recorded amount, we would reduce our valuation allowance, increasing
             income in the period such determination was made.

      o      We periodically review our long-lived assets, including property and equipment, for impairment and
             determine whether an event or change in facts and circumstances indicates their carrying amount may
             not be recoverable.  We determine recoverability of the assets by comparing the carrying amount of the
             assets to the net future undiscounted cash flows expected to be generated by those assets.  If the sum of
             the undiscounted cash flows is less than the carrying value of the assets, an impairment charge is
             recognized.  Adverse economic conditions could cause us to record impairment charges in the future.

      o      We assess goodwill regularly for impairment by applying a fair-value-based test, using the enterprise as
             the reporting unit.  If the book value of the reporting unit is below the fair value of the reporting unit,
             there is no impairment loss.  Adverse economic conditions could cause us to record impairment charges
             in the future.

Legal Proceedings

         On September 24, 2002, Montgomery Ward, LLC filed suit against O'Sullivan Industries in the U.S.
Bankruptcy Court, District of Delaware, alleging that payments made by Montgomery Ward within 90 days prior to
its bankruptcy constituted preferential transfers under the Bankruptcy Code that should be recovered from
O'Sullivan Industries by Montgomery Ward, together with interest.  The alleged payments aggregate $3.7 million.
We responded to the suit denying we received any preferential payments.  We are contesting this lawsuit vigorously.

         In August 2002, Ames decided to close all of its stores and liquidate.  Actual net sales to Ames in fiscal
2003 were minimal.  In August 2003, Ames Department Stores, Inc. filed suit against O'Sullivan Industries in the
U.S. Bankruptcy Court, Southern District of New York alleging that payments made by Ames within 90 days prior to
its bankruptcy constituted preferential transfers under the Bankruptcy Code that should be recovered from
O'Sullivan Industries by Ames, together with interest.  The alleged payments aggregate $2.1 million.  We received
the summons in this action on September 22, 2003.  We intend to respond to the suit denying we received any
preferential payments.  We intend to contest this lawsuit vigorously.




                                                        20





Cautionary Statement Regarding Forward Looking Information

         Certain portions of this Report, and particularly the Notes to the Consolidated Financial Statements and the
Management's Discussion and Analysis of Financial Condition and Results of Operations, contain forward-looking
statements.  These statements can be identified by the use of future tense or dates or terms such as "believe,"
"would," "expect,"  "anticipate" or "plan."  These forward-looking statements involve risks and uncertainties.  Actual
results may differ materially from those predicted by the forward-looking statements.  Factors and possible events
which could cause results to differ include:

        o     changes from anticipated levels of sales, whether due to future national or regional economic and
              competitive conditions, including new domestic or foreign entrants into the industry, customer
              acceptance of existing and new products, terrorist attacks or otherwise, as we are experiencing now;
        o     loss of liquidity due to the arbitration panel's opinion in RadioShack Corporation v. O'Sullivan
              Industries Holdings, Inc.;
        o     significant indebtedness that may limit our financial and operational flexibility;
        o     raw material cost increases, particularly in particleboard and fiberboard, as occurred in 1994 and 1995
              and to a lesser extent in fiscal 2000;
        o     pricing pressures due to excess capacity in the ready-to-assemble furniture industry, as is occurring
              again now, or customer demand in excess of our ability to supply product;
        o     transportation cost increases, due to higher fuel costs or otherwise;
        o     loss of or reduced sales to significant customers as a result of bankruptcy, liquidation, merger,
              acquisition or any other reason, as occurred with the liquidation of Montgomery Ward in fiscal 2001,
              the liquidation of Ames in fiscal 2003 and with the reorganization of Kmart beginning in fiscal 2002;
        o     actions of current or new competitors, foreign or domestic, that increase competition with our products
              or prices;
        o     the consolidation of manufacturers in the ready-to-assemble furniture industry;
        o     increased advertising costs associated with promotional efforts;
        o     increased interest rates;
        o     pending or new litigation or governmental regulations such as the arbitration involving RadioShack;
        o     other uncertainties which are difficult to predict or beyond our control; and
        o     the risk that we incorrectly analyze these risks and forces, or that the strategies we develop to address
              them could be unsuccessful.

See also the Risk Factors section in our annual report on Form 10-K for the year ended June 30, 2003.

         Because these forward-looking statements involve risks and uncertainties, actual results may differ
significantly from those predicted in these forward-looking statements.  You should not place a lot of weight on these
statements.  These statements speak only as of the date of this document or, in the case of any document incorporated
by reference, the date of that document.

         All subsequent written and oral forward-looking statements attributable to O'Sullivan or any person acting
on our behalf are qualified by the cautionary statements in this section.  We will have no obligation to revise these
forward-looking statements.

ITEM 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         Our market risk is affected by changes in interest rates, foreign currency exchange rates and certain
commodity prices.  Under our policies, we may use natural hedging techniques and derivative financial instruments
to reduce the impact of adverse changes in market prices.  We do not hold or issue derivative instruments for trading
purposes.  We believe that our foreign exchange risk is not material.

         We have market risk in interest rate exposure, primarily in the United States.  We manage interest rate
exposure through our mix of fixed and floating rate debt.  Interest rate instruments may be used to adjust interest rate


                                                        21





exposures when appropriate based on market conditions.  Our interest rate collar expired on March 31, 2003.  At
June 30, 2003, $10.0 million of our debt was subject to variable interest rates.  A change in interest rates of one
percentage point would change our cash interest by about $100,000 annually.

         Due to the nature of our product lines, we have material sensitivity to some commodities, including
particleboard, fiberboard, corrugated cardboard and hardware.  We manage commodity price exposures primarily
through the duration and terms of our vendor agreements.  A 1.0% change in our raw material prices would affect
our cost of sales by approximately $1.4 million annually.

         In fiscal 2000, certain particleboard and fiberboard suppliers imposed price increases, which increased our
cost of sales in fiscal 2000 and the first half of fiscal 2001.  We were able to reduce the effect of the increases
somewhat through our value analysis program and productivity gains in manufacturing.  In fiscal 2001, particleboard
and fiberboard prices declined, increasing our operating income in the later portion of the year.  Industry pricing for
particleboard was flat to slightly lower in fiscal 2002 and the first half of fiscal 2003.  We saw small increases in
particleboard pricing in the third quarter of fiscal 2003 and another increase in the first quarter of fiscal 2004.  Prices
for fiberboard increased in the fourth quarter of fiscal 2002, but declined slightly during fiscal 2003.  We cannot
assure you that raw materials prices will not increase further in the future.

Item 4. Controls and Procedures.

         (a)  O'Sullivan carried out an evaluation as of the end of the period covered by this report, under the
supervision and with the participation of O'Sullivan's management, including O'Sullivan's Chief Executive Officer
and Chief Financial Officer, of the effectiveness of the design and operation of O'Sullivan's disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")).  Based on that evaluation, O'Sullivan's Chief Executive Officer and Chief Financial Officer
concluded that O'Sullivan's disclosure controls and procedures (1) were effective in alerting them, in a timely
manner, to material information relating to O'Sullivan required to be included in O'Sullivan's periodic SEC filings
and (2) were adequate to ensure that information required to be disclosed by O'Sullivan in the reports filed or
submitted by O'Sullivan under the Exchange Act is recorded, processed and summarized and reported within the
time periods specified in the SEC's rules and forms.

         (b)  There have been no significant changes in O'Sullivan's internal controls over financial reporting
subsequent to the evaluation described in paragraph (a) above that have materially affected or are reasonably likely
to materially affect, O'Sullivan's internal control over financial reporting.





                                                        22





                                          PART II --  OTHER  INFORMATION


ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K.

         (a)      Exhibits:

         A list of exhibits required to be filed as part of this Report is set forth in the Index to Exhibits, which
immediately precedes such exhibits, and is incorporated herein by reference.

         (b)      Reports on Form 8-K:

         During the quarter ended September 30, 2003, O'Sullivan furnished a report on form 8-K under Items 9 and
12 dated September 29, 2003 relating to the Closing of $100 Million Senior Secured Notes Offering.


                                                        23





                                                    SIGNATURES

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




                                                                         O'SULLIVAN INDUSTRIES, INC.



Date:   November 13, 2003                                 By:                  /s/ Richard D. Davidson
                                                                 --------------------------------------------------

                                                                                 Richard D. Davidson
                                                                                    President and
                                                                               Chief Executive Officer



Date:   November 13, 2003                                 By:                   /s/ Phillip J. Pacey
                                                                 -------------------------------------------------------------------------------------------------------------------

                                                                                  Phillip J. Pacey
                                                                              Senior Vice President and
                                                                               Chief Financial Officer
                                                                    (Principal Financial and Accounting Officer)



                                                        24





                                                 INDEX TO EXHIBITS


                                                                                                           Page
 Exhibit No.                                         Description                                            No.
  3.1 & 4.1   Amended and Restated Certificate of Incorporation of O'Sullivan (incorporated by
              reference from Exhibit 3.1 to Registration Statement on Form S-4 (File No. 333-31282))

  3.2 & 4.2   Bylaws of O'Sullivan (incorporated by reference from Exhibit 3.2 to Registration
              Statement on Form S-1 (File No. 333-32182))

     4.3      Indenture dated as of November 30, 1999, by O'Sullivan Industries, Inc., as Issuer,
              O'Sullivan Industries - Virginia, Inc., as Guarantor, and Norwest Bank Minnesota, National
              Association, as Trustee, relating to O'Sullivan Industries, Inc.'s $100,000,000 principal
              amount of 13.375% senior subordinated notes (incorporated by reference to Exhibit 4.4 to
              Quarterly Report on Form 10-Q for the quarter ended March 31, 1999
               (File No. 0-28493))

     4.4      Warrant Agreement dated as of November 30, 1999 between O'Sullivan Industries
              Holdings, Inc. and Norwest Bank Minnesota, National Association, as Warrant Agent,
              relating to warrants to purchase 39,273 shares of O'Sullivan Industries Holdings, Inc.
              Series B junior preferred stock, including form of warrant certificate (incorporated by
              reference to Exhibit 4.5 to Quarterly Report on Form 10-Q for the quarter ended March 31,
              1999 (File No. 0-28493))

     4.6      Warrant Agreement dated as of November 30, 1999 between O'Sullivan Industries
              Holdings, Inc. and Norwest Bank Minnesota, National Association, as Warrant Agent,
              relating to warrants to purchase 93,273 shares of O'Sullivan Industries Holdings, Inc.
              common stock, including form of warrant certificate (incorporated by reference to
              Exhibit 4.6 to Quarterly Report on Form 10-Q for the quarter ended December 31, 1999
              (File No. 0-28493))

     4.8      Amended and Restated Warrant Agreement dated as of January 31, 2000 between
              O'Sullivan Industries Holdings, Inc. and the holder thereof relating to warrants to purchase
              93,273 shares of O'Sullivan Industries Holdings, Inc. common stock, including form of
              warrant certificate (incorporated by reference to Exhibit 4.8 to Quarterly Report on Form
              10-Q for the quarter ended December 31, 1999 (File No. 0-28493))
     4.6      Indenture dated as of September 29, 2003 between O'Sullivan Industries, Inc. and each of
              the guarantors party thereto and The Bank of New York, as Trustee, including form of
              Notes (incorporated by reference to Exhibit 4 to Current Report on Form 8-K dated
              September 29, 2003 (File No. 333-31282))
     10.1     Credit Agreement dated as of September 29, 2003 by and among O'Sullivan Industries,
              Inc., O'Sullivan Furniture Factory Outlet, Inc. and O'Sullivan Industries - Virginia, Inc.
              Borrowers, and the other persons party thereto that are designated as credit parties and  , as
              General Electric Capital Corporation, as Agent, L/C issuer and as a lender, and the other
              financial institutions party thereto, as lenders (incorporated by reference to Exhibit 99.
              Current Report on Form 8-K dated September 29, 2003 (File No. 333-31282))                 2 to

    10.1a     Amendment No. 1 to Credit Agreement (incorporated by reference to Exhibit 10.1a to
              Quarterly Report on Form 10-Q for the quarter ended September 30, 2003 (File No. 0-
              28493))



                                                        25






     10.2     Security Agreement dated as of September 29, 2003 between O'Sullivan Industries, Inc.,
              O'Sullivan Furniture Factory Outlet, Inc. and O'Sullivan Industries - Virginia, Inc., as
              Grantors, and General Electric Capital Corporation, as Agent  (incorporated by reference to
              Exhibit 10.2 to Quarterly Report on Form 10-Q for the quarter ended September 30, 2003
              (File No. 0-28493))

     10.3     Security and Pledge Agreement dated as of September 29, 2003 among O'Sullivan
              Industries, Inc., O'Sullivan Industries Holdings, Inc., O'Sullivan Industries - Virginia, Inc.
              and O'Sullivan Furniture Factory Outlet, Inc., as grantors, and The Bank of New York,
              Trustee  (incorporated by reference to Exhibit 10.3 to Quarterly Report on Form 10-Q for
              the quarter ended September 30, 2003 (File No. 0-28493))

     10.4     Registration Rights Agreement dated as of September 29, 2003 among O'Sullivan
              Industries, Inc., O'Sullivan Industries Holdings, Inc., O'Sullivan Industries - Virginia, Inc.
              and O'Sullivan Furniture Factory Outlet, Inc. and Credit Suisse First Boston LLC with
              respect to the O'Sullivan Industries, Inc. 10.63% senior secured notes  (incorporated by
              reference to Exhibit 10.4 to Quarterly Report on Form 10-Q for the quarter ended
              September 30, 2003 (File No. 0-28493))

     10.5     Lockbox Account Agreement dated as of October 28, 2003 among Bank of America, N.A.,
              O'Sullivan Industries, Inc. and General Electric Capital Corporation (incorporated by
              reference to Exhibit 10.5 to Quarterly Report on Form 10-Q for the quarter ended
              September 30, 2003 (File No. 0-28493))

     10.6     Blocked Account Agreement dated as of October 28, 2003 among Bank of America, N.A.,
              O'Sullivan Industries, Inc. and General Electric Capital Corporation (incorporated by
              reference to Exhibit 10.6 to Quarterly Report on Form 10-Q for the quarter ended
              September 30, 2003 (File No. 0-28493))

     31.1     Certification of chief executive officer pursuant to Section 302 of the Sarbanes-Oxley Act         27
              of 2002

     31.2     Certification of chief financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of      28
              2002

     32.1     Certification of chief executive officer pursuant to 18 U.S.C. Section 1350, as adopted            29
              pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

     32.2     Certification of chief financial officer pursuant to 18 U.S.C. Section 1350, as adopted            30
              pursuant to Section 906 of the Sarbanes-Oxley Act of 2002







                                                        26

EX-31

                                                                                                       Exhibit 31.1

                                                   CERTIFICATION

         I, Richard D. Davidson, certify that:

1.       I have reviewed this annual report on Form 10-K of O'Sullivan Industries, Inc.

2.       Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this quarterly report; and

3.       Based on my knowledge, the financial statements, and other financial information included in this quarterly
report, fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.

4.       The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

                  (a)      Designed such disclosure controls and procedures, or caused such disclosure controls and
         procedures to be designed under our supervision, to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
         particularly during the period in which this report is being prepared;

                  (b)      Evaluated the effectiveness of the registrant's disclosure controls and procedures and
         presented in this report our conclusions about the effectiveness of the controls and procedures, as of the end
         of the period covered by this report based on such evaluation; and

                  (c)      Disclosed in this report any change in the registrant's internal control over financial
         reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter
         in the case of an quarterly report) that has materially affected, or is reasonably likely to materially affect, the
         registrant's internal control over financial reporting; and

5.       The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board
of directors (or persons performing the equivalent functions):

                  (a)      All significant deficiencies and material weaknesses in the design or operation of internal
         control over financial reporting which are reasonably likely to adversely affect the registrant's ability to
         record process, summarize and report financial information; and

                  (b)      Any fraud, whether or not material, that involves management or other employees who
         have a significant role in the registrant's internal control over financial reporting.



Date:    November 13, 2003                                                   /s/ Richard D. Davidson
                                                              ____________________________________
                                                                               Richard D. Davidson
                                                                      President and Chief Executive Officer

EX-31

                                                                                                       Exhibit 31.2

                                                   CERTIFICATION

         I, Phillip J. Pacey, certify that:

1.       I have reviewed this quarterly report on Form 10-Q of O'Sullivan Industries, Inc.

2.       Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this quarterly report; and

3.       Based on my knowledge, the financial statements, and other financial information included in this quarterly
report, fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.

4.       The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

                  (a)      Designed such disclosure controls and procedures, or caused such disclosure controls and
         procedures to be designed under our supervision, to ensure that material information relating to the
         registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
         particularly during the period in which this report is being prepared;

                  (b)      Evaluated the effectiveness of the registrant's disclosure controls and procedures and
         presented in this report our conclusions about the effectiveness of the controls and procedures, as of the end
         of the period covered by this report based on such evaluation; and

                  (c)      Disclosed in this report any change in the registrant's internal control over financial
         reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter
         in the case of an quarterly report) that has materially affected, or is reasonably likely to materially affect, the
         registrant's internal control over financial reporting; and

5.       The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board
of directors (or persons performing the equivalent functions):

                  (a)      All significant deficiencies and material weaknesses in the design or operation of internal
         control over financial reporting which are reasonably likely to adversely affect the registrant's ability to
         record process, summarize and report financial information; and

                  (b)      Any fraud, whether or not material, that involves management or other employees who
         have a significant role in the registrant's internal control over financial reporting.



Date:    November 13, 2003                                                    /s/ Phillip J. Pacey
                                                              ____________________________________
                                                                            Senior Vice President and
                                                                             Chief Financial Officer